RIGHT START INC /CA
EX. 10.6 SECURITY AGREEMENT CHICAGO NOTE
<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>13
<FILENAME>securityagreementchicago.txt
<DESCRIPTION>EX. 10.6 SECURITY AGREEMENT CHICAGO NOTE
<TEXT>
                               SECURITY AGREEMENT

     This  SECURITY  AGREEMENT,  dated as of  January  6,  2002,  is made by Toy
Soldier, Inc., a Delaware corporation ("Grantor"), in favor of KBB Retail Assets
Corp., f/k/a F.A.O.  Schwarz, a New York corporation (the "Subordinated  Secured
Parties"), holders of a certain subordinated note (the "Chicago Note") issued by
Grantor to Subordinated Secured Parties, with reference to the following facts:

                                    RECITALS

     A. Pursuant to the Letter Agreement by and among Grantor,  The Right Start,
Inc., a California corporation ("Parent"),  Royal Vendex KBB N.V., a Netherlands
corporation  ("Vendex"),  Quality  Fulfillment  Services,  Inc.  ("QFS") and the
Subordinated Secured Parties, dated March 22, 2002 (the "Letter Agreement"), the
Subordinated  Secured Parties have agreed to accept the Chicago Note, in payment
of the purchase price for the inventories related to the store located at 840 N.
Michigan Avenue,  Chicago,  Illinois (the "Chicago Store") purchased pursuant to
that certain  Interim  Operating  Agreement  dated as of January 6, 2002, by and
among Grantor,  Parent,  Subordinated  Secured  Parties and Vendex (the "Interim
Operating Agreement").

     B. The Letter  Agreement  provides,  as a condition  of  acceptance  of the
Chicago  Note,  that  Grantor  shall enter into this  Agreement  and shall grant
security interests to the Subordinated Secured Parties as herein provided.

     C. The security  interests created under this Security Agreement are junior
and subordinated as specified in Section 8 hereof.


                                    AGREEMENT

     NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt  and
adequacy of which hereby is acknowledged,  Grantor hereby represents,  warrants,
covenants, agrees, assigns and grants as follows:

     1.  Definitions.  This Agreement is the security  agreement  referred to in
Section 3(b)(iv) of the Letter Agreement.  Terms defined in the Chicago Note and
not  otherwise  defined in this  Agreement  shall have the meanings  defined for
those  terms  in the  Chicago  Note.  Terms  defined  in the  New  York  Uniform
Commercial  Code and not otherwise  defined in this  Agreement or in the Chicago
Note shall have the  meanings  defined for those  terms in the New York  Uniform
Commercial  Code. As used in this Agreement,  the following terms shall have the
meanings respectively set forth after each:

     "Agreement"   means   this   security   agreement,   and  any   extensions,
modifications, renewals, restatements, supplements or amendments hereof.

     "Collateral"  means all of Grantor's now owned or hereafter acquired right,
title and interest in and to each of the following:

                            (a) accounts, contract rights, and all other forms
                            of obligations owing to Grantor arising out of the
                            sale or lease of goods transferred to Grantor under
                            the Bill of Sale or later placed in the Chicago

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                            Store by the Grantor or the rendition of services in
                            connection with the Chicago Store by Grantor,
                            irrespective of whether earned by performance, and
                            any and all credit insurance, guaranties, or
                            security therefor;

                            (b) books and records including: ledgers; records
                            indicating, summarizing, or evidencing Grantor's
                            properties or assets or liabilities; all information
                            relating to the business operations or financial
                            condition of the Chicago Store; and all other
                            computer programs, disk or tape files, printouts,
                            runs, or other computer prepared information about
                            the Chicago Store;

                            (c) deposit accounts (as that term is defined from
                            time to time in the Uniform Commercial Code as in
                            effect in the State of New York) transferred to
                            Grantor under the Bill of Sale;

                            (d) all of Grantor's general intangibles and other
                            personal property (including contract rights, rights
                            arising under common law, statutes, or regulations,
                            choses or things in action, commercial tort claims,
                            goodwill, patents, trade names, trademarks, service
                            marks, copyrights, blueprints, drawings, purchase
                            orders, customer lists, monies due or recoverable
                            from pension funds, route lists, rights to payment
                            and other rights under any royalty or licensing
                            agreements, infringement claims, computer programs,
                            information contained in computer disks or tapes,
                            literature, reports, catalogs, insurance premium
                            rebates, tax refunds, and tax refund claims)
                            transferred to Grantor under the Bill of Sale;

