<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE RIGHT START, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
THE RIGHT START, INC.
5388 Sterling Center Drive, Unit C
Westlake Village, California 91361
August 6, 1999
Dear Shareholders:
Our Annual Meeting of Shareholders will be held on September 9, 1999, at
9:00 a.m., at The Right Start retail store located at 18723 Ventura Blvd.,
Tarzana, California. We urge you to attend this meeting to give us an
opportunity to meet you personally, to allow us to introduce to you the key
personnel responsible for the management of your Company, to show you a Right
Start store and to answer any questions you may have.
The formal Notice of Meeting, the Proxy Statement and the proxy card are
enclosed. A copy of the Annual Report to Shareholders describing the Company's
operations during the fiscal year ended January 30, 1999 is also enclosed.
We hope that you will be able to attend the meeting in person. Whether or
not you plan to attend the meeting, please sign and return the enclosed proxy
card promptly. A prepaid return envelope is provided for this purpose. Your
shares will be voted at the meeting in accordance with your proxy.
If you have shares in more than one name or if your stock is registered in
more than one way, you may receive more than one copy of the proxy materials.
If so, please sign and return each of the proxy cards you receive so that all of
your shares may be voted. We look forward to meeting you at the September 9,
1999 Annual Meeting of Shareholders.
Very truly yours,
/s/ Jerry R. Welch
Jerry R. Welch
Chairman of the Board, President
and Chief Executive Officer
<PAGE>
THE RIGHT START, INC.
5388 Sterling Center Drive, Unit C
Westlake Village, California 91361
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
---------------
To Be Held September 9, 1999
The Annual Meeting of The Right Start, Inc. (the "Company") will be held at
The Right Start retail store located at 18723 Ventura Blvd., Tarzana, California
on September 9, 1999, at 9:00 a.m. for the following purposes:
1. To elect six (6) directors to hold office until the next annual
meeting and until their successors are elected;
2. To ratify the appointment of Arthur Andersen LLP as independent
auditors for the fiscal year ending January 29, 2000 (Proposal 1);
3. To approve a proposed amendment to the Company's 1991 Employee
Stock Option Plan increasing the maximum aggregate number of shares of the
Company's common stock subject to the plan from 725,000 to 900,000 shares,
an increase of 175,000 shares (Proposal 2);
4. To approve a proposed amendment to the Company's 1995 Non-
Employee Director Plan increasing the maximum aggregate number of shares of
the Company's common stock subject to the plan from 175,000 to 200,000
shares, an increase of 25,000 shares (Proposal 3); and
5. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The close of business on July 30, 1999, is the date of record for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting.
All shareholders are urged to attend the meeting in person or by proxy.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED PREPAID RETURN ENVELOPE.
The Proxy is revocable and will not affect your right to vote in person in the
event you attend the meeting.
By Order of The Board of Directors
/s/ Gina M. Engelhard
Gina M. Engelhard
Secretary
Westlake Village, California
August 6, 1999
<PAGE>
THE RIGHT START, INC.
---------------
PROXY STATEMENT
INFORMATION CONCERNING SOLICITATION AND VOTING
Solicitation and Revocation of Proxies
The enclosed Proxy is solicited by and on behalf of the Board of Directors
of The Right Start, Inc. (the "Company") for use in connection with the Annual
Meeting of Shareholders to be held on the 9th day of September, 1999 at 9:00
a.m. and at any and all adjournments thereof.
The persons named as proxies were designated by the Board of Directors and
are officers or directors of the Company. Any Proxy may be revoked or superseded
by executing a proxy bearing a later date or by giving notice of revocation in
writing prior to, or at, the Annual Meeting, or by attending the Annual Meeting
and voting in person. All proxies which are properly completed, signed and
returned to the Company prior to the meeting, and not revoked, will be voted in
accordance with the instructions given in the Proxy. If a choice is not
specified in the Proxy, the Proxy will be voted FOR the election of the director
nominees listed below, FOR Proposal 1 to ratify the appointment of Arthur
Andersen LLP as independent auditors for the Company, FOR Proposal 2 to approve
a proposed amendment to the Company's 1991 Employee Stock Option Plan (the "1991
Plan") increasing the maximum aggregate number of shares of the Company's common
stock subject to the 1991 Plan, and FOR Proposal 3 to approve a proposed
amendment to the Company's 1995 Non-Employee Director Stock Option Plan (the
"1995 Plan") increasing the maximum aggregate number of shares of the Company's
common stock subject to the 1995 Plan. "Broker non-votes" will be counted for
general quorum purposes but will not be considered as present or entitled to
vote.
This Proxy Statement and the accompanying Proxy are being mailed to
shareholders on or about August 6, 1999. The entire cost of the solicitation of
proxies will be borne by the Company. Expenses will also include reimbursements
paid to brokerage firms and others for their expenses incurred in forwarding
solicitation material regarding the meeting to beneficial owners of the
Company's common stock. It is contemplated that this solicitation will be
primarily by mail. In addition, some of the officers, directors and employees of
the Company may solicit proxies personally or by telephone, facsimile, telegraph
or cable; such persons will not be compensated for such solicitation.
Voting at the Meeting
The shares of common stock constitute the only class of securities of the
Company entitled to notice of, and to vote at, the Annual Meeting. Only
shareholders of record at the close of business on July 30, 1999 will be
entitled to vote at the meeting or any adjournment or postponement thereof. As
of July 30, 1999, there were 5,051,817 shares of common stock issued and
outstanding, each share being entitled to one vote on each matter to be voted
upon, except that voting for directors may be cumulative. A shareholder
intending to cumulate votes for directors must notify the Company of such
intention at the meeting prior to commencement of the voting for directors. If
any shareholder has given such notice, every shareholder attending the meeting
may cumulate votes for candidates in nomination and give one candidate a number
of votes equal to the number of directors to be elected multiplied by the number
of votes to which the shareholder's shares are entitled, or distribute the
shareholder's votes on the same principle among two or more candidates. A
shareholder who is not in attendance at the meeting may not invoke cumulative
voting.
Discretionary authority to cumulate votes represented by proxies is
solicited by the Board of Directors because, in the event nominations are made
in opposition to the nominees of the Board of Directors, it is the intention of
the persons named in the enclosed Proxy to cumulate votes represented by proxies
for individual nominees in accordance with their best judgment in order to
assure the election of as many of the nominees to the Board of Directors as
possible.
