Document:

Exhibit 4.7A

 

FIRST AMENDMENT TO SECURITY AGREEMENT
 (U.S. DOMICILED LOAN PARTIES)

 

This FIRST AMENDMENT TO SECURITY AGREEMENT (U.S. DOMICILED LOAN PARTIES) (this “Amendment”) dated as of September 12, 2012, amends that certain Security Agreement dated as of May 31, 2011 (as amended hereby and as may be further amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”) among CLEAN HARBORS, INC., a Massachusetts corporation (the “U.S. Borrower”), each of the subsidiaries of the U.S. Borrower listed on Annex A thereto or that has become a party thereto pursuant to Section 8.13 thereof (each such subsidiary being a “Subsidiary Grantor” and, collectively, the “Subsidiary Grantors”; the Subsidiary Grantors and the U.S. Borrower are referred to collectively as the “Grantors”), and BANK OF AMERICA, N.A., as administrative agent (hereinafter, in such capacity together with its successors and assigns, the “Agent”) under the Credit Agreement referred to below.

 

W I T N E S S E T H

 

WHEREAS, the U.S. Borrower and Clean Harbors Industrial Services Canada, Inc., an Alberta corporation (the “Canadian Borrower” and, together with the U.S. Borrower, the “Borrowers”), have entered into that certain Third Amended and Restated Credit Agreement dated as of May 31, 2011 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”; capitalized terms used herein and not otherwise defined having the respective meanings ascribed to them in the Credit Agreement and the Security Agreement, as applicable) with the lenders from time to time party thereto (collectively, the “Lenders” and individually, a “Lender”) and the Agent, pursuant to which the Lenders, subject to the terms and conditions set forth therein, have agreed to make Loans and other financial accommodations to the Borrowers;

 

WHEREAS, pursuant to the Security Agreement, the Grantors granted the Agent a security interest in substantially all of their assets including, without limitation, the Rolling Stock (as defined in the Security Agreement); and

 

WHEREAS, the Grantors have requested that the Agent, on behalf of itself and the Lenders, release its lien on and security interest in the Rolling Stock, and the Agent is willing to do so, subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, for good and valuable consideration, receipt and sufficiency of which is hereby acknowledged, it is hereby agreed as follows:

 

1.                                      Amendments to Security Agreement.

 

(a)                                 Section 1(b) of the Security Agreement is hereby amended by deleting the definition of “Excluded Property” set forth therein in its entirety and inserting in lieu thereof the following:

 

“Excluded Property” shall mean:

 

 

(a)                                 prior to the Discharge of the Senior Secured Notes Obligations (as defined in the Intercreditor Agreement), any Deposit Account or Securities Account established solely to hold the identifiable proceeds of any sale of Non-Accounts Collateral;

 

(b)                                 assets owned by any Grantor on the date hereof or hereafter acquired and any proceeds thereof that are subject to a Lien securing Debt in respect of Capital Leases permitted to be incurred pursuant to Sections 10.2.2(f) of the Credit Agreement to the extent and for so long as the contract or other agreement in which such Lien is granted (or the documentation providing for such Debt in respect of such Capital Lease) validly prohibits the creation of any other Lien on such assets and proceeds;

 

(c)                                  any property of a person existing at the time such person is acquired or merged with or into or consolidated with any Grantor that is subject to a Lien permitted by Section 10.2.1(o) of the Credit Agreement to the extent and for so long as the contract or other agreement in which such Lien is granted validly prohibits the creation of any other Lien on such property;

 

(d)                                 any intent-to-use trademark application to the extent and for so long as creation by a Grantor of a security interest therein would result in the loss by such Grantor of any material rights therein;

 

(e)                                  assets of the Grantors held outside of the United States and Canada;

 

(f)                                   assets of any Foreign Subsidiary;

 

(g)                                  any capital stock, notes, instruments, other equity interests and other Securities of any Subsidiary or Affiliate of the U.S. Borrower (other than any Securities Account); provided, that (x) notwithstanding the foregoing, intercompany Debt held by any Grantor shall be deemed Collateral, but no notes or Securities evidencing the same shall be required to be delivered to the Agent hereunder and such notes or Securities (but not the Debt underlying such notes and Securities) shall not be Collateral, (y) no Grantor or any of its Subsidiaries shall pledge or grant any security interest in any such note or Security to any Person without the consent of the Agent, and (z) the intercompany loans (or any whole or partial replacements or refinancing thereof) being made on or about the date hereof to one or more Canadian Subsidiaries shall not be evidenced by a note or a security;

 

(h)                                 any property or asset only to the extent and for so long as the grant of a security interest in such property or asset is prohibited by any Applicable Law or requires the consent not obtained of any Governmental Authority pursuant to any Applicable Law; and

 

(i)                                     subject to Section 4.8, any Rolling Stock.

