<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
------------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Amendment No. __
Safety 1st, Inc.
- -------------------------------------------------------------------------------
(Name of issuer)
Common Stock, par value $.01 per share
- -------------------------------------------------------------------------------
(Title of class of securities)
786475-10-3
- -------------------------------------------------------------------------------
(CUSIP number)
James T. Byrne, Jr.
Office of the Secretary
Bankers Trust New York Corporation
130 Liberty Street
New York, New York 10006
(212) 250-1869
(Name, address and telephone number of person
authorized to receive notices and communications)
Copy to:
Harvey M. Eisenberg, Esq.
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
(212) 408-2400
July 30, 1997
- -------------------------------------------------------------------------------
(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
(Continued on following pages)
<PAGE>
CUSIP No. 786475-10-3 13D Page 2 of ___ Pages
___________
<TABLE>
<C> <S>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
BT Capital Partners, Inc.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
3 SEC USE ONLY
4 SOURCE OF FUNDS*
WC
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 634,173
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
634,173
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
634,173
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* / /
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
7.5%
14 TYPE OF REPORTING PERSON*
CO
</TABLE>
<PAGE>
CUSIP No. 786475-10-3 13D Page 3 of ___ Pages
___________
<TABLE>
<C> <S>
1 NAME OF REPORTING PERSONS
S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
Bankers Trust New York Corporation
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) /x/
3 SEC USE ONLY
4 SOURCE OF FUNDS*
Not applicable.
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) / /
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
7 SOLE VOTING POWER
NUMBER OF 0
SHARES
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH
0
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* /x/
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0
14 TYPE OF REPORTING PERSON*
CO
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Statement relates to the Common Stock, par value $.01 per share
("Common Stock"), of Safety 1st, Inc. (the "Issuer"), whose principal
executive offices are at 210 Boylston Street, Chestnut Hill, Massachusetts,
02167.
ITEM 2. IDENTITY AND BACKGROUND.
ITEM 2(A) THROUGH (C), ITEM 2(F).
This statement is being filed by (i) BT Capital Partners, Inc., a
Delaware corporation ("BT Capital Partners"), with respect to shares of
Common Stock beneficially owned by it as principal and (ii) Bankers Trust New
York Corporation, a New York corporation ("BTNY").
BT Capital Partners is an indirect wholly owned subsidiary of BTNY,
through BTNY's subsidiary, BT Holdings (New York), Inc., a Delaware
corporation ("BT Holdings"). BT Capital Partners is referred to from time to
time as the "Purchaser". Attached hereto as Exhibit 1 is a chart showing the
ownership relationship between BTNY and the Purchaser.
The principal business of BT Capital Partners is as acting as a small
business investment company licensed by the Small Business Administration
under the Small Business Investment Act of 1958, as amended, investing in
management buyouts, venture capital opportunities and mezzanine financing.
The principal business of BT Holdings is as a holding company. The principal
business of BTNY is as a bank holding company.
The address of the principal business and principal office of BT Capital
Partners is 130 Liberty Street, 25th Floor, New York, New York 10006. The
address of the principal business and principal office of BT Holdings and
BTNY is 130 Liberty Street, New York, New York 10006.
The name, citizenship, business or residence address, principal
occupation or employment, and name, principal business and address of any
corporation or organization in which such employment is conducted of each
director and executive officer of the Purchaser and BTNY is set forth in
Annex A attached hereto and incorporated into this item 2 by reference.
Items 2(d) and (3).
Except as disclosed in Annex B hereto, neither the Purchaser, BTNY, nor,
to their best knowledge or belief, BT Holdings, or any of the persons
identified in Annex A, have during the past five years been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
DESCRIPTION OF TRANSACTION
On July 30, 1997, BT Capital Partners, the Issuer and Bear, Stearns & Co.
Inc. ("Bear Stearns") entered into a Stock and Warrant Purchase Agreement
(the "Agreement"). Pursuant to
<PAGE>
the Agreement, BT Capital Partners purchased (i) 7,500 shares of the Issuer's
non-voting Series A Preferred Stock, par value $1.00 per share, (ii) Warrants
to purchase 570,755 shares of the Issuer's Common Stock and (iii) Warrants to
purchase 63,418 shares of the Issuer's Common Stock subject to the Issuer's
right to repurchase such Warrants under certain conditions. BT Capital
Partners' original cost basis for the purchases of the Series A Preferred
Stock and the Warrants was $7,500,000. Any funds used in this acquisition
came from working capital.
DISCLAIMER OF GROUP STATUS
Pursuant to the Agreement, BT Capital Partners and Bear, Stearns were
issued warrants to purchase shares of the Issuer's Common Stock. In
addition, in connection with the Agreement and the closing of the
transactions contemplated thereby, BT Capital Partners entered into (i) a
Voting Agreement (a copy of which is attached hereto as Exhibit 3) (the
"Voting Agreement") among the Issuer, BT Capital Partners, Bear, Stearns and
certain shareholders of the Issuer and (ii) a Registration Rights Agreement
(the "Registration Rights Agreement") among the Issuer, BT Capital Partners,
Bear, Stearns and Michael Lerner. The Voting Agreement provides that each
party to the agreement, including Bear Stearns, will (subject to the
satisfaction of a minimum percentage holding of Common Stock by BT Capital
Partners) vote all their respective holdings of Common Stock to elect one
person designated by BT Capital Partners to the Issuer's Board of Directors.
Pursuant to the Registration Rights Agreement, the Issuer agrees with BT
Capital Partners and Bear, Stearns to provide certain rights of registration
under the Securities Act of 1933 as amended (the "1933 Act"), with respect to
their stockholdings of Common Stock. Prior to execution of the Agreement and
the Voting Agreement, BT Capital Partners had no contractual or other
relationship with Bear, Stearns with respect to beneficial ownership of the
Issuer's Common Stock. The Series A Preferred Stock has no voting rights. As
a party to the Voting Agreement, BT Capital Partners might be considered to
be a member of a group together with Bear, Stearns because BT Capital
Partners and Bear, Stearns have agreed (subject to the satisfaction of a
minimum percentage holding of Common Stock) to vote their respective shares
of Common Stock in favor of the appointment of persons designated by BT
Capital Partners and Bear, Stearns, respectively, to the Board of Directors.
However, BT Capital Partners disclaims membership in any such group and
disclaims beneficial ownership of the shares of Common Stock owned by the
other parties to the Voting Agreement. The Voting Agreement is filed as an
exhibit hereto and is hereby incorporated by reference in its entirety.
ITEM 4. PURPOSE OF TRANSACTION.
The Purchaser has acquired the shares of Common Stock reported herein for
investment purposes. The Purchaser intends to review from time to time the
Issuer's business affairs and financial position. Based on such evaluation
and review, as well as general economic and industry conditions existing at
the time, the Purchaser may consider from time to time various alternative
courses of action. Such actions may include the acquisition of additional
Common Stock through open market purchases, privately negotiated
transactions, tender offer, exchange offer or otherwise. Alternatively, such
actions may involve the sale of all or a portion of the Common Stock in the
open market, in privately negotiated transactions, through a public offering
or otherwise. Except as set forth above, the Purchaser has no plan or
proposals which relate to or would result in any of the transactions
described in subparagraphs (a) through (j) of Item 4 of Schedule 13D.
<PAGE>
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) BT Capital Partners beneficially owns 634,173 shares of Common Stock
(all of which 634,173 shares are the subject of warrants), constituting 7.5%
of the issued and outstanding shares of Common Stock of the Issuer. 1
As a parent of the Purchaser, BTNY may be deemed to be the indirect
beneficial owner of the shares of Common Stock owned by the Purchaser.
To the best knowledge and belief of the Purchaser and BTNY, none of the
persons listed on Annex A hereto beneficially owns any shares of Common Stock.
(b) Subject to the provisions of the Voting Agreement, the Purchaser has
sole power to vote and dispose of the shares of Common Stock beneficially
owned by it.
(c) Annex C hereto sets forth all transactions in shares of Common Stock
that were effected during the past sixty days by the persons referred to in
paragraph (a).
(d) No person other than the persons described in paragraph (a) has the
right to receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, Common Stock beneficially owned by it.
(e) Inapplicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Reference is made to the information disclosed under Items 3 and 4 of
this Statement which is incorporated by reference in response to this Item.
In addition to such information, the following contracts, arrangements,
understandings or relationships are reported hereunder.
(a) Unconditional Warrant. Pursuant to Section 2.1 of the Agreement, the
Issuer has issued Warrants, which are presently exercisable, dated as of July
30, 1997 which allow each of BT Capital Partners and Bear, Stearns to
purchase up to 570,755 shares of Common Stock of the Issuer.
(b) Conditional Warrant. Pursuant to Section 2.1 of the Agreement, the
Issuer has issued Warrants, which are exercisable upon the satisfaction of
certain conditions, dated as of July 30, 1997 which allow each of BT Capital
Partners and Bear, Stearns to purchase to up 63,418 shares of Common Stock of
the Issuer.
- ------------------------
(1) After giving effect to the exercise of the warrants. Percentages used in
this Item 5 are based on the number of securities outstanding as contained
in the most recently available filing by the Issuer with the Securities and
Exchange Commission.
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Corporate Structure of BTNY and Certain Subsidiaries.
2. Joint filing statement pursuant to Rule 13d-1(f)(1).
3. Voting Agreement dated as of July 30, 1997 among Michael Lerner, Michael
S. Bernstein, BT Capital Partners, Inc. and Bear, Stearns & Co. Inc.
4. Warrant dated as of July 30, 1997 to purchase Common Stock of Safety
1st, Inc.
5. Warrant dated as of July 30, 1997 to purchase Common Stock of Safety
1st, Inc.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief, I
certify that the information set forth in this Statement is true, complete
and correct.
Date: August , 1997
BANKERS TRUST NEW YORK CORPORATION
By: /s/ James T. Byrne
----------------------------------
Name: James T. Byrne
Title: Senior Vice President
<PAGE>
ANNEX A
BANKERS TRUST NEW YORK CORPORATION
The following sets forth the name, mailing address, occupation or
principal business affiliation and citizenship of each director and executive
officer of BTNY. To the best knowledge and belief of BTNY, none of the
following person beneficially owns any shares of Common Stock.
<TABLE>
<CAPTION>
OCCUPATION OR PRINCIPAL BUSINESS
NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP
- ---------------------------------------- --------------------------------------------------- -----------
<S> <C> <C>
George B. Beitzel Retired Senior Vice President and Director U.S.
29 King Street International Business Machines Corporation
Chappaqua, NY 10514-3432
Phillip A. Griffiths Chairman U.S.
Institute for Advanced Study Institute for Advanced Study
Olden Lane
Princeton, NJ 08540
William R. Howell Chairman Emeritus U.S.
J.C. Penney Company, Inc. J.C. Penney Company, Inc.
P.O. Box 10001
Dallas, TX 75301-0001
Vernon E. Jordan, Jr. Senior Partner U.S.
Akin, Gump, Strauss, Hauer & Feld, LLP
1333 New Hampshire Avenue, N.W.
Suite 400
Washington, D.C. 20036
Hamish Maxwell Retired Chairman and Chief Executive Officer U.S.
Philip Morris Companies, Inc. Philip Morris Companies, Inc.
100 Park Avenue
New York, NY 10017
Frank N. Newman Chairman of the Board and Chief Executive Officer U.S.
Bankers Trust Company and President Bankers Trust Company; Chairman of
130 Liberty Street the Board and Chief Executive Officer and
New York, NY 10006 President Bankers Trust New York Corporation
N.J. Nicholas Jr. Investor U.S.
15 West 53rd Street, #34F
New York, NY 10019
Russell E. Palmer Chairman and Chief Executive Officer U.S.
The Palmer Group The Palmer Group
3600 Market Street
Suite 530
Philadelphia, PA 19104
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OCCUPATION OR PRINCIPAL BUSINESS
NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP
- ---------------------------------------- --------------------------------------------------- -----------
<S> <C> <C>
Donald L. Staheli Chairman of the Board and Chief Executive Officer U.S.
39 Locust Street (Retired), Continental Grain Company
New Canaan, CT 0684
Patricia Carry Stewart Former Vice President U.S.
Bankers Trust Company The Edna McConnell Clark Foundation
c/o Office of the Secretary
130 Liberty Street
New York, NY 10006
George J. Vojta Vice Chairman U.S.
Bankers Trust Company Bankers Trust Company and
130 Liberty Street Bankers Trust New York Corporation
New York, NY 10006
Paul A. Volcker Director of Various Corporations U.S.
599 Lexington Avenue
40th Floor
New York, NY 10021
</TABLE>
<TABLE>
<CAPTION>
NAME AND MAIL ADDRESS EXECUTIVE OFFICERS CITIZENSHIP
- ---------------------------------------- --------------------------------------------------- -----------
<S> <C> <C>
Joseph A. Manganello, Jr. Senior Managing Director and U.S.
Bankers Trust Company Chief Credit Officer
130 Liberty Street Bankers Trust Company;
New York, NY 10006 Executive Vice President and
Chief Credit Officer
Bankers Trust New York Corporation
Richard H. Daniel Senior Managing Director, Chief Financial Officer U.S.
Bankers Trust Company and Controller Bankers Trust Company;
130 Liberty Street Vice Chairman, Chief Financial Officer and
New York, NY 10006 Controller Bankers Trust New York Corporation
Melvin A. Yellin Senior Managing Director and General Counsel U.S.
Bankers Trust Company Bankers Trust Company;
130 Liberty Street Executive Vice President and General Counsel
New York, NY 10006 Bankers Trust New York Corporation
Mary Cirillo Senior Managing Director Bankers Trust Company U.S.
Bankers Trust Company Executive Vice President
130 Liberty Street Bankers Trust New York Corporation
New York, NY 10006
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OCCUPATION OR PRINCIPAL BUSINESS
NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP
- ---------------------------------------- --------------------------------------------------- -----------
<S> <C> <C>
I. David Marshall Senior Managing Director and Chief Information U.S.
Bankers Trust Company Officer Bankers Trust Company
130 Liberty Street Executive Vice President and
New York, NY 10006 Chief Information Officer
Bankers Trust New York Corporation
</TABLE>
<PAGE>
BT CAPITAL PARTNERS, INC.
The following sets forth the name, mailing address, occupation or
principal affiliation and citizenship of each director and executive officer
of BT Capital Partners. To the best knowledge and belief of BT Capital
Partners, none of the following persons beneficially owns any shares of
Common Stock.
<TABLE>
<CAPTION>
OCCUPATION OR PRINCIPAL BUSINESS
NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP
- ---------------------------------------- --------------------------------------------------- -----------
DIRECTORS
- ---------------------------------------- --------------------------------------------------- -----------
<S> <C> <C>
Douglas Brent President Canada
BT Capital Partners, Inc. BT Capital Partners, Inc.
130 Liberty Street
New York, NY 10006
Carl Mueller Chairman U.S.
c/o Bankers Trust Company BT Capital Partners, Inc.
280 Park Avenue
New York, NY 10006
Alfred Brittain, III Former Chairman U.S.
c/o Bankers Trust Company Bankers Trust New York Corporation
280 Park Avenue
New York, NY 10006
Howard Blauvelt Former CEO of Conoco Oil U.S.
1410 Piper Way
Keswick, VA 22947
George Vojta Vice Chairman U.S.
Bankers Trust Company Bankers Trust New York Corporation
130 Liberty Street
New York, NY 10006
Patrick Callahan, Jr. Partner U.S.
Lazard Freres & Co. Lazard Freres & Co.
200 W. Madison
Chicago, IL 60606
Larry Williams President U.S.
945 East Paces Ferry Road The Breckenridge Group, Inc.
Atlanta, GA 30326
James Hellmuth Former President U.S.
270 Park Avenue, 5th Floor BT Capital Corporation
New York, NY 10006
Hamish Maxwell Former Chairman U.S.
Philip Morris Co. Philip Morris & Companies
100 Park Avenue
10th Floor
New York, NY 10017
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
OCCUPATION OR PRINCIPAL BUSINESS
NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP
- ---------------------------------------- --------------------------------------------------- -----------
<S> <C> <C>
Yves De Balman Chairman France
1 Appold Street Bankers Trust International
Broadgate, 4th Floor
London, EC2A 2HE
OFFICERS
- ---------------------------------------- --------------------------------------------------- -----------
Heide Silverstein Treasurer/Secretary U.S.
Bankers Trust Company
130 Liberty Street, 25th Floor
New York, NY 10006
Joseph T. Wood Senior Vice President U.S.
BT Capital Partners, Inc. Bankers Trust New York Corporation;
130 Liberty Street, 25th Floor Officer BT Capital Partners, Inc.
New York, NY 10006
</TABLE>
<PAGE>
ANNEX B
BTCo., BTNY and BTNY's subsidiary, BT Securities Corporation were subject
to a Written Agreement, dated December 4, 1994 (the "Written Agreement"),
with the Federal Reserve Bank of New York and a Memorandum of Understanding,
dated December 21, 1994 (the "Memorandum"), with the New York State Banking
Department. The Written Agreement and Memorandum are described in BTNY's
Forms 8-K are hereby incorporated by reference into this Annex B. The Written
Agreement expired in 1996.