The election of directors will require the affirmative vote of a plurality
of the shares of common stock voting in person or by proxy at the Annual
Meeting. The approval of Proposal 1, Proposal 2 and Proposal 3 will require the
affirmative vote of a majority of the shares of common stock present or
represented at the Annual Meeting and entitled to vote on such proposal.
1
<PAGE>
PRINCIPAL SHAREHOLDERS AND MANAGEMENT
The following table sets forth certain information, as of July 1, 1999,
with respect to all those known by the Company to be the beneficial owners of
more than 5% of its outstanding common stock, each director who owns shares of
common stock, each executive officer named in the Summary Compensation Table
(the "Named Executive Officers"), and all directors and executive officers of
the Company as a group.
<TABLE>
<CAPTION>
Name and Address of Beneficial Amount and Nature of Percent of
- ------------------------------ Beneficial ----------
Owner Ownership(1) Class
- ----- -------------------- -----
<S> <C> <C>
Richard A. Kayne (2) 4,364,610 60.9%
KAIM Non-Traditional, L.P.
1800 Avenue of the Stars
Second Floor
Los Angeles, CA 90067
Cahill, Warnock Strategic Partners 333,333 6.6%
Fund, L.P. (3)
One South Street, Suite 2150
Baltimore, MD 21202
Fred Kayne (4) 703,211 13.2%
Fortune Fashions
6501 Flotilla Street
Commerce, CA 90040
Albert O. Nicholas 312,500 6.2%
Nicholas Co., Inc.
700 North Water Street
Milwaukee, WI 53202
Howard Kaplan 305,000 6.0%
99 Chauncy Street
Boston, MA 02111
Lloyd I. Miller, III (5) 256,900 5.1%
4550 Gordon Drive
Naples, Florida 34102
Citigroup Inc. (6) 126,667 2.5%
153 East 53rd Street
New York, NY 10043
Gerald E. Mitchell (7) 42,272 *
5388 Sterling Center Drive, Unit C
Westlake Village, CA 91361
Gina M. Engelhard (8) 20,716 *
5388 Sterling Center Drive, Unit C
Westlake Village, CA 91361
Marilyn Platfoot (9) 27,624 *
5388 Sterling Center Drive, Unit C
Westlake Village, CA 91361
Andrew Feshbach (10) 17,151 *
Big Dog Sportswear
121 Gray Avenue, Suite 300
Santa Barbara, CA 93101
</TABLE>
2
<PAGE>
<TABLE>
<S> <C> <C>
Robert R. Hollman (10) 9,768 *
Topa Management
1800 Avenue of the Stars
Suite 1400
Los Angeles, CA 90067
Jerry R. Welch (10)(11) 217,151 4.1%
Kayne Anderson Investment
Management, Inc.
1800 Avenue of the Stars
Second Floor
Los Angeles, CA 90067
Howard M. Zelikow (10)(11) 17,151 *
Kayne Anderson Investment
Management, Inc.
1800 Avenue of the Stars
Second Floor
Los Angeles, CA 90067
Ronald J. Blumenthal (12) 33,296 *
5388 Sterling Center Drive, Unit C
Westlake Village, CA 91361
All executive officers and directors 5,476,762 69.9%
as a group (eleven persons) (13)
</TABLE>
- --------------------
* Less than one percent.
(1) Except as otherwise noted below, the persons named in the table have
sole voting power and investment power with respect to all shares of
common stock shown as beneficially owned by them, subject to community
property laws where applicable.
(2) The 4,364,610 shares include (i) 89,750 shares held directly by Mr.
Kayne (including 17,151 shares which may be acquired within 60 days
upon exercise of options) and (ii) 4,274,860 shares held by managed
accounts of KAIM Non-Traditional, L.P. ("KAIM, LP"), a registered
investment adviser (including 399,999 shares which may be acquired
upon conversion of the Series B Preferred Stock and 1,691,650 shares
which may be acquired upon conversion of the Series C Preferred
Stock). Mr. Kayne has sole voting and dispositive power over the
shares he holds directly. He has shared voting and dispositive power
along with Kayne Anderson Investment Management, Inc. ("KAIM, Inc."),
the general partner of KAIM, LP, over the remaining shares. (Mr.
Kayne is the President, Chief Executive Officer and a Director of
KAIM, Inc., and the principal stockholder of its parent company.) The
shares held by managed accounts of KAIM, LP include the following
shares held by investment funds for which KAIM, LP serves as general
partner or manager: 1,256,051 shares held by Kayne Anderson Non-
Traditional Investments, L.P. (including 50,000 shares which may be
acquired upon conversion of the Series B Preferred Stock and 465,200
shares which may be acquired upon conversion of the Series C Preferred
Stock); 1,056,025 shares held by ARBCO Associates, L.P. (including
50,000 shares which may be acquired upon conversion of the Series B
Preferred Stock and 465,200 shares which may be acquired upon
conversion of the Series C Preferred Stock); 1,117,612 shares held by
Offense Group Associates, L.P. (including 133,333 shares which may be
acquired upon conversion of the Series B Preferred Stock and 465,200
shares which may be acquired upon conversion of the Series C Preferred
Stock); 478,822 shares held by Opportunity Associates, L.P. (including
91,666 shares which may be acquired upon conversion of the Series B
Preferred Stock and 211,450 shares which may be acquired upon
conversion of the Series C Preferred Stock); and 197,100 shares held
by Kayne Anderson Offshore Limited (including 75,000 shares which may
be acquired upon conversion of the Series B Preferred Stock and 84,600
shares which may be acquired upon conversion of the Series C Preferred
Stock). An additional 169,500 shares are held in other Kayne Anderson
accounts or affiliates of Kayne Anderson and its principals. KAIM
disclaims beneficial
3
<PAGE>
ownership of the shares reported, except those shares attributable to
it by virtue of its general partner interests in the limited
partnerships holding such shares. Mr. Kayne disclaims beneficial
ownership of the shares reported, except those shares held by him
directly or attributable to him by virtue of his limited and general
partner interests in such limited partnerships and by virtue of his
indirect interest in the interest of KAIM in such limited
partnerships. The foregoing is based on information provided by Mr.
Kayne and KAIM, L.P. to the Company as of July 1, 1999.
