-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jyr1soSM+MscY4dTpmELM6vdCfBWnpWKm447l7m50+nP7UXK8klVfoetHGjfZfy5 UTtCHLU9wG+ufy/7NcaHzQ== 0000912057-97-026418.txt : 19970808 0000912057-97-026418.hdr.sgml : 19970808 ACCESSION NUMBER: 0000912057-97-026418 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 19970807 SROS: NASD GROUP MEMBERS: BANKERS TRUST NEW YORK CORP GROUP MEMBERS: BT CAPITAL PARTNERS, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: SAFETY 1ST INC CENTRAL INDEX KEY: 0000898306 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 042836423 STATE OF INCORPORATION: MA FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-45047 FILM NUMBER: 97653206 BUSINESS ADDRESS: STREET 1: 210 BOYLSTON ST CITY: CHESTNUT HILL STATE: MA ZIP: 02167 BUSINESS PHONE: 6179647744 MAIL ADDRESS: STREET 1: 210 BOYLSTON ST CITY: CHESNUT HILL STATE: MA ZIP: 02167 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: BANKERS TRUST NEW YORK CORP CENTRAL INDEX KEY: 0000009749 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 136180473 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 130 LIBERTY STREET CITY: NEW YORK STATE: NY ZIP: 10006 BUSINESS PHONE: 2122502500 MAIL ADDRESS: STREET 1: 130 LIBERTY STREET CITY: NEW YORK STATE: NY ZIP: 10006 FORMER COMPANY: FORMER CONFORMED NAME: BT NEW YORK CORP DATE OF NAME CHANGE: 19671107 SC 13D 1 SCHEDULE 13D SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------ SCHEDULE 13D Under the Securities Exchange Act of 1934 Amendment No. __ Safety 1st, Inc. - ------------------------------------------------------------------------------- (Name of issuer) Common Stock, par value $.01 per share - ------------------------------------------------------------------------------- (Title of class of securities) 786475-10-3 - ------------------------------------------------------------------------------- (CUSIP number) James T. Byrne, Jr. Office of the Secretary Bankers Trust New York Corporation 130 Liberty Street New York, New York 10006 (212) 250-1869 (Name, address and telephone number of person authorized to receive notices and communications) Copy to: Harvey M. Eisenberg, Esq. O'Sullivan Graev & Karabell, LLP 30 Rockefeller Plaza New York, New York 10112 (212) 408-2400 July 30, 1997 - ------------------------------------------------------------------------------- (Date of event which requires filing of this statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. (Continued on following pages) CUSIP No. 786475-10-3 13D Page 2 of ___ Pages ___________ 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS BT Capital Partners, Inc. 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / 3 SEC USE ONLY 4 SOURCE OF FUNDS* WC 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 SOLE VOTING POWER NUMBER OF 634,173 SHARES BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 634,173 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 634,173 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* / / 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 7.5% 14 TYPE OF REPORTING PERSON* CO
CUSIP No. 786475-10-3 13D Page 3 of ___ Pages ___________ 1 NAME OF REPORTING PERSONS S.S. OR I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS Bankers Trust New York Corporation 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) /x/ 3 SEC USE ONLY 4 SOURCE OF FUNDS* Not applicable. 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) / / 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware 7 SOLE VOTING POWER NUMBER OF 0 SHARES BENEFICIALLY 8 SHARED VOTING POWER OWNED BY EACH 0 REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 0 10 SHARED DISPOSITIVE POWER 0 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 0 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* /x/ 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0 14 TYPE OF REPORTING PERSON* CO
*SEE INSTRUCTIONS BEFORE FILLING OUT! ITEM 1. SECURITY AND ISSUER. This Statement relates to the Common Stock, par value $.01 per share ("Common Stock"), of Safety 1st, Inc. (the "Issuer"), whose principal executive offices are at 210 Boylston Street, Chestnut Hill, Massachusetts, 02167. ITEM 2. IDENTITY AND BACKGROUND. ITEM 2(A) THROUGH (C), ITEM 2(F). This statement is being filed by (i) BT Capital Partners, Inc., a Delaware corporation ("BT Capital Partners"), with respect to shares of Common Stock beneficially owned by it as principal and (ii) Bankers Trust New York Corporation, a New York corporation ("BTNY"). BT Capital Partners is an indirect wholly owned subsidiary of BTNY, through BTNY's subsidiary, BT Holdings (New York), Inc., a Delaware corporation ("BT Holdings"). BT Capital Partners is referred to from time to time as the "Purchaser". Attached hereto as Exhibit 1 is a chart showing the ownership relationship between BTNY and the Purchaser. The principal business of BT Capital Partners is as acting as a small business investment company licensed by the Small Business Administration under the Small Business Investment Act of 1958, as amended, investing in management buyouts, venture capital opportunities and mezzanine financing. The principal business of BT Holdings is as a holding company. The principal business of BTNY is as a bank holding company. The address of the principal business and principal office of BT Capital Partners is 130 Liberty Street, 25th Floor, New York, New York 10006. The address of the principal business and principal office of BT Holdings and BTNY is 130 Liberty Street, New York, New York 10006. The name, citizenship, business or residence address, principal occupation or employment, and name, principal business and address of any corporation or organization in which such employment is conducted of each director and executive officer of the Purchaser and BTNY is set forth in Annex A attached hereto and incorporated into this item 2 by reference. Items 2(d) and (3). Except as disclosed in Annex B hereto, neither the Purchaser, BTNY, nor, to their best knowledge or belief, BT Holdings, or any of the persons identified in Annex A, have during the past five years been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. DESCRIPTION OF TRANSACTION On July 30, 1997, BT Capital Partners, the Issuer and Bear, Stearns & Co. Inc. ("Bear Stearns") entered into a Stock and Warrant Purchase Agreement (the "Agreement"). Pursuant to the Agreement, BT Capital Partners purchased (i) 7,500 shares of the Issuer's non-voting Series A Preferred Stock, par value $1.00 per share, (ii) Warrants to purchase 570,755 shares of the Issuer's Common Stock and (iii) Warrants to purchase 63,418 shares of the Issuer's Common Stock subject to the Issuer's right to repurchase such Warrants under