<PAGE>
As filed with the Securities and Exchange Commission on February 13, 1997
Registration No. 333-__________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
___________
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
THE RIGHT START, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
CALIFORNIA 95-3971414
(State or Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification Number)
5334 STERLING CENTER DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91361
(818) 707-7100
(Address, Including Zip Code, and Telephone Number, Including Area Code,)
of Registrant's Principal Executive Offices)
1995 NON-EMPLOYEE DIRECTORS OPTION PLAN
(Full title of Plan)
___________________________
MR. JERRY R. WELCH
CHIEF EXECUTIVE OFFICER
5334 STERLING CENTER DRIVE
WESTLAKE VILLAGE, CALIFORNIA 91361
(818) 707-7100
(Name, Address, Including Zip Code, and Telephone Number, Including
Area Code, of Agent For Service)
COPIES TO:
Kenneth J. Baronsky, Esq.
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Street, 30th Floor
Los Angeles, California 90017
(213) 892-4000
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================
Proposed maximum Proposed maximum
Title of Securities to Amount to be Offering price per aggregate offering Amount of registration
be Registered registered (1) share (2) price (2) fee (2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 125,000 $5.25 $656,250.00 $199.00
no par value
===============================================================================================================
</TABLE>
(1) There are also registered hereby such indeterminate number of shares of
Common Stock as may become issuable by reason of operation of the anti-
dilution provisions of the 1995 Non-Employee Directors Option Plan of
the Registrant described herein.
(2) Pursuant to Rule 457 under the Securities Act of 1933, as amended, the
proposed maximum offering price per share and the proposed maximum
aggregate offering price are estimated solely for purposes of
calculating the registration fee and are based upon the average of the
high and low prices of the Common Stock of the Registrant on the Nasdaq
National Market System on February 7, 1997.
<PAGE>
PART I
------
INFORMATION REQUIRED IN THE SECTION 10 PROSPECTUS
Item 1. Plan Information
----------------
Information required by Part I to be contained in the Section 10(a)
Prospectus (the "Prospectus") is omitted from the Registration Statement in
accordance with Rule 428 promulgated pursuant to the Securities Act of 1933, as
amended (the "Securities Act") and the Note to Part I on Form S-8. The Right
Start, Inc. (the "Registrant") has delivered or caused to be delivered to each
offeree of securities covered by this Registration Statement the Prospectus
relating thereto.
Item 2. Registrant Information and Non-Employee Director Plan Annual
------------------------------------------------------------
Information
-----------
The Registrant will, upon written or oral request, provide without
charge to any person to whom the Prospectus relating to this Registration
Statement is delivered, a copy of any and all of the information which has been
incorporated by reference in such Prospectus and this Registration Statement
(pursuant to Item 3 of Part II below) as well as other documents required by
Rule 428(b) promulgated pursuant to the Securities Act. Such requests should be
directed to the Chief Financial Officer, The Right Start, Inc., 5334 Sterling
Center Drive, Westlake Village, California 91361.
PART II
-------
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
-----------------------------------------------
The following documents filed by the Registrant with the Securities and
Exchange Commission (the "Commission") are incorporated by reference in this
Registration Statement:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year ended
June 1, 1996, filed pursuant to Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act").
(b) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended August 31, 1996, filed pursuant to Section 13(a) of the Exchange Act.
(c) The Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended November 30, 1996, filed pursuant to Section 13(a) of the Exchange
Act.
(d) The description of the Registrant's common stock contained in the
Registration Statement on Form 8-A filed by the Registrant under Section 12
of the Exchange Act, including any amendment or report updating such
description of Common Stock.
<PAGE>
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a post-
effective amendment to the Registration Statement which indicates that all of
the shares of Common Stock registered hereunder have been sold or which
deregisters all of such shares of Common Stock then remaining unsold, shall be
deemed to be incorporated by reference in this Registration Statement and to be
part hereof from the date of filing such documents.
Item 4. Description of Securities
-------------------------
Only securities registered under Section 12 of the Exchange Act are
being offered.
Item 5. Interests of Named Experts and Counsel
--------------------------------------
None.
Item 6. Indemnification of Directors and Officers
-----------------------------------------
Section 317 of the California General Corporation Law makes provision
for the indemnification of directors and officers, including indemnification
under certain circumstances for liabilities arising under the Securities Act of
1933, as amended. The Registrant's Amended and Restated Articles of
Incorporation provide for indemnification of its directors and officers to the
fullest extent permitted by the California General Corporation Law. In addition,
the Registrant has entered into indemnification agreements with its directors
and officers which contractually obligate the Registrant to indemnify its
directors and officers where permitted by applicable law.
