EXHIBIT 2
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. U-2
of Common Stock: 570,755
WARRANT
to Purchase Common Stock of
SAFETY 1ST, INC.
THIS IS TO CERTIFY THAT Bear, Xxxxxxx & Co. Inc., or its registered
assigns, is entitled to purchase in whole or in part from time to time from
Safety 1st, Inc., a Massachusetts corporation (the "Issuer"), at any time on
and after the Effective Date (as hereinafter defined), but not later than
5:00 p.m., New York time, on July 30, 2007 (the "Expiration Date"), 570,755
shares of Common Stock (as hereinafter defined) at a purchase price of $0.01
per share (the "Exercise Price"), subject to the terms and conditions
provided herein and in the Purchase Agreement (as hereinafter defined). The
number of shares of Common Stock for which this Warrant shall be exercisable
and the Exercise Price are subject to adjustment from time to time as
provided herein.
This Warrant is issued pursuant to the Stock and Warrant Purchase
Agreement dated as of July 30, 1997 (as modified and supplemented and in
effect from time to time, the "Purchase Agreement") among the Issuer, BT
Capital Partners, Inc. and Bear, 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):
"Affiliate" means, with respect to any specified Person, any other
Person that, directly or indirectly, controls, is under common control with,
or is owned or controlled by, such specified Person. For purposes of this
definition, (i) "control" means, with respect to any specified Person, the
power to direct the management or policies of the specified Person through
the ownership of voting securities, by contract, voting agreement or
otherwise, and (ii) the terms "controlling", "control with" and "controlled
by", etc. shall have meanings correlative to the foregoing.
"Appraisal Procedure", if applicable, shall mean the following
procedure to determine the fair market value, as to any security, for
purposes of the definition of "Current Market Price" or the fair market
value, as to any other property (in either case, the "valuation amount").
The valuation amount shall be determined in good faith jointly by the Board
and the Majority Holders; provided, however, that if such parties are not
able to agree on the valuation amount within a reasonable period of time (not
to exceed twenty (20) Business Days) the valuation amount shall be determined
by an investment banking firm of national recognition, which firm shall be
reasonably acceptable to the Board and the Majority Holders. If the Board
and the Majority Holders are unable to agree upon an acceptable investment
banking firm within ten (10) Business Days after the date either party
proposed that one be selected, the investment banking firm will be selected
by an arbitrator located in New York City, New York, selected by the American
Arbitration Association (or if such organization ceases to exist, the
arbitrator shall be chosen by a court of competent jurisdiction). The
arbitrator shall select the investment banking firm (within ten (10) days of
his appointment) from a list, jointly prepared by the Board and the Majority
Holders, of not more than six investment banking firms of national standing
in the United States, of which no more than three may be named by the Board
and no more than three may be named by the Majority Holders. The arbitrator
may consider, within the ten-day period allotted, arguments from the parties
regarding which investment banking firm to choose, but the selection by the
arbitrator shall be made in its sole discretion from the list of six. The
Board and the Majority Holders shall submit to the investment banking firm
their respective determinations of the valuation amount, and any supporting
arguments and other data as they may desire, within ten (10) days of the
appointment of the investment banking firm, and the investment banking firm
shall as soon as practicable thereafter make its own determination of the
valuation amount. The final valuation amount for purposes hereof shall be
the average of the two valuation amounts closest together, as determined by
the investment banking firm, from among the valuation amounts submitted by
the Issuer and the Majority Holders and the valuation amount calculated by
the investment banking firm. Such determination of the final valuation amount
by such investment banking firm shall be final and binding upon the parties.
The fees and expenses of the investment banking firm and arbitrator (if any)
used to determine the valuation amount shall be paid by the Issuer or the
applicable Warrant Holders (on a pro rata basis), whichever party's valuation
amount is excluded from the average referred to above, unless the investment
banking firm's valuation amount is excluded from the average, in which case
such fees and expenses will be divided evenly between the Issuer and such
Warrant Holders. If required by any such investment banking firm or
arbitrator, the Issuer shall execute a retainer and engagement letter
containing reasonable terms and conditions, including, without limitation,
customary provisions concerning the rights of indemnification and
contribution by the Issuer in favor of such investment banking firm or
arbitrator and its officers, directors, partners, employees, agents and
Affiliates.