certain conditions. BT Capital Partners' original cost basis for the purchases of the Series A Preferred Stock and the Warrants was $7,500,000. Any funds used in this acquisition came from working capital. DISCLAIMER OF GROUP STATUS Pursuant to the Agreement, BT Capital Partners and Bear, Stearns were issued warrants to purchase shares of the Issuer's Common Stock. In addition, in connection with the Agreement and the closing of the transactions contemplated thereby, BT Capital Partners entered into (i) a Voting Agreement (a copy of which is attached hereto as Exhibit 3) (the "Voting Agreement") among the Issuer, BT Capital Partners, Bear, Stearns and certain shareholders of the Issuer and (ii) a Registration Rights Agreement (the "Registration Rights Agreement") among the Issuer, BT Capital Partners, Bear, Stearns and Michael Lerner. The Voting Agreement provides that each party to the agreement, including Bear Stearns, will (subject to the satisfaction of a minimum percentage holding of Common Stock by BT Capital Partners) vote all their respective holdings of Common Stock to elect one person designated by BT Capital Partners to the Issuer's Board of Directors. Pursuant to the Registration Rights Agreement, the Issuer agrees with BT Capital Partners and Bear, Stearns to provide certain rights of registration under the Securities Act of 1933 as amended (the "1933 Act"), with respect to their stockholdings of Common Stock. Prior to execution of the Agreement and the Voting Agreement, BT Capital Partners had no contractual or other relationship with Bear, Stearns with respect to beneficial ownership of the Issuer's Common Stock. The Series A Preferred Stock has no voting rights. As a party to the Voting Agreement, BT Capital Partners might be considered to be a member of a group together with Bear, Stearns because BT Capital Partners and Bear, Stearns have agreed (subject to the satisfaction of a minimum percentage holding of Common Stock) to vote their respective shares of Common Stock in favor of the appointment of persons designated by BT Capital Partners and Bear, Stearns, respectively, to the Board of Directors. However, BT Capital Partners disclaims membership in any such group and disclaims beneficial ownership of the shares of Common Stock owned by the other parties to the Voting Agreement. The Voting Agreement is filed as an exhibit hereto and is hereby incorporated by reference in its entirety. ITEM 4. PURPOSE OF TRANSACTION. The Purchaser has acquired the shares of Common Stock reported herein for investment purposes. The Purchaser intends to review from time to time the Issuer's business affairs and financial position. Based on such evaluation and review, as well as general economic and industry conditions existing at the time, the Purchaser may consider from time to time various alternative courses of action. Such actions may include the acquisition of additional Common Stock through open market purchases, privately negotiated transactions, tender offer, exchange offer or otherwise. Alternatively, such actions may involve the sale of all or a portion of the Common Stock in the open market, in privately negotiated transactions, through a public offering or otherwise. Except as set forth above, the Purchaser has no plan or proposals which relate to or would result in any of the transactions described in subparagraphs (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) BT Capital Partners beneficially owns 634,173 shares of Common Stock (all of which 634,173 shares are the subject of warrants), constituting 7.5% of the issued and outstanding shares of Common Stock of the Issuer. 1 As a parent of the Purchaser, BTNY may be deemed to be the indirect beneficial owner of the shares of Common Stock owned by the Purchaser. To the best knowledge and belief of the Purchaser and BTNY, none of the persons listed on Annex A hereto beneficially owns any shares of Common Stock. (b) Subject to the provisions of the Voting Agreement, the Purchaser has sole power to vote and dispose of the shares of Common Stock beneficially owned by it. (c) Annex C hereto sets forth all transactions in shares of Common Stock that were effected during the past sixty days by the persons referred to in paragraph (a). (d) No person other than the persons described in paragraph (a) has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, Common Stock beneficially owned by it. (e) Inapplicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. Reference is made to the information disclosed under Items 3 and 4 of this Statement which is incorporated by reference in response to this Item. In addition to such information, the following contracts, arrangements, understandings or relationships are reported hereunder. (a) Unconditional Warrant. Pursuant to Section 2.1 of the Agreement, the Issuer has issued Warrants, which are presently exercisable, dated as of July 30, 1997 which allow each of BT Capital Partners and Bear, Stearns to purchase up to 570,755 shares of Common Stock of the Issuer. (b) Conditional Warrant. Pursuant to Section 2.1 of the Agreement, the Issuer has issued Warrants, which are exercisable upon the satisfaction of certain conditions, dated as of July 30, 1997 which allow each of BT Capital Partners and Bear, Stearns to purchase to up 63,418 shares of Common Stock of the Issuer. - ------------------------ (1) After giving effect to the exercise of the warrants. Percentages used in this Item 5 are based on the number of securities outstanding as contained in the most recently available filing by the Issuer with the Securities and Exchange Commission. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. 1. Corporate Structure of BTNY and Certain Subsidiaries. 2. Joint filing statement pursuant to Rule 13d-1(f)(1). 3. Voting Agreement dated as of July 30, 1997 among Michael Lerner, Michael S. Bernstein, BT Capital Partners, Inc. and Bear, Stearns & Co. Inc. 4. Warrant dated as of July 30, 1997 to purchase Common Stock of Safety 1st, Inc. 5. Warrant dated as of July 30, 1997 to purchase Common Stock of Safety 1st, Inc. SIGNATURE After reasonable inquiry and to the best of our knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct. Date: August , 1997 BANKERS TRUST NEW YORK CORPORATION By: /s/ James T. Byrne ---------------------------------- Name: James T. Byrne Title: Senior Vice President ANNEX A BANKERS TRUST NEW YORK CORPORATION The following sets forth the name, mailing address, occupation or principal business affiliation and citizenship of each director and executive officer of BTNY. To the best knowledge and belief of BTNY, none of the following person beneficially owns any shares of Common Stock.
