EXHIBIT 10.23
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of
April 13, 1998 between The Right Start, Inc., a California corporation (the
"Company"), and ARBCO Associates, L.P., a California limited partnership, Xxxxx
Xxxxxxxx Non-Traditional Investments, L.P., a California limited partnership,
Xxxxx Xxxxxxxx Offshore Limited, a British Virgin Islands corporation, Offense
Group Associates, L.P., a California limited partnership, Opportunity
Associates, L.P., a California limited partnership and Xxxxxx X. Xxxx, as
Trustee for the Xxxxxx X. Xxxx & Company Money Purchase Plan (each individually
a "Purchaser," and collectively the "Purchasers").
WHEREAS, the Company and Purchasers have entered into a Securities
Purchase Agreement dated as of April 13, 1998 (the "Purchase Agreement")
WHEREAS, pursuant to the Purchase Agreement, the Company and
Purchasers desire to enter into this Agreement to provide Purchasers 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.
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1.1 Demand Registration Rights.
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(a) Subject to the provisions of this Section 1.1, at any time after
the date hereof, Purchasers may request registration for sale under the Act of
all or part of the Common Stock, no par value, of the Company ("Common Stock")
then held by Purchasers or issuable to Purchasers pursuant to exercise of the
Warrant of even date herewith, issued by the Company to Purchasers pursuant to
the Purchase Agreement (the "Warrant"). The Company shall thereafter, as
expeditiously as practicable, use its best efforts (i) to file with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "Act"), a registration statement on the appropriate form (using
Form S-3 or other "short form," if available) covering all the shares of Common
Stock specified in the demand request and (ii) to cause such registration
statement to be declared effective. The Company shall use its best efforts to
cause each offering pursuant to this Section 1.1 to be managed, on a firm
commitment basis, by a recognized regional or national underwriter. The Company
shall not be required to comply with more than two (2) requests by Purchasers
for demand registration pursuant to this Section 1.1(a).
(b) The Company shall not be required to effect a demand registration
under the Act pursuant to Section 1.1(a) above if (i) the Company receives such
request for registration within 120 days preceding the anticipated effective
date of a proposed underwritten public offering of securities of the Company
approved by the Company's Board of Directors prior to the Company's receipt of
such request; (ii) within 180 days prior to any such request for registration ,
a registration of securities of the Company has been effected in which
Purchasers had the right to participate pursuant to Section 1.2 hereof; or (iii)
the Board of Directors of the Company reasonably determines in good faith that
effecting such a demand registration at such time would have a material adverse
effect upon a proposed sale of all (or substantially all) the assets of the
Company, or a merger, reorganization, recapitalization, or similar transaction
materially affecting the capital structure or equity ownership of the Company,
including the transactions set forth in the Letter Agreement dated April 6, 1998
(the "Letter Agreement") among the Company, the holders of the Company's
Convertible Debentures and the holders of the Company's 11.5% Senior
Subordinated Notes due 2000; provided, however, that the Company may only delay
a demand registration pursuant to this Section 1.1(b)(iii) for a period not
exceeding 90 days (or until such earlier time as such transaction is consummated
or no longer proposed). The Company shall promptly notify Purchasers in writing
of any decision not to effect any such request for registration pursuant to this
Section 1.1(b), which notice shall set forth in reasonable detail the reason for
such decision and shall include an undertaking by the Company promptly to notify
Purchasers as soon as a demand registration may be effected.
(c) Purchasers may withdraw a request for demand registration at any
time before a registration statement is declared effective, in which event the
Company shall withdraw such registration statement (and Purchasers shall not be
deemed to have requested a demand registration for purposes of Section 1.1(a)
hereof). If the Company withdraws a registration statement under this Section
1.1(c) in respect of a registration for which the Company would otherwise be
required to pay expenses under Section 1.4(b) hereof, Purchasers shall be liable
to the Company for all expenses of such registration specified in Section 1.4(b)
hereof in proportion to the number of shares each of the Purchasers shall have
requested to be registered, and Purchasers shall not be deemed to have requested
a demand registration for purposes of Section 1.1(a) hereof.
