REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of
September 5, 2001 between The Right Start, Inc., a California corporation (the
"Company"), and Athanor Holdings, LLC ("Athanor"), Xxxx Xxxxx, an individual
("Xxxx Xxxxx"), ARBCO Associates, L.P., Xxxxx Xxxxxxxx Non-Traditional
Investments, L.P., Xxxxx Xxxxxxxx Offshore Limited, Xxxxx Xxxxxxxx Diversified
Capital Partners, L.P., Xxxxx Xxxxxxxx Capital Partners, L.P. (collectively, the
"Kayne Entities"), Xxxxxxx Xxxxx, an individual ("Xxxxxxx Xxxxx"), Palomar
Ventures I, L.P. ("Palomar"), Marina Corporate LLC ("Marina") and Xxxxxxx
Xxxxxxx, an individual ("Xxxxxxx Xxxxxxx") (Athanor, Xxxx Xxxxx, the Kayne
Entities, Xxxxxxx Xxxxx, Palomar, Marina and Xxxxxxx Xxxxxxx, each a "Holder").
R E C I T A L S
WHEREAS, the Company and Athanor have entered into an Investment Agreement,
dated August 15, 2001 as amended by Amendment No. 1 to Investment Agreement,
dated September 5, 2001 (the "Athanor Purchase Agreement") pursuant to which the
Company sold and Athanor purchased the Company's Series E Convertible Preferred
Stock, $.01 par value per share, (the "Series E Preferred") and the Company's 4%
Subordinated Convertible Redeemable Pay-in-Kind Note due 2004 (the "PIK Notes");
WHEREAS, the Company and Xxxxxxx Xxxxxxx have entered into the LLC Purchase
Agreement, dated August 17, 2001 (the "LLC Purchase Agreement") pursuant to
which the Company sold and Xxxxxxx Xxxxxxx purchased the Company's Series F
Convertible Preferred Stock, $.01 par value per share (the "Series F
Preferred"); and the Company and Palomar, Marina, Xxxx Xxxxx, Xxxxxxx Xxxxx, and
the Kayne Entities (the "Xxxxxxx-RS Holders" and, together with Xxxxxxx Xxxxxxx,
the "Series F Holders") have entered into the Xxxxxxx-RS LLC Note Purchase
Agreement, dated September 5, 2001 (the "Xxxxxxx Note Purchase Agreement"),
pursuant to which the Company sold and the Xxxxxxx-RS Holders purchased the
Company's Series F Preferred;
WHEREAS, the Company, Xxxx Xxxxx and the Kayne Entities (the "Series G
Holders") have entered into the Series G Convertible Preferred Stock Purchase
Agreement, dated September 5, 2001 (the "Series G Purchase Agreement" and,
together with the Athanor Purchase Agreement, the LLC Purchase Agreement, the
Xxxxxxx-RS Purchase Agreement, the "Purchase Agreements" ) pursuant to which the
Company sold and the Series G Holders purchased the Company's Series G
Convertible Preferred Stock, $.01 par value per share (the "Series G Preferred"
and, together with the Series E Preferred, the Series F Preferred; and the PIK
Notes, the "Convertible Securities");
WHEREAS, pursuant to the Purchase Agreements, the Company and each Holder
desires to enter into this Agreement to provide each Holder with certain
registration rights and to address related matters;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein, the parties agree as follows:
1. Registration Rights.
1.1 Demand Registration Rights.
Subject to the provisions of this Section 1.1, the Company shall, from time
to time, as expeditiously as practicable, use its best efforts to file with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Act"), a registration statement (a "Shelf Registration") for an
offering to be made on a continuous basis pursuant to Rule 415 of the Act, on
the appropriate form (using Form S-3 or other "short form," if available)
covering all the Registrable Securities (as defined below) requested to be
covered by any Holder(s) pursuant to Section 1.2. As more fully provided in
Section 1.2, each Holder or group of Holders may request various registrations
from time to time covering any or all of the Registrable Securities of such
Holder(s), and references herein to a Shelf Registration shall be deemed to
include, separately, each registration statement filed in response to any such
request. "Registrable Securities" means all the shares of Common Stock of the
Company, no par value per share ("Common Stock"), issuable to each Holder
pursuant to conversion of the Convertible Securities issued by the Company to
such Holder pursuant to the Purchase Agreements and, to the extent not already
registrable pursuant to other registration rights held by such Holder, all other
shares of Common Stock held by or issuable under convertible securities or
securities exercisable for Common Stock held by such Holder on the date hereof.
