UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) : August 15, 1996
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HEALTHRITE, INC.
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(Exact name of registrant as specified in its charter)
Delaware 0-23016 13-3714405
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
200 Madison Avenue New York, New York 10016
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 953-0100
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HRITE8-K/PPM
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Item 5. Other Events.
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In August, 1996, HealthRite, Inc. (the "Company") sold 432,500
shares of Series A Preferred Stock, par value $.001 per share (the "Series A")
in its private placement for an aggregate gross proceeds of $865,000, or $2.00
per share. The net proceeds, after deducting applicable expenses, will be used
primarily to fund the development and sale of a range of products under the
brand name, Nautilus, the rights to which name were obtained pursuant to a
long term license agreement, and for other working capital purposes. Each
Series A share is entitled to a preferential dividend of 8% ($.16) per share,
is to be redeemed in August 2001 at its liquidation value of $2.00 per share
plus unpaid accrued dividends and is convertible into one share of Common
Stock, subject to certain adjustments. The Series A shares are nonvoting
except with respect to certain actions which may adversely affect their rights
and proposals to effect a merger, consolidation or a sale of substantially all
the Company's assets. The Series A shareholders will also have a right as a
class to elect a Director during a period of default which lasts longer than
90 days in the payment of an annual dividend installment.
In connection with the private placement, the Company issued five
year Common Stock Warrants to purchase at a price of $2.50 per share (i)
21,375 shares to H.C. Wainwright & Co. ("Wainwright"), for services rendered
as a placement agent, and (ii) 30,000 shares to Founders Management Services,
Inc. ("Founders"), an affiliate of Messrs. Warren H. Haber, Chairman of the
Board and Chief Executive Officer, and John L. Teeger, Vice Chairman and Chief
Financial Officer of the Company, in satisfaction of the Company's obligation
under a long-term agreement, pursuant to which Founders provides certain
management and financial consulting services to the Company.
HRITE8-K/PPM
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At the Company's Annual Meeting of the Board of Directors, the
Board increased the number of Directors from six to seven and thereupon
elected Mr. Jack McConville as a Director. Mr. McConville had been employed
for approximately 40 years until he retired in 1990 by J.C. Penney & Co., Inc.
with which he held several managerial and executive positions - the last being
President of its Women's Division, a position which he had held commencing in
1987. He has been a member of the Navy Advisory Committee since 1988 and had
been a director of the Heart Research Foundation of Mount Sinai from 1987 to
1995.
Item 7. Financial Statements and Exhibits.
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a) Financial Statements - None.
b) Exhibits
10(g) - Form of Warrant issued to H.C. Wainwright & Co. and
Founders Management Services, Inc.
HRITE8-K/PPM
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 23, 1996
HEALTHRITE, INC.
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(Registrant)
By: /s/ John L. Teeger
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Name: John L. Teeger
Title: Secretary
HRITE8-K/PPM
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: August 23, 1996
HEALTHRITE, INC.
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(Registrant)
By: --------------------------------
Name: John L. Teeger
Title: Secretary
HRITE8-K/PPM
COMMON STOCK PURCHASE WARRANT
THE SECURITIES REPRESENTED HEREBY AND ISSUABLE UPON EXERCISE
HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NEITHER THE SECURITIES NOR ANY INTEREST
THEREIN MAY BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) A
REGISTRATION STATEMENT UNDER SUCH ACT, OR (ii) AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT.
THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.
THIS WARRANT IS VOID AFTER 5:00 P.M. NEW YORK CITY LOCAL TIME,
AUGUST 14, 2001.
HEALTHRITE INC.
WARRANTS FOR THE PURCHASE
OF
_______ SHARES OF COMMON STOCK, PAR VALUE $.001 PER SHARE
No. HRI-_
THIS CERTIFIES that, for value received, _________________ (together
with all permitted assigns, the "Holder") is entitled to subscribe for, and
purchase from, HEALTHRITE INC., a Delaware corporation (the "Company"), upon
the terms and conditions set forth herein, at any time or from time to time
after August 15, 1996, New York City local time until 5:00 P.M. New York City
local time on August 14, 2001 (the "Exercise Period"), up to an aggregate of
_______ shares of common stock, par value $.001 per share (the "Common
Stock"). This Warrant is initially exercisable at $2.50 per share; provided,
however, that upon the occurrence of any of the events specified in Section 5
hereof, the rights granted by this Warrant, including the exercise price and
the number of shares of Common Stock to be received upon such exercise, shall
be adjusted as therein specified. The term "Exercise Price" shall mean,
depending on the context, the initial exercise price (as set forth above) or
the adjusted exercise price per share.
