STOCK PURCHASE AGREEMENT
Exhibit
10.1
This
STOCK
PURCHASE AGREEMENT
(the
“Agreement”),
dated
as of February 22, 2007 (the “Closing
Date”),
is
entered into by and among PacificHealth Laboratories, Inc., a Delaware
corporation, with an office located at 000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxxxx,
Xxx
Xxxxxx (the “Company”),
and
Aquifer Opportunity Fund, L.P. and Xxxx Xxxxxxxxxx (each a “Buyer”,
and
together, the “Buyers”).
WHEREAS:
A. The
Company and the Buyers are executing and delivering this Agreement in reliance
upon an exemption from securities registration afforded by the Securities
Act of
1933, as amended (the “Securities
Act”);
B. The
Buyers wish to purchase, and the Company wishes to sell, upon the terms and
conditions stated in this Agreement, shares of the Company’s Common Stock, par
value $.0025 per share, for an aggregate purchase price of US $450,000.
NOW
THEREFORE,
intending to be legally bound hereby the Company and the Buyers hereby agree
as
follows:
1. PURCHASE
AND SALE OF COMMON SHARES
a. Purchase
of Common Shares.
The
Company hereby issues and sells to the Buyers and the Buyers hereby purchase
from the Company such number of shares of the Company’s Common Stock
set
forth
opposite such Buyer’s name on Schedule A
hereto
(the “Common
Shares”)
for
the purchase price of $1.85 per share based on 10-day average closing price
looking back from February 15, 2007, for an aggregate purchase price of $450,000
(the “Purchase
Price”).
b. Form
of Payment.
Simultaneously with the execution and delivery of this Agreement, each Buyer
shall pay the Purchase Price for the Common Shares, by wire transfer or such
form of payment as the Company shall accept, and (ii) upon receipt of such
payment, the Company shall issue irrevocable instructions to its transfer
agent
and thereafter promptly deliver to each Buyer a stock certificate (the
“Common
Share Certificate”)
representing the Common Shares of such Buyer, duly executed on behalf of
the
Company and registered in the name of such Buyer.
2. BUYERS’
REPRESENTATIONS AND WARRANTIES.
As
a
material inducement to the issuance of the Common Shares by the Company,
each
Buyer represents and warrants to that:
a. Investment
Purpose.
Buyer
is acquiring the Common Shares for its own account for investment only and
not
with a view towards, or for resale in connection with, the public sale or
distribution thereof;
b. Accredited
Investor Status.
Buyer
is an "accredited investor" as that term is defined in Rule 501(a)(3) of
Regulation D under the Securities Act.
c. Reliance
on Exemptions.
Buyer
understands that the Common Shares are being offered and sold to it in reliance
on specific exemptions from the registration requirements of United States
federal and state securities laws and that the Company is relying in part
upon
the truth and accuracy of, and Buyer's compliance with, the representations,
warranties, agreements, acknowledgments and understandings of Buyer set forth
herein in order to determine the availability of such exemptions and the
eligibility of Buyer to acquire the Common Shares.
d. Information.
Buyer
has reviewed the Company’s Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2005, as filed with the United States Securities and Exchange
Commission (the “Commission”)
and
any filings which have been made subsequently by the Company. Buyer and his
advisors, if any, have been afforded the opportunity to ask questions of
the
Company and receive additional information regarding the Company, its business,
finances and affairs. Buyer has such knowledge and expertise in financial
and
business matters that Buyer is capable of evaluating the merits and risks
involved in an investment in the Common Shares. Buyer is relying upon its
own
investigation of the Company and the terms of the offer of Common Shares,
and is
not relying upon any representation or warranty of the Company. Buyer is
not
depending upon liquidity in the investment in the Common Shares and has
sufficient financial resources to enable Buyer to bear the risk of investment
in
the Common Shares for an indefinite period of time. Buyer understands that
its
investment in the Common Shares involves risk. Buyer has sought such accounting,
legal and tax advice as it considered necessary to make an informed investment
decision with respect to its acquisition of the Common Shares.
e. No
Governmental Review.
Buyer
understands that no United States federal or state agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Common Shares or the fairness or suitability of the
investment in the Common Shares nor have such authorities passed upon or
endorsed the merits of the offering of the Common Shares.
f. Transfer
or Resale.
