EXHIBIT 10.13


 


WATTLES ACQUISITION CORP.


321 W 84th Avenue, Suite A


Thornton, CO 80260


 


 


November 5, 2007


 


Wattles
Capital, LLC


c/o
Wattles Acquisition Corp.


321
W 84th Avenue, Suite A


Thornton,
CO 80260


 


 


RE:          Securities
Subscription Agreement


 


Dear Mr. Wattles:


 


We are pleased to accept the offer Mark Wattles (the
“Subscriber”) has made to purchase 5,750,000 shares (the “Shares”) of common stock,
$0.0001 par value per share (the “Common Stock”), up to 750,000 of which Shares
are subject to complete or partial forfeiture (the “Forfeiture”) by you if the
underwriters’ of the initial public offering of Wattles Acquisition Corp., a Delaware corporation (the “Company”)
do not fully exercise their over-allotment option.  The terms on which the Company is willing to sell
the Shares to the Subscriber, and the Company and the Subscriber’s agreements
regarding such Shares, are as follows:


 


1.             Purchase
of Shares.   For the aggregate sum of
$25,000.00 (the “Purchase Price”), which the Company acknowledges receiving in
cash, and subject to the Forfeiture, the Company hereby sells and issues the Shares
to the Subscriber, and the Subscriber hereby purchases the Shares from the
Company, on the terms and subject to the Forfeiture and other conditions set
forth in this Agreement.  Concurrently
with the Subscriber’s execution of this Agreement, the Company is delivering to
the Subscriber a certificate registered in the Subscriber’s name representing
the Shares, receipt of which the Subscriber hereby acknowledges.


 


2.             Representations
and Warranties of the Company. To induce the
Subscriber to purchase the Shares from the Company, the Company hereby
represents and warrants to the Subscriber and agrees with the Subscriber as
follows:


 


2.1           Organization
and Corporate Power. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
qualified to do business in every jurisdiction in which the failure to so
qualify would reasonably be expected to have a material adverse effect on the
financial condition, operating results or assets of the Company. The Company
possesses all requisite corporate power and authority necessary to carry out
the transactions contemplated by this Agreement.


 


 

















 


2.2           Authorization;
No Breach.


 


(a) The execution and delivery of
this Agreement, and performance of this Agreement have been duly authorized by
the Company as of the date hereof. This Agreement constitutes the valid and
binding obligation of the Company, enforceable in accordance with its terms.


 


(b) The execution and delivery by
the Company of this Agreement, and the sale and issuance of the Shares and the
fulfillment of and compliance with the respective terms hereof and thereof by
the Company, do not and will not as of the date hereof (i) conflict with
or result in a breach of the terms, conditions or provisions of, (ii) constitute
a default under, (iii) result in the creation of any lien, security
interest, charge or encumbrance upon the Company’s capital stock or assets, (iv) result
in a violation of, or (v) require any authorization, consent, approval,
exemption or other action by or notice or declaration to, or filing with, any
court or administrative or governmental body or agency pursuant to the
Certificate of Incorporation of the Company or the bylaws of the Company, or
any material law, statute, rule or regulation to which the Company is subject,
or any agreement, order, judgment or decree to which the Company is subject,
except for any filings required after the date hereof under federal or state
securities laws.


 


2.3. Title to Securities. Upon
issuance in accordance with, and payment pursuant to, the terms hereof the Shares
will be duly and validly issued, fully paid and nonassessable. Upon issuance in
accordance with, and payment pursuant to, the terms hereof the Subscriber will have
or receive good title to the Shares, free and clear of all liens, claims and
encumbrances of any kind, other than (a) transfer restrictions hereunder
and under the other agreements contemplated hereby, (b) transfer restrictions
under federal and state securities laws, and (c) liens, claims or encumbrances
imposed due to the actions of the Subscriber.


