8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) October 17, 2016

XFIT BRANDS, INC.

(Exact name of registrant as specified in its charter)

Nevada	000-55372	47-1858485
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

25731 Commercentre Drive, Lake Forest, CA	92630
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 916-9680

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2.below):

[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Acquisition of Assets of Environmental Turf Services, LLC

On October 14, 2016 but effective as of October 10, 2016, XFit Brands, Inc. (“XFit” or the “Company”) acquired the assets of Environmental Turf Services, LLC (“EnviroTurf”) pursuant to a definitive Asset Purchase Agreement dated October 10, 2016 (the “Purchase Agreement”) between the Company and EnviroTurf. The acquired assets consisted of inventory, accounts receivable, equipment and vehicles, the registered trademark “ENVIROTURF” and the associated goodwill. The acquisition was completed on October 14, 2016 upon delivery and acceptance of the schedules to the Purchase Agreement (the “Acquisition”).

At the closing of the Acquisition, the Company paid and issued to EnviroTurf a total purchase price of $346,000 as follows: (i) assumption of $200,000 of EnviroTurf’s accounts payable and (ii) 2,000,000 restricted shares of XFit Common Stock (the “Purchase Price Shares”), which were valued at the closing price on the date of XFit’s Common Stock on the date of the Acquisition. The Company will fund the non-share purchase price and the costs and expenses of the Acquisition through a combination of cash on hand and internally-generated working capital.

The Purchase Agreement contains customary representations, warranties and covenants by the parties.

The foregoing description of the Purchase Agreement and the transactions contemplated thereby is not complete and is subject and qualified in its entirety by reference to the text of the Purchase Agreement, which is filed as Exhibit 2.1 to this report and incorporated by reference in this Item 1.01. The representations and warranties of the parties in the Purchase Agreement have been made solely for the benefit of the other parties to the Purchase Agreement, and were not intended to be, and should not be, relied upon by any person other than such parties, including shareholders of the Company; should not be treated as categorical statements of fact, but rather as a way of allocating risk between the parties; in some cases have been qualified by disclosures that were made to the other parties in connection with the negotiation of the Purchase Agreement, which disclosures are not necessarily reflected in the Purchase Agreement; may apply standards of materiality in a way that may differ from standards of materiality applied by investors; and were made only as of the date of the Purchase Agreement or as of such other date or dates as may be specified in the Purchase Agreement, and are subject to developments occurring after those dates.

After giving effect to the issuance of the shares of Common Stock issued EnviroTurf at closing, EnviroTurf will beneficially own approximately 7.7% of the Company’s outstanding shares of Common Stock. In addition, pursuant to the Purchase Agreement, Jim Bateman, the majority equity owner of EnviroTurf, entered into an employment agreement with the Company for an initial term ending June 30, 2019 pursuant to which he will be President of the Sports Division and join the Board of Directors of the Company for base compensation of $72,000 per year, In addition, the Company shall also pay to Bateman (i) a commission of $0.05 per square of installed and paid turf from the EnviroTurf business; (ii) 2% of Net Sales (defined as Gross Sales less Discounts) directly generated by Bateman on the sale of any other product in the XFit Brand portfolio; and (iii) an equity bonus equivalent to 100,000 shares of XFit Common Stock or share-based equivalents (subject to adjustments for share splits and recapitalizations) for each $5,000,000 in EnviroTurf Net Sales. Finally, Bateman will be provided an equity incentive of 1,000,000 shares of XFit Common Stock following the successful sales and collection of $5,000,000 in EnviroTurf Net Sales. The foregoing description of the Employment Agreement is not complete and is subject and qualified in its entirety by reference to the text of such agreement, which is filed as Exhibit 10.1 to this report and incorporated by reference in this Item 1.01.

Item 2.01 Completion of Acquisition or Disposition of Assets.

As described under Item 1.01 of this Current Report on Form 8-K, the Company completed its acquisition of EnviroTurf effective October 10, 2016 for a total purchase price of $346,000 funded with shares of XFit Common Stock and existing working capital. The foregoing does not constitute a complete summary of the Acquisition or the terms of the Purchase Agreement, and reference is made to the disclosures contained in Item 1.01 hereof and the complete text of the Purchase Agreement filed as Exhibit 2.1 to this Current Report on Form 8-K, which are incorporated by reference herein.

Item 3.02 Unregistered Sales of Equity Securities.

The information set forth in Item 1.01 of this Current Report on Form 8-K regarding the issuance of the shares of Common Stock by XFit pursuant to the Acquisition is incorporated herein by reference. The securities issued pursuant to the Acquisition are restricted securities and were offered and sold in private transactions to an accredited investor (as such term is defined in Rule 501(a), as promulgated under the Securities Act of 1933), without registration under the Securities Act and the securities laws of certain states, in reliance on the exemption provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and similar exemptions under applicable state laws. The securities sold in the foregoing transaction may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

2

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired

The Company will furnish the financial statements of the business acquired as required by Item 9.01(a) by amendment not later than 71 calendar days after the date on which the initial Current Report on Form 8-K with respect to the consummation of the Acquisition reported under Item 2.01 of this report is required to have been filed with the SEC pursuant to SEC rules.

(b) Pro Forma Financial Information

The Company will furnish the pro forma financial information required by Item 9.01(b) by amendment not later than 71 calendar days after the date on which the initial Current Report on Form 8-K with respect to the consummation of the Acquisition reported under Item 2.01 of this report is required to have been filed with the SEC pursuant to SEC rules.

(d) Exhibits

The following exhibits are attached to this Current Report on Form 8-K:

Exhibit Number Exhibit Title or Description

2.1 Asset Purchase Agreement between the Company and Environmental Turf Services, LLC (The schedules and exhibits to the Purchase Agreement are omitted pursuant to Item 601(b)(2) of Regulation S-K. XFit Brands, Inc. agrees to furnish as supplemental information to the SEC, upon request, a copy of any omitted schedule or exhibit).

10.1 Employment Agreement between the Company and Jim Batemen.

3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	XFIT BRANDS, INC.
	(Registrant)
Date: October 19, 2016	By:	/s/ David E. Vautrin
		David E. Vautrin
		Chief Executive Officer

4

EX-2.1

ASSET PURCHASE AGREEMENT

BETWEEN

XFIT BRANDS, INC.

AND

ENVIRONMENTAL TURF SERVICES, LLC

October 10, 2016

 

ASSET PURCHASE AGREEMENT

THIS AGREEMENT made the 10th day of October, 2016,

B E T W E E N:

XFIT BRANDS, INC.,

a corporation incorporated under the laws of Nevada,

(hereinafter referred to as the “Purchaser”),

- and -

ENVIRONMENTAL TURF SERVICES, LLC,

a limited liability organized under the laws of Mississippi,

(hereinafter referred to as the “Seller”).

THIS AGREEMENT WITNESSES THAT in consideration of the respective covenants, agreements, representations, warranties and indemnities of the parties herein contained and for other good and valuable consideration (the receipt and sufficiency of which are acknowledged by each party), the parties agree as follows:

Section 1

INTERPRETATION

1.1 Definitions

For the purposes of this Agreement, unless the context otherwise requires, the following terms shall have the respective meanings set out below and grammatical variations of such terms shall have corresponding meanings:

“Affiliate” means, with respect to any Person, any other Person Controlling, Controlled by, or under common Control with, such Person.

“Applicable Laws” means all laws, statutes, ordinances, regulations, rules, by-laws, judgments, decrees or orders of any Authority having jurisdiction over the Seller or over any part of the Purchased Assets.