As used herein, the term "this Warrant" shall mean and include this
Warrant and any Warrant or Warrants hereafter issued as a consequence of the
exercise or transfer of this Warrant
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in whole or in part. This Warrant may not be sold, transferred, assigned, or
hypothecated until September 30, 1996, except that it may be transferred, in
whole or in part, to (i) one or more officers or partners of the Holder (or
the officers or partners of any such partner); (ii) a successor to the Holder,
or the officers or partners of such successor; (iii) a purchaser of
substantially all of the assets of the Holder; or (iv) by operation of law.
The term the "Holder" as used herein shall include any transferee to whom this
Warrant has been transferred in accordance with the above.
Each share of Common Stock issuable upon the exercise hereof shall be
hereinafter referred to as a "Warrant Share".
1. This Warrant may be exercised during the Exercise Period, either
in whole or in part, by the surrender of this Warrant (with the election at
the end hereof duly executed) to the Company at its office at 200 Madison
Avenue, New York, New York, 10016 or at such other place as is designated in
writing by the Company, together with a certified or bank cashier's check
payable to the order of the Company in an amount equal to the product of the
Exercise Price and the number of Warrant Shares for which this Warrant is
being exercised.
2. Upon each exercise of the Holder's rights to purchase Warrant
Shares, the Holder shall be deemed to be the holder of record of the Warrant
Shares, notwithstanding that the transfer books of the Company shall then be
closed or certificates representing the Warrant Shares with respect to which
this Warrant was exercised shall not then have been actually delivered to the
Holder. As soon as practicable after each such exercise of this Warrant, the
Company shall issue and deliver to the Holder a certificate or certificates
representing the Warrant Shares issuable upon such exercise, registered in the
name of the Holder or its designee. If this Warrant should be exercised in
part only, the Company shall, upon surrender of this Warrant for cancellation,
execute and deliver a Warrant evidencing the right of the Holder to purchase
the balance of the aggregate number of Warrant Shares purchasable hereunder as
to which this Warrant has not been exercised or assigned.
3. Any Warrants issued upon the transfer or exercise in part of this
Warrant shall be numbered and shall be registered in a warrant register (the
"Warrant Register") as they are issued. The Company shall be entitled to treat
the registered holder of any Warrant on the Warrant Register as the owner in
fact thereof for all purposes, and shall not be bound to recognize any
equitable or other claim to, or interest in, such Warrant on the part of any
other person, and shall not be liable for any registration or transfer of
Warrants which are registered or to be registered in the name of a fiduciary
or the nominee of a fiduciary unless made with the actual knowledge that a
fiduciary or nominee is committing a breach of trust in requesting such
registration or transfer, or with the knowledge of such facts that its
participation therein amounts to bad faith. This Warrant shall be transferable
on the books of the Company only upon delivery thereof duly endorsed by the
Holder or by his duly authorized attorney or representative, or accompanied by
proper evidence of succession, assignment, or authority to transfer. In all
cases of transfer by an attorney, executor, administrator, guardian, or other
legal representative, duly authenticated evidence of his, her, or its
authority shall be produced. Upon any registration of transfer, the Company
shall deliver a new
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Warrant or Warrants to the person entitled thereto. This Warrant may be
exchanged, at the option of the Holder thereof, for another Warrant, or other
Warrants of different denominations, of like tenor and representing in the
aggregate the right to purchase a like number of Warrant Shares (or portions
thereof), upon surrender to the Company or its duly authorized agent.
Notwithstanding the foregoing, the Company shall have no obligation to cause
Warrants to be transferred on its books to any person if, in the opinion of
counsel to the Company, such transfer does not comply with the provisions of
the Securities Act of 1933, as amended (the "Act"), and the rules and
regulations thereunder.
4. The Company shall at all times reserve and keep available out of
its authorized and unissued Common Stock, solely for the purpose of providing
for the exercise of the Warrants, such number of shares of Common Stock as
shall, from time to time, be sufficient therefor. The Company represents that
all shares of Common Stock issuable upon exercise of this Warrant are duly
authorized and, upon receipt by the Company of the full payment for such
Warrant Shares, will be validly issued, fully paid, and nonassessable, without
any personal liability attaching to the ownership thereof and will not be
issued in violation of any preemptive or similar rights of stockholders.