OCCUPATION OR PRINCIPAL BUSINESS NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP - ---------------------------------------- --------------------------------------------------- ----------- George B. Beitzel Retired Senior Vice President and Director U.S. 29 King Street International Business Machines Corporation Chappaqua, NY 10514-3432 Phillip A. Griffiths Chairman U.S. Institute for Advanced Study Institute for Advanced Study Olden Lane Princeton, NJ 08540 William R. Howell Chairman Emeritus U.S. J.C. Penney Company, Inc. J.C. Penney Company, Inc. P.O. Box 10001 Dallas, TX 75301-0001 Vernon E. Jordan, Jr. Senior Partner U.S. Akin, Gump, Strauss, Hauer & Feld, LLP 1333 New Hampshire Avenue, N.W. Suite 400 Washington, D.C. 20036 Hamish Maxwell Retired Chairman and Chief Executive Officer U.S. Philip Morris Companies, Inc. Philip Morris Companies, Inc. 100 Park Avenue New York, NY 10017 Frank N. Newman Chairman of the Board and Chief Executive Officer U.S. Bankers Trust Company and President Bankers Trust Company; Chairman of 130 Liberty Street the Board and Chief Executive Officer and New York, NY 10006 President Bankers Trust New York Corporation N.J. Nicholas Jr. Investor U.S. 15 West 53rd Street, #34F New York, NY 10019 Russell E. Palmer Chairman and Chief Executive Officer U.S. The Palmer Group The Palmer Group 3600 Market Street Suite 530 Philadelphia, PA 19104
OCCUPATION OR PRINCIPAL BUSINESS NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP - ---------------------------------------- --------------------------------------------------- ----------- Donald L. Staheli Chairman of the Board and Chief Executive Officer U.S. 39 Locust Street (Retired), Continental Grain Company New Canaan, CT 0684 Patricia Carry Stewart Former Vice President U.S. Bankers Trust Company The Edna McConnell Clark Foundation c/o Office of the Secretary 130 Liberty Street New York, NY 10006 George J. Vojta Vice Chairman U.S. Bankers Trust Company Bankers Trust Company and 130 Liberty Street Bankers Trust New York Corporation New York, NY 10006 Paul A. Volcker Director of Various Corporations U.S. 599 Lexington Avenue 40th Floor New York, NY 10021
NAME AND MAIL ADDRESS EXECUTIVE OFFICERS CITIZENSHIP - ---------------------------------------- --------------------------------------------------- ----------- Joseph A. Manganello, Jr. Senior Managing Director and U.S. Bankers Trust Company Chief Credit Officer 130 Liberty Street Bankers Trust Company; New York, NY 10006 Executive Vice President and Chief Credit Officer Bankers Trust New York Corporation Richard H. Daniel Senior Managing Director, Chief Financial Officer U.S. Bankers Trust Company and Controller Bankers Trust Company; 130 Liberty Street Vice Chairman, Chief Financial Officer and New York, NY 10006 Controller Bankers Trust New York Corporation Melvin A. Yellin Senior Managing Director and General Counsel U.S. Bankers Trust Company Bankers Trust Company; 130 Liberty Street Executive Vice President and General Counsel New York, NY 10006 Bankers Trust New York Corporation Mary Cirillo Senior Managing Director Bankers Trust Company U.S. Bankers Trust Company Executive Vice President 130 Liberty Street Bankers Trust New York Corporation New York, NY 10006
OCCUPATION OR PRINCIPAL BUSINESS NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP - ---------------------------------------- --------------------------------------------------- ----------- I. David Marshall Senior Managing Director and Chief Information U.S. Bankers Trust Company Officer Bankers Trust Company 130 Liberty Street Executive Vice President and New York, NY 10006 Chief Information Officer Bankers Trust New York Corporation
BT CAPITAL PARTNERS, INC. The following sets forth the name, mailing address, occupation or principal affiliation and citizenship of each director and executive officer of BT Capital Partners. To the best knowledge and belief of BT Capital Partners, none of the following persons beneficially owns any shares of Common Stock.
