FREEDOM TRAIL CORP. WARRANT SUBSCRIPTION AGREEMENT
Exhibit 10.7
FREEDOM TRAIL CORP.
THIS SUBSCRIPTION AGREEMENT (this “Agreement”) is made as of the 14th day of March,
2008, by and between Freedom Trail Corp., a Delaware corporation (the “Company”), and
Liberty Lane Funding LLC, a Delaware limited liability company (“Purchaser”).
WHEREAS, it is the intention of the parties that, upon consummation of the Company’s initial
public offering (the “IPO”), Purchaser will own that number of Insider Warrants (as defined
herein) equal to 10% of the number of shares of common stock of the Company, par value $0.001 per
share (the “Common Stock”), sold in the IPO, including any shares sold pursuant to the
exercise of the Option (as defined herein).
WHEREAS, the Company desires to commit to issue and sell, and Purchaser desires to commit to
purchase and acquire, Insider Warrants on the terms and conditions hereinafter set forth;
NOW, THEREFORE, for and in consideration of the promises and mutual covenants set forth
herein, it is agreed between the parties as follows:
1. Commitment to Purchase Insider Warrants.
(a) Subject to and immediately prior to the consummation of the IPO, Purchaser hereby
agrees to subscribe for and purchase from the Company, and the Company hereby agrees to
issue and sell to Purchaser, 3,500,000 warrants (each an “Initial Insider Warrant”
and, together with the Subsequent Insider Warrants (as defined below), the “Insider
Warrants”) at a purchase price of $1.00 per Initial Insider Warrant for an aggregate
purchase price of $3,500,000. The closing of the purchase and sale of the Initial Insider
Warrants hereunder, including payment for and delivery of the Initial Insider Warrants,
shall occur at the offices of the Company immediately prior to, and subject to consummation
of, the IPO.
(b) If the underwriter (the “Underwriter”) in the IPO exercises, in whole or in
part from time to time, its option (the “Option”) to purchase additional units to be
granted by the Company to the Underwriter pursuant to an underwriting agreement to be
executed by and between the Underwriter and the Company, then, subject to and immediately
prior to the closing of each such exercise of the Option (which may occur simultaneously
with the consummation of the IPO or thereafter), Purchaser hereby agrees to subscribe for
and purchase from the Company, and the Company hereby agrees to issue and sell to Purchaser,
a number of warrants (the “Subsequent Insider Warrants”) equal to 525,000 multiplied
by a fraction, the numerator of which is the number of shares of Common Stock with respect
to which the Option is being exercised and the denominator of which is 5,250,000, at a
purchase price of $1.00 per Subsequent Insider Warrant. The closing of the purchase and sale
of the Subsequent Insider Warrants hereunder, including payment for and delivery of the Subsequent Insider Warrants, shall occur at the offices
of the Company immediately prior to, and subject to consummation of, the applicable closing
of the exercise of the Option.
(c) Each Insider Warrant shall entitle the holder thereof to purchase one share of
Common Stock at an exercise price of $7.50, in accordance with the terms of the Insider
Warrant substantially as set forth in the Form of Warrant Agreement attached hereto as
Exhibit A (the
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“Warrant Agreement”) to be entered into by and between the Company
and American Stock Transfer & Trust Company, as warrant agent, and shall be subject to the
terms of the Warrant Agreement upon execution thereof.
2. Payment of Purchase Price. The purchase price for the Insider Warrants shall be tendered in
full at the applicable closing by one or a combination of the following means:
(a) wiring of immediately available United States funds to an account for the benefit
of the Company, pursuant to wire instructions provided by the Company in advance; or
(b) by delivery of a cashier’s check to the Company of immediately available United
States funds.
3. Acceptance or Rejection of Agreement. The Company has the right to reject this Agreement
and any subscription for the Insider Warrants represented hereby in whole or in part, for any
reason and at any time prior to a closing, notwithstanding receipt by Purchaser of prior notice of
acceptance of such subscription. The Insider Warrants subscribed for herein will not be deemed
issued to or owned by Purchaser until a copy of this Agreement has been executed by the Company and
Purchaser and a closing with respect to such Insider Warrants has occurred. In the event that a
closing does not take place for any reason with respect to some or all of the Insider Warrants, all
cash proceeds delivered by Purchaser in accordance herewith with respect to such Insider Warrants
shall be returned to Purchaser as soon as practicable, without interest, offset or deduction.