As to any particular Registrable Securities, such securities shall cease to be
Registrable Securities when such securities shall: (x) have been disposed of
pursuant to an effective registration statement or Rule 144 promulgated under
the Act ("Rule 144"); (y) be freely transferable pursuant to paragraph (k) of
Rule 144; or (z) cease to be outstanding.
If a Shelf Registration or any Substitute Shelf Registration (as defined
below) ceases to be effective for any reason at any time during the
Effectiveness Period (as defined below) (other than because of the sale of all
of the Registrable Securities registered thereunder), the Company shall use its
reasonable best efforts to obtain the prompt withdrawal of any order suspending
the effectiveness thereof, and in any event shall within thirty (30) business
days of such cessation of effectiveness amend the Shelf Registration or
Substitute Shelf Registration in a manner reasonably expected to obtain the
withdrawal of the order suspending the effectiveness thereof, or file a
substitute "shelf" registration statement pursuant to Rule 415 covering all of
the Registrable Securities requested under such Shelf Registration which have
not been sold (a "Substitute Shelf Registration"). If a Substitute Shelf
Registration is filed, the Company shall use its reasonable best efforts to
cause the Substitute Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such registration statement
continuously effective in accordance with the terms of this Agreement.
Subject to the provisions of this Section 1.1, the Company shall cause each
registration statement filed hereunder to remain effective on a continuous basis
until the earlier of (A) three months after such time as no Selling Holder (as
defined in Section 1.2 below) is deemed an "affiliate" of the Company under Rule
144 or (B) no Registrable Securities covered by such registration statement
remain outstanding, determined on an as-converted basis (the date such
registration statement becomes effective until the earlier of (A) or (B) above,
the "Effectiveness Period").
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The Selling Holders agree not to effect a public sale or distribution under
such registration statement and the Company may suspend resales by any Selling
Holder under such registration pursuant to this Section 1.1 for the period (the
"Suspension Period") (i) beginning 30 days prior to the anticipated effective
date of a proposed underwritten public offering of equity securities of the
Company approved by the Company's Board of Directors through the period ending
90 days after such effective date unless the underwriters managing the public
offering otherwise agree (provided that the Company shall not rely on the
suspension under this clause (i), if the offering includes Common Stock, unless
the Company makes available a reasonable portion of such offering to any Selling
Holders who wish to be included as sellers; provided further, that the portion
made available shall be determined to be reasonable if determined by the
underwriter, if any, to be reasonable after taking into account the ability of
the market to absorb the full offering without a reduction in the selling price
anticipated to be received for the securities sold in such offering (such a
reduction to be due solely to the increase in number of shares in the offering);
provided further that in any circumstance in which all Registrable Securities
requested to be included in a registration that is excepted from a suspension
under this clause (i) cannot be so included, the number of shares of Registrable
Securities that may be so included shall be allocated among the Selling Holders
that have a right to be included in such registration and have exercised such
right, pro rata on the basis of the number of shares of Registrable Securities
and such other securities that would be held assuming conversion of the shares
requested to be registered); (ii) for no more than 90 days after the Board of
Directors of the Company reasonably determines in good faith that the disclosure
which, based on the advice of counsel, is required to permit such resales during
such time would have a material adverse effect upon the Company's ability to
accomplish a proposed sale of all (or substantially all) of the assets of the
Company, or a merger, reorganization, recapitalization or similar transaction
materially affecting the capital structure or equity ownership of the Company;
or (iii) for no more than 90 days after the Board of Directors of the Company
reasonably determines in good faith that there is material undisclosed
information with respect to the Company or its publicly traded securities for
which immediate disclosure would be adverse to the Company.
The Company shall promptly notify each Selling Holder in writing of any
decision to cease to maintain a Shelf Registration or Substitute Shelf
Registration or to prohibit resales pursuant to this Section 1.1, which notice
shall set forth in reasonable detail the reason for such decision and shall
include an undertaking by the Company promptly to notify each Selling Holder as
soon as resales may resume. Upon receipt by a Selling Holder of notice of an
event of the kind described in this Section 1.1, such Selling Holder shall
forthwith discontinue such Selling Holder's disposition of Registrable
Securities until the earlier of the expiration of the Suspension Period set
forth above and such Selling Holder's receipt of notice from the Company that
such disposition may continue and of any supplemented or amended prospectus
indicated in such notice. Notwithstanding anything herein to the contrary, the
Company may not invoke more than one (1) Suspension Period in any 365 day
period.
