UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 2)*
The Right Start, Inc.
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(Name of Issuer)
Common Stock, No Par Value
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(Title of Class of Securities)
766574-10-7
(CUSIP Number)
Walter H. Stowell, Esq.
Testa, Hurwitz & Thibeault, LLP
125 High Street, Boston, MA 02110
(617) 248-7000
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
May 30, 1997
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(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom copies
are to be sent.
- ---------------------------
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not
be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
SCHEDULE 13D
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CUSIP NO. 766574-10-7
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- ---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Edward L. Cahill
SSN: ###-##-####
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [X]
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
AF
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
NUMBER OF
-------- ------------------------------------------
-------- ------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 908,333
OWNED BY
-------- ------------------------------------------
-------- ------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON
-------- ------------------------------------------
-------- ------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES (See Instructions)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.6%
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IN
- ---------- ---------------------------------------------------------------------
SCHEDULE 13D
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CUSIP NO. 766574-10-7
- ------------------------------------------
- ---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
David L. Warnock
SSN: ###-##-####
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [X]
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
AF
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
NUMBER OF
-------- ------------------------------------------
-------- ------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 908,333
OWNED BY
-------- ------------------------------------------
-------- ------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON
-------- ------------------------------------------
-------- ------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES (See Instructions)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.6%
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IN
SCHEDULE 13D
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CUSIP NO. 766574-10-7
- ------------------------------------------
- ---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cahill, Warnock Strategic Partners, L.P.
IRSN: 52-1970604
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [X]
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
AF
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware Limited Partnership
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
NUMBER OF
-------- ------------------------------------------
-------- ------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 908,333
OWNED BY
-------- ------------------------------------------
-------- ------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON
-------- ------------------------------------------
-------- ------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES (See Instructions)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.6%
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
SCHEDULE 13D
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CUSIP NO. 766574-10-7
- ------------------------------------------
- ---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cahill, Warnock Strategic Partners Fund, L.P.
IRSN: 52-1970619
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X]
(b) [ ]
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware Limited Partnership
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
NUMBER OF
-------- ------------------------------------------
-------- ------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 908,333
OWNED BY
-------- ------------------------------------------
-------- ------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON
-------- ------------------------------------------
-------- ------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES (See Instructions)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.6%
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
SCHEDULE 13D
- ------------------------------------------
CUSIP NO. 766574-10-7
- ------------------------------------------
- ---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Cahill, Warnock & Company, LLC
IRSN: 52-1931617
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [ ]
(b) [X]
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
AF
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland Limited Liability Company
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
NUMBER OF
-------- ------------------------------------------
-------- ------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 908,333
OWNED BY
-------- ------------------------------------------
-------- ------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON
-------- ------------------------------------------
-------- ------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES (See Instructions)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.6%
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
OO
SCHEDULE 13D
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CUSIP NO. 766574-10-7
- ------------------------------------------
- ---------- ---------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Strategic Associates, L.P.
IRSN: 52-1991689
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a) [X]
(b) [ ]
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
3 SEC USE ONLY
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
WC
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED [ ]
PURSUANT TO ITEMS 2(d) or 2(e)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware Limited Partnership
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
7 SOLE VOTING POWER
-0-
NUMBER OF
-------- ------------------------------------------
-------- ------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 908,333
OWNED BY
-------- ------------------------------------------
-------- ------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING -0-
PERSON
-------- ------------------------------------------
-------- ------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
908,333
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN [ ]
SHARES (See Instructions)
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.6%
- ---------- ---------------------------------------------------------------------
- ---------- ---------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
PN
This Schedule 13D Amendment No. 2 is an amendment to the Schedule 13D
(filed on October 21, 1996) and the Amendment No. 1 to Schedule 13D (filed on
May 16, 1997) that were filed with the Securities and Exchange Commission (the
"SEC") on behalf of Cahill, Warnock Strategic Partners Fund, L.P. ("Strategic
Partners Fund"), Cahill, Warnock Strategic Partners, L.P. ("Strategic
Partners"), Strategic Associates, L.P. ("Strategic Associates"), Cahill, Warnock
& Company, LLC ("Cahill, Warnock & Co."), Edward L. Cahill ("Cahill") and David
L. Warnock ("Warnock"). Strategic Partners Fund, Strategic Partners, Strategic
Associates, Cahill, Warnock & Co., Cahill and Warnock are sometimes referred to
collectively herein as the "Reporting Persons."
The Right Start, Inc., a California corporation, is referred to herein
as the "Issuer."