“Assigned Contracts” has the meaning set out in paragraph 2.1(b)

“Assumed Liabilities” has the meaning set out in subsection 3.6.

“Authority” means any governmental or regulatory authority, department, body or agency or any court, tribunal, bureau, commission, arbitrator or arbitration board or other similar body, whether federal, state or municipal.

“Books and Records” means all books and records relating to the Purchased Assets (other than books and records required to be retained by the Seller, copies of which will be made available to the Purchaser).

“Business Day” means any day, other than a Saturday or a Sunday, or a statutory public holiday in the State of California.

“Cash Payment” has the meaning set out in subsection 3.2.

“Claim” has the meaning set out in subsection 10.3.

“Closing Date” means ●, 2016, or such other date as the Seller and the Purchaser may mutually determine.

“Commission” means the Securities and Exchange Commission.

“Common Stock” means the common stock, par value $0.0001 per share, of the Purchaser.

“Contracts” means any agreement, indenture, contract, lease, deed of trust, licence, option, instrument, orders or other commitment, whether written or oral.

“Control” and its derivatives mean, with regard to any Person, the legal, beneficial or equitable ownership, directly or indirectly, of more than 50% of the capital stock (or other ownership interests, if not a corporation) of such Person ordinarily having voting or equivalent rights.

“Derivative Works” means any work of authorship that is based, in whole or in part, upon any pre-existing works, such as a revision, modification, translation, abridgement, condensation, expansion or any other form in which such pre-existing works may be recast, transformed or adopted and which, if prepared without authorization of the owner of the copyright in such pre-existing work, would constitute an infringement of copyright in that work.

“Direct Claim” has the meaning set out in Section 10.3.

“Elected Amount” for any Purchased Asset means the amount determined in respect of such Purchased Asset in accordance with subsection Through

“Encumbrance” means any encumbrance, lien, charge, hypothec, pledge, mortgage, title retention agreement, security interest of any nature, adverse claim, exception, reservation, easement, right of occupation, any matter capable of registration against title, option, right of pre-emption, privilege or any contract to create any of the foregoing.

“Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

“Indemnified Party” has the meaning set out in subsection 10.3.

“Indemnifying Party” has the meaning set out in subsection 10.3.

“Intellectual Property” means all industrial or intellectual property in any jurisdiction, including: (a) trademarks, service marks, trade names, brand names, domain names, social media sites and other identifying names or marks; (b) patents and patent rights; (c) registered and unregistered industrial designs; (d) trade secrets and other confidential or non-public business information, including ideas, formulae, compositions, inventor’s notes, discoveries and improvements, know-how, business processes and techniques, manufacturing and production processes and techniques, and research and development information (whether or not patentable), invention disclosures, unpatented blueprints, drawings, specifications, designs, plans, proposals and technical data, business and marketing plans and supplier lists and information; (e) writings and other copyrightable works of authorship, including computer programs, data bases, business processes and documentation therefore, and all copyrights to any of the foregoing; (f) moral rights and waivers thereof; (g) internet protocol addresses and all other network addresses; (h) registrations of, and applications to register, any of the foregoing with any government authority and any renewals or extensions thereof; and (j) any claims or causes of action arising out of or related to any infringement or misappropriation of any of the foregoing.

“Knowledge of the Seller” and any equivalent expressions means the knowledge of those employees of the Seller involved with the business conducted with the Purchased Assets who would reasonably be expected to have knowledge of the subject matter at hand, after due inquiry.

“Losses”, in respect of any matter, means all claims, demands, proceedings, losses, damages, liabilities, deficiencies, costs and expenses (including, without limitation, all legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement) arising directly as a consequence of such matter.

“Permits” has the meaning set out in subsection 4.1.

“Person” means an individual, corporation, partnership, joint venture, association, trust, pension fund, union, Authority or other entity.

“Purchase Price” has the meaning set out in subsection 3.1.

“Purchased Assets” has the meaning set out in subsection 2.1.

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

“Samples” means the samples of products listed in Schedule 1.1C.

“SEC Reports” shall have the meaning ascribed to such term in subsection 5.8.

“Securities Act” means the United States Securities Act of 1933, as amended.

“Shares” means the shares of Common Stock issuable to the Seller hereunder in respect of the Purchase Price.

“Time of Closing” means 11:00 a.m. (Pacific time) on the Closing Date, or such other time on the Closing Date as the Seller and the Purchaser may mutually determine.

“Third Party Claim” has the meaning set out in subsection 10.3.

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the OTCQB, the NYSE MKT, the New York Stock Exchange, or the Nasdaq Market.

“Transaction Agreements” means, collectively, this Agreement, the Employment Agreement and any other agreement delivered in connection herewith or therewith.

1.2 Sections and Headings

The division of this Agreement into sections and the insertion of headings are for convenience of reference only and shall not affect the interpretation of this Agreement. Unless otherwise indicated, any reference in this Agreement to a Section or Schedule refers to the specified Section of or Schedule to this Agreement and any reference in this Agreement to a Section shall include a subsection of such Section, as applicable.

1.3 Number and Gender

In this Agreement, words importing the singular number only shall include the plural and vice versa and words importing gender shall include all genders.

1.4 Entire Agreement

This Agreement and the Transaction Documents constitute the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether written or oral. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied, collateral, statutory or otherwise, relating to the subject matter hereof except as herein provided.

1.5 Time of Essence

Time shall be of the essence in this Agreement.

1.6 Applicable Law

This Agreement shall be construed, interpreted and enforced in accordance with, and the respective rights and obligations of the parties shall be governed by, the laws of the State of California and the federal laws of the United States applicable therein and each party irrevocably attorns to the non-exclusive jurisdiction of the courts of such State and all courts competent to hear appeals therefrom.

1.7 Severability

If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such determination shall not impair or affect the validity, legality or enforceability of the remaining provisions hereof, and each provision is hereby declared to be separate, severable and distinct.

1.8 Successors and Assigns

This Agreement shall ensure to the benefit of and shall be binding on and enforceable by the parties and, where the context so permits, their respective successors and permitted assigns. Neither party may assign any of its rights or obligations hereunder without the prior written consent of the other party.

1.9 Amendment and Waivers

No amendment or waiver of any provision of this Agreement shall be binding on either party unless consented to in writing by such party. No waiver of any provision of this Agreement shall constitute a waiver of any other provision, nor shall any waiver constitute a continuing waiver unless otherwise provided.

1.10 Schedules

The following Schedules are attached to and form part of this Agreement. Where no Schedule as referred to following is attached, the Schedule shall be deemed to be attached and shall be interpreted as “Nil”:

Schedule 1.1C	–	Samples
Schedule 2.1(a)	–	Equipment, Vehicles, Inventory
Schedule 2.1(b)	–	Assigned Contracts
Schedule 2.1(d)	–	Books and Records
Schedule 3.2	–	Assumed Liabilities
Schedule 4.6	–	Permits
Schedule 4.7(a)	–	Required Regulatory Consents
Schedule 4.7(b)	–	Required Contractual Consents
Schedule 4.8	–	Litigation
Schedule 4.10(h)	–	Third Party Disclosures
Exhibit A	–	Employment Agreement

Section 2
PURCHASE AND SALE OF PURCHASED ASSETS and subscription

2.1 Transfer of Purchased Assets

Subject to the applicable provisions of this Agreement, the Seller agrees to sell, assign and transfer to the Purchaser and the Purchaser agrees to purchase and assume from the Seller, all right, title, obligations and interest of the Seller in and to the following property and assets (collectively, the “Purchased Assets”):

(a)	Equipment. All of the Seller’s right, title and interest to the equipment and vehicles described in Schedule 2.1 (a) (the “Equipment”);
(b)	Assigned Contracts. All rights, benefits and obligations under the Contracts listed in Schedule 2.1 (b) (the “Assigned Contracts”);
(c)	Books and Records. The Seller’s right and title to the Books and Records;
(d)	Samples. The Seller’s right and title to the Samples;
(e)	Inventory. All of the Seller’s right, title and interest in inventory;
(h)	Deposits and Accounts Receivable. All of the Seller’s right, title and interest in accounts receivable and customer deposits; and
(i)	Goodwill, Internet Domains, Trademarks; and Customer List. All of Seller’s right, title and interest in the name “EnviroTurf;” any trademark used or useful in Seller’s business, its Internet domain and all customer list.