1.2 Registration Procedures. Upon written request from any Holder or group
of Holders of Registrable Securities (each, a "Selling Holder"), the Company
shall prepare and file a registration statement or a Shelf Registration, as
requested by the Selling Holder(s), covering the Registrable Securities
requested to be included by such Holder(s); provided that such request relates
to not less than the lesser of (i) 1,000,000 (one million) Registrable
Securities and (ii) all remaining Registrable Securities held by the Selling
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Holders(s). A Holder or group of Holders may request registration of any or all
of the Registrable Securities of such Holder(s) and may make such requests from
time to time as set forth in the immediately preceding sentence. The purpose of
the foregoing provision is to permit a Holder or group of Holders to request
initial registration of a portion of its or their Registrable Securities,
followed by additional registrations in the future, and so that over time and in
the aggregate a Holder or group of Holders may request registration of all of
its or their Registrable Securities. The Holders agree that they will consult
with the Company and with each other in order that the timing and size of
separate requested registrations may be appropriately coordinated or combined.
In connection therewith, each Selling Holder shall furnish the Company with all
information and statements about or pertaining to such Selling Holder in such
reasonable detail and on such timely basis as is reasonably requested by the
Company in connection with the preparation of such registration statement;
provided, however, that any such information shall be given or made by a Selling
Holder without representation or warranty of any kind whatsoever, except with
respect to the identity of such Selling Holder, such Selling Holder's
Registrable Securities and such Selling Holder's intended method of distribution
or any other representation required by applicable law. In connection with
requests by any Selling Holder and the filing of any registration statement
hereunder, the Company shall use its reasonable best efforts, as expeditiously
as possible to:
(a) prepare and file with the SEC, as soon as practicable, but in no event
later than 30 days after such request by any Selling Holder of Registrable
Securities, a registration statement with respect to the shares requested to be
registered by such Selling Holder and use its reasonable best efforts to cause
such registration statement to become effective as soon as practicable, but in
no event later than 60 days after such filing has been made (or 90 days after
such filing has been made if a "full review" is made by the SEC pursuant to such
filing) as provided herein. Notwithstanding the foregoing, before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company shall furnish counsel for such Selling Holder(s) with copies of all
such documents proposed to be filed and shall make such changes reasonably
requested by the Selling Holder(s) or their counsel in writing;
(b) prepare and file with the SEC such amendments and supplements to such
registration statement and prospectus used in connection therewith with respect
to the shares requested to be registered by such Selling Holder(s) as may be
necessary to keep such registration statement effective and to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement during the Effectiveness Period;
(c) furnish to such Selling Holder(s) such number of conformed copies of
such registration statement, each amendment and supplement thereto (including
all exhibits), the prospectus included in such registration statement (including
each preliminary prospectus and any summary prospectus), any other prospectus
filed under the Act, and such other documents as such Selling Holder(s) may
reasonably request;
(d) use its reasonable best efforts to register or qualify all Registrable
Securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as such Selling Holder(s) request(s) in
writing (and to maintain such registrations and qualifications effective during
the Effectiveness Period and to do any and all other acts and things which may
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be reasonable or advisable to enable such Selling Holder(s) to consummate the
disposition in such jurisdictions of such shares (provided that the Company will
not be required to (i) qualify generally to do business in any jurisdiction
where it would not be required but for this Section 1.2(d), (ii) subject itself
to taxation in any such jurisdiction, or (iii) file any general consent to
service of process in any such jurisdiction);
(e) in any underwritten offering, and if reasonable and customary in the
context of such offering, use its reasonable best efforts to furnish to the
Selling Holders a signed counterpart, addressed to the Selling Holders of
Registrable Securities (and the underwriters, if any):
(x) an opinion of counsel for the Company, dated the effective date of
such registration statement or the date of the closing under the
underwriting agreement in the form negotiated by the underwriters, and
(y) a "comfort" or procedures letter in the form negotiated by the
underwriters dated such dates(s) as the letter(s) delivered to the underwriters,
signed by the independent public accountants who have certified the Company's
financial statements included in such registration statement, in accordance with
the provisions of Statement on Auditing Standards ("SAS") No. 72, as amended by
SAS 76 and SAS 86 (and any successor supplementing statements), covering
substantially the same matters with respect to such registration statement and
the prospectus included therein (and, in the case of the accountants' letter,