 

provided, however, that (A) Excluded Property shall not include any Proceeds, substitutions or replacements of any Excluded Property referred to in clauses (a), (b), (c), (d), (e), (f), (g), (h) or (i) (unless such Proceeds, substitutions or replacements would constitute Excluded Property referred to in clause (a), (b), (c), (d), (e), (f), (g), (h) or (i)),

 

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and (B) any property or asset that constitutes Excluded Property by reason of any violation or restriction shall cease to be Excluded Property upon the ineffectiveness, lapse or termination of such prohibition or restriction.”

 

(b)                                 Section 2(a) of the Security Agreement is hereby amended by deleting clause (ix) thereof in its entirety and inserting in lieu thereof the following:

 

“(ix)                        all Goods, including Equipment and Inventory;”

 

(c)                                  Section 3.2(a) of the Security Agreement is hereby amended by deleting clause (i)(C) thereof in its entirety and inserting in lieu thereof the following:

 

“(C)                         [intentionally omitted]”

 

(d)                                 Section 4.8 of the Security Agreement is hereby amended by deleting such section in its entirety and inserting in lieu thereof the following:

 

“4.8                 Special Covenants with Respect to Rolling Stock.  Each Grantor covenants and agrees that, in the event that such Grantor grants any Liens on any Rolling Stock to any Person (including, without limitation, pursuant to Sections 10.2.1(l) and (m) of the Credit Agreement), then simultaneously therewith such Grantor shall take whatever action as may be necessary or advisable in the opinion of the Agent (including executing and delivering an amendment to this Security Agreement and the filing of UCC financing statements) to vest in the Agent (or in any representative of the Agent designated by it) valid and subsisting Liens in such Rolling Stock.  To the extent that any Grantor grants the Agent a Lien in any Rolling Stock pursuant to the immediately preceding sentence, (a) such Grantor shall cause such Rolling Stock (whether then owned or thereafter acquired by such Grantor) that, under Applicable Law, is required to be registered, to be properly registered (including, without limitation, the payment of all necessary taxes and receipt of any applicable permits) in the name of such Grantor and cause such Rolling Stock (whether then owned or thereafter acquired by such Grantor), the ownership of which, under Applicable Law (including, without limitation, any Motor Vehicle Law), is evidenced by a certificate of title or ownership, to be properly titled in the name of such Grantor, and in the case of any individual Rolling Stock of such Grantor with a fair market value in excess of $50,000, the Security Interest of the Agent shall be noted thereon, and (b) the Agent shall be authorized to enter into a collateral agency agreement, at the expense of the Grantors, with a Person reasonably acceptable to the Grantors to act as collateral agent with respect to Rolling Stock for the benefit of the Agent.”

 

(e)                                  Section 6.2 of the Security Agreement is hereby amended by deleting the third paragraph thereof in its entirety.

 

2.                                      Reaffirmation; Grant of Security Interest.  Each Grantor reaffirms all of its obligations under the Security Agreement, the Credit Agreement and the other Loan Documents to which it is a party, each as amended from time to time.  In addition, each Grantor hereby (a) ratifies and reaffirms all of the Liens and security interests heretofore granted pursuant to the Security Agreement and the other Loan Documents to which it is a party, each as amended from time to time,

 

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and (b) bargains, sells, conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to the Agent, for the benefit of the Secured Parties, and hereby grants to the Agent, for the benefit of the Secured Parties, a security interest in all of the following property now owned or hereafter acquired by such Grantor or in which such Grantor now has or at any time in future may acquire any right, title or interest, as collateral security for the prompt and complete payment and performance when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations:  (i) all Accounts Collateral; (ii) all cash and/or money; (iii) all Chattel Paper; (iv) all Deposit Accounts; (v) all Documents; (vi) all General Intangibles; (vii) all Instruments; (viii) all Intellectual Property; (ix) all Goods, including Equipment and Inventory; (x) all Investment Property; (xi) all Commercial Tort Claims described on Schedule 15 to the U.S. Perfection Certificate; (xii) all Supporting Obligations; (xiii) all Letter-of-Credit Rights; (xiv) books and records pertaining to the Collateral; (xv) any other contract rights or rights to payment of money, insurance claims and proceeds; and (xvi) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing.  Notwithstanding anything to the contrary contained in clauses (i) through (xvi) above, the security interest created by this Amendment shall not extend to, and the term “Collateral” shall not include, any Excluded Property.

