Item 2.01 Completion of Acquisition or Disposition of
Assets
Completion of Merger with XpresSpa
Holdings, LLC
On December 23, 2016 (the “
Closing
Date
”), FHXMS, LLC (“
Merger Sub
”), a Delaware limited liability company and wholly-owned subsidiary
of FORM Holdings Corp., a Delaware corporation (“
FORM
”), merged with and into XpresSpa Holdings LLC, a Delaware
limited liability company (“
XpresSpa
”), with XpresSpa being the surviving entity and a wholly-owned subsidiary
of FORM, pursuant to the terms and conditions of the previously announced Agreement and Plan of Merger, dated as of August 8, 2016,
as subsequently amended on September 8, 2016 and October 25, 2016 (collectively, the “
Merger Agreement
”), by
and among FORM, Merger Sub, XpresSpa, the unitholders of XpresSpa who are parties thereto or who become parties thereto (the “
Unitholders
”)
and Mistral XH Representative, LLC, as representative of the Unitholders (the “
Representative
”) (the “
Merger
”).
On the Closing Date, (i) the then-outstanding
common units of XpresSpa (other than those held by FORM and its subsidiaries, which were cancelled without any consideration) and
(ii) the then-outstanding preferred units of XpresSpa (other than those held by FORM and its subsidiaries, which were cancelled
without any consideration) were cancelled and automatically converted into the right to receive an aggregate of:
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(a)
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2,500,000 shares of FORM common stock, par value $0.01 per share (“
FORM Common Stock
”),
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(b)
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494,792 shares of newly designated Series D Convertible Preferred Stock, par value $0.01 per share, of FORM (the “
FORM
Preferred Stock
”) with an aggregate initial liquidation preference of $23,750,000, accruing dividends at 9% per annum
and which are initially convertible into 3,958,336 shares of FORM Common Stock, and
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(c)
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five-year warrants to purchase an aggregate of 2,500,000 shares of FORM Common Stock, at an exercise price of $3.00 per share,
in each case, subject to adjustment in the event of a stock split, dividend or similar events.
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As a result of the consummation of the Merger,
as of the Closing Date, the former stockholders of XpresSpa own approximately 18% of the outstanding shares of FORM Common Stock
(or 33% of the outstanding shares of FORM Common Stock calculated on a fully diluted basis) and the stockholders of FORM prior
to the Merger own approximately 82% of the outstanding shares of FORM Common Stock (or 67% of the outstanding shares of FORM Common
Stock calculated on a fully diluted basis).
The FORM Common Stock and FORM Preferred
Stock issued in connection with the Merger were registered under the Securities Act of 1933, as amended (the “
Securities
Act
”), pursuant to a registration statement on Form S-4 (File No. 333-213566), originally filed with the SEC on
September 9, 2016, as amended, and declared effective on October 27, 2016 (the “
Form S-4
”). The prospectus included
in the Form S-4 contains additional information about the Merger and the related transactions. The Form S-4 also included the proxy
statement (the “
Proxy Statement
”) for FORM’s 2016 Annual Meeting of Stockholders, held on November 28,
2016 (the “
Annual Meeting
”).
The foregoing description of the Merger
Agreement is not complete and is subject to, and qualified in its entirety by, the full text of the Merger Agreement, which was
attached as Annex A to the Proxy Statement, the terms of which are incorporated herein by reference.
Rockmore Senior Secured Note
XpresSpa is obligated under a senior secured
note payable to Rockmore Investment Master Fund Ltd. (“
Rockmore
”), a significant equity holder of XpresSpa,
with an outstanding balance of approximately $6,500,000 (the “
Senior Secured Note
”). The Senior Secured Note
accrues interest of 9.24% per annum, payable monthly, plus an additional 2.0% per annum, and matures on May 1, 2018, with an additional
one-year extension if both FORM and Rockmore consent to such extension. Upon completion of the Merger, the Senior Secured Note
remained outstanding as an obligation of XpresSpa, but became guaranteed by FORM. Rockmore is an investment entity controlled by
FORM’s board member, Bruce T. Bernstein. Rockmore owned equity securities of XpresSpa that received approximately 9.5% of
the merger consideration and, following completion of the Merger, Rockmore remained the holder of the Senior Secured Note, and
holds approximately 4.7% of the outstanding common stock of FORM on a fully diluted basis. Rockmore provided its consent to the
Merger.