Section 3
PURCHASE PRICE

3.1 Purchase Price

The aggregate purchase price (the “Purchase Price”) payable by the Purchaser for the Purchased Assets shall be equal to the value of the Shares issued in subsection 3.2 hereof and the assumption of the Assumed Liabilities (as defined below), such sum being the aggregate fair market value of the Purchased Assets as at the Time of Closing.

3.2 Satisfaction of Purchase Price

In full payment and satisfaction of the Purchase Price, the Purchaser hereby agrees to issue and deliver to the Seller at the Time of Closing certificates representing 2,000,000 Shares registered in the name of the Seller, and to assume $200,000 in the accounts payable of the Seller identified on Schedule 3.2 (the “Assumed Liabilities”). The Purchaser shall pay the Assumed Liabilities in the due course of its business. The Purchaser shall not assume nor have any responsibility with respect to any debt or obligation of the Seller except as specifically listed herein.

3.3 Allocation of Purchase Price

The Seller and the Purchaser agree to negotiate in good faith the allocation of the Purchase Price among the purchased assets prior to the Closing Date and to report the purchase and sale of the Purchased Assets for all federal, state and local tax purposes in a manner consistent with such allocation.

3.4 Transfer Taxes

The Purchaser shall be liable for and shall pay all federal and state sales taxes and all other taxes, duties, fees or other like charges of any jurisdiction payable in connection with the purchase of the Purchased Assets.

3.5 Assumption of Warranties

The Purchaser shall assume all outstanding warranties on prior installations by Environmental Turf Services LLC.

Section 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER

The Seller represents and warrants to the Purchaser as follows and acknowledges that the Purchaser is relying on such representations and warranties in connection with its purchase of the Purchased Assets:

4.1 Organization

The Seller is a limited liability company existing under the laws of Mississippi and has the corporate power to own the Purchased Assets and to enter into this Agreement and to perform its obligations hereunder.

4.2 Authorization

This Agreement has been duly authorized, executed and delivered by the Seller and is a legal, valid and binding obligation of the Seller, enforceable against the Seller by the Purchaser in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.

4.3 No Other Agreements to Purchase

No person other than the Purchaser has any written or oral agreement or option or any right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option for the purchase or acquisition from the Seller of any of the Purchased Assets.

4.4 No Violation

The execution and delivery of this Agreement by the Seller and the consummation of the transactions herein provided for will not result in:

(a) except for the requirement to give the required notices and to obtain the required consents described in Schedules 4.7(a) and 4.7(b), the material breach or violation of any of the provisions of, or constitute a material default under, or materially conflict with or cause the acceleration of any obligation of the Seller under:

(i)	any Contract to which the Seller is a party or by which it or its properties are bound;
(ii)	any provision of the operating agreement or resolutions of the members of the Seller;
(iii)	any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over the Seller;
(iv)	any Permit; or
(v)	any Applicable Law; nor

(b) the creation or imposition of any Encumbrance on any of the Purchased Assets.

4.5 Title

The Purchased Assets are owned beneficially by the Seller with good title thereto, free and clear of all Encumbrances.

4.6 Compliance with Laws; Permits

The Seller has complied in all material respects with all Applicable Laws applicable to the Purchased Assets. Schedule 4.6 sets out a complete and accurate list of all permits issued by Authorities, licenses, approvals, consents, registrations, certificates and other authorizations (collectively, the “Permits”) held by or granted to the Seller which are material to the Purchased Assets, and there are no other material Permits necessary for the Purchaser to use the Purchased Assets as currently used by the Seller, or for the Seller to own or lease the Purchased Assets in compliance with Applicable Law. All such Permits are valid, subsisting and in good standing and the Seller is not in material default or breach of any Permit and, to the knowledge of the Seller, no proceeding is pending or threatened to revoke or limit any Permits. The Seller has provided a true and complete copy of each Permit listed in Schedule 4.6 and all amendments thereto to the Purchaser.

4.7 Consents and Approvals

(a)	Except as described in Schedule 4.7(a), there is no requirement to make any filing with or give any notice to any Authority, or obtain any Permit as a condition to the lawful consummation of the transactions contemplated by this Agreement other than those which relate solely to the identity of the Purchaser or the nature of any business carried on by the Purchaser.
(b)	There is no requirement under any Contract to which the Seller is a party or by which it or its properties are bound to give any notice to, or to obtain the consent or approval of, any party to such agreement, instrument or commitment relating to the consummation of the transactions contemplated by this Agreement, except for the notifications, consents and approvals described in Schedule 4.7(b).

4.8 Litigation

Except as described in Schedule 4.8, there are no actions, suits, proceedings, audits, investigations or complaints (whether or not purportedly on behalf of the Seller) pending or, to the best of the knowledge of the Seller, threatened, at law or in equity or before or by any Authority against the Seller, which could affect the Purchased Assets or result in an Encumbrance upon any of the Purchased Assets.

4.9 Residency

The Seller is a resident of Mississippi.

4.10 Assigned Contracts

The Seller has complied in all material respects with all Assigned Contracts and is not in default thereunder. To the knowledge of the Seller, the other parties to the Assigned Contracts have complied in all material respects with the terms thereof and are not in default thereunder.

4.11 Inventory.

All of the inventory is in good saleable condition and any write downs in respect of spoiled or obsolete inventory have been taken in accordance with GAAP.

4.12 Accounts Receivable.

All of the accounts receivable represent bona fide obligations of the respective customers, free and clear of any set-offs or counter claims. A schedule of Accounts Receivable aging as of September 30 is attached as Schedule 4.12.

4.13 Securities Representations

(a)	Investment Intent.    The Seller is entering into this Agreement for its own account and not with a view to any distribution of the Shares acquired by it, and it has no present arrangement to sell any of its Shares to or through any Person, provided that this representation shall not be construed as an undertaking to hold any Shares for any minimum or other specific term, and the Seller reserves the right to dispose of its Shares at any time in accordance with Applicable Law.
(b)	Sophistication.    The Seller has such experience in business and financial matters that it is capable of evaluating the merits and risks of an investment in the Shares. The Seller acknowledges that an investment in the Shares is speculative and involves a high degree of risk.
(c)	Access to Information.    The Seller has received or had access to all documents, records and other information pertaining to its investment in the Shares that it has requested, including documents filed by the Purchaser under the Exchange Act, and has been given the opportunity to meet or have telephonic discussions with representatives of the Purchaser, to ask questions of them, to receive answers concerning the terms and conditions of this investment and to obtain information that the Purchaser possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy of the information provided to the Seller.
(d)	Manner of Sale.    At no time was the Seller presented with or solicited by or through any leaflet, public promotional meeting, television advertisement or any other form of general solicitation or advertising relating to the Purchaser or any investment in the Shares.