                            (e) goods (as that term is defined from time to time
                            in the Uniform Commercial Code as in effect in the
                            State of New York) located at the Chicago Store
                            whether transferred to Grantor under the Bill of
                            Sale or later placed in the Chicago Store by
                            Grantor;

                            (f) investment property (as that term is defined
                            from time to time in the Uniform Commercial Code as
                            in effect in the State of New York) transferred to
                            Grantor under the Bill of Sale;

                            (g) negotiable collateral, including all Grantor's
                            right, title and interest with respect to any
                            letters of credit, letter of credit rights,
                            instruments, drafts, documents and chattel paper (as
                            each term is defined from time to time in the
                            Uniform Commercial Code as in effect in the State of
                            New York) and any and all supporting obligations in
                            respect thereof to the extent transferred to Grantor
                            under the Bill of Sale;

                            (h) all parcels of real property and the related
                            improvements thereto (whether as owner, lessee, or
                            otherwise) transferred to Grantor under the Bill of
                            Sale;

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                            (i) money or other assets of Grantor transferred to
                            Grantor under the Bill of Sale;

                            (j) all Inventories (as such term is defined in that
                            certain Purchase Agreement, dated November 19, 2001,
                            among Vendex, Subordinated Secured Parties, QFS,
                            Parent and Grantor) attributable to the Chicago
                            Store;and

                            (k) the proceeds and products, whether tangible or
                            intangible, of any of the foregoing, including
                            proceeds of insurance covering any or all of the
                            foregoing, and any and all of the foregoing, or
                            other tangible or intangible property resulting from
                            the sale, exchange, collection, or other disposition
                            of any of the foregoing, or any portion thereof or
                            interest therein, and the proceeds thereof.

     "Secured  Obligations"  means any and all present and future obligations of
Grantor  arising  under or relating  to the  Chicago  Note or any one or more of
them,  whether due or to become due,  matured or  unmatured,  or  liquidated  or
unliquidated,  including  interest  that accrues after the  commencement  of any
bankruptcy or insolvency proceeding by or against Grantor.

     "Trade Debt" means the  principal of,  interest on (including  any interest
accruing  after the  commencement  of any  bankruptcy  event or which would have
accrued but for such event  whether or not allowed) and other  amounts due on or
with  respect to  indebtedness  of Grantor to its vendors,  suppliers  and trade
creditors incurred in the ordinary course of business.

     2. Further Assurances.  At any time and from time to time at the request of
the  Subordinated  Secured  Parties,  Grantor  shall  execute and deliver to the
Subordinated Secured Parties all such financing statements and other instruments
and documents in form and substance  satisfactory  to the  Subordinated  Secured
Parties as shall be necessary or desirable to fully  perfect,  when filed and/or
recorded,  the Subordinated  Secured Parties'  subordinated  security  interests
granted  pursuant to Section 3 of this  Agreement.  At any time and from time to
time, the  Subordinated  Secured Parties shall be entitled to file and/or record
any or all such financing  statements,  instruments  and documents held by them,
and any or all such further financing statements, documents and instruments, and
to take all such other actions,  as the  Subordinated  Secured  Parties may deem
appropriate  to perfect  and to maintain  perfected  the  subordinated  security
interests  granted  in  Section  3 of  this  Agreement.  Before  and  after  the
occurrence  of any  Event  of  Default,  at the  Subordinated  Secured  Parties'
request,   Grantor  shall  execute  all  such  further   financing   statements,
instruments and documents, and shall do all such further acts and things, as may
be deemed necessary or desirable by the  Subordinated  Secured Parties to create
and perfect, and to continue and preserve, an indefeasible subordinated security
interest in the Collateral in favor of the Subordinated  Secured Parties, or the
priority thereof,  including  causing any such financing  statements to be filed
and/or recorded in the applicable jurisdiction.