Buyer
understands that: (i) except as set forth in Section 5, the sale of the Common
Shares by the Company to Buyer has not been and will not be registered under
the
Securities Act or any state securities laws, and the Common Shares may not
be
offered for sale, sold, assigned or transferred by the Buyer unless (A) the
offer or sale of the Common Shares by the Buyer is registered under the
Securities Act, or (B) Buyer shall have delivered to the Company an opinion
of
counsel, in a form reasonably acceptable to Company counsel, to the effect
that
the Common Shares to be sold, assigned or transferred may be sold, assigned
or
transferred pursuant to an exemption from such registration, or (C) Buyer
provides the Company with reasonable assurance that such Common Shares have
been
or are to be sold, assigned or transferred pursuant to Rule 144 promulgated
under the Securities Act, as amended, (or a successor rule thereto)
(“Rule
144”);
and
(ii)
any
sale of the Common Shares made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, and if Buyer intends to
utilize Rule 144 but Rule 144 is not applicable to such resale, any resale
of
the Common Shares under circumstances in which the seller (or the person
through
whom the sale is made) may be deemed to be an underwriter (as that term is
defined in the Securities Act) may require compliance with some other exemption
under the Securities Act or the rules and regulations of the Commission
thereunder.
g. Validity;
Enforcement.
This
Agreement has been duly authorized by all necessary corporate, partnership
or
limited liability company action on behalf of each Buyer which is an entity,
and
is a valid and binding agreement of Buyer enforceable against Buyer in
accordance with its terms, subject as to enforceability to general principles
of
equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the
enforcement of applicable creditors’ rights and remedies. No consent or approval
of any governmental agency is necessary for the execution, delivery and
performance of this Agreement by Buyer.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.
The
Company represents and warrants to each Buyer that:
a. Authorization;
Enforcement; Validity.
(i) The
Company has the requisite corporate power and authority to enter into and
perform this Agreement, and to issue the Common Shares in accordance with
the
terms hereof and thereof, (ii) the execution and delivery of this Agreement
and
the issuance of the Common Shares by the Company have been duly authorized
by
the Company's Board of Directors and no further consent or authorization
is
required by the Company, its Board of Directors or its stockholders, (iii)
this
Agreement has been duly executed and delivered by the Company, and (iv) this
Agreement constitutes the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as such
enforceability may be limited by general principles of equity or applicable
bankruptcy, insolvency, reorganization, moratorium, liquidation or similar
laws
relating to, or affecting generally, the enforcement of creditors’ rights and
remedies.
b.
Issuance
of Securities.
The
Common Shares are duly authorized and, upon issuance in accordance with the
terms hereof, shall be (i) validly issued, fully paid and non-assessable
and
(ii) free from all liens, charges, voting restrictions, transfer restrictions
(other than those imposed by securities law), pre-emptive rights and rights
of
first refusal, other than those which may have been caused by action of the
Buyers.
c.
Corporate
Organization.
The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware with full corporate power and authority
to carry on its business as it is now being conducted, to own or hold under
lease the properties and assets which it owns or holds under lease and perform
all its obligations under the agreements and instruments to which it is a
party
or by which it is bound.
d.
No
Violations.
The
execution and delivery of this Agreement by the Company will not violate
(a) the
Company’s Certificate of Incorporation or By-laws, (b) any material agreement,
instrument or indenture to which the Company is a party or by which the
Company’s assets may be bound, or (c) any order or decree of any court of
competent jurisdiction or any administrative agency to which the Company
is a
party or by which its assets may be bound. Assuming the accuracy of the
representations and warranties of Buyer contained in this Agreement, no approval
or consent of any United States federal or state governmental authority,
or the
OTCBB, is necessary for the execution, delivery of and performance of this
Agreement by the Company, other than the requirement that the Company file
a
Notice on SEC Form D within fifteen days after the date of this
Agreement.
5. REGISTRATION
RIGHTS.
a.
Restrictive
Legend.
(i)
Each certificate representing the Common Shares shall, except as otherwise
provided in this Section 5(a)(i) or in Section 5(a)(ii), be stamped or
otherwise imprinted with legends substantially in the following
form:
“THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933 AND MAY NOT BE TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS THEY HAVE BEEN REGISTERED UNDER THAT ACT OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.”