Item 7. Exhibits
--------
4.1.1* Amended and Restated Articles of Incorporation of the Registrant,
dated August 12, 1991.
4.1.2* Amendment to Articles of Incorporation, dated August 20, 1991.
4.1.3* Form of Amendment to Articles of Incorporation, dated August 24,
1991.
4.2* Bylaws of the Registrant, as amended.
4.3* Specimen Common Stock Certificate for the Registrant.
4.4 1995 Non-Employee Directors Option Plan.
5 Opinion of Milbank, Tweed, Hadley & McCloy.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Milbank, Tweed, Hadley & McCloy (included in Exhibit 5).
<PAGE>
24 Power of Attorney (contained on the signature page hereof).
__________________
*Previously filed.
Item 9. Undertakings
------------
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement
to include any material information with respect to the plan of
distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
---------
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in this Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
---------
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than
payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of
<PAGE>
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
--------------
1933, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-8, and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Westlake Village, State of California, on this
13th day of February, 1997.
THE RIGHT START, INC.
By: /s/ Jerry R. Welch
------------------------------
Name: Jerry R. Welch
Title: Chief Executive Officer
POWER OF ATTORNEY
The Registrant and each person whose signature appears below hereby
authorizes Jerry R. Welch and Gina M. Shauer, and each of them, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto,
and other documents in connection therewith, with the Commission, granting unto
said attorneys-in-fact and agents full power and authority to do so and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof and the Registrant hereby confers like
authority on its behalf.
<PAGE>
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jerry R. Welch Chairman of the Board, February 13, 1997
- ------------------------- President
Jerry R. Welch and Chief Executive Officer
/s/ Richard A. Kayne Director February 13, 1997
- -------------------------
Richard A. Kayne
Director
- -------------------------
Andrew D. Feshbach
/s/ Robert R. Hollman Director February 13, 1997
- -------------------------
Robert R. Hollman
Director
- -------------------------
Fred Kayne
/s/ Howard M. Zelikow Director February 13, 1997
- -------------------------
Howard M. Zelikow
Director
- -------------------------
David Warnock
/s/ Gina M. Shauer Chief Financial Officer February 13, 1997
- ------------------------- (Principal Financial and
Gina M. Shauer Accounting Officer)
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
- -------------- -----------
<C> <S>
4.1.1* Amended and Restated Articles of
Incorporation of the Registrant, dated August
12, 1991.
4.1.2* Amendment to Articles of Incorporation, dated
August 20, 1991.
4.1.3* Form of Amendment of Articles of
Incorporation, dated August 24, 1991.
4.2* Bylaws of the Registrant, as amended.
4.3* Specimen Common Stock Certificate for the
Registrant.
4.4 1995 Non-Employee Directors Option Plan.
5 Opinion of Milbank, Tweed, Hadley & McCloy.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Milbank, Tweed, Hadley & McCloy.
(included in Exhibit 5).
24 Power of Attorney (contained on the signature
page hereof).
</TABLE>
______________
*Previously filed.
<PAGE>
EXHIBIT 4.4
THE RIGHT START, INC.
1995 NON-EMPLOYEE DIRECTORS OPTION PLAN
SECTION 1. PURPOSE.
The purpose of The Right Start, Inc. 1995 Non-Employee Directors Option
Plan (the "Plan") is to promote the interests of The Right Start, Inc., a
California corporation (the "Company") and its shareholders by strengthening the
Company's ability to attract and retain the services of experienced and
knowledgeable non-employee directors through formula grants and deferral
elections of non-qualified stock options to acquire shares of the Company's
Common Stock (as defined below). In addition, such grants will encourage the
closer alignment of the interests of such directors with those of the Company's
shareholders.
SECTION 2. DEFINITIONS.
For purposes of the Plan, the following terms shall have the meanings set
forth below:
2.1. "Annual Meeting" means the annual meeting of the Company's
shareholders for any fiscal year held in accordance with the Company's Articles
of Incorporation and By-Laws.
2.2. "Board" means the Board of Directors of the Company as constituted
from time to time.
