EXHIBIT 1
VOTING AGREEMENT, dated as of July 30,
1997 (this "Agreement"), among SAFETY
1ST, INC., a Massachusetts Corporation
(the "Company"), XXXXXXX XXXXXX
("Xxxxxx"), XXXXXXX X. XXXXXXXXX
("Xxxxxxxxx", and together with Xxxxxx,
the "Stockholders"), BT CAPITAL
PARTNERS, INC. ("BT") and BEAR, XXXXXXX
& 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.
(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 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).
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, Xxxxx Xxxxxxx and Xxxx Xxxxxx, 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 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.
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.
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.
* * * * *
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, XXXXXXX & CO. INC.
By:---------------------
Name:
Title:
------------------------
XXXXXXX XXXXXX
------------------------
XXXXXXX X. XXXXXXXXX
Exhibit A
Name and Address Number of Shares of Safety 1st,
of Stockholder Inc. Owned by Stockholder
Xxxxxxx Xxxxxx 2,990,667*
c/o Safety 1st, Inc.
000 Xxxxxxxx Xx.
Xxxxxxxx Xxxx, XX 00000
Xxxxxxx X. Xxxxxxxxx 744,901*
c/o Safety 1st, Inc.
000 Xxxxxxxx Xx.
Xxxxxxxx Xxxx, XX 00000
* Exceptions to Sections 1.3(b) and 1.4:
Pledge Agreement dated January 31, 1997, between Xxxxxxx Xxxxxx, 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 Xxxxxxx Xxxxxxxxx, 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.
EXHIBIT B
July 30, 1997
Safety lst, Inc.
000 Xxxxxxxx Xx.
Xxxxxxxx Xxxx, XX 00000
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 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 xxxxx). (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 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.
"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.
* * * * *
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:
Schedule I
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SBIC Securities
---- ----------
BT Capital Partners, Inc. The Shares
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.
