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Item 1.01
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Entry Into a Material Definitive Agreement
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Summary of Transactions
On August 8, 2016,
FORM Holdings Corp., a Delaware corporation (“FORM”), entered into an Agreement and Plan of Merger (the “Merger
Agreement”) with FHXMS, LLC, a Delaware limited liability company and wholly-owned subsidiary of FORM (“Merger Sub”),
XpresSpa Holdings, LLC, a Delaware limited liability company (“XpresSpa”), the unitholders of XpresSpa who are parties
thereto (the “Unitholders”) and Mistral XH Representative, LLC, as representative of the Unitholders (the “Representative”),
pursuant to which Merger Sub will merge with and into XpresSpa, with XpresSpa being the surviving entity and a wholly-owned subsidiary
of FORM (the “Surviving Entity”) and the Unitholders becoming stockholders of FORM (the “Merger”).
Upon completion of
the Merger, (i) the then-outstanding common units of XpresSpa (other than those held by FORM and its subsidiaries, which will be
cancelled without any consideration) and (ii) the then-outstanding preferred units of XpresSpa (other than those held by FORM and
its subsidiaries, which will be cancelled without any consideration) will be 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 (“FORM Preferred Stock”), and
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(c) 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.
In addition, FORM entered
into a subscription agreement to sell 750,574 shares of its Common Stock to Mistral Spa Holdings, LLC, at a purchase price of $2.31
per share, for an aggregate purchase price of $1,733,828.
On August 8, 2016,
FORM entered into a subscription agreement to purchase from XpresSpa an aggregate of 1,733,826 Series C Preferred Units of XpresSpa,
at a per unit purchase price of $1.00 per unit, for an aggregate purchase price of $1,733,826.
Immediately following
the completion of the Merger (without taking into account any shares of FORM Common Stock held by XpresSpa equity holders prior
to the completion of the Merger), the former Unitholders of XpresSpa are expected to own approximately 18% of the outstanding FORM
Common Stock (or 33% of the outstanding FORM Common Stock calculated on a fully diluted basis) and the current stockholders of
FORM are expected to own approximately 82% of the outstanding FORM Common Stock (or 67% of the outstanding FORM Common Stock calculated
on a fully diluted basis).
Merger Agreement
XpresSpa is a leading
airport retailer of spa services and related products, and also sells spa products through its internet site. Services and products
include: (i) massage services for the neck, back, feet and whole body, (ii) nail care, such as pedicures, manicures and polish
changes, (iii) beauty care services such as waxing and facials, (iv) hair care, such as hair cuts and blow outs, (v) spa products
such as massagers, lotions and aromatherapy aids and (vi) travel products such as neck pillows and eye masks.
Upon completion of
the Merger, (i) the then-outstanding common units of XpresSpa (other than those held by FORM and its subsidiaries, which will be
cancelled without any consideration) and (ii) the then-outstanding preferred units of XpresSpa (other than those held by FORM and
its subsidiaries, which will be cancelled without any consideration) will be 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,
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(b)
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494,792 shares of FORM Preferred Stock, and
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(c) 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.
Immediately following
the completion of the Merger (without taking into account any shares of FORM Common Stock held by XpresSpa equity holders prior
to the completion of the Merger), the former Unitholders of XpresSpa are expected to own approximately 18% of the outstanding FORM
Common Stock (or 33% of the outstanding FORM Common Stock calculated on a fully diluted basis) and the current stockholders of
FORM are expected to own approximately 82% of the outstanding FORM Common Stock (or 67% of the outstanding FORM Common Stock calculated
on a fully diluted basis).
No fractional shares
of FORM Common Stock or FORM Preferred Stock will be issued in connection with the Merger. Instead, each Unitholder who would be
otherwise entitled to receive a fractional share will receive from FORM, in lieu thereof, the next highest whole number shares
of FORM Common Stock or FORM Preferred Stock, as applicable.
