Document:

Exhibit 10.11

 

SUBSCRIPTION AGREEMENT

 

SUBSCRIPTION AGREEMENT (this
“Agreement”) made as of this 13th day of November, 2007 for the
benefit of Wattles Acquisition Corp.,
a Delaware corporation (the “Company”), having its principal place of business
at 321 West 84th Ave., Suite A, Thornton, CO 80260 by Wattles Capital, LLC
(“Subscriber”).

 

WHEREAS, the Company desires
to sell on a private placement basis (the “Offering”) an aggregate of 5,750,000
warrants (the “Warrants”) of the Company for a purchase price of $1.00 per
Warrant.  Each Warrant is exercisable to
purchase one share of the Company’s common stock, par value $0.0001 per share
(the “Common Stock”) at an exercise price of $7.50 per share during the period
commencing on the later of: (i) the date that is 12 months from the date
of the final prospectus relating to the Company’s IPO (as defined below) and (ii) the
date on which the Company completes its Business Combination (as defined in Section 5
below) and shall end on the earlier of: (i) the date that is four years
from the date of the Company’s final prospectus for the Company’s IPO and (ii) the
Business Day (as defined below) preceding the date on which such Warrants are
redeemed or otherwise expire.  For
purposes of this Agreement, “Business Day” means any day on which the American
Stock Exchange is open for trading and which is not a Saturday, a Sunday or any
other day on which banks in the City of New York, New York, are authorized or
required by law to close.;

 

WHEREAS, Subscriber wishes
to purchase the Warrants and the Company wishes to accept such subscription.

 

NOW, THEREFORE, in
consideration of the premises and the mutual covenants hereinafter set forth
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and Subscriber hereby agree as follows

 

1.   Agreement to Subscribe

 

1.1.          Purchase and Issuance of the Warrants. Upon the
terms and subject to the conditions of this Agreement, Subscriber hereby agrees
to purchase from the Company, and the Company hereby agrees to sell to the
Subscriber, on the Closing Date, the Warrants for an aggregate purchase price
of $5,750,000 (the “Purchase Price”).

 

1.2.          Delivery of the Purchase Price. Upon execution of
this Agreement, the undersigned is hereby bound to fulfill its obligations
hereunder and hereby irrevocably commits to deliver into a trust account (the “Trust
Account”) at a financial institution to be chosen by the Company, maintained by
American Stock Transfer & Trust Company, acting as trustee, on the
Closing Date (as defined below), the Purchase Price in immediately available
funds by certified bank check, wire transfer or such other form of payment as
shall be acceptable to the Trustee, in its sole and absolute discretion, at the
Closing.

 

 

 

1.3.          Closing. The closing (the “Closing”) of the
Offering, shall take place at the offices of the Company, immediately prior to
the effective date of the registration statement pursuant to which the Company
proposes to register its initial public offering (the “IPO”) of 20,000,000
units of Common Stock and Warrants (the “Closing Date”).

 

2.   Representations and Warranties of the Subscriber

 

Subscriber represents and
warrants to the Company that:

 

2.1.          No Government Recommendation or Approval. Subscriber
understands that no United States federal or state agency has passed upon or
made any recommendation or endorsement of the Company or the Offering of the
Warrants or the Common Stock underlying the Warrants (the “Warrant Shares” and,
collectively with the Warrants, the “Securities”).

 

2.2.          Regulation D Offering.  Subscriber represents that it 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.

 

2.3.          Intent. Subscriber is purchasing the Warrants solely
for investment purposes, for the Subscriber’s own account and not for the
account or benefit of any U.S. Person, and not with a view towards the
distribution thereof and Subscriber has no present arrangement to sell the
Securities to or through any person or entity. 
Subscriber shall not engage in hedging transactions with regard to the
Warrants and the underlying securities unless in compliance with the Securities
Act.

 

2.4.          Restrictions on Transfer.
Subscriber acknowledges and understands the Warrants are being offered in a
transaction not involving a public offering in the United States within the
meaning of the Securities Act.  The
Securities have not been registered under the Securities Act, and, if in the
future the Subscriber decides to offer, resell, pledge or otherwise transfer
the Securities, such Securities may be offered, resold, pledged or otherwise
transferred only (i) pursuant to an effective registration statement filed
under the Securities Act, (ii) pursuant to an exemption from registration
under Rule 144 promulgated under the Securities Act, if available, or (iii) pursuant
to any other available 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 its Securities 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 another available exemption from registration, the Subscriber agrees it will
not 

 

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resell the
Securities.  Subscriber explicitly
understands and acknowledges 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 Securities despite technical compliance with the
requirements of Rule 144, in which event the resale transactions would
need to be made through a registered offering.

