RIGHT START INC /CA
EX-10.12 TRANSITIONAL SERVICES
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<TYPE>EX-10
<SEQUENCE>17
<FILENAME>transvs.txt
<DESCRIPTION>EX-10.12 TRANSITIONAL SERVICES
<TEXT>
                          TRANSITION SERVICES AGREEMENT


     TRANSITION   SERVICES   AGREEMENT,   dated  as  of  January  6,  2002  (the
"Agreement"),  among THE RIGHT START, INC., a California corporation ("Parent"),
TOY SOLDIER, INC. , a Delaware corporation and wholly-owned subsidiary of Parent
("Buyer"),  F.A.O. SCHWARZ, a New York corporation ("FAO"),  QUALITY FULFILLMENT
SERVICES,  INC.,  a Virginia  corporation  ("QFS" and,  together  with FAO,  the
"Sellers"   )  and  ROYAL   VENDEX   KBB   N.V.,   a   Netherlands   corporation
("Shareholder").



                                R E C I T A L S:


     Parent,  Buyer, Sellers and Shareholder have entered into an Asset Purchase
Agreement,  dated November 19, 2001 (the "APA"),  pursuant to which, among other
things,  Buyer  shall  purchase  the  Assets  (as  such  term,  and  each  other
capitalized term used herein without definition, is defined in the APA) from the
Sellers upon the terms and subject to the conditions set forth in the APA.

     Subsequent  to the  Closing  under the APA,  FAO  proposes  to operate  the
Closure  Stores for  purposes  of  effecting  the orderly  liquidation  of FAO's
retained assets and the termination of its business.

     As a condition to the Closing under the APA, the parties hereto have agreed
to enter into this Agreement.

     In consideration  of the foregoing and the mutual  agreements and covenants
hereinafter set forth, the parties hereto hereby agree as follows:

     1.  Transition  Services.  In order to permit  FAO to operate  the  Closure
Stores after the Effective Time, during the Term (as defined in Section 5 below)
Buyer  hereby  agrees to perform  (and Parent  shall cause Buyer to perform) for
Sellers the transition services specified on Exhibit A and such other transition
services  as may be  requested  from time to time by  Sellers  in  writing  (the
"Transition Services").  FAO shall reimburse (and Shareholder shall cause FAO to
reimburse)  the Buyer on a monthly  basis,  20 days after  receipt of an invoice
from  the  Buyer,  for the  Buyer's  actual  costs  incurred  in  providing  the
Transition Services.

                   2.      Use of Name.


          (a)  FAO has retained,  as of the Closing (and Buyer acknowledges that
               FAO  possesses) a royalty  free,  non-transferable,  nonexclusive
               license,  for the  duration of the Term and solely in  connection
               with the operation of the Closure Stores by FAO, to use the names
               "FAO Schwarz" and "FAO  Schweetz," any derivatives  thereof,  and
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               any  trademarks,  service marks or trade names used by FAO in the
               operation of its business prior to the Closing (the "FAO Names").

          (b)  FAO  agrees to use the FAO Names in  accordance  with  reasonable
               written quality control guidelines  delivered by Buyer to FAO and
               in accordance with the Schwarz Agreement. Buyer acknowledges that
               use of the FAO Names in  professionally  created  signage  of the
               type   typically  used  by  nationally   recognized   liquidators
               conducting  store  closure sales shall not be a violation of such
               quality control guidelines.

     3. Further Assurances. The parties shall cooperate fully with each other to
enable the parties to fulfill their obligations and responsibilities  hereunder.
The parties shall use all reasonable  efforts to take, or cause to be taken, all
appropriate  action,  do or cause to be done all  things  necessary,  proper  or
advisable  under  applicable  laws,  and execute and deliver such  documents and
other papers as may be required or  appropriate  to carry out the  provisions of
this  Agreement and to consummate,  perform and make effective the  transactions
contemplated hereby.