2.3. "Change of Control" shall mean:
(i) The acquisition by an individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than the
Company, Kayne, Anderson Investment Management, Inc., any group (as heretofore
defined) of which any of them is a member, any affiliate of any of the foregoing
or any person who on the effective date of this Plan is an officer or director
of the Company, of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of more than 50% of either (A) the shares of
the Common Stock, or (B) the combined voting power of the voting securities of
the Company entitled to vote generally in the election of directors (the "Voting
Securities"); provided, however, that the following acquisitions shall not
constitute a Change of Control: (x) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Company or any
Subsidiary, or (y) any acquisition by any corporation if, immediately following
such acquisition, more than 50% of the outstanding shares of common stock of
such corporation and the combined voting power of the then outstanding voting
securities of such corporation (entitled to vote generally in the election of
directors), is beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who, immediately prior to such
acquisition, were the beneficial owners of the Common Stock and the Voting
Securities in substantially the same proportions, respectively, as their
<PAGE>
ownership, immediately prior to such acquisition, of the Common Stock and Voting
Securities; or
(ii) Approval by the shareholders of the Company of a reorganization,
merger or consolidation, other than a reorganization, merger or consolidation
with respect to which all or substantially all of the individuals and entities
who were the beneficial owners, immediately prior to such reorganization, merger
or consolidation, of the Common Stock and Voting Securities beneficially own,
directly or indirectly, immediately after such reorganization, merger or
consolidation more than 50% of the then outstanding common stock and voting
securities (entitled to vote generally in the election of directors) of the
corporation resulting from such reorganization, merger or consolidation in
substantially the same proportions as their respective ownership, immediately
prior to such reorganization, merger or consolidation, of the Common Stock and
the Voting Securities; or
(iii) Approval by the shareholders of the Company of (A) a complete
liquidation or substantial dissolution of the Company, or (B) the sale or other
disposition of all or substantially all of the assets of the Company, other than
to a Subsidiary, wholly-owned, directly or indirectly, by the Company.
2.4. "Code" means the Internal Revenue Code of 1986, as in effect and as
amended from time to time, or any successor statute thereto, together with any
rules, regulations and interpretations promulgated thereunder or with respect
thereto.
2.5. "Committee" means the Compensation Committee of the Board, which
Committee shall administer the Plan.
2.6. "Common Stock" means the common stock, no par value, of the Company or
any security of the Company issued in substitution or exchange therefor.
2.7. "Company" means The Right Start, Inc., a California corporation, or
any successor corporation to The Right Start, Inc.
2.8. "Deferral Election" means the election to receive Deferral Election
Options by an Eligible Director pursuant to and in accordance with this Plan.
2.9. "Deferral Election Option" means any Option granted to an Eligible
Director pursuant to a Deferral Election.
2.10. "Disability" means any physical or mental disability which is deemed
to be total and permanent by a physician selected in good faith by the Company.
2.11. "Eligible Director" means any director of the Company who is not,
and who for at least one year preceding the commencement of his or her
membership on the Board has not been, an employee of the Company or any
Subsidiary of the Company.
2.12. "Exchange Act" means the Securities Exchange Act of 1934, as in
effect and as amended from time to time, or any successor statute thereto,
together with any rules, regulations and interpretations promulgated thereunder.
<PAGE>
2.13. "Fair Market Value" means on, or with respect to, any given date,
the closing per share market trading price for the Common Stock as reported on
the consolidated transaction reporting system for any domestic stock exchange
or, if the Common Stock is not then listed, on Nasdaq ("Nasdaq") or, if the
Common Stock is not then so reported, the average of the closing bid and asked
prices quoted on Nasdaq or, if the Common Stock shall not be quoted on Nasdaq,
the average of the closing bid and asked prices in the domestic over-the-counter
market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization for such date, or, if the Common Stock was not
traded on such date, on the next preceding day on which the Common Stock was
traded.
2.14. "Grant Date" means the date of any Annual Meeting on which an
Eligible Director is entitled to receive an Annual Grant or has elected to
receive Deferral Election Options pursuant to and in accordance with this Plan.
2.15. "Initial Election Date" means, for each member of the Board of
Directors, the later of (i) the date the Plan is adopted by the Board of
Directors or (ii) the date of such member's initial election or appointment to
the Board of Directors.
2.16. "Option" means any option issued to an Eligible Director pursuant an
Annual Grant or Deferral Election.
2.17. "Option Agreement" means a written agreement between the Company and
an Eligible Director setting forth the terms and conditions of an Option.
2.18. "SEC" means the Securities and Exchange Commission, or any successor
governmental agency.
2.19. "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations, including and beginning with the Company, if
each of such corporations, other than the last corporation in the unbroken
chain, owns, directly or indirectly, more than fifty percent of the voting stock
of one of the other corporations in such chain.
SECTION 3. OPTIONS.
3.1. Nature of Options. All Options granted under the Plan shall be
nonstatutory stock options and are not intended to qualify under Section 422 of
the Code as "incentive stock options."
3.2. Annual Grant. An Option to purchase 3,000 shares of Common Stock (as
adjusted pursuant to Section 6 of the Plan) shall be granted (an "Annual Grant")
automatically to each Eligible Director on the date of the Annual Meeting for
such year.