BT Securities entered into an Order, dated December 22, 1994, of the
Securities and Exchange Commission and an Order dated December 22, 1994, of
the Commodity Futures Trading Commission. These Orders are included in and
described in BTNY's Form 8-K, dated December 22, 1994. This Form 8-K is
hereby incorporated by reference into this Annex B.
<PAGE>
ANNEX C
Except as set forth below, neither BT Capital Partners, BTNY nor, to the
best of their knowledge, any of the persons referred to Item 5, paragraph (a)
had any transactions in shares of Common Stock within the last 60 days.
<TABLE>
<CAPTION>
PRICE PER
IDENTITY TRADE DATE TRANSACTION QUANTITY SHARE
- -------------------- ------------ ---------------- -------- ---------
<S> <C> <C> <C> <C>
BT Capital Partners 07/30/97 Private Purchase 634,173 $ 0.01
</TABLE>
<PAGE>
EXHIBIT INDEX
DOCUMENT
1. Corporate Structure of BTNY and Certain Subsidiaries.
2. Joint filing statement pursuant to Rule 13d-1(f)(1).
3. Voting Agreement dated as of July 30, 1997 among Michael Lerner, Michael S.
Bernstein, BT Capital Partners, Inc. and Bear, Stearns & Co. Inc.
4. Warrant dated as of July 30, 1997 to purchase Common Stock of Safety
1st, Inc.
5. Warrant dated as of July 30, 1997 to purchase Common Stock of Safety
1st, Inc.
<PAGE>
EXHIBIT 1
BT Capital Partners is classified as a corporation and is an indirect
subsidiary of Bankers Trust New York Corporation, which is classified as a
holding company. The chain of ownership from Bankers Trust New York
Corporation to the Purchaser is shown below.
Bankers Trust New York Corporation
100%
BT Holdings (New York), Inc.
100%
BT Capital Partners, Inc.
<PAGE>
EXHIBIT 2
JOINT FILING STATEMENT
Pursuant to Rule 13d-1(f)(1), each of the undersigned hereby consents to
the joint filing of a statement on Schedule 13D with respect to shares of
Common Stock, $0.01 par value, of Safety 1st, Inc., on behalf of each of them.
Dated: _______________
BANKERS TRUST NEW YORK CORPORATION
By:________________________________
Name:
Title:
BT CAPITAL PARTNERS, INC.
By:________________________________
Name:
Title:
<PAGE>
EXHIBIT 3
VOTING AGREEMENT, dated as of July 30, 1997 (this
"Agreement"), among SAFETY 1ST, INC., a Massachusetts
Corporation (the "Company"), MICHAEL LERNER
("Lerner"), MICHAEL S. BERNSTEIN ("Bernstein", and
together with Lerner, the "Stockholders"), BT CAPITAL
PARTNERS, INC. ("BT") and BEAR, STEARNS & CO.
INC. ("BS") (each, an "Investor," and collectively, the
"Investors").
As of the date hereof each Stockholder owns (either beneficially or
of record) the number of shares of Common Stock, par value $.01 per share
(the "Safety 1st Stock"), of the Company set forth opposite such
Stockholder's name on Exhibit A hereto (all such shares and any shares
hereafter acquired by the Stockholders prior to the termination of this
Agreement including shares of Safety 1st Stock, and shares of Safety 1st
Stock obtained by a Stockholder upon the exercise, exchange or conversion of
any option, warrant or other security, being referred to herein as the
"Shares").
Pursuant to the Stock and Warrant Purchase Agreement dated as of the
date hereof, among the Company and the Investors (the "Purchase Agreement"),
the Company is issuing and the Investors are purchasing Preferred Stock and
Warrants for an aggregate purchase price of $15,000,000. In order to induce
the Investors to enter into the Stock and Warrant Purchase Agreement and
consummate the transactions contemplated thereby, the Company has requested
that each Stockholder agree, and each Stockholder has agreed, to grant the
Company irrevocable proxies to vote his Shares in favor of appointing one
Director designated by each of the Investors to the Board of Directors of the
Company (the "Board") on the terms and conditions set forth in this Agreement.
ACCORDINGLY, in consideration of the promises and of the mutual
agreements and covenants set forth herein and in the Stock and Warrant
Purchase Agreement, the parties hereto agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder, severally and not jointly, hereby represents and
warrants to the Investors, as follows:
1.1. Due Authority.
(a) Such Stockholder has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby. This Agreement has been duly executed and delivered by or on behalf
of such Stockholder and, constitutes a legal, valid and binding obligation of
such Stockholder, enforceable against such Stockholder in accordance with its
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency, moratorium or similar laws affecting creditors' rights generally
and subject, as to enforceability, to the effect of general principles of
equity (regardless of whether such enforceability is considered in proceeding
in equity or at law).
(b) There is no beneficiary or holder of a voting trust certificate
or other interest of any trust of which such Stockholder is trustee whose
consent is required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
<PAGE>
(c) If such Stockholder is married and such Stockholder's Shares
constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding agreement of,
such Stockholder's spouse, enforceable against such person in accordance with
its terms.
1.2. No Conflict; Consents.
(a) The execution and delivery of this Agreement by such
Stockholder do not, and the performance of the transaction contemplated by
this Agreement by such Stockholder and the compliance by such Stockholder
with any provisions hereof shall not (i) conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to such Stockholder or
by which such Stockholders assets are bound or affected, (ii) result in any
breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of such Stockholder's assets
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which such
Stockholder is a party or by which such Stockholder or such Stockholder's
assets are bound or affected or (iii) violate any order, writ, injunction,
decree, judgment, order, statute, rule or regulation applicable to such
Stockholder or any of such Stockholder's properties or assets.
(b) The execution and delivery of this Agreement by such
Stockholder do not, and the performance of this Agreement by such Stockholder
shall not, require any consent, approval, authorization or permit of, or
filing with or notification to, any governmental or regulatory authority
except for applicable requirements, if any, of the Securities Exchange Act of
1934, as amended, and except where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent or delay the performance by such Stockholder
of his, her or its obligations under this Agreement in any material respect.
1.3. Title to Shares.
(a) Such Stockholder is the record or beneficial owner of his
Shares free and clear of any proxy or voting restriction other than pursuant
to this Agreement. The Shares set forth opposite such Stockholder's name on
Exhibit A hereto constitute all of the shares of Safety 1st Stock owned of
record or beneficially by such Stockholder.
(b) Except as noted on Exhibit A, such Stockholder has sole power
of disposition with respect to all the Shares set forth opposite such
Stockholder's name on Exhibit A hereto and the sole voting power with respect
to the matters set forth in Article II hereof and the sole power to demand
dissenter's or appraisal rights, in each case with respect to all of the
Shares set forth opposite such Stockholder's name on Exhibit A hereto, with
no restrictions on such rights, subject to applicable federal securities laws
and the terms of this Agreement.
1.4. No Encumbrances.
Except as noted on Exhibit A, such Stockholder's Shares and the
certificates representing such Shares are now and at all times during the
Term will be held by such Stockholder, or by a nominee or custodian for the
benefit of such Stockholder, free and clear of all liens, claims, security
interests, proxies, voting trusts or agreements, understandings or
arrangements or any other encumbrances whatsoever except for any such
encumbrances or proxies arising hereunder, provided that nothing herein shall
prevent the bona fide pledge of such Stockholder's Shares, so long as the
pledgee thereof (except in the case of the pledges referred to on Exhibit A)
agrees to be subject to the terms hereof or such other
<PAGE>
agreement with provisions reasonably acceptable to the Investors that provide
for the proxy agreement to remain in full force and effect.
1.5. Acknowledgment of Reliance.
Such Stockholder understands and acknowledges that the Investors are
entering into the Stock and Warrant Purchase Agreement in reliance upon such
Stockholder's execution and delivery of this Agreement.
ARTICLE II
VOTING OF SHARES
2.1. Voting of Shares; Further Assurances.
(a) Each Stockholder (which term under this Section 2.1 shall be
deemed to include each of the Investors), with respect to those Shares that
such Stockholder owns of record, does hereby, during and for the Term, agree
to vote (except as noted on Exhibit A) each of such Shares at every annual,
special or adjourned meeting of the stockholders of the Company to authorize
the Company to take all actions necessary to cause the Company to be managed
at all times by a Board which shall be comprised (x) so long as BT owns at
least 5% of the 10,155,626 Common Equivalents (as hereinafter defined) which
are outstanding on the date hereof (comprised of 7,187,288 shares of issued
and outstanding shares of Common Stock, 1,699,993 shares of Common Stock
issuable pursuant to outstanding options granted pursuant to the Stock Option
Plans (as defined in the Purchase Agreement) and out of plan grants and
1,268,345 shares of Common Stock issuable pursuant to the Warrants (as
defined in the Purchase Agreement) as the same may be adjusted by stock
splits, consolidations, reclassifications, reorganizations or like
adjustments; provided, that for the purpose of calculating the foregoing
percentage of Common Equivalents there shall be excluded any changes in the
number of Common Equivalents outstanding and the number of Common Equivalents
owned by the Investors resulting from any adjustments made pursuant to
Sections 4(c) or (d) of the Warrants), of one Director designated by BT, and
(y) so long as BS owns at least 5% of the 10,155,626 Common Equivalents (as
hereinafter defined) which are outstanding on the date hereof (comprised of
7,187,288 shares of issued and outstanding shares of Common Stock, 1,699,993
shares of Common Stock issuable pursuant to outstanding options granted
pursuant to the Stock Option Plans (as defined in the Purchase Agreement) and
out of plan grants and 1,268,345 shares of Common Stock issuable pursuant to
the Warrants (as defined in the Purchase Agreement) as the same may be
adjusted by stock splits, consolidations, reclassifications, reorganizations
or like adjustments; provided, that for the purpose of calculating the
foregoing percentage of Common Equivalents there shall be excluded any
changes in the number of Common Equivalents outstanding and the number of
Common Equivalents owned by the Investors resulting from any adjustments made
pursuant to Sections 4(c) or (d) of the Warrants), of one Director designated
by BS. In this Section 2.1 (a) the term "Common Equivalents" shall mean a
share of Common Stock or the right to acquire a share of Common Stock
pursuant to a Warrant or Stock Option Plans and out of plan stock option
grants.
(b) For the purposes of this Agreement, "Term" shall mean the
period from the execution of this Agreement, until the earlier to occur of
(x) the date that both BT and BS cease to have the right to designate a
Director under Section 2.1(a), (y) the tenth anniversary of the date hereof
and (z) the occurrence of the situation described in (i) of the definition of
Change of Control (as defined in the Certificate of Designation of the
Company dated July 28, 1997) with respect to 51% or more of the total voting
stock of the Company (and not 30%) or of the occurrence of any of the
situations described in (ii) of the definition of Change of Control (as
defined in the Certificate of Designation of the Company dated July 28,
1997).
<PAGE>
Each Stockholder shall perform such further acts and execute such
further documents and instruments as may reasonably be required to vest in
the Company the power to carry out the intent and provisions of this
Agreement.
2.2. Certain Events.
Each Stockholder agrees that this Agreement and the obligations
hereunder shall attach to such Stockholder's Shares and shall be binding upon
any person or entity to which legal or beneficial ownership of such Shares
shall pass, whether by operation of law or otherwise, including without
limitation such Stockholder's heirs, guardians, administrators or successors
or as a result of any divorce.
2.3.Company Obligation.
The Company undertakes and agrees with each of the Investors and the
Stockholders that it shall during the Term (a) use its best efforts to cause
the Directors designated by BT and BS in accordance with Section 2.1(a) to be
nominated to the Board, and (b) without limiting the generality of Section
2.3 (a), use its best efforts to cause that, as of the Closing (as defined in
the Purchase Agreement) the original designees of BT and BS, being,
respectively, James Dworkin and John Howard, shall be appointed to the Board.
2.4.Cooperation of Other Stockholders.
Each Stockholder agrees to cooperate with the Company in all
reasonable respects in complying with the terms and provisions of the letter
agreement between the Company and Investor, a copy of which is attached
hereto as Exhibit B, regarding small business matters (the "Small Business
Sideletter"), including without limitation, voting to approve amending the
Company's Articles of Organization, the Company's by-laws or this Agreement
in a manner reasonably requested by Investor or any Regulated Holder (as
defined in the Small Business Sideletter) entitled to make such request
pursuant to the Small Business Sideletter. Anything contained in this
Section 2.4 to the contrary notwithstanding, no Stockholder shall be required
under this Section 2.4 to take any action that would adversely affect in any
material respect such Stockholder's rights under this Agreement or as a
stockholder of the Company.
2.5. Covenant Not to Amend.
The Company and each Stockholder agree not to amend or waive the
voting or other provisions of the Company's Articles of Organization, the
Company's by-laws or this Agreement if such amendment or waiver would cause
any Regulated Holder to have a Regulatory Problem (as defined in the Small
Business Sideletter), provided that any such Regulated Holder notifies the
Company that it would have a Regulatory Problem promptly after it has notice
of such proposed amendment or waiver.
ARTICLE III
TRANSFERS
On or before the expiration of the Term no Stockholder shall
Transfer (as hereinafter defined) any Shares to a Person (as hereinafter
defined) not already a party to this Agreement as a Stockholder unless and
until such Person executes and delivers to the Company a written agreement,
in form and substance reasonably acceptable to the Investors, pursuant to
which such Person shall (unless he is already a Stockholder) agree to become
a party to, and to be bound by and to comply with the provisions of, this
Agreement in the same capacity and to the same extent as the Stockholder
Transferring such Shares. Any Transfer of Shares that is not made in
compliance with the provisions hereof shall be void ab initio. The foregoing
provisions of this Article III shall not apply to a Transfer of Shares by a
<PAGE>
Stockholder pursuant to Public Sale (as hereinafter defined); and with
respect to a Transfer pursuant to a Public Sale, the transferee shall take
the Shares free and clear of any provisions of this Agreement. In this
Article III "Person" shall be construed broadly and shall include an
individual, a partnership, a Company, an association, a joint stock company,
a limited liability company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof; "Public Sale" means any sale of securities of the
Company to the public pursuant to an offering registered under the Securities
Act of 1933, as amended, or to the public through a broker, dealer or market
maker pursuant to the provisions of Rule 144 promulgated by the Securities
and Exchange Commission under the Securities Act of 1933, as amended, as such
rule may be amended from; "Transfer" shall be construed broadly and shall
include any transfer (whether voluntary, involuntary or by operation of law)
of securities or any interest therein, including without limitation, by way
of issuance, sale, participation, pledge, gift, bequeath, intestate transfer,
distribution, liquidation, merger or consolidation.
ARTICLE IV
GENERAL PROVISIONS
4.1. Severability.
If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible to the fullest
extent pertained by applicable law in an acceptable manner to the end that
the transactions contemplated hereby are fulfilled to the extent possible.
4.2. Entire Agreement.
This Agreement constitutes the entire agreement of the parties and
supersedes all prior agreements and undertakings, both written and oral,
between the parties, or any of them, with respect to the subject matter
hereof.
4.3. Amendments.
This Agreement may not be modified, amended, altered or
supplemented, except upon the execution and delivery of a written agreement
executed by the parties hereto; provided that Exhibit A hereto may be
supplemented by the Company by adding the name and other relevant information
concerning any stockholder of the Company who agrees to be bound by the terms
of this Agreement without the agreement of any other party hereto, and
thereafter such added stockholder shall be treated as a "Stockholder" for all
purposes of this Agreement.
<PAGE>
4.4. Assignment.
This Agreement shall not be assigned by operation of law or
otherwise; provided that this Agreement may be assigned to an affiliate of
such Stockholder so long as such affiliate shall continue to be bound by the
obligations hereof as a Stockholder hereunder.
4.5. Parties in Interest.
This Agreement shall be binding upon and inure solely to the benefit
of each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any person any right, benefit or remedy of
any nature whatsoever under or by reason of this Agreement.
4.6. Specific Performance.
The parties hereto agree that irreparable damage would occur in the
event any provision of this Agreement was not performed in accordance with
the terms hereof and that the parties shall be entitled to an injunction to
prevent breaches of this Agreement and specific performance of the terms
hereof, in addition to any other remedy at law or in equity.
4.7. Further Assurances.
At the other party's request and without further consideration, each
party hereto shall execute and deliver such additional documents and take all
such further action as may be necessary or desirable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.
4.8. Governing Law; Waiver of Jury Trial.
(a) All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed and enforced in
accordance with the domestic laws of the Commonwealth of Massachusetts,
without giving effect to any choice or conflict of law provision or rule
(whether in the Commonwealth of Massachusetts or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the
Commonwealth of Massachusetts. In furtherance of the foregoing, the internal
law of the Commonwealth of Massachusetts will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of
law or conflict of law analysis, the substantive law of some other
jurisdiction would ordinarily or necessarily apply.