Upon completion of
the Merger, Edward Jankowski, XpresSpa’s current Chief Executive Officer, will continue to serve in his current role. In
addition, upon completion of the Merger, Andrew R. Heyer, who is currently a member of the XpresSpa board of managers, will become
a member of the FORM board of directors as the designee of the FORM Preferred Stock holders.
XpresSpa is obligated
under a senior secured note payable to its principal equity holder Rockmore Investment Master Fund Ltd. (“Rockmore”)
with an outstanding balance of approximately $6,500,000. Rockmore is an investment entity controlled by FORM’s board member,
Bruce T. Bernstein.
The Merger Agreement
contains customary representations and warranties of each of FORM and XpresSpa (many of which are qualified by concepts of knowledge,
materiality and/or dollar thresholds and are further modified and limited by confidential disclosure schedules exchanged by the
parties), as applicable, relating to, among other things, (a) organization and qualification; (b) subsidiaries; (c) capital structure;
(d) authorization, performance and enforceability of the Merger Agreement; (e) board approval and required vote; (f) financial
statements; (g) absence of undisclosed liabilities and minimum cash; (h) absence of changes or events; (i) agreements, contracts
and commitments; (j) compliance with laws; (k) material permits; (l) litigation; (m) employee and employee benefit plans; (n) taxes;
(o) tangible assets; (p) real property leases; (q) insurance; (r) intellectual property; (s) environmental laws; (t) interested
party transactions; (u) brokers; and (v) information related to the Proxy Statement (as defined below).
Subject to certain
exceptions described below, prior to the completion of the Merger or the earlier termination of the Merger Agreement, XpresSpa
has agreed that it will not, and it will not authorize or permit its subsidiaries and/or its officers, directors, employees, investment
bankers, attorneys, accountants and other advisors or representatives to directly or indirectly: (a) solicit, initiate, induce
or take any action to facilitate, encourage, solicit, initiate or induce any action relating to, or the submission of any Company
Acquisition Proposal (as defined below); (b) enter into, participate or engage in discussions or negotiations in any way with any
person concerning any Company Acquisition Proposal; (c) furnish to any person (other than FORM and its designees) any information
relating to XpresSpa or its subsidiaries or afford to any person (other than FORM or its representatives or designees) access to
the business, properties, assets, books, records or other information, or to any personnel of XpresSpa or any of its subsidiaries,
in any case, with the intent to induce or solicit the making or submission of a Company Acquisition Proposal or the making of any
proposal that would reasonably be expected to lead to a Company Acquisition Proposal; (d) approve a Company Acquisition Proposal
or take any action that would require it to abandon, terminate or fail to consummate, or that would reasonably be expected to result
in the abandonment or, termination or failure to consummate the Merger; or (e) enter into any agreement in principle, letter of
intent, term sheet, merger agreement, acquisition agreement or other similar instrument (whether binding or not) or contract constituting
or otherwise relating to a Company Acquisition Proposal (other than an executed non-disclosure agreement having provisions no less
favorable than that certain non-disclosure agreement between FORM and XpresSpa).
Notwithstanding the
foregoing, XpresSpa or its board of directors, may, directly or indirectly, enter to discussions with any person in response to
an unsolicited bona fide written Company Acquisition Proposal (as defined below), if and only to the extent that prior to engaging
in any such discussions the XpresSpa board of directors determines in good faith, after consultation with its outside legal counsel,
that such Company Acquisition Proposal either constitutes or could reasonably be expected to lead to a Company Superior Proposal
(as defined below) and the XpresSpa board of directors receives from such person a non-disclosure agreement.