OCCUPATION OR PRINCIPAL BUSINESS NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP - ---------------------------------------- --------------------------------------------------- ----------- DIRECTORS - ---------------------------------------- --------------------------------------------------- ----------- Douglas Brent President Canada BT Capital Partners, Inc. BT Capital Partners, Inc. 130 Liberty Street New York, NY 10006 Carl Mueller Chairman U.S. c/o Bankers Trust Company BT Capital Partners, Inc. 280 Park Avenue New York, NY 10006 Alfred Brittain, III Former Chairman U.S. c/o Bankers Trust Company Bankers Trust New York Corporation 280 Park Avenue New York, NY 10006 Howard Blauvelt Former CEO of Conoco Oil U.S. 1410 Piper Way Keswick, VA 22947 George Vojta Vice Chairman U.S. Bankers Trust Company Bankers Trust New York Corporation 130 Liberty Street New York, NY 10006 Patrick Callahan, Jr. Partner U.S. Lazard Freres & Co. Lazard Freres & Co. 200 W. Madison Chicago, IL 60606 Larry Williams President U.S. 945 East Paces Ferry Road The Breckenridge Group, Inc. Atlanta, GA 30326 James Hellmuth Former President U.S. 270 Park Avenue, 5th Floor BT Capital Corporation New York, NY 10006 Hamish Maxwell Former Chairman U.S. Philip Morris Co. Philip Morris & Companies 100 Park Avenue 10th Floor New York, NY 10017
OCCUPATION OR PRINCIPAL BUSINESS NAME AND MAIL ADDRESS AFFILIATION CITIZENSHIP - ---------------------------------------- --------------------------------------------------- ----------- Yves De Balman Chairman France 1 Appold Street Bankers Trust International Broadgate, 4th Floor London, EC2A 2HE OFFICERS - ---------------------------------------- --------------------------------------------------- ----------- Heide Silverstein Treasurer/Secretary U.S. Bankers Trust Company 130 Liberty Street, 25th Floor New York, NY 10006 Joseph T. Wood Senior Vice President U.S. BT Capital Partners, Inc. Bankers Trust New York Corporation; 130 Liberty Street, 25th Floor Officer BT Capital Partners, Inc. New York, NY 10006
ANNEX B BTCo., BTNY and BTNY's subsidiary, BT Securities Corporation were subject to a Written Agreement, dated December 4, 1994 (the "Written Agreement"), with the Federal Reserve Bank of New York and a Memorandum of Understanding, dated December 21, 1994 (the "Memorandum"), with the New York State Banking Department. The Written Agreement and Memorandum are described in BTNY's Forms 8-K are hereby incorporated by reference into this Annex B. The Written Agreement expired in 1996. BT Securities entered into an Order, dated December 22, 1994, of the Securities and Exchange Commission and an Order dated December 22, 1994, of the Commodity Futures Trading Commission. These Orders are included in and described in BTNY's Form 8-K, dated December 22, 1994. This Form 8-K is hereby incorporated by reference into this Annex B. ANNEX C Except as set forth below, neither BT Capital Partners, BTNY nor, to the best of their knowledge, any of the persons referred to Item 5, paragraph (a) had any transactions in shares of Common Stock within the last 60 days.
PRICE PER IDENTITY TRADE DATE TRANSACTION QUANTITY SHARE - -------------------- ------------ ---------------- -------- --------- BT Capital Partners 07/30/97 Private Purchase 634,173 $ 0.01
EXHIBIT INDEX DOCUMENT 1. Corporate Structure of BTNY and Certain Subsidiaries. 2. Joint filing statement pursuant to Rule 13d-1(f)(1). 3. Voting Agreement dated as of July 30, 1997 among Michael Lerner, Michael S. Bernstein, BT Capital Partners, Inc. and Bear, Stearns & Co. Inc. 4. Warrant dated as of July 30, 1997 to purchase Common Stock of Safety 1st, Inc. 5. Warrant dated as of July 30, 1997 to purchase Common Stock of Safety 1st, Inc. EX-99.1 2 EXHIBIT 1 EXHIBIT 1 BT Capital Partners is classified as a corporation and is an indirect subsidiary of Bankers Trust New York Corporation, which is classified as a holding company. The chain of ownership from Bankers Trust New York Corporation to the Purchaser is shown below. Bankers Trust New York Corporation 100% BT Holdings (New York), Inc. 100% BT Capital Partners, Inc. EX-99.2 3 EXHIBIT 2 EXHIBIT 2 JOINT FILING STATEMENT Pursuant to Rule 13d-1(f)(1), each of the undersigned hereby consents to the joint filing of a statement on Schedule 13D with respect to shares of Common Stock, $0.01 par value, of Safety 1st, Inc., on behalf of each of them. Dated: _______________ BANKERS TRUST NEW YORK CORPORATION By:________________________________ Name: Title: BT CAPITAL PARTNERS, INC. By:________________________________ Name: Title: EX-99.3 4 EXHIBIT 3 EXHIBIT 3 VOTING AGREEMENT, dated as of July 30, 1997 (this "Agreement"), among SAFETY 1ST, INC., a Massachusetts Corporation (the "Company"), MICHAEL LERNER ("Lerner"), MICHAEL S. BERNSTEIN ("Bernstein", and together with Lerner, the "Stockholders"), BT CAPITAL PARTNERS, INC. ("BT") and BEAR, STEARNS & CO. INC. ("BS") (each, an "Investor," and collectively, the "Investors"). As of the date hereof each Stockholder owns (either beneficially or of record) the number of shares of Common Stock, par value $.01 per share (the "Safety 1st Stock"), of the Company set forth opposite such Stockholder's name on Exhibit A hereto (all such shares and any shares hereafter acquired by the Stockholders prior to the termination of this Agreement including shares of Safety 1st Stock, and shares of Safety 1st Stock obtained by a Stockholder upon the exercise, exchange or conversion of any option, warrant or other security, being referred to herein as the "Shares"). Pursuant to the Stock and Warrant Purchase Agreement dated as of the date hereof, among the Company and the Investors (the "Purchase Agreement"), the Company is issuing and the Investors are purchasing Preferred Stock and Warrants for an aggregate purchase price of $15,000,000. In order to induce the Investors to enter into the Stock and Warrant Purchase Agreement and consummate the transactions contemplated thereby, the Company has requested that each Stockholder agree, and each Stockholder has agreed, to grant the Company irrevocable proxies to vote his Shares in favor of appointing one Director designated by each of the Investors to the Board of Directors of the Company (the "Board") on the terms and conditions set forth in this Agreement. ACCORDINGLY, in consideration of the promises and of the mutual agreements and covenants set forth herein and in the Stock and Warrant