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION:
The information provided herein in this Item 3 amends and supplements
the information previously disclosed in Item 3 in the Schedule 13D (filed
October 21, 1996) and Amendment No. 1 to Schedule 13D (filed May 16, 1997) filed
on behalf of the Reporting Persons.
As previously reported in the Schedule 13D filed on behalf of the
Reporting Persons on October 21, 1996, on October 11, 1996 Strategic Partners
Fund acquired 2,842 units of 8% Convertible Debentures due May 31, 2002 for a
total purchase price of $2,842,000. These debentures were originally convertible
into 473,666.67 shares of the Issuer's Common Stock. Pursuant to a certain First
Amendment to Convertible Debenture Purchase Agreement and Convertible Debenture,
dated as of May 30, 1997 (attached hereto as Exhibit 2), these debentures became
convertible into 710,500 shares of the Issuer's Common Stock. The working
capital of Strategic Partners Fund was the source of funds for the debentures.
No part of the purchase price was represented by funds or other consideration
borrowed or otherwise obtained for the purpose of acquiring, holding, trading or
voting the securities.
As previously reported in the Schedule 13D filed on behalf of the
Reporting Persons on October 21, 1996, on October 11, 1996 Strategic Associates
acquired 158 units of 8% Convertible Debentures due May 31, 2002 for a total
purchase price of $158,000. These debentures were originally convertible into
26,333.33 shares of the Issuer's Common Stock. Pursuant to a certain First
Amendment to Convertible Debenture Purchase Agreement and Convertible Debenture,
dated as of May 30, 1997 (attached hereto as Exhibit 3), these debentures became
convertible into 39,500 shares of the Issuer's Common Stock. The working capital
of Strategic Associates was the source of funds for the debentures. No part of
the purchase price was represented by funds or other consideration borrowed or
otherwise obtained for the purpose of acquiring, holding, trading or voting the
securities.
ITEM 5. INTEREST IN THE SECURITIES OF THE ISSUER:
The information provided herein in this Item 5 amends and supplements
the information previously disclosed in Item 5 in the Schedule 13D (filed
October 21, 1996) and Amendment No. 1 to Schedule 13D (filed May 16, 1997) filed
on behalf of the Reporting Persons.
(a) Strategic Partners Fund is the record owner of 2,842 units of 8%
Convertible Debentures due May 31, 2002 (the "Fund Debentures"). The Fund
Debentures are convertible into 710,500 shares of the Issuer's Common Stock (the
"Fund Conversion Shares"). In addition, Strategic Partners Fund is the record
owner of warrants to purchase up to 150,100 shares of the Issuer's Common Stock
(the "Fund Warrants"). The Fund Warrants are currently exercisable and expire
on May 6, 2002.
Strategic Associates is the record owner of 158 units of 8% Convertible
Debentures due May 31, 2002 (the "Associates Debentures"). The Associates
Debentures are convertible into 39,500 shares of the Issuer's Common Stock (the
"Associates Conversion Shares"). In addition, Strategic Associates is the record
owner of warrants to purchase up to 8,233 shares of the Issuer's Common Stock
(the "Associates Warrants"). The Associates Warrants are currently exercisable
and expire on May 6, 2002.
Because of their relationship as affiliated entities, both Strategic
Partners Fund and Strategic Associates may be deemed to own beneficially the
Fund Conversion Shares, the shares of Common Stock underlying the Fund Warrants,
the Associates Conversion Shares and the shares of Common Stock underlying the
Associates Warrants. As general partners of Strategic Partners Fund and
Strategic Associates, respectively, Strategic Partners and Cahill, Warnock & Co.
may be deemed to own beneficially the Fund Conversion Shares, the shares of
Common Stock underlying the Fund Warrants, the Associates Conversion Shares and
the shares of Common Stock underlying the Associates Warrants. As the individual
general partners of Strategic Partners and as the members of Cahill, Warnock &
Co., both Cahill and Warnock may be deemed to own beneficially the Fund
Conversion Shares, the shares of Common Stock underlying the Fund Warrants, the
Associates Conversion Shares and the shares of Common Stock underlying the
Associates Warrants.
Each of the Reporting Persons may be deemed to own beneficially 9.6% of
the Issuer's Common Stock, which percentage is calculated based upon (i)
8,593,639 shares reported outstanding by the Issuer on May 6, 1997, and (ii) the
-2-
number of shares (908,333) issuable upon conversion of the Fund Debentures, the
Fund Warrants, the Associates Debentures and the Associates Warrants.