"Articles of Organization" means the Restated Articles of
Organization of the Issuer as amended and restated and in effect at the time
in question.
"Board" shall mean the Board of Directors of the Issuer.
"By-laws" means the by-laws of the Issuer, as amended and in effect
at time in question.
"Common Stock" shall mean the Issuer's Common Stock, par value $.01
per share.
"Convertible Securities" shall have the meaning given to such term
in Section 4(d).
"Current Market Price" shall mean, as to any security, the average
of the closing prices of such security's sales on all domestic securities
exchanges on which such security may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if
on any day such security is not so listed, the average of the representative
bid and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York
City time, on such day, or, if on any day such security is not quoted in the
NASDAQ System, the average of the highest bid and lowest asked prices on such
day in the domestic over-the-counter market as reported by the National
Quotation Bureau, Incorporated, or any similar or successor organization (and
in each such case (i) averaged over a period of 21 days consisting of the day
immediately preceding the day as of which "Current Market Price" is being
determined and the 20 consecutive Business Days prior to such immediately
preceding day and (ii) excluding any trades that are not bona fide, arm's
length transactions). If at any time such security is not listed on any
domestic securities exchange or quoted in the NASDAQ System or the domestic
over-the-counter market, the "Current Market Price" of such security shall be
the fair market value thereof as determined in accordance with the Appraisal
Procedure, using an appropriate valuation method, assuming an arms-length
sale to an independent party. In determining the fair market value of the
Common Stock, a sale of all of the issued and outstanding Common Stock of the
Issuer will be assumed, without giving regard to the lack of liquidity of
such stock due to any restrictions (contractual or otherwise) applicable
thereto or any discount for minority interests and assuming the conversion or
exchange of all securities then outstanding that are convertible into or
exchangeable for Common Stock and the exercise of all rights and warrants
(including the Warrants) then outstanding and exercisable to purchase shares
of such stock or securities convertible into or exchangeable for shares of
such stock. Common Stock issued in an underwritten public offering shall be
deemed to be issued for fair market value.
"Effective Date" shall mean the date set forth on the signature page
of this Warrant.
"Excluded Stock" shall mean (i) any shares of Common Stock issuable
upon the exercise of any options granted pursuant to the Stock Option Plans,
and (ii) any shares of Common Stock issuable upon exercise of any Warrants.
"Exercise Condition" shall have the meaning assigned to it in
Section 2 hereof.
"Exercise Notice" shall have the meaning assigned to such term in
Section 2 hereof.
"Exercise Price" shall have the meaning assigned to such term in the
first paragraph of this Warrant.
"Expiration Date" shall have the meaning assigned to such term in
the first paragraph of this Warrant.
"Fundamental Documents" means the documents by which any Person
(other than an individual) establishes its legal existence or which govern
its internal affairs. The Fundamental Documents of the Issuer are the
Articles of Organization and By-laws.
"Holder" shall mean the registered holder of this Warrant and the
registered holder of any Warrant Stock issued upon exercise hereof.
"include" and "including" shall be construed as if followed by the
phrase ", without being limited to,".
"Issuer" shall have the meaning assigned to such term in the first
paragraph of this Warrant.
"Majority Holders" shall mean those Warrant Holders holding (or
having the right to receive upon exercise of Warrants) Warrant Stock
representing a majority of the total amount of Warrant Stock held by, or
issuable to, all Warrant Holders.
"NASDAQ System" shall mean the National Association of Securities
Dealers Automated Quotation System.
"Options" shall have the meaning given to such term in Section 4(d).