5. (a) The Exercise Price for the Warrant in effect from
time to time, and the number of shares of Common Stock issuable upon exercise
of the Warrant, shall be subject to adjustment, as follows:
(i) In the event that the Company shall at any time after the date
hereof (A) declare a dividend on the outstanding Common Stock payable in
shares of its capital stock, (B) subdivide the outstanding Common Stock, (C)
combine the outstanding Common Stock into a smaller number of shares, or (D)
issue any shares of its capital stock by reclassification of the Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Company is the continuing corporation), then, in each
case, the Exercise Price per Warrant Share in effect at the time of the record
date for the determination of stockholders entitled to receive such dividend
or distribution or of the effective date of such subdivision, combination, or
reclassification shall be adjusted so that it shall equal the price determined
by multiplying such Exercise Price by a fraction, the numerator of which shall
be the number of shares of Common Stock outstanding immediately prior to such
action, and the denominator of which shall be the number of shares of Common
Stock outstanding after giving effect to such action. Such adjustment shall be
made successively whenever any event listed above shall occur and shall become
effective at the close of business on such record date or at the close of
business on the date immediately preceding such effective date, as applicable.
(ii) In the event that the Company shall fix a record date for the
determination of stockholders entitled to receive issuance of rights or
warrants to be issued to all holders of Common Stock entitling such
stockholders to subscribe for or purchase shares of Common Stock (or
securities convertible into Common Stock) at a price (the "Subscription
Price") (or having a conversion price per share) less than the then Current
Market Price (as defined below) per share
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of Common Stock on such record date, the Exercise Price in effect at the time
of such record date shall be adjusted so that the same shall equal the price
determined by multiplying such Exercise Price in effect immediately prior to
the date of such issuance by a fraction, the numerator of which shall be the
sum of the number of shares of Common Stock outstanding on such record date
and the number of additional shares of Common Stock which the aggregate
offering price of the total number of shares of Common Stock so offered (or
the aggregate conversion price of the convertible securities so offered) would
purchase at such Current Market Price per share of the Common Stock, and the
denominator of which shall be the sum of the number of shares of Common Stock
outstanding on such record date and the number of additional shares of Common
Stock offered for subscription or purchase (or into which the convertible
securities so offered are convertible). Such adjustment shall be made
successively whenever such rights or warrants are issued and shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants; and, to the extent
that shares of Common Stock are not delivered (or securities convertible into
Common Stock are not delivered) after the expiration of such rights or
warrants, the Exercise Price shall be readjusted to the Exercise Price which
would then be in effect had the adjustments made upon the issuance of such
rights or warrants been made upon the basis of delivery of only the number of
shares of Common Stock (or securities convertible into Common Stock) actually
delivered.
(iii) In the event the Company shall fix a record date for the
determination of stockholders entitled to receive (including any such
distribution made to the stockholders of the Company in connection with a
consolidation or merger in which the Company is the continuing corporation in
a distribution to all holders of Common Stock) evidences of its indebtedness,
cash, or assets (other than distributions and dividends payable in shares of
Common Stock), or rights, options, or warrants to subscribe for or purchase
shares of Common Stock, or securities convertible into, or exchangeable for,
shares of Common Stock (excluding those referred to in paragraph (ii) above)
in a distribution to all holders of Common Stock, then, in each case, the
Exercise Price in effect at the time of such record date shall be adjusted by
multiplying the Exercise Price in effect immediately prior to such record date
by a fraction, the numerator of which shall be the Current Market Price per
share of Common Stock on such record date, less the fair market value (as
determined in good faith by the board of directors of the Company, whose
determination shall be conclusive absent manifest error) of the portion of the
evidences of indebtedness or assets so to be distributed, or of such rights,
options, or warrants, or convertible or exchangeable securities, or the amount
of such cash, applicable to one share of Common Stock, and the denominator of
which shall be such Current Market Price per share of Common Stock on such
record date. Such adjustment shall be made successively whenever any event
listed above shall occur and become effective at the close of business on such
record date.
(b) The Current Market Price per share of Common Stock on any date
shall be deemed to be the average of the daily closing prices for the 10
consecutive trading days immediately preceding the date in question. The
closing price for each day shall be the last reported sales price regular way
or, in case no such reported sale takes place on such day, the closing bid
price regular way, in either case on the principal national securities
exchange (including, for purposes hereof,
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the NASDAQ National Market System) on which the Common Stock is listed or
admitted to trading or, if the Common Stock is not listed or admitted to
trading on any national securities exchange, the highest reported bid price
for the Common Stock as furnished by the National Association of Securities
Dealers, Inc. through the Nasdaq SmallCap Market or a similar organization if
the Nasdaq SmallCap Market is no longer reporting such information. If, on any
such date, the Common Stock is not listed or admitted to trading on any
national securities exchange and is not quoted on the Nasdaq SmallCap Market
or any similar organization, the fair value of a share of Common Stock on such
date, as determined in good faith by the board of directors of the Company,
whose determination shall be conclusive absent manifest error, shall be used.
(c) All calculations under this Section 5 shall be made to the
nearest cent or to the nearest one-hundredth of a share, as the case may be.