(3) David L. Warnock and Edward L. Cahill are each managing members of
Cahill, Warnock & Company, LLC ("CW") and general partners of Cahill,
Warnock Strategic Partners, L.P. ("CWSP"). CWSP and CW are the
general partners, respectively, of Cahill, Warnock Strategic Partners
Fund, L.P. ("SPF") and Strategic Associates, L.P. ("SA"). SPF owns
9,475 shares of Series B Preferred Stock currently convertible into
315,833 shares of common stock. SA owns 525 shares of Series B
Preferred Stock currently convertible into 17,500 shares of common
stock. Each of Messrs. Warnock and Cahill, CW, CWSP, SPF and SA may
be deemed to beneficially own 333,333 shares of common stock. Messrs.
Warnock and Cahill, CW and CWSP disclaim beneficial ownership with
respect to the shares held by SPF and SA. SPF disclaims beneficial
ownership with respect to the shares underlying the Series B Preferred
Stock held by SA. SA disclaims beneficial ownership with respect to
the shares underlying the Series B Preferred Stock held by SPF. The
shares reported above and in the table exclude 4,608 currently
exercisable options to purchase common stock held by Mr. Warnock.
(4) Of the 703,211 shares beneficially owned, 427,727 shares are held
directly by Mr. Kayne, 83,333 shares may be acquired upon conversion
of Series B Preferred Stock, 175,000 shares may be acquired upon
conversion of Series C Preferred Stock and 17,151 are underlying
currently exercisable options to purchase common stock.
(5) According to a Schedule 13G filed on February 1, 1999, Mr. Miller
shares dispositive and voting power on 139,250 shares of the reported
securities as an adviser to the trustee of certain family trusts and
Mr. Miller has sole voting and dispositive power on 117,650 of the
reported securities owned by him personally and/or as the manager of a
limited liability company that is the general partner of a limited
partnership.
(6) Includes 60,000 shares of common shares held directly by The Travelers
Indemnity Company and 66,667 shares of common stock which may be
acquired upon conversion of the Series B Preferred Stock.
(7) Includes 4,499 shares, currently exercisable options to purchase
27,500 shares of common stock and 10,231 and 42 shares held by the
Company's Employee Stock Purchase Plan and Employee Stock Ownership
Plan, respectively for the benefit of Mr. Mitchell.
(8) Includes 145 shares, currently exercisable options to purchase 20,000
shares of common stock and 571 shares held by the Company's Employee
Stock Ownership Plan for the benefit of Ms. Engelhard.
(9) Includes currently exercisable options to purchase 27,500 shares of
common stock and 93 and 31 shares held by the Company's Employee Stock
Purchase Plan and Employee Stock Ownership Plan, respectively, for the
benefit of Ms. Platfoot.
(10) All shares consist of currently exercisable options to purchase common
stock.
(11) Messrs. Welch and Zelikow are Managing Directors of Kayne Anderson
Investment Management, Inc.; however, they disclaim beneficial
ownership with respect to shares held by KAIM or any of its
affiliates.
(12) Includes currently exercisable stock options to purchase 32,500 shares
of common stock and 796 shares held by the Company's Employee Stock
Ownership Plan for the benefit of Mr. Blumenthal.
(13) Includes options and common stock beneficially owned by executive
officers and directors, including 23,812 with respect to Mr. Pollock.
4
<PAGE>
EXECUTIVE OFFICERS
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Executive
Name Age Position Officer Since
---- --- -------- -------------
<S> <C> <C> <C>
Jerry R. Welch 49 Chairman of the Board, 1996
President and Chief
Executive Officer
Gina M. Engelhard 36 Chief Financial Officer and 1994
Secretary
Ronald J. Blumenthal 53 Senior Vice President 1994
Gerald E. Mitchell 44 Senior Vice President-Merchandising 1996
and Marketing
Marilyn Platfoot 44 Senior Vice President-Retail Operations 1996
and Human Resources
Richard Pollock 47 Vice President-Logistics 1996
</TABLE>
All officers serve at the discretion of the Board of Directors.
Business Experience of Executive Officers
JERRY R. WELCH became Chief Executive Officer of the Company in March 1996,
assumed the position of President in September 1996 and has served as Chairman
of the Board since August 1995. Mr. Welch also serves as a Managing Director of
Kayne Anderson Investment Management, Inc. and has served in such capacity since
January 1993. Mr. Welch is also the Chairman of the Board and Chief Executive
Officer of Glacier Water Services, Inc. and has served in such capacities since
April 1993 and September 1994, respectively.
GINA M. ENGELHARD became Chief Financial Officer of the Company in May 1994
and Secretary in August 1995. Ms. Engelhard served as a Senior Manager with
Price Waterhouse in Woodland Hills, California from January 1986 until April
1994.
RONALD J. BLUMENTHAL became Senior Vice President of the Company in
September 1996 and served as Vice President-Retail Operations from December 1993
to September 1996. Prior to joining the Company, Mr. Blumenthal served as Vice
President of Store Operations for Cost Plus Imports from 1990 until 1993.
GERALD E. MITCHELL became Senior Vice President-Merchandising and Marketing
in May 1999. Prior to that, Mr. Mitchell served as Vice President-Merchandising
of the Company from July 1996 to April 1999. Prior to joining the Company, Mr.
Mitchell served as Vice President-Merchandising for Discovery Channel Stores.
Mr. Mitchell's prior experience includes senior management roles in department
store merchandising and product management.
MARILYN PLATFOOT became Senior Vice President-Retail Operations and Human
Resources in May 1999. Prior to that, Ms. Platfoot served as Vice President-
Retail Operations of the Company from April 1996 to April 1999. Ms. Platfoot
previously served as Western Regional Manager for Brookstone Stores from 1992 to
1996.
RICHARD POLLOCK became Vice President-Logistics of the Company in September
1996 and served as Director of Logistics from June to September 1996. Prior to
joining the Company, Mr. Pollock served as Regional Operations Manager with USCO
Distribution Services and has held several senior level distribution positions.
5
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors proposes the election of six (6) directors, each to
hold office until the next annual meeting and until their successors are elected
and qualified. Unless authority to vote for directors has been withheld in the
Proxy, the persons named in the enclosed Proxy intend to vote at the meeting for
the election of the nominees presented below. All nominees have consented to
serve as a director for the ensuing year. Although the Board of Directors does
not contemplate that any of the nominees will be unable to serve, if any nominee
withdraws or otherwise becomes unavailable to serve, the persons named in the
enclosed Proxy will vote for any substitute nominee designated by the Board of
Directors.
