Exhibit 10.2


 


SECURITIES ESCROW AGREEMENT


 


SECURITIES
ESCROW AGREEMENT, dated as of [                ],
2008 (the “Agreement”) by and among Wattles Acquisition Corp., a Delaware
corporation (the “Company”), the undersigned party listed as the Initial Stockholder
on the signature page hereto (collectively, the “Initial Stockholder”) and
American Stock Transfer & Trust Company, a New York corporation (the “Escrow
Agent”).


 


WHEREAS,
the Company has entered into an Underwriting Agreement, dated [               ],
2008 (“Underwriting Agreement”) with UBS Securities LLC (“UBS) and Ladenburg
Thalmann & Co. Inc. (“Ladenburg” and together with UBS, the “Representatives”)
acting as representatives of the several underwriters (collectively, the “Underwriters”),
pursuant to which, among other matters, the Underwriters have agreed to
purchase 20,000,000 units (not including the underwriters’ over-allotment
option) (“Units”) of the Company. Each Unit consists of one share of the
Company’s common stock, par value $.0001 per share (the “Common Stock”), and
one warrant (“Warrant”), each Warrant to purchase one share of Common Stock,
all as more fully described in the Company’s definitive Prospectus, dated [                   ],
2008 (“Prospectus”) comprising part of the Company’s Registration Statement on Form S-1
(File No. 333-                )
under the Securities Act of 1933, as amended (the “Registration Statement”),
declared effective on [              ],
2008 (the “Effective Date”);


 


WHEREAS,
the Initial Stockholder have agreed, as a condition of the Underwriters’
obligation to purchase the Units pursuant to the Underwriting Agreement and to
offer them to the public, to deposit all its shares of Common Stock, as set
forth opposite its name in Exhibit A attached hereto (collectively the “Escrow
Shares”), in escrow as hereinafter provided;


 


WHEREAS,
the Company has entered into a Subscription Agreement with the Initial
Stockholder (the “Initial Warrantholder,” and together with status as Initial
Stockholder, the “Initial Holder”), dated                   ,
2007 (the “Subscription Agreement”), pursuant to which the Initial
Warrantholder has agreed to purchase 5,750,000 of the Company’s warrants (the “Private
Warrants”) in a private placement transaction;


 


WHEREAS,
the Initial Warrantholder has agreed as a condition of the sale of the Private
Warrants to deposit the Private Warrants (together with the Escrow Shares, the “Escrow
Securities”), with the Escrow Agent as hereinafter provided; and


 


WHEREAS,
the Company and the Initial Holder desire that the Escrow Agent accept the
Escrow Securities, in escrow, to be held and disbursed as hereinafter provided.


 


IT
IS AGREED:


 


1.             Appointment of Escrow Agent.
The Company and the Initial Holders hereby appoint the Escrow Agent to act in
accordance with and subject to the terms of this Agreement


 

















 


and
the Escrow Agent hereby accepts such appointment and agrees to act in
accordance with and subject to such terms.


 


2.             Deposit of Escrow Securities.
On or before the Effective Date, the Initial Holder shall deliver to the Escrow
Agent certificates representing its Escrow Securities, to be held and disbursed
subject to the terms and conditions of this Agreement. The Initial Holder
acknowledges and agrees that the certificates representing the Escrow
Securities will bear a legend to reflect the deposit of such Escrow Securities
under this Agreement.


 


3.             Disbursement of the Escrow
Securities.


 