(d) In any case in which this Section 5 shall require that an
adjustment in the number of Warrant Shares be made effective as of a record
date for a specified event, the Company may elect to defer, until the
occurrence of such event, issuing to the Holder, if the Holder exercised this
Warrant after such record date, the Warrant Shares, if any, issuable upon such
exercise over and above the number of Warrant Shares issuable upon such
exercise on the basis of the number of shares of Common Stock in effect prior
to such adjustment; provided, however, that the Company shall deliver to the
Holder a due bill or other appropriate instrument evidencing the Holder's
right to receive such additional shares of Common Stock upon the occurrence of
the event requiring such adjustment.
(e) Whenever there shall be an adjustment as provided in this Section
5, the Company shall within 15 days thereafter cause written notice thereof to
be sent by registered mail, postage prepaid, to the Holder, at its address as
it shall appear in the Warrant Register, which notice shall be accompanied by
an officer's certificate setting forth the number of Warrant Shares issuable
and the Exercise Price thereof after such adjustment and setting forth a brief
statement of the facts requiring such adjustment and the computation thereof,
which officer's certificate shall be conclusive evidence of the correctness of
any such adjustment absent manifest error.
(f) The Company shall not be required to issue fractions of shares of
Common Stock or other capital stock of the Company upon the exercise of this
Warrant. If any fraction of a share of Common Stock would be issuable on the
exercise of this Warrant (or specified portions thereof), the Company shall
purchase such fraction for an amount in cash equal to the same fraction of the
Current Market Price of such share of Common Stock on the date of exercise of
this Warrant.
(g) No adjustment in the Exercise Price per Warrant Share shall be
required if such adjustment is less than $.05; provided, however, that any
adjustments which by reason of this Section 5 are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
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(h) Whenever the Exercise Price payable upon exercise of this Warrant
is adjusted pursuant to Subsections (a)(i), (a)(ii) or (a)(iii) above, the
number of Warrant Shares issuable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the number of Warrant Shares
theretofore issuable upon exercise of this Warrant by the Exercise Price in
effect on the date hereof and dividing the product so obtained by the Exercise
Price, as adjusted.
(i) Notwithstanding anything herein to the contrary, if the Holder is
a member of the National Association of Securities Dealers, Inc. (the "NASD")
and any adjustment under this Section 5 of the Exercise Price or the number of
shares of Common Stock or other securities issuable upon exercise of this
Warrant shall be determined by the NASD to violate either or both of Section
44(c)(6)(B)(vi)(7) or Section 44(c)(6)(B)(vi)(8) of Article III of the Rules
of Fair Practice of the NASD, and such determination shall not be subject to
further appeal or review, the violative provisions or provisions shall be
deemed to be amended to the minimum extent necessary to cause each such
provision to comply with the applicable violated paragraph of Section 44 of
the NASD Rules of Fair Practice.
6. (a) In case of any capital reorganization, other than in the cases
referred to in Section 5(a) hereof, or the consolidation or merger of the
Company with or into another corporation (other than a merger or consolidation
in which the Company is the continuing corporation and which does not result
in any reclassification of the outstanding shares of Common Stock or the
conversion of such outstanding shares of Common Stock into shares of other
stock or other securities or property), or in the case of any sale, lease, or
conveyance to another corporation of the property and assets of any nature of
the Company as an entirety or substantially as an entirety (such actions being
hereinafter collectively referred to as "Reorganizations"), there shall
thereafter be deliverable upon exercise of this Warrant (in lieu of the number
of Warrant Shares theretofore deliverable) the number of shares of stock or
other securities or property to which a holder of the respective number of
Warrant Shares which would otherwise have been deliverable upon the exercise
of this Warrant would have been entitled upon such Reorganization if this
Warrant had been exercised in full immediately prior to such Reorganization.
In case of any Reorganization, appropriate adjustment, as determined in good
faith by the board of directors of the Company, shall be made in the
application of the provisions herein set forth with respect to the rights and
interests of the Holder so that the provisions set forth herein shall
thereafter be applicable, as nearly as possible, in relation to any shares or
other property thereafter deliverable upon exercise of this Warrant. Any such
adjustment shall be made by, and set forth in, a supplemental agreement
between the Company, or any successor thereto, and the Holder, with respect to
this Warrant, and shall for all purposes hereof conclusively be deemed to be
an appropriate adjustment. The Company shall not effect any such
Reorganization unless, upon or prior to the consummation thereof, the
successor corporation, or if the Company shall be the surviving corporation in
any such Reorganization and is not the issuer of the shares of stock or other
securities or property to be delivered to holders of shares of the Common
Stock outstanding at the effective time thereof, then such issuer, shall
assume by written instrument the obligation to deliver to the Holder such
shares of stock, securities, cash, or other property as such Holder shall be
entitled to purchase in accordance with the foregoing provisions. In the event
of sale, lease, or
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conveyance or other transfer of all or substantially all of the assets of the
Company as part of a plan for liquidation of the Company, all rights to
exercise this Warrant shall terminate 30 days after the Company gives written
notice to the Holder that such sale or conveyance or other transfer has been
consummated.