3.3. Deferral Election. In addition to any Options that an Eligible
Director may be entitled to receive pursuant to an Annual Grant, each Eligible
Director shall be entitled to make an irrevocable election (a "Deferral
Election") each year, at least six months prior to the Company's next scheduled
annual meeting of shareholders (the "Next Meeting") (or with respect to any
Eligible Director whose Initial Election Date falls within
<PAGE>
the period of six months prior to the Next Meeting, on prior to such Initial
Election Date), to receive, in lieu of all or any portion of the compensation to
which such Eligible Director would otherwise be entitled to receive as a member
of the Board of Directors (other than reimbursement for expenses) (the "Director
Fee") for the period from the Next Meeting to the day prior to the annual
meeting subsequent to the Next Meeting, Deferral Election Options. Deferral
Election Options shall be granted on the day of the Annual Meeting in each year
for which a Deferral Election has been made. The number of shares of Common
Stock covered by a Deferral Election Option shall be determined by an
independent valuation expert, retained by the Committee, such that the value of
the Deferral Election Option is equivalent on the Grant Date to the Director Fee
which the Eligible Director would otherwise have been entitled to receive for
such year. No Eligible Director shall be entitled to receive Deferral Election
Options having a value greater than the amount of the Director Fee that such
director would have been entitled to receive on the date of the adoption of the
Plan, unless, in the event that the amount of the Director Fee is increased
subsequent to the date of the adoption of the Plan, such increase has been
approved by a majority of the shareholders of the Company. Each Deferral
Election shall be set forth in a written notice delivered to the Secretary of
the Company. Such election shall remain in effect until terminated or modified
by written notice to the Secretary of the Company, in which case such
termination or modification shall become effective six months after the receipt
of such notice by the Company.
3.4. Exercise Price. The exercise price per share of Common Stock for any
Option issued to an Eligible Director pursuant to this Plan shall be the Fair
Market Value of the Common Stock on the first trading day (that is, a day on
which Nasdaq or any other exchange or association on or through which the stock
is traded is open for trading and during which at least one share of Common
Stock is traded) preceding the Grant Date of such Option.
3.5. Notice. Upon becoming exercisable in accordance with Section 4 of
the Plan, the exercisable portion of an Option may be exercised in whole or in
part, at any time, and from time to time, during the Option Period (as defined
in Section 3.7 of the Plan) by giving written notice, signed by the person
entitled to exercise the Option, to the Secretary of the Company stating the
number of shares of Common Stock in respect of which the Option is being
exercised, accompanied by payment in full of the aggregate exercise price for
the shares of Common Stock to be purchased. The date both such notice and
payment are received by the office of the Secretary of the Company shall be the
date of exercise of the Option as to such number of shares of Common Stock. No
Option may be exercised at any time in respect of a fractional share.
3.6. Payment. Payment of the aggregate option exercise price may be made
in cash or by certified or cashier's check, bank draft or money order payable to
the order of the Company or, if permitted by the Committee and applicable law,
by delivery of, alone or in conjunction with a partial cash or instrument
payment (i) shares of Common Stock already owned by the Eligible Director for at
least six (6) months and having a Fair Market Value equal to all or a portion of
the option exercise price at the time of such exercise, or (ii) some other form
of payment acceptable to the Committee. The Committee may also permit Eligible
Directors to simultaneously exercise Options and sell the shares of Common Stock
thereby acquired, pursuant to a "cashless exercise"
<PAGE>
arrangement or program, selected by and approved in all respects in advance by
the Committee.
3.7. Option Period. Each Option granted pursuant to an Annual Grant and
each Option granted pursuant to a Deferral Election shall expire five years
after its Grant Date, unless terminated earlier in accordance with Section 3.8
below (the "Option Period").
3.8. Rights Upon Termination of Board Membership. In the event that an
Eligible Director ceases to be a director of the Company or its Subsidiaries for
any reason, all Options held by an Eligible Director shall immediately and fully
vest and the Eligible Director or his or her successor shall have the right to
exercise any such Option during its term within a period of one year after such
Eligible Director ceased to be a director; provided, however, that unless the
Eligible Director ceases to be a director of the Company or its Subsidiaries by
reason of death or Disability, the number of shares of Common Stock covered by
any Deferral Election Options which are not exercisable immediately prior to the
date such Eligible Director ceased to be a director shall be reduced to reflect
the amount of the Director Fee actually earned in such year.