with respect to events subsequent to the date of such financial statements), as
are customarily covered in opinions of issuer's counsel and in accountants'
letters delivered to the underwriters in underwritten public offerings of
securities, and in the case of the accountants' letter, such other financial
matters as such underwriters may reasonably request;
(f) promptly notify such Selling Holder(s), at any time during which a
prospectus relating thereto is required to be delivered under the Act within the
period that the Company is required to keep a registration statement effective
with respect to such shares being registered, of the happening of any event as a
result of which the prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact required to be stated
therein or necessary to make the statements therein not misleading, and, except
during a Suspension Period, promptly prepare a supplement or amendment to such
prospectus and deliver it to the Selling Holder(s), so that, as thereafter
delivered to the Selling Holder(s), such prospectus will not contain an untrue
statement of a material fact or omit to state any fact required to be stated
therein or necessary to make the statements therein not misleading;
(g) use its reasonable best efforts to cause all Registrable Securities
covered by such registration statement to be listed on the securities exchanges
or interdealer quotation systems (including the NASDAQ National Market), if any,
on which similar securities issued by the Company are then listed;
(h) comply with all applicable rules and regulations of the SEC, and make
available to its security holders, as soon as reasonably practicable, an
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earnings statement covering the period of at least twelve (12) months, but not
more than eighteen (18) months, beginning with the first full calendar month
after the effective date of such registration statement, which earnings
statement shall satisfy the provisions of Section 11(a) of the Act and Rule 158
promulgated thereunder;
(i) provide a transfer agent and registrar for all Registrable Securities
covered by such registration statement not later than the effective date of such
registration statement, and enter into such customary agreements, including an
underwriting agreement in customary form with a lead underwriter, if any, chosen
by the Selling Holder(s), both the lead underwriter and the agreement to be
reasonably acceptable to the Company, and take all such other actions as such
Selling Holder(s) or underwriters reasonably request (and subject to the
reasonable approval of such Selling Holder(s)) in order to expedite or
facilitate the disposition of such shares);
(j) use its reasonable best efforts to obtain the withdrawal of any order
suspending the effectiveness of a registration statement, or the lifting of any
suspension of the qualification (or exemption from qualification) of any of the
Registrable Securities for sale in any jurisdiction, as promptly as practicable;
and
(k) make reasonably available for inspection by such Selling Holder(s) and
by any underwriter, in each case, participating in any distribution pursuant to
such registration statement, and by any attorney, accountant or other agent
retained by such Selling Holder(s), or by any such underwriter, all relevant
financial and other records, pertinent corporate documents, and properties
(other than confidential intellectual property) of the Company and to use its
reasonable best efforts to cause the Company's officers, directors, employees
and independent accountants to supply all information reasonably requested by
such persons in connection with such registration statement; provided, however,
that any information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such information (and the fact
of, and the actual, notice under Section 1.1 that a registration statement will
not be maintained or that resales will be suspended) shall be kept confidential
by each Selling Holder and by any underwriter, attorney, accountant or agent
participating in any distribution pursuant to such registration statement,
unless such disclosure is required to be made in connection with a court
proceeding or, in the written opinion of legal counsel acceptable to the
Company, required by law (provided, in each case, that the Company is given
prompt notice of such requirement and the disclosing party assists the Company
to obtain a protective order against such disclosure), or such information
becomes available to the public generally or through a third party without an
accompanying obligation of confidentiality, in each case, without violation of
the confidentiality obligations of each Selling Holder under this Agreement.
1.3 Registration Expenses. The Company will pay all Registration Expenses
of all registrations made under this Agreement. For purposes of this Section,
the term "Registration Expenses" means all expenses incurred by the Company in
complying with this Agreement, including, without limitation, all registration
and filing fees (other than National Association of Securities Dealers, Inc.
filing fees pursuant to an underwritten offering), exchange listing fees,
printing expenses, fees, and expenses of counsel and accountants for the Company
and the reasonable fees and expenses of one firm or counsel selected by the
Selling Holders collectively, state Blue Sky fees and expenses, and the expense
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of any special audits incident to or required by any such registration, but
excluding underwriting discounts and selling commissions and transfer taxes, if
any, which shall be paid by the Selling Holders pro rata, based on the number of
shares sold by each Selling Holder under the applicable registration statement.