 

2.5.          Sophisticated Investor.

 

(i)   
Subscriber is sophisticated in financial matters and is able to evaluate the
risks and benefits of the investment in the Securities.

 

(ii)   
Subscriber is aware that an investment in the Warrants is highly speculative
and subject to substantial risks because, among other things, none of the
Securities have been registered under the Securities Act and therefore cannot
be sold unless subsequently registered under the Securities Act or an exemption
from such registration is available. 
Subscriber is able to bear the economic risk of its investment in the
Securities for an indefinite period of time. 
Notwithstanding the foregoing, Subscriber further understands and
acknowledges the SEC has taken the position that the Subscriber is 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 an “underwriter” under the Securities Act when
reselling the securities of that blank check company.  Accordingly, Rule 144 promulgated under
the Securities Act would not be available for the resale of the Securities
despite technical compliance with the requirements of Rule 144, in which
event the resale transactions would need to be made through a registered
offering.

 

2.6.          Independent Investigation.  Subscriber, in making the decision to
purchase the Warrants, has relied upon an independent investigation of the
Company and has not relied upon any information or representations made by any
third parties or upon any oral or written representations or assurances from
the Company, its officers, directors or employees or any other representatives
or agents of the Company, other than as set forth in this Agreement.  Subscriber is familiar with the business,
operations and financial condition of the Company and has had an opportunity to
ask questions of, and receive answers from, the Company’s officers and
directors concerning the Company and the terms and conditions of the offering
of the Warrants and has had full access to such other information concerning
the Company as the Subscriber has requested. 
Subscriber confirms that all documents that it has requested have been
made available and that the Subscriber has been supplied with all of the
additional information concerning this investment which Subscriber has
requested.

 

2.7.          Authority. This Agreement has been validly
authorized, executed and delivered by Subscriber and is a valid and binding
agreement enforceable in accordance with its terms, subject to the general
principles of equity and to bankruptcy or other laws affecting the enforcement
of creditors’ rights generally.  The
execution, delivery and performance of this 

 

 

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Agreement by Subscriber does
not and will not conflict with, violate or cause a breach of any agreement,
contract or instrument to which Subscriber is a party.

 

2.8.          No Legal Advice from Company.  Subscriber acknowledges it has had the
opportunity to review this Agreement and the transactions contemplated by this
Agreement and the other agreements entered into between the parties hereto with
the Subscriber’s own legal counsel and investment and tax advisors.  Except for any statements or representations
of the Company made in this Agreement and the other agreements entered into
between the parties hereto, Subscriber is relying solely on such counsel and
advisors and not on any statements or representations of the Company or any of
its representatives or agents for legal, tax or investment advice with respect
to this investment, the transactions contemplated by this Agreement or the
securities laws of any jurisdiction.

 

2.9.          Reliance on Representations and Warranties.
Subscriber understands the Warrants are being offered and sold to Subscriber in
reliance on exemptions from the registration requirements under the Securities
Act, and analogous provisions in the laws and regulations of various states,
and that the Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and understandings of
the Subscriber set forth in this Agreement in order to determine the
applicability of such provisions.

 

2.10.        No General Solicitation or Advertising.  The Subscriber did not enter into this
Agreement as a result of any general solicitation or general advertising within
the meaning of Rule 502 under the Securities Act.

 

2.11.        Legend. 
Subscriber acknowledges and agrees the certificates evidencing the
Warrants and the Warrant Shares shall bear a restrictive legends (the “Legends”),
in form and substance as set forth in Section 4 hereof, prohibiting the
offer, sale, pledge or transfer of the securities, except (i) pursuant to
an effective registration statement covering these securities under the
Securities Act or (ii) pursuant to any other exemptions from the
registration requirements under the Securities Act and such laws which, in the
opinion of counsel for this Company, is available.

 

3.             Representations and
Warranties of the Company

 

The Company represents and
warrants to Subscriber that:

 

3.1.          Valid Issuance of Capital Stock.  The total number of shares of all classes of
capital stock which the Company will have authority to issue is 75,000,000
shares of Common Stock and 1,000,000 shares of Preferred Stock. As of the date
hereof, the Company has 5,750,000 shares of Common Stock and no shares of
Preferred Stock issued and outstanding. All of the issued shares of capital
stock of the Company have been duly authorized, validly issued, and are fully
paid and non-assessable.