1.2 Piggyback Registration Rights.
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(a) If at any time or times after the date hereof, the Company
proposes to make a registered public offering of any of its securities under the
Act, whether to be sold by it or by one or more third parties (other than an
offering pursuant to a demand registration under Section 1.1(a) hereof or an
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offering registered on Form X-0, Xxxx X-0, or comparable forms), the Company
shall, not less than 45 days prior to the proposed filing date of the
registration form, give written notice of the proposed registration to
Purchasers, and at the written request of Purchasers delivered to the Company
within 20 days after the receipt of such notice, shall include in such
registration and offering, and in any underwriting of such offering, all shares
of Common Stock that may have been designated in Purchasers' request.
(b) If a registration in which Purchasers have the right to
participate pursuant to this Section 1.2 is an underwritten offering for the
account of the Company or for the account of a security holder (other than
Purchaser) pursuant to the exercise of a demand registration right, and the
managing underwriters advise the Company or such security holder, as the case
may be, in writing that in their opinion the number of securities requested to
be included in such registration, together with the securities being offered by
the Company or such security holder, as the case may be, exceeds the number
which can be effectively sold in such offering, the Company shall include in
such registration (i) first, the securities of the Company or such security
holder proposed to be sold, and (ii) second, to the extent possible, the Common
Stock proposed to be sold by each of the Purchasers and any other selling
stockholders, in proportion to the number of shares of Common Stock with respect
to which they have requested registration.
1.3 Registration Procedures. The Company shall have no obligation to
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file a registration statement pursuant to Section 1.1 hereof, or to include
shares of Common Stock owned by or issuable to any Purchaser in a registration
statement pursuant to Section 1.2 hereof, unless and until such Purchaser shall
have furnished the Company with all information and statements about or
pertaining to such Purchaser in such reasonable detail and on such timely basis
as is reasonably required by the Company in connection with the preparation of
the registration statement. Whenever Purchasers have requested that any shares
of Common Stock be registered pursuant to Section 1.1 or 1.2 hereof, the Company
shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration statement with
respect to such shares and use its best efforts to cause such registration
statement to become effective as soon as reasonably practicable thereafter
(provided that before filing a registration statement or prospectus or any
amendments or supplements thereto, the Company shall furnish counsel for
Purchasers with copies of all such documents proposed to be filed);
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and prospectus used in connection therewith as may
be necessary to
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keep such registration statement effective for a period of not less than nine
months (or two years, if the provisions of Rule 415 under the Act are available
with respect thereto) or until Purchasers have completed the distribution
described in such registration statement, whichever occurs first;
(c) furnish to Purchasers such number of copies of such registration
statement, each amendment and supplement thereto, the prospectus included in
such registration statement (including each preliminary prospectus), and such
other document as Purchasers may reasonably request;
(d) use its best efforts to register or qualify such shares under such
other securities or blue sky laws of such jurisdictions as Purchasers request
(and to maintain such registrations and qualifications effective for a period of
nine months or until Purchasers have completed the distribution of such shares,
whichever occurs first), and to do any and all other acts and things which may
be necessary or advisable to enable Purchasers 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 1.3(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) notify Purchasers, 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, 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
necessary to make the statements therein not misleading, and prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such shares, such prospectus will not contain an untrue
statement of a material fact or omit to state any fact necessary to make the
statements therein not misleading;
(f) use its best efforts to cause all such shares to be listed on
securities exchanges or interdealer quotation systems (including Nasdaq National
Market), if any, on which similar securities issued by the Company are then
listed;
(g) enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions as Purchasers
reasonably request (and subject to Purchasers' reasonable approval) in order to
expedite or facilitate the disposition of such shares; and
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(h) make reasonably available for inspection by Purchasers, by
any underwriter participating in any distribution pursuant to such registration
statement, and by any attorney, accountant or other agent retained by Purchasers
or by any such underwriter, all relevant financial and other records, pertinent
corporate documents, and properties (other than confidential intellectual
property) of the Company; 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 shall be kept confidential by Purchasers or any
such underwriter, attorney, accountant or agent, unless such disclosure is made
in connection with a court proceeding or required by law, or such information
becomes available to the public generally or through a third party without an
accompanying obligation of confidentiality.