(ii)
The
Company shall, at the request of Buyer (or any affiliate of Buyer to which
any
of the Common Shares may have been transferred as contemplated by Section
5(b)),
remove from each certificate evidencing the Common Shares the legend described
in Section 5(a)(i) if in the opinion of counsel satisfactory to the Company
the
securities evidenced thereby may be publicly sold without registration under
the
Securities Act.
b.
Notice
of Proposed Transfer.
Prior
to any proposed transfer of any Common Shares, the holder thereof shall give
written notice to the Company of its intention to effect such transfer. Each
such notice shall describe the manner of the proposed transfer and, if requested
by the Company, shall be accompanied by an opinion of counsel satisfactory
to
the Company to the effect that the proposed transfer may be effected without
registration under the Securities Act, whereupon the holder of such Common
Shares shall be entitled to transfer such Common Shares in accordance with
the
terms of its notice, subject in any event to the restrictions in this Section
5;
provided,
however,
that no
such opinion of counsel shall be required for a transfer to one or more partners
of the transferor (in the case of a transferor that is a partnership) or
to an
affiliated corporation (in the case of a transferor that is a corporation).
Each
certificate for Common Shares transferred as above provided shall bear the
legend set forth in Section 5(a)(i), except that such certificate shall not
bear such legend if (x) such transfer is in accordance with the provisions
of Rule 144 of the Securities Act (or any other rule permitting public sale
without registration under the Securities Act) or (y) the opinion of
counsel referred to above is to the further effect that the transferee and
any
subsequent transferee (other than an affiliate of the Company) would be entitled
to transfer such securities in a public sale without registration under the
Securities Act. The restrictions provided for in this Section 5(b) shall
not apply to securities that are not required to bear the legend prescribed
by
Section 5(a)(i) in accordance with the provisions of Section
5(a).
c.
Registration.
(i)
Subject to Section 5(g), if at any time the Company determines that it
shall file a registration statement under the Securities Act for the
registration of the Company’s Common Stock (other than a registration statement
on a Form S-4 or S-8 or filed in connection with an exchange offer or an
offering of securities solely to the Company’s existing stockholders) on any
form that would also permit the registration of the Shares and such filing
is to
be on its behalf or on behalf of selling holders of its securities for the
general registration of the Company’s Common Stock to be sold for cash, the
Company shall each such time promptly give the Buyers written notice of such
determination setting forth the date on which the Company proposes to file
such
registration statement, which date shall be no earlier than 15 days from
the
date of such notice, and advising each Buyer of its right to have Common
Shares
included in such registration. Upon the written request of any holder of
the
Common Shares received by the Company no later than 15 days after the date
of
the Company’s notice, the Company shall use all reasonable efforts to cause to
be registered under the Securities Act all of the Common Shares that each
such
holder has so requested to be registered.
(ii)
If,
in the written opinion of the managing underwriter (or, in the case of a
non-underwritten offering, in the written opinion of the Company), the total
amount of such securities to be so registered pursuant to subparagraph (i),
including such Common Shares, will exceed the maximum amount of the Company’s
securities which can be marketed (x) at a price reasonably related to the
then current market value of such securities, or (y) without otherwise
materially and adversely affecting the entire offering, then the Company
shall
be entitled to reduce the number of shares of the Company’s Common Stock to be
sold in such offering by the holders and any other stockholder of the Company
hereafter granted incidental registration rights in proportion (as nearly
as
practicable) to the amount of the Company’s Common Stock requested to be
included by each holder of Common Shares and each other stockholder at the
time
of filing the registration statement.
(iii) If,
within two years after the Closing Date, Xxxx Xxxxx shall cease to be a member
of the Company’s board of directors, Aquifer Opportunity Fund, L.P. (”Aquifer”)
may demand that the Company register the Registrable Securities held by Aquifer
(a “Demand Request”), which Demand Request shall (x) specify the number of
Registrable Securities that Aquifer intends to sell or dispose of and (y)
state
the intended method or methods of sale or disposition of the Registrable
Securities. The other holders shall have the rights given in subparagraph
(i) to
be included in such registration
(iv)
In
the
event of a demand Request, the Company shall cause to be filed, as soon as
practicable, but within ninety (90) days of the date of delivery to the Company
of the Demand Request, a Registration Statement covering such Registrable
Securities that the Company has been so requested to register by the holder
and
other Persons, providing for the registration under the Securities Act of
such
Registrable Securities to the extent necessary to permit the disposition
of such
Registrable Securities in accordance with the intended method of distribution
specified in the Demand Request and use its best efforts to have such
Registration Statement declared effective by the SEC as soon as practicable
thereafter,
d.