 

3.                                      Effect on Security Agreement.  The execution, delivery, and performance of this Amendment shall not operate as a waiver or amendment of any right, power, or remedy of the Agent under the Security Agreement or any other Loan Document.  Except to the extent expressly amended hereby, the Security Agreement shall be unaffected hereby, shall continue in full force and effect, is ratified and confirmed, and shall constitute the legal, valid, binding and enforceable obligation of each Grantor to the Agent.

 

4.                                      GOVERNING LAW.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAWS OTHER THAN SECTION 5-1401 AND SECTION 5-1402 OF THE GENERAL OBLIGATIONS LAWS OF THE STATE OF NEW YORK AND FEDERAL LAWS RELATING TO NATIONAL BANKS).

 

5.                                      Counterparts; Delivery by Facsimile or Electronic Mail.  This Amendment may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed and delivered, shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument.  Delivery of an executed counterpart of a signature page to this Amendment by facsimile or electronic mail shall be as effective as delivery of a manually executed counterpart of this Amendment.  Any party delivering an executed counterpart of this Amendment by facsimile or electronic mail also shall deliver a manually executed counterpart of this Amendment but the failure to deliver a manually executed counterpart shall not affect the validity, enforceability, and binding effect of this Amendment.

 

[The remainder of this page is intentionally left blank.]

 

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IN WITNESS WHEREOF, each of the undersigned has caused this First Amendment to Security Agreement to be duly executed and delivered as of the date first above written.

 

	
 
    	
 
    	
 
    
	
 
    	
CLEAN   HARBORS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:   
    	
/s/   James M. Rutledge
    
	
 
    	
Name:
    	
James   M. Rutledge
    
	
 
    	
Title:   
    	
Vice   Chairman, President and
    
	
 
    	
 
    	
Chief   Operating Officer
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
CLEAN   HARBORS ENVIRONMENTAL SERVICES, INC.
    
	
 
    	
CLEAN   HARBORS INDUSTRIAL SERVICES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   James M. Rutledge
    
	
 
    	
Name:
    	
James   M. Rutledge
    
	
 
    	
Title:
    	
Executive   Vice President
    
				

 

(signatures continued on next page)

 

[ Signature Page to First Amendment to Security Agreement (U.S. Domiciled Loan Parties) ]

 

 

	
 
    	
ALTAIR   DISPOSAL SERVICES, LLC
    
	
 
    	
BATON   ROUGE DISPOSAL, LLC
    
	
 
    	
BRIDGEPORT   DISPOSAL, LLC
    
	
 
    	
CH   INTERNATIONAL HOLDINGS, LLC
    
	
 
    	
CLEAN   HARBORS (MEXICO), INC.
    
	
 
    	
CLEAN   HARBORS ANDOVER, LLC
    
	
 
    	
CLEAN   HARBORS ANTIOCH, LLC
    
	
 
    	
CLEAN   HARBORS ARAGONITE, LLC
    
	
 
    	
CLEAN   HARBORS ARIZONA, LLC
    
	
 
    	
CLEAN   HARBORS BATON ROUGE, LLC
    
	
 
    	
CLEAN   HARBORS BDT, LLC
    
	
 
    	
CLEAN   HARBORS BUTTONWILLOW, LLC
    
	
 
    	
CLEAN HARBORS CATALYST   TECHNOLOGIES, LLC
    
	
 
    	
CLEAN   HARBORS CHATTANOOGA, LLC
    
	
 
    	
CLEAN   HARBORS CLIVE, LLC
    
	
 
    	
CLEAN   HARBORS COFFEYVILLE, LLC
    
	
 
    	
CLEAN   HARBORS COLFAX, LLC
    
	
 
    	
CLEAN   HARBORS DEER PARK, LLC
    
	
 
    	
CLEAN   HARBORS DEER TRAIL, LLC
    
	
 
    	
CLEAN   HARBORS DEVELOPMENT, LLC
    
	
 
    	
CLEAN   HARBORS DISPOSAL SERVICES, INC.
    