     3. Security  Agreement.  For valuable  consideration,  Grantor  assigns and
pledges to the  Subordinated  Secured  Parties,  and grants to the  Subordinated
Secured Parties a subordinated  security interest in, all currently existing and
hereafter acquired Collateral,  as security for the timely payment of all of the
Secured  Obligations.  This Agreement is a continuing and irrevocable  agreement
and all the rights, powers, privileges and remedies hereunder shall apply to any
and all Secured  Obligations,  including those Secured Obligations arising under
successive  transactions  which shall either  continue the Secured  Obligations,
increase or decrease  them, or from time to time create new Secured  Obligations
after  all  or  any  prior  Secured   Obligations   have  been  satisfied,   and
notwithstanding the bankruptcy of Grantor.

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     4. Events of Default. There shall be an Event of Default hereunder upon the
occurrence  and during the  continuance of an Event of Default under the Chicago
Note.

     5.  Rights  Upon  Event of  Default.  Upon the  occurrence  and  during the
continuance of an Event of Default, the Subordinated Secured Parties shall have,
in any jurisdiction where enforcement hereof is sought, in addition to all other
rights  and  remedies  that the  Subordinated  Secured  Parties  may have  under
applicable law or in equity or under this Agreement all rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any jurisdiction.

     6. Voting Rights; Dividends; Etc. With respect to any Collateral consisting
of securities,  partnership interests,  joint venture interests,  investments or
the like in the  possession of the  Subordinated  Secured  Parties  (referred to
collectively  and  individually  in  this  Section  6 and  in  Section  7 as the
"Investment  Collateral"),  so long as no Event of Default  occurs  and  remains
continuing:

     6.1 Voting Rights. Grantor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Investment Collateral, or any part
thereof, for any purpose not inconsistent with the terms of this Agreement,  the
Chicago Note or the Letter Agreement.

     6.2 Dividend and Distribution Rights.  Grantor shall be entitled to receive
and to retain and use any and all dividends or distributions  paid in respect of
the Investment Collateral.

     7.  Rights  During  Event  of  Default.  With  respect  to  any  Investment
Collateral in the possession of the Subordinated  Secured Parties, so long as an
Event of Default has occurred and is continuing:

     7.1  Voting,  Dividend  and  Distribution  Rights.  At  the  option  of the
Subordinated  Secured Parties,  all rights of Grantor to exercise the voting and
other  consensual  rights  which they would  otherwise  be  entitled to exercise
pursuant to Section 6.1 above,  and to receive the dividends  and  distributions
which they would  otherwise  be  authorized  to receive  and retain  pursuant to
Section 6.2 above,  shall  cease,  and all such rights  thereupon  shall  become
vested in the  Subordinated  Secured Parties which thereupon shall have the sole
right to exercise such voting and other consensual  rights and to receive and to
hold as pledged Collateral such dividends and distributions.

     7.2  Dividends  and  Distributions  Held in Trust.  All dividends and other
distributions  which are received by Grantor  contrary to the provisions of this
Agreement shall be received in trust for the benefit of the Subordinated Secured
Parties,  shall be segregated from other funds of Grantor and forthwith shall be
paid over to Subordinated Secured Parties as pledged Collateral in the same form
as so received (with any necessary endorsements).

     8. Subordination.  This Agreement and the rights and obligations  evidenced
hereby are subordinate in the manner and to the extent set forth in that certain
Subordination  and  Intercreditor  Agreement  dated as of  January  6,  2002 (as
amended,   supplemented   or  otherwise   modified   from  time  to  time,   the
"Subordination   Agreement")   among  Vendex,   Subordinated   Secured  Parties,
Grantor,Parent and Wells Fargo Retail Finance, LLC (the "Senior Lender"), to the
indebtedness  (including  interest)  owed by  Grantor  pursuant  to the loan and
security agreement between The Right Start, Inc., Grantor and Wells Fargo Retail
Finance,  LLC,  dated as of  January  23,  2001  (as  amended,  supplemented  or
otherwise   modified  from  time  to  time,  the  "Wells  Loan   Agreement")  as

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contemplated  by  the  Subordination   Agreement,   and  to  any  other  secured
indebtedness  of Grantor  permitted to be incurred by the Wells Loan  Agreement,
and each Subordinated Secured Party, by acceptance hereof, agrees to be bound by
the provisions of the Subordination  Agreement. In the event that any provisions
of this Guaranty are deemed to conflict with the  Subordination  Agreement,  the
provisions of the Subordination Agreement shall govern.