(b) Number of shares of the Issuer's Common Stock as to which each
such person has
(i) Sole power to vote or direct the vote:
0 shares for each Reporting Person;
(ii) Shared power to vote or direct the vote:
908,333 shares for each Reporting Person;
(iii) Sole power to dispose or to direct the disposition:
0 shares for each Reporting Person;
(iv) Shared power to dispose or to direct the disposition:
908,333 shares for each Reporting Person.
Strategic Partners Fund disclaims beneficial ownership of all of the
Associates Conversion Shares and shares of Common Stock underlying the
Associates Warrants. Strategic Associates disclaims beneficial ownership of all
of the Fund Conversion Shares and shares of Common Stock underlying the Fund
Warrants. Strategic Partners, Cahill, Warnock & Co., Cahill and Warnock each
disclaim beneficial ownership of the Fund Conversion Shares, the shares of
Common Stock underlying the Fund Warrants, the Associates Conversion Shares and
the shares of Common Stock underlying the Associates Warrants.
(c) Except as set forth herein, none of the Reporting Persons has
effected any transaction in the Issuer's Common Stock since the Amendment No. 1
to Schedule 13D was filed on their behalf with the SEC on May 16, 1997.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER:
The information provided herein in this Item 6 amends and supplements
the information previously disclosed in Item 6 in the Schedule 13D (filed
October 21, 1996) and Amendment No. 1 to Schedule 13D (filed May 16, 1997) filed
on behalf of the Reporting Persons.
Pursuant to a certain First Amendment to Convertible Debenture Purchase
Agreement and Convertible Debenture, dated as of May 30, 1997 (attached hereto
as Exhibit 2) by and among Strategic Partners Fund and the Issuer, the
conversion price applicable to the Fund Debentures was changed from $6.00 per
share to $4.00 per share. As a consequence, the number of shares of Common Stock
into which the Fund Debentures convert changed from 473,666.67 to 710,500
shares. In addition, this agreement provides that in the event of a change in
control, as that term is defined therein, the Issuer must offer to repurchase
the Fund Debentures from Strategic Partners Fund.
Pursuant to a certain First Amendment to Convertible Debenture Purchase
Agreement and Convertible Debenture, dated as of May 30, 1997 (attached hereto
as Exhibit 3) by and among Strategic Associates and the Issuer, the conversion
price applicable to the Associates Debentures was changed from $6.00 per share
to $4.00 per share. As a consequence, the number of shares of Common Stock into
which the Associates Debentures convert was changed from 26,333.33 to 39,500
shares. In addition, this agreement provides that in the event of a change in
control, as that term is defined therein, the Issuer must offer to repurchase
the Associates Debentures from Strategic Associates.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS:
The information provided herein in this Item 7 amends and supplements
the information previously disclosed in Item 7 in the Schedule 13D (filed
October 21, 1996) and Amendment No. 1 to Schedule 13D (filed May 16, 1997) filed
on behalf of the Reporting Persons.
Exhibit 1 - Agreement regarding filing of joint Schedule 13D
Exhibit 2 - First Amendment to Convertible Debenture Purchase
Agreement and Convertible Debenture, dated as of May 30,
1997, by and among the Issuer and Strategic Partners Fund
Exhibit 3 - First Amendment to Convertible Debenture Purchase
Agreement and Convertible Debenture, dated as of May 30,
1997, by and among the Issuer and Strategic Associates
-3-
SCHEDULE 13D
SIGNATURE
After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this statement is true, complete
and correct.
Dated: June 6, 1997 /s/ Edward L. Cahill
--------------------
Edward L. Cahill
/s/ David L. Warnock
--------------------
David L. Warnock
CAHILL, WARNOCK STRATEGIC
PARTNERS FUND, L.P.
By: Cahill, Warnock Strategic Partners,
L.P., its Sole General Partner
By: /s/ Edward L. Cahill
----------------------------------
Edward L. Cahill, General Partner
By: /s/ David L. Warnock
----------------------------------
David L. Warnock, General Partner
CAHILL, WARNOCK STRATEGIC PARTNERS, L.P.
By: /s/ Edward L. Cahill
----------------------------------
Edward L. Cahill, General Partner
By: /s/ David L. Warnock
----------------------------------
David L. Warnock, General Partner
STRATEGIC ASSOCIATES, L.P.