	
 
    	
CLEAN   HARBORS EL DORADO, LLC
    
	
 
    	
CLEAN   HARBORS FLORIDA, LLC
    
	
 
    	
CLEAN   HARBORS GRASSY MOUNTAIN, LLC
    
	
 
    	
CLEAN   HARBORS KANSAS, LLC
    
	
 
    	
CLEAN HARBORS KINGSTON FACILITY   CORPORATION
    
	
 
    	
CLEAN   HARBORS LAPORTE, LLC
    
	
 
    	
CLEAN   HARBORS LAUREL, LLC
    
	
 
    	
CLEAN   HARBORS LONE MOUNTAIN, LLC
    
	
 
    	
CLEAN   HARBORS LONE STAR CORP.
    
	
 
    	
CLEAN   HARBORS LOS ANGELES, LLC
    
	
 
    	
CLEAN   HARBORS OF BALTIMORE, INC.
    
	
 
    	
CLEAN   HARBORS OF BRAINTREE, INC.
    
	
 
    	
CLEAN   HARBORS OF CONNECTICUT, INC.
    
	
 
    	
CLEAN   HARBORS PECATONICA, LLC
    
	
 
    	
CLEAN   HARBORS PPM, LLC
    
	
 
    	
CLEAN HARBORS RECYCLING   SERVICES OF CHICAGO, LLC
    
	
 
    	
CLEAN HARBORS RECYCLING   SERVICES OF OHIO, LLC
    
	
 
    	
CLEAN   HARBORS REIDSVILLE, LLC
    
	
 
    	
CLEAN   HARBORS SAN JOSE, LLC
    
	
 
    	
CLEAN   HARBORS SERVICES, INC.
    
	
 
    	
CLEAN   HARBORS TENNESSEE, LLC
    
	
 
    	
CLEAN   HARBORS WESTMORLAND, LLC
    
	
 
    	
(list   continued on next page)
    

 

[ Signature Page to First Amendment to Security Agreement (U.S. Domiciled Loan Parties) ]

 

 

	
 
    	
CLEAN   HARBORS WHITE CASTLE, LLC
    
	
 
    	
CLEAN   HARBORS WILMINGTON, LLC
    
	
 
    	
CROWLEY   DISPOSAL, LLC
    
	
 
    	
DISPOSAL   PROPERTIES, LLC
    
	
 
    	
DURATHERM, INC.
    
	
 
    	
GSX   DISPOSAL, LLC
    
	
 
    	
HILLIARD   DISPOSAL, LLC
    
	
 
    	
MURPHY’S   WASTE OIL SERVICE, INC.
    
	
 
    	
PEAK   ENERGY SERVICES USA, INC.
    
	
 
    	
ROEBUCK   DISPOSAL, LLC
    
	
 
    	
SANITHERM   USA, INC.
    
	
 
    	
SAWYER   DISPOSAL SERVICES, LLC
    
	
 
    	
SERVICE   CHEMICAL, LLC
    
	
 
    	
SPRING   GROVE RESOURCE RECOVERY, INC.
    
	
 
    	
TULSA   DISPOSAL, LLC
    

 

 

	
 
    	
By:   
    	
/s/   James M. Rutledge
    
	
 
    	
Name:
    	
James   M. Rutledge
    
	
 
    	
Title:
    	
Executive   Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
ARC   ADVANCED REACTORS AND COLUMNS, LLC
    
	
 
    	
CLEAN   HARBORS EXPLORATION SERVICES, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   James M. Rutledge
    
	
 
    	
Name:
    	
James   M. Rutledge
    
	
 
    	
Title:
    	
Executive   Vice President
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
PLAQUEMINE   REMEDIATION SERVICES, LLC
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Michael McDonald
    
	
 
    	
Name:
    	
Michael   McDonald
    
	
 
    	
Title:
    	
President
    

 

[ Signature Page to First Amendment to Security Agreement (U.S. Domiciled Loan Parties) ]

 

 

	
 
    	
BANK   OF AMERICA, N.A.,
    
	
 
    	
as   Administrative Agent
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Christopher M. O’Halloran
    
	
 
    	
Name:
    	
Christopher   M. O’Halloran
    
	
 
    	
Title:
    	
Senior   Vice President
    

 

[ Signature Page to First Amendment to Security Agreement (U.S. Domiciled Loan Parties) ]Exhibit 4.2

 

THIS WARRANT AND THE SECURITIES REPRESENTED BY OR ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR QUALIFIED UNDER APPLICABLE STATE SECURITIES LAWS AND HAVE BEEN TAKEN FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH ANY DISTRIBUTION THEREOF.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH QUALIFICATION, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION AND QUALIFICATION IS NOT REQUIRED.