The candidates in the election of directors receiving the highest number of
affirmative votes of the shares entitled to vote, up to the number of directors
to be elected by such shares, will be elected. Votes against a candidate and
votes withheld, including broker non-votes, have no legal effect on the
election, however all such votes count as a part of the quorum. The names and
certain information concerning the persons to be nominated as directors at the
Annual Meeting are set forth below.
YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF EACH
OF THE NOMINEES NAMED BELOW.
Directors and Nominees
<TABLE>
<CAPTION>
Name Age Director Since Business Experience
- ---- --- -------------- -------------------
<S> <C> <C> <C>
Andrew Feshbach 38 1995 Mr. Feshbach is a Vice President of Fortune Financial,
President of Big Dog Sportswear and an Executive Vice
President of Fortune Fashions. Previously, Mr. Feshbach was
a partner in Maiden Lane, a merchant bank, and a Vice
President in the Mergers and Acquisitions Group of Bear
Stearns & Co. Inc.
Robert R. Hollman 55 1995 Mr. Hollman has been President and Chief Executive Officer
of Topa Management Company since 1971 and President and
Chief Executive Officer of Topa Savings Bank since 1989. He
has also been a Director and Officer of Topa Equities, Ltd.,
the parent company of Topa Savings Bank, since 1969.
Fred Kayne 61 1995 Mr. Kayne is President and Chairman of Fortune Financial,
where he is responsible for directing all of its investment
activities. Mr. Kayne is also President of Fortune Fashions
and Chairman of Big Dog Sportswear. Mr. Kayne was a partner
of Bear, Stearns & Co. Inc. until its initial public
offering in 1985 after which he was a Managing Director and
a member of the Board of Directors until he resigned in
1986. Fred Kayne and Richard A. Kayne are brothers.
Richard A. Kayne 54 1995 Mr. Kayne currently serves as President and Chief Executive
Officer of Kayne Anderson Investment Management, Inc., and
its broker dealer affiliate, K.A. Associates, Inc. Mr.
Kayne has been with Kayne Anderson Investment Management,
Inc. since 1985 when it was founded by Mr. Kayne and John E.
Anderson. He is also a Director of Foremost Corporation of
America and Glacier Water Services, Inc. Richard A. Kayne
and Fred Kayne are brothers.
Jerry R. Welch 48 1995 See "Business Experience of Executive Officers" above.
</TABLE>
6
<PAGE>
<TABLE>
<S> <C> <C> <C>
Howard M. Zelikow 65 1995 Mr. Zelikow has been a management and financial consultant
doing business at ZKA Associates since 1987 and has been a
Managing Director of Kayne Anderson Investment Management,
Inc. since 1988. Mr. Zelikow has been a director of
Financial Security Assurance Holdings Ltd. since 1996 and
has served as a director of Queensway Financial Holdings
Limited since 1993. Mr. Zelikow was a director of Victoria
Financial Corporation from 1991 to 1995, a director of
Capital Guaranty Corporation from 1994 to 1995, and a
director of Nobel Insurance Limited from 1989 to 1993.
</TABLE>
The Directors of the Company serve until their successors are elected and
duly qualified at next year's Annual Meeting of Shareholders, which is expected
to be held on or about June 2000. During the fiscal year ended January 30, 1999,
the Company's Audit Committee consisted of Messrs. Feshbach, Hollman and Zelikow
and the Company's Compensation Committee consisted of Messrs. Richard Kayne and
Fred Kayne. The Board of Directors does not have a standing Nominating
Committee. The Audit Committee reviews and reports to the Board of Directors
with respect to various auditing and accounting matters, including the selection
of the Company's independent accountants. The Compensation Committee reviews the
Company's general compensation strategy and reviews and reports to the Board of
Directors with respect to compensation of officers and employee benefit
programs.
Your proxy cannot be voted for a greater number of persons than the number
of nominees named.
Attendance at Meetings
During the fiscal year ended January 30, 1999, the Board of Directors held
a total of five meetings, the Compensation Committee held one meeting and the
Audit Committee held one meeting. No member of the Board of Directors,
Compensation Committee or Audit Committee attended fewer than 75% of the
meetings of the Board, Compensation Committee or Audit Committee.
7
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Executive Compensation
The following table sets forth summary information concerning compensation
paid or accrued by the Company for services rendered during the fiscal year
ended January 30, 1999, the fiscal year ended January 31, 1998 and the
transition period ended February 1, 1997 to the Company's Chief Executive
Officer and the other executive officers who received compensation (on an
annualized basis) of at least $100,000.
Summary Compensation Table
<TABLE>
<CAPTION>
Annual Compensation Long Term
------------------- ---------
Compensation
------------
Fiscal Other Annual Securities Underlying
Name and Principal Position Year Salary Bonus Compensation (1) Options (#)
- --------------------------- ---------- -------- ----- ---------------- ---------------------
<S> <C> <C> <C> <C> <C>
Jerry R. Welch (2) 1998 $ -0- $ -0- $ -0- 211,669
Chairman of the Board, 1997 -0- -0- -0- 7,383
President and Chief Transition -0- -0- -0- 4,609
Executive Officer Period
Ronald J. Blumenthal 1998 135,000 -0- -0- 62,500
Senior Vice President 1997 135,000 -0- -0- 7,500
Transition 90,865 -0- -0- -0-
Period
Gerald E. Mitchell 1998 164,046 -0- 4,477 77,500
Vice President 1997 155,000 -0- 8,048 7,500
Merchandising Transition 80,481 -0- 3,875 37,500
Period
Marilyn Platfoot 1998 137,615 -0- 62 77,500
Vice President Retail 1997 115,000 -0- -0- 7,500
Operations Transition 72,981 -0- -0- -0-
Period
Gina M. Engelhard 1998 113,292 -0- -0- 60,000
Chief Financial Officer and 1997 105,000 -0- -0- 5,000
Secretary Transition 66,635 -0- 750 -0-
Period
</TABLE>
(1) Amounts shown include Company contributions under the Company's Employee
Stock Ownership Plan and the Company's Employee Stock Purchase Plan, as
applicable for the listed executives.
(2) Mr. Welch receives no compensation for serving as Chief Executive Officer
or President.