(b) In case of any reclassification or change of the shares of Common
Stock issuable upon exercise of this Warrant (other than a change in par value
or from a specified par value to no par value, or as a result of a subdivision
or combination, but including any change in the shares into two or more
classes or series of shares), or in case of any consolidation or merger of
another corporation into the Company in which the Company is the continuing
corporation and in which there is a reclassification or change (including a
change to the right to receive cash or other property) of the shares of Common
Stock (other than a change in par value, or from no par value to a specified
par value, or as a result of a subdivision or combination, but including any
change in the shares into two or more classes or series of shares), the Holder
or holders of this Warrant shall have the right thereafter to receive upon
exercise of this Warrant solely the kind and amount of shares of stock and
other securities, property, cash, or any combination thereof receivable upon
such reclassification, change, consolidation, or merger by a holder of the
number of Warrant Shares for which this Warrant might have been exercised
immediately prior to such reclassification, change, consolidation, or merger.
Thereafter, appropriate provision shall be made for adjustments which shall be
as nearly equivalent as practicable to the adjustments in Section 5.
(c) The above provisions of this Section 6 shall similarly
apply to successive reclassifications and changes of shares of Common Stock
and to successive consolidations, mergers, sales, leases, or conveyances.
7. In case at any time the Company shall propose:
(a) to pay any dividend or make any distribution on shares
of Common Stock in shares of Common Stock or make any other distribution
(other than regularly scheduled cash dividends which are not in a greater
amount per share than the most recent such cash dividend) to all holders of
Common Stock; or
(b) to issue any rights, warrants, or other securities to
all holders of Common Stock entitling them to purchase any additional shares
of Common Stock or any other rights, warrants, or other securities; or
(c) to effect any reclassification or change of
outstanding shares of Common Stock or any consolidation, merger, sale, lease,
or conveyance of property, as described in Section 6; or
(d) to effect any liquidation, dissolution, or
winding-up of the Company; or
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(e) to take any other action which would cause an
adjustment to the Exercise Price per Warrant Share;
then, and in any one or more of such cases, the Company shall give written
notice thereof by registered mail, postage prepaid, to the Holder at the
Holder's address as it shall appear in the Warrant Register, mailed at least
15 days prior to (i) the date as of which the holders of record of shares of
Common Stock to be entitled to receive any such dividend, distribution,
rights, warrants, or other securities are to be determined, (ii) the date on
which any such reclassification, change of outstanding shares of Common Stock,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up is expected to become effective and the date as of
which it is expected that holders of record of shares of Common Stock shall be
entitled to exchange their shares for securities or other property, if any,
deliverable upon such reclassification, change of outstanding shares,
consolidation, merger, sale, lease, conveyance of property, liquidation,
dissolution, or winding-up, or (iii) the date of such action which would
require an adjustment to the Exercise Price per Warrant Share.
8. The issuance of any shares or other securities upon the exercise
of this Warrant and the delivery of certificates or other instruments
representing such shares or other securities shall be made without charge to
the Holder for any tax or other charge in respect of such issuance. The
Company shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of any certificate
in a name other than that of the Holder and the Company shall not be required
to issue or deliver any such certificate unless and until the person or
persons requesting the issue thereof shall have paid to the Company the amount
of such tax or shall have established to the satisfaction of the Company that
such tax has been paid.