3.9. Shareholder and Other Rights. Neither the Eligible Director, nor an
Eligible Director's successor or successors in interest, shall have any rights
as a stockholder of the Company with respect to any shares of Common Stock
subject to an Option granted to any such Eligible Director until the date of
issuance of a stock certificate in respect of such shares. No shares shall be
required to be issued and delivered upon exercise of any Option unless and until
all of the requirements of law and of all regulatory agencies having
jurisdiction over the issuance and delivery of the securities have been fully
complied with. Neither the Plan, nor the granting of an Option, nor any other
action taken pursuant to the Plan shall constitute or be evidence of any
agreement or understanding, express or implied, that an Eligible Director has a
right to continue as a director of the Company for any period of time or at any
particular rate of remuneration.
SECTION 4. VESTING.
Subject to Section 3.7 of the Plan, an Option shall become exercisable in
respect of the aggregate number of underlying shares of Common Stock, determined
as of the Grant Date, on the first anniversary of the Grant Date (or such longer
period as the Committee may set on or prior to the Grant Date).
SECTION 5. BOARD AUTHORITY.
The existence of the Plan, any Option Agreement and/or the Annual Grants
and Deferral Elections made hereunder shall not limit, affect or restrict in any
way the right or power of the Board or the shareholders of the Company to make
or authorize (a) any adjustment, recapitalization, reorganization or other
change in the Company's or any Subsidiary's capital structure or its business,
(b) any merger, consolidation or change in the ownership of the Company or any
Subsidiary, (c) any issue of bonds, debentures, capital, preferred or prior
preference stocks ahead of or affecting the Company's or any Subsidiary's
capital stock or the rights thereof, (d) any dissolution or liquidation of the
Company or any Subsidiary, (e) any sale or transfer of all or any part of the
Company's
<PAGE>
or any Subsidiary's assets or business, or (f) any other corporate act or
proceeding by the Company or any Subsidiary. An Eligible Director, any
beneficiary(ies) of any such Eligible Director and/or any other person shall not
have any claim against any member of the Board or any committee thereof, the
Company or any Subsidiary, or any employees, officers or agents of the Company
or any Subsidiary, as a result of any such action.
SECTION 6. RECAPITALIZATION ADJUSTMENTS.
If the outstanding shares of Common Stock are increased, decreased, changed
into, or exchanged for a different number or kind of shares or securities
through merger, consolidation, combination, exchange of shares, other
reorganization, recapitalization, reclassification, stock dividend, stock split
or reverse stock split, an appropriate and proportionate adjustment shall be
made in the maximum number and kind of shares as to which Options may be granted
under this Plan. A corresponding adjustment changing the number and kind of
shares allocated to unexercised Options or portions thereof, which shall have
been granted prior to any such change, shall likewise be made. Any such
adjustment in outstanding Options shall be made without change in the aggregate
purchase price applicable to the unexercised portion of the Option, but with a
corresponding adjustment in the price for each share or other unit of any
security covered by the Option.
SECTION 7. CERTAIN MERGERS.
7.1. The Company as Surviving Corporation. If the Company enters into or
is involved in any merger, reorganization or other business combination with any
person or entity (such merger, reorganization or other business combination to
be referred to herein as a "Merger Event") and as a result of any such Merger
Event, the Company will be or is the surviving corporation, an Eligible Director
shall be entitled, as of the date of the execution of the agreement evidencing
the Merger Event (the "Execution Date") and with respect to both exercisable and
non-exercisable Options (but only to the extent not previously exercised), to
receive substitute stock options in respect of the shares of the surviving
corporation on such terms and conditions, as to the number of shares, pricing
and otherwise, which shall substantially preserve the value, rights and benefits
of any affected Option granted hereunder as of the date of the consummation of
the Merger Event. Notwithstanding anything to the contrary in this Section, if
any Merger Event occurs, the Company shall have the right, but not the
obligation, to pay to each affected Eligible Director an amount in cash or
certified check equal to the excess of the Fair market Value of the Common Stock
underlying any affected unexercised Options as of the Execution Date (whether
then exercisable or not) over the aggregate exercise price of such unexercised
Options; provided, however, that if the Company chooses to make such a payment
to any Eligible Director, it must make such a payment to all Eligible Directors.
7.2. The Company Not the Surviving Corporation. In the case of a Merger
Event in which the Company will not be, or is not, the surviving corporation,
and the Company determines not to make the cash or certified check payment
described in Section 7.1 of the Plan, the Company shall compel and obligate, as
a condition of the consummation of the Merger Event, the surviving or resulting
corporation and/or the other party to the Merger Event, as necessary, or any
parent, Subsidiary or acquiring corporation thereof,
<PAGE>
to grant, with respect to both exercisable and non-exercisable Options (but only
to the extent not previously exercised), substitute options in respect of the
shares of common or other capital stock of such surviving or resulting
corporation on such terms and conditions, as to the number of shares, pricing
and otherwise, as shall substantially preserve the value, rights and benefits of
any affected Options previously granted hereunder as of the date of the
consummation of the Merger Event.