 

FAIRWAY GROUP HOLDINGS CORP.

 

WARRANT TO PURCHASE SHARES OF COMMON STOCK

 

March 26, 2009

 

No.             

 

This Warrant is issued to                              (including its assigns or transferees, the “Holder”) by Fairway Group Holdings Corp., a Delaware corporation (the “Company”), pursuant to the terms of that Securities Purchase Agreement dated as of March 26, 2009 (as amended, modified or supplemented, the “Purchase Agreement”) in connection with the Company’s issuance and sale of shares of Series A Preferred Stock of the Company to the Holder of this Warrant.

 

1.             Purchase of Warrant Shares.  Subject to the terms and conditions hereinafter set forth, the Holder is entitled, upon surrender of this Warrant at the principal office of the Company (or at such other place as the Company shall notify the Holder hereof in writing), to purchase from the Company up to [                        ] shares of fully paid and nonassessable common stock of the Company, par value $0.001 per share (“Common Stock”).  The number of shares of Common Stock issuable upon exercise hereof is subject to adjustment pursuant to Section 7 hereof (such number of shares, as adjusted from time to time, is hereinafter referred to as the “Warrant Shares”).

 

2.             Exercise Price; Exercise Period.

 

(a)            Exercise Price.  The exercise price for the Warrant Shares shall be $.01 per Warrant Share.  Such price shall be subject to adjustment as set forth in Section 7 hereof (such price, as adjusted from time to time, is herein referred to as the “Exercise Price”).

 

(b)            Exercise Period.  This Warrant shall be exercisable, in whole or in part, during the period commencing on the date hereof and ending on the earlier of (i) 5:00 p.m. New York City time on March 26, 2016 and (ii) the consummation of a Liquidation Event (as such term is defined in the Company’s certificate of incorporation as in effect from time to time (“Liquidation Event”)) (such period the “Exercise Period”).

 

(c)            Automatic Exercise on Last Day of Exercise Period.  If this Warrant shall not have been exercised in full on or before the last day of the Exercise Period, then this Warrant shall be automatically exercised, without further action on the part of the Holder, in full (and the Holder shall

 

 

be deemed to be a Holder of the Warrant Shares issued upon such automatic exercise) on and as of the last day of the Exercise Period, unless at any time on or before such last day of the Exercise Period the Holder shall notify the Company in writing that no such automatic exercise is to occur.  Payment of the Exercise Price due in connection with any such automatic exercise pursuant to this Section 2(c) shall be made in accordance with Section 4 hereof, unless at any time on or before such last day of the Exercise Period the Holder shall notify the Company that such Holder elects to pay the Exercise Price in cash pursuant to Section 3 hereof.  Any automatic exercise pursuant to this Section 2(c) shall be deemed to constitute the confirmation and acknowledgement set forth in paragraph 2 of the Notice of Exercise.

 

3.             Method of Exercise.

 

(a)            While this Warrant remains outstanding and exercisable in accordance with Section 2 above, the Holder may exercise, in whole or in part, the purchase rights evidenced hereby.  Such exercise shall be effected by: (i) the surrender of the Warrant, together with a Notice of Exercise in the form attached hereto as Exhibit A (the “Notice of Exercise”), to the Secretary of the Company at its principal offices; and (ii) unless the Holder has elected in the Notice of Exercise to pay for the Warrant Shares in accordance with the net exercise provisions of Section 4 hereof, by payment to the Company of an amount obtained by multiplying the Exercise Price then in effect by the number of Warrant Shares thereby purchased, as designated in the Notice of Exercise.

 

(b)            This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above (or, in the case of exercise in connection with a Liquidation Event, immediately prior to the consummation of such Liquidation Event), and the person entitled to receive the shares of Common Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date, regardless of when a certificate representing such Warrant Shares is issued.