Cancellation and Grant of Stock Options
On May 5, 1998, the Compensation Committee authorized the cancellation of
outstanding stock options of certain of its employees. In connection therewith,
each of the Company's executive officers agreed to cancel options to purchase an
aggregate of 152,500 shares of Common Stock at exercise prices ranging from
$5.00 to $13.00 per share. The Company also agreed on May 5, 1998, to issue new
options to purchase 262,500 shares of Common Stock at an exercise price of $3.50
(the fair market value of the Common Stock on the effective grant date of May 5,
1998) to its executive officers, which issuance was contingent upon cancellation
of all such officers' previously issued stock options. The new option grant was
also contingent upon the Company's receipt of shareholder approval
8
<PAGE>
at its annual meeting of shareholders held on December 15, 1998, to increase the
number of shares of Common Stock issuable under the Company's 1991 Employee
Stock Option Plan. The Company's shareholders approved the increase on that
date. The Compensation Committee believes that the cancellation of such options
and the grant of new stock options to such executive officers were necessary due
to competitive conditions in the Company's industry to retain and provide
incentives to key management personnel.
<TABLE>
<CAPTION>
- -------------------
Length of
Number of Per Share Exercise Price Original
Shares of Market Price of Cancelled Option Term
Effective Common of Common Options at Per Share Remaining at
Date of Stock Stock at Time Time of Exercise Date of
Name and Issuance of Underlying of Issuance of Grant of New Price of New Issuance of
Position New Options New Options New Options Options Options New Options
-------- ----------- ----------- ----------- ------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gerald Mitchell- 5/5/98 (1) $3.50 (1) $3.50 (1)
Senior Vice
President
Gina Engelhard- 5/5/98 (2) 3.50 (2) 3.50 (2)
Chief Financial
Officer
Marilyn Platfoot- 5/5/98 (3) 3.50 (3) 3.50 (3)
Senior Vice
President
Richard Pollock- 5/5/98 (4) 3.50 (4) 3.50 (4)
Vice President
Ron Blumenthal- 5/5/98 (5) 3.50 (5) 3.50 (5)
Senior Vice
President
</TABLE>
- ---------------
(1) The number of shares of common stock covered by options ("option shares")
granted to Mr. Mitchell does not correlate directly to the number of his
option shares cancelled. The Company cancelled an option to purchase
37,500 shares of common stock exercisable at $10.50 per share (8 years, 2
months remaining in the option's term) and an option to purchase 7,500
shares of common stock exercisable at $5.00 per share (8 years, 6 months
remaining in the option's term). Each cancellation was undertaken by the
Company with Mr. Mitchell's consent. Mr. Mitchell received new stock
option grants covering 62,500 shares of common stock exercisable at $3.50
per share. Such exercise price reflects the fair market value of the
Company's common stock on the effective grant date thereof.
(2) The number of option shares granted to Ms. Engelhard does not correlate
directly to the number of her option shares cancelled. The Company
cancelled an option to purchase 12,500 shares of common stock exercisable
at $6.00 per share (6 years, 5 months remaining in the option's term), an
option to purchase 10,000 shares of common stock exercisable at $9.25 per
share (7 years, 11 months remaining in the option's term), and an option to
purchase 5,000 shares of common stock exercisable at $5.00 per share (8
years, 6 months remaining in the option's term). Each cancellation was
undertaken by the Company with Ms. Engelhard's consent. Ms. Engelhard
received new stock option grants covering 50,000 shares of common stock
exercisable at $3.50 per share. Such exercise price reflects the fair
market value of the Company's common stock on the effective grant date
thereof.
(3) The number of option shares granted to Ms. Platfoot does not correlate
directly to the number of her option shares cancelled. The Company
cancelled an option to purchase 12,500 shares of common stock exercisable
at $10.00 per share (8 years remaining in the option's terms) and an option
to purchase 7,500 shares of common stock exercisable at $5.00 per share (8
years, 6 months remaining in the option's terms). Each cancellation was
undertaken by the Company with Ms. Platfoot's consent. Ms. Platfoot
received new stock option grants covering 62,500 shares of common stock
exercisable at $3.50 per share. Such exercise price reflects the fair
market value of the Company's common stock on the effective grant date
thereof.
(4) The number of option shares granted to Mr. Pollock does not correlate
directly to the number of his option shares cancelled. The Company
cancelled an option to purchase 2,500 shares of common stock exercisable at
$13.00 per share (8 years, 1 month remaining in option term), an option to
purchase 7,500 shares of common stock exercisable at $10.25 per share (8
years, 4 months remaining in option term), and an option to purchase 5,000
shares of common stock exercisable at $5.00 per share (8 years, 7 months
remaining in option term). Each cancellation was undertaken by the Company
with Mr. Pollock's consent. Mr. Pollock received new stock option grants
covering 50,000 shares of common stock exercisable at $3.50 per share.
Such exercise price reflects the fair market value of the Company's common
stock on the effective grant date thereof.
9
<PAGE>
(5) The number of option shares granted to Mr. Blumenthal does not correlate
directly to the number of his option shares cancelled. The Company
cancelled an option to purchase 12,500 shares of common stock exercisable
at $6.00 per share (6 years, 5 months remaining in the option's term), an
option to purchase 25,000 shares of common stock exercisable at $9.25 per
share (7 years, 11 months remaining in the option's term), and an option to
purchase 7,500 shares of common stock exercisable at $5.00 per share (8
years, 6 months remaining in the option's term). Each cancellation was
undertaken by the Company with Mr. Blumenthal's consent. Mr. Blumenthal
received new stock option grants covering 37,500 shares of common stock
exercisable at $3.50 per share. Such exercise price reflects the fair
market value of the Company's common stock on the effective grant date
thereof.
Directors' Fees
All of the Company's non-employee directors receive directors' fees of
$3,000 per quarter. All of the members of the Board of Directors have elected,
in lieu of such compensation, to receive options to purchase common stock of the
Company at the fair market value on the date the options are granted.
Option Grants in the Fiscal Year Ended January 30, 1999
The following table provides certain information regarding stock options
granted to the Named Executive Officers during the fiscal year ended January 30,
1999.