Section 5

REPRESENTATIONS AND WARRANTIES OF THE PURCHASER

The Purchaser represents and warrants to the Seller as follows and acknowledges and confirms that the Seller is relying on such representations and warranties in connection with its sale of the Purchased Assets in exchange for the Shares:

5.1 Organization

The Purchaser is existing under the laws of Nevada and has the corporate power to enter into this Agreement and to perform its obligations hereunder and has the corporate power to enter into this Agreement and to perform its obligations hereunder.

5.2 Authorization

This Agreement has been duly authorized, executed and delivered by the Purchaser and is a legal, valid and binding obligation of the Purchaser, enforceable against the Purchaser by the Seller in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors generally and except that equitable remedies may only be granted in the discretion of a court of competent jurisdiction. All necessary corporate action has been taken by the Purchaser to authorize the issuance of the Shares to the Seller and upon receipt by the Purchaser of the Purchase Price, the Shares will be issued as fully paid and non-assessable shares.

5.3 No Violation

The execution and delivery of this Agreement by the Purchaser and the consummation of the transactions herein provided for will not result in the material breach or violation of any of the provisions of, or constitute a material default under, or materially conflict with or cause the acceleration of any obligation of the Purchaser under:

(a)	any Contract to which the Purchaser is a party or by which it is or its properties are bound;
(b)	any provision of the organizational documents or by-laws or resolutions of the board of directors (or any committee thereof) of the Purchaser;
(c)	any judgment, decree, order or award of any court, governmental body or arbitrator having jurisdiction over the Purchaser; or
(d)	any law, statute, ordinance, regulation, rule, by-law, judgement, decree or order of any Authority having jurisdiction over the Purchaser.

5.4 Consents and Approvals

Except as set out in Schedule 5.4, there is no requirement for the Purchaser to make any filing with or give any notice to any Authority, or obtain any Permit as a condition to the lawful consummation of the transactions contemplated by this Agreement. There is no requirement under any Contract to which the Purchaser is a party or by which it or its properties are bound to give any notice to, or to obtain the consent or approval of, any party to such Contract relating to the consummation of the transactions contemplated by this Agreement, the failure of which to provide such notice or obtain such consent would prevent the Purchaser from fulfilling its obligations under this Agreement.

5.5 Litigation

There are no actions, suits, proceedings, audits, investigations or complaints (whether or not purportedly on behalf of the Purchaser) pending or, to the best of the knowledge of the Purchaser, threatened, at law or in equity or before or by any Authority against the Purchaser which adversely affects or challenges the legality, validity or enforceability of this Agreement, any of the Transaction Agreements or the Shares.

5.6 Organization

The Purchaser is existing under the laws of the state of Nevada and has the corporate power to enter into this Agreement and to perform its obligations hereunder and has the corporate power to enter into this Agreement and to perform its obligations hereunder.

5.7 Capitalization

The capitalization of the Purchaser is as described in the Purchaser’s filings under the Exchange Act. No Person has any right of first refusal, pre-emptive right, right of participation, or any similar right to participate in the transactions contemplated by this Agreement and the Transaction Agreements. Except as described in the Purchaser’s filings under the Exchange Act or as a result of the purchase and sale of the Shares or grants of options under the Purchaser’s Stock Incentive Plan, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any Common Stock, or contracts, commitments, understandings or arrangements by which the Purchaser is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as described in Purchaser’s filings under the Exchange Act, the issue of the Shares will not obligate the Purchaser to issue shares of Common Stock or other securities to any Person (other than the Seller) and will not result in a right of any holder of Purchaser securities to adjust the exercise, conversion, exchange or reset price under such securities.

5.8 SEC Reports; Financial Statements

The Purchaser has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) of the Exchange Act, for the two years preceding the date hereof (or such shorter period as the Purchaser was required by law to file such material) (the foregoing materials, including the exhibits thereto, being collectively referred to herein as the “SEC Reports) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, as applicable, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Purchaser included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Purchaser and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

5.9 Listing and Maintenance Requirements

The Purchaser has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Purchaser is not in compliance with the listing or maintenance requirements of such Trading Market. The Purchaser is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

Section 6

SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES

6.1 Survival of Covenants, Representations and Warranties

To the extent that they have not been fully performed at or prior to the Time of Closing, the covenants, representations and warranties contained in this Agreement and in all certificates and documents delivered pursuant to or contemplated by this Agreement shall survive the closing of the transactions contemplated hereby and shall continue for the applicable limitation period notwithstanding such closing nor any investigation made by or on behalf of the party entitled to the benefit thereof.

Section 7

COVENANTS

7.1 Operate in Ordinary Course.

From and after the date hereof through to the Closing Date, the Seller shall operate in the ordinary course with past practice. Without limiting the foregoing, the Seller shall not without the written consent of the Purchaser:

(a)	accelerate the collection of accounts receivable;
(b)	discount inventory; or
(c)	increase the salary or benefits of any of its employees.

7.2 Preservation of Organization.

The Seller shall use its best efforts to preserve intact its relationships with its employees, provided that this Agreement shall not require the Seller to increase the salary of or make other payments to its employees.

7.3 Access to Purchased Business and Purchased Assets

The Seller shall forthwith make available to the Purchaser and its authorized representatives and, if requested by the Purchaser, provide a copy to the Purchaser of, all title documents, Contracts, policies, plans, reports, licences, orders, Permits and all other documents, information and data relating to the Purchased Assets. The Seller shall afford the Purchaser and its authorized representatives reasonable access to the Purchased Assets. At the request of the Purchaser, the Seller shall execute such consents, authorizations and directions as may be necessary to permit any inspection of the Purchased Assets or to enable the Purchaser or its authorized representatives to obtain full access to all files and records relating to any of the Purchased Assets maintained by Authorities. At the Purchaser’s request, the Seller shall co-operate with the Purchaser in arranging any such meetings as the Purchaser may reasonably request with employees, auditors, accountants, attorneys or any other persons engaged or previously engaged to provide services to the Seller who have knowledge of matters relating to the Purchased Assets. The exercise of any rights of inspection by or on behalf of the Purchaser under this Section 7.3 shall not mitigate or otherwise affect the representations and warranties of the Seller hereunder which shall continue in full force and effect as provided in subsection 6.1.

7.4 Delivery of Books and Records

At the Time of Closing, pursuant to subsection 9.1 there shall be delivered to the Purchaser by the Seller copies of such Books and Records relating to the Purchased Assets as the Purchaser may reasonably request, to the extent such Books and Records have been retained by the Seller. The Purchaser agrees that it will preserve the Books and Records so delivered to it for a period of six years from the Closing Date, or for such longer period as is required by any applicable law, and will permit the Seller or its authorized representatives reasonable access thereto in connection with the affairs of the Seller relating thereto, but the Purchaser shall not be responsible or liable to the Seller for or as a result of any accidental loss or destruction of or damage to any such Books and Records.

7.5 Delivery of Conveyancing Documents

The Seller shall deliver to the Purchaser all necessary deeds, conveyances, bills of sale, assurances, transfers, assignments and any other documentation necessary or reasonably required to transfer the Purchased Assets to the Purchaser with a good title, free and clear of all Encumbrances.