“Company Acquisition
Proposal” means any offer, proposal, discussions, negotiations, indication of interest or inquiry by any person (other than
FORM or any affiliate thereof) in a transaction or series of related transactions (other than the transactions contemplated by
the Merger Agreement) relating to: (i) any issuance, sale or other disposition of (including by way of merger, consolidation, business
combination, equity exchange, recapitalization, joint venture, partnership or any similar transaction) securities (or options,
rights or warrants to purchase, or securities convertible into or exchangeable for, such securities) representing 20% or more of
the voting power or economic interests of XpresSpa or any subsidiary, (ii) any direct or indirect sale, transfer, acquisition or
disposition of more than 20% of the consolidated assets of XpresSpa and its subsidiaries taken as a whole (measured by the fair
market value thereof), including by way of purchase of stock, limited liability interests or other equity interests of the subsidiaries
or (iii) any merger, consolidation, equity exchange, business combination, recapitalization, reorganization, liquidation, joint
venture, dissolution or any similar transaction involving XpresSpa or any subsidiary; provided that any transfer or sale of stock
or assets of any of XpresSpa’s subsidiaries related to the disposition of foreign operations shall not be a “Company
Acquisition Proposal.”
“Company Superior
Proposal” means any bona fide offer or proposal that constitutes a Company Acquisition Proposal on terms that the XpresSpa
board of directors (or any committee thereof) shall have determined in good faith (after consultation with its outside legal counsel),
taking into account all relevant legal (including conditions), financial, regulatory, timing and other aspects of such Company
Acquisition Proposal, is reasonably likely to be consummated and would be more favorable to XpresSpa’s Unitholders (in their
capacity as such) than the Merger, if consummated (including after taking into account any changes to the terms of the Merger Agreement
proposed by FORM in response to such Company Acquisition Proposal); provided that, for purposes of the definition of “Company
Superior Proposal, “the references to “20%” in the definition of “Company Acquisition Proposal” shall
be deemed to be references to “more than 50%.”
The Merger Agreement
contains certain other agreements of the parties including, among other things, that (a) FORM will prepare and file with the U.S.
Securities and Exchange Commission (the “SEC”) a registration statement (the “Registration Statement”)
containing a proxy statement (the “Proxy Statement”) for the vote of the FORM stockholders to approve the Merger, including
but not limited to the issuance of FORM Common Stock, FORM Preferred Stock and warrants to purchase shares of FORM Common Stock
(the “FORM Merger Proposal”); (b) FORM will take all action necessary in accordance with the General Corporation Law
of the State of Delaware and its Certificate of Incorporation and Bylaws to have its stockholders vote on the FORM Merger Proposal;
(c) each party will allow reasonable access to their books and records until the closing of the Merger; (d) each party will maintain
in confidence any non-public information received from the other party; (e) each party will give prompt notice of the occurrence
of any of the following: (i) any event the occurrence, or non-occurrence of which could reasonably be expected to result in any
representation or warranty contained in the Merger Agreement to be untrue or inaccurate in any material respect (or in the case
of any representation or warranty qualified by its terms by materiality, then untrue or inaccurate in any respect); (ii) any failure
of FORM, XpresSpa or Merger Sub, as the case may be, to comply with or satisfy in any material respect any covenant, condition
or agreement to be complied with or satisfied by it under the Merger Agreement, (iii) any notice or communication from any person
alleging that the consent of such person is required in connection with the Merger or other transactions contemplated by the Merger
Agreement, (iv) any notice or other communication from any governmental authority in connection with the Merger or other transactions
contemplated by the Merger Agreement, (v) any litigation, relating to or involving or otherwise affecting XpresSpa or its subsidiaries
or FORM that relates to the Merger or the other transactions contemplated by the Merger Agreement, (vi) the occurrence of a default
or event that, with notice or lapse of time or both, will become a default under a material contract of either party, (vi) any
change that would be considered reasonably likely to result in a Company Material Adverse Effect (as defined in the Merger Agreement)
or Parent Material Adverse Effect (as defined in the Merger Agreement), as the case may be, or is likely to impair in any material
respect the ability of either FORM or XpresSpa to consummate the transactions contemplated by the Merger Agreement, and (vii) any
correspondence between XpresSpa and any of its subsidiaries and any governmental authority regarding any matters that have arisen
as a result of an inspection or otherwise an requesting that XpresSpa and/or its subsidiaries take remedial action either in its
practices, location, fixtures, furnishings, or otherwise; (h) FORM will use its reasonable best efforts to cause the shares of
FORM Common Stock to be issued pursuant to the Merger (including any FORM Common Stock issuable upon the exercise or conversion
of, or as dividends on, any merger consideration issued pursuant to the Merger Agreement) to be approved for listing on The NASDAQ
Capital Market; (i) except as otherwise required by applicable law, court process or the rules of The NASDAQ Capital Market, neither
party shall, nor permit their respective subsidiaries to issue or cause the publication of any press release or public announcement
with respect to the Merger or other transactions contemplated by the Merger Agreement without the consent of the other party, which
consent shall not be unreasonably withheld, conditioned or delayed; (j) XpresSpa will continue to indemnify its present and former
directors and officers (as further described below); (k) the parties will take all action to appoint certain individuals to serve
on the board of directors of FORM; and (l) XpresSpa will deliver to FORM, within 20 days after the end of each such fiscal month
end, the consolidated balance sheet of XpresSpa and its subsidiaries and the related consolidated statements of income, changes
in members’ equity and cash flows of XpresSpa and its subsidiaries for the period then ended since the most recent balance
sheet date.