1.4 Requested Underwritten Offerings. Pursuant to any registration
statement requested by a Holder or Holders under Section 1.2, such Holder(s) may
request that the offering be underwritten by an investment bank, the lead
underwriter of which shall be chosen by the Selling Holder(s) holding at least a
majority of the Registrable Securities requesting such registration, such lead
underwriter to be reasonably acceptable to the Company. If requested by the
underwriters for any such underwritten offering by the Selling Holders, the
Company will use its reasonable best efforts to enter into an underwriting
agreement with such underwriters for such offering, such agreement to be
reasonably satisfactory in substance and form to the Company, each such Selling
Holder and the underwriters and to contain such representations and warranties
by the Company and such other terms as are generally prevailing in agreements of
that type, including, without limitation, indemnities to the effect and to the
extent provided in Section 1.6. The Selling Holder(s) will reasonably cooperate
with the Company in the negotiation of the underwriting agreement, and the
Company shall prepare and make any changes to the underwriting agreement, the
registration statement and related documents reasonably requested by the
underwriters or the Selling Holder(s), as the case may be. Each Selling Holder
participating in such offering shall be a party to such underwriting agreement.
No Selling Holder shall be required to make any representations or warranties
to, or agreements with, the Company other than representations, warranties or
agreements regarding the identity of such Selling Holder, such Selling Holder's
Registrable Securities and such Selling Holder's intended method of distribution
or any other representations required by applicable law. No Selling Holder may
participate in such underwritten offering unless such Holder agrees to sell its
Registrable Securities on the basis provided in the underwriting agreement and
completes and executes all questionnaires, powers of attorney, indemnities and
other documents reasonably required under the terms of the underwriting
agreement. If a Selling Holder disapproves of the terms of the underwriting
agreement, such holder may elect to withdraw therefrom and from such
registration by notice to the Company and the lead underwriter.
1.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Act pursuant to
this Agreement, the Company will give the Selling Holders, their underwriters,
if any, and their respective counsel the opportunity to participate in the
preparation of such registration statement and each prospectus included therein
or filed with the Commission, and each amendment thereof or supplement thereto,
and will give each of them such reasonable access to its books and records and
such opportunities to discuss the business of the Company with its officers and
the independent public accountants who have certified its financial statements
as shall be necessary, in the opinion of such Selling Holders' and such
underwriters' respective counsel, to conduct a reasonable investigation within
the meaning of the Act.
1.6 Indemnity.
(a) In the event that any Registrable Securities are registered by means of
a registration statement pursuant to Section 1.1, the Company agrees to
indemnify and hold harmless each of the Selling Holder(s), each of its partners,
members, managers, officers and directors, as applicable, and each person, if
any, who controls such Selling Holder within the meaning of the Act (each
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Selling Holder, its partners, managers, members, officers and directors, as
applicable, and any such other persons being hereinafter referred to
individually as a "Indemnified Person" and collectively as "Indemnified
Persons") from and against all demands, claims, actions or causes of action,
assessments, losses, damages, liabilities (joint or several), costs, and
expenses (joint or several), including, without limitation, interest, penalties,
and reasonable attorneys' fees and disbursements, asserted against, resulting
to, imposed upon or incurred by such Indemnified Person, directly or indirectly
pursuant to any actual or threatened action, suit, proceeding or investigation,
or to which any of the foregoing Persons may become subject under the Act, the
Securities Exchange Act of 1934, as amended, or any other federal or state laws
(hereinafter referred to in this Section 1.6 in the singular as a "claim" and in
the plural as "claims"), insofar as any such claim is based upon, arising out of
or resulting from any untrue statement or alleged untrue statement of a material
fact contained in the registration statement (including any preliminary
prospectus or final prospectus contained therein, or any amendments or
supplements thereto) or any omission or alleged omission to state therein a
material fact necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, except insofar as such
claim is based upon, arises out of or results from information furnished to the
Company in writing by such Selling Holder expressly for use in connection with
the registration statement. Any indemnity by the Company under this Section 1.6
shall survive the transfer of the Registrable Securities by the Selling Holder
for the benefit of such Selling Holder, and shall also inure to the benefit of
such Selling Holder's successors and assigns. In connection with an underwritten
offering, the Company shall indemnify such underwriters, their officers and
directors and each person who controls such underwriters (within the meaning of
the Act) to the same extent as provided above with respect to the
indemnification of the Selling Holders.