 

4.             Net Exercise.  Notwithstanding any provisions herein to the contrary, if the Fair Market Value of one share of Common Stock is greater than the Exercise Price (at the date of calculation) in lieu of exercising this Warrant for cash, the Holder may elect to receive, without the payment by the Holder of any additional consideration, Warrant Shares equal to the value of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with a Notice of Election in the form attached hereto as Exhibit A, in which event the Company shall issue to the Holder a number of Warrant Shares computed using the following formula:

 

	
 
    	
X=
    	
Y (A - B)
    	
 
    
	
 
    	
 
    	
A
    	
 
    

 

Where

 

	
X
    	
=
    	
The   number of Warrant Shares to be issued to the Holder.
    

 

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Y               =                  the number of Warrant Shares covered by this Warrant in respect of which the net issuance election is made pursuant to this Section 4.

 

A             =                  The “Fair Market Value” of one Warrant Share, as defined below.

 

B               =                  The Exercise Price in effect under this Warrant at the time the net issuance election is made pursuant to this Section 4.

 

For purposes of this Section 4, the “Fair Market Value” of one share of Common Stock shall be determined by the Company’s Board of Directors in good faith; provided, however, that where there exists a public market for the Company’s Common Stock at the time of such exercise, the Fair Market Value per share shall be either (A) if the Common Stock is then traded on a national securities exchange, the average of the closing prices of the Common Stock on such exchange over the ten (10) trading day period ending five (5) trading days prior to the date of exercise, or (B) if the Common Stock is actively traded over-the-counter, the average of the closing bid prices of the Common Stock over the ten (10) trading day period ending five (5) trading days prior to the date of exercise, whichever is applicable and, in either case, as published in the Eastern Edition of The Wall Street Journal; and provided further that if such exercise is in connection with an initial public offering of the Company’s Common Stock, the Fair Market Value per share shall be the “Price to Public” set forth in the prospectus for such initial public offering.

 

5.             Certificates for Warrant Shares.  Upon the exercise of the purchase rights evidenced by this Warrant, one or more certificates for the number of Warrant Shares so purchased (bearing such legends as are required by the Stockholders’ Agreement (as such term is defined in the Purchase Agreement), this Warrant and applicable state and federal securities laws in the opinion of counsel to the Company) shall be issued as soon as practicable thereafter, and in any event within ten (10) days of the delivery of a Notice of Exercise.  If this Warrant is exercised in part, the Company shall deliver to the Holder a new Warrant (dated the date hereof and of like tenor) for the unexercised portion of this Warrant at the time of delivery of such stock certificate or certificates.

 

6.             Issuance of Warrant Shares.  The Warrant Shares, when issued pursuant to the exercise of this Warrant, will be duly and validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issuance thereof.

 

7.             Adjustment of Exercise Price and Number of Warrant Shares.  The number of and kind of securities purchasable upon exercise of this Warrant and the Exercise Price shall be subject to adjustment from time to time as follows:

 

(a)            Dividends, Distributions, Subdivisions and Combinations.  If and whenever the Company subsequent to the date hereof:

 

(i)                                       declares a dividend upon, or makes any distribution in respect of, any shares of Common Stock, payable in shares of Common Stock or Convertible Securities (as defined below), or

 

(ii)                                    subdivides its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

 

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(iii)                                 combines its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

 

then (1) the Warrant Shares for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number of shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisable immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (2) the Exercise Price shall be adjusted to equal (x) the Exercise Price multiplied by the Warrant Shares for which this Warrant is exercisable immediately prior to the adjustment divided by (y) the Warrant Shares for which this Warrant is exercisable immediately after such adjustment.

 

For purposes of this Section 7, “Convertible Securities” shall mean evidences of indebtedness, shares of preferred stock of the Company or other securities which are convertible into or exchangeable or exercisable for, with or without payment of additional consideration, shares of Common Stock, either immediately or upon the arrival of a specified date or the happening of a specified event.

 

Notwithstanding anything herein to the contrary, purchase rights issued by the Company ratably to all holders of its Common Stock pursuant to a so-called “poison pill” program (either initially or under certain circumstances but in any event prior to or upon any Event (as defined below)), which purchase rights are (i) deemed to be transferred with such shares of Common Stock, (ii) are not exercisable and (iii) are also issued in respect to future issuances of any of the Common Stock (including, without limitation, Common Stock issued upon exercise of the Warrants), in each case in clauses (i) through (iii) until the occurrence of a specified event or events (the “Event”), shall for purposes of this section not be deemed issued until the occurrence of the earliest Event.