     9. Costs and Expenses.  Grantor agrees to pay to the  Subordinated  Secured
Parties  all costs  and  expenses  (including,  without  limitation,  reasonable
attorneys' fees and disbursements)  incurred by the Subordinated Secured Parties
in the enforcement or attempted enforcement of this Agreement, whether or not an
action is filed in connection  therewith,  and in connection  with any waiver or
amendment of any term or provision  hereof.  All  advances,  charges,  costs and
expenses,  including reasonable  attorneys' fees and disbursements,  incurred or
paid by the  Subordinated  Secured  Parties in exercising any right,  privilege,
power or remedy conferred by this Agreement,  or in the enforcement or attempted
enforcement  thereof,  shall be secured  hereby  and shall  become a part of the
Secured  Obligations  and shall be paid to the  Subordinated  Secured Parties by
Grantor,  immediately upon demand,  together with interest thereon from the date
of demand at the rate of 8% per annum.

     10. Continuing Effect. This Agreement shall remain in full force and effect
and continue to be effective  should any petition be filed by or against Grantor
for liquidation or  reorganization,  should Grantor become  insolvent or make an
assignment  for the  benefit of  creditors  or should a  receiver  or trustee be
appointed  for  all or any  significant  part of  Grantor's  assets,  and  shall
continue to be  effective or be  reinstated,  as the case may be, if at any time
payment and  performance of the Secured  Obligations,  or any part thereof,  is,
pursuant to applicable law, rescinded or reduced in amount, or must otherwise be
restored or returned by the Subordinated Secured Parties, whether as a "voidable
preference," "fraudulent conveyance" or otherwise, all as though such payment or
performance had not been made. In the event that any payment or any part thereof
is rescinded,  reduced,  restored or returned,  the Secured Obligations shall be
reinstated  and deemed  reduced  only by such amount paid and not so  rescinded,
reduced, restored or returned.

     11. Release of Grantor.  This Agreement shall be terminated and all Secured
Obligations of Grantor hereunder shall be released when all Secured  Obligations
have been paid in full or upon such  release of  Grantor's  Secured  Obligations
hereunder.  Upon such termination  Subordinated Secured Parties shall return any
pledged  Collateral  to Grantor,  or to the person or persons  legally  entitled
thereto, and shall endorse,  execute,  deliver,  record and file all instruments
and  documents,  and do all other acts and things  reasonably  required  for the
return  of the  Collateral  to  Grantor,  or to the  person or  persons  legally
entitled  thereto,  and to evidence or document the release of the  Subordinated
Secured  Parties'  interests  arising  under this  Agreement,  all as reasonably
requested by, and at the sole expense of, Grantor.

     12.  Agreement  to be Pari  Passu with Trade  Debt.  Upon any  dissolution,
winding up, liquidation,  reorganization (under bankruptcy law) or insolvency of
the Grantor (whether (a) in bankruptcy,  insolvency or receivership  proceedings
or upon an assignment  for the benefit of creditors,  (b) upon the assets of the
Grantor becoming less than its liabilities, (c) in the event that the Grantor is
unable  to pay its  debts  when they  become  due or (d) any other  dissolution,
winding  up  or  liquidation  of  the  Grantor)  (a  "Triggering   Event"),  the
Subordinated Secured Parties agree that from and after the date the Subordinated
Secured Parties are notified that a Triggering  Event has occurred,  the holders
of the Trade Debt shall be pari passu in right of payment  and shall be entitled
to  share  the  proceeds  of the  Collateral  pro rata  based  on the  aggregate

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principal  amount of the Trade Debt then  outstanding,  the interest thereon and
any other  amounts due thereon and the aggregate  amount of Secured  Obligations
then outstanding.

     13.  GOVERNING  LAW.  THIS  AGREEMENT  SHALL BE  CONSTRUED  AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.


         IN WITNESS WHEREOF, Grantor has executed this Agreement by its duly
authorized officer as of the date first written above.

                              "Grantor"


                               TOY SOLDIER, INC.,
                               a Delaware corporation


                               By:/s/ Jerry R. Welch
                               Title: President and Chief Executive Officer


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ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:


"Subordinated Secured Parties"

F.A.O. SCHWARZ


By /s/ Hal Prout
Title: Secretary


QUALITY FULFILLMENT SERVICES, INC.

By /s/ Hal Prout

Title: Secretary


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