(b) Subject to Section 1.2, each Selling Holder agrees to indemnify and
hold harmless the Company, its officers and directors, and each person, if any,
who controls the Company within the meaning of the Act (the Company, its
officers and directors, and any such other persons also being hereinafter
referred to individually as an "Indemnified Person" and collectively as
"Indemnified Persons") from and against all claims based upon, arising out of or
resulting from any untrue statement of a material fact contained in the
registration statement or any omission to state therein a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, to the extent that
such claim is based upon, arises out of or results from information furnished
to, or changes to a registration statement requested of, the Company in writing
by such Selling Holder expressly for use in connection with the registration
statement; provided that the obligation to indemnify shall be individual, not
joint and several, for each such Selling Holder and shall be limited to the
gross amount of the proceeds received by such Selling Holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) The indemnification set forth herein shall be in addition to any
liability the Company or a Holder may otherwise have to the Indemnified Persons.
Promptly after actually receiving definitive notice of any claim in respect of
which an Indemnified Person may seek indemnification under this Section 1.6,
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such Indemnified Person shall submit written notice thereof to either the
Company or such Selling Holder, as the case may be (sometimes being hereinafter
referred to as an "Indemnifying Person"). The failure of the Indemnified Person
so to notify the Indemnifying Person of any such claim shall not relieve the
Indemnifying Person from any liability it may have hereunder except to the
extent that (a) such liability was caused or materially increased by such
failure, or (b) the ability of the Indemnifying Person to reduce such liability
was materially adversely affected by such failure. In addition, the failure of
the Indemnified Person so to notify the Indemnifying Person of any such claim
shall not relieve the Indemnifying Person from any liability it may have
otherwise than hereunder. The Indemnifying Person shall have the right to
undertake, by counsel or representatives of its own choosing that are reasonably
satisfactory to the Indemnified Person, the defense, compromise or settlement
(without admitting liability of the Indemnified Person) of any such claim
asserted, such defense, compromise or settlement to be undertaken at the expense
and risk of the Indemnifying Person, and the Indemnified Person shall have the
right to engage separate counsel, at such Indemnified Person's own expense,
which counsel for the Indemnifying Person shall keep informed and consult with
in a reasonable manner. In the event the Indemnifying Person shall elect not to
undertake such defense by its own representatives, the Indemnifying Person shall
give prompt written notice of such election to the Indemnified Person, and the
Indemnified Person may undertake the defense, compromise or settlement (without
admitting liability of the Indemnified Person) thereof on behalf of and for the
account and risk, and at the expense, of the Indemnifying Person by counsel or
other representatives designated by the Indemnified Person. Notwithstanding the
foregoing, in any action or proceeding in which both the Indemnifying Person and
an Indemnified Person is, or is reasonably likely to become, a party, such
Indemnified Person shall have the right to employ separate counsel at the
Indemnifying Person's expense and to control its own defense of such action or
proceeding if, on the reasonable written advice of counsel to such Indemnified
Person, the Indemnified Person reasonably believes (a) there are or may be legal
defenses available to such Indemnified Person or to other Indemnified Persons
that are different from or additional to those available to the Indemnifying
Person and (b) any conflict or potential conflict exists between the
Indemnifying Person and such Indemnified Person that would make such separate
representation advisable; provided, further, however, that in no event shall the
Indemnifying Person be required to pay fees and expenses under this Section 1.6
for more than one firm of attorneys in any jurisdiction in any one legal action
or proceeding or group of related legal actions or proceedings on behalf of the
Indemnified Persons. Notwithstanding the foregoing, no Indemnifying Person shall
be obligated hereunder with respect to amounts paid in settlement of any claim
if such settlement is effected without the consent of such Indemnifying Person,
which consent shall not be unreasonably withheld, and no Indemnifying Person
shall, without the written consent of each Indemnified Person, which consent
shall not be unreasonably withheld, effect the settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending or threatened
action or claim in respect of which indemnification or contribution may be
sought hereunder (whether or not the Indemnified Person is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (A) includes an unconditional release of the Indemnified Person from
all liability arising out of such action or claim without any payment or
consideration provided or obligation incurred by any Indemnified Person and (B)
does not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of any Indemnified Persons.