7.3. Cancellation of Previous Awards. Upon receipt by an affected
Eligible Director of any such cash, certified check, or substitute options as a
result of any such Merger Event, such Eligible Directors' affected Options for
which such cash, certified check or substitute options was received shall be
thereupon canceled without the need for obtaining the consent of any such
affected Eligible Director.
SECTION 8. CHANGE OF CONTROL.
8.1. Acceleration of Awards. Anything in the Plan to the contrary
notwithstanding, if a Change of Control of the Company occurs, all Options then
unexercised and outstanding shall become fully vested and exercisable as of the
date of the Change of Control. The immediately preceding sentence shall apply
to only those Eligible Directors who are directors of the Company and/or one of
its Subsidiaries as of the date of the Change of Control.
8.2. Payment After Change of Control. Anything in the Plan to the
contrary notwithstanding, within thirty (30) days after a Change of Control
under subsection (i) of the definition of Change of Control any Eligible
Director who holds Options shall have the right, but not the obligation, to
elect, within ten (10) business days after the Eligible Director has actual or
constructive knowledge of the occurrence of such Change of Control, to require
the Company to purchase such Options from the Eligible Director for an aggregate
amount equal to the then aggregate Fair Market Value of the Common Stock
underlying such Options tendered, less the aggregate exercise price of such
tendered Options.
SECTION 9. OPTION AGREEMENTS.
Each Eligible Director shall enter into an Option Agreement with the
Company in a form specified by the Company. Each such Eligible Director shall
agree therein to the restrictions, terms and conditions set forth in such Option
Agreement and/or the Plan.
SECTION 10. BENEFICIARIES.
Each Eligible Director may designate a beneficiary or beneficiaries to
receive any payment which under the terms of the Plan and the relevant Option
Agreement may become payable on or after the Eligible Director's death. At any
time, and from time to time, any such designation may be changed or canceled by
the Eligible Director without the consent of any such beneficiary. Any such
designation, change or cancellation must be on a form provided for that purpose
by the Company and shall not be effective until received by the Company. If no
beneficiary has been designated by a deceased Eligible Director, or if the
designated beneficiaries have predeceased the Eligible Director, the beneficiary
shall be the Eligible Director's estate. If the Eligible Director designates
<PAGE>
more than one beneficiary, any payments under the Plan to such beneficiaries
shall be made in equal shares unless the Eligible Director has expressly
designated otherwise, in which case the payments shall be made in the shares
designated by the Eligible Director.
SECTION 11. ADMINISTRATION OF THE PLAN.
11.1. General. The Plan shall be administered by the Committee, and
construed, governed, and amended in accordance with its terms; provided,
however, in no case shall any action be taken by any member of the Committee if
such action would result in the loss of "disinterested administrator" status,
within the meaning of Rule 16b-3, as promulgated by the SEC under Section 16(b)
of the Exchange Act, or any successor rule or regulation thereto, as such Rule
is amended or applied from time to time (the "SEC Rule 16b-3"), of any director
who is a member of the Committee.
11.2. Committee Membership. The Committee shall consist of not less than
two "disinterested" directors within the meaning of SEC Rule 16b-3. The Board
may from time to time remove members from the Committee, fill vacancies on the
Committee and may select one of the members of the Committee as the Committee's
chairman.
11.3. Plan Administration. The Committee may designate persons other than
members of the Committee to carry out the day-to-day ministerial administration
of the Plan and may seek independent advice and counsel from such professional
advisors as it deems necessary. The Committee shall report all actions taken by
it to the Board.
11.4. Limitation of Liability. Neither the Board nor the Committee, nor
any member of either or other employees designated to help administer the Plan,
shall be liable for any act, omission, interpretation, construction or
determination made in good faith in connection with the Plan and the members of
the Board and the Committee and such other employees shall be entitled to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including without limitation attorneys' fees) arising or
resulting therefrom to the fullest extent permitted by law and/or any directors
and officers liability insurance coverage which may be in effect from time to
time.
SECTION 12. COMMON SHARES SUBJECT TO OPTIONS.
