EXHIBIT 3
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, ▇▇▇▇▇▇
▇. ▇▇▇▇, as Trustee for the ▇.▇. ▇▇▇▇ & Company Money Purchase Plan, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇ Strategic Partners Fund, L.P., a Delaware limited partnership, ▇▇▇▇
▇▇▇▇▇, an individual, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Non-Traditional Investments, L.P., a
California limited partnership, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 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, ▇▇▇▇▇▇▇ 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.
1.1 Demand Registration Rights.
(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.
(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 offering registered on Form ▇-▇, ▇▇▇▇ ▇-▇, 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 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 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;
(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.
The Company will pay all Registration Expenses of all
registrations under this Agreement, provided, however, that if a registration
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.
(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, 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
(some-times 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 Indemni-fying 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 cause or permit any new registration statements (except registration
statements on Form ▇-▇, ▇-▇, 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.
2.1 Additional Actions and Documents. Each of the
parties hereto 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 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 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 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 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 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 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.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not constitute notice) to:
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(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 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 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.
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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
The Purchasers:
ARBCO ASSOCIATES, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name:
Title:
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ STRATEGIC PARTNERS FUND, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY
By:
----------------------------------------
Name:
Title:
▇▇▇▇ ▇▇▇▇▇, an individual
/s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ NON-TRADITIONAL INVESTMENTS, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ OFFSHORE LIMITED
By: /s/ CFS Company Ltd
----------------------------------------
Name:
Title:
OFFENSE GROUP ASSOCIATES, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name:
Title:
STRATEGIC ASSOCIATES, L.P.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name:
Title:
OPPORTUNITY ASSOCIATES, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, an individual
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------------
THE TRAVELERS INDEMNITY COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇. ▇▇▇▇, as Trustee for the ▇. ▇. ▇▇▇▇ & Company
Money Purchase Plan
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