Obligations
of the Company.
Whenever required under Section 5(c) to use all reasonable efforts to
effect the registration of any Common Shares, the Company shall, as
expeditiously as possible:
(i)
prepare and file with the Commission a registration statement with respect
to
such Common Shares, and use all reasonable efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby determined as provided hereafter; provided
that the
Company shall not be required to keep any registration statement described
in
subparagraph (i) effective more than 120 days nor to keep any registration
statement filed pursuant to subparagraph (iii) effective more than 240
days.
(ii)
prepare and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as
may be
necessary to comply with the provisions of the Securities Act with respect
to
the disposition of all shares of the Company’s Common Stock covered by such
registration statement and as may be necessary to keep such registration
statement effective for a reasonable period not to exceed 120 days and promptly
notify the holders of any Common Shares covered by the registration statement
of
any stop order issued or, to the Company’s knowledge, threatened to be issued by
the Commission and take all reasonable actions required to prevent the entry
of
such stop order or to remove it if entered;
(iii) furnish
to the holders of Common Shares covered by the registration statement such
numbers of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus and any amendments or supplements
thereto in conformity with the requirements of the Securities Act any exhibits
filed therewith and such other documents and information as they may reasonably
request;
(iv) use
all
reasonable efforts to register or qualify the Common Shares covered by such
registration statement under such other securities or blue sky laws of such
jurisdiction within the United States and Puerto Rico as shall be reasonably
appropriate for the distribution of the Common Shares covered by the
registration statement; provided,
however,
that
the Company shall not be required in connection therewith or as a condition
thereto to qualify to do business in or to file a general consent to service
of
process in any jurisdiction wherein it would not but for the requirements
of
this Section 5(d)(iv) be obligated to do so; and provided,
further,
that
the Company shall not be required to qualify such Common Shares in any
jurisdiction in which the securities regulatory authority requires that any
holder submit any Common Shares to the terms, provisions and restrictions
of any
escrow, lockup or similar agreement(s) for consent to sell shares of the
Company
Common Stock covered by the registration statement in such jurisdiction unless
such holder agrees to do so;
(v) promptly
notify each holder for whom such Common Shares are covered by such registration
statement, at any time when a prospectus relating thereto is required to
be
delivered under the Securities Act, of the happening of any event as a result
of
which the prospectus included in such registration statement, as then in
effect,
includes an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances under
which
they were made, and at the request of any such holder promptly prepare and
furnish to such holder a reasonable number of copies of a supplement to or
an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary to make the statements therein
not
misleading in light of the circumstances under which they were made. In the
event the Company shall give such notice, the Company shall extend the period
during which such registration statement shall be maintained effective as
provided in Section 5(d)(i) by the number of days during the period from
and
including the date of the giving of such notice to the date when the Company
shall make available to the holders such supplemented or amended
prospectus;
(vi)
furnish, at the request of any holder requesting registration of Common Shares
pursuant to Sections 5(c), if the method of distribution is by means of an
underwriting, on the date that the Common Shares are delivered to the
underwriters for sale pursuant to such registration, or if such Common Shares
are not being sold through underwriters, on the date that the registration
statement with respect to such Common Shares becomes effective, (x) a
signed opinion, dated such date, of the independent legal counsel representing
the Company for the purpose of such registration, addressed to the underwriters,
if any, and if such Common Shares are not being sold through underwriters,
then
to the holders making such request, as to such matters as such underwriters
or
the holders holding a majority of the Company’s Common Stock included in such
registration, as the case may be, may reasonably request and as would be
customary in such a transaction; and (y) letters dated such date and the
date the offering is priced from the independent certified public accountants
of
the Company, addressed to the underwriters, if any, and if such Common Shares
not being sold through underwriters, then to the holders making such request
and, if such accountants refuse to deliver such letters to such holders,
then to
the Company (i) stating that they are independent certified public
accountants within the meaning of the Securities Act and that, in the opinion
of
such accountants, the financial statements and other financial data of the
Company included in the registration statement or the prospectus, or any
amendment or supplement thereto, comply as to form in all material respects
with
the applicable accounting requirements of the Securities Act and
(ii) covering such other financial matters (including information as to the
period ending not more than five business days prior to the date of such
letters) with respect to the registration in respect of which such letter
is
being given as such underwriters or the holders holding a majority of the
Company’s Common Stock included in such registration, as the case may be, may
reasonably request and as would be customary in such a transaction;
(vii)
enter into customary agreements (including if the method of distribution
is by
means of an underwriting, an underwriting agreement in customary form) and
take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of the Common Shares to be so included in the registration
statement;
(viii) otherwise
use all reasonable efforts to comply with all applicable rules and regulations
of the Commission, and make available to its security holders, as soon as
reasonably practicable, but not later than 18 months after the effective
date of
the registration statement, an earnings statement covering the period of
at
least 12 months beginning with the first full month after the effective date
of
such registration statement, which earnings statements shall satisfy the
provisions of Section 11(a) of the Securities Act; and
(ix) use
all
reasonable efforts to list the Common Shares covered by such registration
statement with any securities exchange on which the Company’s Common Stock is
then listed.