 

(b)            Other Distributions.  If at any time after the date hereof the Company distributes to holders of its Common Stock, other than as part of its dissolution or liquidation or the winding up of its affairs (including, without limitation, any Liquidation Event), any evidence of indebtedness (other than Convertible Securities) or any of its assets (other than (i) cash dividends paid in the ordinary course or (ii) Convertible Securities), then the Company shall provide by resolution of the Company’s Board of Directors that on exercise of this Warrant, the Holder hereof shall thereafter be entitled to receive, in addition to the shares of Common Stock otherwise receivable on exercise hereof, the evidence of indebtedness or assets which would have been received had this Warrant been exercised immediately prior to the record date for such distribution.

 

(c)            Effect of Reclassification, Capital Reorganization or Change of Securities.  In case of any reclassification, capital reorganization, or change of securities of the class issuable upon exercise of this Warrant (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of any subdivision, combination, stock dividend or other distribution provided for in Sections 7(a) and (b) above), or in case of any consolidation or merger of the Company with or into any entity (other than a consolidation or merger (i) with another entity in which the Company is the acquiring and surviving entity and which does not result in any reclassification or change of outstanding securities issuable upon exercise of this Warrant or (ii) that constitutes a Liquidation Event), the Company or such successor entity, as the case may be, shall duly execute and deliver to the Holder a new Warrant (in form and substance reasonably satisfactory to the Holder), or the Company shall make appropriate provision without the issuance of a new Warrant, so that the Holder shall have the right to receive, at a total purchase price not to exceed that

 

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payable upon the exercise of the unexercised portion of this Warrant, and in lieu of the Warrant Shares theretofore issuable upon exercise of this Warrant, the same kind and amount of shares of stock, other securities, money and property (and upon the same terms and with the same rights) as would have been distributed to the Holder upon such reclassification, capital reorganization or change of securities had the Holder exercised this Warrant immediately prior to the record date for such reclassification, capital reorganization or change of securities (subject to subsequent adjustments under this Section 7).  In any such case, appropriate provisions shall be made with respect to the rights and interest of Holder so that the provisions hereof shall thereafter be applicable to any shares of stock or other securities and property deliverable upon exercise hereof, or to any new Warrant delivered pursuant to this Section 7(c), and appropriate corresponding adjustments shall be made to the Exercise Price per share payable hereunder, provided, that the aggregate amount payable upon the exercise in full of this Warrant shall remain the same.  The provisions of this Section 7(c) shall similarly apply to successive reclassifications, capital reorganizations and changes.

 

(d)            Notice of Adjustment.  Whenever the Exercise Price or number of Warrant Shares purchasable hereunder shall be adjusted pursuant to this Section 7, the Company shall execute and deliver to the Holder a certificate setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated and the Exercise Price and number of and kind of securities purchasable hereunder after giving effect to such adjustment, and shall cause a copy of such certificate to be mailed (by first class mail, postage prepaid) to the Holder.

 

8.             No Fractional Shares or Scrip.  No fractional shares or scrip representing fractional shares will be issued upon exercise of this Warrant.  If upon any exercise of this Warrant a fraction of a share results, the Company will pay the Holder the difference between the cash value of the fractional share and the portion of the Exercise Price allocable to the fractional share.

 

9.             No Stockholder Rights.  Prior to the exercise of this Warrant, nothing contained in this Warrant shall be construed as conferring upon the Holder or his or its transferees the right to vote or to receive dividends or to consent or to receive notice as a stockholder in respect of any meeting of stockholders for the election of directors of the Company or of any other matter, or any rights whatsoever as stockholders of the Company.  The Company shall give notice to the Holder by registered mail if at any time prior to the expiration or exercise in full of the Warrants, any of the following events shall occur:

 

1)             a dissolution, liquidation or winding up of the Company or other Liquidation Event shall be proposed;

 

2)             a capital reorganization or reclassification of the Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value), or any subdivision, combination, stock dividend or other distribution); or

 

3)             a taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities or property, or to receive any other rights.