The maximum aggregate number of shares of Common Stock with respect to
which Options may be granted from time to time under the Plan is 125,000 shares,
subject to adjustment as provided in Section 6 the Plan. The Common Stock
issued under the Plan may be either previously authorized but unissued shares or
treasury shares acquired by the Company. In the event that any Option expires,
lapses, is forfeited, is settled in cash in lieu of Common Stock or otherwise
terminates, any shares of Common Stock allocable to the terminated portion of
such Option may again be made subject to an Option under the Plan; provided,
however, if an individual has received the benefits of ownership with respect to
the securities underlying any option granted under the Plan, including without
limitation, the right to receive dividends, such shares may not again be made
subject to an Option under the Plan.
SECTION 13. ELIGIBILITY AND PARTICIPATION.
<PAGE>
Only Eligible Directors may receive Options under the Plan.
SECTION 14. EFFECTIVE DATE AND TERM OF THE PLAN.
The Plan shall be effective upon its adoption by the Board, subject to the
approval of the Plan by the Company's shareholders in accordance with SEC Rule
16b-3 and Sections 162(m) and 422 of the Code. The Plan shall remain in effect
until all Options granted thereunder have been satisfied by the issuance of
Common Stock or the payment of cash (unless sooner terminated under Section 15
of the Plan).
SECTION 15. TERMINATION AND AMENDMENT OF THE PLAN.
In general, the Plan shall terminate 10 years from the date it is adopted
by the Board of Directors, or the date it is approved by the shareholders,
whichever is earlier, or shall terminate at such earlier time as the Board of
Directors may so determine. No options shall be granted under the Plan after
that date. Subject to the limitation contained in Section 16 of the Plan, the
Committee may at any time amend or revise the terms of the Plan, including the
form and substance of the Option Agreements to be used hereunder; provided,
however, that the terms and provisions of the Plan which determine the
eligibility of Eligible Directors to receive grants and the amount, price and
timing of the Annual Grants and Deferral Elections shall not be amended more
than once every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder; provided further, however, that without approval by the shareholders
of the Company representing a majority of the shares entitled to vote thereon
(as described in Section 14 of the Plan) no amendment or revision shall (i)
except as provided in Section 6 of the Plan, materially increase the maximum
number of shares that may be issued under this Plan; (ii) change the minimum
purchase price for shares under Section 3 of the Plan; (iii) increase the
maximum term established under the Plan for any Option; (iv) materially modify
the requirements as to eligibility for participation in the Plan; (v) change the
term of the Plan described in Section 14; or (vi) materially increase the
benefits accruing to participants under the Plan. In addition, no such
amendment or revision shall be effective if it would disqualify the Plan from
the exemptions provided by SEC Rule 16b-3.
SECTION 16. PRIOR RIGHTS AND OBLIGATIONS.
No amendment, suspension, or termination of the Plan shall, without the
consent of the individual who has received an Option, alter or impair any of
that person's rights or obligations under any Option granted under the Plan
prior to that amendment, suspension, or termination.
SECTION 17. RESERVATION OF SHARES OF COMMON STOCK.
The Company, during the term of this Plan, will at all times reserve and
keep available such number of shares of Common Stock as shall be sufficient to
satisfy the requirements of the Plan. In addition, the Company will from time
to time, as is necessary to accomplish the purposes of this Plan, seek or obtain
from any regulatory agency having jurisdiction any requisite authority in order
to issue and sell shares of Common Stock hereunder. The inability of the
Company to obtain from any regulatory
<PAGE>
agency having jurisdiction the authority deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any shares of its stock hereunder
shall relieve the Company of any liability in respect of the non-issuance or
sale of the stock as to which the requisite authority shall not have been
obtained.
SECTION 18. TAX WITHHOLDING.
The Company shall have the right to deduct from any payment or settlement
under the Plan, including, without limitation, the exercise of any Option, or
the delivery, transfer or vesting of any Common Stock, any federal, state, local
or other taxes of any kind which the Committee, in its sole discretion, deems
necessary to be withheld to comply with the Code and/or any other applicable
law, rule or regulation. If the Committee in its sole discretion, permits
shares of Common Stock to be used to satisfy any such tax withholding, such
Common Stock shall be valued based on the Fair Market Value of such stock as of
the date the tax withholding is required to be made, such date to be determined
by the Committee. The Committee may establish rules limiting the use of Common
Stock to meet withholding requirements by Eligible Directors who are subject to
Section 16 of the Exchange Act.
SECTION 19. SEC COMPLIANCE.
With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of SEC Rule 16b-3. To the extent any provision of the Plan or any
action of the Committee fails to comply with such rule, it shall be deemed null
and void, to the extent permitted by law and deemed advisable by the Committee.
If a person subject to Section 16 of the Exchange Act exercises his or her
rights under an Option grant under the Plan before six months have passed from
the date of the grant, the Company shall hold in its custody any resulting stock
certificate until six months has passed from the date of the grant; provided,
however, that upon the occurrence of any Change of Control all such stock
certificates which have been withheld shall immediately be delivered to such
person.