(b) BECAUSE DISPUTES ARISING IN CONNECTION WITH COMPLEX FINANCIAL
TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED BY AN EXPERIENCED AND
EXPERT PERSON AND THE PARTIES WISH APPLICABLE LAWS TO APPLY (RATHER THAN
ARBITRATION RULES), THE PARTIES DESIRE THAT THEIR DISPUTES BE RESOLVED BY A
JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE, TO ACHIEVE THE BEST
COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF ARBITRATION, THE
PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES UNDER THIS
AGREEMENT OR ANY DOCUMENTS RELATED HERETO.
<PAGE>
4.9. Counterparts.
This Agreement may be executed in one or more counterparts, and by
the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
* * * * *
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Voting Agreement
as of the date first written above.
SAFETY 1ST, INC.
By:
-------------------------------
Name:
Title:
BT CAPITAL PARTNERS, INC.
By:
-------------------------------
Name:
Title:
BEAR, STEARNS & CO. INC.
By:
-------------------------------
Name:
Title:
-----------------------------------
MICHAEL LERNER
-----------------------------------
MICHAEL S. BERNSTEIN
<PAGE>
Exhibit A
Name and Address Number of Shares of Safety 1st,
of Stockholder Inc. Owned by Stockholder
---------------- --------------------------------
Michael Lerner 2,990,667*
c/o Safety 1st, Inc.
210 Boylston St.
Chestnut Hill, MA 02167
Michael S. Bernstein 744,901*
c/o Safety 1st, Inc.
210 Boylston St.
Chestnut Hill, MA 02167
* Exceptions to Sections 1.3(b) and 1.4:
Pledge Agreement dated January 31, 1997, between Michael Lerner, as Pledgor,
and Fleet National Bank, as Agent for itself, The First National Bank of
Boston and USTrust, pledging 27,043 shares of Safety 1st common stock. Upon
default of obligations to the Pledgee, Pledgee has the right to vote these
shares.
Pledge Agreement dated January 31, 1997, between Michael Bernstein, as
Pledgor, and Fleet National Bank, as Agent for itself, The First National
Bank of Boston and USTrust, pledging 6,761 shares of Safety 1st common stock.
Upon default of obligations to the Pledgee, Pledgee has the right to vote
these shares.
<PAGE>
EXHIBIT B
July 30, 1997
Safety lst, Inc.
210 Boylston St.
Chestnut Hill, MA 02167
Ladies and Gentlemen:
Reference is made to that certain Stock and Warrant Purchase
Agreement (the "Purchase Agreement"), dated as of the date hereof, among
Safety lst, Inc. (the "Company"), BT Capital Partners, Inc. ("Investor"), and
the other parties identified therein, pursuant to which Investor is
purchasing shares of the Company's Series A Preferred Stock and Warrants to
purchase shares of the Company's Common Stock (collectively referred to
herein as the "Shares").
Investor is a Small Business Investment Company ("SBIC") licensed by
the United States Small Business Administration ("SBA"). In order for
Investor to acquire and hold the Shares, it must obtain from the Company
certain representations and rights as set forth below. As a material
inducement to Investor to enter into the Purchase Agreement and to purchase
the Shares, the Company hereby makes the following representations and
warranties and agrees to comply with the following covenants:
(a) Small Business Matters.
(1)The Company, together with its "affiliates" (as that term is
defined in Title 13, Code of Federal Regulations, Section 121.103), is a
"small business concern" within the meaning of the Small Business Investment
Act of 1958, as amended ("SBIA"), and the regulations thereunder, including
Title 13, Code of Federal Regulations, Section 121.301(c). The information
set forth in the Small Business Administration Forms 480, 652 and Parts A and
B of Form 1031 regarding the Company and its affiliates, when delivered to
Investor, will be accurate and complete and will be in form and substance
acceptable to Investor. Copies of such forms shall be completed and executed
by the Company and delivered to Investor at the closing of the sale of the
Shares under the Purchase Agreement (the "Closing").
(2)The proceeds from the sale of the Shares will be used by the
Company to (1) repay in part indebtedness due and payable under the Existing
Credit Agreement (as defined in the Purchase Agreement), (2) pay expenses
related to the transactions contemplated by the Purchase Agreement and (3)
for ongoing working capital requirements. No portion of such proceeds (i)
will be used to provide capital to a corporation licensed under the Small
Business Investment Act of 1958, as amended ("SBIA"), (ii) will be used to
acquire farm land, (iii) will be used to fund production of a single item or
defined limited number of items, generally over a defined production period,
and such production will constitute the majority of the activities of the
Company and its Subsidiaries (examples include motion pictures and electric
generating plants), or (iv) will be used for any purpose contrary to the
public interest (including, but not limited to, activities which are in
violation of law) or inconsistent with free competitive enterprise, in each
case, within the meaning of 13 C.F.R. Section 107.720.
(3)Neither the Company's nor any of its Subsidiaries' primary
business activity involves, directly or indirectly, providing funds to
others, the purchase or discounting of debt obligations, factoring or
long-term leasing of equipment with no provision for maintenance or repair,
and neither the Company nor any of its Subsidiaries is classified under Major
Group 65 (Real Estate) of the SIC Manual. The assets of the business of the
Company and its Subsidiaries (the "Business") will not be reduced or
consumed, generally without replacement, as the life of the Business
progresses, and the nature of the
<PAGE>
Business does not require that a stream of cash payments be made to the
Business's financing sources, on a basis associated with the continuing sale
of assets (examples of such businesses would include real estate development
projects and oil and gas wells). (See 13 CFR Section 107.720)
(4)The proceeds from the sale of the Shares will not be used
substantially for a foreign operation; and at Closing or within one year
thereafter, no more than 49 percent of the employees or tangible assets of
the Company and its Subsidiaries will be located outside the United States
(unless the Company can show, to SBA's satisfaction, that the proceeds from
the sale of the Shares will be used for a specific domestic purpose). This
subsection (d) does not prohibit such proceeds from being used to acquire
foreign materials and equipment or foreign property rights for use or sale in
the United States.
(5)To the best knowledge of the Company, each SBIC that owns
any Securities issued by the Company, together with a description of the
kinds and amounts of Securities held, are listed on Schedule I hereto.
Without the Investor's consent, the Company will not issue Securities to any
SBIC in the future if such issuance would cause Investor to be deemed to be a
member of an "Investor Group" in "Control" of the Company (as such terms are
defined in 13 CFR Section 107.865).
(b) Small Business Matters.
(1)Regulatory Compliance Cooperation.
a)In the event that Investor determines that it has a
Regulatory Problem, the Company agrees to take all such actions as are
reasonably requested by Investor in order (A) to effectuate and facilitate
any transfer by Investor of any Securities of the Company then held by
Investor to any Person designated by Investor, (B) to permit Investor (or any
of its Affiliates) to exchange all or any portion of the voting Securities
then held by such Person on a share-for-share basis for shares of a class of
non-voting Securities of the Company, which non-voting Securities shall be
identical in all respects to such voting Securities, except that such new
Securities shall be non-voting and shall be convertible into voting
Securities on such terms as are requested by Investor in light of regulatory
considerations then prevailing, and (C) to continue and preserve the
respective allocation of the voting interests with respect to the Company
arising out of Investor's ownership of voting Securities and/or provided for
in the Voting Agreement before the transfers and amendments referred to above
(including entering into such additional agreements as are requested by
Investor to permit any Person(s) designated by Investor to exercise any
voting power which is relinquished by Investor upon any exchange of voting
Securities for nonvoting Securities of the Company); and the Company shall
enter into such additional agreements, adopt such amendments to this
Agreement, the Company's Articles of Organization and the Company's By-laws
and other relevant agreements and taking such additional actions, in each
case as are reasonably requested by Investor in order to effectuate the
intent of the foregoing. If Investor elects to transfer Securities of the
Company to a Regulated Holder in order to avoid a Regulatory Problem, the
Company shall enter into such agreements with such Regulated Holder as it may
reasonably request in order to assist such Regulated Holder in complying with
applicable laws, and regulations to which it is subject. Such agreements may
include restrictions on the redemption, repurchase or retirement of
Securities of the Company that would result or be reasonably expected to
result in such Regulated Holder holding more voting securities or total
securities (equity and debt) than it is permitted to hold under such laws and
regulations.
b)In the event Investor has the right to acquire any of
the Company's Securities from the Company or any other Person (as the result
of a preemptive offer, pro rata offer or otherwise), at Investor's request
the Company will offer to sell to Investor non-voting Securities (or, if the
Company is not the proposed seller, will arrange for the exchange of any
voting securities for non-voting securities immediately prior to or
simultaneous with such sale) on the same terms as would have existed
<PAGE>
had Investor acquired the Securities so offered and immediately requested
their exchange for non-voting Securities pursuant to subsection (i) above.
c)In the event that any Affiliate of the Company ever
offers to issue any of its Securities to Investor, then the Company will
cause such Affiliate to enter into agreements with Investor substantially
similar to this Section 2(a) and Section 2(b) below.
d)In the event that the Company is required to authorize a
class of non-voting Securities in order to comply with the foregoing
provisions if the Investor has a Regulatory Problem, Investor agrees to take
all such actions as are reasonably requested by the Company in order (A) to
provide the Company with a sufficient period of time as is reasonably
necessary to create such class of non-voting Securities and (B) to reimburse
the Company all its reasonable expenses in order to create a class of
non-voting Securities.
(2)Information Rights and Related Covenants.
a)Promptly after the end of each fiscal year (but in any
event prior to February 28 of each year), the Company shall provide to
Investor a written assessment, in form and substance reasonably satisfactory
to Investor, of the economic impact of Investor's financing hereunder,
specifying the full-time equivalent jobs created or retained, the impact of
the financing on the consolidated revenues and profits of the Business and on
taxes paid by the Business and its employees (See 13 CFR Section
107.630(e)).
b)Upon the request of Investor or any of their Affiliates,
the Company will (A) provide to such Person such financial statements and
other information as such Person may from time to time reasonably request for
the purpose of assessing the Company's financial condition and (B) furnish to
such Person all information reasonably requested by it in order for it to
prepare and file SBA Form 468 and any other information reasonably requested
or required by any governmental agency asserting jurisdiction over such
Person.
c)For a period of one year following the date hereof,
neither the Company nor any of its Subsidiaries will change its business
activity if such change would render the Company ineligible to receive
financial assistance from an SBIC under the SBIA and the regulations
thereunder (within the meanings of 13 CFR Sections 107.720 and 107.760(b)).
d)The Company will at all times comply with the
non-discrimination requirements of 13 C.F.R., Parts 112, 113 and 117.
(c) Stockholder Cooperation. The Company shall use its best
efforts to cause the provisions attached hereto as Exhibit A to be included
in the Voting Agreement.
(d) Definitions.
"Affiliate" means, with respect to any Person, (i) a director,
officer or stockholder of such Person, (ii) a spouse, parent, sibling or
descendant of such Person (or spouse, parent, sibling or descendant of any
director or executive officer of such Person), and (iii) any other Person
that, directly or indirectly through one or more intermediaries, Controls, or
is Controlled by, or is under common Control with, such Person.
"Control" means, with respect to any Person, the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ownership of voting
securities, by contract or otherwise.
<PAGE>
"Person" shall be construed broadly and shall include an
individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an
unincorporated organization or a governmental entity (or any department,
agency or political subdivision thereof).
"Regulated Holder" means any holder of the Company's Securities
that is (or that is a subsidiary of a bank holding company that is) subject
to the various provisions of Regulation Y of the Board of Governors of the
Federal Reserve Systems, 12 C.F.R., Part 225 (or any successor to Regulation
Y).
"Regulatory Problem" means (i) any set of facts or
circumstances wherein it has been asserted by any governmental regulatory
agency (or Investor believes that there is a significant risk of such
assertion) that such Person (or any bank holding company that controls such
Person) is not entitled to hold, or exercise any material right with respect
to, all or any portion of the Securities of the Company which such Person
holds or (ii) when such Person and its Affiliates would own, control or have
power (including voting rights) over a greater quantity of Securities of the
Company than is permitted under any law or regulation or any requirement of
any governmental authority applicable to such Person or to which such Person
is subject.
"Securities" means, with respect to any Person, such Person's
capital stock or any options, warrants or other Securities which are directly
or indirectly convertible into, or exercisable or exchangeable for, such
Person's capital stock (whether or not such derivative Securities are issued
by the Company). Whenever a reference herein to Securities refers to any
derivative Securities, the rights of Investor shall apply to such derivative
Securities and all underlying Securities directly or indirectly issuable upon
conversion, exchange or exercise of such derivative Securities.
"Subsidiary" means, with respect to any Person, any other
Person of which the securities having a majority of the ordinary voting power
in electing the board of directors (or other governing body), at the time as
of which any determination is being made, are owned by such first Person
either directly or through one or more of its Subsidiaries.
"Voting Agreement" means the Voting Agreement to be entered
into on the date of the Closing among the Company and certain shareholders of
the Company.
* * * * *
<PAGE>
Please indicate your acceptance of the terms of this letter
agreement by returning a signed copy to the undersigned.
BT Capital Partners, Inc.
By: ___________________________
Name:
Title:
Agreed as of the date
first set forth above:
Safety lst, Inc.
By:____________________________
Name:
Title:
<PAGE>
Schedule I
SBIC Securities
- ---- ------------
BT Capital Partners, Inc. The Shares
<PAGE>
EXHIBIT A
INSERT INTO VOTING AGREEMENT
SECTION __. Regulatory Matters.
(1) Cooperation of Other Stockholders. Each Stockholder agrees to
cooperate with the Company in all reasonable respects in complying with the
terms and provisions of the letter agreement between the Company and
Investor, a copy of which is attached hereto as Exhibit __, regarding small
business matters (the "Small Business Sideletter"), including without
limitation, voting to approve amending the Company's Certificate of
Incorporation, the Company's by-laws or this Agreement in a manner reasonably
requested by Investor or any Regulated Holder (as defined in the Small
Business Sideletter) entitled to make such request pursuant to the Small
Business Sideletter. Anything contained in this Section __ to the contrary
notwithstanding, no Stockholder shall be required under this Section __ to
take any action that would adversely affect in any material respect such
Stockholder's rights under this Agreement or as a stockholder of the Company.
(2) Covenant Not to Amend. The Company and each Stockholder agree
not to amend or waive the voting or other provisions of the Company's
Articles of Organization, the Company's by-laws or this Agreement if such
amendment or waiver would cause any Regulated Holder to have a Regulatory
Problem (as defined in the Small Business Sideletter), provided that any such
Stockholder notifies the Company that it would have a Regulatory Problem
promptly after it has notice of such amendment or waiver.
<PAGE>
<PAGE>
EXHIBIT 4
WARRANT
THE TRANSFER, SALE OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AND THE SECURITIES WHICH MAY BE ACQUIRED ON THE EXERCISE HEREOF
ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE STOCK AND WARRANT PURCHASE
AGREEMENT DATED AS OF JULY 30, 1997 AMONG SAFETY 1ST, INC., A MASSACHUSETTS
CORPORATION (THE "ISSUER"), BT CAPITAL PARTNERS, INC. AND BEAR, STEARNS & CO.
INC., AS SUCH AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM
TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN
FULFILLED. A COPY OF SUCH AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE
PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS CERTIFICATE, BY
ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF SUCH
AGREEMENTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES WHICH MAY BE
ACQUIRED ON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY,
SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
No. of Shares Warrant No. U-1
of Common Stock: 570,755
WARRANT
to Purchase Common Stock of
SAFETY 1ST, INC.
THIS IS TO CERTIFY THAT BT Capital Partners, Inc., or its registered
assigns, is entitled to purchase in whole or in part from time to time from
Safety 1st, Inc., a Massachusetts corporation (the "Issuer"), at any time on and
after the Effective Date (as hereinafter defined), but not later than 5:00 p.m.,
New York time, on July 30, 2007 (the "Expiration Date"), 570,755 shares of
Common Stock (as hereinafter defined) at a purchase price of $0.01 per share
(the "Exercise Price"), subject to the terms and conditions provided herein and
in the Purchase Agreement (as hereinafter defined). The number of shares of
Common Stock for which this Warrant shall be exercisable and the Exercise Price
are subject to adjustment from time to time as provided herein.
This Warrant is issued pursuant to the Stock and Warrant Purchase
Agreement dated as of July 30, 1997 (as modified and supplemented and in effect
from time to time, the "Purchase Agreement") among the Issuer, BT Capital
Partners, Inc. and Bear, Stearns & Co. Inc. and is subject to the provisions of
the Purchase Agreement and the Registration Rights Agreement (as hereinafter
defined).
SECTION 1. Certain Definitions. (a) Each capitalized term used
herein without definition shall have the meaning assigned thereto (or
incorporated by reference) in the Purchase Agreement and in the Exhibits
thereto.