By: Cahill, Warnock & Co., LLC, its
sole General Partner
By: /s/ Edward L. Cahill
------------------------
dward L. Cahill, Member
By: /s/ David L. Warnock
------------------------
David L. Warnock, Member
CAHILL, WARNOCK & CO., LLC
By: /s/ Edward L. Cahill
-------------------------
Edward L. Cahill, Member
By: /s/ David L. Warnock
-------------------------
David L. Warnock, Member
-4-
Exhibit 1
AGREEMENT
Pursuant to Rule 13d-1(f)(1) under the Securities Exchange Act of 1934,
the undersigned hereby agree that only one statement containing the information
required by Schedule 13D need be filed with respect to the ownership by each of
the undersigned of shares of stock of The Right Start, Inc.
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
Executed this 6th day of June, 1997.
/s/ Edward L. Cahill
------------------------------------
Edward L. Cahill
/s/ David L. Warnock
------------------------------------
David L. Warnock
CAHILL, WARNOCK STRATEGIC
PARTNERS FUND, L.P.
By: Cahill, Warnock Strategic Partners, L.P.,
its Sole General Partner
By: /s/ Edward L. Cahill
----------------------------------
Edward L. Cahill, General Partner
By: /s/ David L. Warnock
----------------------------------
David L. Warnock, General Partner
CAHILL, WARNOCK STRATEGIC PARTNERS, L.P.
By: /s/ Edward L. Cahill
------------------------------------
Edward L. Cahill, General Partner
By: /s/ David L. Warnock
------------------------------------
David L. Warnock, General Partner
STRATEGIC ASSOCIATES, L.P.
By: Cahill, Warnock & Co., LLC, its
sole General Partner
By: /s/ Edward L. Cahill
-------------------------------
Edward L. Cahill, Member
By: /s/ David L. Warnock
-------------------------------
David L. Warnock, Member
-5-
CAHILL, WARNOCK & CO., LLC
By: /s/ Edward L. Cahill
------------------------------------
Edward L. Cahill, Member
By: /s/ David L. Warnock
------------------------------------
David L. Warnock, Member
Exhibit 2
FIRST AMENDMENT TO
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
AND
CONVERTIBLE DEBENTURE
THIS FIRST AMENDMENT TO CONVERTIBLE DEBENTURE PURCHASE AGREEMENT AND
CONVERTIBLE DEBENTURE (this "Amendment") is made as of May 30, 1997, between The
Right Start, Inc., a California corporation (the "Company") and Cahill Warnock
Strategic Partners Fund, L.P., a Delaware limited partnership (the "Purchaser").
RECITALS:
A. The Company and the Purchaser entered into that certain Convertible
Debenture Purchase Agreement dated as of October 11, 1996 (the "Agreement")
providing for the sale by the Company to the Purchaser of the Company's
Convertible Debenture dated October 11, 1996 (the "Debenture"). All capitalized
terms used, and not otherwise defined, in this Amendment shall have the meanings
set forth in the Agreement and the Debenture;
B. The Company issued the Debenture to the Purchaser on October 11,
1996; and
C. The Company and the Purchaser desire to amend the Agreement and the
Debenture as set forth below for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged.
Accordingly, the parties hereby agree to amend and modify the Agreement
and to restate the Debenture as set forth below:
1. The last sentence of Section 2.01 of the Agreement shall be amended
to read in its entirety as follows:
"The Debenture from and after the effectiveness of the First
Amendment to this Agreement dated as of May 30, 1997, shall have a
conversion price of $4.00 per share of Common Stock, subject to
adjustment in certain circumstances."