4. Limitations on Transfer. The Insider Warrants (and any underlying securities) will be
subject to the applicable restrictions on transfer described in the registration statement for the
IPO.
5. Restrictive Legends. All certificates representing the Insider Warrants (and any underlying
securities) shall have endorsed thereon legends in substantially the following forms (in addition
to any other legend which may be required by other agreements between the parties hereto):
(a) “THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED. THE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED.”
(b) Any legend required pursuant to the terms of the Warrant Agreement.
(c) Any legend required by appropriate blue sky officials.
6. Investment Representations. In connection with the purchase of the Insider Warrants,
Purchaser represents to the Company the following:
(a) Purchaser has been furnished with all materials relating to the Company’s business
affairs and financial condition and materials related to the offer and sale of the Insider
Warrants that have been requested by Purchaser and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision to acquire the Insider Warrants.
Purchaser has been afforded the opportunity to ask questions of the executive officers and
directors of the Company. Purchaser understands that its investment in the Insider Warrants
involves a high degree of risk. Purchaser has sought such accounting, legal and tax advice
as
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Purchaser has considered necessary to make an informed investment decision with respect
to Purchaser’s acquisition of the Insider Warrants. Purchaser has such knowledge and
expertise in financial and business matters, knows of the high degree of risk associated
with investments generally and particularly investments in the securities of companies in
the development stage such as the Company, is capable of evaluating the merits and risks of
an investment in the Insider Warrants, and is able to bear the economic risk of an
investment in the Insider Warrants in the amount contemplated hereunder. Purchaser has
adequate means of providing for its current financial needs and contingencies and will have
no current or anticipated future needs for liquidity which would be jeopardized by the
investment in the Insider Warrants. Purchaser can afford a complete loss of its investment
in the Insider Warrants. Purchaser is purchasing the Insider Warrants for investment for
Purchaser’s own account only and not with a view to, or for resale in connection with, any
“distribution” thereof within the meaning of the Securities Act of 1933, as amended (the
“Act”). Purchaser understands that the Company is a blank check development stage
company recently formed for the purpose of consummating an initial business combination (a
“Business Combination”) and understands that there is no assurance as to the future
performance of the Company and that the Company may never effectuate a Business Combination.
(b) Purchaser understands that the Insider Warrants (and the underlying securities)
have not been registered under the Act or any state securities law by reason of a specific
exemption therefrom, and that the Company is relying on the truth and accuracy of, and
Purchaser’s compliance with, the representations and warranties and agreements of Purchaser
set forth herein to determine the availability of such exemptions and the eligibility of
Purchaser to acquire such Insider Warrants, including, but not limited to, the bona fide
nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the Insider Warrants (and the
underlying securities) must be held indefinitely, unless the Insider Warrants (and the
underlying securities) are subsequently registered under the Act or an exemption from such
registration is available. Purchaser understands that the certificates evidencing the
Insider Warrants (and the underlying securities) will be imprinted with a legend which
prohibits the transfer of the Insider Warrants (and the underlying securities) unless the
Insider Warrants (and the underlying securities) are registered or such registration is not
required in the opinion of counsel for the Company.
(d) Purchaser is familiar with the provisions of Rule 144 under the Act, as in effect
from time to time (“Rule 144”), which, in substance, permit limited public resale of
“restricted securities” acquired, directly or indirectly, from the issuer thereof (or from
an affiliate of such issuer), in a non-public offering subject to the satisfaction of
certain conditions. Unless the Company registers the Insider Warrants (and the underlying
securities) under the Act, the Insider Warrants (and the underlying securities) may be
resold by Purchaser only in certain limited circumstances subject to the provisions of Rule
144, which may require , among other things: (i) the availability of certain public
information about the Company and (ii) the resale occurring following the required holding
period under Rule 144 after Purchaser has purchased, and made full payment of (within the
meaning of Rule 144), the securities to be sold.