"Person" shall be construed in its broadest possible sense and shall
include any individual, corporation, general or limited partnership, joint
venture, association, limited liability company, joint stock company, trust,
business trust, bank, trust company, estate (including any beneficiaries
thereof), unincorporated organization, cooperative, association or
governmental branch, authority, agency or political subdivision thereof.
"Purchase Agreement" shall have the meaning assigned to such term in
the second paragraph of this Warrant.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement dated as of July 30, 1997 between the Issuer and the Holders, as
modified and supplemented and in effect from time to time.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Series A Preferred Stock" shall mean the Issuer's Series A
Preferred Stock, par value $1 per share.
"Stock Option Plans" shall have the meaning assigned to such term in
the Purchase Agreement and any other stock option plans adopted by the Issuer
and any other grants of stock options made by the Issuer, in each case
granted to employees, directors and independent contractors of the Issuer or
its subsidiaries.
"Voting Agreement" shall mean the Voting Agreement dated as of July
30, 1997 among the Issuer, the Holders and the other signatories thereto, as
modified and supplemented and in effect from time to time.
"Warrant" shall mean this Warrant and all other warrants originally
issued by the Issuer pursuant to the Purchase Agreement and all warrants
issued upon transfer, division, or combination of, or in substitution for,
this Warrant or any such other warrant. All Warrants shall be substantially
in the form of Exhibit D attached to the Purchase Agreement except that the
Warrants need not bear the legends appearing on the first page of this
Warrant from and after such time as the restrictions set forth therein no
longer apply.
"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 5 hereof, (i) a written
notice of the Holder's election to exercise this Warrant, which notice shall
be substantially in the form of Annex A attached hereto and shall be properly
completed (the "Exercise Notice"), (ii) payment of the Exercise Price
(payable as set forth in Section 2(b) below) for the Warrant Stock as to
which this Warrant is being exercised, and (iii) this Warrant. Except to the
extent necessary to cause the number of shares of Common Stock deliverable as
provided in Section 2(b) to be a whole number of shares, this Warrant shall
be exercisable in part only for a whole number of shares.
(b) At the option of the Holder, the Exercise Price shall be
payable (i) in cash or by certified or official bank check payable to the
order of the Issuer or (ii) by exchange of this Warrant in accordance with
the further provisions of this Section 2(b). In exchange for the portion of
this Warrant that is being exercised at such time, the Holder shall receive
the number of shares of Common Stock determined by multiplying (A) the number
of shares of Common Stock for which this Warrant is being exercised at such
time by (B) a fraction, (1) the numerator of which shall be the difference
between (x) Current Market Price per share of Common Stock at such time and
(y) the Exercise Price per share of Common Stock, and (2) the denominator of
which shall be the Current Market Price per share of Common Stock at such
time. The Issuer shall issue a new Warrant for the portion, if any, of this
Warrant not being exercised as provided in Section 2(f).
(c) Subject to the provisions of Section 2(d), upon receipt of an
Exercise Notice, the aggregate Exercise Price payable and this Warrant, the
Issuer shall, as promptly as practicable and in any event within five (5)
Business Days thereafter, issue to the Holder one or more stock certificates
representing the aggregate number of shares of Common Stock to which the
Holder is entitled and transfer to the Holder of this Warrant appropriate
evidence of ownership of other securities or property (including any cash) to
which the Holder is entitled, in such denominations, and registered or
otherwise placed in, or payable to the order of, such name or names, as may
be directed in writing by the Holder, and shall deliver such stock
certificates, evidence of ownership and any other securities or property
(including any cash) to the Person or Persons entitled to receive the same,
together with an amount in cash in lieu of any fraction of a share (or
fractional interest in any other security), as hereinafter provided. The
Issuer shall pay all expenses in connection with, and any and all
documentary, stamp or similar issue or transfer taxes of the United States or
any state thereof payable in respect of, the issue or delivery of the Warrant
Stock upon exercise of this Warrant. However, the Issuer shall not be
required to pay any tax or other charge imposed in connection with any
assignment or transfer involved in the issue of any certificate or other
evidence of ownership of Warrant Stock.
