EXHIBIT 10.18
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of May
6, 1997 between The Right Start, Inc., a California corporation (the "Company"),
and ARBCO Associates, L.P., a California limited partnership, Xxxxxx X. Xxxx, as
Trustee for the X.X. Xxxx & Company Money Purchase Plan, Xxxxxx, Xxxxxxx
Strategic Partners Fund, L.P., a Delaware limited partnership, Xxxx Xxxxx, an
individual, 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, Strategic
Associates, L.P., a Delaware limited partnership, Xxxxxxx Tragoff, an
individual, and The Travelers Indemnity Company, a Connecticut corporation (each
individually a "Purchaser," and collectively the "Purchasers").
WHEREAS, the Company and Purchasers have entered into a Securities
Purchase Agreement dated as of May 6, 1997 (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 6 months 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; provided, however, that the Company may only delay a demand
registration pursuant to this Section 1.1(b)(iii) for a period not exceeding 3
months (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
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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 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
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obligation to 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
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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 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 or Small-Cap Market), if any, on which similar securities issued
by the Company are then listed;
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(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
(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
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under Section 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 this Section, 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
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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, 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 result 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 statement 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 result 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
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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 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
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cause 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
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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.
2.3 Entire Agreement; Amendment. This Agreement, including the other
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writings referred to herein or delivered pursuant hereto, constitutes the entire
agreement among the parties hereto with respect to the transactions contemplated
herein, and its 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 shall
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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:
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(a) If to the Company:
The Right Start, Inc.
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: President
Facsimile: (000) 000-0000
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/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Vice President of Xxxxx
Xxxxxxxx Investment
Management, general partner of
KAIM Non-Traditional, LP,
General Partner
XXXXXX, XXXXXXX STRATEGIC PARTNERS
FUND, L.P.
By: /s/ Xxxxx X. Xxxxxxx
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XXXX XXXXX, an individual
/s/ Xxxx Xxxxx
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XXXXX XXXXXXXX NON-TRADITIONAL
INVESTMENTS, L.P.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Vice President of Xxxxx
Xxxxxxxx Investment
Management, general partner of
KAIM Non-Traditional, LP,
General Partner
XXXXX XXXXXXXX OFFSHORE LIMITED
By: /s/ CFS Cinoabt KTD
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CFS Company Ltd., Director
OFFENSE GROUP ASSOCIATES, L.P.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Vice President of Xxxxx
Xxxxxxxx Investment
Management, general partner of
KAIM Non-Traditional, LP,
General Partner
STRATEGIC ASSOCIATES, L.P.
By: /s/ Xxxxx X. Xxxxxxx
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Xxxxx X. Xxxxxxx
OPPORTUNITY ASSOCIATES, L.P.
By: /s/ Xxxxxx X. Xxxxxxx
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Xxxxxx X. Xxxxxxx
Vice President of Xxxxx
Xxxxxxxx Investment
Management, general partner of
KAIM Non-Traditional, LP,
General Partner
XXXXXXX XXXXXXX, an individual
/s/ Xxxxxxx Xxxxxxx
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THE TRAVELERS INDEMNITY COMPANY
By: /s/ Xxxxx X. Xxxxx
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Name: Xxxxx X. Xxxxx
Title: Senior Vice President
XXXXXX X. XXXX, as Trustee for the
X. X. Xxxx & Company Money Purchase
Plan
By: /s/ Xxxxxx X. Xxxx
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Xxxxxx X. Xxxx