Purchase Agreement, the parties hereto agree as follows: ARTICLE I REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS Each Stockholder, severally and not jointly, hereby represents and warrants to the Investors, as follows: 1.1. Due Authority. (a) Such Stockholder has full power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by or on behalf of such Stockholder and, constitutes a legal, valid and binding obligation of such Stockholder, enforceable against such Stockholder in accordance with its terms, subject to the effect of any applicable bankruptcy, reorganization, insolvency, moratorium or similar laws affecting creditors' rights generally and subject, as to enforceability, to the effect of general principles of equity (regardless of whether such enforceability is considered in proceeding in equity or at law). (b) There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which such Stockholder is trustee whose consent is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. (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, James Dworkin and John Howard, shall be appointed to the Board. 2.4.Cooperation of Other Stockholders. Each Stockholder agrees to cooperate with the Company in all reasonable respects in complying with the terms and provisions of the letter agreement between the Company and Investor, a copy of which is attached hereto as Exhibit B, regarding small business matters (the "Small Business Sideletter"), including without limitation, voting to approve amending the Company's Articles of Organization, the Company's by-laws or this Agreement in a manner reasonably requested by Investor or any Regulated Holder (as defined in the Small Business Sideletter) entitled to make such request pursuant to the Small Business Sideletter. Anything contained in this Section 2.4 to the contrary notwithstanding, no Stockholder shall be required under this Section 2.4 to take any action that would adversely affect in any material respect such Stockholder's rights under this Agreement or as a stockholder of the Company. 2.5. Covenant Not to Amend. The Company and each Stockholder agree not to amend or waive the voting or other provisions of the Company's Articles of Organization, the Company's by-laws or this Agreement if such amendment or waiver would cause any Regulated Holder to have a Regulatory Problem (as defined in the Small Business Sideletter), provided that any such Regulated Holder notifies the Company that it would have a Regulatory Problem promptly after it has notice of such proposed amendment or waiver. ARTICLE III TRANSFERS On or before the expiration of the Term no Stockholder shall Transfer (as hereinafter defined) any Shares to a Person (as hereinafter defined) not already a party to this Agreement as a Stockholder unless and until such Person executes and delivers to the Company a written agreement, in form and substance reasonably acceptable to the Investors, pursuant to which such Person shall (unless he is already a Stockholder) agree to become a party to, and to be bound by and to comply with the provisions of, this Agreement in the same capacity and to the same extent as the Stockholder Transferring such Shares. Any Transfer of Shares that is not made in compliance with the provisions hereof shall be void ab initio. The foregoing provisions of this Article III shall not apply to a Transfer of Shares by a 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, STEARNS & CO. INC. By: ------------------------------- Name: Title: ----------------------------------- MICHAEL LERNER ----------------------------------- MICHAEL S. BERNSTEIN Exhibit A Name and Address Number of Shares of Safety 1st, of Stockholder Inc. Owned by Stockholder ---------------- -------------------------------- Michael Lerner 2,990,667* c/o Safety 1st, Inc. 210 Boylston St. Chestnut Hill, MA 02167 Michael S. Bernstein 744,901* c/o Safety 1st, Inc. 210 Boylston St. Chestnut Hill, MA 02167 * Exceptions to Sections 1.3(b) and 1.4: Pledge Agreement dated January 31, 1997, between Michael Lerner, as Pledgor, and Fleet National Bank, as Agent for itself, The First National Bank of Boston and USTrust, pledging 27,043 shares of Safety 1st common stock. Upon default of obligations to the Pledgee, Pledgee has the right to vote these shares. Pledge Agreement dated January 31, 1997, between Michael Bernstein, as Pledgor, and Fleet National Bank, as Agent for itself, The First National Bank of Boston and USTrust, pledging 6,761 shares of Safety 1st common stock. Upon default of obligations to the Pledgee, Pledgee has the right to vote these shares. EXHIBIT B July 30, 1997 Safety lst, Inc. 210 Boylston St. Chestnut Hill, MA 02167 Ladies and Gentlemen: Reference is made to that certain Stock and Warrant Purchase Agreement (the "Purchase Agreement"), dated as of the date hereof, among Safety lst, Inc. (the "Company"), BT Capital Partners, Inc. ("Investor"), and the other parties identified therein, pursuant to which Investor is purchasing shares of the Company's Series A Preferred Stock and Warrants to purchase shares of the Company's Common Stock (collectively referred to herein as the "Shares"). Investor is a Small Business Investment Company ("SBIC") licensed by the United States Small Business Administration ("SBA"). In order for Investor to acquire and hold the Shares, it must obtain from the Company certain representations and rights as set forth below. As a material inducement to Investor to enter into the Purchase Agreement and to purchase the Shares, the Company hereby makes the following representations and warranties and agrees to comply with the following covenants: (a) Small Business Matters. (1)The Company, together with its "affiliates" (as that term is defined in Title 13, Code of Federal Regulations, Section 121.103), is a "small business concern" within the meaning of the Small Business Investment Act of 1958, as amended ("SBIA"), and the regulations thereunder, including Title 13, Code of Federal Regulations, Section 121.301(c). The information set forth in the Small Business Administration Forms 480, 652 and Parts A and B of Form 1031 regarding the Company and its affiliates, when delivered to Investor, will be accurate and complete and will be in form and substance acceptable to Investor. Copies of such forms shall be completed and executed by the Company and delivered to Investor at the closing of the sale of the Shares under the Purchase Agreement (the "Closing"). (2)The proceeds from the sale of the Shares will be used by the Company to (1) repay in part indebtedness due and payable under the Existing Credit Agreement (as defined in the Purchase Agreement), (2) pay expenses related to the transactions contemplated by the Purchase Agreement and (3) for ongoing working capital requirements. No portion of such proceeds (i) will be used to provide capital to a corporation licensed under the Small Business Investment Act of 1958, as amended ("SBIA"), (ii) will be used to acquire farm land, (iii) will be used to fund production of a single item or defined limited number of items, generally over a defined production period, and such production will constitute the majority of the activities of the Company and its Subsidiaries (examples include motion pictures and electric generating plants), or (iv) will be used for any purpose contrary to the public interest (including, but not limited to, activities which are in violation of law) or inconsistent with free competitive enterprise, in each case, within the meaning of 13 C.F.R. Section 107.720. (3)Neither the Company's nor any of its Subsidiaries' primary business activity involves, directly or indirectly, providing funds to others, the purchase or discounting of debt obligations, factoring or long-term leasing of equipment with no provision for maintenance or repair, and neither the Company nor any of its Subsidiaries is classified under Major Group 65 (Real Estate) of the SIC Manual. The assets of the business of the Company and its Subsidiaries (the "Business") will not be reduced or consumed, generally without replacement, as the life of the Business progresses, and the nature of the Business does not require that a stream of cash payments be made to the Business's financing sources, on a basis associated with the continuing sale of assets (examples of such businesses would include real estate development projects and oil and gas wells). (See 13 CFR Section 107.720) (4)The proceeds from the sale of the Shares will not be used substantially for a foreign operation; and at Closing or within one year thereafter, no more than 49 percent of the employees or tangible assets of the Company and its Subsidiaries will be located outside the United States (unless the Company can show, to SBA's satisfaction, that the proceeds from the sale of the Shares will be used for a specific domestic purpose). This subsection (d) does not prohibit such proceeds from being used to acquire foreign materials and equipment or foreign property rights for use or sale in the United States. (5)To the best knowledge of the Company, each SBIC that owns any Securities issued by the Company, together with a description of the kinds and amounts of Securities held, are listed on Schedule I hereto. Without the Investor's consent, the Company will not issue Securities to any SBIC in the future if such issuance would cause Investor to be deemed to be a member of an "Investor Group" in "Control" of the Company (as such terms are defined in 13 CFR Section 107.865). (b) Small Business Matters. (1)Regulatory Compliance Cooperation. a)In the event that Investor determines that it has a Regulatory Problem, the Company agrees to take all such actions as are reasonably requested by Investor in order (A) to effectuate and facilitate any transfer by Investor of any Securities of the Company then held by Investor to any Person designated by Investor, (B) to permit Investor (or any of its Affiliates) to exchange all or any portion of the voting Securities then held by such Person on a share-for-share basis for shares of a class of non-voting Securities of the Company, which non-voting Securities shall be identical in all respects to such voting Securities, except that such new Securities shall be non-voting and shall be convertible into voting Securities on such terms as are requested by Investor in light of regulatory considerations then prevailing, and (C) to continue and preserve the respective allocation of the voting interests with respect to the Company arising out of Investor's ownership of voting Securities and/or provided for in the Voting Agreement before the transfers and amendments referred to above (including entering into such additional agreements as are requested by Investor to permit any Person(s) designated by Investor to exercise any voting power which is relinquished by Investor upon any exchange of voting Securities for nonvoting Securities of the Company); and the Company shall enter into such additional agreements, adopt such amendments to this Agreement, the Company's Articles of Organization and the Company's By-laws and other relevant agreements and taking such additional actions, in each case as are reasonably requested by Investor in order to effectuate the intent of the foregoing. If Investor elects to transfer Securities of the Company to a Regulated Holder in order to avoid a Regulatory Problem, the Company shall enter into such agreements with such Regulated Holder as it may reasonably request in order to assist such Regulated Holder in complying with applicable laws, and regulations to which it is subject. Such agreements may include restrictions on the redemption, repurchase or retirement of Securities of the Company that would result or be reasonably expected to result in such Regulated Holder holding more voting securities or total securities (equity and debt) than it is permitted to hold under such laws and regulations. b)In the event Investor has the right to acquire any of the Company's Securities from the Company or any other Person (as the result of a preemptive offer, pro rata offer or otherwise), at Investor's request the Company will offer to sell to Investor non-voting Securities (or, if the Company is not the proposed seller, will arrange for the exchange of any voting securities for non-voting securities immediately prior to or simultaneous with such sale) on the same terms as would have existed 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 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. EX-99.4 5 EXHIBIT 4 EXHIBIT 4 WARRANT THE TRANSFER, SALE OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES WHICH MAY BE ACQUIRED ON THE EXERCISE HEREOF ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE STOCK AND WARRANT PURCHASE AGREEMENT DATED AS OF JULY 30, 1997 AMONG SAFETY 1ST, INC., A MASSACHUSETTS CORPORATION (THE "ISSUER"), BT CAPITAL