9. (a) If, at any time during the five-year period
commencing on August 15, 1996, the Company shall file a registration statement
(other than on Form S-4, Form S-8 or any successor form) with the Securities
and Exchange Commission (the "Commission") while any Registrable Securities
(as hereinafter defined) are outstanding, the Company shall give all the then
holders of any Registrable Securities (the "Eligible Holders") at least 15
days prior written notice of the filing of such registration statement. If
requested by any Eligible Holder in writing within 20 days after the mailing
of any such notice, the Company shall, at the Company's sole expense (other
than the fees and disbursements of counsel for the Eligible Holders and the
underwriting discounts, if any, payable in respect of the Registrable
Securities sold by any Eligible Holder), use its best efforts to register or
qualify all or, at each Eligible Holder's option, any portion of the
Registrable Securities of any Eligible Holders who shall have made such
request, concurrently with the registration of such other securities, all to
the extent requisite to permit the public offering and sale of the Registrable
Securities through the facilities of all appropriate securities exchanges and
the over-the-counter market, and will use its best efforts through its
officers, directors, auditors, and counsel to cause such registration
statement to become effective as promptly as practicable. Notwithstanding the
foregoing, if the managing underwriter of any such offering shall advise the
Company in writing that, in its opinion, the distribution of all or a portion
of the Registrable Securities requested to be included in the registration
concurrently with the securities being
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registered by the Company would materially adversely affect the distribution
of such securities by the Company for its own account, then the Registrable
Securities to be offered for the accounts of the Eligible Holders shall be
eliminated entirely or reduced pro rata as to all Eligible Holders who
requested registration on the basis of the relative number of Registrable
Securities each such Eligible Holder has requested to be included in such
registration, to the extent necessary to reduce the total amount advised by
such managing underwriter; provided, however, that no securities may be
offered in such registration for the account of persons other than the Company
(including for this purpose any affiliate of the Company) by virtue of their
having "piggyback" registration rights or otherwise, unless the Registrable
Securities requested to be included in such registration are included on a pro
rata basis (by percentage of each class of securities) as to such other
persons and the Eligible Holders requesting registration and provided, further
that nothing in this Section 9 (a) shall be implied to permit the Company to
include in such registration, shares of any person other than persons holding
"piggyback" registration rights unless the Registrable Securities requested to
be included in such registration are included. In no event shall the amount of
Registrable Securities included in the offering be reduced below thirty-three
and one-third percent (33-1/3%) of the total amount of the selling stockholder
securities included in such offering. As used herein, "Registrable Securities"
shall mean the Warrant Shares which have not been previously sold pursuant to
a registration statement or Rule 144 promulgated under the Act.
(b) The Company is obligated to effect only two (2) such
registrations of the type referred to in Section 9(a).
(c) With respect to the registration described in Section 9(a), and
subject to its right to refrain from, postpone or withdraw any registration
statement, the Company shall use its best efforts to:
(i) Prepare and file with the Commission a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and keep such
registration statement effective for up to one hundred twenty (120) days or if
the Registration Statement is on Form S-3 (or a successor form) for up to one
year.
(ii) Prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement.
(iii) Furnish to the Eligible Holders such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably
request in order to facilitate the disposition of Registrable Securities owned
by them.
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(iv) Use its best efforts to register and qualify the
Registrable Securities under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Eligible Holders
thereof, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(v) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering, provided that
each Eligible Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.
(vi) Notify each Eligible Holder covered by such
registration statement in the event the Company has delivered preliminary or
final prospectuses to any such Eligible Holder and, after having done so, such
prospectus is amended to comply with the requirements of the Act. Upon such
notification, such Eligible Holders shall immediately cease making offers of
Registrable Securities and return all prospectuses to the Company. The Company
shall promptly provide such Eligible Holders with revised prospectuses and,
following receipt of the revised prospectuses, such Eligible Holders shall be
free to resume making offers of the Registrable Securities.
(vii) Furnish, at the request of any Eligible Holder
requesting registration of Registrable Securities pursuant to this Agreement,
on the date that such Registrable Securities are delivered to the underwriters
for sale in connection with a registration pursuant hereto, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to such Eligible
Holders and (ii) a letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily
given by independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to
such Eligible Holders.
(viii) Use its best efforts to list the Registrable
Securities covered by such registration statement with any securities exchange
or trading market on which the Common Stock of the Company is then listed.
(d) It shall be a condition precedent to the obligations of the
Company to take any action pursuant hereto with respect to the Registrable
Securities of any selling Eligible Holder (the "Selling Holder") that such
Selling Holder shall furnish to the Company such information regarding itself,
the Registrable Securities held by it, and the intended method of disposition
of such securities as shall be required to effect the registration of such
Selling Holder's Registrable Securities.
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<PAGE>
(e) The Company shall bear and pay all expenses incurred in
connection with all registration, filing or qualification of Registrable
Securities with respect to all registrations pursuant to Section 9(a) for each
Eligible Holder (which right may be assigned as provided in Section 11),
including (without limitation) all registration, filing, and qualification
fees, printing and accounting fees relating or apportionable thereto, and the
fees and disbursements of one counsel for all the Selling Holders (but not to
exceed $5,000), but excluding underwriting discounts and commissions relating
to Registrable Securities and any nonaccountable expense allowance of the
underwriters of an offering by the Selling Holders, which shall be paid by the
Selling Holders on a pro rata basis according to the amount of Registrable
Securities sold.