(d) The Holder's election to exercise this Warrant may, in the sole
discretion of the Holder, be conditioned upon, and in such event, the
exercise shall be subject in all respects to a Change of Control, the Issuer
ceasing to be a reporting company under the Securities and Exchange Act of
1934, as amended, the consummation of a sale of the Issuer, any public
offering of the Issuer's Common Stock registered under the Securities Act or
other similar transaction involving the Issuer (collectively referred to
herein as the "Exercise Conditions"), as specified in the Exercise Notice,
and the Issuer shall provide the Holder with written notice no less than 20
business days prior to the occurrence of an Exercise Condition. If any
exercise of this Warrant is so conditioned, then, subject to delivery of the
items required by Section 2(b), the Issuer shall deliver the certificates and
other evidence of ownership of other securities or other property in such
manner as the Holder shall direct as required in connection with the
consummation of the transaction upon which the exercise is conditioned. At
any time that the Issuer shall give notice to the Holder that such
transaction has been abandoned or the Issuer has withdrawn from participation
in such transaction, the Issuer shall return the items delivered pursuant to
Section 2(c) and the Holder's election to exercise this Warrant shall be
deemed rescinded.
(e) The stock certificate or certificates or other evidence of
ownership of Warrant Stock to be delivered pursuant to Section 2(c) hereof
shall be deemed to have been issued, and the Holder or any other Person so
designated to be named therein shall, to the extent permitted by law and the
Purchase Agreement, be deemed to have become a holder of record of the
Warrant Stock represented thereby, including having the right to vote any
voting securities included therein or to consent or to receive notice as a
shareholder, as of the date on which the last of the Exercise Notice, payment
of the Exercise Price and this Warrant is received by the Issuer as aforesaid
(subject, in the case of an exercise to which Section 2(d) applies, to the
consummation of the transaction upon which such exercise is conditioned),
notwithstanding that the transfer books of the Issuer shall then be closed or
that such certificates or other evidence of ownership shall not then actually
have been delivered to the Holder.
(f) If this Warrant shall have been exercised only in part, the
Issuer shall, at the time of delivery of the certificate or certificates or
other evidence of ownership of Warrant Stock, execute and deliver to the
Holder, without charge, a new Warrant evidencing the rights of the Holder to
purchase the unpurchased Warrant Stock called for by this Warrant, which new
Warrant shall in all other respects be identical to this Warrant, or, at the
request of the Holder, appropriate notation may be made on this Warrant and
the same returned to the Holder.
(g) The Issuer shall not be required to issue any fractional share
of Common Stock (or fractional interest in any other security) upon exercise
of this Warrant. As to any fraction of a share (or fractional interest in
any other security) that the Holder would otherwise be entitled to receive
upon such exercise, the Issuer shall pay a cash adjustment in respect of such
fraction in an amount equal to the same fraction of the Current Market Price
per share of Common Stock (and/or other security) on the date of exercise;
provided, however, that in the event that the Issuer undertakes a reduction
in the number of shares of Common Stock or other securities outstanding, it
shall be required to issue fractional shares or fractional interests in such
other securities to the Holder if the Holder exercises all or any part of
this Warrant, unless the Holder shall have consented in writing to such
reduction and provided the Issuer with a written waiver of its right to
receive fractional shares or interests in accordance with this paragraph. If
the Holder shall exercise more than one Warrant in the same transaction, any
payment in respect of fractional shares (or other fractional interests) shall
be based on the final fraction resulting from aggregating all such exercises.
(h) The Issuer hereby agrees at all times to keep reserved for
issuance and delivery upon exercise of this Warrant such number of its
authorized but unissued shares (or treasury shares) of Common Stock or other
securities of the Issuer from time to time issuable upon exercise of this
Warrant as will be sufficient to permit the exercise in full of this Warrant.