 


3.             The
Subscriber’s Representations, Warranties and Agreements.  To induce the Company to issue the Shares to
the Subscriber, the Subscriber hereby represents and warrants to the Company
and agrees with the Company as follows:


 


3.1.          No
Government Recommendation or Approval. 
The Subscriber understands that no United States federal or state agency
or similar agency of any other country, has passed upon or made any
recommendation or endorsement of the offering of the Shares or the fairness or
suitability of the investment in the Shares by the Subscriber nor have such
authorities passed upon or endorsed the merits of the offering of the Shares.


 


3.2.          Experience,
Financial Capability and Suitability. 
The Subscriber is sufficiently experienced in financial and business
matters to be capable of evaluating the merits and risks of this investment and
to make an informed decision relating thereto. The Subscriber is aware his
investment in the Company is a speculative investment that has limited
liquidity, because there may never be an established market for the Company’s securities.  The Subscriber has the financial capability
for making the investment and the investment is a suitable one for the
Subscriber.  The Subscriber can, without
impairing his financial condition, hold the Shares for an indefinite period of
time and can afford a complete loss of the investment. The Subscriber
acknowledges that the Company has urged the Subscriber to seek independent
advice from professional advisors relating to the suitability of an investment
in the Company and in connection with this Agreement, and that the Subscriber
has sought and received such 


 


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independent professional advice with respect to
such investment and this Agreement or, after careful consideration, the
Subscriber has determined to waive his right to seek and/or receive such
independent professional advice.


 


3.3.          Access
to Information.   Prior to the
execution of this Agreement, the Subscriber has had the opportunity to ask questions
of and receive answers from representatives of the Company concerning an investment
in the Company, as well as the finances, operations, business and prospects of the
Company, and the opportunity to obtain additional information to verify the
accuracy of all information so obtained.


 


3.4.          Regulation
D Offering.  Subscriber represents that
he is an “accredited investor” as such
term is defined in Rule 501(a) of Regulation D under the Securities
Act of 1933, as amended (the “Securities Act”) and acknowledges the sale contemplated hereby is being made in
reliance on a private placement exemption to “accredited investors” within the
meaning of Section 501(a) of Regulation D under the Securities Act or
similar exemptions under state law; and, accordingly, such securities will be “restricted
securities” within the meaning of Rule 144(a)(3) under the Securities
Act, and therefore may not be offered, pledged or sold by him, directly or
indirectly, in the United States without registration under United States
federal and state securities laws and Subscriber understands the certificates
representing such securities will contain a legend in respect of such
restrictions.  The Subscriber did not
decide to enter into Agreement as a result of any general solicitation or
general advertising within the meaning of Rule 502 under the Securities
Act.


 


3.5.                              Restrictions on
Transfer. Subscriber acknowledges and understands the Shares
are being offered in a transaction not involving a public offering within the
meaning of the Securities Act. The Shares have not been registered under the
Securities Act, and, if in the future the Subscriber decides to offer, resell,
pledge or otherwise transfer the Shares, such Shares may be offered, resold,
pledged or otherwise transferred only (A) pursuant to an effective
registration statement filed under the Securities Act, (B) pursuant to an
exemption from registration under Rule 144 promulgated under the
Securities Act, if available, or (C) pursuant to any available other
exemption from the registration requirements of the Securities Act, and in each
case in accordance with any applicable securities laws of any state or any
other jurisdiction.  Subscriber agrees
that if any transfer of his Shares or any interest therein is proposed to be
made, as a condition precedent to any such transfer, Subscriber may be required
to deliver to the Company an opinion of counsel satisfactory to the
Company.  Absent registration or an available
exemption from registration, the Subscriber agrees that he will not resell the
Shares.  Subscriber explicitly understands
and acknowledges that the Securities and Exchange Commission (the “SEC”) has
taken the position the Subscriber would be considered a promoter under the
Securities Act and that promoters or affiliates of a blank check company and
their transferees, both before and after a business combination, would act as “underwriters”
under the Securities Act when reselling the securities of that blank check
company.  Accordingly, Rule 144
promulgated under the Securities Act will not be available to the Subscriber
for the resale of the Shares despite technical compliance with the requirements
of Rule 144, in which event the resale transactions would need to be made
through a registered offering.