(d) If for any reason the foregoing indemnity is unavailable to, or is
insufficient to hold harmless, an Indemnified Person, then the Indemnifying
Person shall contribute to the amount paid or payable by the Indemnified Person
as a result of such claims, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Person and the Indemnified Person as well as
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any other relevant equitable considerations. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The indemnification and contribution to the extent required by this
Sec-tion 1.6 shall be made by periodic payments of the amounts thereof during
the course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred; provided that such amounts shall
be refunded immediately to the extent it is finally judicially determined that
the Indemnified Person was not entitled to indemnification under this Section
1.6.
2. Miscellaneous.
2.1 Additional Actions and Documents. Each of the parties hereto hereby
agrees to use its reasonable best efforts to take or cause to be taken such
further actions, to execute, deliver and file or cause to be executed, delivered
and filed such further documents and instruments, and to obtain such consents,
as may be necessary or as may be reasonably requested in order to fully
effectuate the purposes, terms and conditions of this Agreement.
2.2 Assignment. Any Holder may assign its rights under this Agreement to
any assignee of the Convertible Securities, the Registrable Securities or the
shares of Common Stock issuable upon exercise thereof.
2.3 Entire Agreement; Amendment and Waiver. This Agreement, including the
other writings referred to herein or delivered pursuant hereto, constitutes the
entire agreement among the parties hereto with respect to the transactions
contemplated herein, and it supersedes all prior oral or written agreements,
commitments or understandings with respect to the matters provided for herein,
including, with respect to the Series E Preferred, Series F Preferred and the
Series G Preferred, any pre-existing registration rights agreements. No
amendment, modification or discharge of this Agreement shall be valid or binding
unless set forth in writing and duly executed by a party against whom
enforcement of the amendment, modification, or discharge is sought. No course of
dealing or the failure of any party to enforce any of the provisions of this
Agreement shall in any way operate as a waiver of such provisions and shall not
affect the right of such party thereafter to enforce each and every provision of
this Agreement in accordance with its terms.
2.4 Limitation on Benefits. Except as provided for elsewhere herein, it is
the explicit intention of the parties hereto that no person or entity other than
the parties hereto (and their respective successors and assigns) is or shall be
entitled to bring any action to enforce any provision of this Agreement against
any of the parties hereto, and the covenants, undertakings and agreements set in
this Agreement shall be solely for the benefit of, and shall be enforceable only
by, the parties hereto or their respective successors and assigns.
2.5 Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and assigns.
The respective indemnities, agreements, representations, warranties and other
provisions set forth in this Agreement or made pursuant hereto shall remain in
full force and effect following any sale of Registrable Securities as
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contemplated hereby and regardless of any investigation (or statement as to the
results thereof) made by or on behalf of any Holder or any representative of any
Holder.
2.6 Governing Law. This Agreement, the rights and obligations of the
parties hereto, and any claims or disputes relating thereto, shall be governed
by and construed in accordance with the laws of the State of California, without
regard to conflicts of laws principles.
2.7 Notices. All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be made by
facsimile transmission and shall be mailed by over-night or registered mail,
return receipt requested, postage prepaid, or transmitted by hand delivery,
including delivery by courier, addressed as follows:
(a) If to the Company:
The Right Start, Inc.
00000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Legal
Facsimile: 818.735.7242
with a copy (which shall not constitute notice) to:
Fulbright & Xxxxxxxx L.L.P.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxx-Xxxxx Xxxxx
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxx Xxx, Esq.
Facsimile: 213.680.4518
(b) If to a Holder, to the addresses set forth in the Purchase Agreement to
which such Holder is a party and any other designees specified therein.
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request, or communication that is mailed, delivered
or transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, the affidavit of
messenger or (with respect to a telex) the answer back being deemed conclusive
(but not exclusive) evidence of such delivery) or at such time as delivery is
refused by the addressee upon presentation.
2.8 Headings. Article and Section headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or affect the
meaning, construction or scope of any of the provisions hereof.