3.1.          The Escrow Agent shall hold the Escrow
Shares and the Private Warrants until the termination of their respective
Escrow Period (as defined below). The “Escrow Period” for the Escrow Shares shall
be the period beginning on the date the certificates representing the Shares
are deposited with the Escrow Agent and ending on the date that is the earlier
of twelve (12) months following the consummation of the initial Business
Combination (as such term is defined in the Registration Statement) or two (2) years
from the Effective Date, except that if the
over-allotment option is not exercised in full or in part, up to 750,000 shares
of common stock may be released from escrow for cancellation. For the Private
Warrants, the “Escrow Period” shall be the period beginning on the date the
certificates representing the Private Warrants are deposited with the Escrow
Agent and ending 30 days after the date of the consummation of the initial
Business Combination. On the termination date of the applicable Escrow Period,
the Escrow Agent shall, upon written instructions from the Initial Holder,
disburse the Initial Holder’s applicable Escrow Securities to such Initial
Holder; provided, however, that if the Escrow Agent is notified by the Company
pursuant to Section 6.7 hereof that the Company is being liquidated at any
time during the Escrow Period, then the Escrow Agent shall promptly destroy the
certificates representing the Escrow Securities; provided further, that if,
after the Company consummates a Business Combination (as such term is defined
in the Registration Statement), it (or the surviving entity) subsequently
consummates a liquidation, merger, stock exchange or other similar transaction
which results in all of its stockholders of such entity having the right to
exchange their shares of Common Stock for cash, securities or other property,
then the Escrow Agent will, upon receipt of a notice, executed by the Chairman,
Chief Executive Officer or Chief Financial Officer of the Company, in form
reasonably acceptable to the Escrow Agent, certifying that such transaction is
then being consummated, release the Escrow Securities to the Initial Holder so
that they can similarly participate. The Escrow Agent shall have no further
duties hereunder after the disbursement or destruction of the Escrow Securities
in accordance with this Section 3.


 


4.             Rights of Initial Holders in
Escrow Securities.


 


4.1.          Voting Rights as a Stockholder.
Subject to the terms of the Insider Letter described in Section 4.4 hereof
and except as herein provided, the Initial Stockholder shall retain all of its
rights as a stockholder of the Company during the Escrow Period, including,
without limitation, the right to vote the Escrow Shares.


 


2

















 


 


4.2.          Dividends and Other Distributions
in Respect of the Escrow Securities. During the Escrow Period, all
dividends payable in cash with respect to the Escrow Securities shall be paid
to the Initial Stockholder, but all dividends payable in stock or other
non-cash property (“Non-Cash Dividends”) shall be delivered to the Escrow Agent
to hold in accordance with the terms hereof. As used herein, the term “Escrow
Securities” shall be deemed to include the Non-Cash Dividends distributed
thereon, if any.


 


4.3.          Restrictions on Transfer.
During the Escrow Period, no sale, transfer or other disposition may be made of
any or all of the Escrow Securities except (i) to an entity’s members upon
liquidation (ii) by gift to a member of Initial Holder’s immediate family
or to a trust or other entity, the beneficiary of which is an Initial Holder or
a member of an Initial Holder’s immediate family, (iii) by virtue of the
laws of descent and distribution upon the death of any Initial Holder, (iv) pursuant
to a qualified domestic relations order, (v) to an entity that is an
Initial Holder, (vi) to any person or entity controlling, controlled by,
or under common control with, an Initial Holder or (vii) with respect to
an Initial Holder who is an individual, to an entity controlled by such Initial
Holder; provided, however, that such permitted transfers may be implemented
only upon the respective transferee’s written agreement to be bound by the
terms and conditions of this Agreement and of the Insider Letter signed by the
Initial Holder transferring the Escrow Securities. During the Escrow Period,
the Initial Holder shall not pledge or grant a security interest in the Escrow
Securities or grant a security interest in their rights under this Agreement.


 


4.4.          Insider Letters. The Initial
Holder has executed a letter agreement with the Representatives and the
Company, dated as of the Effective Date, and which is filed as an exhibit to
the Registration Statement (“Insider Letter”), respecting the rights and
obligations of such Initial Holder in certain events, including, but not
limited to, the liquidation of the Company.


 


5.             Concerning the Escrow Agent.


 


5.1.          Good Faith Reliance. The Escrow
Agent shall not be liable for any action taken or omitted by it in good faith
and in the exercise of its own best judgment, and may rely conclusively and
shall be protected in acting upon any order, notice, demand, certificate,
opinion or advice of counsel (including counsel chosen by the Escrow Agent),
statement, instrument, report or other paper or document (not only as to its
due execution and the validity and effectiveness of its provisions, but also as
to the truth and acceptability of any information therein contained) which is
believed by the Escrow Agent to be genuine and to be signed or presented by the
proper person or persons. The Escrow Agent shall not be bound by any notice or
demand, or any waiver, modification, termination or rescission of this
Agreement unless evidenced by a writing delivered to the Escrow Agent signed by
the proper party or parties and, if the duties or rights of the Escrow Agent
are affected, unless it shall have given its prior written consent thereto.