The Merger Agreement
provides that, for a period of six years from the effective time, XpresSpa will provide directors’ and officers’ liability
insurance that provides coverage for events occurring prior to the effective time that is no less favorable than its existing policy,
or, if insurance coverage that is no less favorable is unavailable, the best available coverage, subject to the limitation that
XpresSpa will not be required to spend in any one year more than 300% of the last annual premium paid prior to the date of the
Merger Agreement for XpresSpa’s existing policy.
The Merger Agreement
also provides that all representations and warranties contained in the Merger Agreement shall survive the closing for a period
of eighteen (18) months, however the representations made by XpresSpa related to organization and qualification, capital structure,
authority; no conflict; required filings, board approval; required vote, taxes, environmental and safety laws and brokers and the
representations made by FORM related to organization, power and authorization, brokers and capitalization shall survive the closing
until the expiration of the applicable statute of limitations plus a period of sixty (60) days and in the event there is no applicable
statute of limitations they shall survive until the sixth anniversary of the closing. In addition, the Unitholders and FORM have
agreed to indemnify the other party, its affiliates and respective representatives for any Losses (as defined in the Merger Agreement)
in certain situations, as more fully described in the Merger Agreement. The Merger Agreement provides that a total aggregate amount
of up to $12.55 million be deposited into various escrow accounts to for a period of eighteen (18) months, or such other term related
to specific escrows, to cover certain indemnification claims that may be made pursuant to the Merger Agreement.
The obligations of
each of FORM and XpresSpa to consummate the Merger are subject to the satisfaction or waiver of certain additional conditions,
including, among other things, (a) the stockholders and the board of directors of FORM have approved the Merger and the Merger
Agreement; (b) the Registration Statement has become effective; (c) the shares of FORM Common Stock shall have been approved for
listing on The NASDAQ Capital Market; (d) there exists no temporary restraining order, preliminary or permanent injunction or other
order which prevents the consummation of the Merger; (e) the representations and warranties of the other party contained in the
Merger Agreement are true and correct in except for (i) such changes resulting from actions permitted under the Merger Agreement,
(ii) to the extent any such representation or warranty is made as of a time other than the Effective Time (as defined in the Merger
Agreement), in which case, such representation or warranty need only be true an correct at and as of such time, or (iii) where
the failure of any such representation or warranty to be true and correct (without giving effect to any materiality or Company
Material Adverse Effect, qualification or limitation) would not reasonably be expected, individually or in the aggregate, to have
a Company Material Adverse Effect; (f) the other party shall have performed or complied in all material respects with all agreements
and covenants under the Merger Agreement; (g) the receipt of all necessary consents or approvals; (h) the absence of a Company
Material Adverse Effect or a Parent Material Adverse Effect, as the case may be; (i) FORM shall have received written resignations
from all of the directors of XpresSpa and its subsidiaries and all of the officers of its subsidiaries; (j) FORM shall have received
joinder agreements from the XpresSpa Unitholders representing 95% of the outstanding XpresSpa units; (k) FORM shall have received
sufficient evidence regarding the ratification of each of XpresSpa’s subsidiaries of all appropriate prior actions and certain