<PAGE>
(b) As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1 or in other provisions of this
Warrant in the singular to have the same meanings when used in the plural and
vice versa):
"Affiliate" means, with respect to any specified Person, any other
Person that, directly or indirectly, controls, is under common control with, or
is owned or controlled by, such specified Person. For purposes of this
definition, (i) "control" means, with respect to any specified Person, the power
to direct the management or policies of the specified Person through the
ownership of voting securities, by contract, voting agreement or otherwise, and
(ii) the terms "controlling", "control with" and "controlled by", etc. shall
have meanings correlative to the foregoing.
"Appraisal Procedure", if applicable, shall mean the following
procedure to determine the fair market value, as to any security, for purposes
of the definition of "Current Market Price" or the fair market value, as to any
other property (in either case, the "valuation amount"). The valuation amount
shall be determined in good faith jointly by the Board and the Majority Holders;
provided, however, that if such parties are not able to agree on the valuation
amount within a reasonable period of time (not to exceed twenty (20) Business
Days) the valuation amount shall be determined by an investment banking firm of
national recognition, which firm shall be reasonably acceptable to the Board and
the Majority Holders. If the Board and the Majority Holders are unable to agree
upon an acceptable investment banking firm within ten (10) Business Days after
the date either party proposed that one be selected, the investment banking firm
will be selected by an arbitrator located in New York City, New York, selected
by the American Arbitration Association (or if such organization ceases to
exist, the arbitrator shall be chosen by a court of competent jurisdiction).
The arbitrator shall select the investment banking firm (within ten (10) days of
his appointment) from a list, jointly prepared by the Board and the Majority
Holders, of not more than six investment banking firms of national standing in
the United States, of which no more than three may be named by the Board and no
more than three may be named by the Majority Holders. The arbitrator may
consider, within the ten-day period allotted, arguments from the parties
regarding which investment banking firm to choose, but the selection by the
arbitrator shall be made in its sole discretion from the list of six. The Board
and the Majority Holders shall submit to the investment banking firm their
respective determinations of the valuation amount, and any supporting arguments
and other data as they may desire, within ten (10) days of the appointment of
the investment banking firm, and the investment banking firm shall as soon as
practicable thereafter make its own determination of the valuation amount. The
final valuation amount for purposes hereof shall be the average of the two
valuation amounts closest together, as determined by the investment banking
firm, from among the valuation amounts submitted by the Issuer and the Majority
Holders and the valuation amount calculated by the investment banking firm.
Such determination of the final valuation amount by such investment banking firm
shall be final and binding upon the parties. The fees and expenses of the
investment banking firm and arbitrator (if any) used to determine the valuation
amount shall be paid by the Issuer or the applicable Warrant Holders (on a pro
rata basis), whichever party's valuation amount is excluded from the average
referred to above, unless the investment banking firm's valuation amount is
excluded from the average, in which case such fees and expenses will be divided
evenly between the Issuer and such Warrant Holders. If required by any such
investment banking firm or arbitrator, the Issuer shall execute a retainer and
engagement letter containing reasonable terms and conditions, including, without
limitation, customary provisions concerning the rights of indemnification and
contribution by the Issuer in favor of such investment banking firm or
arbitrator and its officers, directors, partners, employees, agents and
Affiliates.
"Articles of Organization" means the Restated Articles of Organization
of the Issuer as amended and restated and in effect at the time in question.
"Board" shall mean the Board of Directors of the Issuer.
"By-laws" means the by-laws of the Issuer, as amended and in effect at
time in question.
<PAGE>
"Common Stock" shall mean the Issuer's Common Stock, par value $.01
per share.
"Convertible Securities" shall have the meaning given to such term in
Section 4(d).
"Current Market Price" shall mean, as to any security, the average of
the closing prices of such security's sales on all domestic securities exchanges
on which such security may at the time be listed, or, if there have been no
sales on any such exchange on any day, the average of the highest bid and lowest
asked prices on all such exchanges at the end of such day, or, if on any day
such security is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York City time, on such
day, or, if on any day such security is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization (and in each such case
(i) averaged over a period of 21 days consisting of the day immediately
preceding the day as of which "Current Market Price" is being determined and the
20 consecutive Business Days prior to such immediately preceding day and
(ii) excluding any trades that are not bona fide, arm's length transactions).
If at any time such security is not listed on any domestic securities exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the
"Current Market Price" of such security shall be the fair market value thereof
as determined in accordance with the Appraisal Procedure, using an appropriate
valuation method, assuming an arms-length sale to an independent party. In
determining the fair market value of the Common Stock, a sale of all of the
issued and outstanding Common Stock of the Issuer will be assumed, without
giving regard to the lack of liquidity of such stock due to any restrictions
(contractual or otherwise) applicable thereto or any discount for minority
interests and assuming the conversion or exchange of all securities then
outstanding that are convertible into or exchangeable for Common Stock and the
exercise of all rights and warrants (including the Warrants) then outstanding
and exercisable to purchase shares of such stock or securities convertible into
or exchangeable for shares of such stock. Common Stock issued in an underwritten
public offering shall be deemed to be issued for fair market value.
"Effective Date" shall mean the date set forth on the signature page
of this Warrant.
"Excluded Stock" shall mean (i) any shares of Common Stock issuable
upon the exercise of any options granted pursuant to the Stock Option Plans, and
(ii) any shares of Common Stock issuable upon exercise of any Warrants.
"Exercise Condition" shall have the meaning assigned to it in
Section 2 hereof.
"Exercise Notice" shall have the meaning assigned to such term in
Section 2 hereof.
"Exercise Price" shall have the meaning assigned to such term in the
first paragraph of this Warrant.
"Expiration Date" shall have the meaning assigned to such term in the
first paragraph of this Warrant.
"Fundamental Documents" means the documents by which any Person (other
than an individual) establishes its legal existence or which govern its internal
affairs. The Fundamental Documents of the Issuer are the Articles of
Organization and By-laws.
"Holder" shall mean the registered holder of this Warrant and the
registered holder of any Warrant Stock issued upon exercise hereof.
<PAGE>
"include" and "including" shall be construed as if followed by the
phrase ", without being limited to,".
"Issuer" shall have the meaning assigned to such term in the first
paragraph of this Warrant.
"Majority Holders" shall mean those Warrant Holders holding (or having
the right to receive upon exercise of Warrants) Warrant Stock representing a
majority of the total amount of Warrant Stock held by, or issuable to, all
Warrant Holders.
"NASDAQ System" shall mean the National Association of Securities
Dealers Automated Quotation System.
"Options" shall have the meaning given to such term in Section 4(d).
"Person" shall be construed in its broadest possible sense and shall
include any individual, corporation, general or limited partnership, joint
venture, association, limited liability company, joint stock company, trust,
business trust, bank, trust company, estate (including any beneficiaries
thereof), unincorporated organization, cooperative, association or governmental
branch, authority, agency or political subdivision thereof.
"Purchase Agreement" shall have the meaning assigned to such term in
the second paragraph of this Warrant.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of July 30, 1997 between the Issuer and the Holders, as
modified and supplemented and in effect from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Series A Preferred Stock" shall mean the Issuer's Series A Preferred
Stock, par value $1 per share.
"Stock Option Plans" shall have the meaning assigned to such term in
the Purchase Agreement and any other stock option plans adopted by the Issuer
and any other grants of stock options made by the Issuer, in each case granted
to employees, directors and independent contractors of the Issuer or its
subsidiaries.
"Voting Agreement" shall mean the Voting Agreement dated as of July
30, 1997 among the Issuer, the Holders and the other signatories thereto, as
modified and supplemented and in effect from time to time.
"Warrant" shall mean this Warrant and all other warrants originally
issued by the Issuer pursuant to the Purchase Agreement and all warrants issued
upon transfer, division, or combination of, or in substitution for, this Warrant
or any such other warrant. All Warrants shall be substantially in the form of
Exhibit D attached to the Purchase Agreement except that the Warrants need not
bear the legends appearing on the first page of this Warrant from and after such
time as the restrictions set forth therein no longer apply.
<PAGE>
"Warrant Holder" shall mean any Person who acquires Warrants or
Warrant Stock pursuant to the provisions of the Purchase Agreement or any
Warrant, including any transferees of Warrants or Warrant Stock.
"Warrant Stock" shall mean (a) all shares of Common Stock issued or
issuable from time to time upon exercise of this Warrant, (b) all other
securities or other property issued or issuable upon any such exercise and
(c) any securities distributed with respect to the securities referred to in the
preceding clauses (a) and (b); provided, however, that the term "Warrant Stock"
shall not include shares of Common Stock or other securities following the time
such shares or other securities have been sold in a public offering registered
under the Securities Act or sold under Rule 144 promulgated thereunder. As used
in this Warrant, the phrase "Warrant Stock then held" shall mean Warrant Stock
held at the time of determination by the Holder, and shall include Warrant Stock
issuable upon exercise of any Warrants held at the time of determination by such
Holder.
SECTION 2. Exercise of Warrant. (a) On and after the Effective Date
and until 5:00 p.m., New York City time, on the Expiration Date, the Holder may
exercise this Warrant, on one or more occasions, on any Business Day, in whole
or in part, by delivering to the Issuer, at its office maintained for such
purpose pursuant to Section 5 hereof, (i) a written notice of the Holder's
election to exercise this Warrant, which notice shall be substantially in the
form of Annex A attached hereto and shall be properly completed (the "Exercise
Notice"), (ii) payment of the Exercise Price (payable as set forth in
Section 2(b) below) for the Warrant Stock as to which this Warrant is being
exercised, and (iii) this Warrant. Except to the extent necessary to cause the
number of shares of Common Stock deliverable as provided in Section 2(b) to be a
whole number of shares, this Warrant shall be exercisable in part only for a
whole number of shares.
(b) At the option of the Holder, the Exercise Price shall be payable
(i) in cash or by certified or official bank check payable to the order of the
Issuer or (ii) by exchange of this Warrant in accordance with the further
provisions of this Section 2(b). In exchange for the portion of this Warrant
that is being exercised at such time, the Holder shall receive the number of
shares of Common Stock determined by multiplying (A) the number of shares of
Common Stock for which this Warrant is being exercised at such time by (B) a
fraction, (1) the numerator of which shall be the difference between (x) Current
Market Price per share of Common Stock at such time and (y) the Exercise Price
per share of Common Stock, and (2) the denominator of which shall be the Current
Market Price per share of Common Stock at such time. The Issuer shall issue a
new Warrant for the portion, if any, of this Warrant not being exercised as
provided in Section 2(f).
(c) Subject to the provisions of Section 2(d), upon receipt of an
Exercise Notice, the aggregate Exercise Price payable and this Warrant, the
Issuer shall, as promptly as practicable and in any event within five (5)
Business Days thereafter, issue to the Holder one or more stock certificates
representing the aggregate number of shares of Common Stock to which the Holder
is entitled and transfer to the Holder of this Warrant appropriate evidence of
ownership of other securities or property (including any cash) to which the
Holder is entitled, in such denominations, and registered or otherwise placed
in, or payable to the order of, such name or names, as may be directed in
writing by the Holder, and shall deliver such stock certificates, evidence of
ownership and any other securities or property (including any cash) to the
Person or Persons entitled to receive the same, together with an amount in cash
in lieu of any fraction of a share (or fractional interest in any other
security), as hereinafter provided. The Issuer shall pay all expenses in
connection with, and any and all documentary, stamp or similar issue or transfer
taxes of the United States or any state thereof payable in respect of, the issue
or delivery of the Warrant Stock upon exercise of this Warrant. However, the
Issuer shall not be required to pay any tax or other charge imposed in
connection with any assignment or transfer involved in the issue of any
certificate or other evidence of ownership of Warrant Stock.
<PAGE>
(d) The Holder's election to exercise this Warrant may, in the sole
discretion of the Holder, be conditioned upon, and in such event, the exercise
shall be subject in all respects to a Change of Control, the Issuer ceasing to
be a reporting company under the Securities and Exchange Act of 1934, as
amended, the consummation of a sale of the Issuer, any public offering of the
Issuer's Common Stock registered under the Securities Act or other similar
transaction involving the Issuer (collectively referred to herein as the
"Exercise Conditions"), as specified in the Exercise Notice, and the Issuer
shall provide the Holder with written notice no less than 20 business days prior
to the occurrence of an Exercise Condition. If any exercise of this Warrant is
so conditioned, then, subject to delivery of the items required by Section 2(b),
the Issuer shall deliver the certificates and other evidence of ownership of
other securities or other property in such manner as the Holder shall direct as
required in connection with the consummation of the transaction upon which the
exercise is conditioned. At any time that the Issuer shall give notice to the
Holder that such transaction has been abandoned or the Issuer has withdrawn from
participation in such transaction, the Issuer shall return the items delivered
pursuant to Section 2(c) and the Holder's election to exercise this Warrant
shall be deemed rescinded.
(e) The stock certificate or certificates or other evidence of
ownership of Warrant Stock to be delivered pursuant to Section 2(c) hereof shall
be deemed to have been issued, and the Holder or any other Person so designated
to be named therein shall, to the extent permitted by law and the Purchase
Agreement, be deemed to have become a holder of record of the Warrant Stock
represented thereby, including having the right to vote any voting securities
included therein or to consent or to receive notice as a shareholder, as of the
date on which the last of the Exercise Notice, payment of the Exercise Price and
this Warrant is received by the Issuer as aforesaid (subject, in the case of an
exercise to which Section 2(d) applies, to the consummation of the transaction
upon which such exercise is conditioned), notwithstanding that the transfer
books of the Issuer shall then be closed or that such certificates or other
evidence of ownership shall not then actually have been delivered to the Holder.
(f) If this Warrant shall have been exercised only in part, the
Issuer shall, at the time of delivery of the certificate or certificates or
other evidence of ownership of Warrant Stock, execute and deliver to the Holder,
without charge, a new Warrant evidencing the rights of the Holder to purchase
the unpurchased Warrant Stock called for by this Warrant, which new Warrant
shall in all other respects be identical to this Warrant, or, at the request of
the Holder, appropriate notation may be made on this Warrant and the same
returned to the Holder.
(g) The Issuer shall not be required to issue any fractional share of
Common Stock (or fractional interest in any other security) upon exercise of
this Warrant. As to any fraction of a share (or fractional interest in any
other security) that the Holder would otherwise be entitled to receive upon such
exercise, the Issuer shall pay a cash adjustment in respect of such fraction in
an amount equal to the same fraction of the Current Market Price per share of
Common Stock (and/or other security) on the date of exercise; provided, however,
that in the event that the Issuer undertakes a reduction in the number of shares
of Common Stock or other securities outstanding, it shall be required to issue
fractional shares or fractional interests in such other securities to the Holder
if the Holder exercises all or any part of this Warrant, unless the Holder shall
have consented in writing to such reduction and provided the Issuer with a
written waiver of its right to receive fractional shares or interests in
accordance with this paragraph. If the Holder shall exercise more than one
Warrant in the same transaction, any payment in respect of fractional shares (or
other fractional interests) shall be based on the final fraction resulting from
aggregating all such exercises.
(h) The Issuer hereby agrees at all times to keep reserved for
issuance and delivery upon exercise of this Warrant such number of its
authorized but unissued shares (or treasury shares) of Common Stock or other
securities of the Issuer from time to time issuable upon exercise of this
Warrant as will be sufficient to permit the exercise in full of this Warrant.
All such shares and other securities shall be duly authorized and, when issued
upon such exercise, shall be validly issued, fully paid and
<PAGE>
non-assessable, free and clear of all liens, security interests, charges and
other encumbrances or restrictions on sale (except to the extent of any
applicable provisions set forth in the Purchase Agreement, Voting Agreement,
Registration Rights Agreement or the Issuer's Fundamental Documents) and free
and clear of all preemptive or similar rights.
(i) If the issuance of any shares of Common Stock or other securities
required to be reserved for purposes of the exercise of this Warrant requires
the registration with, or approval of, any governmental authority or requires
listing on any national securities exchange or national market system before
such shares or other securities may be so issued, the Issuer shall at its
expense use its best efforts to cause such shares to be duly registered,
approved or listed, as the case may be, so that such shares or other securities
may be issued in accordance with the terms hereof; provided, however, that this
provision shall not obligate the Issuer to register such shares or other
securities under the Securities Act or qualify them under state securities or
blue sky laws.
SECTION 3. Transfer, Division and Combination. (a) This Warrant,
all rights hereunder and any Warrant Stock issued or issuable upon exercise
hereof are assignable and transferable, at any time in whole or in part, to any
Person or Persons subject in all cases to the provisions of Article VII of the
Purchase Agreement. Any such transfer shall not require the consent of any
security holder of the Issuer.
(b) Upon a transfer permitted by Section 3(a), this Warrant shall be
transferable upon surrender of this Warrant to the Issuer, together with a
written assignment of this Warrant substantially in the form of Annex B attached
hereto, duly executed by the Holder hereof or such Holder's agent or attorney.