 


5.2.          Indemnification. The Escrow
Agent shall be indemnified and held harmless by the Company from and against
any expenses, including reasonable counsel fees and disbursements, or loss
suffered by the Escrow Agent in connection with any action, suit or other
proceeding involving any claim which in any way, directly or indirectly, arises
out of or relates


 


3

















 


to
this Agreement, the services of the Escrow Agent hereunder, or the Escrow Securities
held by it hereunder, other than expenses or losses arising from the gross
negligence or willful misconduct of the Escrow Agent. Promptly after the
receipt by the Escrow Agent of notice of any demand or claim or the
commencement of any action, suit or proceeding, the Escrow Agent shall notify
the other parties hereto in writing. In the event of the receipt of such
notice, the Escrow Agent, in its sole discretion, may commence an action in the
nature of interpleader in an appropriate court to determine ownership or
disposition of the Escrow Securities or it may deposit the Escrow Securities
with the clerk of any appropriate court or it may retain the Escrow Securities
pending receipt of a final, non appealable order of a court having jurisdiction
over all of the parties hereto directing to whom and under what circumstances
the Escrow Securities are to be disbursed and delivered. The provisions of this
Section 5.2 shall survive in the event the Escrow Agent resigns or is
discharged pursuant to Sections 5.5 or 5.6 below.


 


5.3.          Compensation. The Escrow Agent
shall be entitled to reasonable compensation from the Company for all services
rendered by it hereunder, as set forth on Exhibit B hereto. The Escrow
Agent shall also be entitled to reimbursement from the Company for all expenses
paid or incurred by it in the administration of its duties hereunder including,
but not limited to, all counsel, advisors’ and agents’ fees and disbursements
and all taxes or other governmental charges.


 


5.4.          Further Assurances. From time
to time on and after the date hereof, the Company and the Initial Holder shall
deliver or cause to be delivered to the Escrow Agent such further documents and
instruments and shall do or cause to be done such further acts as the Escrow
Agent shall reasonably request to carry out more effectively the provisions and
purposes of this Agreement, to evidence compliance herewith or to assure itself
that it is protected in acting hereunder.


 


5.5.          Resignation. The Escrow Agent
may resign at any time and be discharged from its duties as escrow agent
hereunder by its giving the other parties hereto written notice and such
resignation shall become effective as hereinafter provided. Such resignation
shall become effective at such time that the Escrow Agent shall turn over to a
successor escrow agent appointed by the Company and approved by the
Representatives, the Escrow Securities held hereunder. If no new escrow agent
is so appointed within the 60 day period following the giving of such notice of
resignation, the Escrow Agent may deposit the Escrow Securities with any court
it deems appropriate.


 


5.6.          Discharge of Escrow Agent. The
Escrow Agent shall resign and be discharged from its duties as escrow agent
hereunder if so requested in writing at any time by the other parties hereto,
jointly, provided, however, that such resignation shall become effective only
upon acceptance of appointment by a successor escrow agent as provided in Section 5.5.


 


5.7.          Liability. Notwithstanding
anything herein to the contrary, the Escrow Agent shall not be relieved from
liability hereunder for its own gross negligence or its own willful misconduct.


 


6.             Miscellaneous.


 


4

















 


6.1.          Governing Law. This Agreement
shall for all purposes be deemed to be made under and shall be construed in
accordance with the laws of the State of New York. Each of the parties hereby
agrees that any action, proceeding or claim against it arising out of or
relating in any way to this Agreement shall be brought and enforced in the
courts of the State of New York or the United States District Court for the
Southern District of New York, and irrevocably submits to such jurisdiction,
which jurisdiction shall be exclusive. Each of the parties hereby waives any
objection to such exclusive jurisdiction and that such courts represent an
inconvenient forum.


 


6.2.          Third Party Beneficiaries. The
Initial Holder hereby acknowledges that the Underwriters, including, without
limitation, the Representatives, are third party beneficiaries of this
Agreement and this Agreement may not be modified or changed without the prior
written consent of the Representatives.