individuals shall have been appointed to certain offices and committees as specified by FORM; (l) XpresSpa shall have delivered
a certificate regarding the closing conditions to FORM and Merger Sub; (m) FORM shall have received a certificate from Rockmore
Investment Master Fund Ltd. (“Rockmore”) regarding XpresSpa’s compliance with its obligations under the existing
loan documents; (n) FORM shall have received satisfactory evidence of termination of that certain Monitoring and Management Services
Agreement; (o) the escrow agreement shall have been executed and delivered; (p) the Representative shall have delivered to FORM
a duly executed statement on behalf of XpresSpa that is in compliance with Treasury Regulations Section 1.1445-11T(d)(2), and from
Unitholders representing ninety five percent (95%) of the outstanding XpresSpa units, a duly executed certificate of non-foreign
status in compliance with Treasury Regulations Section 1.1445-2(b); (q) good standing certificates of XpresSpa and each of its
subsidiaries and (r) delivery of all ACDBE certificates.
The closing of the
Merger will take place no later than the second business day after the satisfaction or waiver of the conditions to the completion
of the Merger contained in the Merger Agreement, other than the conditions which by their terms can be satisfied only as of the
closing of the Merger, or on such other day as FORM, XpresSpa and Merger Sub may mutually agree. The completion of the Merger will
occur at the time that the parties file the certificate of merger with the Secretary of State of the State of Delaware on the closing
date of the Merger or on such later date as FORM, Merger Sub and XpresSpa mutually agree (and set forth in the certificate of merger).
Because the completion of the Merger is subject to the satisfaction of other conditions, FORM cannot predict the exact time at
which the Merger will become effective.
The Merger Agreement
may be terminated at any time prior to the closing of the Merger, as follows: (a) by mutual written consent of FORM, Merger Sub
and XpresSpa; (b) by either FORM or XpresSpa if the closing has not occurred on or before December 31, 2016, or in certain circumstances,
March 31, 2017; (c) by either FORM or XpresSpa if any law enacted by a governmental authority prohibits the consummation of the
Merger, or any governmental authority has issued an order or taken any other action which restrains, enjoins or otherwise prohibits
the Merger, which order has become final and non-appealable; (d) by either FORM or XpresSpa if FORM’s stockholders do not
approve the Merger; (e) by FORM if (i) the XpresSpa board of managers has effected a Company Board Approval Change (as defined
in the Merger Agreement), (ii) XpresSpa shall have entered or caused itself or its subsidiaries to enter, into any letter of intent,
agreement in principle, term sheet, merger agreement, acquisition agreement or other similar agreement related to any Company Acquisition
Proposal, (iii) XpresSpa shall have breached any term of the non-solicitation provision of the Merger Agreement or (iv) XpresSpa’s
board of directors or any authorized committee shall have resolved to do any of the foregoing (i)-(iii); (f) by XpresSpa if the
board of directors of FORM or any authorized committee has failed to present or recommend the approval of the Merger Agreement
and the Merger to the stockholders or include the recommendation in the proxy statement/prospectus; (g) by either party if the
other party, or in the case of XpresSpa, FORM or Merger Sub, is in material breach of its obligations or representations or warranties
under the Agreement that is incapable of being cured; (h) by XpresSpa if XpresSpa determines to enter into a definitive agreement
relating to an XpresSpa Superior Proposal; or (i) by XpresSpa, at any time, upon payment to FORM of the XpresSpa Termination Fee
(as defined below).