 

3.2.          Organization and Qualification. The Company is a
corporation duly incorporated and existing in good standing under the laws of
the state of Delaware and has the requisite 

 

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corporate power to own its
properties and assets and to carry on its business as now being conducted.

 

3.3.          Authorization; Enforcement. (i) The Company has
the requisite corporate power and authority to enter into and perform its
obligations under this Agreement and to issue the Warrants and the underlying
securities in accordance with the terms hereof, (ii) the execution,
delivery and performance of this Agreement by the Company and the consummation
by it of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, and no further consent or authorization of the Company
or its Board of Directors or stockholders is required, and (iii) this
Agreement constitutes valid and binding obligations of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
moratorium, reorganization, or similar laws relating to, or affecting generally
the enforcement of, creditors’ rights and remedies or by equitable principles
of general application and except as enforcement of rights to indemnity and
contribution may be limited by federal and state securities laws or principles
of public policy.

 

3.4.          No Conflicts. The execution, delivery and
performance of this Agreement and the consummation by the Company of the transactions
contemplated hereby do not (i) result in a violation of the Company’s
Certificate of Incorporation or Bylaws or (ii) conflict with, or
constitute a default under any agreement, indenture or instrument to which the
Company is a party. Other than any SEC or state securities filings which may be
required to be made by the Company subsequent to the Closing, and any
registration statement which may be filed pursuant thereto, the Company is not
required under federal, state or local law, rule or regulation to obtain
any consent, authorization or order of, or make any filing or registration
with, any court or governmental agency or self-regulatory entity in order for
it to perform any of its obligations under this Agreement or issue the Common
Stock in accordance with the terms hereof.

 

4.             Legends

 

4.1.          Legend. The Company will issue the Warrants, and
when issued, the Warrant Shares, purchased by the Subscriber in the name of the
Subscriber.  The Warrants shall bear the
following Legend and appropriate “stop transfer” instructions:

 

THE SECURITIES REPRESENTED
BY THIS CERTIFICATE (INCLUDING THE SHARES OF COMMON STOCK OF THE COMPANY
ISSUABLE UPON EXERCISE OF SUCH SECURITIES) HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED OR ANY STATE SECURITIES LAWS, AND MAY NOT
BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION FROM REGISTRATION IS AVAILABLE.  IN ADDITION, THE SECURITIES REPRESENTED BY
THIS CERTIFICATE ARE SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET FORTH IN A
WARRANT AGREEMENT AND UNDER AN ESCROW AGREEMENT.

 

 

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SECURITIES EVIDENCED BY THIS
CERTIFICATE AND SHARES OF COMMON STOCK OF THE COMPANY ISSUABLE UPON EXERCISE OF
SUCH SECURITIES WILL BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION
RIGHTS AGREEMENT.

 

                The Warrant Shares shall bear the following Legend
and appropriate “stop transfer” instructions

 

“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).”

 

4.2.          Subscriber’s Compliance. Nothing in this Section 4
shall affect in any way the Subscribers’ obligations and agreements to comply
with all applicable securities laws upon resale of the Securities.

 

4.3.          Company’s Refusal to Register Transfer of the Securities.
The Company shall refuse to register any transfer of the Securities, if in the
sole judgment of the Company such purported transfer would not be made (i) pursuant
to an effective registration statement filed under the Securities Act, or (ii) pursuant
to an available exemption from the registration requirements of the Securities
Act.

 

5.             Escrow.  Upon consummation of the IPO, the holders of
the Warrants shall enter into a securities escrow agreement (the “Escrow
Agreement”) with American Stock Transfer & Trust Company, whereby the
Warrants shall be held in escrow until the earlier of: (i) 30 days
following the consummation of a Business Combination or earlier if the
underwriters’ of the Company’s IPO over-allotment option is not exercised in
full or in part in order to have up to 750,000 shares of Common Stock cancelled
and (ii) the consummation of a transaction after the Company’s Business
Combination that results in all of the Company’s stockholders at the time 

 

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of the transaction having
the right to exchange their shares of Common Stock for cash, securities or
other property.

 

6.                                       Securities
Laws Restrictions.

 

                In addition to the restrictions contained in the
Escrow Agreement and the warrant agreement to be entered into between American
Stock Transfer & Trust Company and the Company upon the consummation
of the IPO, Subscriber agrees not to sell, transfer, pledge, hypothecate or
otherwise dispose of all or any part of the Securities unless, prior thereto (i) a
registration statement on the appropriate form under the Securities Act and
applicable state securities laws with respect to the Securities proposed to be
transferred shall then be effective or (ii) 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.