7.6 Assigned Contracts

(a) Consent Cannot Be Obtained. The Seller shall, for a period of 6 months after the Closing Date, use its commercially reasonable efforts to obtain all consents and waivers necessary to assign the Assigned Contracts and Assigned Third Party Software Licences to the Purchaser. Notwithstanding anything above, commercially reasonable efforts do not include the Seller being required to pay consideration to obtain consents and waivers. In any case where a consent required under a Contract referred to in Schedule 2.1 (b) shall be refused or otherwise not obtained or where such Contract cannot be assigned, leased, subleased, sub-licensed or transferred to the Purchaser:

(i)	(to the extent permissible under the relevant Contract) the Seller shall provide or cause to be provided to the Purchaser the benefit of the Contract, or the relevant portions thereof, take all commercially reasonable actions and cause to be done all commercially reasonable actions at the request of the Purchaser to preserve the value of the Contract and shall deliver or caused to be delivered to the Purchaser any monies, goods or other benefits received thereunder as agent of and trustee for the Purchaser and shall, immediately upon receipt of the same, account for and pay or deliver to the Purchaser all such monies, goods and other benefits;
(ii)	the Seller shall take all commercially reasonable efforts to enforce all rights of the Seller under any such Contract against the other party or parties hereto;
(iii)	(to the extent permissible under the relevant Contract) the Purchaser shall perform the Contract, on its respective terms and conditions; and
(iv)	the Seller shall use its commercially reasonable efforts to reach a mutually acceptable solution to enable the Purchaser to obtain the benefit of such Contract.

(b) Consents Obtained After Closing Date. In the event that there are any Assigned Contracts which have not been assigned to the Purchaser at the Time of Closing and such contracts are assigned to the Purchaser within three (3) months of the Closing Date, the Purchaser shall reimburse the Seller for the benefit of any prepaid expenses in connection with such contracts existing at the time of such assignment.

7.7 Bulk Sales Act

The Seller shall comply with the Bulk Sales Act in respect of the transaction contemplated hereby.

7.8 Furnishing of Information

As long as the Seller owns Shares, the Purchaser covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Purchaser after the date hereof pursuant to the Exchange Act.

Section 8

CONDITIONS OF CLOSING

8.1 Conditions of Closing in Favor of the Purchaser

The purchase and sale of the Purchased Assets is subject to the following terms and conditions for the exclusive benefit of the Purchaser, to be performed or fulfilled at or prior to the Time of Closing:

(a)	Representations and Warranties. The representations and warranties of the Seller contained in this Agreement shall be true and correct at the Time of Closing in all material respects (except where a representation and warranty contains a materiality qualification, in which case the representation and warranty shall be true and correct at the Time of Closing in all respects) with the same force and effect as if such representations and warranties were made at and as of such time, and a certificate executed by the Seller, dated the Closing Date, to that effect shall have been delivered to the Purchaser, such certificate to be in form and substance satisfactory to the Purchaser, acting reasonably;
(b)	Covenants. All of the terms, covenants and conditions of this Agreement to be complied with or performed by the Seller at or before the Time of Closing shall have been complied with or performed in all material respects, and a certificate executed by a senior officer of the Seller, dated the Closing Date, to that effect shall have been delivered to the Purchaser, such certificate to be in form and substance satisfactory to the Purchaser, acting reasonably;
(c)	Regulatory Consents. There shall have been obtained from all appropriate Authorities such consents and approvals as are required to be obtained by the Seller to permit the change of ownership of the Purchased Assets contemplated hereby, including, without limitation, those described in Schedule 4.7(a), in each case in form and substance satisfactory to the Purchaser, acting reasonably;

(d)	Contractual Consents. Subject to Section  7.4, the Seller shall have given or obtained the notices, consents and approvals described in Schedule 4.7(b), in each case in form and substance satisfactory to the Purchaser, acting reasonably;
(e)	No Action or Proceeding. No legal or regulatory action or proceeding shall be pending or threatened by any person against the Purchased Assets or to enjoin, restrict or prohibit the purchase and sale of the Purchased Assets contemplated hereby or the performance of any party’s obligations under any agreement contemplated in this Agreement to be executed and delivered by either party at the Time of Closing;
(f)	No Material Damage. No material damage by fire or other hazard to the whole or any material part of the Purchased Assets shall have occurred prior to the Time of Closing;
(g)	No Encumbrances. All Encumbrances on the Purchased Assets, except Permitted Encumbrances shall have been validly discharged;
(h)	Employment of James Bateman. The Purchaser shall have entered into an employment agreement with James Bateman in the form attached as Exhibit A; and
(i)	Transaction Agreements. The Transaction Agreements shall have been entered into by the parties thereto, in a form satisfactory to the parties thereto, acting reasonably.

If any of the conditions contained in this subsection 8.1 shall not be performed or fulfilled at or prior to the Time of Closing to the satisfaction of the Purchaser, acting reasonably, the Purchaser may, by notice to the Seller, terminate this Agreement and the obligations of the Seller and the Purchaser under this Agreement shall be terminated. Any such condition may be waived in whole or in part by the Purchaser without prejudice to any claims it may have for breach of covenant, representation or warranty.

8.2 Conditions of Closing in Favor of the Seller

The purchase and sale of the Purchased Assets is subject to the following terms and conditions for the exclusive benefit of the Seller, to be performed or fulfilled at or prior to the Time of Closing:

(a)

Representations and Warranties. The representations and warranties of the Purchaser contained in this Agreement shall be true and correct in all material respects at the Time of Closing (except where a representation and warranty contains a materiality qualification, in which case the representation and warranty shall be true and correct at the Time of Closing in all respects) with the same force and effect as if such representations and warranties were made at and as of such time, and a certificate executed by the Purchaser dated the Closing Date to that effect shall have been delivered to the Seller, such certificates to be in form and substance satisfactory to the Seller, acting reasonably;

(b)

Covenants. All of the terms, covenants and conditions of this Agreement to be complied with or performed by the Purchaser at or before the Time of Closing shall have been complied with or performed in all material respects, and a certificate executed by a senior officer of the Purchaser dated the Closing Date to that effect shall have been delivered to the Seller, such certificate to be in form and substance satisfactory to the Seller, acting reasonably;

(c)	No Action or Proceeding. No legal or regulatory action or proceeding shall be pending or threatened by any person to enjoin, restrict or prohibit the purchase and sale of the Purchased Assets contemplated hereby or the performance of any party’s obligations under any agreement contemplated in this Agreement to be executed and delivered by either party at the Time of Closing;
(d)	Transaction Agreements. The Transaction Agreements shall have been entered into by the parties thereto, acting reasonably;
(e)	Share Certificate. The Purchaser shall have delivered to the Seller certificates representing the Shares registered in the name of the Seller; and
(f)	Assumption of Liabilities. The Purchaser shall have assumed the Assumed Liabilities in accordance with subsection 3.2 hereof.

If any of the conditions contained in this subsection 8.2 shall not be performed or fulfilled at or prior to the Time of Closing to the satisfaction of the Seller, acting reasonably, the Seller may, by notice to the Purchaser, terminate this Agreement and the obligations of the Seller and the Purchaser under this Agreement shall be terminated. Any such condition may be waived in whole or in part by the Seller without prejudice to any claims it may have for breach of covenant, representation or warranty.

Section 9

CLOSING DATE AND TRANSFER OF POSSESSION

9.1 Place of Closing

The closing of the purchase and sale of the Purchased Assets shall take place at the Time of Closing at the offices of the Purchaser.