All such shares and other securities shall be duly authorized and, when
issued upon such exercise, shall be validly issued, fully paid and
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 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 Holder had exercised this Warrant in full
immediately prior to the occurrence of such merger, consolidation, share
exchange or disposition of assets. In the case of any such merger,
consolidation, share exchange or disposition of assets, the successor or
acquiring entity (and any Affiliate thereof issuing securities) shall
expressly assume the due and punctual observance and performance of each and
every covenant and condition of this Warrant to be performed and observed by
the Issuer and all of the obligations and liabilities hereunder, subject to
such modifications as may be deemed appropriate (as determined by resolution
of the Board and reasonably acceptable to the Majority Holders) in order to
provide for adjustments of the Warrant Stock issuable upon exercise of this
Warrant that shall be as nearly equivalent as practicable to the adjustments
provided for in this Section 4. The foregoing provisions shall similarly
apply to successive mergers, consolidations, share exchanges and dispositions
of assets.
(h) Capital Reorganization or Capital Reclassification. If the
Issuer shall effect any capital reorganization or any reclassification of its
capital stock (other than a change in par value or from par value to no par
value or from no par value to par value or as a result of a stock dividend or
subdivision, split-up or combination of shares), then in each case the Issuer
shall cause effective provision to be made so that this Warrant shall be
exercisable for the kind and number of shares of stock, other securities,
cash or other property to which a holder of the Warrant Stock deliverable
upon exercise of this Warrant would have been entitled upon such
reorganization or reclassification and any such provision shall include
adjustments in respect of such stock, securities or other property that shall
be as nearly equivalent as may be practicable to the adjustments provided for
in this Section 4 with respect to this Warrant.
(i) Other Action Affecting Common Stock. If at any time or from
time to time the Issuer shall take any action affecting its Common Stock,
other than any action described in this Section 4, then, unless such action
will not have an adverse effect upon the Holder's rights, the number of
shares of Warrant Stock issuable upon exercise of this Warrant and the
Exercise Price shall be adjusted in such manner and at such time as the Board
shall in good faith determine (such determination to be reasonably acceptable
to the Majority Holders) to be equitable in the circumstances, but no such
adjustment shall decrease the number of shares of Warrant Stock issuable upon
exercise of this Warrant or increase the Exercise Price.
(j) If at any time the Issuer shall issue any shares of its Common
Stock pursuant to the exercise of an option granted under a Stock Option
Plan, then the number of shares of Common Stock issuable upon the exercise of
this Warrant shall be increased by an amount equal to the product of (x) the
number of such shares issued pursuant to the option exercise and (y) 0.1764.
The provisions of this Section 4(j) shall only apply to issuances after the
date hereof of the first 1,300,000 shares of Common Stock pursuant to the
Stock Option Plans, as such number may be adjusted pursuant to any stock
splits, divisions, combinations or similar adjustments.
(k) Notice of Adjustments. Whenever the number of shares of
Warrant Stock issuable upon exercise of this Warrant shall be adjusted
pursuant to this Agreement, the Issuer shall forthwith obtain a certificate
signed by a firm of independent accountants of recognized national standing
selected by the Issuer setting forth, in reasonable detail, the event
requiring the adjustment, the method by which such adjustment was calculated
and specifying the number of shares of Warrant Stock issuable upon exercise
of this Warrant after giving effect to such adjustment (except in the case of
adjustments pursuant to Section 4(j) in which event a certificate shall be
obtained on December 31 and June 30). The Issuer shall promptly cause a
signed copy of such certificate to be delivered to the Holder. The Issuer
shall keep at its office maintained for purposes of Section 7(a) hereof
copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by the Holder or any
prospective purchaser of a Warrant designated by the registered Holder hereof.