<TABLE>
<CAPTION>
Individual Grants
-----------------
Number of % of Total
Common Shares Options Potential Realizable Value at
Underlying Granted to Assumed Annual Rates of
Options Employees Exercise or Stock Price Appreciation for
Granted in Fiscal Base Price Expiration Option Term
------- -----------
Name (#)(1) Year ($/Share) Date 5% ($) 10% ($)
- ---- ------ ---- --------- ---- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Jerry R. Welch 10,169 1.40% $2.50 12/15/01 4,068 8,847
1,500 0.21 2.50 12/15/08 2,430 6,405
200,000 27.52 2.50 12/15/08 324,000 854,000
Gerald Mitchell 62,500 8.60 3.50 05/05/08 141,875 373,750
15,000 2.06 2.50 12/15/08 24,300 64,050
Ron Blumenthal 37,500 5.16 3.50 05/05/08 85,125 224,250
25,000 3.44 2.50 12/15/08 40,500 106,750
Marilyn Platfoot 62,500 8.60 3.50 05/05/08 141,875 373,750
15,000 2.06 2.50 12/15/08 24,300 64,050
Gina Engelhard 50,000 6.88 3.50 05/05/08 113,500 299,000
10,000 1.38 2.50 12/15/08 16,200 42,700
</TABLE>
- --------------------
(1) Named Executive Officers receive options pursuant to the Company's stock
compensation plans described elsewhere in this Proxy Statement. The
material terms of that program related to recipients, grant timing, number
of options, option price and duration are determined by the Board of
Directors, subject to certain limitations.
10
<PAGE>
Aggregate Option Exercises in the Fiscal Year Ended January 30, 1999 and Option
Values at Fiscal Year End
The following table provides certain information regarding the exercise of
stock options held by the Named Executive Officers during the fiscal year ended
January 30, 1999 and the number and value of options held as of the end of such
fiscal year.
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Unexercised Options At In-The-Money Options
Fiscal Year End (#) At Fiscal Year End ($)(1)
-------------------- -------------------------
Shares Acquired
Name on Exercise (#) Value Realized($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ---- --------------- -------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Jerry R. Welch -0- -0- 17,151 211,669 7,383 740,842
Ronald J. Blumenthal -0- -0- -0- 62,500 -0- 181,250
Gerald E. Mitchell -0- -0- -0- 77,500 -0- 280,750
Marilyn Platfoot -0- -0- -0- 77,500 -0- 280,750
Gina M. Engelhard -0- -0- -0- 60,000 -0- 160,000
</TABLE>
- --------------------
(1) On January 29, 1999 (the last day the Company's common stock was traded in
the fiscal year ended January 30, 1999), the closing sale price of the
Company's common stock on the Nasdaq National Market System was $6.00 per
share.
Employment Agreements
No employment agreements are currently in effect between the Company and
any of its employees.
Stock Compensation Programs
1991 Employee Stock Option Plan
The Company adopted the 1991 Plan, as amended, to cover an aggregate of
725,000 shares of the Company's common stock, in October 1991, in order to
provide a means of encouraging certain officers and employees of the Company to
obtain a proprietary interest in the enterprise and thereby create an additional
incentive for such persons to further the Company's growth and development. The
information regarding the 1991 Plan provided herein is qualified in its entirety
by the full text of such plan, copies of which have been filed with the
Securities and Exchange Commission. Options granted vest over periods of up to
five years (depending on the terms of the individual grant) commencing on the
grant date and expire 10 years thereafter. Options for 696,160 shares were
outstanding as of January 30, 1999 under the 1991 Plan, 11,991 of which were
exercisable.
The Board of Directors of the Company has proposed an amendment to the 1991
Plan to increase the maximum number of shares of common stock issuable under
such plan from 725,000 to 900,000 shares (an increase of 175,000 shares),
subject to the approval of the shareholders of the Company as provided herein.
The amendment to the 1991 Plan, as approved by the Board of Directors, is set
forth in its entirety in Proposal 2 below. The Company proposes to increase the
aggregate number of shares of common stock issuable under both the 1991 Plan and
the 1995 Plan by 200,000 shares.
1995 Non-Employee Directors Option Plan
In October 1995, the Company adopted the 1995 Plan, as amended, to cover an
aggregate of 175,000 shares of common stock. The information regarding the 1995
Plan provided herein is qualified in its entirety by the full text of such plan,
copies of which have been filed with the Securities and Exchange Commission.
The 1995 Plan provides for the annual issuance, to each non-employee director,
of options to purchase 1,500 shares of common stock. In addition, each director
is entitled to make an election to receive, in lieu of directors' fees,
additional options to purchase common stock. The amount of additional options
is determined based on an independent valuation such that the value of the
options issued is equivalent to the fees that the director would be otherwise
entitled to receive. Options issued under this plan vest on the anniversary
date of their grant and upon termination of Board membership. 153,859 options
were issued under the 1995 Plan, 95,515 of which were exercisable as of January
30, 1999.
The Board of Directors of the Company has proposed an amendment to the 1995
Plan to increase the maximum number of shares of common stock issuable under
such plan from 175,000 to 200,000 shares (an increase
11
<PAGE>
of 25,000 shares), subject to the approval of the shareholders of the Company as
provided herein. The amendment to the 1995 Plan, as approved by the Board of
Directors, is set forth in its entirety in Proposal 3 below. The Company
proposes to increase the aggregate number of shares of common stock issuable
under both the 1991 Plan and the 1995 Plan by 200,000 shares.
Company Employee Stock Purchase Plan
The Company matches employees' contributions to the Company Employee Stock
Purchase Plan at a rate of 50%. The Company's contributions amounted to
$14,000, $24,000, $21,000 and $28,000 in Fiscal 1998, Fiscal 1997, the
Transition Period ended February 1, 1997 and Fiscal 1996, respectively.
Company Employee Stock Ownership Plan
The Company Employee Stock Ownership Plan is funded exclusively by
discretionary contributions determined by the Board of Directors. No
contributions were authorized for Fiscal 1998, Fiscal 1997 or the Transition
Period ended February 1, 1997. The Board of Directors authorized contributions
of $70,000 to the Company Employee Stock Ownership Plan in Fiscal 1996.
Compensation Committees Interlocks and Insider Participation
Richard Kayne and Fred Kayne, each directors of the Company, are each
members of the Company's Compensation Committee and have participated in
transactions requiring disclosure under the section "Certain Relationships and
Related Transactions."
Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for approving compensation
programs for the Company's management. During the fiscal year ended January 30,
1999, the Compensation Committee consisted of Messrs. Richard Kayne and Fred
Kayne.
Mr. Welch receives a fee for serving as a director, but receives no
additional compensation for serving as Chief Executive Officer or President.
The Compensation Committee believes that the compensation provided to
employees of the Company must be competitive for the Company to attract or
obtain highly qualified and experienced key employees. Based upon a preliminary
review, the Compensation Committee believes that, overall, the Company's
compensation programs are competitive with those of comparable companies.