1.4 Registration Expenses.
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The Company will pay all Registration Expenses of all registrations
under this Agreement, provided, however, that if a registration under Section
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1.1 is withdrawn at the request of Purchasers (other than as a result of
information concerning the business or financial condition of the Company that
is made known to the Purchasers after the date on which such registration was
requested) and if the requesting Purchasers elect not to have such registration
counted as a registration requested under Section 1.1, Purchasers shall pay the
Registration expenses of such registration. For purposes of this Section, the
term "Registration Expenses" means all expenses incurred by the Company in
complying with sections 1.1, 1.2 and 1.3, 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 for the Company
and the reasonable fees and expenses of one firm or counsel selected by
Purchasers to represent it, state Blue Sky fees and expenses, and the expense of
any special audits incident to or required by any such registration, but
excluding underwriting discounts and selling commissions.
1.5 Indemnity.
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(a) In the event that any shares of Common Stock owned by
Purchasers are sold by means of a registration statement pursuant to Section 1.1
or 1.2 hereof, the Company agrees to indemnify and hold harmless such
Purchasers, each of its partners and their officers and directors, and each
person, if any, who controls such Purchasers within the meaning of the Act
(Purchaser, its partners and their officers and directors, and any such other
persons being hereinafter referred to individually as an "Indemnified Person"
and collectively as "Indemnified Persons") from and against all demands, claims,
actions or causes of action, assessments, losses, damages,
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liabilities, costs, and expenses, 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 (hereinafter referred to in this Section 1.5 in the singular as a
"claim" and in the plural as "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 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
Purchaser for use in connection with the registration statement.
(b) Each Purchaser 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 the Company in writing by Purchaser for use in
connection with the registration statement.
(c) The indemnification set forth herein shall be in addition to any
liability the Company or a Purchaser 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 1.5, such Indemnified Person shall submit written notice thereof to
either the Company or Purchaser, 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, the defense,
compromise or settlement (without admitting liability of the Indemnified Person)
of any such claim asserted, such defense, compromise or
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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, whom 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 of the
Indemnifying Person by counsel or other representatives designated by the
Indemnified Person. 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.
(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 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.
1.6 Subsequent Registration Statements. The Company shall not cause
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or permit any new registration statements (except registration statements on
Form X-0, X-0, or comparable forms) to become effective during the 90 days after
the effective date of a registration statement covering shares of Common Stock
owned by Purchasers.
2. Miscellaneous.
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2.1 Additional Actions and Documents. Each of the parties hereto
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hereby agrees to use its good faith 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 Purchaser may assign its rights under this
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Agreement to any assignee of the Warrant or the shares of Common Stock issuable
thereunder.
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2.3 Entire Agreement; Amendment. This Agreement, including the
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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.
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.
2.4 Limitation on Benefits. It is the explicit intention of the
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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 forth 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
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shall inure to the benefit of the parties hereto and their respective successors
and assigns.
2.6 Governing Law. This Agreement, the rights and obligations of
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the parties hereto, and any claims or disputes relating thereto, shall be
governed by and construed in accordance with the laws of Delaware.
2.7 Notices. All notices, demands, requests, or other communications
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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 mailed
by first-class, registered or certified mail, return receipt requested, postage
prepaid, or transmitted by hand delivery, including delivery by courier,
telegram, telex, or facsimile transmission, addressed as follows:
(a) If to the Company:
The Right Start, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
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with a copy (which shall not constitute notice) to:
Milbank, Tweed, Xxxxxx & XxXxxx
000 X. Xxxxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to Purchaser, to the address set
forth in the Securities Purchase
Agreement for such Purchaser.
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 which shall be 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
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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.
2.9 Execution in Counterparts. To facilitate execution, this
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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.
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed on its behalf as of the date first above written.
THE RIGHT START, INC.
By: /s/ Xxxxx X. Xxxxx
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Xxxxx X. Xxxxx
Chief Executive Officer
THE PURCHASERS:
ARBCO ASSOCIATES, L.P.
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
Title:
XXXXX XXXXXXXX NON-TRADITIONAL
INVESTMENTS, L.P.
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
Title:
XXXXX XXXXXXXX OFFSHORE LIMITED
By: /s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: Secretary
S-1
OFFENSE GROUP ASSOCIATES, L.P.
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
Title:
OPPORTUNITY ASSOCIATES, L.P.
By: /s/ Xxxxx Xxxxxxxxxx
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Name: Xxxxx Xxxxxxxxxx
Title:
XXXXXX X. XXXX & COMPANY MONEY
PURCHASE PLAN
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: Trustee
S-2
XXXX XXXXX
By: /s/ Xxxx Xxxxx
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Name: Xxxx Xxxxx
Title:
S-3