(l) Notice of Certain Corporate Action. If the Issuer shall
propose (i) to pay any dividend to the holders of its Common Stock or to make
any other distribution to the holders of its Common Stock; (ii) to offer to
the holders of its Common Stock rights to subscribe for or to purchase any
additional shares of Common Stock or any Options or Convertible Securities;
(iii) to effect any reorganization or reclassification of its Common Stock;
(iv) to otherwise issue any Common Stock, Options, or Convertible Securities;
(v) to effect any other capital reorganization; (vi) to effect any
consolidation, merger or share exchange or any sale, transfer or other
disposition of all or substantially all of its assets; or (vii) to effect the
liquidation, dissolution or winding up of the Issuer, then, in each such
case, the Issuer shall give to the Holder a notice of such proposed action,
which shall specify the date on which a record is to be taken for the
purposes of such dividend, distribution or rights offer, or the date on which
such reclassification, issuance, reorganization, consolidation, merger, share
exchange, sale, transfer, disposition, liquidation, dissolution or winding up
is to take place and the date of participation therein by the holders of
Common Stock, if any such date is to be fixed, and shall also set forth such
facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action on the Common Stock, and the number of shares of
Warrant Stock that are issuable upon exercise of this Warrant after giving
effect to any adjustment that will be required as a result of such action.
Such notice shall be so given in the case of any action covered by clause (i)
or (ii) above at least 10 days prior to the record date for determining
holders of the Common Stock for purposes of such action, and in the case of
any other such action, at least 10 days prior to the date of the taking of
such proposed action.
(m) No Impairment. The Issuer will not, by amendment of its
Articles of Organization or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or performed hereunder by the Issuer, but will at
all times in good faith assist in the carrying out of all the provisions of
this Section 4 and in the taking of all such action as may be necessary or
appropriate in order to protect the exercise rights of the Holder against
impairment.
(n) Miscellaneous. The computations of all amounts under this
Section 4 shall be made assuming all other anti-dilution or similar
adjustments to be made to the terms of all other securities resulting from
the transaction causing an adjustment pursuant to this Section 4 have
previously been made so as to maintain the relative economic interest of this
Warrant vis a vis all other securities issued by the Issuer.
SECTION 5. Miscellaneous.
(a) Office of Issuer. So long as this Warrant remains outstanding,
the Issuer shall maintain an office in the continental United States where
the Warrants may be presented for exercise, transfer, division or combination
as provided in this Warrant. Such office shall be at 000 Xxxxxxxx Xxxxxx,
Xxxxxxxx Xxxx, XX 00000, 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 nationally-chartered
financial institution or an Affiliate thereof, its own agreement being
satisfactory), or (in the case of mutilation) upon surrender and cancellation
of this Warrant, the Issuer shall, without charge, execute and deliver a new
Warrant exercisable for the same amount of Warrant Stock; provided, however,
that (in the case of loss, theft or destruction) no indemnity bond shall be
required unless the Issuer has a class of securities registered pursuant to
the Securities Exchange Act of 1934, as amended, and the Issuer's transfer
agent requires such indemnity bond as a condition to the issuance of a new
Warrant.
(f) Amendments and Waivers. Any provision of this Warrant may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by the Issuer and the Holders and, in
the case of a waiver, by the party against whom the waiver is to be
effective. No failure or delay by either party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
* * *
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].1
Dated:________________________
__________________________________
(Signature of Registered Holder)2
Instructions for issuance and
registration of shares of
Common Stock:
_________________________ Social Security or Other
Name of Registered Holder Identifying Number:________________
(please print)
Please deliver certificate to
the following address:
______________________________
Street
______________________________
City, State and Zip Code
________________________
1 Include if applicable.
2 The signature must correspond with the name as written upon the face of
the attached Warrant in every particular, without alteration.
ANNEX B
FORM OF ASSIGNMENT
(To be executed by the registered holder hereof)
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all the
rights of the undersigned under this Warrant with respect to the number of
shares of Common Stock covered thereby set forth below to:
Number of
Shares of
Name of Assignee Address Common Stock
---------------- ------- ------------
References in this Exercise Notice to "Common Stock" shall include other
securities or other property to the extent included in Warrant Stock.
Dated:____________________________
_________________________________
(Signature of Registered Holder)3
_________________________________
Name of Registered Holder
(Please Print)
Witness:
___________________________________
-----------------------------
3 The signature must correspond with the name as written upon the face of the
attached Warrant in every particular, without alteration.