Upon such surrender, the Issuer shall, without charge, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees (and, if the
Holder's entire interest is not being assigned, in the name of the Holder), and
in the denominations specified in such instrument of assignment, and this
Warrant shall promptly be canceled.
(c) This Warrant may be exchanged for, or combined with, other
Warrants upon presentation of this Warrant and any other Warrants with which
this Warrant is to be combined to the Issuer, together with a written notice
specifying the denominations in which a new Warrant or Warrants are to be
issued, signed by the Holder. The Issuer shall execute and deliver a new
Warrant or Warrants to the Holder in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice.
(d) The Issuer shall maintain books for the registration and transfer
of the Warrants, and shall allow each Warrant Holder to inspect such books at
such reasonable times as such holder shall request.
SECTION 4. Adjustments.
(a) Dividends and Distributions. If at any time the Issuer shall pay
any dividend or make any other distribution to holders of its Common Stock of
any cash, evidence of indebtedness or other property (including any rights or
warrants to purchase any securities of the Issuer) of any nature whatsoever
(other than as contemplated by subsections (b), (c)(i)(A) and (d)(i)(A) of this
Section 4), the Issuer shall at the same time pay or distribute to the Holder
(whether or not the Holder exercises this Warrant) the cash evidence of
indebtedness or other property the Holder would have been entitled to receive if
such Holder had exercised this Warrant immediately prior to the record date for
such dividend or distribution.
(b) Subdivisions and Combinations. If at any time the Issuer shall
<PAGE>
(i) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution of Common
Stock;
(ii) subdivide, split or reclassify its outstanding shares of Common
Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock;
then immediately after the occurrence of any such event (A) the number of shares
of Common Stock issuable upon exercise of this Warrant shall be adjusted so as
to equal the number of shares of Common Stock such holder would have held
immediately after the occurrence of such event (in the case of an event referred
to in clause (i), after giving effect to such dividend or distribution) if such
holder had exercised this Warrant immediately prior to the occurrence of such
event and (B) the Exercise Price shall be adjusted to be equal to (x) the
Exercise Price immediately prior to the occurrence of such event multiplied by
(y) a fraction (1) the numerator of which is the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to the adjustment
in clause (A) and (2) the denominator of which is the number of shares of Common
Stock issuable upon exercise of this Warrant immediately after the adjustment in
clause (A).
(c) Issuance of Common Stock. If at any time the Issuer (i) shall
(A) take a record of the holders of its Common Stock for the purpose of
entitling them to subscribe for or purchase shares of any class or series of
Common Stock or (B) otherwise sell or issue any shares of any class or series of
Common Stock (other than Excluded Stock) and (ii) the consideration per share of
Common Stock paid or to be paid upon such subscription, purchase, sale or
issuance is less than the Current Market Price per share of Common Stock
immediately before such record date or immediately before the date of such sale
or issuance, as the case may be, then the number of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted to be that number
determined by multiplying (x) the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such record date or sale or
issuance date, as the case may be, by (y) a fraction (not to be less than one)
(i) the numerator of which shall be equal to the product of (A) the number of
shares of Common Stock outstanding (determined on a fully-diluted basis) after
giving effect to such subscription, purchase, sale or issuance (and assuming all
such subscription or purchase offers are exercised) and (B) the Current Market
Price per share of Common Stock determined immediately before such record date
or sale or issuance date, as the case may be, and (ii) the denominator of which
shall be equal to the sum of (A) the product of (1) the number of shares of
Common Stock outstanding (determined on a fully-diluted basis) immediately
before such record date or sale or issuance date, as the case may be, and
(2) the Current Market Price per share of Common Stock determined immediately
before such record date or sale or issuance date, as the case may be, and
(B) the aggregate consideration received or to be received by the Issuer for the
total number of shares of Common Stock to be subscribed for or purchased, sold
or issued. Simultaneously with the adjustment in the preceding sentence, the
Exercise Price shall be adjusted to be equal to (x) the Exercise Price
immediately prior to the occurrence of such event multiplied by (y) a fraction
(1) the numerator of which is the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to the adjustment in the preceding
sentence and (2) the denominator of which is the number of shares of Common
Stock issuable upon exercise of this Warrant immediately after the adjustment in
the preceding sentence.
(d) Issuance of Convertible Securities or Options. If at any time
(i) the Issuer shall (A) take a record of the holders of its Common Stock for
the purpose of entitling them to subscribe for or purchase options to purchase
or rights to subscribe for Common Stock, securities directly or indirectly
convertible into or exchangeable for Common Stock ("Convertible Securities") or
options or rights with respect to Convertible Securities (options or rights with
respect to Common Stock or Convertible
<PAGE>
Securities being referred to as "Options") or (B) otherwise issue or sell any
Options or Convertible Securities (other than Options exercisable for
Excluded Stock) and (ii) the consideration per share paid or to be paid for
the Common Stock deliverable upon exercise of such Options and/or conversion
or exchange of such Convertible Securities (determined by dividing (x) the
total amount received or receivable by the Issuer in consideration of the
subscription, purchase, sale or issuance of such Options or Convertible
Securities plus any amount payable to the Issuer upon such exercise and/or
conversion or exchange, by (y) the total maximum number of shares of Common
Stock necessary to effect the exercise and/or conversion or exchange of all
such Options or Convertible Securities) shall be less than the Current Market
Price per share of Common Stock on such record date or sale or issuance date,
as the case may be, then the number of shares of Common Stock issuable upon
exercise of this Warrant shall be adjusted to be that number determined by
multiplying the number of shares of Common Stock issuable upon exercise of
this Warrant immediately prior to such date by a fraction (not to be less
than one) (i) the numerator of which shall be equal to the product of (A) the
total maximum number of shares of Common Stock outstanding (determined on a
fully diluted basis) after giving effect to the assumed exercise and/or
conversion of all such Options or Convertible Securities and (B) the Current
Market Price per share of Common Stock determined immediately before such
record date or sale or issuance date, as the case may be, and (ii) the
denominator of which shall be equal to the sum of (A) the product of (1) the
number of shares of Common Stock outstanding (determined on a fully-diluted
basis) immediately before such record date or sale or issuance date, as the
case may be, and (2) the Current Market Price per share of the Common Stock
determined immediately before such record date or sale or issuance date, as
the case may be, and (B) the aggregate consideration for which Common Stock
is deliverable upon exercise and/or conversion or exchange for such Options
or Convertible Securities. Simultaneously with the adjustment in the
preceding sentence, the Exercise Price shall be adjusted to be equal to (x)
the Exercise Price immediately prior to the occurrence of such event
multiplied by (y) a fraction (1) the numerator of which is the number of
shares of Common Stock issuable upon exercise of this Warrant immediately
prior to the adjustment in the preceding sentence and (2) the denominator of
which is the number of shares of Common Stock issuable upon exercise of this
Warrant immediately after the adjustment in the preceding sentence. The
adjustment of the exercise price of an Option shall not be deemed to be the
issuance or sale of an Option at less than the Current Market Price per share
of Common Stock if the exercise price as adjusted is not less than the
Current Market Price per share of Common Stock on the date of such adjustment.
(e) Superseding Adjustment. If, at any time after any adjustment in
the number of shares of Common Stock issuable upon exercise of this Warrant
shall have been made on the basis of the issuance of any Options or Convertible
Securities:
(i) any such Options shall expire prior to exercise or the right
to convert or exchange any such Convertible Securities shall terminate
prior to conversion or exchange; or
(ii) the consideration per share for which shares of Common Stock
are issuable pursuant to the terms of such Options or Convertible
Securities shall be increased or decreased;
then such previous adjustment shall be rescinded and annulled (without
affecting any other adjustments resulting from any other events). Thereupon, a
recomputation shall be made of the adjustment in the number of shares of Common
Stock issuable upon exercise of this Warrant on the basis of
(A) treating the number of shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the
previous exercise, conversion or exchange of such Options or
Convertible Securities as having been issued on the date or
dates of such exercise and/or conversion or
<PAGE>
exchange and for the consideration actually received and
receivable therefor, and
(B) treating any such Options or Convertible Securities that
then remain outstanding as having been granted or issued
immediately after the time of such increase or decrease for
the consideration per share for which shares of Common Stock
are issuable upon exercise and/or conversion or exchange of
such Options or Convertible Securities,
which new adjustment shall supersede the previous adjustment so rescinded and
annulled. For purposes of the computation of such new adjustment, the Current
Market Price shall be deemed to be the Current Market Price used in computing
the previous adjustment.
(f) Other Provisions Applicable to Adjustments under this Section.
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock issuable upon exercise of this Warrant:
(i) The sale or other disposition of any issued shares of Common
Stock owned or held by or for the account of the Issuer shall be
deemed to be an issuance thereof for purposes of this Section.
(ii) In computing adjustments under this Section, fractional
interests in Common Stock shall be taken into account to the nearest
one-thousandth of a share.
(iii) If the Issuer shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend
or distribution or subscription or purchase rights and shall,
thereafter and before the payment of such dividend or distribution or
the granting of such subscription or purchase rights, legally abandon
its plan to pay or deliver such dividend, distribution, subscription
or purchase rights, then thereafter no adjustment shall be required by
reason of the taking of such record and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
(iv) Aggregate consideration for purposes of Sections 4(c) and
4(d) shall be determined as follows: In case any Common Stock,
Options, or Convertible Securities shall be issued or sold, or be
exercisable, convertible or exchangeable for cash, the consideration
received therefor shall be deemed to be the amount payable to the
Issuer therefor, after deduction therefrom of any expenses incurred or
any underwriting commissions or concessions or discounts or, in the
case of a private placement thereof, finders' fees or commissions paid
or allowed by the Issuer in connection therewith. In case any such
Common Stock, Options, or Convertible Securities shall be issued or
sold, or be exercisable, convertible or exchangeable for a
consideration other than cash payable to the Issuer, the consideration
received therefor shall be deemed to be the fair market value of such
consideration (as determined in accordance with the Appraisal
Procedure), after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or allowed
by the Issuer in connection therewith. In case any such Common Stock,
or Options, Convertible Securities shall be issued or sold, or be
exercisable, convertible or exchangeable in connection with any merger
of another corporation into the Issuer, the amount of consideration
therefor shall be deemed to be the fair market value (as determined in
accordance with the Appraisal Procedure) of such portion of the assets
of such merged corporation as the Board shall reasonably determine
(such determination to be reasonably acceptable to the Majority
Holders) in good faith to be attributable to such options, rights or
securities.
<PAGE>
(g) Merger, Consolidation or Disposition of Assets. If the Issuer
shall merge, consolidate or effect a share exchange with another entity, or
shall sell, transfer or otherwise dispose of all or substantially all of its
assets to another entity and pursuant to the terms of such merger,
consolidation, share exchange or disposition of assets, cash, shares of Common
Stock or other securities of the successor or acquiring entity, or property of
any nature is to be received by or distributed to the holders of Common Stock of
the Issuer, then the Holder shall be entitled to receive in respect of the
Warrant Stock issuable upon exercise of this Warrant, and upon delivery to the
Issuer of this Warrant for cancellation, the amount of cash, shares of Common
Stock, other securities or other property that it would have been entitled to
receive if such Holder had exercised this Warrant in full immediately prior to
the occurrence of such merger, consolidation, share exchange or disposition of
assets. In the case of any such merger, consolidation, share exchange or
disposition of assets, the successor or acquiring entity (and any Affiliate
thereof issuing securities) shall expressly assume the due and punctual
observance and performance of each and every covenant and condition of this
Warrant to be performed and observed by the Issuer and all of the obligations
and liabilities hereunder, subject to such modifications as may be deemed
appropriate (as determined by resolution of the Board and reasonably acceptable
to the Majority Holders) in order to provide for adjustments of the Warrant
Stock issuable upon exercise of this Warrant that shall be as nearly equivalent
as practicable to the adjustments provided for in this Section 4. The foregoing
provisions shall similarly apply to successive mergers, consolidations, share
exchanges and dispositions of assets.
(h) Capital Reorganization or Capital Reclassification. If the
Issuer shall effect any capital reorganization or any reclassification of its
capital 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 as a result of a stock dividend or
subdivision, split-up or combination of shares), then in each case the Issuer
shall cause effective provision to be made so that this Warrant shall be
exercisable for the kind and number of shares of stock, other securities, cash
or other property to which a holder of the Warrant Stock deliverable upon
exercise of this Warrant would have been entitled upon such reorganization or
reclassification and any such provision shall include adjustments in respect of
such stock, securities or other property that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 4 with
respect to this Warrant.
(i) Other Action Affecting Common Stock. If at any time or from time
to time the Issuer shall take any action affecting its Common Stock, other than
any action described in this Section 4, then, unless such action will not have
an adverse effect upon the Holder's rights, the number of shares of Warrant
Stock issuable upon exercise of this Warrant and the Exercise Price shall be
adjusted in such manner and at such time as the Board shall in good faith
determine (such determination to be reasonably acceptable to the Majority
Holders) to be equitable in the circumstances, but no such adjustment shall
decrease the number of shares of Warrant Stock issuable upon exercise of this
Warrant or increase the Exercise Price.
(j) If at any time the Issuer shall issue any shares of its Common
Stock pursuant to the exercise of an option granted under a Stock Option Plan,
then the number of shares of Common Stock issuable upon the exercise of this
Warrant shall be increased by an amount equal to the product of (x) the number
of such shares issued pursuant to the option exercise and (y) 0.1764. The
provisions of this Section 4(j) shall only apply to issuances after the date
hereof of the first 1,300,000 shares of Common Stock pursuant to the Stock
Option Plans, as such number may be adjusted pursuant to any stock splits,
divisions, combinations or similar adjustments.
(k) Notice of Adjustments. Whenever the number of shares of Warrant
Stock issuable upon exercise of this Warrant shall be adjusted pursuant to this
Agreement, the Issuer shall forthwith obtain a certificate signed by a firm of
independent accountants of recognized national standing selected by the Issuer
setting forth, in reasonable detail, the event requiring the adjustment, the
method by which such adjustment was calculated and specifying the number of
shares of Warrant Stock issuable upon exercise of this Warrant after giving
effect to such adjustment (except in the case of adjustments pursuant
<PAGE>
to Section 4(j) in which event a certificate shall be obtained on December 31
and June 30). The Issuer shall promptly cause a signed copy of such
certificate to be delivered to the Holder. The Issuer shall keep at its
office maintained for purposes of Section 7(a) hereof copies of all such
certificates and cause the same to be available for inspection at said office
during normal business hours by the Holder or any prospective purchaser of a
Warrant designated by the registered Holder hereof.
(l) Notice of Certain Corporate Action. If the Issuer shall propose
(i) to pay any dividend to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock; (ii) to offer to the holders of
its Common Stock rights to subscribe for or to purchase any additional shares of
Common Stock or any Options or Convertible Securities; (iii) to effect any
reorganization or reclassification of its Common Stock; (iv) to otherwise issue
any Common Stock, Options, or Convertible Securities; (v) to effect any other
capital reorganization; (vi) to effect any consolidation, merger or share
exchange or any sale, transfer or other disposition of all or substantially all
of its assets; or (vii) to effect the liquidation, dissolution or winding up of
the Issuer, then, in each such case, the Issuer shall give to the Holder a
notice of such proposed action, which shall specify the date on which a record
is to be taken for the purposes of such dividend, distribution or rights offer,
or the date on which such reclassification, issuance, reorganization,
consolidation, merger, share exchange, sale, transfer, disposition, liquidation,
dissolution or winding up is to take place and the date of participation therein
by the holders of Common Stock, if any such date is to be fixed, and shall also
set forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the Common Stock, and the number of shares
of Warrant Stock that are issuable upon exercise of this Warrant after giving
effect to any adjustment that will be required as a result of such action. Such
notice shall be so given in the case of any action covered by clause (i) or (ii)
above at least 10 days prior to the record date for determining holders of the
Common Stock for purposes of such action, and in the case of any other such
action, at least 10 days prior to the date of the taking of such proposed
action.
(m) No Impairment. The Issuer will not, by amendment of its Articles
of Organization or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Issuer, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder against
impairment.
(n) Miscellaneous. The computations of all amounts under this
Section 4 shall be made assuming all other anti-dilution or similar adjustments
to be made to the terms of all other securities resulting from the transaction
causing an adjustment pursuant to this Section 4 have previously been made so as
to maintain the relative economic interest of this Warrant vis a vis all other
securities issued by the Issuer.
SECTION 5. Miscellaneous.
(a) Office of Issuer. So long as this Warrant remains outstanding,
the Issuer shall maintain an office in the continental United States where the
Warrants may be presented for exercise, transfer, division or combination as
provided in this Warrant. Such office shall be at 210 Boylston Street,
Chestnut Hill, MA 02167, unless and until the Issuer shall designate and
maintain some other office for such purposes and give notice thereof to the
Holder.
(b) Notices Generally. Any notices and other communications pursuant
to the provisions hereof shall be sent in accordance with the provisions of
Section 10.6 of the Purchase Agreement.