 


                                3.6           Pro-rata Forfeiture.  Subscriber hereby acknowledges and
understands that the 750,000 of the 5,750,000 Shares being offered herein are
subject to partial or complete 


 


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forfeiture
in the event that the underwriters’ over-allotment option is not exercised,
either partially or fully, as set forth in Section 4.4 herein.


 


4.             Forfeiture of Shares; Escrow of
Shares.


 


4.1.          Failure to Consummate Business
Combination.   All of the Shares
initially shall be subject to forfeiture to the Company in accordance with this
Section 4.  The Shares shall be forfeited
to the Company in the event the Company does not consummate a Business Combination,
as such term is defined in the Company’s registration statement on Form S-1
under the Securities Act (the “Registration Statement”), with respect the
Company’s initial public offering (the “IPO”) of its securities, within 24
months from the consummation of the IPO.


 


4.2.          Termination
of Rights as Stockholder.  If the Shares
are forfeited in accordance with this Section 4, then after such time the
Subscriber (or successor in interest), shall no longer have any rights as a
holder of such Shares, and the Company shall take such action as is appropriate
to cancel such Shares.  In addition, the
Subscriber hereby irrevocably grants the Company a limited power of attorney
for the purpose of effectuating the foregoing.


 


4.3.          Escrow.  Upon
consummation of the IPO, the Subscriber, and his designees, shall enter into a
securities escrow agreement (the “Escrow Agreement”) with American Stock
Transfer & Trust Company (the “Escrow Agent”), whereby the Shares (and
any shares of Common Stock which may be issued as a dividend as a result of any
stock split) shall be held in escrow and will not be released until one year
after the consummation of the Company’s initial business combination, unless
the Company were to engage in a transaction subsequent to such business
combination that results in all of the Company’s stockholders of the combined
entity having the right to exchange their shares of common stock for cash,
securities or other property.  As used
herein, “Business Combination” shall mean an acquisition by the Company by
merger, capital stock exchange, exchangeable share transaction, joint venture,
asset or stock acquisition, or other similar business combination of one or
more operating businesses.


 


4.4           Pro-rata Forfeiture.  If the underwriters of the IPO fail to
exercise any portion or all of the over-allotment option granted to them within
30 days of the effective date of the Company’s Registration Statement, then
Subscriber shall automatically forfeit up to 750,000 shares of Common Stock
purchased hereunder, such that Subscriber shall, in the aggregate, beneficially
own no greater than 20% of the Common Stock of the Company issued and
outstanding pursuant to this Agreement and the Company’s IPO (but not including
shares of Common Stock underlying warrants).


 


                5.             Waiver of Liquidation Distributions;
Conversion Rights.  In connection with the Shares purchased
pursuant to this Agreement and any other Company securities purchased on a
private placement basis, the Subscriber hereby waives any and all right, title,
interest or claim of any kind in or to any distributions by the Company from
the Trust Account, as such term is defined in the Registration Statement, in
the event of a liquidation of the Company upon the Company’s failure to timely
complete a Business Combination.  For
purposes of clarity, in the event the Subscriber purchases shares of Common
Stock in the IPO or in the aftermarket, any additional shares so purchased
shall be eligible to receive any liquidating distributions by the Company.  However, in no event will Subscriber have the
right to redeem any Shares into funds 


 


 


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held in the trust account
with the Escrow Agent upon the successful completion of a Business Combination.


 


6.             Restrictions
on Transfer.


 


6.1           Securities Law Restrictions.  In addition to the restrictions contained in
the Escrow Agreement, Subscriber agrees not to sell, transfer, pledge,
hypothecate or otherwise dispose of all or any part of the Shares unless, prior
thereto (a) a registration statement on the appropriate form under the
Securities Act and applicable state securities laws with respect to the Shares
proposed to be transferred shall then be effective or (b) the Company
shall have received an opinion from counsel reasonably satisfactory to the
Company, that such registration is not required because such transaction
complies with the Securities Act and the rules promulgated by the
Securities and Exchange Commission thereunder and with all applicable state
securities laws.