10. In the event any Registrable Securities are included in a
registration statement as contemplated by Section 9 hereof:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Selling Holder of Registrable Securities and
such Selling Holder's officers and directors, any underwriter (as defined in
the Act) for such Selling Holder and each person, if any, who controls such
Selling Holder or underwriter within the meaning of the Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act") (each, an "Indemnitee"),
against any losses, claims, damages, or liabilities (joint or several) to
which they may become subject under the Act, or the 1934 Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or supplements
thereto, (ii) the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, any state securities law or any rule
or regulation promulgated under the Act, or the 1934 Act or any state
securities law; and the Company will pay to each such Indemnitee, any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 10 shall not
apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage,
liability, or action to the extent that it arises out of or is based upon a
Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration
by any such Indemnitee. Notwithstanding the above, the foregoing indemnity
agreement is subject to the condition that, insofar as it relates to any such
untrue statement, alleged untrue statement, omission or alleged omission made
in a preliminary prospectus, such indemnity agreement shall not inure to the
benefit of any Selling Holder if a copy of the final prospectus was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Act if the
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<PAGE>
final prospectus corrected the untrue statement or omission or alleged untrue
statement or omission.
(b) To the extent permitted by law, each Selling Holder severally and
not jointly will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement,
each person, if any, who controls the Company within the meaning of the Act,
any underwriter, any other Selling Holder selling securities in such
registration statement and any controlling person of any such underwriter or
other Selling Holder, against any losses, claims, damages, or liabilities
(joint or several) to which any of the foregoing persons may become subject,
under the Act, or the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereto) arise
out of or are based upon any Violation, in each case to the extent (and only
to the extent) that such Violation occurs in reliance upon and in conformity
with written information furnished by such Selling Holder expressly for use in
connection with such registration; and each such Selling Holder will pay any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Section 10(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Section 10(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Selling Holder, which consent shall not be unreasonably withheld; provided,
that, in no event shall any indemnity under this Section 10(b) exceed the
gross proceeds from the offering received by such Selling Holder.
(c) Promptly after receipt by an indemnified party under this Section
10 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 10, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties, provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by
such counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 10 to the extent of such prejudice, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section
10.
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<PAGE>
(d) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section 10(a)
or 10(b) but it is found in a final judicial determination, not subject to
further appeal, that such indemnification may not be enforced in such case,
even though this Agreement expressly provides for indemnification in such
case, or (ii) any indemnified or indemnifying party seeks contribution under
the Act, the 1934 Act, or otherwise, then the Company (including for this
purpose any contribution made by or on behalf of any officer, director,
employee, agent or counsel of the Company, or any controlling person of the
Company), on the one hand, and the Selling Holders severally and not jointly
(including for this purpose any contribution by or on behalf of an indemnified
party), on the other hand, shall contribute to the losses, liabilities,
claims, damages, and expenses to which any of them may be subject, in such
proportions as are appropriate to reflect the relative benefits received by
the Company, on the one hand, and the Selling Holders, on the other hand;
provided, however, that if applicable law does not permit such allocation,
then other relevant equitable considerations such as the relative fault of the
Company and the Selling Holders in connection with the facts which resulted in
such losses, liabilities, claims, damages, and expenses shall also be
considered. The relative benefits received by the Company, on the one hand,
and the Selling Holders, on the other hand, shall be deemed to be in the same
proportion as the total proceeds from the offering received by the Company on
the one hand and the Selling Holders, on the other hand.
The relative fault, in the case of an untrue statement,
alleged untrue statement, omission, or alleged omission, shall be determined
by, among other things, whether such statement, alleged statement, omission,
or alleged omission relates to information supplied by the Company or by a
Selling Holder, and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement, alleged
statement, omission, or alleged omission. The Company and the Selling Holders
agree that it would be unjust and inequitable if the respective obligations of
the Company and the Selling Holders for contribution were determined by pro
rata or per capital allocation of the aggregate losses, liabilities, claims,
damages, and expenses or by any other method of allocation that does not
reflect the equitable considerations referred to in this Section 10(d). No
person guilty of a fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who is not
guilty of such fraudulent misrepresentation. For purposes of this Section
10(d), each person, if any, who controls a Selling Holder within the meaning
of Section 15 of the Act or Section 20(a) of the 1934 Act and each officer,
director, stockholder, employee, agent, and counsel of the Selling Holders,
shall have the same rights of contribution as the Selling Holders, and each
person, if any, who controls the Company within the meaning of Section 15 of
the Act or Section 20(a) of the 1934 Act and each officer, director, employee,
agent, and counsel of the Company, shall have the same rights to contribution
as the Company, subject in each case to the provisions of this Section 10(d).
Anything in this Section 10(d) to the contrary notwithstanding, no party shall
be liable for contribution with respect to the settlement of any claim or
action effected without its written consent. This Section 10(d) is intended to
supersede any right to contribution under the Act, the 1934 Act, or otherwise.