     4. Term.  This  Agreement  shall be effective as of the Effective  Time and
shall terminate on the earlier to occur of (a) the six month  anniversary of the
Closing and (b) the date on which  Sellers  notify Buyer that all of the Closure
Stores  have been  closed  and the  remaining  employees  of  Sellers  have been
discharged  (the "Term"),  provided that the obligations of Buyer hereunder with
respect  to COBRA  coverage  shall not  terminate  until the  minimum  statutory
obligation to provide such coverage shall terminate.

     5. Amendments. This Agreement may not be amended except in a writing signed
by, or on behalf of, all parties hereto.

     6. Notices.  All notices,  consents,  instructions and other communications
required or permitted  under this Agreement  (collectively,  "Notice")  shall be
effective  only if given in writing  and shall be  considered  to have been duly
given  when (i)  delivered  by  hand,  (ii)  sent by  telecopier  (with  receipt
confirmed),  provided  that a copy is mailed (on the same date) by  certified or
registered mail, return receipt requested, postage prepaid, or (iii) received by
the  addressee,  if sent by Express  Mail,  Federal  Express or other  reputable
express  delivery service  (receipt  requested),  or by first class certified or
registered mail, return receipt requested, postage prepaid. Notice shall be sent
in each case to the appropriate  addresses or telecopier numbers set forth below
(or to such other  addresses and telecopier  numbers as a party may from time to
time  designate as to itself by notice  similarly  given to the other parties in
accordance  herewith,  which  shall not be deemed  given  until  received by the
addressee). Notice shall be given:

                  to FAO at:

                                          Royal Vendex KBB, N.V.
                                          De Klencke 6, NL-1083 HH Amsterdam
                                          Postbus 7997, 1008, AD Amsterdam
                                          Attention: Marcel Smits/Eric ter Hark


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                                          The Netherlands
                                          Tel: 31.20.5490.596
                                          Fax: 21.20.6461.954
                                          Email: eric.ter.hark@vendexkbb.nl

   with required copy to (which, in and of itself, shall not constitute notice):

                                          Kronish Lieb Weiner & Hellman LLP
                                          1114 Avenue of the Americas
                                          New York, New York 10036
                                          Attention: Mark Lipschutz
                                          Tel: (212) 479-6120
                                          Fax: (212) 479-6275
                                          Email: mlipschutz@klwhllp.com

                  and to Buyer and Parent at:

                                          Toy Soldier Inc.
                                          26610 Agoura Road, Suite 250
                                          Calabasas, California 91302
                                          Attention: General Counsel
                                          Tel: (818) 735-7252
                                          Fax: (818) 735-7242
                                          Email: jgroner@rightstart.com


   with required copy to (which, in and of itself, shall not constitute notice):

                                          Fulbright & Jaworski L.L.P.
                                          865 South Figueroa Street, 29th Floor
                                          Los Angeles, CA 90017
                                          Attention: Victor Hsu, Esq.
                                          Tel:  (213) 892-9326
                                          Fax: (213) 680-4518
                                          Email: vhsu@fulbright.com

     7. Governing  Law. This  Agreement will be governed by and construed  under
the laws of the State of New York without regard to conflicts-of-laws principles
that would require the application of any other law.

     8.  Jurisdiction;  Service of  Process.  Any  Proceeding  arising out of or
relating to this Agreement may be brought in the courts of the State of New York
, County of New York, or, if it has or can acquire  jurisdiction,  in the United
States  District  Court for the Southern  District of New York,  and each of the
parties irrevocably submits to the exclusive  jurisdiction of each such court in
any such Proceeding,  waives any objection it may now or hereafter have to venue

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or to convenience of forum,  agrees that all claims in respect of the Proceeding
shall be heard and determined only in any such court and agrees not to bring any
Proceeding  arising out of or relating to this Agreement in any other court. The
parties agree that either or both of them may file a copy of this paragraph with
any court as written evidence of the knowing,  voluntary and bargained agreement
between  the  parties  irrevocably  to  waive  any  objections  to  venue  or to
convenience  of forum.  Each party hereto  agrees that service of process in any
Proceeding may be made upon it in any manner  permitted by the laws of the state
of New York or the  federal  laws of the  United  States or as  follows:  (i) by
personal  service or (ii) by certified or registered mail to the party for which
intended  at its address  for notice  pursuant to Section 6.  Service of process
upon any party in any manner  referred  to in the  preceding  sentence  shall be
deemed in every respect effective service of process upon such party.