 

7.             Waiver
of Liquidation Distributions.

 

In
connection with the Securities purchased pursuant to this Agreement, and with
respect to any Common Stock purchased by Subscriber prior to the private
placement, Subscriber hereby waives any and all right, title, interest or claim
of any kind in or to any liquidating distributions by the Company 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 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.  In no event will a Subscriber have the right
to exercise any Warrants prior to the later of: (i) the date that is 12
months from the date of the final prospectus relating to the Company’s IPO and (ii) the
date on which the Company completes its Business Combination.

 

8.  Forfeiture of Warrants.

 

8.1.          Failure
to Consummate Business Combination.  
The Warrants shall be forfeited to the Company in the event that the
Company does not consummate a Business Combination within 24 months from the
date of the final prospectus relating to the Company’s IPO.

 

8.2.          Termination
of Rights as holder; Escrow.  If the
Warrants are forfeited in accordance with this Section 8, then after such
time the Subscriber (or successor in interest), shall no longer have any rights
as a holder of such Warrants, and the Company shall take such action as is
appropriate to cancel such Warrants.  To
effectuate the foregoing, all certificates representing the Warrants shall be
held in escrow as provided in Section 5 hereof.  In addition, Subscriber hereby irrevocably
grants the Company a limited power of attorney for the purpose of effectuating
the foregoing.

 

9.             Rescission Right Waiver and Indemnification.

 

9.1.          Subscriber understands and
acknowledges an exemption from the registration requirements of the Securities
Act requires there be no general solicitation of purchasers of the 

 

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Warrants.
In this regard, if the IPO were deemed to be a general solicitation with
respect to the Warrants, the offer and sale of such Warrants may not be exempt
from registration and, if not, the Subscriber may have a right to rescind its
purchase of the Warrants.  In order to
facilitate the completion of the Offering and in order to protect the Company,
its stockholders and the trust account from claims that may adversely affect
the Company or the interests of its stockholders, Subscriber hereby agrees to
waive, to the maximum extent permitted by applicable law, any claims, right to
sue or rights in law or arbitration, as the case may be, to seek rescission of
its purchase of the Warrants.  Subscriber
acknowledges and agrees this waiver is being made in order to induce the
Company to sell the Warrants to the Subscriber. 
Subscriber agrees the foregoing waiver of rescission rights shall apply
to any and all known or unknown actions, causes of action, suits, claims or
proceedings (collectively, “Claims”) and related losses, costs, penalties,
fees, liabilities and damages, whether compensatory, consequential or
exemplary, and expenses in connection therewith, including reasonable attorneys’
and expert witness fees and disbursements and all other expenses reasonably
incurred in investigating, preparing or defending against any Claims, whether
pending or threatened, in connection with any present or future actual or
asserted right to rescind the purchase of the Warrants hereunder or relating to
the purchase of the Warrants and the transactions contemplated hereby.

 

9.2.          Subscriber agrees not to seek recourse
against the Trust Account for any reason whatsoever in connection with its
purchase of the Warrants or any Claim that may arise now or in the future.

 

9.3.          Subscriber acknowledges and agrees the
stockholders of the Company, UBS Securities LLC and Ladenburg Thalmann &
Co. Inc. are and shall be third-party beneficiaries of the foregoing
provisions of this Agreement.

 

9.4.          Subscriber agrees that to the extent any
waiver of rights under this Section 9 is ineffective as a matter of law;
Subscriber has offered such waiver for the benefit of the Company as an
equitable right that shall survive any statutory disqualification or bar that
applies to a legal right. Subscriber acknowledges the receipt and sufficiency
of consideration received from the Company hereunder in this regard.

 

10.           Terms of the Warrant

 

The Warrants are
substantially identical to the warrants included in the units offered in the
IPO, except: (i) they will not have a
claim to the funds held in the Trust Account, (ii) they will be placed in
escrow and not released before, except in limited circumstances, until after
the consummation of a Business Combination, as more fully described in Section 5,
(iii) they are being purchased in a private placement pursuant to an
exemption from the registration requirements of the Securities Act and will
become freely tradable only after they are registered pursuant to a
registration rights agreement to be entered on or before the date of the final
prospectus relating to the Company’s IPO, (iv) they will be non-redeemable
so long as they are held by the initial holder thereof (or any of its
permitted transferees), and (v) they
are exercisable (a) on a “cashless” basis if held by the initial
holder thereof or its permitted assigns and (b) in
the absence of an effective registration statement covering the shares of
common stock underlying the warrants.  In
no event will the Company be required to net cash settle the Warrant exercise.

