EXHIBIT 10.2
FIRST AMENDMENT TO
CONVERTIBLE DEBENTURE PURCHASE AGREEMENT
AND
CONVERTIBLE DEBENTURE
THIS FIRST AMENDMENT TO CONVERTIBLE DEBENTURE PURCHASE
AGREEMENT AND CONVERTIBLE DEBENTURE (this "Amendment") is made as of May 30,
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1997, between The Right Start, Inc., a California corporation (the "Company")
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and Strategic Associates, L.P., a Delaware limited partnership (the
"Purchaser").
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R E C I T A L S:
A. The Company and the Purchaser entered into that certain
Convertible Debenture Purchase Agreement dated as of October 11, 1996 (the
"Agreement") providing for the sale by the Company to the Purchaser of the
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Company's Convertible Debenture dated October 11, 1996 (the "Debenture"). All
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capitalized terms used, and not otherwise defined, in this Amendment shall have
the meanings set forth in the Agreement;
B. The Company issued the Debenture to the Purchaser on
October 11, 1996;
C. The Company and the Purchaser desire to amend the Agreement
and the Debenture as set forth below for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged.
Accordingly, the parties hereby agree to amend and modify the
Agreement and to restate the Debenture as set forth below:
1. The last sentence of Section 2.01 of the Agreement
shall be amended to read in its entirety as follows:
"The Debenture, from and after the effectiveness of
the First Amendment to this Agreement dated as of May 30, 1997, shall
have a conversion price of $4.00 per share of Common Stock, subject to
adjustment in certain circumstances."
2. Section 5.01 of the Agreement shall be amended by
adding the following provision at the end of such section:
"(l) Change of Control. If at any time there is a
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Change of Control of the Company then the Company shall, immediately
following the occurrence of any such event, send a notice to Purchaser
offering to repurchase the Debenture (or at each Purchaser's option,
any portion thereof) at the par amount thereof, plus interest accrued
and unpaid on the Debenture to the date of such repurchase. If the
Purchaser desires to accept such offer in whole or in part, the
Purchaser must advise the Company of such acceptance within 30 days of
the date of receiving such notice. The Company shall then repurchase
the Debenture or portion thereof so tendered for repurchase by the
Purchaser by paying the purchase price to the Purchaser (or any person
or persons designated by the Purchaser in such acceptance notice), in
immediately available funds, within five days of the Company's receipt
of the Purchaser's acceptance notice. For purposes of this
covenant (l), "Change of Control" shall mean an event or series of
events by which (1) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ceases to beneficially own (as
beneficial ownership is defined in Rule 13d-3 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) and control,
directly or indirectly, at least twenty-five percent (25%) of the
issued and outstanding shares of each class of capital stock of the
Company entitled (without regard to the occurrence of any contingency)
to vote for the election of a majority of the members of the board of
directors of the Company; (2) any person or group (as defined in Rule
13d-1 of the Exchange Act), other than a group which includes ▇▇▇▇▇
▇▇▇▇▇▇▇▇, who obtains beneficial ownership (as defined in Rule 13d-3 of
the Exchange Act) or control of a majority of the securities of the
Company ordinarily having the right to vote in the election of
directors; (3) during any two year period commencing on the date
hereof, individuals who at the beginning of such period constituted the
Board of Directors cease for any reason to constitute a majority of the
Board of Directors; (4) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all, or
substantially all, the assets of the Company; (5) the merger or
consolidation of the Company with another corporation with the effect
that immediately after such transaction any beneficial owner of the
Company shall have become the beneficial owner of securities of the
corporation surviving such merger or consolidation representing a
majority of the combined voting power of the outstanding securities of
the surviving corporation ordinarily having the right to vote in the
election of directors; or (6) the adoption of a plan leading to the
liquidation or dissolution of the Company. For purposes of this
covenant (l), "▇▇▇▇▇ ▇▇▇▇▇▇▇▇" means ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Investment
Management, Inc., KAIM Non-Traditional, L.P., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Non-Traditional Investments, L.P., ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Offshore Limited,
ARBCO Associates, L.P., Offense Group Associates, L.P., and Opportunity
Associates, L.P. and each of their affiliates.
3. On the date hereof, the Debenture as issued shall be
cancelled and the Company shall deliver to the Purchaser a replacement debenture
identical in all respects to the Debenture, except that Section 2.1 of the
Debenture shall have been amended to read in its entirety as follows:
"2.1 Right of Conversion. Subject to and in
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compliance with the provisions of this Section 2, the Holder shall have
the right, at the Holder's option, at any time, and before the date on
which the entire principal amount hereof, all accrued and unpaid
interest hereon, and all other amounts payable to the Holder hereunder
or under the Purchase Agreement have been paid in full (the "Expiration
Date"), to convert the principal amount of this Convertible Debenture,
or any portion thereof, into the number of fully paid and nonassessable
shares of Common Stock, no par value, of the Company determined by
dividing the principal amount so converted by the purchase price per
share of $4.00, as adjusted from time to time as hereinafter provided
(the "Conversion Price").
4. The Agreement shall remain in full force and effect as
amended hereby and all parties hereto hereby ratify and affirm the Agreement as
so amended.
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5. Two or more duplicate originals of this Amendment may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and the same original.
6. This Amendment, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of the State of Delaware (excluding the
choice of law rules thereof).
IN WITNESS WHEREOF, this Amendment is executed as of the day
and year first above written.
THE RIGHT START, INC.
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
STRATEGIC ASSOCIATES, L.P.
By: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Company, LLC,
its general partner
By:
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▇▇▇▇▇ ▇▇▇▇▇▇▇
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