COMPENSATION COMMITTEE
Richard A. Kayne Fred Kayne
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, that might incorporate future filings
including this Proxy Statement, in whole or in part, the foregoing Report, and
the performance graph immediately following, shall not be incorporated by
reference into any such filings.
12
<PAGE>
Performance Graph
This graph compares the cumulative total return to shareholders of the
Company, the Nasdaq National Market (the "Broad Market") index and a peer group
of companies (the "Industry Index")(1).
[Performance Graph Appears Here]
<TABLE>
<CAPTION>
Fiscal Year
Ending
-----------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Company $100 $ 56.34 $146.48 $116.90 $ 39.44 $ 67.61
Broad Market 100 111.25 154.99 127.02 129.20 149.13
Peer Group 100 109.45 154.49 171.64 202.17 315.54
</TABLE>
(1) The Industry Index chosen is an index of specialty retailers compiled
by Media General Group that includes forty-three publicly traded companies
offering a wide array of specialty retail goods.
Assumes $100 invested at the beginning of the periods presented and assumes
dividends have been reinvested.
13
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's executive officers, directors and persons
who own more than 10% of the Company's common stock to file reports of ownership
on Forms 3, 4 and 5 with the Commission. Executive officers, directors and 10%
stockholders are required by the Commission to furnish the Company with copies
of all Forms 3, 4 and 5 as filed.
Based solely on the Company's review of the copies of such forms it has
received, the Company believes that all of its executive officers, directors and
greater than 10% beneficial owners complied with all the filing requirements
applicable to them with respect to transactions during the fiscal year ended
January 30, 1999.
14
<PAGE>
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
During the fiscal year ended January 30, 1999, Kayne Anderson Investment
Management, Inc. provided management, consulting and advisory services to the
Company for which it received a fee of $100,000.
In April 1998, each of the holders, including SPF ($3,790,000), SA
($210,000), Fred Kayne ($250,000), KAIM ($1,200,000) and Citigroup Inc.
($200,000), (a) of the Company's Convertible Debentures dated October 11, 1996,
as amended on May 30, 1997, in the aggregate principal amount of $3,000,000 (the
"1996 Debentures") and (b) of the Company's 11.5% Senior Subordinated Notes due
May 6, 2000 in the aggregate principal amount of $3,000,000 (the "'1997 Notes")
and warrants to purchase 237,500 shares of the Company's common stock issued in
connection with the 1997 Notes (the "1997 Warrants" and together with the 1997
Notes, the "1997 Securities") entered into a Letter Agreement dated April 6,
1998, as amended on April 13, 1998 and July 7, 1998 (collectively, the "Amended
Letter Agreement") setting forth a plan of recapitalization (the
"Recapitalization").
The Recapitalization consisted of the following: (a) the issuance of
$3,850,000 aggregate principal amount of the Company's non-interest bearing
Senior Subordinated Notes due May 6, 2000 (the "New Notes") and detachable
warrants to purchase 1,925,000 shares of the Company's common stock (the "New
Warrants", and together with the New Notes, the "1998 New Securities") to, among
others, Fred Kayne ($350,000) and KAIM ($3,383,333), (b) a waiver by the holders
of all of their rights to interest payments accrued and owing on the 1996
Debentures and the 1997 Notes on or after February 28, 1998, (c) an agreement by
the holders to exchange the 1996 Debentures and the 1997 Securities for either
Series A Mandatorily Redeemable Preferred Stock or Series B Convertible
Preferred Stock and (d) an agreement by the holders to exchange the 1998 New
Securities for Series C Convertible Preferred Stock simultaneous with the
exchange of the 1996 Debentures and the 1997 Securities for Series A Mandatorily
Redeemable Preferred Stock and/or Series B Convertible Preferred Stock.
On December 28, 1998, as part of the Recapitalization, (a) each of the
holders of the 1996 Debentures and the 1997 Securities exchanged such securities
for Series A Mandatorily Redeemable Preferred Stock and Series B Convertible
Preferred Stock, as detailed below for certain affiliates of the Company:
<TABLE>
<CAPTION>
Aggregate principal amount of Series A Mandatorily
1996 Debentures and Redeemable Series B Convertible
1997 Securities Preferred Stock Preferred Stock
----------------------------- -------------------- --------------------
<S> <C> <C> <C>
SPF $3,790,000 28,425 shares 9,475 shares
SA 210,000 1,575 525
Fred Kayne 250,000 0 2,500
KAIM 1,200,000 0 12,000
Citigroup 200,000 0 2,000
</TABLE>
and (b) each of the holders of the 1998 Securities exchanged such securities for
Series C Convertible Preferred Stock, as detailed below for certain affiliates
of the Company:
<TABLE>
<CAPTION>
Aggregate principal amount of
1996 Debentures and Series C Convertible
1997 Securities Preferred Stock
----------------------------- --------------------
<S> <C> <C>
Fred Kayne $ 250,000 2,500 shares
KAIM 1,200,000 12,000
</TABLE>
15
<PAGE>
PROPOSAL ONE
------------
RATIFICATION OF
APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The firm of Arthur Andersen LLP was selected by the Board of Directors,
upon recommendation of the Audit Committee of the Board of Directors, to act as
the Company's independent accountants for the fiscal year ending January 29,
2000. Neither the firm nor any of its members has any relationship with the
Company or any of its affiliates except in the firm's capacity as the Company's
auditor. The Board of Directors is asking for ratification of such appointment
by the Company's shareholders.
Representatives of Arthur Andersen LLP are expected to be present at the
Annual Meeting and will have the opportunity to make statements if they so
desire and respond to appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP.
PROPOSAL TWO
------------
APPROVAL OF AMENDMENT TO 1991 EMPLOYEE STOCK OPTION PLAN
The Board of Directors has proposed to amend Article 3 of the Company's
1991 Plan to increase the maximum number of shares of the Company's common stock
subject to the 1991 Plan from 725,000 to 900,000 shares, an increase of 175,000
shares. The proposed amendment to the 1991 Plan reads as follows:
"3. Shares Subject to the Plan.
--------------------------
The stock issuable under this Plan shall be shares of the
Company's authorized but unissued or reacquired Common Stock ("Common
Stock"). The total number of shares of Common Stock that may be issued
under this Plan shall not exceed 900,000 shares in the aggregate, subject
to adjustment as provided in Section 8 below."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PROPOSED
AMENDMENT TO THE 1991 EMPLOYEE STOCK OPTION PLAN.