 

 

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11.           Governing Law;
Jurisdiction; Waiver of Jury
Trial

 

This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware
for agreements made and to be wholly performed within such state. The parties
hereto hereby waive any right to a jury trial in connection with any litigation
pursuant to this Agreement and the transactions contemplated hereby.

 

12.           Assignment; Entire
Agreement; Amendment

 

12.1.        Assignment. Neither this Agreement nor any rights
hereunder may be assigned by any party to any other person other than by
Subscriber to a person agreeing to be bound by the terms hereof.

 

12.2.        Entire Agreement. This Subscription Agreement sets
forth the entire agreement and understanding between the parties as to the
subject matter thereof and merges and supersedes all prior discussions,
agreements and understandings of any and every nature among them.

 

12.3.        Amendment. Except as expressly provided in this Agreement,
neither this Agreement nor any term hereof may be amended, waived, discharged
or terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought.

 

12.4.        Binding upon Successors.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs, legal
representatives, successors and permitted assigns.

 

13.           Notices; Indemnity

 

13.1         Notices. Unless otherwise provided herein, any notice
or other communication to a party hereunder shall be sufficiently given if in
writing and personally delivered or sent by facsimile or other electronic
transmission with copy sent in another manner herein provided or sent by
courier (which for all purposes of this Agreement shall include Federal Express
or other recognized overnight courier) or mailed to said party by certified
mail, return receipt requested, at its address provided for herein or such
other address as either may designate for itself in such notice to the
other.  Communications shall be deemed to
have been received when delivered personally, on the scheduled arrival date
when sent by next day or 2-day courier service, or if sent by facsimile upon
receipt of confirmation of transmittal or, if sent by mail, then three days
after deposit in the mail.  If given by
electronic transmission, such notice shall be deemed to be delivered (a) if
by electronic mail, when directed to an electronic mail address at which the
stockholder has consented to receive notice; (b) if by a posting on an
electronic network together with separate notice to the stockholder of such
specific posting, upon the later of (1) such posting and (2) the
giving of such separate notice; and (c) if by any other form of electronic
transmission, when directed to the stockholder.

 

 

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13.2         Indemnification. Each party shall indemnify the other
against any loss, cost or damages (including reasonable attorney’s fees and expenses)
incurred as a result of such party’s breach of any representation, warranty,
covenant or agreement in this Agreement.

 

14.           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.

 

15.           Survival; Severability

 

15.1.        Survival. The representations, warranties, covenants
and agreements of the parties hereto shall survive the Closing.

 

15.2.        Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to
any party.

 

16.           Headings.

 

The titles and subtitles
used in this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.

 

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This subscription is
accepted by the Company on the 13th day of November, 2007.

 

	
   

  	
  WATTLES
  ACQUISITION CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name: Mark Wattles

  
	
   

  	
   

  	
  Title: Chairman &
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WATTLES
  CAPITAL, LLC

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:
  Mark Wattles

  
	
   

  	
   

  	
  Title:
  Managing Member

  

 

 

11Exhibit 10.12

 

THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”).  THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT
ONLY AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF
REGISTRATION OF THE RESALE THEREOF UNDER THE SECURITIES ACT OR AN OPINION OF
COUNSEL REASONABLY SATISFACTORY IN FORM, SCOPE AND SUBSTANCE TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.

 

PROMISSORY NOTE
 

	Principal Amount: $237,500
	 
	Dated as of November 13, 2007

	 
	 
	Thornton, Colorado

 
                Wattles Acquisition Corp., a Delaware Corporation, (the “Maker”) promises to pay to the order of Mark Wattles or his registered assigns or successors in interest (the “Payee”), or order, the principal sum of Two Hundred Thirty-Seven Thousand Five Hundred Dollars ($237,500) in lawful money of the United States of America, on the terms and conditions described below.  All payments on this Note shall be made by check or wire transfer of immediately available funds or as otherwise determined by the Maker to such account as the Payee may from time to time designate by written notice in accordance with the provisions of this Note.
 
1.             Principal. The principal balance of this Promissory Note (this “Note”) shall be payable on the earlier of (i) November 5, 2008 or (ii) the date on which Maker consummates an initial public offering of its securities.
 
