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, XXXXXXX & 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, Xxxxxxx & 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.
(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.
"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
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.
"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).
"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
Xxxxxx.
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,
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
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 Xxxxx X attached
hereto, duly executed by the Holder hereof or such Xxxxxx'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
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
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,
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
entitled to receive if such Xxxxxx 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
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
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.
* * *
IN WITNESS WHEREOF, the Issuer has duly executed this Warrant.
Dated: July __, 1997
SAFETY 1ST, INC.
By:
-----------------------
Name
Title:
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.
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.