9.2 Further Assurances

From time to time subsequent to the Closing Date, each party to this Agreement covenants and agrees that it will at all times after such date, at the expense of the requesting party, promptly execute and deliver all such documents, including, without limitation, all such additional conveyances, transfers, assignments, consents and other assurances and do all such other acts and things as the other party, acting reasonably, may from time to time request be executed or done in order to better evidence or perfect or effectuate any provision of this Agreement or of any agreement or other document executed pursuant to this Agreement or any of the respective obligations intended to be created hereby or thereby.

Section 10

INDEMNIFICATION

10.1 Indemnification by the Seller

The Seller agrees to indemnify and save harmless the Purchaser from all Losses suffered or incurred by the Purchaser as a result of or arising directly or indirectly out of or in connection with:

(a)	any breach by the Seller of or any inaccuracy in any representation or warranty of the Seller contained in this Agreement or in any agreement, certificate or other closing document delivered pursuant hereto (provided that the Seller shall not be required to indemnify or save harmless the Purchaser in respect of any breach of or inaccuracy in any representation or warranty unless the Purchaser shall have provided notice to the Seller in accordance with subsection 10.3 on or prior to the expiration of the applicable time period related to such representation and warranty as set out in Section 6.1);
(b)	any breach or non-performance by the Seller of any covenant to be performed by it which is contained in this Agreement or in any agreement, certificate or other closing document delivered pursuant hereto; and
(c)	any liabilities, obligations or commitments of the Seller related to the Purchased Assets, existing at or prior to the Time of Closing or arising from or relating to the period prior to the Time of Closing (provided however that any such liabilities, obligations or commitments, to the extent that they arise from or relate to the period after the Time of Closing, shall be the responsibility of the Purchaser);

provided that the indemnity by the Seller pursuant to this Section 10.1 shall not be for any Losses in connection with liabilities, obligations or commitments related to the Assigned Contracts arising after the Time of Closing.

10.2 Indemnification by the Purchaser

The Purchaser and the Purchaser agree to jointly and severally indemnify and save harmless the Seller from all Losses suffered or incurred by the Seller as a result of or arising directly or indirectly out of or in connection with:

(a)	any breach by the Purchaser of or any inaccuracy in any representation or warranty contained in this Agreement or in any agreement, instrument, certificate or other closing document delivered pursuant hereto (provided that the Purchaser shall not be required to indemnify or save harmless the Seller in respect of any breach of or inaccuracy in any representation or warranty unless the Seller shall have provided notice to the Purchaser in accordance with subsection 10.3 on or prior to the expiration of the applicable time period related to such representation and warranty as set out in subsection 6.1);
(b)	any breach or non-performance by the Purchaser of any covenant to be performed by it which is contained in this Agreement or in any agreement, certificate or other closing document delivered pursuant hereto, including any breach or non-performance by the Purchaser of any covenant to be performed after the Time of Closing in connection with the Assigned Contracts; and
(c)	the operations of the Purchased Assets after the Time of Closing including, without limitation, any failure by the Purchaser to pay, satisfy, discharge, perform or fulfil any of the Assumed Liabilities;

10.3 Notice of Claim

In the event that a party (the “Indemnified Party”) shall become aware of any claim, proceeding or other matter (a “Claim”) in respect of which the other party (the “Indemnifying Party”) has agreed to indemnify the Indemnified Party pursuant to this Agreement, the Indemnified Party shall promptly give written notice thereof to the Indemnifying Party. Such notice shall specify whether the Claim arises as a result of a claim by a person against the Indemnified Party (a “Third Party Claim”) or whether the Claim does not so arise (a “Direct Claim”), and shall also specify with reasonable particularity (to the extent that the information is available), the factual basis for the Claim and the amount of the Claim, if known. If, through the fault of the Indemnified Party, the Indemnifying Party does not receive notice of any Claim in time effectively to contest the determination of any liability susceptible of being contested, the Indemnifying Party shall be entitled to set off against the amount claimed by the Indemnified Party the amount of any Losses incurred by the Indemnifying Party resulting from the Indemnified Party’s failure to give such notice on a timely basis.

10.4 Direct Claims

With respect to any Direct Claim, following receipt of notice from the Indemnified Party of the Claim, the Indemnifying Party shall have thirty (30) Business Days to make such investigation of the Claim as is considered necessary or desirable. For the purpose of such investigation, the Indemnified Party shall make available to the Indemnifying Party the information relied upon by the Indemnified Party to substantiate the Claim, together with all such other information as the Indemnifying Party may reasonably request. If both parties agree at or prior to the expiration of such thirty-day period (or any mutually agreed upon extension thereof) to the validity and amount of such Claim, the Indemnifying Party shall immediately pay to the Indemnified Party the full agreed upon amount of the Claim. If the parties are unable to resolve the dispute within a reasonable time, and in any event within thirty (30) Business Days of such written request (or a mutually agreed upon extension thereof), the dispute shall, at the request of either party, be referred to binding arbitration in accordance with the provisions of Schedule 10.4.

10.5 Third Party Claims

With respect to any Third Party Claim, the Indemnifying Party shall have the right, at its expense, to participate in or assume control of the negotiation, settlement or defence of the Claim and, in such event, the Indemnifying Party shall reimburse the Indemnified Party for all the Indemnified Party’s out-of-pocket expenses as a result of such participation or assumption. If the Indemnifying Party elects to assume such control, the Indemnified Party shall have the right to participate in the negotiation, settlement or defence of such Third Party Claim and to retain counsel to act on its behalf, provided that the fees and disbursements of such counsel shall be paid by the Indemnified Party unless the Indemnifying Party consents to the retention of such counsel or unless the named parties to any action or proceeding include both the Indemnifying Party and the Indemnified Party and the representation of both the Indemnifying Party and the Indemnified Party by the same counsel would be inappropriate due to the actual or potential differing interests between them (such as the availability of different defences). If the Indemnifying Party, having elected to assume such control, thereafter fails to defend the Third Party Claim within a reasonable time, the Indemnified Party shall be entitled to assume such control at the expense of the Indemnifying Party, and the Indemnifying Party shall be bound by the results obtained by the Indemnified Party with respect to such Third Party Claim.

10.6 Settlement of Third Party Claims

If the Indemnifying Party fails to assume control of the defence of any Third Party Claim, the Indemnified Party shall have the exclusive right to contest, settle or pay the amount claimed. Whether or not the Indemnifying Party assumes control of the negotiation, settlement or defence of any Third Party Claim, the Indemnifying Party shall not settle any Third Party Claim without the written consent of the Indemnified Party, which consent shall not be unreasonably withheld or delayed; provided, however, that the liability of the Indemnifying Party shall be limited to the proposed settlement amount if any such consent is not obtained for any reason.

10.7 Co-operation

The Indemnified Party and the Indemnifying Party shall co-operate fully with each other with respect to Third Party Claims, and shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it becomes available).

10.8 Exclusivity

The provisions of this Section 10 shall apply to any Claim for breach of any covenant, representation, warranty, indemnity or other provision of this Agreement or any agreement, certificate or other document delivered pursuant to this Agreement (other than a claim for specific performance or injunctive relief) with the intent that all such Claims shall be subject to the limitations and other provisions contained in this Section 10.

Section 11
MISCELLANEOUS

11.1 Neutral Construction

The Parties represent and agree that the final terms of this Agreement are the product of fair and arm’s length negotiations between the Parties, each of whom has sought and received legal advice from counsel of its own choosing with regard to its contents and the rights and obligations affected hereby. The Parties agree that this Agreement shall therefore be deemed to have been drafted by them jointly and equally, and that the provisions of this Agreement should not be construed against either Party for reason that such Party had a greater degree of drafting responsibility for such provision(s).