In the event that either
(a) XpresSpa terminates the Merger Agreement because (i) it determines to enter into a definitive agreement relating to a XpresSpa
Superior Proposal, or (ii) XpresSpa elects to terminate for any reason or no reason at all or (b) FORM terminates the Merger Agreement
because (i) XpresSpa effected a Company Board Approval Change (as defined in the Merger Agreement), (ii) XpresSpa enters into any
agreement related to an XpresSpa Acquisition Proposal, (iii) XpresSpa materially breached the provision related to XpresSpa Acquisition
Proposals contained in the Merger Agreement or (iv) XpresSpa’s board of directors shall have resolved to do any of the foregoing
(i)-(iii), then XpresSpa shall pay to FORM a fee (the “XpresSpa Termination Fee”) equal to $750,000, plus an amount
in cash equal to FORM’s reasonable out-of-pocket fees and expenses incurred in connection with the Merger, in an amount not
to exceed $500,000.
In the event that either
(a) XpresSpa terminates the Merger Agreement because (i) the FORM board of directors fails to present and recommend the approval
and adoption of the Merger Agreement, (ii) FORM fails to include the Board Recommendation (as defined in the Merger Agreement)
in the proxy statement/proposal, or (iii) FORM’s board of directors shall have resolved to do any of the foregoing (i)-(ii)
or (b) XpresSpa or FORM terminates the Merger Agreement because the FORM annual meeting and FORM’s stockholders approval
is not obtained prior to December 31, 2016, then FORM shall pay to XpresSpa a fee (the “FORM Termination Fee”) equal
to $750,000, plus an amount in cash equal to XpresSpa’s reasonable out-of-pocket fees and expenses incurred in connection
with the Merger, in an amount not to exceed $500,000.
In the event that (i)
the Merger Agreement is terminated by XpresSpa because the Merger is not consummated on or before December 31, 2016, and (ii) an
XpresSpa Acquisition Proposal has either previously been publicly announced or has been proposed or communicated to XpresSpa and
a definitive agreement with respect to such XpresSpa Acquisition Proposal has been signed or consummated within six (6) months
following the termination of the Agreement, then XpresSpa shall pay to FORM the XpresSpa Termination Fee.
In the event that the
Merger Agreement is terminated by FORM because the Merger is not consummated on or before December 31, 2016, or in certain circumstances,
March 31, 2017, and within six months following such termination XpresSpa consummates a transaction for the (i) issuance, sale
or other disposition of securities representing 50% or more of the voting power or economic interests of XpresSpa or any subsidiary,
(ii) any direct or indirect sale, transfer, acquisition or disposition of more than 50% of the consolidated assets of XpresSpa
and its subsidiaries taken as a whole, including by way of purchase of stock, limited liability interests or other equity interests
of the subsidiaries or (iii) any merger, consolidation, equity exchange, business combination, recapitalization, reorganization,
liquidation, joint venture, dissolution or any similar transaction involving XpresSpa or any of its subsidiaries, (in each case
in clause (iii), that result in the equity holders of XpresSpa beneficially owning less than 50% of XpresSpa) then XpresSpa shall
pay to FORM the XpresSpa Termination Fee.
The foregoing summary
of the Merger Agreement and the transactions contemplated thereby does not purport to be complete and is subject to, and qualified
in its entirety by, the full text of the Merger Agreement, which is filed as Exhibit 2.1 to this Current Report on Form 8-K and
incorporated herein by reference. Additional information regarding XpresSpa can be found on its website at www.xpresspa.com.
The Merger Agreement
and the above description thereof have been included to provide investors and security holders with information regarding the terms
of the agreement. They are not intended to provide any other factual information about FORM, XpresSpa, Merger Sub or their respective
subsidiaries or affiliates or equity holders. The representations, warranties and covenants contained in the Merger Agreement were
made only for purposes of such agreement and as of specific dates; were solely for the benefit of the parties to the Merger Agreement;
and may be subject to limitations agreed upon by the parties, including being qualified by confidential disclosures made by each
contracting party to the other for the purposes of allocating contractual risk between them that differ from those applicable to
investors. Investors should not rely on the representations, warranties and covenants or any description thereof as characterizations
of the actual state of facts or condition of FORM, XpresSpa, Merger Sub or any of their respective subsidiaries, affiliates, businesses,
or equity holders. Moreover, information concerning the subject matter of the representations, warranties and covenants may change
after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in public disclosures by
FORM or XpresSpa. Accordingly, investors should read the representations and warranties in the Merger Agreement not in isolation
but only in conjunction with the other information about FORM or XpresSpa and their respective subsidiaries that FORM includes
in reports, statements and other filings it makes with the SEC.