 

Such giving of notice shall be simultaneous with (or in any event, no later than) the giving of notice to holders of Common Stock.  Such notice shall specify the record date or the date of closing

 

5

 

the stock transfer books, as the case may be.  Failure to provide such notice shall not affect the validity of any action contemplated in this Section 9.

 

10.           Amendments and Waivers.  Any term of this Warrant may be amended and the observance of any term of this Warrant may be waived (either generally or in a particular instance and either retroactively or prospectively), with the written consent of the Company and the holders of sixty percent of the Warrant Shares issuable upon exercise of all Warrants issued pursuant to the Purchase Agreement that are then outstanding, provided, however, that such amendment must apply to all such holders equally and ratably in accordance with the number of shares of Common Stock issuable upon exercise of their Warrants.  The Company shall promptly give notice to all holders of Warrants of any amendment effected in accordance with this Section 10.  Any waiver or amendment effected in accordance with this Section 10 shall be binding upon each holder of a Warrant and the Company.

 

11.           Restrictions on Transfers.  By acceptance of this Warrant, the Holder (i) agrees to comply with the restrictions on transfer set forth in Sections 4.01 to 4.04 of the Stockholders’ Agreement and (ii) acknowledges that this Warrant and the Warrant Shares issuable upon exercise hereof shall be “Restricted Securities” for purposes of the Stockholders’ Agreement and that the Warrant Shares shall (unless otherwise permitted by the provisions of the Stockholders’ Agreement) be stamped or imprinted with a legend substantially similar to the legend set forth in Section 4.06 of the Stockholders’ Agreement.

 

12.           Governing Law.  This Warrant shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law provisions of the State of New York, or of any other state.

 

13.           Charges, Taxes and Expenses.  The Company shall pay all transfer taxes or other incidental charges, if any, in connection with the issuance and delivery by the Company to the Holder of the Warrant Shares purchased pursuant to the exercise of this Warrant.

 

14.           Loss, Theft, Destruction or Mutilation of Warrant.  Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor and dated as of such cancellation, in lieu of this Warrant.

 

15.           Saturdays, Sundays, Holidays, etc.  If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall be a Saturday or a Sunday or shall be a legal holiday, then such action may be taken or such right may be exercised on the next succeeding day not a Saturday, Sunday or legal holiday.

 

16.           Authorized Shares.  The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of Common Stock upon the exercise of any purchase rights under this Warrant.  The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of the Company’s Common Stock upon the exercise of the purchase rights under this Warrant.

 

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17.           Miscellaneous.

 

(a)           Binding Effect.  This Warrant and the various rights and obligations arising hereunder shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

(b)           Headings.  The headings in this Warrant are for convenience only and shall not alter or otherwise affect the meaning hereof.

 

(c)           Severability.  If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision were so excluded and the balance shall be enforceable in accordance with its terms.

 

[Remainder of page intentionally left blank.]

 

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IN WITNESS WHEREOF, Company has caused this Warrant to be issued as of the date first written above.

 

	
 
    	
FAIRWAY   GROUP HOLDINGS CORP.
    
	
 
    	
a   Delaware corporation
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    

 

(Signature Page to Warrant to Purchase Common Stock)

 

 

EXHIBIT A

 

NOTICE OF EXERCISE

 

To:          FAIRWAY GROUP HOLDINGS CORP.

 

(1)           The undersigned hereby (A) elects to purchase                          shares of Common Stock of FAIRWAY GROUP HOLDINGS CORP. pursuant to the provisions of Section 3(a) of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full, or (B) elects to exercise this Warrant for the purchase of                        shares of Common Stock, pursuant to the provisions of Section 4 of the attached Warrant.

 

(2)           In exercising this Warrant, the undersigned hereby confirms and acknowledges that the shares of Common Stock are being acquired solely for the account of the undersigned and not as a nominee for any other party, and for investment, and that the undersigned will not offer, sell or otherwise dispose of any such shares of Common Stock except under circumstances that will not result in a violation of the Securities Act of 1933, as amended, or any applicable state securities laws.

 

(3)           Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as specified below:

 

	
 
    	
 
    
	
 
    	
(Name)
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Name)
    

 

(4)           If applicable, please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below:

 

	
 
    	
 
    	
 
    
	
 
    	
 
    	
(Name)
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
(Date)
    	
 
    	
(Signature)
    

 

B-1

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