 

11.2 Notices

(a) Any notice or other communication required or permitted to be given hereunder shall be in writing and shall be delivered by personal delivery, by overnight courier, by telecopy or similar means of recorded electronic communication or by registered mail addressed as follows:

If to the Seller:	Environmental Turf Services, LLC
	Attn: James Bateman
	2580 Lakeland Drive, Suite A
	Flowood, MS 39232-1417
With a copy to:	Stuart Kruger

	2580 Lakeland Drive, Suite A
	Flowood, MS 39232-1417
If to the Purchaser:
	XFit Brands, Inc.
	Attn: Dave Vautrin
	Chief Executive Officer
	25731 Commercentre Drive
	Lake Forest, CA 92630
	Fax: (949) 630-0491
With a copy to:	J.P. Galda
	J.P. Galda & Co.
	1055 Westlakes Dr., Suite 300
	Berwyn, PA 19312
	Fax: (610) 727-4001

(b)

Any such notice or other communication delivered by personal delivery or overnight courier shall be deemed to have been given and received on the day on which it was delivered (or, if such day is not a Business Day, on the next following Business Day), and if transmitted by telecopier, on the day of transmission thereof if such day is a Business Day and is received before 5:00 pm (local time to the recipient) or otherwise on the next Business Day after the day of transmittal, provided that the party so transmitting the notice has received confirmation of its successful transmittal, and if mailed or sent by registered mail, on the fifth Business Day following the date of mailing; provided, however, that if at the time of mailing or within three Business Days thereafter there is or occurs a labour dispute or other event which might reasonably be expected to disrupt the delivery of documents by mail, any notice or other communication hereunder shall be delivered or transmitted by means personal delivery, telecopier or recorded electronic communication as aforesaid.

(c)

Either party may at any time change its address for service from time to time by giving notice to the other party in accordance with this subsection 11.2.

11.3 Commissions, etc

Each party agrees to indemnify and save harmless the other party from and against all Losses suffered or incurred in respect of any commission or other remuneration payable or alleged to be payable to any broker, agent or other intermediary who purports to act or have acted for or on behalf of the other party.

11.4 Consultation

The parties shall consult with each other before issuing any press release or making any other public announcement with respect to this Agreement or the transactions contemplated hereby and, except as required by any applicable law or regulatory requirement, neither of them shall issue any such press release or make any such public announcement without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed.

11.5 Disclosure

Prior to any public announcement of the transaction contemplated hereby pursuant to subsection 11.4, neither party shall disclose this Agreement or any aspects of such transaction except to its board of directors, its senior management, its legal, accounting, financial or other professional advisors, any financial institution or other investor contacted by it with respect to any financing required in connection with such transaction and counsel to such institution or other investor, or as may be required by any applicable law or any regulatory authority or stock exchange having jurisdiction.

11.6 Reasonable Commercial Efforts

The parties acknowledge and agree that, for all purposes of this Agreement, an obligation on the part of either party to use reasonable commercial efforts to obtain any waiver, consent, approval, permit, licence or other document shall not require such party to make any payment to any person for the purpose of procuring the same, other than payments for amounts due and payable to such person, payments for incidental expenses incurred by such person and payments required by any applicable law or regulation.

11.7 Counterparts

This Agreement may be executed in counterparts, each of which shall constitute an original and all of which taken together shall constitute one and the same instrument. Execution may be made by facsimile signature which, for all purposes, shall be deemed to be an original.

IN WITNESS WHEREOF this Agreement has been executed by the parties.

XFIT BRANDS, INC.
Per:
Name:	David E. Vautrin
Title:	Chief Executive Officer
ENVIRONMENTAL TURF SERVICES LLC
Per:
Name:	James Bateman
Title:	President

EX-10.1

October 10, 2016

This agreement is made between:

XFit Brands, Inc (hereinafter referred to as the “Corporation”) of the first part

- and -

James Bateman of the City of Madison in the State of Mississippi (hereafter referred to as the “Executive”) of the second part

Whereas the Corporation has determined to employ James Bateman as President - Sports and member of the Board of Directors of the Corporation effective as of the Employment Commencement Date (as defined below), reporting to the Chief Executive Officer of the Corporation; and

Whereas the Corporation and the Executive have agreed to enter into this Employment Agreement (hereinafter referred to as the “Agreement”) to formalize in writing the terms and conditions reached between them governing the Executive’s employment and agreement with the Company;

Now, therefore, in consideration of the covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by the parties, the parties hereto, intending to be legally bound, agree as follows:

COMMENCEMENT AND TERM

The term of the Executive’s employment under this Agreement commences immediately following the closing of the Asset Purchase Agreement of even date herewith between the Corporation and Environmental Turf Services, LLC (the “Employment Commencement Date”) and shall continue until June 30, 2019 unless terminated pursuant to this Agreement as herein provided. This Agreement shall renew thereafter on an annual basis beginning July 1, 2019 and for every successive year thereafter unless the parties invoke the provisions herein provided. Either Party shall provide written notice to the other Party if the former elects not to renew this Agreement, however, the exercising Party shall provide said written notice on or before 60 (sixty) days prior to the commencement of the renewal period.

EMPLOYMENT

Subject to the terms and conditions hereof, the Executive shall be employed by the Corporation as President – Sports effective as of the above date and shall perform such duties and exercise such powers and responsibilities as are typically associated with such title.

The Executive agrees to dedicate 100% of his available time and attention to the business and affairs of the Corporation and to discharge the responsibilities assigned to the Executive. Anything herein to the contrary notwithstanding, nothing shall preclude the Executive from (i) serving, as a director/officer/advisor of non-competing businesses, (ii) serving on the boards of directors/ advisors of one or more non-competing business, trade associations and/or charitable organizations, (iii) engaging in charitable activities and community affairs, and (iv) managing his personal investments and affairs.

REMUNERATION

Base Salary. During the first calendar year of employment, the Corporation shall pay the Executive a base salary (the “Base Salary”) payable monthly in arrears. The Base Salary shall be $72,000 per year and begin immediately upon the Employment Commencement Date.

Bonus. The Corporation shall pay the Executive a performance bonus (the “Bonus”) equivalent to $0.05 (five cents) per square foot of surface placements (the “EnviroTurf Business”), immediately upon completion of any install. The Corporation shall also pay to the Executive 2% of Net Sales (defined as Gross Sales less Discounts) directly generated by the Executive on the sale of any other product in the XFit Brand Portfolio. The Corporation shall also pay to the Executive any equity bonus (the “Equity Kicker”) equivalent to 100,000 shares of common stock or share-based equivalents (subject to adjustments for share splits and recapitalizations) for each $5,000,000 in Net Sales of the EnviroTurf business achieved.

Equity Incentive. The Executive will be provided an equity incentive of 1,000,000 shares of Common Stock of the Corporation following the successful sales and collection of $5,000,000 in in Net Sales in the EnviroTurf Business. In an effort to support the Executive’s ability to achieve this Equity Incentive, the Corporation agrees to fund the EnviroTurf Business with $500,000 within 75 days of the Employment Commencement Date in accordance with the Use of Proceeds provided to the Executive concurrent with the execution of this Agreement.