Certificate of Designation of Preferences,
Rights and Limitations of Series D Convertible Preferred Stock
The FORM Preferred
Stock will have the powers, designations, preferences and other rights in accordance with a Certificate of Designation of Preferences,
Rights and Limitations of Series D Convertible Preferred Stock, a form of which is attached hereto as Exhibit 3.1, which rights
include, among other things, an aggregate initial liquidation preference of $23,750,000 and the right to participate in any dividends
and distributions paid to common stockholders on an as-converted basis. The FORM Preferred Stock will vote on an as-converted basis.
The FORM Preferred Stock shall be initially convertible into an aggregate of 3,958,336 shares of FORM Common Stock, which equals
a $6.00 per share conversion price, and each holder of FORM Preferred Stock shall be entitled to cast the number of votes equal
to the number of whole shares of FORM Common Stock into which such shares of FORM Preferred Stock are convertible. Upon the occurrence
of certain fundamental events, the holders of the FORM Preferred Stock will be able to require FORM to redeem the shares of FORM
Preferred Stock at the greater of the liquidation preference and the amount per share as would have been payable had the shares
of FORM Preferred Stock been converted into FORM Common Stock. The holders of record of FORM Preferred Stock shall be entitled
to elect one director of FORM, voting exclusively as a separate class, so long as the holders of FORM Preferred Stock represent
beneficial ownership in the aggregate of equal to or more than 5% of FORM’s issued and outstanding Common Stock on an as-converted
basis.
The holders of FORM
Preferred Stock shall have the right to convert at any time and from time to time into shares of FORM Common Stock at an initial
conversion rate of 48 shares of FORM Common Stock for each one share of FORM Preferred Stock (the “Conversion Ratio”).
The Conversion Ratio is subject to adjustment upon certain fundamental events. In addition FORM shall have the right, but not the
obligation, upon ten trading days’ notice to convert the outstanding shares of FORM Preferred Stock into FORM Common Stock
at the Conversion Ratio, at any time or from time to time, if the volume weighted average price per share of the FORM Common Stock
exceeds $9.00 for over any 20 days in a 30 consecutive trading day period.
The foregoing description
of the Certificate of Designation of Preferences, Rights and Limitations of Series D Convertible Preferred Stock is subject to,
and qualified in its entirety by, the full text of the form of Certificate of Designation of Preferences, Rights and Limitations
of Series D Convertible Preferred Stock, which is attached to this Current Report as Exhibit 3.1, and is incorporated herein by
reference.
Private Placements
In addition, FORM entered
into a subscription agreement to sell 750,574 shares of its Common Stock to Mistral Spa Holdings, LLC, at a purchase price of $2.31
per share, for an aggregate purchase price of $1,733,828. The parties anticipate closing this transaction within 15 business days after effectiveness of FORM’s registration statement on Form S-4 to be filed
with the SEC.
On August 8, 2016,
FORM entered into a subscription agreement to purchase from XpresSpa an aggregate of 1,733,826 Series C Preferred Units of XpresSpa,
at a per unit purchase price of $1.00 per unit, for an aggregate purchase price of $1,733,826. The Series C Preferred Units will
have a preference in the amount of its initial investment and shall bear 12% PIK interest for the first year or until the closing
of the anticipated merger agreement and thereafter shall bear interest at the rate of two times the liquidation preference.
The foregoing descriptions
of the subscription agreements entered into in connection with the private placements are incomplete and are subject to, and qualified
in their entirety by, the full text of the Subscription Agreements, which are attached to this Current Report as Exhibit 10.1 and
Exhibit 10.2, respectively, and are incorporated herein by reference.