For
purposes of Sections 5(d)(i) and 5(d)(ii), the period of distribution of
Common Shares in a firm commitment underwritten public offering shall be
deemed
to extend until each underwriter has completed the distribution of all
securities purchased by it, and the period of distribution of Common Shares
in
any other registration shall be deemed to extend until the earlier of the
sale
of all the Company’s Common Stock covered thereby and 120 days after the
effective date thereof.
e.
Furnish
Information.
It
shall be a condition precedent to the obligations of the Company to take
any
action pursuant to this Agreement that the holders of the Common Shares shall
furnish to the Company such information regarding themselves, the Shares
held by
them, and the intended method of disposition of such securities as the Company
shall reasonably request and as shall be required in connection with the
action
to be taken by the Company.
f.
Expenses
of Registration.
All
expenses incurred in connection with each registration pursuant to
Section 5(c)(i) of this Agreement, excluding underwriters' discounts and
commissions, but including without limitation all registration, filing and
qualification fees, word processing, duplicating, printers' and accounting
fees
(including the expenses of any special audits or "cold comfort" letters required
by or incident to such performance and compliance), fees of the National
Association of Securities Dealers, Inc. or listing fees, messenger and delivery
expenses, all fees and expenses of complying with state securities or blue
sky
laws, and the fees and disbursements of counsel for the Company, shall be
paid
by the Company. The holders shall bear and pay the underwriting commissions
and
discounts applicable to securities offered for their account and the fees
and
disbursements of their counsel in connection with any registrations, filings
and
qualifications made pursuant to this Agreement. The holders shall bear 50%
of
their proportionate share of the expenses incurred in connection with a
registration pursuant to Section 5(c)(iii) of this Agreement other than
listing fees, in based on the ratio of the number of Common Shares held by
such
holder to the total number of shares being registered at that time.
g.
Underwriting
Requirements.
In
connection with any underwritten offering, the Company shall not be required
under Section 5(c) to include Common Shares in such underwritten offering
unless the holders of such Common Shares accept the terms of the underwriting
of
such offering that have been reasonably agreed upon between the Company and
the
underwriters.
h.
Indemnification.
In the
event any Common Shares are included in a registration statement under this
Agreement:
(i)
the
Company shall indemnify and hold harmless each holder, such holder's directors
and officers, each person who participates in the offering of such Common
Shares, including underwriters (as defined in the Securities Act), and each
person, if any, who controls such holder or participating person within the
meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which they may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based
on any
untrue or alleged untrue statement of any material fact contained in such
registration statement on the effective date thereof (including any prospectus
filed under Rule 424 under the Securities Act or any amendments or
supplements thereto) or arise out of or are based upon 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, and shall reimburse
each such holder, such holder's directors and officers, such participating
person or controlling person for any legal or other expenses reasonably incurred
by them (but not in excess of expenses incurred in respect of one counsel
for
all of 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 5(h) 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; provided,
further,
that
the Company shall not be liable to any holder, such holder's directors and
officers, participating person or controlling person 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 an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such registration statement,
preliminary prospectus, final prospectus or amendments or supplements thereto,
in reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such holder, such holder's
directors and officers, participating person or controlling person. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of any such holder, such holder's directors and officers,
participating person or controlling person, and shall survive the transfer
of
such securities by such holder.