     9.  Specific  Performance.  The  parties  hereto  agree  that if any of the
provisions  of this  Agreement  were not  performed  in  accordance  with  their
specific terms or were otherwise  breached,  irreparable  damage would occur, no
adequate  remedy at law would exist and damages would be difficult to determine,
and that, in the event of a breach or threatened  breach of this Agreement,  the
parties shall be entitled to specific performance, injunctive or other equitable
relief,  in addition to any other remedy available at law or in equity,  without
posting bond or other undertaking.

     10.  Severability.  Any provision of this  Agreement  that is prohibited or
unenforceable in any jurisdiction  shall, as to such  jurisdiction,  be adjusted
rather than voided,  if possible,  in order to achieve the intent of the parties
to this Agreement to the extent possible,  without invalidating or adjusting the
remaining  provisions  hereof,  and any such  prohibition,  unenforceability  or
adjustment in any  jurisdiction  shall not invalidate,  render  unenforceable or
adjust such provision in any other jurisdiction.

     11. Successors and Assigns.  All covenants and agreements in this Agreement
contained  by or on behalf of the  parties  hereto  shall  bind and inure to the
benefit of the respective successors and assigns of the parties.

     12. Descriptive Headings.  The descriptive headings of the several sections
and  paragraphs of this Agreement are inserted for  convenience  only and do not
constitute a part of this Agreement.

     13.   Counterparts.   This  Agreement  may  be  executed  in  one  or  more
counterparts,  each of  which  will be  deemed  to be an  original  copy of this
Agreement and all of which,  when taken  together,  will be deemed to constitute
one and the same  agreement.  The  exchange of copies of this  Agreement  and of
signature pages by facsimile  transmission shall constitute  effective execution
and delivery of this  Agreement as to the parties and may be used in lieu of the
original  Agreement for all purposes.  Signatures of the parties  transmitted by
facsimile shall be deemed to be their original signatures for all purposes.

     14.  Shareholder's  Obligations.  Where in this Agreement provision is made
for any action to be taken or not taken by either Seller, Shareholder undertakes
to cause such Seller to take or not take such action, as the case may be.


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     IN WITNESS WHEREOF,  the parties have caused this Agreement to be executed,
by  their  respective  duly  authorized  officers,  as of the date  first  above
written.

                                          TOY SOLDIER, INC.



                                          By: /s/ Jerry R. Welch
                                          Title: President and CEO


                                          THE RIGHT START, INC.



                                          By: Jerry R. Welch
                                          Title: President and CEO


                                          F.A.O. SCHWARZ



                                          By: /s/ Bud Johnson
                                          Title: CEO



                                          QUALITY FULFILLMENT SERVICES, INC.



                                          By: /s/ Bud Johnson
                                          Title:  CEO


                                          ROYAL VENDEX KBB N.V.



                                          By: /s/ Eric Terhark
                                          Title: Director Corporate Development




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                                    EXHIBIT A

                               Transition Services


Maintaining and updating the Accounts of Sellers on the Accounting System
transferred to Buyer.

Providing payroll services for employees of Sellers.

Providing human resource services to Sellers, including managing all of
Sellers' employee benefit programs.

Providing office space, in the facilities currently occupied by Seller's New
York headquarters office, to administrative and executive personnel of Sellers.

Providing and delivering inventory to the Closure Stores at cost (including
distribution) to the extent requested by Sellers to facilitate the operation of
the Closure Stores.

Assisting Sellers in the termination of Sellers' 401(k) plan.

Elevator and escalator maintenance services for certain Closure Stores pursuant
to the Complete Maintenance Agreement for Elevators and Escalators dated October
5, 1998 between Montgomery KONE and FAO.

Any other administrative services provided by headquarters to stores.

Any third party services which are delivered at the individual stores but
contracted for on an FAO-wide basis under contracts which are being assigned to
the Buyer.

Providing COBRA coverage to former employees of Sellers from and after the time
requested by Sellers, to the extent requested by Sellers.




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