<PAGE>
(c) Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of New York without regard to its
conflicts of laws rules. The Issuer agrees that it may be served with process
in the State of New York and any action for breach of this Warrant may be
prosecuted against it in the courts of such State or any Federal court located
in such State.
(d) Limitation of Liability. Except as otherwise provided herein,
this Warrant does not entitle the Holder to any voting rights or other rights of
a shareholder of the Issuer, as a shareholder. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no mere enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the Exercise Price or as a
shareholder of the Issuer, whether such liability is asserted by the Issuer, by
any creditor of the Issuer or any other Person.
(e) Loss or Destruction of Warrant. Upon receipt by the Issuer of
evidence satisfactory to it (in the exercise of its reasonable discretion) of
the loss, theft, destruction or mutilation of this Warrant and (in the case of
loss, theft or destruction), if requested by the Issuer, of reasonably
satisfactory indemnification (if the Holder is a nationally-chartered financial
institution or an Affiliate thereof, its own agreement being satisfactory), or
(in the case of mutilation) upon surrender and cancellation of this Warrant, the
Issuer shall, without charge, execute and deliver a new Warrant exercisable for
the same amount of Warrant Stock; provided, however, that (in the case of loss,
theft or destruction) no indemnity bond shall be required unless the Issuer has
a class of securities registered pursuant to the Securities Exchange Act of
1934, as amended, and the Issuer's transfer agent requires such indemnity bond
as a condition to the issuance of a new Warrant.
(f) Amendments and Waivers. Any provision of this Warrant may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Issuer and the Holders and, in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
* * *
<PAGE>
IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.
Dated: July __, 1997
SAFETY 1ST, INC.
By:__________________________________
Name:
Title:
<PAGE>
ANNEX A
FORM OF EXERCISE NOTICE
(To be executed by the registered holder hereof)
The undersigned registered owner of this Warrant exercises this
Warrant for the purchase of ________ shares of Common Stock of Safety 1st, Inc.,
a Massachusetts corporation, and herewith makes payment therefor of $__________
(such payment being made [check one] (x) [ ] in cash or by certified or
official bank check or (y) [ ] by acceptance of a reduced number of shares of
Common Stock upon cancellation of this Warrant as provided in Section 2(b) of
this Warrant, all on the terms and conditions specified in this Warrant, and
requests that (i) certificates and/or other instruments covering such shares of
Common Stock be issued in accordance with the instructions given below and
(ii) if such shares of Common Stock shall not include all of the shares of
Common Stock to which the Holder is entitled under this Warrant, that a new
Warrant for the unpurchased balance of the shares of Common Stock issuable
hereunder be delivered to the undersigned. References in this Exercise Notice
to "Common Stock" shall include other securities or other property to the extent
included in Warrant Stock.
[This Exercise Notice is being delivered contingent upon the
consummation of [describe transaction] as contemplated by Section 2(d) of this
Warrant].[1]
Dated:_____________________
___________________________________
(Signature of Registered Holder)[2]
Instructions for issuance and
registration of shares of
Common Stock:
__________________________ Social Security or Other
Name of Registered Holder Identifying Number:__________________
(please print)
Please deliver certificate to
the following address:
________________________________________
Street
________________________________________
City, State and Zip Code
- --------------
[1] Include if applicable.
[2] The signature must correspond with the name as written upon the face of
the attached Warrant in every particular, without alteration.
<PAGE>
ANNEX B
FORM OF ASSIGNMENT
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all the rights
of the undersigned under this Warrant with respect to the number of shares of
Common Stock covered thereby set forth below to:
Number of
Shares of
Name of Assignee Address Common Stock
References in this Exercise Notice to "Common Stock" shall include other
securities or other property to the extent included in Warrant Stock.
Dated:__________________________
____________________________________
(Signature of Registered Holder)[3]
_____________________________________
Name of Registered Holder
(Please Print)
Witness:
________________________________
- -------------------
[3] The signature must correspond with the name as written upon the face of
the attached Warrant in every particular, without alteration.
<PAGE>
EXHIBIT 5
WARRANT
THE TRANSFER, SALE OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AND THE SECURITIES WHICH MAY BE ACQUIRED ON THE EXERCISE HEREOF ARE
SUBJECT TO THE CONDITIONS SPECIFIED IN THE STOCK AND WARRANT PURCHASE AGREEMENT
DATED AS OF JULY 30, 1997 AMONG SAFETY 1ST, INC., A MASSACHUSETTS CORPORATION
(THE "ISSUER"), BT CAPITAL PARTNERS, INC. AND BEAR, STEARNS & CO. INC., AS SUCH
AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND
NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR
EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF SUCH AGREEMENT
IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER.
THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE
BOUND BY THE PROVISIONS OF SUCH AGREEMENTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES WHICH MAY BE
ACQUIRED ON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY,
SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT IN
COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE
FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM.
No. of Shares Warrant No. C-1
of Common Stock: 63,418
WARRANT
to Purchase Common Stock of
SAFETY 1ST, INC.
THIS IS TO CERTIFY THAT BT Capital Partners, Inc., or its registered
assigns, is entitled to purchase in whole or in part from time to time from
Safety 1st, Inc., a Massachusetts corporation (the "Issuer"), at any time on and
after the Effective Date (as hereinafter defined), but not later than 5:00 p.m.,
New York time, on July 30, 2007 (the "Expiration Date"), 63,418 shares of
Common Stock (as hereinafter defined) at a purchase price of $0.01 per share
(the "Exercise Price"), subject to the terms and conditions provided herein and
in the Purchase Agreement (as hereinafter defined). The number of shares of
Common Stock for which this Warrant shall be exercisable and the Exercise Price
are subject to adjustment from time to time as provided herein.
This Warrant is issued pursuant to the Stock and Warrant Purchase
Agreement dated as of July 30, 1997 (as modified and supplemented and in effect
from time to time, the "Purchase Agreement") among the Issuer, BT Capital
Partners, Inc. and Bear, Stearns & Co. Inc. and is subject to the provisions of
the Purchase Agreement and the Registration Rights Agreement (as hereinafter
defined).
SECTION 1. Certain Definitions. (a) Each capitalized term used
herein without definition shall have the meaning assigned thereto (or
incorporated by reference) in the Purchase Agreement and in the Exhibits
thereto.
<PAGE>
(b) As used herein, the following terms shall have the following
meanings (all terms defined in this Section 1 or in other provisions of this
Warrant in the singular to have the same meanings when used in the plural and
vice versa):
"Accountants" shall have the meaning given to such term in Section
5(a).
"Affiliate" means, with respect to any specified Person, any other
Person that, directly or indirectly, controls, is under common control with, or
is owned or controlled by, such specified Person. For purposes of this
definition, (i) "control" means, with respect to any specified Person, the power
to direct the management or policies of the specified Person through the
ownership of voting securities, by contract, voting agreement or otherwise, and
(ii) the terms "controlling", "control with" and "controlled by", etc. shall
have meanings correlative to the foregoing.
"Appraisal Procedure", if applicable, shall mean the following
procedure to determine the fair market value, as to any security, for purposes
of the definition of "Current Market Price" or the fair market value, as to any
other property (in either case, the "valuation amount"). The valuation amount
shall be determined in good faith jointly by the Board and the Majority Holders;
provided, however, that if such parties are not able to agree on the valuation
amount within a reasonable period of time (not to exceed twenty (20) Business
Days) the valuation amount shall be determined by an investment banking firm of
national recognition, which firm shall be reasonably acceptable to the Board and
the Majority Holders. If the Board and the Majority Holders are unable to agree
upon an acceptable investment banking firm within ten (10) Business Days after
the date either party proposed that one be selected, the investment banking firm
will be selected by an arbitrator located in New York City, New York, selected
by the American Arbitration Association (or if such organization ceases to
exist, the arbitrator shall be chosen by a court of competent jurisdiction).
The arbitrator shall select the investment banking firm (within ten (10) days of
his appointment) from a list, jointly prepared by the Board and the Majority
Holders, of not more than six investment banking firms of national standing in
the United States, of which no more than three may be named by the Board and no
more than three may be named by the Majority Holders. The arbitrator may
consider, within the ten-day period allotted, arguments from the parties
regarding which investment banking firm to choose, but the selection by the
arbitrator shall be made in its sole discretion from the list of six. The Board
and the Majority Holders shall submit to the investment banking firm their
respective determinations of the valuation amount, and any supporting arguments
and other data as they may desire, within ten (10) days of the appointment of
the investment banking firm, and the investment banking firm shall as soon as
practicable thereafter make its own determination of the valuation amount. The
final valuation amount for purposes hereof shall be the average of the two
valuation amounts closest together, as determined by the investment banking
firm, from among the valuation amounts submitted by the Issuer and the Majority
Holders and the valuation amount calculated by the investment banking firm. The
determination of the final valuation amount by such investment banking firm
shall be final and binding upon the parties. The fees and expenses of the
investment banking firm and arbitrator (if any) used to determine the valuation
amount shall be paid by the Issuer or the applicable Warrant Holders (on a pro
rata basis), whichever party's valuation amount is excluded from the average
referred to above, unless the investment banking firm's valuation amount is
excluded from the average, in which case such fees and expenses will be divided
evenly between the Issuer and such Warrant Holders. If required by any such
investment banking firm or arbitrator, the Issuer shall execute a retainer and
engagement letter containing reasonable terms and conditions, including, without
limitation, customary provisions concerning the rights of indemnification and
contribution by the Issuer in favor of such investment banking firm or
arbitrator and its officers, directors, partners, employees, agents and
Affiliates.
"Articles of Organization" means the Restated Articles of Organization
of the Issuer, as amended and restated and in effect at the time in question.
"Board" shall mean the Board of Directors of the Issuer.
<PAGE>
"By-laws" means the by-laws of the Issuer, as amended and in effect at
the time in question.
"Capital Stock" means any and all shares, interests, participation or
other equivalents (however designated) of corporate stock, including all common
stock and preferred stock.
"Certificate of Designation" shall have the meaning ascribed to such
term in the Purchase Agreement.
"Change of Control" shall have the meaning ascribed to such term in
the Certificate of Designation.
"Common Stock" shall mean the Issuer's Common Stock, par value $.01
per share.
"Convertible Securities" shall have the meaning given to such term in
Section 4(d).
"Current Market Price" shall mean, as to any security, the average of
the closing prices of such security's sales on all domestic securities exchanges
on which such security may at the time be listed, or, if there have been no
sales on any such exchange on any day, the average of the highest bid and lowest
asked prices on all such exchanges at the end of such day, or, if on any day
such security is not so listed, the average of the representative bid and asked
prices quoted in the NASDAQ System as of 4:00 P.M., New York City time, on such
day, or, if on any day such security is not quoted in the NASDAQ System, the
average of the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization (and in each such case
(i) averaged over a period of 21 days consisting of the day immediately
preceding the day as of which "Current Market Price" is being determined and the
20 consecutive Business Days prior to such immediately preceding day and
(ii) excluding any trades that are not bona fide, arm's length transactions).
If at any time such security is not listed on any domestic securities exchange
or quoted in the NASDAQ System or the domestic over-the-counter market, the
"Current Market Price" of such security shall be the fair market value thereof
as determined in accordance with the Appraisal Procedure, using an appropriate
valuation method, assuming an arms-length sale to an independent party. In
determining the fair market value of the Common Stock, a sale of all of the
issued and outstanding Common Stock of the Issuer will be assumed, without
giving regard to the lack of liquidity of such stock due to any restrictions
(contractual or otherwise) applicable thereto or any discount for minority
interests and assuming the conversion or exchange of all securities then
outstanding that are convertible into or exchangeable for Common Stock and the
exercise of all rights and warrants (including the Warrants) then outstanding
and exercisable to purchase shares of such stock or securities convertible into
or exchangeable for shares of such stock. Common Stock issued in an underwritten
public offering shall be deemed to be issued for fair market value.
"EBIT" means, for Fiscal 1998, the Net Income of the Issuer and its
consolidated Subsidiaries plus (without the duplication) (a) Interest Expense,
net of interest income and (b) income tax expense, refunds or credits for such
period all determined in accordance with GAAP.
"EBIT Target" shall mean $16,000,000 as adjusted pursuant to Section
5(b).
"Effective Date" shall mean the earlier to occur of (i) the date of
the determination by the Accountants pursuant to Section 5(a) that EBIT for
Fiscal 1998 is less than the EBIT Target and (ii) the occurrence of an Exercise
Condition.
"Equity Interest" means (a) with respect to a corporation, any and all
Capital Stock or warrants, options or other rights to acquire Capital Stock (but
excluding any debt security which is
<PAGE>
convertible into, or exchangeable for, Capital Stock) and (b) with respect
to a partnership, limited liability company or similar Person, any and all
units, interests, rights to purchase, warrants, options or other equivalents
of, or other ownership interests in, any such Person.
"Excluded Stock" shall mean (i) any shares of Common Stock issuable
upon the exercise of any options granted pursuant to the Stock Option Plans and
(ii) any shares of Common Stock issuable upon exercise of any Warrants.
"Exercise Condition" shall have the meaning assigned to it in
Section 2 hereof.
"Exercise Notice" shall have the meaning assigned to such term in
Section 2 hereof.
"Exercise Price" shall have the meaning assigned to such term in the
first paragraph of this Warrant.
"Expiration Date" shall have the meaning assigned to such term in the
first paragraph of this Warrant.
"Fiscal 1998" shall have the meaning assigned to such term in Section
5 (a) hereof.
"Fundamental Documents" means the documents by which any Person (other
than an individual) establishes its legal existence or which govern its internal
affairs. The Fundamental Documents of the Issuer are the Articles of
Organization and By-laws.
"GAAP" means generally accepted accounting principles in the United
States and statements and interpretations (if applicable) issued by the
Financial Accounting Standards Board, or any successor body, as in effect from
time to time, unless otherwise stated.
"Guaranty" has the meaning set forth in the Certificate of
Designation.
"Holder" shall mean the registered holder of this Warrant and the
registered holder of any Warrant Stock issued upon exercise hereof.
"Include" and "Including" shall be construed as if followed by the
phrase ", without being limited to,".
"Indebtedness" has the meaning set forth in the Certificate of
Designation.
"Interest Expense" means, for Fiscal 1998, all interest (including
capitalized interest) and all amortization of debt discount and expense on any
particular Indebtedness (including, without limitation payment-in-kind, zero
coupon and other like securities and the interest component of capital lease
obligations applicable to such period) of the Issuer and its Subsidiaries
determined on a consolidated basis in accordance with GAAP.
"Investment" in any Person, means any loan or advance to such Person,
any purchase or other acquisition of any Equity Interest or other ownership or
profit interest, warrants, rights, options, obligations or other securities of
such Person, any capital contribution to such Person or any other investment in
such Person, including any arrangement pursuant to which an investing Person
incurs Indebtedness of the types referred to in clause (f) or (i) of the
definition of "Indebtedness" in respect of such Person.
<PAGE>
"Issuer" shall have the meaning assigned to such term in the first
paragraph of this Warrant.
"Majority Holders" shall mean those Warrant Holders holding (or having
the right to receive upon exercise of Warrants) Warrant Stock representing a
majority of the total amount of Warrant Stock held by, or issuable to, all
Warrant Holders.
"NASDAQ System" shall mean the National Association of Securities
Dealers Automated Quotation System.
"Net Income" means, for Fiscal 1998, the gross revenues of the Issuer
and its consolidated Subsidiaries for such period less all expenses and other
proper charges, including returns and allowances, in each case determined in
accordance with GAAP, but excluding in any event:
(a) any gains or losses on the sale or other disposition of
Investments or fixed or capital assets or from any transaction classified as
extraordinary under GAAP, any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses;
(b) the proceeds of any life insurance policy;
(c) to the extent not reflected in adjustments made pursuant to
Section 5(b), net earnings and losses of any corporation, substantially all the
assets of which have been acquired in any manner by the Company and its
consolidated subsidiaries, realized by such corporation prior to the date of
such acquisition;
(d) to the extent not reflected in adjustments made pursuant to
Section 5(b), net earnings and losses of any corporation which shall have merged
into the Issuer or any of its consolidated Subsidiaries prior to the date of
such merger;
(e) to the extent not reflected in adjustments made pursuant to
Section 5(b), net earnings of any business entity in which the Issuer or its
consolidated Subsidiaries has an ownership interest unless such net earnings
actually shall have been received by the Issuer or its Subsidiaries in the form
of cash distributions;
(f) earnings resulting from a reappraisal, revaluation or write-up of
assets;
(g) any charge to net earnings resulting from the amortization of the
value of stock options given to employees to the extent required by APB 25;
(h) to the extent not reflected in adjustments made pursuant to
Section 5(b), any increase or decrease of net income arising from a change in
the Issuer's accounting methods;
(i) any gains resulting from the forgiveness of Indebtedness or the
retirement of Indebtedness at a discount;
(j) any gain arising from the acquisition of any securities of the
Issuer or its consolidated subsidiaries; and
(k) any reversal of any contingency reserve, except that provision
for such contingency reserve shall have been made from income arising during
such period.