(ii)
Each
holder requesting or joining in a registration severally and not jointly
shall
indemnify and hold harmless the Company, each of its directors and officers,
each person, if any, who controls the Company within the meaning of the
Securities Act, and each agent and any underwriter for the Company (within
the
meaning of the Securities Act) against any losses, claims, damages or
liabilities, joint or several, to which the Company or any such director,
officer, controlling person, agent or underwriter may become subject, under
the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or proceedings in respect thereof) arise out of or are based
upon
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement on the effective date thereof (including any
prospectus filed under Rule 424 under the Securities Act or any amendments
or supplements thereto) or arise out of or are based upon 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, in each case
to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged
omission
was made in such registration statement, preliminary or final prospectus,
or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished by or on behalf of such holder expressly for
use
in connection with such registration; and each such holder shall reimburse
any
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, agent or underwriter (but not in excess of expenses
incurred in respect of one counsel for all of 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 5(h)(ii) 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 such holder,
and
provided,
further,
that
the liability of each holder hereunder shall be limited to the proportion
of any
such loss, claim, damage, liability or expense which is equal to the proportion
that the net proceeds from the sale of the shares sold by such holder under
such
registration statement bears to the total net proceeds from the sale of all
securities sold thereunder, but not in any event to exceed the net proceeds
received by such holder from the sale of Common Shares covered by such
registration statement.
(iii)
Promptly after receipt by an indemnified party under this Section 5(h) of
notice
of the commencement of any action, such indemnified party shall, if a claim
in
respect thereof is to be made against any indemnifying party under this Section
5(h), notify the indemnifying party in writing of the commencement thereof
and
the indemnifying party shall have the right to participate in and assume
the
defense thereof with counsel selected by the indemnifying party and reasonably
satisfactory to the indemnified party (unless (x) such indemnified party
reasonably objects to such assumption on the grounds that there may be defenses
available to it which are different from or in addition to those available
to
such indemnifying party and counsel would have a conflict as a consequence
of
such different or additional defenses, (y) the indemnifying party and such
indemnified party shall have mutually agreed to the retention of such counsel
or
(z) in the reasonable opinion of such indemnified party 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, in which case the indemnified party shall be reimbursed by the
indemnifying party for the reasonable expenses incurred in connection with
retaining separate legal counsel); provided,
however,
that an
indemnified party shall have the right to retain its own counsel, with all
fees
and expenses thereof to be paid by such indemnified party, and to be apprised
of
all progress in any proceeding the defense of which has been assumed by the
indemnifying party. The failure to notify an indemnifying party promptly
of the
commencement of any such action shall not relieve the indemnifying party
from
any liability in respect of such action which it may have to such indemnified
party on account of the indemnity contained in this Section 5(h), unless
(and
only to the extent) the indemnifying party was prejudiced by such failure,
and
in no event shall such failure relieve the indemnifying party from any other
liability which it may have to such indemnified party. No indemnifying party
shall, without the prior written consent of the indemnified party, effect
any
settlement of any claim or pending or threatened proceeding in respect of
which
the indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability arising
out of such claim or proceeding.
(iv)
(A)
To the extent any indemnification by an indemnifying party is prohibited
or
limited by law, the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified
party
as a result of such losses, claims, damages or liabilities in such proportion
as
is appropriate to reflect the relative fault of the indemnifying party and
indemnified party in connection with the actions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of such indemnifying party and indemnified
party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of material
fact or omission or alleged omission to state a material fact, has been made
by,
or relates to information supplied by, such indemnifying party or indemnified
party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent such action. The amount paid or payable
by a
party as a result of the losses, claims, damages or liabilities referred
to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding.
(B)
The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 5(h) were determined by pro rata allocation or by
any other method of allocation which does not take account of the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f)
of the Securities Act) shall be entitled to contribution from any person
who was
not guilty of such fraudulent misrepresentation.
i.
Lockup.
Each
holder shall, in connection with any registration of Common Shares, upon
the
request of the Company or the underwriters managing any underwritten offering
of
the Company’s Common Stock, agree in writing not to effect any sale, disposition
or distribution of any Common Shares (other than that included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time from 30 days prior
to
the effective date of such registration as the Company or the underwriters
may
specify; provided,
however,
that
(x) all executive officers and directors of the Company shall also have
agreed not to effect any sale, disposition or distribution of any the Company’s
Common Stock under the circumstances and pursuant to the terms set forth
in this
Section 5(i) and (y) in no event shall the holders be required to not
effect any sale, disposition or distribution for longer than 180 days after
the
registration statement becomes effective. The obligations under this Section
5(i) shall terminate on the second anniversary of the date of this
Agreement.
j.
