SUBSCRIPTION AGREEMENT
This
Subscription Agreement (this "Agreement"),
effective as of March 23, 2010, is made and entered into by and between Formula
Acquisition Corp., a Delaware corporation (the "Company"),
and [___________] ("Buyer").
RECITALS:
WHEREAS, Buyer wishes to
purchase from the Company 468,750 shares of the Company's Common Stock, par
value $0.0001 per share (the "Shares");
and
WHEREAS, Buyer wishes to
purchase the Shares from the Company and the Company wishes to sell the Shares
to Buyer on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in
consideration of the premises, representations, warranties and the mutual
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt, sufficiency and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE
I.
DEFINITIONS
The terms
defined in this Article I shall have for
all purposes of this Agreement the respective meanings set forth
below:
"Buyer"
shall have the meaning set forth in the preamble to this Agreement.
"Closing"
shall have the meaning set forth in Section 2.3 of this
Agreement.
"Closing
Date" shall have the meaning set forth in Section 2.3 of this
Agreement.
"Common
Stock" shall mean the Common Stock, $0.0001 par value per share, of the
Company.
"Company"
shall have the meaning set forth in the preamble to this Agreement.
"Consent"
means any consent, approval, notification, waiver, or other similar action that
is necessary or convenient.
"Governmental
Body" shall mean any legislature, agency, bureau, branch, department,
division, commission, court, tribunal or other similar recognized organization
or body of any federal, state, county, municipal, local or foreign government or
other similar recognized organization or body exercising similar powers or
authority.
"Law" shall
mean any law (statutory, common or otherwise), constitution, ordinance, rule,
regulation, executive order or other similar authority enacted, adopted,
promulgated or applied by any Governmental Body.
"Lien"
shall mean a mortgage, deed of trust, pledge, hypothecation, assignment,
encumbrance, charge, restriction, lien (statutory or otherwise, including,
without limitation, any lien for taxes), security interest, preference,
participation interest, priority or security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any document under the law of any applicable jurisdiction to evidence any of the
foregoing, other than (i) statutory, mechanics' or other Liens incurred in
the Company's ordinary course of business or (ii) Liens for taxes incurred
but not yet due.
"Order"
shall mean an order, ruling, decision, award, judgment, injunction or other
similar determination or finding by, before or under the supervision of any
Governmental Body or arbitrator.
"Permit"
shall mean a permit, license, certificate, waiver, notice or similar
authorization to which Buyer is a party or by which Buyer is bound or any of its
assets are subject.
"Purchase
Price" shall have the meaning set forth in Section 2.2 of this
Agreement.
"SEC" shall
mean the U.S. Securities and Exchange Commission.
"Securities
Act" shall mean the Securities Act of 1933, as amended, or any successor
federal statute, and the applicable rules and regulations promulgated and in
effect from time to time thereunder.
"Shares"
shall have the meaning set forth in the recitals to this Agreement.
ARTICLE
II
PURCHASE
OF SECURITIES
Section 2.1 Purchase and
Sale of Shares. Subject to the terms and
conditions hereof and in reliance upon the representations and warranties of the
parties contained or incorporated by reference herein, simultaneous with the
execution hereof, the Company shall sell and deliver to Buyer, and Buyer shall
purchase from the Company, the Shares, in consideration of the payment of the
Purchase Price noted herein.
Section 2.2 Purchase
Price. As payment in full for the Shares being
purchased under this Agreement and against delivery of the certificates
therefor, simultaneous with the execution hereof, Buyer shall pay $8.333.33 to
the Company by wire transfer of immediately available funds or by such other
method as may be reasonably acceptable to the Company (the "Purchase
Price").
Section 2.3 Closing. The
closing of the purchase and sale of the Shares (the "Closing")
shall be deemed to occur on the date of this Agreement ("Closing
Date") at the offices of Xxxxxxx Xxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, 0xx xxxxx,
Xxx Xxxx, XX 00000, or such other place as may be agreed upon by the parties
hereto.
Section 2.4 Closing
Deliveries. All actions taken at the Closing shall
be deemed to have been taken simultaneously.
(a) Buyer
Deliveries. At the Closing, Buyer shall deliver to
the Company the Purchase Price.
(b) Company
Deliveries. At the Closing, or within a reasonable
time after the Closing but in no event later than thirty (30) days after
Closing, the Company shall deliver to the Buyer the Shares.