"Options" shall have the meaning given to such term in Section 4(d).
<PAGE>
"Person" shall be construed in its broadest possible sense and shall
include any individual, corporation, general or limited partnership, joint
venture, association, limited liability company, joint stock company, trust,
business trust, bank, trust company, estate (including any beneficiaries
thereof), unincorporated organization, cooperative, association or governmental
branch, authority, agency or political subdivision thereof.
"Purchase Agreement" shall have the meaning assigned to such term in
the second paragraph of this Warrant.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of July 30, 1997 between the Issuer and the Holders, as
modified and supplemented and in effect from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Series A Preferred Stock" shall mean the Issuer's Series A Preferred
Stock, par value $1 per share.
"Stock Option Plans" shall have the meaning assigned to such term in
the Purchase Agreement and any other stock option plans adopted by the Issuer
and any other grants of stock options made by the Issuer, in each case granted
to employees, directors and independent contractors of the Issuer or its
subsidiaries.
"Subsidiaries" shall have the meaning given to such term in the
Purchase Agreement.
"Voting Agreement" shall mean the Voting Agreement dated as of July
30, 1997 among the Issuer, the Holders and the other signatories thereto, as
modified and supplemented and in effect from time to time.
"Warrant" shall mean this Warrant and all other warrants originally
issued by the Issuer pursuant to the Purchase Agreement and all warrants issued
upon transfer, division, or combination of, or in substitution for, this Warrant
or any such other warrant. All Warrants shall be substantially in the form of
Exhibit C attached to the Purchase Agreement except that the Warrants need not
bear the legends appearing on the first page of this Warrant from and after such
time as the restrictions set forth therein no longer apply.
"Warrant Holder" shall mean any Person who acquires Warrants or
Warrant Stock pursuant to the provisions of the Purchase Agreement or any
Warrant, including any transferees of Warrants or Warrant Stock.
"Warrant Stock" shall mean (a) all shares of Common Stock issued or
issuable from time to time upon exercise of this Warrant, (b) all other
securities or other property issued or issuable upon any such exercise and
(c) any securities distributed with respect to the securities referred to in the
preceding clauses (a) and (b); provided, however, that the term "Warrant Stock"
shall not include shares of Common Stock or other securities following the time
such shares or other securities have been sold in a public offering registered
under the Securities Act or sold under Rule 144 promulgated thereunder. As used
in this Warrant, the phrase "Warrant Stock then held" shall mean Warrant Stock
held at the time of determination by the Holder, and shall include Warrant Stock
issuable upon exercise of any Warrants held at the time of determination by such
Holder.
<PAGE>
SECTION 2. Exercise of Warrant. (a) On and after the Effective Date
and until 5:00 p.m., New York City time, on the Expiration Date, the Holder may
exercise this Warrant, on one or more occasions, on any Business Day, in whole
or in part, by delivering to the Issuer, at its office maintained for such
purpose pursuant to Section 6 hereof, (i) a written notice of the Holder's
election to exercise this Warrant, which notice shall be substantially in the
form of Annex A attached hereto and shall be properly completed (the "Exercise
Notice"), (ii) payment of the Exercise Price (payable as set forth in
Section 2(b) below) for the Warrant Stock as to which this Warrant is being
exercised, and (iii) this Warrant. Except to the extent necessary to cause the
number of shares of Common Stock deliverable as provided in Section 2(b) to be a
whole number of shares, this Warrant shall be exercisable in part only for a
whole number of shares.
(b) At the option of the Holder, the Exercise Price shall be payable
(i) in cash or by certified or official bank check payable to the order of the
Issuer or (ii) by exchange of this Warrant in accordance with the further
provisions of this Section 2(b). In exchange for the portion of this Warrant
that is being exercised at such time, the Holder shall receive the number of
shares of Common Stock determined by multiplying (A) the number of shares of
Common Stock for which this Warrant is being exercised at such time by (B) a
fraction, (1) the numerator of which shall be the difference between (x) Current
Market Price per share of Common Stock at such time and (y) the Exercise Price
per share of Common Stock, and (2) the denominator of which shall be the Current
Market Price per share of Common Stock at such time. The Issuer shall issue a
new Warrant for the portion, if any, of this Warrant not being exercised as
provided in Section 2(f).
(c) Subject to the provisions of Section 2(d), upon receipt of an
Exercise Notice, the aggregate Exercise Price payable and this Warrant, the
Issuer shall, as promptly as practicable and in any event within five (5)
Business Days thereafter, issue to the Holder one or more stock certificates
representing the aggregate number of shares of Common Stock to which the Holder
is entitled and transfer to the Holder of this Warrant appropriate evidence of
ownership of other securities or property (including any cash) to which the
Holder is entitled, in such denominations, and registered or otherwise placed
in, or payable to the order of, such name or names, as may be directed in
writing by the Holder, and shall deliver such stock certificates, evidence of
ownership and any other securities or property (including any cash) to the
Person or Persons entitled to receive the same, together with an amount in cash
in lieu of any fraction of a share (or fractional interest in any other
security), as hereinafter provided. The Issuer shall pay all expenses in
connection with, and any and all documentary, stamp or similar issue or transfer
taxes of the United States or any state thereof payable in respect of, the issue
or delivery of the Warrant Stock upon exercise of this Warrant. However, the
Issuer shall not be required to pay any tax or other charge imposed in
connection with any assignment or transfer involved in the issue of any
certificate or other evidence of ownership of Warrant Stock.
(d) The Holder's election to exercise this Warrant may, in the sole
discretion of the Holder, be conditioned upon, and in such event, the exercise
shall be subject in all respects to a Change of Control, the Issuer ceasing to
be a reporting company under the Securities and Exchange Act of 1934, as
amended, the consummation of a sale of the Issuer, any public offering of the
Issuer's Common Stock registered under the Securities Act or other similar
transaction involving the Issuer (each of the foregoing referred to herein as an
Exercise Condition and collectively referred to herein as the "Exercise
Conditions"), as specified in the Exercise Notice, and the Issuer shall provide
the Holder with written notice no less than 20 business days prior to the
occurrence of an Exercise Condition. If any exercise of this Warrant is so
conditioned, then, subject to delivery of the items required by Section 2(b),
the Issuer shall deliver the certificates and other evidence of ownership of
other securities or other property in such manner as the Holder shall direct as
required in connection with the consummation of the transaction upon which the
exercise is conditioned. At any time that the Issuer shall give notice to the
Holder that such transaction has been abandoned or the Issuer has withdrawn from
participation in such transaction,
<PAGE>
the Issuer shall return the items delivered
pursuant to Section 2(c) and the Holder's election to exercise this Warrant
shall be deemed rescinded.
(e) The stock certificate or certificates or other evidence of
ownership of Warrant Stock to be delivered pursuant to Section 2(c) hereof shall
be deemed to have been issued, and the Holder or any other Person so designated
to be named therein shall, to the extent permitted by law and the Purchase
Agreement, be deemed to have become a holder of record of the Warrant Stock
represented thereby, including having the right to vote any voting securities
included therein or to consent or to receive notice as a shareholder, as of the
date on which the last of the Exercise Notice, payment of the Exercise Price and
this Warrant is received by the Issuer as aforesaid (subject, in the case of an
exercise to which Section 2(d) applies, to the consummation of the transaction
upon which such exercise is conditioned), notwithstanding that the transfer
books of the Issuer shall then be closed or that such certificates or other
evidence of ownership shall not then actually have been delivered to the Holder.
(f) If this Warrant shall have been exercised only in part, the
Issuer shall, at the time of delivery of the certificate or certificates or
other evidence of ownership of Warrant Stock, execute and deliver to the Holder,
without charge, a new Warrant evidencing the rights of the Holder to purchase
the unpurchased Warrant Stock called for by this Warrant, which new Warrant
shall in all other respects be identical to this Warrant, or, at the request of
the Holder, appropriate notation may be made on this Warrant and the same
returned to the Holder.
(g) The Issuer shall not be required to issue any fractional share of
Common Stock (or fractional interest in any other security) upon exercise of
this Warrant. As to any fraction of a share (or fractional interest in any
other security) that the Holder would otherwise be entitled to receive upon such
exercise, the Issuer shall pay a cash adjustment in respect of such fraction in
an amount equal to the same fraction of the Current Market Price per share of
Common Stock (and/or other security) on the date of exercise; provided, however,
that in the event that the Issuer undertakes a reduction in the number of shares
of Common Stock or other securities outstanding, it shall be required to issue
fractional shares or fractional interests in such other securities to the Holder
if the Holder exercises all or any part of this Warrant, unless the Holder shall
have consented in writing to such reduction and provided the Issuer with a
written waiver of its right to receive fractional shares or interests in
accordance with this paragraph. If the Holder shall exercise more than one
Warrant in the same transaction, any payment in respect of fractional shares (or
other fractional interests) shall be based on the final fraction resulting from
aggregating all such exercises.
(h) The Issuer hereby agrees at all times to keep reserved for
issuance and delivery upon exercise of this Warrant such number of its
authorized but unissued shares (or treasury shares) of Common Stock or other
securities of the Issuer from time to time issuable upon exercise of this
Warrant as will be sufficient to permit the exercise in full of this Warrant.
All such shares and other securities shall be duly authorized and, when issued
upon such exercise, shall be validly issued, fully paid and non-assessable, free
and clear of all liens, security interests, charges and other encumbrances or
restrictions on sale (except to the extent of any applicable provisions set
forth in the Purchase Agreement, Voting Agreement, Registration Rights Agreement
or the Issuer's Fundamental Documents) and free and clear of all preemptive or
similar rights.
(i) If the issuance of any shares of Common Stock or other
securities required to be reserved for purposes of the exercise of this
Warrant requires the registration with, or approval of, any governmental
authority or requires listing on any national securities exchange or national
market system before such shares or other securities may be so issued, the
Issuer shall at its expense use its best efforts to cause such shares to be
duly registered, approved or listed, as the case may be, so that such shares
or other securities may be issued in accordance with the terms hereof;
provided, however, that this provision
<PAGE>
shall not obligate the Issuer to register such shares or other securities
under the Securities Act or qualify them under state securities or blue sky
laws.
SECTION 3. Transfer, Division and Combination. (a) This Warrant,
all rights hereunder and any Warrant Stock issued or issuable upon exercise
hereof are assignable and transferable, at any time in whole or in part, to any
Person or Persons subject in all cases to the provisions of Article VII of the
Purchase Agreement. Any such transfer shall not require the consent of any
security holder of the Issuer.
(b) Upon a transfer permitted by Section 3(a), this Warrant shall be
transferable upon surrender of this Warrant to the Issuer, together with a
written assignment of this Warrant substantially in the form of Annex B attached
hereto, duly executed by the Holder hereof or such Holder's agent or attorney.
Upon such surrender, the Issuer shall, without charge, execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees (and, if the
Holder's entire interest is not being assigned, in the name of the Holder), and
in the denominations specified in such instrument of assignment, and this
Warrant shall promptly be canceled.
(c) This Warrant may be exchanged for, or combined with, other
Warrants upon presentation of this Warrant and any other Warrants with which
this Warrant is to be combined to the Issuer, together with a written notice
specifying the denominations in which a new Warrant or Warrants are to be
issued, signed by the Holder. The Issuer shall execute and deliver a new
Warrant or Warrants to the Holder in exchange for the Warrant or Warrants to be
divided or combined in accordance with such notice.
(d) The Issuer shall maintain books for the registration and transfer
of the Warrants, and shall allow each Warrant Holder to inspect such books at
such reasonable times as such holder shall request.
SECTION 4. Adjustments.
(a) Dividends and Distributions. If at any time the Issuer shall pay
any dividend or make any other distribution to holders of its Common Stock of
any cash, evidence of indebtedness or other property (including any rights or
warrants to purchase any securities of the Issuer) of any nature whatsoever
(other than as contemplated by subsections (b), (c)(i)(A) and (d)(i)(A) of this
Section 4), the Issuer shall at the same time pay or distribute to the Holder
(whether or not the Holder exercises this Warrant) the cash, evidence of
indebtedness or other property the Holder would have been entitled to receive if
such Holder would have been entitled to receive if such had exercised this
Warrant immediately prior to the record date for such dividend or distribution.
(b) Subdivisions and Combinations. If at any time the Issuer shall
(i) take a record of the holders of its Common Stock for the purpose
of entitling them to receive a dividend or other distribution of Common
Stock;
(ii) subdivide, split or reclassify its outstanding shares of Common
Stock into a larger number of shares of Common Stock; or
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock;
then immediately after the occurrence of any such event (A) the number of shares
of Common Stock issuable upon exercise of this Warrant shall be adjusted so as
to equal the number of shares of Common
<PAGE>
Stock such holder would have held immediately after the occurrence of such
event (in the case of an event referred to in clause (i), after giving effect
to such dividend or distribution) if such holder had exercised this Warrant
immediately prior to the occurrence of such event and (B) the Exercise Price
shall be adjusted to be equal to (x) the Exercise Price immediately prior to
the occurrence of such event multiplied by (y) a fraction (1) the numerator
of which is the number of shares of Common Stock issuable upon exercise of
this Warrant immediately prior to the adjustment in clause (A) and (2) the
denominator of which is the number of shares of Common Stock issuable upon
exercise of this Warrant immediately after the adjustment in clause (A).
(c) Issuance of Common Stock. If at any time the Issuer (i) shall
(A) take a record of the holders of its Common Stock for the purpose of
entitling them to subscribe for or purchase shares of any class or series of
Common Stock or (B) otherwise sell or issue any shares of any class or series of
Common Stock (other than Excluded Stock) and (ii) the consideration per share of
Common Stock paid or to be paid upon such subscription, purchase, sale or
issuance is less than the Current Market Price per share of Common Stock
immediately before such record date or immediately before the date of such sale
or issuance, as the case may be, then the number of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted to be that number
determined by multiplying (x) the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to such record date or sale or
issuance date, as the case may be, by (y) a fraction (not to be less than one)
(i) the numerator of which shall be equal to the product of (A) the number of
shares of Common Stock outstanding (determined on a fully-diluted basis) after
giving effect to such subscription, purchase, sale or issuance (and assuming all
such subscription or purchase offers are exercised) and (B) the Current Market
Price per share of Common Stock determined immediately before such record date
or sale or issuance date, as the case may be, and (ii) the denominator of which
shall be equal to the sum of (A) the product of (1) the number of shares of
Common Stock outstanding (determined on a fully-diluted basis) immediately
before such record date or sale or issuance date, as the case may be, and
(2) the Current Market Price per share of Common Stock determined immediately
before such record date or sale or issuance date, as the case may be, and
(B) the aggregate consideration received or to be received by the Issuer for the
total number of shares of Common Stock to be subscribed for or purchased, sold
or issued. Simultaneously with the adjustment in the preceding sentence, the
Exercise Price shall be adjusted to be equal to (x) the Exercise Price
immediately prior to the occurrence of such event multiplied by (y) a fraction
(1) the numerator of which is the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to the adjustment in the preceding
sentence and (2) the denominator of which is the number of shares of Common
Stock issuable upon exercise of this Warrant immediately after the adjustment in
the preceding sentence.
(d) Issuance of Convertible Securities or Options. If at any time
(i) the Issuer shall (A) take a record of the holders of its Common Stock for
the purpose of entitling them to subscribe for or purchase options to purchase
or rights to subscribe for Common Stock, securities directly or indirectly
convertible into or exchangeable for Common Stock ("Convertible Securities") or
options or rights with respect to Convertible Securities (options or rights with
respect to Common Stock or Convertible Securities being referred to as
"Options") or (B) otherwise issue or sell any Options or Convertible Securities
(other than Options exercisable for Excluded Stock) and (ii) the consideration
per share paid or to be paid for the Common Stock deliverable upon exercise of
such Options and/or conversion or exchange of such Convertible Securities
(determined by dividing (x) the total amount received or receivable by the
Issuer in consideration of the subscription, purchase, sale or issuance of such
Options or Convertible Securities plus any amount payable to the Issuer upon
such exercise and/or conversion or exchange, by (y) the total maximum number of
shares of Common Stock necessary to effect the exercise and/or conversion or
exchange of all such Options or Convertible Securities) shall be less than the
Current Market Price per share of Common Stock on such record date or sale or
issuance date, as the case may be, then the number of shares of Common Stock
issuable upon exercise of this Warrant shall be adjusted to be that number
determined by multiplying the number of shares of Common Stock issuable upon
<PAGE>
exercise of this Warrant immediately prior to such date by a fraction (not to be
less than one) (i) the numerator of which shall be equal to the product of
(A) the total maximum number of shares of Common Stock outstanding (determined
on a fully diluted basis) after giving effect to the assumed exercise and/or
conversion of all such Options or Convertible Securities and (B) the Current
Market Price per share of Common Stock determined immediately before such record
date or sale or issuance date, as the case may be, and (ii) the denominator of
which shall be equal to the sum of (A) the product of (1) the number of shares
of Common Stock outstanding (determined on a fully-diluted basis) immediately
before such record date or sale or issuance date, as the case may be, and
(2) the Current Market Price per share of the Common Stock determined
immediately before such record date or sale or issuance date, as the case may
be, and (B) the aggregate consideration for which Common Stock is deliverable
upon exercise and/or conversion or exchange for such Options or Convertible
Securities. Simultaneously with the adjustment in the preceding sentence, the
Exercise Price shall be adjusted to be equal to (x) the Exercise Price
immediately prior to the occurrence of such event multiplied by (y) a fraction
(1) the numerator of which is the number of shares of Common Stock issuable upon
exercise of this Warrant immediately prior to the adjustment in the preceding
sentence and (2) the denominator of which is the number of shares of Common
Stock issuable upon exercise of this Warrant immediately after the adjustment in
the preceding sentence. The adjustment of the exercise price of an Option shall
not be deemed to be the issuance or sale of an Option at less than the Current
Market Price per share of Common Stock if the exercise price as adjusted is not
less than the Current Market Price per share of Common Stock on the date of such
adjustment.
