SCHEDULE: Xponential Fitness: Investor Agreement & Ownership Update

Fund 1 Investments LLC amends Schedule 13D, detailing a strategic agreement with Xponential Fitness, Inc. that waives certain Delaware anti-takeover provisions and sets new ownership limits.

Summary

• Fund 1 Investments, LLC has filed an amendment to its Schedule 13D regarding its holdings in Xponential Fitness, Inc.
• The filing details an agreement entered into on September 28, 2026, between Fund 1 Investments and Xponential Fitness.
• This agreement waives Delaware General Corporation Law Section 203 (DGCL 203) restrictions on business combinations for Fund 1 Investments and related parties (PLP Parties).
• This waiver allows the PLP Parties to acquire additional shares and enter into derivative agreements without triggering DGCL 203's restrictions.
• Fund 1 Investments currently beneficially owns 4,160,610 shares, representing approximately 9.9% of Xponential Fitness's outstanding Class A common stock.
• The total purchase price for these shares was approximately $25,803,895.
• The agreement imposes a limit, preventing the PLP Parties from acquiring beneficial ownership of more than 19.9% of the outstanding shares (including shares subject to derivative agreements).
• The PLP Parties must vote 'excess voting securities' (votes exceeding 9.9%) in the same proportion as other shareholders.
• The agreement has a term of five years from the date of execution.

Sentiment

Score: 7

Explanation: StockSavvy.ai views this filing as moderately positive, indicating strategic alignment and a commitment from a significant investor, though it also highlights ongoing regulatory considerations and potential future limitations.

Positives

• The company's Board of Directors has approved and waived DGCL 203 provisions, facilitating potential future investment and strategic alignment with Fund 1 Investments.
• Fund 1 Investments continues to believe in the potential value of Xponential Fitness and intends to engage in discussions regarding operational and strategic opportunities.
• The agreement provides clarity on future share acquisition limits (19.9%) and voting arrangements, reducing uncertainty for both parties.
• Fund 1 Investments has economic exposure to an additional 2,821,118 notional shares through cash-settled total return swap agreements.

Negatives

• The voting agreement requires Fund 1 Investments to vote 'excess voting securities' in proportion to other shareholders, limiting their independent voting power on matters where their holdings exceed 9.9%.
• The 19.9% ownership cap limits the potential for Fund 1 Investments to acquire a controlling stake in the company.
• The filing mentions ongoing engagement with the Board and management, which could imply current strategic discussions or potential disagreements.

Risks

• The agreement's voting provisions could lead to misalignment if Fund 1 Investments' views diverge significantly from the majority of other shareholders.
• The 19.9% ownership cap may limit the ability of Fund 1 Investments to influence strategic decisions through share accumulation.
• The termination of the agreement in five years could lead to a reassessment of the relationship and potential market impact.

Future Outlook

Fund 1 Investments continues to believe in the potential value of Xponential Fitness and intends to engage in discussions with the Board and management regarding operational and strategic opportunities to enhance stockholder value. The agreement sets a framework for future share acquisitions and voting, with a cap of 19.9% ownership and specific voting requirements for excess shares.

Management Comments

• The Reporting Person continues to believe in the potential value of the Issuer, and has engaged in, and intends to continue engaging in, discussions with the Board and management team regarding operational and strategic opportunities for the Issuer to enhance stockholder value.
• The Company hereby represents and warrants to Fund 1 Investments that, at Fund 1 Investments request, the Board of Directors of the Company has approved the acquisition of additional Class A Shares for purposes of Section 203 of the General Corporation Law of the State of Delaware (DGCL 203), and effectively and validly waived the applicability of DGCL 203...

Industry Context

StockSavvy.ai notes that this filing reflects a common strategy where significant investors negotiate specific agreements with companies to manage regulatory hurdles like DGCL 203, especially when aiming for substantial, but not controlling, stakes. This allows for strategic engagement without triggering full takeover defenses.

Corporate Governance

Related Party Transactions

• The agreement between Fund 1 Investments and Xponential Fitness, Inc. is a material related-party transaction, as Fund 1 Investments is a significant beneficial owner and the company's board has approved specific terms for its investment activities.

Stakeholder Impact

• Shareholders: The agreement provides a framework for a significant investor's activities, potentially stabilizing or influencing share price through strategic engagement and defined ownership limits. The voting agreement may impact the influence of Fund 1 Investments on shareholder votes.
• Management and Board: The waiver of DGCL 203 and ongoing discussions indicate a collaborative relationship, but also highlight the Board's responsiveness to significant investor interests.
• Creditors: No direct impact is immediately apparent, but any significant strategic shifts or changes in financial health resulting from future investments could indirectly affect creditors.

Next Steps

• Fund 1 Investments will continue to engage in discussions with the Xponential Fitness Board and management regarding strategic opportunities.
• Fund 1 Investments will comply with the terms of the Letter Agreement, including voting requirements and ownership limitations.
• The agreement will remain in effect until its termination date on September 28, 2031.

Key Dates

Recommendation

The filing indicates a strategic alignment and a waiver of certain anti-takeover provisions, which is positive. However, the strict voting requirements on excess shares and the 19.9% ownership cap limit the upside potential for Fund 1 Investments to exert significant control or drive substantial immediate value through aggressive acquisition. The ongoing nature of discussions and the five-year term suggest a longer-term strategic play rather than an immediate catalyst. Therefore, a 'hold' recommendation is appropriate, pending further developments in the strategic discussions and operational performance.

Keywords

Schedule 13D, Xponential Fitness, Fund 1 Investments, DGCL 203, Business Combinations, Shareholder Agreement, Beneficial Ownership, Derivative Agreements