Section 2.5 Further
Assurances. The parties hereto shall execute and
deliver such additional documents and take such additional actions as any party
reasonably may deem to be practical and necessary in order to consummate the
transactions contemplated by this Agreement.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
Buyer
represents and warrants to the Company that the statements contained in this
ARTICLE III are correct
and complete as of the date of this Agreement.
Section 3.1 Investment
Representations.
(a) Buyer is an "accredited investor" as defined in
Rule 501 of Regulation D under the Securities Act.
(b) Buyer
has received, has thoroughly read, is familiar with and understands the contents
of this Agreement.
(c) Buyer
hereby acknowledges that an investment in the Shares involves certain
significant risks. Buyer acknowledges that there is a substantial risk that he
will lose all or a portion of his investment and that he is financially capable
of bearing the risk of such investment for an indefinite period of time. Buyer
has no need for liquidity in his investment in the Shares for the foreseeable
future and is able to bear the risk of that investment for an indefinite period.
Buyer understands that there presently is no public market for the Shares and
none is anticipated to develop in the foreseeable future. Buyer's present
financial condition is such that Buyer is under no present or contemplated
future need to dispose of any portion of the Shares subscribed for hereby to
satisfy any existing or contemplated undertaking, need or indebtedness. Buyer's
overall commitment to investments which are not readily marketable is not
disproportionate to his net worth and the investment in the Company will not
cause such overall commitment to become excessive.
(d) Buyer
acknowledges that the Shares have not been registered under the Securities Act,
or any state securities act, and are being sold on the basis of exemptions from
registration under the Securities Act and applicable state securities acts,
except those state securities acts that require registration of the Shares
thereunder. Reliance on such exemptions, where applicable, is predicated in part
on the accuracy of the Buyer's representations and warranties set forth herein.
Buyer acknowledges and hereby agrees that the Shares will not be transferable
under any circumstances unless Buyer either registers the Shares in accordance
with federal and state securities laws or finds and complies with an available
exemption under such laws. Accordingly, Buyer hereby acknowledges that there can
be no assurance that he will be able to liquidate his investment in the
Company.
(e) There
are substantial risk factors pertaining to an investment in the Company. Buyer
acknowledges that he has read the information set forth above regarding certain
of such risks and is familiar with the nature and scope of all such risks,
including, without limitation, risks arising from the fact that the Company is
an entity with limited operating history and financial resources; and Buyer is
fully able to bear the economic risks of such investment for an indefinite
period, and can afford a complete loss thereof.
(f) Buyer
has been given the opportunity to (i) ask questions of and receive answers
from the Company and its designated representatives concerning the terms and
conditions of the offering, the Company and the business and financial condition
of the Company and (ii) obtain any additional information that the Company
possesses or can acquire without unreasonable effort or expense that is
necessary to assist Buyer in evaluating the advisability of the purchase of the
Shares and an investment in the Company. Buyer further represents and warrants
that, prior to signing this Agreement, he has asked such questions, received
such answers and obtained such information as he has deemed necessary or
advisable to evaluate the merits and risks of the purchase of the Shares and an
investment in the Company. Buyer is not relying on any oral representation made
by any person as to the Company or its operations, financial condition or
prospects.
(g) Buyer
understands that no federal, state or other governmental authority has made any
recommendation, findings or determination relating to the merits of an
investment in the Company.
(h) Buyer
agrees that the Shares will be placed in an escrow account and are subject to
certain transfer restrictions as described in Article VII below.
(i) Buyer
agrees to vote the Shares in the same manner as a majority of the public
stockholders in connection with the vote required to approve the Company's
initial business combination.
(j) Buyer
understands and acknowledges that he will not be able to exercise conversion
rights (as described below) with respect to the Shares.
(k) Buyer
agrees to waive his rights to participate in any liquidation distribution with
respect to the Shares if we fail to consummate a business
combination.
ARTICLE
IV
VOTING
OF SHARES
Buyer
agrees to vote the Shares owned by him acquired hereby in accordance with the
majority of the shares of common stock voted by the public stockholders with
respect to any business combination. Accordingly, our existing stockholders will
not be able to exercise redemption rights for the Shares with respect to a
potential business combination.
ARTICLE
V
REDEMPTION
RIGHTS
Buyer
understands and acknowledges that if the Company's initial business combination
is approved and completed, only public stockholders voting against such business
combination will be entitled to convert their stock into a pro rata share of the
trust account. Buyer agrees to vote the Shares in favor of a business
combination and acknowledges that he is not entitled to redemption rights with
respect to any such shares if the business combination is approved and
completed.