Benefits. The Executive shall be entitled to participate in all of the Corporation’s benefit plans made generally available to the employees and senior executives of the Corporation, in accordance with the terms of such plans including participation in XFit Brands Medical, Dental and other Health programs. The Executive’s participation in the Corporation’s benefit plan is subject to the terms, conditions and limitations contained in the applicable benefit plan documents. All forms of compensation and benefits are subject to applicable reductions to reflect statutory withholdings for federal, state, and local payroll taxes. Additional benefits are outlined in the Employee Handbook, a copy of which you will be given upon commencement of employment.

Vacation. The Executive shall be entitled to (3) three weeks vacation with pay annually. Such vacation shall be taken at a time acceptable to the Corporation with regard to its operations.

Expenses. Consistent with its corporate policies as established from time to time, the Corporation agrees to reimburse the Executive for all expenses reasonably incurred in connection with the performance of his duties upon being provided with proper vouchers or receipts.

Taxes. The Executive shall be responsible to pay for all federal, state, provincial and local taxes assessed on any income received from the Executive under this Agreement, which are over and above the amounts that may be deducted and remitted on the Executive’s behalf by the Company.

Performance Equity Incentive. The Executive shall be 100% eligible to participate in any ESOP programs consistent with the C-level annual equity compensation or incentives.

COVENANTS OF THE PARTIES

The Executive acknowledges that in the course of carrying out, performing and fulfilling his obligations to the Corporation hereunder, the Executive will have access to and will be entrusted with information that would reasonably be considered confidential to the Corporation, the disclosure of which to competitors of the Corporation or to the general public will be highly detrimental to the best interests of the Corporation. Except as may be required in the course of carrying out his duties hereunder, the Executive covenants and agrees that he will not disclose, for the duration of this Agreement any such information to any person, other than to the directors, officers, employees or agents of the Corporation that have a need to know such information, nor shall the Executive use or exploit, directly or indirectly, such information for any purpose other than for the purposes of the Corporation, nor will he disclose nor use for any purpose, other than for those of the Corporation, any other information which he may during his employment with respect to the business and affairs of the Corporation or otherwise.

The Executive acknowledges and agrees that all right, title and interest in and to any information, trade secrets, advances, discoveries, improvements, research materials and data bases made or conceived by the Executive during his employment relating to the business or affairs of the Corporation, shall belong to the Corporation. Any business opportunities related to the business of the Corporation which become known to the Executive during his employment hereunder must be fully disclosed and made available to the Corporation by the Executive, and the Executive agrees not to take or attempt to take any action if the result would be to divert from the Corporation any opportunity which is within the scope of its business.

The Executive will not at any time, without the prior written consent of the Corporation, during the Term of this Agreement and after the expiration or termination of the Executive’s employment so long as Executive is receiving bargained for consideration which is defined as Base Salary plus any annual incentives, either individually or in partnership, jointly or in conjunction with any person or persons, firm, association, syndicate, company or corporation, directly or indirectly engage in, carry on or otherwise have any interest in, advise, or permit the Executive’s name to be used in connection with, any business which is directly competitive to the Business, or which provides generally the same services as the Business; or solicit, interfere with, accept any business from or render any services to anyone whom Executive knows or should have reason to know is a client or a prospective client of the Corporation.

The Executive will comply with all applicable securities laws and any policies of the Corporation in effect with respect to transactions in securities of the Corporation.

The Executive shall not disparage the Corporation or any of its affiliates, directors, officers, employees or other representatives in any manner and shall in all respects avoid any negative criticism of the Corporation.

The Executive acknowledges and agrees that in the event of a breach of the covenants, provisions and restrictions in this section, the Corporation’s remedy in the form of monetary damages will be inadequate and that the Corporation shall be, and is hereby, authorized and entitled, in addition to all other rights and remedies available to it, to apply for and obtain from a court of competent jurisdiction interim and permanent injunctive relief and an accounting of all profits and benefits arising out of such breach.

Each and every provision of these Sections in “Covenants of the Parties” hereunder shall survive the termination or expiration of this Agreement or the Executive’s employment hereunder.

TERMINATION OF EMPLOYMENT

The Corporation may terminate this Agreement and the Executive’s employment hereunder without payment of any compensation, other than as set forth in this Agreement, either by way of anticipated earnings or damages of any kind, at any time by delivery of a Notice of Termination to the Executive for any of the following reasons

(i)	the Executive, in carrying out his duties, engages in conduct that constitutes intentional or conscientious misconduct (including but not limited to intentional or reckless breach of fiduciary duties); or
(ii)	the Executive commits an intentional or reckless and material breach of this Agreement or commits an intentional or reckless act of misappropriation or fraud against the Corporation, its property, or otherwise; or
(iii)	the Executive is convicted of any felonious of act of dishonesty by a Court of competent jurisdiction.

DIRECTORS AND OFFICERS

If the Executive is a director or officer at the relevant time, the Executive agrees that upon termination or expiration of his employment with the Corporation he will tender his resignation from any position he may hold as an officer or director of the Corporation or any of its affiliated or related companies.

The Corporation shall maintain such directors’ and officers’ liability insurance for the benefit of the Executive in accordance with corporate policies and as generally provided to the Directors of the Corporation.

The Corporation agrees that, if the Executive is made a party, or is threatened to be made a party, to any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “Proceeding”), by reason of the fact that he is or was a director, officer or employee of the Corporation or is or was serving at the request of the Corporation as a director, officer, member, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether or not the basis of such Proceeding is the Executive’s alleged action in an official capacity while serving as a director, officer, member employee or agent, the Executive shall be defended, indemnified and held harmless by the Corporation to the fullest extent legally permitted or authorized by the Corporation’s certificate of incorporation or bylaws against all cost, expense, liability, and loss (including, without limitation, attorney’s fees, judgments, fines, excise taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by the Executive in connection therewith, and such defense, indemnification and held harmlessness shall continue as to the Executive even if he has ceased to be a director, member, employee or agent of the Corporation or other entity and shall inure to the benefit of the Executive’s heirs, executors and administrators. The Corporation shall advance to the Executive all reasonable costs and expenses incurred by him, whether paid or unpaid, in connection with a Proceeding within 20 days after receipt by the Corporation of a written request for such advance. Such request shall include an undertaking by the Executive to repay the amount of such advance if it shall ultimately be determined that he is not entitled to be indemnified against such cost and expenses.

ARBITRATION

All matters in difference between the parties in relation to this Agreement, shall be referred to the arbitration of a single arbitrator, if the parties agree upon one, otherwise to three arbitrators, one to be appointed by the Corporation and one to be appointed by the Executive and a third to be chosen by the first two arbitrators named before they enter upon the business of arbitration. The award and determination of the arbitrator or arbitrators or any of two of three arbitrators shall be binding upon the parties and their respective heirs, executors, administrators and assigns. Each party shall be responsible for its or his own expenses with respect to the arbitration, which will be held in greater Seattle area.

MISCELLANEOUS PROVISIONS

The headings of the Articles and paragraphs herein are inserted for convenience of reference only and shall not affect the meaning or construction hereof.

If any provision contained herein is determined to be void or unenforceable in whole or in part, it shall not be deemed to affect or impair the validity of any other provision herein and each such provision is deemed to be separate and distinct.

This Agreement contains the entire understanding and agreement between the parties concerning the subject matter hereof and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between the parties with respect thereto. This Agreement shall be governed by, and construed under, the laws of California.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first above written.

XFit Brands, Inc.		James Bateman, Individually
Date:
By:
Name:	David Vautrin	James Bateman
Title:	Chief Executive Officer	President - Sports