(e) Purchaser further understands that at the time Purchaser wishes to sell the Insider
Warrants there may be no public market upon which to make such a sale, and that, even if
such a public market then exists, the Company may not be satisfying the current public
information requirements of Rule 144, and that, in such event, Purchaser may be precluded
from selling the Insider Warrants (and the underlying securities) under Rule 144 even if the
minimum holding
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period requirement had been satisfied. Notwithstanding Sections 6(d) and
(e) hereof, Purchaser understands that the Insider Warrants (and the underlying securities)
may not be resold under Rule 144 in certain circumstances until one year after the
consummation of a Business Combination.
(f) Purchaser represents that Purchaser is an “accredited investor” as that term is
defined in Rule 501 of Regulation D promulgated by the U.S. Securities and Exchange
Commission under the Act.
(g) Purchaser has all necessary limited liability company power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. All limited
liability company action necessary to be taken by Purchaser to authorize the execution,
delivery and performance of this Agreement and all other agreements and instruments
delivered by Purchaser in connection with the transactions contemplated hereby has been duly
and validly taken, and this Agreement has been duly executed and delivered by Purchaser.
Subject to the terms and conditions of this Agreement, this Agreement constitutes the valid,
binding and enforceable obligation of Purchaser, enforceable in accordance with its terms,
except as enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general application now
or hereafter in effect affecting the rights and remedies of creditors and by general
principles of equity (regardless of whether enforcement is sought in a proceeding at law or
in equity); and (ii) the applicability of the federal and state securities laws and public
policy as to the enforceability of the indemnification provisions of this Agreement. The
purchase by Purchaser of the Insider Warrants does not conflict with the organizational
documents of Purchaser or with any material contract by which Purchaser or its property is
bound, or any laws or regulations or decree, ruling or judgment of any court applicable to
Purchaser or its property. The principal place of business of Purchaser is as set forth on
the signature page hereto.
(h) Purchaser did not decide to enter into this Agreement as a result of any general
solicitation or general advertising within the meaning of Rule 502(c) of the Act.
(i) Purchaser understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation or endorsement of
the Insider Warrants or the fairness or suitability of the investment in the Insider
Warrants, nor have such authorities passed upon or endorsed the merits of the offering of
the Insider Warrants.
7. Company Representations and Warranties. The Company hereby represents and warrants to
Purchaser that the Company has all necessary corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby. All corporate action necessary to
be taken by the Company to authorize the execution, delivery and performance of this Agreement and
all other agreements and instruments delivered by the Company in connection with the transactions
contemplated hereby has been duly and validly taken and this Agreement has been duly executed and
delivered by the Company. Subject to the terms and conditions of this Agreement, this Agreement
constitutes the valid, binding and enforceable obligation of the Company, enforceable in accordance
with its terms, except as enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws of general application now or
hereafter in effect affecting the rights and remedies of creditors and by general principles of
equity (regardless of whether enforcement is sought in a proceeding at law or in equity); and
(ii) the applicability of the federal and state securities laws and public policy as to the
enforceability of the indemnification provisions of this Agreement. The sale by the Company of the
Insider Warrants does not conflict with the certificate of incorporation or by-laws of the Company
or any material contract by which the Company or its property
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is bound, or any federal or state
laws or regulations or decree, ruling or judgment of any United States or state court applicable to
the Company or its property.
8. Indemnification. Purchaser hereby agrees to indemnify and hold harmless the Company and the
Company’s officers, directors, stockholders, employees, agents, and attorneys against any and all
losses, claims, demands, liabilities and expenses (including reasonable legal or other expenses
incurred by each such person in connection with defending or investigating any such claims or
liabilities, whether or not resulting in any liability to such person or whether incurred by the
indemnified party in any action or proceeding between the indemnitor and indemnified party or
between the indemnified party and any third party) to which any such indemnified party may become
subject, insofar as such losses, claims, demands, liabilities and expenses (a) arise out of or are
based upon any untrue statement or alleged untrue statement of a material fact made by Purchaser
and contained herein, or (b) arise out of or are based upon any breach by Purchaser of any
representation, warranty or agreement made by Purchaser contained herein.