PROPOSAL THREE
--------------
APPROVAL OF AMENDMENT TO 1995 NON-EMPLOYEE DIRECTORS OPTION PLAN
The Board of Directors has proposed to amend section 12 of the Company's
1995 Plan to increase the maximum number of shares of the Company's common stock
subject to the 1995 Plan from 175,000 to 200,000 shares, an increase of 25,000
shares. The proposed amendment to the 1995 Plan reads as follows:
"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 200,000
shares, subject to adjustment as provided in Section 6 of the Plan."
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE PROPOSED
AMENDMENT TO THE 1995 NON-EMPLOYEE DIRECTORS OPTION PLAN.
16
<PAGE>
ANNUAL REPORT
The Annual Report of the Company including financial statements for the
fiscal year ended January 30, 1999, is being forwarded to each shareholder with
this Proxy Statement.
OTHER MATTERS
The Board of Directors has no knowledge of any other matters which may come
before the Annual Meeting. If any other matters shall properly come before the
meeting, the persons named in the Proxies will have discretionary authority to
vote the shares thereby represented in accordance with their best judgment.
PROPOSALS OF SHAREHOLDERS
Proposals of shareholders intended to be presented at the Company's next
Annual Meeting of Shareholders must be received by the Secretary of the Company
prior to May 1, 2000 for inclusion in the Proxy Statement for the Annual Meeting
of Shareholders scheduled to be held in June of 2000.
Please return your proxy as soon as possible. Unless a quorum consisting of
a majority of the outstanding shares entitled to vote is represented at the
Meeting, no business can be transacted. Therefore, please be sure to date and
sign your proxy exactly as your name appears on your stock certificate and
return it in the enclosed postage prepaid return envelope. Please act promptly
to insure that you will be represented at this important meeting.
/s/ Gina M. Engelhard
Gina M. Engelhard
Secretary
Dated: August 6, 1999
17
<PAGE>
AVAILABILITY
COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K, AS AMENDED AND FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION WILL BE PROVIDED TO SHAREHOLDERS
WITHOUT CHARGE UPON WRITTEN REQUEST TO THE CORPORATE SECRETARY, THE RIGHT START,
INC., 5388 STERLING CENTER DRIVE, UNIT C, WESTLAKE VILLAGE, CALIFORNIA 91361.
FORWARD-LOOKING STATEMENTS
This Proxy Statement contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended. The forward-looking
statements in this Proxy Statement are intended to be subject to the safe harbor
protection provided by Sections 27A and 21E. All forward-looking statements
involve risks and uncertainties. Although the Company believes that its
expectations are based upon reasonable assumptions within the bounds of its
knowledge of its business and operations, there can be no assurance that actual
results will not materially differ from its expectations. For factors that may
cause actual results to materially differ from expectations and underlying
assumptions, see the Company's Registration Statement on Form S-3 (File No. 333-
84319) and periodic reports, including the Annual Report on Form 10-K, as
amended, for the fiscal year ended January 30, 1999, filed by the Company with
the Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on any forward-looking statements, which speak only as of the
date thereof. The Company undertakes no obligation to publicly release any
revisions to such forward-looking statements to reflect events or circumstances
after the date hereof.
INCORPORATION BY REFERENCE
The financial and other information required pursuant to Item 13 (a) of
Proxy Rule 14A-101/Schedule 14a is hereby incorporated by reference into this
proxy statement from the information provided in the Company's previously filed
Form 10-K/A for the fiscal year ended January 30, 1999. All documents
subsequently filed by the Company pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act prior to the date of the Company's 1999 annual meeting of
shareholders shall be deemed to be incorporated by reference into this proxy
statement.
18
<PAGE>
PROXY
THE RIGHT START, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
JERRY R. WELCH, with full power of substitution, is hereby appointed proxy to
vote the stock of the undersigned in The Right Start, Inc. at the Annual
Meeting of Shareholders on September 9, 1999, and at any adjournments, to be
held at The Right Start retail store located at 18723 Ventura Blvd., Tarzana,
California.
MANAGEMENT RECOMMENDS THAT YOU VOTE "FOR" AUTHORITY ON ELECTION OF DIRECTORS
AND FOR THE BOARD'S PROPOSALS ONE, TWO AND THREE.
ELECTION OF DIRECTORS
[_] FOR all Nominees listed [_] WITHHOLD
below (except as AUTHORITY to
indicated to the vote for all
contrary below) Nominees listed
below
Jerry Welch, Richard Kayne, Fred Kayne, Andrew Feshbach, Robert Hollman and
Howard Zelikow.
INSTRUCTION: To withhold authority to vote for any individual Nominee, write
that Nominee's name in the space provided below.
-------------------------------------------
PROPOSAL 1. RATIFICATION OF AUDITORS [_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 1 ratification of appointment of Arthur Andersen LLP as auditors for
the fiscal year ending January 29, 2000.
PROPOSAL 2. APPROVAL OF AMENDMENT TO 1991 EMPLOYEE STOCK OPTION PLAN
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 2 approval of amendment to The Right Start, Inc. 1991 Employee Stock
Option Plan increasing the maximum aggregate number of shares of the Company's
common stock subject to the plan from 725,000 to 900,000 shares.
PROPOSAL 3. APPROVAL OF AMENDMENT TO THE 1995 NON-EMPLOYEE DIRECTOR PLAN
[_] FOR [_] AGAINST [_] ABSTAIN
PROPOSAL 3 approval of amendment to The Right Start, Inc. 1995 Non-Employee
Director Plan increasing the maximum aggregate number of shares of the
Company's common stock subject to the plan from 175,000 to 200,000 shares.
In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting or any adjournment thereof,
including procedural and other matters relating to the conduct of the meeting.
THE PROXY WILL BE VOTED AS DIRECTED. UNLESS OTHERWISE DIRECTED, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE SIX DIRECTOR NOMINEES AND FOR PROPOSALS
1, 2 AND 3.
Please sign exactly as name appears
hereon.
__________________________________
__________________________________
Dated: _____________________, 1999
When shares are held by joint
tenants, both should sign. When
signing as attorney, as executor,
administrator, trustee or
guardian, please indicate as such.
If a corporation, please sign in
full corporate name by President
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
PLEASE DATE, SIGN AND RETURN THIS CARD IN THE ENCLOSED ENVELOPE