PARTNERS, INC. AND BEAR, STEARNS & CO. INC., AS SUCH AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF SUCH AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF SUCH AGREEMENTS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES WHICH MAY BE ACQUIRED ON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM. No. of Shares Warrant No. U-1 of Common Stock: 570,755 WARRANT to Purchase Common Stock of SAFETY 1ST, INC. THIS IS TO CERTIFY THAT BT Capital Partners, Inc., or its registered assigns, is entitled to purchase in whole or in part from time to time from Safety 1st, Inc., a Massachusetts corporation (the "Issuer"), at any time on and after the Effective Date (as hereinafter defined), but not later than 5:00 p.m., New York time, on July 30, 2007 (the "Expiration Date"), 570,755 shares of Common Stock (as hereinafter defined) at a purchase price of $0.01 per share (the "Exercise Price"), subject to the terms and conditions provided herein and in the Purchase Agreement (as hereinafter defined). The number of shares of Common Stock for which this Warrant shall be exercisable and the Exercise Price are subject to adjustment from time to time as provided herein. This Warrant is issued pursuant to the Stock and Warrant Purchase Agreement dated as of July 30, 1997 (as modified and supplemented and in effect from time to time, the "Purchase Agreement") among the Issuer, BT Capital Partners, Inc. and Bear, Stearns & Co. Inc. and is subject to the provisions of the Purchase Agreement and the Registration Rights Agreement (as hereinafter defined). SECTION 1. Certain Definitions. (a) Each capitalized term used herein without definition shall have the meaning assigned thereto (or incorporated by reference) in the Purchase Agreement and in the Exhibits thereto. (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 Holder. SECTION 2. Exercise of Warrant. (a) On and after the Effective Date and until 5:00 p.m., New York City time, on the Expiration Date, the Holder may exercise this Warrant, on one or more occasions, on any Business Day, in whole or in part, by delivering to the Issuer, at its office maintained for such purpose pursuant to Section 5 hereof, (i) a written notice of the Holder's election to exercise this Warrant, which notice shall be substantially in the form of Annex A attached hereto and shall be properly completed (the "Exercise Notice"), (ii) payment of the Exercise Price (payable as set forth in Section 2(b) below) for the Warrant Stock as to which this Warrant is being exercised, and (iii) this Warrant. Except to the extent necessary to cause the number of shares of Common Stock deliverable as provided in Section 2(b) to be a whole number of shares, this Warrant shall be exercisable in part only for a whole number of shares. (b) At the option of the Holder, the Exercise Price shall be payable (i) in cash or by certified or official bank check payable to the order of the Issuer or (ii) by exchange of this Warrant in accordance with the further provisions of this Section 2(b). In exchange for the portion of this Warrant that is being exercised at such time, the Holder shall receive the number of shares of Common Stock determined by multiplying (A) the number of shares of Common Stock for which this Warrant is being exercised at such time by (B) a fraction, (1) the numerator of which shall be the difference between (x) Current Market Price per share of Common Stock at such time and (y) the Exercise Price per share of Common Stock, and (2) the denominator of which shall be the Current Market Price per share of Common Stock at such time. The Issuer shall issue a new Warrant for the portion, if any, of this Warrant not being exercised as provided in Section 2(f). (c) Subject to the provisions of Section 2(d), upon receipt of an Exercise Notice, the aggregate Exercise Price payable and this Warrant, the Issuer shall, as promptly as practicable and in any event within five (5) Business Days thereafter, issue to the Holder one or more stock certificates representing the aggregate number of shares of Common Stock to which the Holder is entitled and transfer to the Holder of this Warrant appropriate evidence of ownership of other securities or property (including any cash) to which the Holder is entitled, in such denominations, and registered or otherwise placed in, or payable to the order of, such name or names, as may be directed in writing by the Holder, and shall deliver such stock certificates, evidence of ownership and any other securities or property (including any cash) to the Person or Persons entitled to receive the same, together with an amount in cash in lieu of any fraction of a share (or fractional interest in any other security), as hereinafter provided. The Issuer shall pay all expenses in connection with, and any and all documentary, stamp or similar issue or transfer taxes of the United States or any state thereof payable in respect of, the issue or delivery of the Warrant Stock upon exercise of this Warrant. However, the Issuer shall not be required to pay any tax or other charge imposed in connection with any assignment or transfer involved in the issue of any certificate or other evidence of ownership of Warrant Stock. (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 Annex B attached hereto, duly executed by the Holder hereof or such Holder's agent or attorney. Upon such surrender, the Issuer shall, without charge, execute and deliver a new Warrant or Warrants in the name of the assignee or assignees (and, if the Holder's entire interest is not being assigned, in the name of the Holder), and in the denominations specified in such instrument of assignment, and this Warrant shall promptly be canceled. (c) This Warrant may be exchanged for, or combined with, other Warrants upon presentation of this Warrant and any other Warrants with which this Warrant is to be combined to the Issuer, together with a written notice specifying the denominations in which a new Warrant or Warrants are to be issued, signed by the Holder. The Issuer shall execute and deliver a new Warrant or Warrants to the Holder in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. (d) The Issuer shall maintain books for the registration and transfer of the Warrants, and shall allow each Warrant Holder to inspect such books at such reasonable times as such holder shall request. SECTION 4. Adjustments. (a) Dividends and Distributions. If at any time