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<PAGE>
(e) The obligations of the Company and Selling Holders under this
Section 10 shall survive the completion of any offering of Registered
Securities hereunder, and otherwise.
11. The rights to cause the Company to register Registrable
Securities pursuant to this Agreement may be assigned (but only with all
related obligations) by the Holder to a transferee or assignee of such
Registrable Securities, provided: (i) the Company is, within a reasonable time
after such transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned; (ii) such assignment shall be
effective only if immediately following such transfer the further disposition
of such securities by the transferee or assignee is restricted under the Act;
(iii) such transferee or assignee shall as a condition to such transfer,
deliver to the Company a written instrument by which such transferee agrees to
be bound by the obligations imposed upon Eligible Holders pursuant hereto;
(iv) any such transferee or assignee may not again transfer such rights to any
other person or entity, other than as provided in this Section 11; and (v)
such transfer of Registrable Securities is in compliance with applicable
federal and state securities laws.
12. Any provision of Sections 9, 10 and 11 may be amended and the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively) only with the written consent of
the Company and the Holders of the majority of the Registrable Securities then
outstanding. Any amendment or waiver effected in accordance with this
paragraph shall be binding upon each Eligible Holder, each future Eligible
Holder and the Company.
13. Unless registered pursuant to the provisions of Section 9 hereof,
the Warrant Shares issued on exercise of the Warrants shall be subject to a
stop transfer order and the certificate or certificates representing the
Warrant Shares shall bear the following legend:
"THE SECURITIES REPRESENTED BY THIS
CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, (THE
"ACT"). SUCH SECURITIES MAY NOT BE OFFERED OR
SOLD EXCEPT PURSUANT TO (i) A REGISTRATION
STATEMENT FILED UNDER THE ACT, OR (ii) AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT."
14. Upon receipt of evidence satisfactory to the Company of the loss,
theft, destruction, or mutilation of any Warrant (and upon surrender of any
Warrant if mutilated), and upon receipt by the Company of reasonably
satisfactory indemnification, the Company shall execute and deliver to the
Holder thereof a new Warrant of like date, tenor, and denomination.
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<PAGE>
15. The Holder of any Warrant shall not have, solely on account of
such status, any rights of a stockholder of the Company, either at law or in
equity, or to any notice of meetings of stockholders or of any other
proceedings of the Company, except as provided in this Warrant.
16. This Warrant shall be construed in accordance with the laws of
the State of New York applicable to contracts made and performed within such
State, without regard to principles of conflicts of law.
17. The Company irrevocably consents to the jurisdiction of the
courts of the State of New York and of any federal court located in such State
in connection with any action or proceeding arising out of, or relating to,
this Warrant, any document or instrument delivered pursuant to, in connection
with, or simultaneously with, this Warrant, or a breach of this Warrant or any
such document or instrument.
Dated: ____________, 1996
HEALTHRITE INC.
BY: __________________________
BRADLEY T. MACDONALD
PRESIDENT
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<PAGE>
FORM OF ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED HOLDER IF SUCH HOLDER DESIRES TO
TRANSFER THE ATTACHED WARRANT.)
FOR VALUE RECEIVED, ______________________ hereby sells, assigns, and
transfers unto _________________ a Warrant to purchase __________ shares of
Common Stock, par value $.001 per share, of HealthRite Inc., a Delaware
corporation (the "Company"), and does hereby irrevocably constitute and
appoint ___________ attorney to transfer such Warrant on the books of the
Company, with full power of substitution.
Dated: _________________
Signature_______________________
NOTICE
The signature on the foregoing Assignment must correspond to the name
as written upon the face of this Warrant in every particular, without
alteration or enlargement or any change whatsoever.
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<PAGE>
ELECTION TO EXERCISE
To: HealthRite Inc.
200 Madison Avenue
New York, New York 10016
The undersigned hereby exercises his, her, or its rights to
purchase shares of Common Stock, par value $.001 per share ("the Common
Stock"), of HealthRite Inc., a Delaware corporation (the "Company"), covered
by the within Warrant and tenders payment herewith in the amount of $_____ in
accordance with the terms thereof, and requests that certificates for the
securities constituting such shares of Common Stock be issued in the name of,
and delivered to:
(Print Name, Address, and Social Security
or Tax Identification Number)
and, if such number of shares of Common Stock shall not constitute all such
shares of Common Stock covered by the within Warrant, that a new Warrant for
the balance of the shares of Common Stock covered by the within Warrant shall
be registered in the name of, and delivered to, the undersigned at the address
stated below.
Dated: __________________ Name________________________
(Print)
Address:
------------------------
(Signature)
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