 


6.2           Restrictive
Legends.  All certificates
representing the Shares shall have endorsed thereon legends substantially as
follows:


 


“THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”),
OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
SUCH LAWS WHICH, IN THE OPINION OF COUNSEL FOR THIS CORPORATION, IS AVAILABLE.”


 


SECURITIES EVIDENCED BY THIS CERTIFICATE WILL BE
ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS AGREEMENT TO BE
EXECUTED BY THE COMPANY.


 


“THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO THE TERMS AND CONDITIONS CONTAINED IN A SECURITIES ESCROW
AGREEMENT (THE “AGREEMENT”) AND MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED OR OTHERWISE DISPOSED DURING THE TERM OF THE ESCROW PERIOD (AS DEFINED
IN THE AGREEMENT).”


 


6.3.          Additional
Shares or Substituted Securities.   In
the event of the declaration of a stock dividend, the declaration of an extraordinary
dividend payable in a form other than stock, a spin-off, a stock split, an adjustment
in conversion ratio, a recapitalization or a similar transaction affecting the
Company’s outstanding capital stock without receipt of consideration, any new,
substituted or additional securities or other property which are by reason of
such transaction distributed with respect to any Shares subject to this Section 6
or into which such Shares thereby become convertible shall immediately be
subject to this Section 6 and 


 


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Section 4.3.  Appropriate adjustments to reflect the
distribution of such securities or property shall be made to the number and/or
class of Shares subject to this Section 6 and Section 4.3.


 


7.             Other
Agreements.


 


7.1.          Further
Assurances.  Subscriber agrees to execute
such further instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement.


 


7.2           No
Obligation as to Employment.     The
Company is not by reason of this Agreement obligated to employ, or continue to
employ, the Subscriber in any capacity.


 


7.3.          Notices.
  All notices, requests, consents and
other communications hereunder shall be in writing, shall be addressed to the
receiving party’s address set forth on the first page of this Agreement or
to such other address as a party may designate by notice hereunder, and shall
be either (a) delivered by hand, (b) sent by overnight courier, or (c) sent
by certified mail, return receipt requested, postage prepaid.  All notices, requests, consents and other
communications hereunder shall be deemed to have been given either (i) if
by hand, at the time of the delivery thereof to the receiving party at the
address of such party set forth above, (ii) if sent by overnight courier,
on the next business day following the day such notice is delivered to the
courier service, or (iii) if sent by certified mail, on the (5th)
business day following the day such mailing is made.


 


7.4.          Entire
Agreement.  This Agreement, together
with that certain letter agreement between Subscriber and the Company,
substantially in the form filed as an exhibit to the Registration Statement, embodies
the entire agreement and understanding between the Subscriber and the Company
with respect to the subject matter hereof and supersedes all prior oral or
written agreements and understandings relating to the subject matter
hereof.  No statement, representation,
warranty, covenant or agreement of any kind not expressly set forth in this
Agreement shall affect, or be used to interpret, change or restrict, the
express terms and provisions of this Agreement.


 


7.5.          Modifications
and Amendments.   The terms and
provisions of this Agreement may be modified or amended only by written agreement
executed by all parties hereto.


 


7.6.          Waivers
and Consents.   The terms and
provisions of this Agreement may be waived, or consent for the departure
therefrom granted, only by written document executed by the party entitled to
the benefits of such terms or provisions. 
No such waiver or consent shall be deemed to be or shall constitute a
waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar.  Each such
waiver or consent shall be effective only in the specific instance and for the
purpose for which it was given, and shall not constitute a continuing waiver or
consent.


 


7.7.          Assignment.
  The rights and obligations under this
Agreement may not be assigned by either party hereto without the prior written
consent of the other party.