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2.9 Execution in Counterparts. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required; and it shall not be
necessary that the signatures of each party appear on each counterpart; but it
shall be sufficient that the signature of each party appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of all of the parties hereto. Signatures pages may be
delivered with original signatures or by facsimile, and the delivery of a
signature by facsimile shall have the same effect as the delivery of an original
signature.
2.10 Remedies. Each Holder of Registrable Securities, in addition to being
entitled to exercise all rights granted by law, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company agrees that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by it of the provisions of this Agreement
and hereby agrees to waive the defense in any action for specific performance
that a remedy at law would be adequate.
2.11 Illegality. If any term or provision of this Agreement or any
application thereof shall be declared or held invalid, illegal or unenforceable,
in whole or in part, whether generally or in any particular jurisdiction, such
provision shall be deemed amended to the extent, but only to the extent,
necessary to cure such invalidity, illegality or unenforceability, and the
validity, legality and enforceability of the remaining provisions, both
generally and in every other jurisdiction, shall not in any way be affected or
impaired thereby.
2.12 Inspection. For so long as this Agreement shall be in effect, this
Agreement and a complete list of the names and addresses of all the Holders of
Registrable Securities shall be made available for inspection and copying on any
business day after reasonable notice to the Company by any Holder of Registrable
Securities at the offices of the Company at the address thereof set forth in
Section 2.7 above.
2.13 No Inconsistent Agreements. The Company has not entered into (except,
with the respect to 500,000 shares then held by Xxxxxx X. Xxxxxxxx and Primerica
Life Insurance Company under the Registration Rights Agreement dated as of
August 3, 1995 between them, the Company and certain of the shareholders of the
Company, which to the best knowledge of the Company do not currently have rights
inconsistent with the rights granted hereby), and will not hereafter enter into,
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement.
Without limiting the generality of the foregoing, the Company will not hereafter
grant to any holder of the Company's securities registration rights that are
senior to or that would have the effect of blocking or delaying the rights of
any of the Holders herein. Each of the parties hereto hereby expressly waives
any inconsistent rights granted by the Company to such party under any previous
agreement, if any. The foregoing waiver is also intended to be effective with
respect to, and for the benefit of, the holders from time to time of any of
"Registrable Securities" as defined in the Vendex Agreement (as defined below)
so that any registration rights granted by the Company to any of the parties
hereto under any previous agreement (which specifically does not include this
Agreement) are not deemed inconsistent with or senior to the rights granted by
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the Company in that certain Registration Rights Agreement dated January 6, 2002,
between the Company and Royal Vendex KBB, N.V. (the "Vendex Agreement").
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IN WITNESS WHEREOF, each of the parties hereto has caused this Registration
Rights Agreement to be duly executed on its behalf as of the date first above
written.
THE RIGHT START, INC.
By: /s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
Chief Executive Officer
THE HOLDERS:
ATHANOR HOLDINGS, LLC
By: /s/ Xxxxxxx Xxxxxxx
Name: Xxxxxxx Xxxxxxx
Title: Manager
By: /s/ Xxxxxxx Xxxxx
Name: Xxxxxxx Xxxxx
Title: Manager
/s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
/s/ Xxxx Xxxxx
Xxxx Xxxxx
ARBCO ASSOCIATES, L.P.
By: /s/ Xxxxx Xxxxxxxxxx
Its: Secretary, Corporate General Partner
XXXXX XXXXXXXX DIVERSIFIED CAPITAL PARTNERS, L.P.
By: /s/ Xxxxx Xxxxxxxxxx
Its: Secretary, Corporate General Partner
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XXXXX XXXXXXXX NON-TRADITIONAL INVESTMENTS, L.P.
By: /s/ Xxxxx Xxxxxxxxxx
Its: Secretary, Corporate General Partner
XXXXX XXXXXXXX OFFSHORE LIMITED
By: /s/ Xxxxx Xxxxxxxxxx
Its: Secretary, Corporate General Partner
XXXXX XXXXXXXX CAPITAL PARTNERS, L.P.
By: /s/ Xxxxx Xxxxxxxxxx
Its: Secretary, Corporate General Partner
PALOMAR VENTURES I, L.P.,
By: /s/ Xxx Xxxxx
Its: General Partner
MARINA CORPORATE LLC,
By: Guidance Solutions, Inc.,
its sole member
By: /s/ Xxxxxxx Xxxxxxx
Its: V.P. and General Counsel
/s/ Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
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