ARTICLE
VI
LIQUIDATION
RIGHTS AND PREFERENCES
Buyer
acknowledges and agrees that in the event the Company has not consummated a
business combination within twenty-four months from the date of the offering of
its securities, its
corporate existence will cease by operation of law and it will promptly
distribute only to its public stockholders the amount in its trust account
(including any accrued interest, after taxes payable on such interest) plus any
remaining net assets. Buyer further agrees to waive his rights to participate in
any liquidation as part of the Company's plan of dissolution and liquidation
with respect to those shares of common stock acquired by him prior to the
offering of the Company's securities. Buyer will participate in any liquidation
distribution with respect to any shares of common stock acquired as part of the
offering of the Company's securities or in the aftermarket.
ARTICLE
VII
ESCROW
OF SECURITIES
Buyer
agrees he will place the Shares into an escrow account maintained by an escrow
agent acceptable to the Company, on such date as the Company shall file a
registration statement on Form S-1 ("Form S-1") with the SEC. Buyer
acknowledges and agrees that these Shares will not be transferable during the
escrow period except for (i) transfers to an entity’s members upon its
liquidation; (ii) transfers to relatives and trusts for estate planning
purposes; or (iii) transfers by private sales made at or prior to the
consummation of a business combination at prices no greater than the price at
which the shares were originally purchased, in each case where the transferee
agrees to the terms of the escrow agreement and Buyer will retain all other
rights as a stockholder, including, without limitation, the right to vote the
Shares and the right to receive cash dividends, if declared. Buyer
further acknowledges and agrees that the Shares will not be released from escrow
until the earlier of:
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one
year after the consummation of a business
combination;
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the
last sales price of the Company’s Common Stock equals or exceeds $12.00
per share for any 20 trading days within any 30-trading day period
commencing after the consummation of a business combination;
or
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the
Company consummates a liquidation, merger, stock exchange or other similar
transaction after the consummation of the initial business combination
that results in all of its stockholders having the right to exchange their
shares of Common Stock for cash, securities or other
property.
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If
dividends are declared and payable in shares of Common Stock, such dividends
will also be placed in escrow.
ARTICLE
VIII
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
Section 8.1 Organization
and Good Standing. The Company is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware.
Section 8.2 Power and
Authority; Enforceability. This Agreement
constitutes the legal, valid, and binding obligation of the Company, enforceable
against the Company in accordance with its terms. The Company has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The Company has taken all actions necessary to authorize the
execution and delivery of this Agreement, the performance of its obligations
hereunder, and the consummation of the transactions contemplated hereby. This
Agreement has been duly authorized, executed, and delivered by, and is
enforceable against, the Company.
Section 8.3 No Violation;
Necessary Approvals. Neither the execution and
delivery of this Agreement by the Company, nor the consummation or performance
by the Company of any of transactions contemplated hereby, will: (a) with
or without notice or lapse of time, constitute, create or result in a breach or
violation of, default under, loss of benefit or right under or acceleration of
performance of any obligation required under any Law, Order, contract or Permit
to which the Company is a party or by which it is bound or any of its assets are
subject, or any provision of the Company's organizational documents as in effect
on the Closing Date, (b) result in the imposition of any lien, claim or
encumbrance upon any assets owned by the Company; (c) require any Consent
under any contract or organizational document to which the Company is a party or
by which it is bound; or (d) require any Permit under any Law or Order
other than (i) required filings, if any, with the SEC and
(ii) notifications or other filings with state or federal regulatory
agencies after the Closing that are necessary or convenient and do not require
approval of the agency as a condition to the validity of the transactions
contemplated hereunder; or (e) trigger any rights of first refusal,
preferential purchase or similar rights with respect to any of the
Shares.
Section 8.4 Authorization
of the Shares. The Shares have been duly
authorized and, when issued in accordance with this Agreement, the Shares will
be duly and validly issued, fully paid and non-assessable shares of Common Stock
and will be free and clear of all Liens and claims, other than restrictions on
transfer imposed by the Securities Act and applicable state securities
laws.
ARTICLE
IX
MISCELLANEOUS
Section 9.1 Entire
Agreement. This Agreement, together with the
certificates, documents, instruments and writings that are delivered pursuant
hereto, constitutes the entire agreement and understanding of the parties hereto
in respect of its subject matter and supersedes all prior understandings,
agreements, or representations by or among the parties hereto, written or oral,
to the extent they relate in any way to the subject matter hereof or the
transactions contemplated hereby.