SECTION 20. GOVERNING LAW.
The Plan and all actions taken thereunder shall be governed by and
construed in accordance with the laws of the State of California (without
reference to the principles of conflict of laws thereof), except to the extent
preempted by federal law which shall govern to that extent.
SECTION 21. LISTING, REGISTRATION AND OTHER LEGAL COMPLIANCE.
No Options or shares of Common Stock shall be required to be granted or
issued under the Plan unless legal counsel for the Company shall be satisfied
that such issuance or grant will be in compliance with all applicable federal
and state securities laws and regulations and any other applicable laws or
regulations. The Committee may require, as a condition of any payment or share
issuance, that such agreements, undertakings, representations, certificates,
and/or information as the Committee may deem necessary or advisable, be executed
or provided to the Company to assure compliance with all such
<PAGE>
applicable laws or regulations. Certificates for shares of Common Stock
delivered under the Plan may be subject to such stock transfer orders and such
other restrictions as the Committee may deem advisable under the rules,
regulations, or other requirements of the SEC, or any stock exchange upon which
the Common Stock is then listed, and any applicable federal or state securities
law. In addition, if, at any time specified herein (or in any Option Agreement
or otherwise) for, (i) the granting of any Option or the making of any
determination, (ii) the issuance or other distribution of Common Stock, or (iii)
the payment of amounts to or through any Eligible Director with respect to any
Option, any law, rule, regulation or other requirement of any governmental
authority or agency shall require either the Company, any Subsidiary or any
Eligible Director (or any estate, designated beneficiary or other legal
representative thereof) to take any action in connection therewith, the granting
of such Option, the making of such determination, the issuance or distribution
of Common Stock or such payment, as the case may be, shall be deferred until
such required action is taken.
SECTION 22. TRANSFER OF OPTIONS.
Options granted under the Plan and any Option Agreement, and any rights or
interests herein or therein, shall not be assigned, transferred, sold,
exchanged, or otherwise disposed of in any way at any time by any Eligible
Director (or any beneficiary(ies) of any Eligible Director), other than by
testamentary disposition by the Eligible Director or intestate succession. Any
such Option, Option Agreement, rights or interests shall not be pledged,
encumbered or otherwise hypothecated in any way at any time by any Eligible
Director (or any beneficiary(ies) of any Eligible Director). Any such Option,
Option Agreement, rights or interests shall not be subject to execution,
attachment or similar legal process. Any attempt to sell, exchange, transfer,
assign, pledge, encumber, or otherwise dispose of or hypothecate in any way any
such Options, rights or interests, or the levy of any execution, attachment or
similar legal process thereon, contrary to the terms of this Plan shall be null
and void and without legal force or effect.
<PAGE>
EXHIBIT 5
Milbank, Tweed, Hadley & McCloy
601 South Figueroa Avenue, 30th Floor
Los Angeles, California 90017
Phone: (213) 892-4000
Fax: (213) 629-5063
February 13, 1997
The Right Start, Inc.
5334 Sterling Center Drive
Westlake Village, California 91361
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the
"Registration Statement") to be filed by you with the Securities and Exchange
Commission in connection with the registration under the Securities Act of 1933,
as amended (the "Securities Act"), of 125,000 shares (the "Shares") of Common
Stock, no par value per share, of The Right Start, Inc. (the "Company") issuable
under the Company's 1995 Non-Employee Directors Option Plan (the "Plan"). As
your counsel in connection with this transaction, we have examined copies,
certified to our satisfaction, of the Plan and such records of the Company as
we have deemed necessary as a basis for the opinion expressed below.
Based on these examinations, it is our opinion that upon the
registration of the Shares under the Securities Act, the issuance of the Shares
in accordance with the terms and conditions of the Plan and the receipt by the
Company of consideration to be received by the Company pursuant to the Plan,
the Shares will be legally and validly issued, fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the
Registration Statement. This opinion is furnished to you in connection with the
registration of the Shares, is solely for your benefit and may not be relied
upon by, nor copies delivered to, any other person or entity without our prior
written consent.
Very truly yours,
/s/ Milbank, Tweed, Hadley & McCloy
------------------------------------
KJB/EHS
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANT
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated July 3, 1996 appearing on page F-1 of
The Right Start, Inc.'s Annual Report on Form 10-K for the year ended June 1,
1996.
/s/ Price Waterhouse LLP
- ------------------------
PRICE WATERHOUSE LLP
Los Angeles, California
February 12, 1997
