DELAWARE CHANCELLOR ENTERS STAND-STILL ORDER
RESTRICTING HEALTHRITE INC'S CONTESTED BOARD OF DIRECTORS
Chancellor William Chandler of the Delaware Court of
Chancery entered a stand-still order on December 23, 1997
restricting the contested board of directors of HealthRite Inc.
While maintaining the authority of the contested board to
continue to manage HealthRite business, the stand-still order
restricts Warren Haber, John Teeger and the other contested board
members of HealthRite from causing HealthRite to transact any
business in excess of the value of $25,000, or from causing the
issuance, sale or purchase of any stock, stock options, warrants
or securities of HealthRite, and it limits the contested board
from transacting certain other business on behalf of HealthRite
outside of the ordinary course of business except on five (5)
business days' notice to the opposition slate of directors. The
order also requires that both parties submit copies of all
proxies in their possession as of December 17, 1997 to
Corporation Trust Company.
The order was entered pending the Court's ruling on a
disputed election of directors at the annual meeting of
shareholders held in Towson, Maryland on December 17, 1997. The
slate of directors elected at the December 17 meeting is led by
Brad McDonald and Charles Walgreen.
The Haber/Teeger contested board failed to appear at the
December 17 shareholder meeting, instead claiming that they had
postponed the meeting and rescheduled it for January 9, 1998.
The Court indicated that, even if the Haber/Teeger contested
board is elected on January 9, 1998, they are in peril of being
removed if the Court determines that the December 17, 1997
shareholder election was valid and the attempted postponement of
that meeting was void. The Court order also prohibits the
rescheduling of the shareholders' meeting without five business
days' notice to the MacDonald/Walgreen slate.
It is anticipated that a final resolution of the validity of
the December 17, 1997 election will be made by Chancellor
Chandler in late January or early February of 1998.<PAGE>
IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE
IN AND FOR NEW CASTLE COUNTY
WARREN H. HABER, JOHN L. )
TEEGER, HOWARD M. BEZOZA, )
M.D. MILTON DATSOPOULOS, )
JOHN C. HORWITZ, JOHN A. )
McCONVILLE, and SIDNEY N. )
TOWLE, JR., )
)
Plaintiffs )
)
v. ) Civil Action No. 16096-NC
)
BRADLEY T. MacDONALD, DAVID M. )
GREEN, RONALD O. HAUGE, )
DAVID H. PANASCI, BEVERLY L. )
VALORE, REED VERDENBERG, and )
CHARLES R. WALGREEN, )
)
and )
)
HEALTHRITE INC., )
)
Nominal defendant )
STATUS QUO ORDER
Plaintiffs, having moved the Court for an order
preserving the status quo pending the Court's disposition of
plaintiffs' claim against defendants pursuant to 8 Del. C. 225,
and the Court having considered the matter, but without ruling on
the merits of plaintiffs' claim:
IT IS SO ORDERED this 23 day of December, 1997, that:
1. Until further order of this Court, plaintiffs,
Warren H. Haber, John L. Teeger, Howard M. Bezoza, M.D., Milton
Datsopoulos, John C. Horwitz, John A. McConville and Sidney N.
Towle, Jr., shall constitute the Board of Directors of HealthRite
Inc. ("HealthRite") with full power and authority to direct the
management of its business, subject to the following terms of
this Order. The provision of this Order does not adjudicate the
merits of plaintiffs' claim to continue as the Board of Directors
of HealthRite and defendants shall be permitted to file a
Counterclaim setting forth the basis upon which they claim to be
the duly elected Board of Directors of HealthRite, Inc. The
provision of this Order is entered to preserve continuity of the
corporate affairs and is not to be construed as an admission or
an adjudication on the merits of plaintiffs' claim.
2. Plaintiffs, as the directors of HealthRite, shall
not cause or permit HealthRite to take any action out of the
ordinary course of business, except upon 5 business days notice
to defendants, including but not limited to, the following:
a. engaging in, entering into, or agreeing to
any transaction, contract or agreement, except as required for
the maintenance of the business of HealthRite, the value of which
exceeds $25,000, including but not limited to the following:
b. engaging in, entering into, or agreeing to any
transaction, contract or agreement, except as required for the
maintenance of the business of HealthRite, the value of which
exceeds $25,000, including but not limited to any financing
agreement;
c. issuing, selling or purchasing, or committing
or agreeing to issue, sell or purchase any stock, stock options,
warrants or securities of HealthRite;
d. rescheduling the shareholder's meeting;
e. entering into or agreeing to any transaction,
the consummation of which would require the approval of or a vote
by HealthRite's stockholders, or amending any such agreement or
transaction;
f. amending, modifying or repealing any of
HealthRite's bylaws, or amending its Certificate of
Incorporation;
g. entering into any agreement, or amendment
thereto, with respect to a merger, tender offer, restructuring or
recapitalization involving HealthRite;
h. declaring or paying any dividend of
distribution to HealthRite's shareholders;
i. selling or transferring all or substantially
all of the assets of HealthRite; or
j. altering, destroying or removing from
HealthRite's premises corporate property or assets of any kind
whatsoever.
3. Defendants shall not take any actions on behalf of
HealthRite, Inc. as directors or officers in contravention of
this Order.
4. The parties shall provide copies of all proxies in
their possession as of December 17, 1997 to Corporation Trust
Company in New York City which shall not share the proxies or the
identity of the party giving the proxy(ies) with the opposing
party until January 10, 1998.
/s/ William B. Chandler
Chancellor