(e) Superseding Adjustment. If, at any time after any adjustment in
the number of shares of Common Stock issuable upon exercise of this Warrant
shall have been made on the basis of the issuance of any Options or Convertible
Securities:
(i) any such Options shall expire prior to exercise or the right
to convert or exchange any such Convertible Securities shall terminate
prior to conversion or exchange; or
(ii) the consideration per share for which shares of Common Stock
are issuable pursuant to the terms of such Options or Convertible
Securities shall be increased or decreased;
then such previous adjustment shall be rescinded and annulled (without
affecting any other adjustments resulting from any other events). Thereupon, a
recomputation shall be made of the adjustment in the number of shares of Common
Stock issuable upon exercise of this Warrant on the basis of
(A) treating the number of shares of Common Stock, if any,
theretofore actually issued or issuable pursuant to the
previous exercise, conversion or exchange of such Options or
Convertible Securities as having been issued on the date or
dates of such exercise and/or conversion or exchange and for
the consideration actually received and receivable therefor,
and
(B) treating any such Options or Convertible Securities that
then remain outstanding as having been granted or issued
immediately after the time of such increase or decrease for
the consideration per share for which shares of Common Stock
are issuable upon exercise and/or conversion or exchange of
such Options or Convertible Securities,
<PAGE>
which new adjustment shall supersede the previous adjustment so rescinded and
annulled. For purposes of the computation of such new adjustment, the Current
Market Price shall be deemed to be the Current Market Price used in computing
the previous adjustment.
(f) Other Provisions Applicable to Adjustments under this Section.
The following provisions shall be applicable to the making of adjustments of the
number of shares of Common Stock issuable upon exercise of this Warrant:
(i) The sale or other disposition of any issued shares of Common
Stock owned or held by or for the account of the Issuer shall be
deemed to be an issuance thereof for purposes of this Section.
(ii) In computing adjustments under this Section, fractional
interests in Common Stock shall be taken into account to the nearest
one-thousandth of a share.
(iii) If the Issuer shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend
or distribution or subscription or purchase rights and shall,
thereafter and before the payment of such dividend or distribution or
the granting of such subscription or purchase rights, legally abandon
its plan to pay or deliver such dividend, distribution, subscription
or purchase rights, then thereafter no adjustment shall be required by
reason of the taking of such record and any such adjustment previously
made in respect thereof shall be rescinded and annulled.
(iv) Aggregate consideration for purposes of Sections 4(c) and
4(d) shall be determined as follows: In case any Common Stock,
Options, or Convertible Securities shall be issued or sold, or be
exercisable, convertible or exchangeable for cash, the consideration
received therefor shall be deemed to be the amount payable to the
Issuer therefor, after deduction therefrom of any expenses incurred or
any underwriting commissions or concessions or discounts or, in the
case of a private placement thereof, finders' fees or commissions paid
or allowed by the Issuer in connection therewith. In case any such
Common Stock, Options, or Convertible Securities shall be issued or
sold, or be exercisable, convertible or exchangeable for a
consideration other than cash payable to the Issuer, the consideration
received therefor shall be deemed to be the fair market value of such
consideration (as determined in accordance with the Appraisal
Procedure), after deduction therefrom of any expenses incurred or any
underwriting commissions or concessions or discounts paid or allowed
by the Issuer in connection therewith. In case any such Common Stock,
or Options, Convertible Securities shall be issued or sold, or be
exercisable, convertible or exchangeable in connection with any merger
of another corporation into the Issuer, the amount of consideration
therefor shall be deemed to be the fair market value (as determined in
accordance with the Appraisal Procedure) of such portion of the assets
of such merged corporation as the Board shall reasonably determine
(such determination to be reasonably acceptable to the Majority
Holders) in good faith to be attributable to such options, rights or
securities.
(g) Merger, Consolidation or Disposition of Assets. If the Issuer
shall merge, consolidate or effect a share exchange with another entity, or
shall sell, transfer or otherwise dispose of all or substantially all of its
assets to another entity and pursuant to the terms of such merger,
consolidation, share exchange or disposition of assets, cash, shares of Common
Stock or other securities of the successor or acquiring entity, or property of
any nature is to be received by or distributed to the holders of Common Stock of
the Issuer, then the Holder shall be entitled to receive in respect of the
Warrant Stock issuable upon exercise of this Warrant, and upon delivery to the
Issuer of this Warrant for cancellation, the amount of cash, shares of Common
Stock, other securities or other property that it would have been
<PAGE>
entitled to receive if such Holder had exercised this Warrant in full
immediately prior to the occurrence of such merger, consolidation, share
exchange or disposition of assets. In the case of any such merger,
consolidation, share exchange or disposition of assets, the successor or
acquiring entity (and any Affiliate thereof issuing securities) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of this Warrant to be performed and observed by
the Issuer and all of the obligations and liabilities hereunder, subject to
such modifications as may be deemed appropriate (as determined by resolution
of the Board and reasonably acceptable to the Majority Holders) in order to
provide for adjustments of the Warrant Stock issuable upon exercise of this
Warrant that shall be as nearly equivalent as practicable to the adjustments
provided for in this Section 4. The foregoing provisions shall similarly
apply to successive mergers, consolidations, share exchanges and dispositions
of assets.
(h) Capital Reorganization or Capital Reclassification. If the
Issuer shall effect any capital reorganization or any reclassification of its
capital 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 as a result of a stock dividend or
subdivision, split-up or combination of shares), then in each case the Issuer
shall cause effective provision to be made so that this Warrant shall be
exercisable for the kind and number of shares of stock, other securities, cash
or other property to which a holder of the Warrant Stock deliverable upon
exercise of this Warrant would have been entitled upon such reorganization or
reclassification and any such provision shall include adjustments in respect of
such stock, securities or other property that shall be as nearly equivalent as
may be practicable to the adjustments provided for in this Section 4 with
respect to this Warrant.
(i) Other Action Affecting Common Stock. If at any time or from time
to time the Issuer shall take any action affecting its Common Stock, other than
any action described in this Section 4, then, unless such action will not have
an adverse effect upon the Holder's rights, the number of shares of Warrant
Stock issuable upon exercise of this Warrant and the Exercise Price shall be
adjusted in such manner and at such time as the Board shall in good faith
determine (such determination to be reasonably acceptable to the Majority
Holders) to be equitable in the circumstances, but no such adjustment shall
decrease the number of shares of Warrant Stock issuable upon exercise of this
Warrant or increase the Exercise Price.
(j) If at any time the Issuer shall issue any shares of its Common
Stock pursuant to the exercise of an option granted under a Stock Option Plan,
then the number of shares of Common Stock issuable upon the exercise of this
Warrant shall be increased by an amount equal to the product of (x) the number
of such shares issued pursuant to the option exercise and (y) 0.1764. The
provisions of this Section 4(j) shall only apply to issuances after the date
hereof of the first 1,300,000 shares of Common Stock pursuant to the Stock
Option Plans, as such number may be adjusted pursuant to any stock splits,
divisions, combinations or similar adjustments.
(k) Notice of Adjustments. Whenever the number of shares of Warrant
Stock issuable upon exercise of this Warrant shall be adjusted pursuant to this
Agreement, the Issuer shall forthwith obtain a certificate signed by a firm of
independent accountants of recognized national standing selected by the Issuer
setting forth, in reasonable detail, the event requiring the adjustment the
method by which such adjustment was calculated and specifying the number of
shares of Warrant Stock issuable upon exercise of this Warrant after giving
effect to such adjustment (except in the case of adjustments pursuant to Section
4(j) in which event a certificate shall be obtained on December 31 and June 30).
The Issuer shall promptly cause a signed copy of such certificate to be
delivered to the Holder. The Issuer shall keep at its office maintained for
purposes of Section 7(a) hereof copies of all such certificates and cause the
same to be available for inspection at said office during normal business hours
by the Holder or any prospective purchaser of a Warrant designated by the
registered Holder hereof.
(l) Notice of Certain Corporate Action. If the Issuer shall propose
(i) to pay any dividend to the holders of its
<PAGE>
Common Stock or to make any other distribution to the holders of its Common
Stock; (ii) to offer to the holders of its Common Stock rights to subscribe
for or to purchase any additional shares of Common Stock or any Options or
Convertible Securities; (iii) to effect any reorganization or
reclassification of its Common Stock; (iv) to otherwise issue any Common
Stock, Options, or Convertible Securities; (v) to effect any other capital
reorganization; (vi) to effect any consolidation, merger or share exchange or
any sale, transfer or other disposition of all or substantially all of its
assets; or (vii) to effect the liquidation, dissolution or winding up of the
Issuer, then, in each such case, the Issuer shall give to the Holder a notice
of such proposed action, which shall specify the date on which a record is to
be taken for the purposes of such dividend, distribution or rights offer, or
the date on which such reclassification, issuance, reorganization,
consolidation, merger, share exchange, sale, transfer, disposition,
liquidation, dissolution or winding up is to take place and the date of
participation therein by the holders of Common Stock, if any such date is to
be fixed, and shall also set forth such facts with respect thereto as shall
be reasonably necessary to indicate the effect of such action on the Common
Stock, and the number of shares of Warrant Stock that are issuable upon
exercise of this Warrant after giving effect to any adjustment that will be
required as a result of such action. Such notice shall be so given in the
case of any action covered by clause (i) or (ii) above at least 10 days prior
to the record date for determining holders of the Common Stock for purposes
of such action, and in the case of any other such action, at least 10 days
prior to the date of the taking of such proposed action.
(m) No Impairment. The Issuer will not, by amendment of its Articles
of Organization or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Issuer, but will at all
times in good faith assist in the carrying out of all the provisions of this
Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder against
impairment.
(n) Miscellaneous. The computations of all amounts under this
Section 4 shall be made assuming all other anti-dilution or similar adjustments
to be made to the terms of all other securities resulting from the transaction
causing an adjustment pursuant to this Section 4 have previously been made so as
to maintain the relative economic interest of this Warrant vis a vis all other
securities issued by the Issuer.
SECTION 5. EBIT Condition
(a) As promptly after the expiration of the Issuer's fiscal year for
1998 ("Fiscal 1998") as reasonably practicable, the Issuer's independent public
accountants (the "Accountants) shall calculate the Issuer's EBIT for Fiscal 1998
and the Accountants shall notify the Holder and the Issuer in writing of their
determination of EBIT for Fiscal 1998. The determination of the Accountants
with respect to any calculations pursuant to this Section 5 (absent manifest
error) shall be final and binding on the Issuer and all Holders. If EBIT for
Fiscal 1998 is equal to or exceeds the EBIT Target, the Holder shall, promptly
following receipt of a written request from the Issuer, surrender this Warrant
to the Issuer for cancellation for no consideration.
(b) In the event the Issuer makes any capital expenditures not
contemplated by the projections upon which the EBIT Target is based, or
consummates any mergers or acquisitions (whether of assets or equity or other
interests) or other extraordinary transactions, the Issuer and the Majority
Holders will determine in good faith an appropriate adjustment to the EBIT
Target.
SECTION 6. Miscellaneous.
(a) Office of Issuer. So long as this Warrant remains outstanding,
the Issuer shall maintain an office in the continental United States where the
Warrants may be presented for exercise, transfer, division, combination or
cancellation as provided in this Warrant. Such office shall be at 210
<PAGE>
Boylston Street, Chestnut Hill, MA 02167, unless and until the Issuer shall
designate and maintain some other office for such purposes and give notice
thereof to the Holder.
(b) Notices Generally. Any notices and other communications pursuant
to the provisions hereof shall be sent in accordance with the provisions of
Section 10.6 of the Purchase Agreement.
(c) Governing Law. This Warrant shall be governed by and construed
in accordance with the laws of the State of New York without regard to its
conflicts of laws rules. The Issuer agrees that it may be served with process
in the State of New York and any action for breach of this Warrant may be
prosecuted against it in the courts of such State or any Federal court located
in such State.
(d) Limitation of Liability. Except as otherwise provided herein,
this Warrant does not entitle the Holder to any voting rights or other rights of
a shareholder of the Issuer, as a shareholder. No provision hereof, in the
absence of affirmative action by the Holder to purchase shares of Common Stock,
and no mere enumeration herein of the rights or privileges of the Holder, shall
give rise to any liability of the Holder for the Exercise Price or as a
shareholder of the Issuer, whether such liability is asserted by the Issuer, by
any creditor of the Issuer or any other Person.
(e) Loss or Destruction of Warrant. Upon receipt by the Issuer of
evidence satisfactory to it (in the exercise of its reasonable discretion) of
the loss, theft, destruction or mutilation of this Warrant and (in the case of
loss, theft or destruction), if requested by the Issuer, of reasonably
satisfactory indemnification (if the Holder is a financial institution or an
Affiliate thereof, its own agreement being satisfactory), or (in the case of
mutilation) upon surrender and cancellation of this Warrant, the Issuer shall,
without charge, execute and deliver a new Warrant exercisable for the same
amount of Warrant Stock; provided, however, that (in the case of loss, theft or
destruction) no indemnity bond shall be required unless the Issuer has a class
of securities registered pursuant to the Securities Exchange Act of 1934, as
amended, and the Issuer's transfer agent requires such indemnity bond as a
condition to the issuance of a new Warrant.
(f) Amendments and Waivers. Any provision of this Warrant may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Issuer and the Holders and, in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
* * *
<PAGE>
IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.
Dated: July __, 1997
SAFETY 1ST, INC.
By:
-----------------------
Name
Title:
<PAGE>
ANNEX A
FORM OF EXERCISE NOTICE
(To be executed by the registered holder hereof)
The undersigned registered owner of this Warrant exercises this
Warrant for the purchase of ________ shares of Common Stock of Safety 1st, Inc.,
a Massachusetts corporation, and herewith makes payment therefor of $__________
(such payment being made [check one] (x) [ ] in cash or by certified or
official bank check or (y) [ ] by acceptance of a reduced number of shares of
Common Stock upon cancellation of this Warrant as provided in Section 2(b) of
this Warrant, all on the terms and conditions specified in this Warrant, and
requests that (i) certificates and/or other instruments covering such shares of
Common Stock be issued in accordance with the instructions given below and
(ii) if such shares of Common Stock shall not include all of the shares of
Common Stock to which the Holder is entitled under this Warrant, that a new
Warrant for the unpurchased balance of the shares of Common Stock issuable
hereunder be delivered to the undersigned. References in this Exercise Notice
to "Common Stock" shall include other securities or other property to the extent
included in Warrant Stock.
[This Exercise Notice is being delivered contingent upon the
consummation of [describe transaction] as contemplated by Section 2(d) of this
Warrant].(4)
Dated:
------------------
---------------------------------
(Signature of Registered Holder)(5)
Instructions for issuance and
registration of shares of
Common Stock:
- ----------------------------- Social Security or Other
Name of Registered Holder Identifying Number:
(please print) ---------------
Please deliver certificate to
the following address:
- -------------------------------
Street
- -------------------------------
City, State and Zip Code
- ------------------------
(4) Include if applicable.
(5) The signature must correspond with the name as written upon the face of
the attached Warrant in every particular, without alteration.
<PAGE>
ANNEX B
FORM OF ASSIGNMENT
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all the rights
of the undersigned under this Warrant with respect to the number of shares of
Common Stock covered thereby set forth below to:
Number of
Shares of
Name of Assignee Address Common Stock
- ---------------- ------- ------------
References in this Exercise Notice to "Common Stock" shall include other
securities or other property to the extent included in Warrant Stock.
Dated:
-----------------
----------------------------
(Signature of Registered Holder)(6)
----------------------------
Name of Registered Holder
(Please Print)
Witness:
- -------------------------------
- ---------------------
(6) The signature must correspond with the name as written upon the face of
the attached Warrant in every particular, without alteration.