Termination.
All of
the Company’s obligations to register shares of the Company’s Common Stock under
Sections 5(c) shall terminate upon the removal from each certificate evidencing
the Common Shares the legend described in Section 5(a)(i) per an opinion
of
counsel satisfactory to the Company that the securities evidenced thereby
may be
publicly sold without registration under the Securities Act.
6. GOVERNING
LAW; MISCELLANEOUS.
a. Governing
Law.
This
Agreement shall be governed by and construed in all respects by the internal
laws of the State of Delaware (except for the proper application of the United
States federal securities laws), without giving effect to any choice of law
or
conflict of law provision or rule (whether of the State of Delaware or any
other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Delaware.
b. Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective
when
counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and
shall
be binding upon the signatory thereto with the same force and effect as if
the
signature were an original, not a facsimile signature.
c. Headings.
The
headings of this Agreement are for convenience of reference and shall not
form
part of, or affect the interpretation of, this Agreement.
d. Severability.
If any
provision of this Agreement shall be invalid or unenforceable in any
jurisdiction, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement in that jurisdiction
or the
validity or enforceability of any provision of this Agreement in any other
jurisdiction.
e. Entire
Agreement; Amendments.
This
Agreement supersedes all other prior oral or written agreements between the
Buyers, the Company, their affiliates and persons acting on their behalf
with
respect to the matters discussed herein, and this Agreement and the instruments
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set
forth
herein or therein, neither the Company nor the Buyers makes any representation,
warranty, covenant or undertaking with respect to such matters. No provision
of
this Agreement may be amended other than by an instrument in writing signed
by
the Company and the Buyers, and no provision hereof may be waived other than
by
an instrument in writing signed by the party against whom enforcement is
sought.
f. Notices.
Any
notices, consents, waivers or other communications required or permitted
to be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending
party);
or (iii) one business day after deposit with a nationally recognized overnight
delivery service, in each case properly addressed to the party to receive
the
same. The addresses and facsimile numbers for such communications shall
be:
If
to the
Company:
000
Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxx,
Xxx Xxxxxx
Facsimile: 732-739-4360
Attention: President
If
to the
Buyers, at such address shown for such Buyer on Schedule
A
hereto.
or
at
such other address and/or facsimile number and/or to the attention of such
other
person as the recipient party has specified by written notice given to each
other party five days prior to the effectiveness of such change.
g. Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns. Neither party may assign this Agreement
or any rights or obligations hereunder without the prior written consent
of the
other.
h. No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may
any
provision hereof be enforced by, any other person.
i. Survival.
The
provisions of this Agreement shall survive closing.
j. Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as the other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
k. No
Strict Construction.
The
language used in this Agreement will be deemed to be the language chosen
by the
parties to express their mutual intent, and no rules of strict construction
will
be applied against any party.
IN
WITNESS WHEREOF,
the
Buyers and the Company have caused this Stock Purchase Agreement to be duly
executed as of the date first written above.
COMPANY:
PacificHealth
Laboratories, Inc.
By:
/s/
Xxxxxx
Xxxxxxx
Xxxxxx
Xxxxxxx
President
BUYERS:
Aquifer
Opportunity Fund, L.P.
By:
/s/
Xxxx
X.
Xxxxx
Xxxx
X. Xxxxx
General
Partner
/s/ Xxxx
Xxxxxxxxxx
Xxxx
Xxxxxxxxxx
Schedule
A
Schedule
of Investors
|
Name
and Address
|
Number
of
Common
Shares Purchased
|
Total
Purchase
Price
of Shares
|
|||||
|
Aquifer
Opportunity Fund, L.P.
000
Xxxxx Xxx, Xxxxx 0000
Xxx
Xxxx, XX 00000
Phone
- 000.000.0000
Attn:
Xxxx X. Xxxxx
|
189,189
|
350,000
|
|||||
|
Xxxx
Xxxxxxxxxx
00
Xxxxx Xxxx
Xxxxxxxxx,
XX 00000
Phone
- 000.000.0000
|
54,054
|
100,000
|
|||||
|
TOTAL
|
243,243
|
$
|
450,000
|
||||