9. Miscellaneous.
(a) Notices. All notices required or permitted hereunder shall be in writing and shall
be deemed effectively given: (i) upon personal delivery to the party to be notified,
(ii) when sent by confirmed facsimile if sent during normal business hours of the recipient,
and if not during normal business hours of the recipient, then on the next business day,
(iii) five calendar days after having been sent by registered or certified mail, return
receipt requested, postage prepaid, or (iv) one business day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written verification of
receipt. All communications shall be sent to the other party hereto at such party’s address
hereinafter set forth on the signature page hereof, or at such other address as such party
may designate by ten days advance written notice to the other party hereto.
(b) Successors and Assigns. This Agreement shall inure to the benefit of the successors
and assigns of the Company and, subject to the restrictions on transfer herein set forth,
shall be binding upon Purchaser and Purchaser’s successors and assigns.
(c) Attorneys’ Fees; Specific Performance. Purchaser shall reimburse the Company for
all costs incurred by the Company in enforcing the performance of, or protecting its rights
under, any part of this Agreement, including reasonable costs of investigation and
attorneys’ fees.
(d) Governing Law; Venue. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the principles of
conflicts of law thereof. The parties agree that any action brought by either party to
interpret or enforce any provision of this Agreement shall be brought in, and each party
agrees to, and does hereby, submit to the jurisdiction and venue of, the appropriate state
or federal court for the district encompassing the Company’s principal place of business.
(e) Further Execution. The parties agree to take all such further action(s) as may
reasonably be necessary to carry out and consummate this Agreement as soon as practicable,
and to take whatever steps may be necessary to obtain any governmental approval in
connection with or otherwise qualify the issuance of the securities that are the subject of
this Agreement.
(f) Independent Counsel. Purchaser acknowledges that this Agreement has been prepared
on behalf of the Company by Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to the Company
and that Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP does not represent, and is not
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acting on behalf of, Purchaser. Purchaser has been provided with an opportunity to consult with
Purchaser’s own counsel with respect to this Agreement.
(g) Entire Agreement; Amendment. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes and merges all
prior agreements or understandings, whether written or oral. This Agreement may not be
amended, modified or revoked, in whole or in part, except by an agreement in writing signed
by each of the parties hereto.
(h) Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, the parties agree to renegotiate such provision in good
faith. In the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (i) such provision shall be excluded from this
Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were
so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with
its terms.
(i) Counterparts. This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original and all of which together shall constitute one instrument.
This Agreement or any counterpart may be executed via facsimile or electronic mail
transmission, and any such executed facsimile or electronic mail copy shall be treated as an
original.
(j) Survival. The representations and warranties contained herein will survive the
delivery of, and the payment for, the Insider Warrants.
(k) Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally
waives the right to a trial by jury in any action, suit, counterclaim or other proceeding
(whether based on contract, tort or otherwise) arising out of, connected with or relating to
this Agreement, the transactions contemplated hereby, or the actions of Purchaser in the
negotiation, administration, performance or enforcement hereof.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year
first above written.
| COMPANY: | ||||||
| FREEDOM TRAIL CORP. | ||||||
| By: | /s/ Xxxxx X. Xxxxx
|
|||||
| Name: Xxxxx X. Xxxxx | ||||||
| Title: Treasurer | ||||||
| Address: | ||||||
| Xxx Xxxxxxx Xxxx | ||||||
| Xxxxxxx, XX 00000 | ||||||
| PURCHASER: | ||||||
| LIBERTY LANE FUNDING LLC | ||||||
| By: | /s/ Xxxx X. Xxxxxxx | |||||
| Name: Xxxx X. Xxxxxxx | ||||||
| Title: Co-President | ||||||
| Address: | ||||||
| Xxx Xxxxxxx Xxxx | ||||||
| Xxxxxxx, XX 00000 | ||||||
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