 


6.3.          Entire Agreement. This
Agreement contains the entire agreement of the parties hereto with respect to
the subject matter hereof and, except as expressly provided herein, may not be
changed or modified except by an instrument in writing signed by the party to
the charged.


 


6.4.          Headings. The headings
contained in this Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation thereof.


 


6.5.          Binding Effect. This Agreement
shall be binding upon and inure to the benefit of the respective parties hereto
and their legal representatives, successors and assigns.


 


6.6.          Notices. Any notice or other
communication required or which may be given hereunder shall be in writing and
either be delivered personally or by private national courier service, or be
mailed, certified or registered mail, return receipt requested, postage
prepaid, and shall be deemed given when so delivered personally or, if sent by
private national courier service, on the next business day after delivery to
the courier, or, if mailed, two business days after the date of mailing, as
follows:


 


If
to the Company, to:


 


Wattles
Acquisition Corp.

321 West 84th Ave., Suite A

Thornton, CO 80260

Attn: Mark Wattles, Chairman and Chief Executive Officer


 


If
to a Stockholder, to his address set forth in Exhibit A.


 


and
if to the Escrow Agent, to:


 


American
Stock Transfer & Trust Company

59 Maiden Lane


 


5

















 


Plaza
Level

New York, NY 10038

Attn: [                       ]

Fax No.: [                       ]


 


A
copy of any notice sent hereunder shall be sent to:


 


UBS
Securities LLC

299 Park Avenue

New York, New York 10171-0026

Attn: [                       ]

Fax: [                       ]


 


and


 


Ladenburg
Thalmann

153 East 53rd Street, 49th Floor

New York, NY 10022

Attn: [                       ]

Fax No.: [                       ]


 


and


 


Ellenoff,
Grossman & Schole LLP

370 Lexington Avenue

New York, New York 10017

Attn: Douglas S. Ellenoff, Esq.

Fax No.: (212) 370-7889


 


and


 


Clifford
Chance LLP

31 West 52nd Street

New York, NY 10019

Attn: Alejandro E. Camacho

Fax: (212) 878-8375


 


The
parties may change the persons and addresses to which the notices or other
communications are to be sent by giving written notice to any such change in
the manner provided herein for giving notice.


 


6.7.          Liquidation of Company. The
Company shall give the Escrow Agent written notification of the liquidation and
dissolution of the Company in the event that the Company fails to consummate a
Business Combination within the time period(s) specified in the
Prospectus.


 


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6.8.          Waiver. Notwithstanding
anything herein to the contrary, the Escrow Agent hereby waives any and all
right, title, interest or claim of any kind (“Claim”) in or to any distribution
of the Trust Account, and hereby agrees not to seek recourse, reimbursement, payment
or satisfaction for any Claim against the Trust Account for any reason
whatsoever.


 


6.9.          Counterparts. This Agreement
may be executed in several counterparts each one of which shall constitute an
original and may be delivered by facsimile transmission and together shall
constitute one instrument.


 


[remainder of page intentionally left blank]


 


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WITNESS
the execution of this Agreement as of the date first above written.


 


 


	
  WATTLES
  ACQUISITION CORP.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:
  

  	
  Mark
  Wattles

  
	
   

  	
  Title:

  	
  Chairman &
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  AMERICAN
  STOCK TRANSER & TRUST COMPANY

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  INITIAL
  STOCKHOLDER

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  WATTLES
  CAPITAL, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Mark
  Wattles

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Managing
  Member

  
						



 


8

















EXHIBIT A


 


 


	
  Investor

  	
   

  	
  Investors Address and Facsimile
  Number

  	
   

  
	
  Name: WATTLES CAPITAL, LLC

  

  Number of Shares: 5,750,000

  Number of Warrants: 5,750,000

  	
   

  	
  321 West 84th Ave.,
  Suite A

  Thornton, CO 80260

  Attn: Mark Wattles

  Facsimile Number: [                           ]

  	
   

  



 


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EXHIBIT B


 


Escrow Agent Fees


 


$[1,800
annually] for acting agent escrow fee.


 


[First
year agent fee to be paid at closing.]


 


10