the Issuer shall pay any dividend or make any other distribution to holders of its Common Stock of any cash, evidence of indebtedness or other property (including any rights or warrants to purchase any securities of the Issuer) of any nature whatsoever (other than as contemplated by subsections (b), (c)(i)(A) and (d)(i)(A) of this Section 4), the Issuer shall at the same time pay or distribute to the Holder (whether or not the Holder exercises this Warrant) the cash evidence of indebtedness or other property the Holder would have been entitled to receive if such Holder had exercised this Warrant immediately prior to the record date for such dividend or distribution. (b) Subdivisions and Combinations. If at any time the Issuer shall (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 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 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. EX-99.5 6 EXHIBIT 5 EXHIBIT 5 WARRANT THE TRANSFER, SALE OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES WHICH MAY BE ACQUIRED ON THE EXERCISE HEREOF ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE STOCK AND WARRANT PURCHASE AGREEMENT DATED AS OF JULY 30, 1997 AMONG SAFETY 1ST, INC., A MASSACHUSETTS CORPORATION (THE "ISSUER"), BT CAPITAL PARTNERS, INC. AND BEAR, STEARNS & CO. INC., AS SUCH AGREEMENT MAY BE MODIFIED AND SUPPLEMENTED AND IN EFFECT FROM TIME TO TIME, AND NO TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. A COPY OF SUCH AGREEMENT IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER. THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES TO BE BOUND BY THE PROVISIONS OF SUCH AGREEMENTS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES WHICH MAY BE ACQUIRED ON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, SUCH SECURITIES MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REGISTRATION OR QUALIFICATION PROVISIONS OF APPLICABLE FEDERAL AND STATE SECURITIES LAWS OR APPLICABLE EXEMPTIONS THEREFROM. No. of Shares Warrant No. C-1 of Common Stock: 63,418 WARRANT to Purchase Common Stock of SAFETY 1ST, INC. THIS IS TO CERTIFY THAT BT Capital Partners, Inc., or its registered assigns, is entitled to purchase in whole or in part from time to time from Safety 1st, Inc., a Massachusetts corporation (the "Issuer"), at any time on and after the Effective Date (as hereinafter defined), but not later than 5:00 p.m., New York time, on July 30, 2007 (the "Expiration Date"), 63,418 shares of Common Stock (as hereinafter defined) at a purchase price of $0.01 per share (the "Exercise Price"), subject to the terms and conditions provided herein and in the Purchase Agreement (as hereinafter defined). The number of shares of Common Stock for which this Warrant shall be exercisable and the Exercise Price are subject to adjustment from time to time as provided herein. This Warrant is issued pursuant to the Stock and Warrant Purchase Agreement dated as of July 30, 1997 (as modified and supplemented and in effect from time to time, the "Purchase Agreement") among the Issuer, BT Capital Partners, Inc. and Bear, Stearns & Co. Inc. and is subject to the provisions of the Purchase Agreement and the Registration Rights Agreement (as hereinafter defined). SECTION 1. Certain Definitions. (a) Each capitalized term used herein without definition shall have the meaning assigned thereto (or incorporated by reference) in the Purchase Agreement and in the Exhibits thereto. (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 Holder. SECTION 2. Exercise of Warrant. (a) On and after the Effective Date and until 5:00 p.m., New York City time, on the Expiration Date, the Holder may exercise this Warrant, on one or more occasions, on any Business Day, in whole or in part, by delivering to the Issuer, at its office maintained for such purpose pursuant to Section 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 Annex B attached hereto, duly executed by the Holder hereof or such Holder's agent or attorney. Upon such surrender, the Issuer shall, without charge, execute and deliver a new Warrant or Warrants in the name of the assignee or assignees (and, if the Holder's entire interest is not being assigned, in the name of the Holder), and in the denominations specified in such instrument of assignment, and this Warrant shall promptly be canceled. (c) This Warrant may be exchanged for, or combined with, other Warrants upon presentation of this Warrant and any other Warrants with which this Warrant is to be combined to the Issuer, together with a written notice specifying the denominations in which a new Warrant or Warrants are to be issued, signed by the Holder. The Issuer shall execute and deliver a new Warrant or Warrants to the Holder in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. (d) The Issuer shall maintain books for the registration and transfer of the Warrants, and shall allow each Warrant Holder to inspect such books at such reasonable times as such holder shall request. SECTION 4. Adjustments. (a) Dividends and Distributions. If at any time the Issuer shall pay any dividend or make any other distribution to holders of its Common Stock of any cash, evidence of indebtedness or other property (including any rights or warrants to purchase any securities of the Issuer) of any nature whatsoever (other than as contemplated by subsections (b), (c)(i)(A) and (d)(i)(A) of this Section 4), the Issuer shall at the same time pay or distribute to the Holder (whether or not the Holder exercises this Warrant) the cash, evidence of indebtedness or other property the Holder would have been entitled to receive if such Holder would have been entitled to receive if such had exercised this Warrant immediately prior to the record date for such dividend or distribution. (b) Subdivisions and Combinations. If at any time the Issuer shall (i) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other distribution of Common Stock; (ii) subdivide, split or reclassify its outstanding shares of Common Stock into a larger number of shares of Common Stock; or (iii) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock; then immediately after the occurrence of any such event (A) the number of shares of Common Stock issuable upon exercise of this Warrant shall be adjusted so as to equal the number of shares of Common 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. 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. -----END PRIVACY-ENHANCED MESSAGE-----