2.             Interest. No interest shall accrue on the unpaid principal balance of this Note.
 
3.             Application of Payments. All payments shall be applied first to payment in full of any costs incurred in the collection of any sum due under this Note, including (without limitation) reasonable attorney’s fees, then to the payment in full of any late charges and finally to the reduction of the unpaid principal balance of this Note.
 
4.             Events of Default. The following shall constitute an event of default (“Event of Default”):
 
(a)           Failure to Make Required Payments. Failure by Maker to pay the principal of this Note within five (5) business days following the date when due.
 
(b)           Voluntary Bankruptcy, Etc. The commencement by Maker of a voluntary case under the Federal Bankruptcy Code, as now constituted or hereafter amended, or any other applicable federal or state bankruptcy, insolvency, reorganization, rehabilitation or 
 

 
other similar law, or the consent by it to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of Maker or for any substantial part of its property, or the making by it of any assignment for the benefit of creditors, or the failure of Maker generally to pay its debts as such debts become due, or the taking of corporate action by Maker in furtherance of any of the foregoing.
 
(c)           Involuntary Bankruptcy, Etc. The entry of a decree or order for relief by a court having jurisdiction in the premises in respect of Maker in an involuntary case under the Federal Bankruptcy Code, as now or hereafter constituted, or any other applicable federal or state bankruptcy, insolvency or other similar law, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of Maker or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs, and the continuance of any such decree or order unstayed and in effect for a period of 60 consecutive days.
 
5.             Remedies.
 
(a)           Upon the occurrence of an Event of Default specified in Section 4(a) hereof, Payee may, by written notice to Maker, declare this Note to be due immediately and payable, whereupon the unpaid principal amount of this Note, and all other amounts payable thereunder, shall become immediately due and payable without presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived, anything contained herein or in the documents evidencing the same to the contrary notwithstanding.
 
(b)           Upon the occurrence of an Event of Default specified in Sections 4(b) and 4(c), the unpaid principal balance of this Note, and all other sums payable with regard to, this Note shall automatically and immediately become due and payable, in all cases without any action on the part of Payee.
 
6.             Waivers. Maker and all endorsers and guarantors of, and sureties for, this Note waive presentment for payment, demand, notice of dishonor, protest, and notice of protest with regard to the Note, all errors, defects and imperfections in any proceedings instituted by Payee under the terms of this Note, and all benefits that might accrue to Maker by virtue of any present or future laws exempting any property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy or sale under execution, or providing for any stay of execution, exemption from civil process, or extension of time for payment; and Maker agrees that any real estate that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued hereon, may be sold upon any such writ in whole or in part in any order desired by Payee.
 
7.             Unconditional Liability. Maker hereby waives all notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Note, and agrees that its liability shall be unconditional, without regard to the liability of any 
 

 
other party, and shall not be affected in any manner by any indulgence, extension of time, renewal, waiver or modification granted or consented to by Payee, and consents to any and all extensions of time, renewals, waivers, or modifications that may be granted by Payee with respect to the payment or other provisions of this Note, and agrees that additional makers, endorsers, guarantors, or sureties may become parties hereto without notice to him or affecting his liability hereunder.
 
8.             Notices. Any notice called for hereunder shall be deemed properly given if (i) sent by certified mail, return receipt requested, (ii) personally delivered, (iii) dispatched by any form of private or governmental express mail or delivery service providing receipted delivery or (iv) sent by telefacsimile or (v) to the following addresses or to such other address as either party may designate by notice in accordance with this Section:
 
If to Maker:

Wattles Acquisition
Corp.

321
W 84th Avenue, Suite A

Thornton,
CO 80260

 

Attn:  Mark Wattles, Chairman and Chief Executive
Officer

 

If to Payee:

Mark
Wattles

321
W 84th Avenue, Suite A

Thornton,
CO 80260

 

                Notice shall be deemed given on the earlier of (i) actual receipt by the receiving party, (ii) the date shown on a telefacsimile transmission confirmation, (iii) the date reflected on a signed delivery receipt, or (iv) two (2) Business Days following tender of delivery or dispatch by express mail or delivery service.
 
     9.        Construction. THIS NOTE SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAW PROVISIONS THEREOF.
 
     10.      Severability. Any provision contained in this Note which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.
 

 
IN WITNESS WHEREOF, Maker, intending to be legally bound hereby, has caused this Note to be duly executed by its Chief Executive Officer the day and year first above written.
 
 

	 
	WATTLES ACQUISITION CORP.

	 
	 

	 
	 

	 
	By:
	 

	 
	 
	Name: Mark Wattles

	 
	 
	Title: Chief Executive Officer and Chairman

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