2. Section 5.01 of the Agreement shall be amended by adding the
following provision at the end of such section:
"(l) Change of Control. If at any time there is a
Change of Control of the Company then the Company shall, immediately
following the occurrence of any such event, send a notice to Purchaser
offering to repurchase the Debenture (or at each Purchaser's option,
any portion thereof) at the par amount thereof, plus interest accrued
and unpaid on the Debenture to the date of
-6-
such repurchase. If the Purchaser desires to accept such offer in whole
or in part, the Purchaser must advise the Company of such acceptance
within 30 days of the date of receiving such notice. The Company shall
then repurchase the Debenture or portion thereof so tendered for
repurchase by the Purchaser by paying the purchase price to the
Purchaser (or any person or persons designated by the Purchaser in such
acceptance notice), in immediately available funds, within five days of
the Company's receipt of the Purchaser's acceptance notice. For
purposes of this covenant (1), "Change of Control" shall mean an event
or series of events by which (1) Kayne Anderson ceases to beneficially
own (as beneficial ownership is defined in Rule 13d-3 under the
Securities Exchange Act of 1934, as amended (the "Exchange Act")) and
control, directly or indirectly, at least twenty-five percent (25%) of
the issued and outstanding shares of each class of capital stock of the
Company entitled (without regard to the occurrence of any contingency)
to vote for the election of a majority of the members of the board of
directors of the Company; (2) any person or group (as defined in Rule
13d-1 of the Exchange Act), other than a group which includes Kayne
Anderson, who obtains beneficial ownership (as defined in Rule 13d-3 of
the Exchange Act) or control of a majority of the securities of the
Company ordinarily having the right to vote in the election of
directors; (3) during any two year period commencing on the date
hereof, individuals who at the beginning of such period constituted the
Board of Directors cease for any reason to constitute a majority of the
Board of Directors; (4) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or
substantially all, the assets of the Company; (5) the merger or
consolidation of the Company with another corporation with the effect
that immediately after such transaction any beneficial owner of the
Company shall have become the beneficial owner of securities of the
corporation surviving such merger or consolidation representing a
majority of the combined voting power of the outstanding securities of
the surviving corporation ordinarily having the right to vote in the
election of directors; or (6) the adoption of a plan leading to the
liquidation or dissolution of the Company. For purposes of this
covenant (1), "Kayne Anderson" means Kayne Anderson Investment
Management, Inc., KAIM Non-Traditional, L.P., Kayne Anderson
Non-Traditional Investments, L.P., Kayne Anderson Offshore Limited,
ARBCO Associates, L.P., Offense Group Associates, L.P., and Opportunity
Associates, L.P. and each of their affiliates."
3. On the date hereof, the Debenture as issued shall be canceled and
the Company shall deliver to the Purchaser a replacement debenture identical in
all respects to the Debenture, except that Section 2.1 of the Debenture shall
have been amended to read in its entirety as follows:
"2.1. Right of Conversion. Subject to and in compliance with
the provisions of this Section 2, the Holder shall have the right, at
the Holder's option, at any time, and before the date on which the
entire principal amount hereof, all accrued and unpaid interest hereon,
and all other amounts payable to the Holder hereunder or under the
Purchase Agreement have been paid in full (the "Expiration Date"), to
convert the principal amount of this Convertible Debenture, or any
portion thereof, into the number of fully paid and nonassessable shares
of Common Stock, no par value, of the Company determined by dividing
the principal amount so converted by the purchase price per share of
$4.00, as adjusted from time to time as hereinafter provided (the
"Conversion Price")."
4. The Agreement shall remain in full force and effect as amended
hereby and all parties hereto hereby ratify and affirm the Agreement as so
amended.
5. Two or more duplicate originals of this Amendment may be signed by
the parties, each of which shall be an original but all of which together shall
constitute one and the same original.
6. This Amendment, 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 the State of Delaware (excluding the choice of
law rules thereof).
-7-
IN WITNESS WHEREOF, this Amendment is executed as of the day and year
first above written.
THE RIGHT START, INC.
By: /s/ Jerry R. Welch
------------------------------
Jerry R. Welch
President and Chief Executive Officer
CAHILL, WARNOCK STRATEGIC PARTNERS FUND, L.P.
By: Cahill, Warnock Strategic Partners, L.P.,
its general partner
By: /s/ David L. Warnock
-----------------------------
Exhibit 3
FIRST AMENDMENT TO
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
AND
CONVERTIBLE DEBENTURE
THIS FIRST AMENDMENT TO CONVERTIBLE DEBENTURE PURCHASE AGREEMENT AND
CONVERTIBLE DEBENTURE (this "Amendment") is made as of May 30, 1997, between The
Right Start, Inc., a California corporation (the "Company") and Strategic
Associates, L.P., a Delaware limited partnership (the "Purchaser").
RECITALS:
A. The Company and the Purchaser entered into that certain Convertible
Debenture Purchase Agreement dated as of October 11, 1996 (the "Agreement")
providing for the sale by the Company to the Purchaser of the Company's
Convertible Debenture dated October 11, 1996 (the "Debenture"). All capitalized
terms used, and not otherwise defined, in this Amendment shall have the meanings
set forth in the Agreement;
B. The Company issued the Debenture to the Purchaser on October 11,
1996; and
C. The Company and the Purchaser desire to amend the Agreement and the
Debenture as set forth below for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged.