Section 9.2 Successors. All
of the terms, agreements, covenants, representations, warranties, and conditions
of this Agreement are binding upon, and inure to the benefit of and are
enforceable by, the parties hereto and their respective successors.
Section 9.3 Assignments. Except
as otherwise provided herein, no party hereto may assign either this Agreement
or any of its rights, interests, or obligations hereunder without the prior
written approval of the other party. Any purported assignment in violation of
this Section 9.3
shall be void and ineffectual and shall not operate to transfer or assign any
interest or title to the purported assignee.
Section 9.4 Waiver of
Jury Trial. THE PARTIES HERETO EACH HEREBY AGREE
TO WAIVE THEIR RESPECTIVE RIGHTS TO JURY TRIAL OF ANY DISPUTE BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OTHER AGREEMENTS RELATING HERETO OR ANY
DEALINGS AMONG THEM RELATING TO THE TRANSACTIONS. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL ACTIONS THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THE TRANSACTIONS, INCLUDING,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
AND STATUTORY CLAIMS. THE PARTIES HERETO EACH ACKNOWLEDGE THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP AND THAT THEY WILL
CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. NOTWITHSTANDING
ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY
NOT BE MODIFIED ORALLY OR IN WRITING, AND THE WAIVER WILL APPLY TO ANY
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING HERETO. IN THE EVENT OF AN ACTION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO TRIAL BY A COURT.
Section 9.5 Counterparts. This
Agreement may be executed in two or more counterparts, each of which will be
deemed an original but all of which together will constitute one and the same
instrument.
Section 9.6 Headings. The
article and section headings contained in this Agreement are inserted for
convenience only and will not affect in any way the meaning or interpretation of
this Agreement.
Section 9.7 Governing
Law. This Agreement, the entire relationship of
the parties hereto, and any litigation between the parties (whether grounded in
contract, tort, statute, law or equity) shall be governed by, construed in
accordance with, and interpreted pursuant to the laws of the State of Delaware,
without giving effect to its choice of laws principles.
Section 9.8 Amendments. This
Agreement may not be amended, modified or waived as to any particular provision,
except by a written instrument executed by all parties hereto.
Section 9.9 Severability. The
provisions of this Agreement will be deemed severable and the invalidity or
unenforceability of any provision will not affect the validity or enforceability
of the other provisions hereof; provided that if any provision of this
Agreement, as applied to any party hereto or to any circumstance, is adjudged by
a Governmental Body, arbitrator, or mediator not to be enforceable in accordance
with its terms, the parties hereto agree that the Governmental Body, arbitrator,
or mediator making such determination will have the power to modify the
provision in a manner consistent with its objectives such that it is
enforceable, and/or to delete specific words or phrases, and in its reduced
form, such provision will then be enforceable and will be enforced.
Section 9.10 Expenses. Except
as otherwise expressly provided in this Agreement, each party hereto will bear
its own costs and expenses incurred in connection with the preparation,
execution and performance of this Agreement and the consummation of the
transactions contemplated hereby, including all fees and expenses of agents,
representatives, financial advisors, legal counsel and accountants.
Section 9.11 Construction. The
parties hereto have participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement will be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof will arise favoring or disfavoring any party
hereto because of the authorship of any provision of this Agreement. Any
reference to any federal, state, local, or foreign Law will be deemed also to
refer to Law as amended and all rules and regulations promulgated thereunder,
unless the context requires otherwise. The words "include," "includes," and "including" will be deemed to
be followed by "without
limitation." Pronouns in masculine, feminine, and neuter genders will be
construed to include any other gender, and words in the singular form will be
construed to include the plural and vice versa, unless the context otherwise
requires. The words "this
Agreement," "herein," "hereof," "hereby," "hereunder," and words of
similar import refer to this Agreement as a whole and not to any particular
subdivision unless expressly so limited. The parties hereto intend that each
representation, warranty, and covenant contained herein will have independent
significance. If any party hereto has breached any representation, warranty, or
covenant contained herein in any respect, the fact that there exists another
representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which such party hereto has
not breached will not detract from or mitigate the fact that such party hereto
is in breach of the first representation, warranty, or
covenant.
Section 9.12 Waiver. No
waiver by any party hereto of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, may be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising because
of any prior or subsequent occurrence.
IN WITNESS WHEREOF, the
undersigned have executed this Agreement to be effective as of the date first
set forth above.
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By:
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Name:
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Xxxxxx
X. Xxxxxx, Xx.
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Title:
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Chief Executive
Officer
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[BUYER]
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/s/
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