 


 


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7.8.          Benefit.
  All statements, representations,
warranties, covenants and agreements in this Agreement shall be binding on the
parties hereto and shall inure to the benefit of the respective successors and
permitted assigns of each party hereto. 
Nothing in this Agreement shall be construed to create any rights or
obligations except among the parties hereto, and no person or entity shall be
regarded as a third-party beneficiary of this Agreement.


 


7.9.          Governing
Law.    This Agreement and the rights
and obligations of the parties hereunder shall be construed in accordance with
and governed by the law of State of New York, without giving effect to the
conflict of law principles thereof.


 


7.10.        Severability.   In the event that any court of competent
jurisdiction shall determine that any provision, or any portion thereof,
contained in this Agreement shall be unreasonable or unenforceable in any
respect, then such provision shall be deemed limited to the extent that such
court deems it reasonable and enforceable, and as so limited shall remain in
full force and effect.  In the event that
such court shall deem any such provision, or portion thereof, wholly
unenforceable, the remaining provisions of this Agreement shall nevertheless
remain in full force and effect.


 


7.11.        No
Waiver of Rights, Powers and Remedies.   No failure or delay by a party hereto in
exercising any right, power or remedy under this Agreement, and no course of
dealing between the parties hereto, shall operate as a waiver of any such
right, power or remedy of such party.  No
single or partial exercise of any right, power or remedy under this Agreement
by a party hereto, nor any abandonment or discontinuance of steps to enforce any
such right, power or remedy, shall preclude such party from any other or
further exercise thereof or the exercise of any other right, power or remedy
hereunder.  The election of any remedy by
a party hereto shall not constitute a waiver of the right of such party to pursue
other available remedies.  No notice to
or demand on a party not expressly required under this Agreement shall entitle
the party receiving such notice or demand to any other or further notice or demand
in similar or other circumstances or constitute a waiver of the rights of the
party giving such notice or demand to any other or further action in any
circumstances without such notice or demand.


 


7.12.        Survival
of Representations and Warranties.   All representations and warranties made by the
parties hereto in this Agreement or in any other agreement, certificate or
instrument provided for or contemplated hereby, shall survive the execution and
delivery hereof and any investigations made by or on behalf of the parties.


 


7.13.        No
Broker or Finder.   Each of the
parties hereto represents and warrants to the other that no broker, finder or
other financial consultant has acted on their behalf in connection with this
Agreement or the transactions contemplated hereby in such a way as to create
any liability on the other.  Each of the
parties hereto agrees to indemnify and save the other harmless from any claim
or demand for commission or other compensation by any broker, finder, financial
consultant or similar agent claiming to have been employed by or on behalf of
such party and to bear the cost of legal expenses incurred in defending against
any such claim.


 


7.14.        Headings
and Captions.   The headings and
captions of the various subdivisions of this Agreement are for convenience of
reference only and shall in no way modify or affect the meaning or construction
of any of the terms or provisions hereof.


 


 


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                7.15.        Counterparts.   This
Agreement may be executed in one or more counterparts, all of which when taken
together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart.  In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a “.pdf” format data file, such signature
shall create a valid and binding obligation of the party executing (or on whose
behalf such signature is executed) with the same force and effect as if such
facsimile or “.pdf” signature page were an original thereof.


 


(Signature page to follow)


 


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                If
the foregoing accurately sets forth our understanding and agreement, please
sign the enclosed copy of this agreement and return it to us.


 


	
   

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  WATTLES ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Mark Wattles

  
	
   

  	
   

  	
  Title: 

  	
  Chairman of the Board of

  
	
   

  	
   

  	
   

  	
  Directors and Chief Executive

  
	
   

  	
   

  	
   

  	
  Officer

  



 


 


	
  Accepted and agreed this

  	
   

  
	
  5th day of November, 2007

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: Mark Wattles

  	
   

  
	
   

  	
   

  



 


 


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