Accordingly, the parties hereby agree to amend and modify the Agreement
and to restate the Debenture as set forth below:
1. The last sentence of Section 2.01 of the Agreement shall be amended
to read in its entirety as follows:
-8-
"The Debenture from and after the effectiveness of the First
Amendment to this Agreement dated as of May 30, 1997, shall have a
conversion price of $4.00 per share of Common Stock, subject to
adjustment in certain circumstances."
2. Section 5.01 of the Agreement shall be amended by adding the
following provision at the end of such section:
"(l) Change of Control. If at any time there is a
Change of Control of the Company then the Company shall, immediately
following the occurrence of any such event, send a notice to Purchaser
offering to repurchase the Debenture (or at each Purchaser's option,
any portion thereof) at the par amount thereof, plus interest accrued
and unpaid on the Debenture to the date of such repurchase. If the
Purchaser desires to accept such offer in whole or in part, the
Purchaser must advise the Company of such acceptance within 30 days of
the date of receiving such notice. The Company shall then repurchase
the Debenture or portion thereof so tendered for repurchase by the
Purchaser by paying the purchase price to the Purchaser (or any person
or persons designated by the Purchaser in such acceptance notice), in
immediately available funds, within five days of the Company's receipt
of the Purchaser's acceptance notice. For purposes of this covenant
(1), "Change of Control" shall mean an event or series of events by
which (1) Kayne Anderson ceases to beneficially own (as beneficial
ownership is defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) and control, directly or
indirectly, at least twenty-five percent (25%) of the issued and
outstanding shares of each class of capital stock of the Company
entitled (without regard to the occurrence of any contingency) to vote
for the election of a majority of the members of the board of directors
of the Company; (2) any person or group (as defined in Rule 13d-1 of
the Exchange Act), other than a group which includes Kayne Anderson,
who obtains beneficial ownership (as defined in Rule 13d-3 of the
Exchange Act) or control of a majority of the securities of the Company
ordinarily having the right to vote in the election of directors; (3)
during any two year period commencing on the date hereof, individuals
who at the beginning of such period constituted the Board of Directors
cease for any reason to constitute a majority of the Board of
Directors; (4) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or
substantially all, the assets of the Company; (5) the merger or
consolidation of the Company with another corporation with the effect
that immediately after such transaction any beneficial owner of the
Company shall have become the beneficial owner of securities of the
corporation surviving such merger or consolidation representing a
majority of the combined voting power of the outstanding securities of
the surviving corporation ordinarily having the right to vote in the
election of directors; or (6) the adoption of a plan leading to the
liquidation or dissolution of the Company. For purposes of this
covenant (1), "Kayne Anderson" means Kayne Anderson Investment
Management, Inc., KAIM Non-Traditional, L.P., Kayne Anderson
Non-Traditional Investments, L.P., Kayne Anderson Offshore Limited,
ARBCO Associates, L.P., Offense Group Associates, L.P., and Opportunity
Associates, L.P. and each of their affiliates."
3. On the date hereof, the Debenture as issued shall be canceled and
the Company shall deliver to the Purchaser a replacement debenture identical in
all respects to the Debenture, except that Section 2.1 of the Debenture shall
have been amended to read in its entirety as follows:
"2.1. Right of Conversion. Subject to and in compliance with
the provisions of this Section 2, the Holder shall have the right, at
the Holder's option, at any time, and before the date on which the
entire principal amount hereof, all accrued and unpaid interest hereon,
and all other amounts payable to the Holder hereunder or under the
Purchase Agreement have been paid in full (the "Expiration Date"), to
convert the principal amount of this Convertible Debenture, or any
portion thereof, into the number of fully paid and nonassessable shares
of Common Stock, no par value, of
-9-
the Company determined by dividing the principal amount so converted by
the purchase price per share of $4.00, as adjusted from time to time as
hereinafter provided (the "Conversion Price")."
4. The Agreement shall remain in full force and effect as amended
hereby and all parties hereto hereby ratify and affirm the Agreement as so
amended.
5. Two or more duplicate originals of this Amendment may be signed by
the parties, each of which shall be an original but all of which together shall
constitute one and the same original.
6. This Amendment, 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 the State of Delaware (excluding the choice of
law rules thereof).
IN WITNESS WHEREOF, this Amendment is executed as of the day and year
first above written.
THE RIGHT START, INC.
By: /s/ Jerry R. Welch
-----------------------------------------
Jerry R. Welch
President and Chief Executive Officer
STRATEGIC ASSOCIATES, L.P.
By: Cahill, Warnock & Company, LLC,
its general partner
By: /s/ David Warnock
-----------------------------------------
David Warnock
