EXHIBIT 4.1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 1st day of June, 2001
between Pacific Health Laboratories Inc., a Delaware corporation ("Pacific") and
Glaxo Wellcome International B.V., a limited liability company organized under
the laws of The Netherlands (the "Investor").
Background. Concurrently with the execution of this Agreement, Pacific
and SmithKline Xxxxxxx plc ("GSK"), an affiliate of the Investor, have entered
into a license agreement (the "License Agreement") pursuant to which Pacific has
granted GSK a license to develop and commercialize certain products in the field
of appetite suppression, meal replacement, weight loss and/or weight management
under certain of Pacific's patents and know-how. In connection with execution of
the License Agreement, the Investor has agreed to purchase shares of common
stock, par value US$.0025 of Pacific ("Pacific Common Stock") on the terms set
forth in this Agreement.
In consideration of the mutual promises, covenants and conditions set
forth below, the parties intending to be legally bound agree as follows:
1. Purchase and Sale of Shares. (a) Subject to the terms and conditions
of this Agreement, Pacific shall issue and sell and the Investor shall purchase
such number of shares of Pacific Common Stock (the "Shares") as is determined by
dividing US$1,500,000 by the Share Price (as defined in Section 1(b) below). The
consideration paid for issuance of the Shares is US$1,500,000 to be paid at the
Closing (as defined in Section 1(c) below).
(b) The "Share Price" shall be equal to the greater of (i) $1.50
and (ii) the average closing price for Pacific Common Stock on the NASD Small
Cap Market system as reported in the Wall Street Journal for the ten (10)
trading days immediately prior to the date of this Agreement.
(c) The closing for the purchase and sale of the Shares shall take
place at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxxxx, Xxxxxxxxxxxx, by the close of
business on the date of this Agreement or at such other time or place as may be
agreed to by Pacific and the Investor (the "Closing").
(d) At the Closing Pacific will deliver to the Investor the Shares,
duly registered in the name of the Investor against payment in full of the
purchase price for the Shares by wire transfer of funds made payable to the
order of Pacific in the amount of US$1,500,000.
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2. Conditions to the Investor's Obligations. The obligation of the
Investor to purchase and pay for the Shares at the Closing shall be subject to
the satisfaction of each of the following conditions precedent, any one or more
of which may be waived by the Investor:
(a) Representations and Warranties. Each of the representations and
warranties of Pacific set forth in Section 3 shall be true and correct as if
made on the date of the Closing, and Pacific shall have delivered to the
Investor a certificate of the chief executive officer and the chief financial
officer of Pacific dated as of the applicable date to such effect.
(b) Opinion of Counsel to Pacific. Pacific shall have delivered to
the Investor a favorable opinion of counsel to Pacific, dated as of the date of
the Initial Closing, substantially in the form set forth in Exhibit A attached
to this Agreement.
(c) Corporate Documents. Pacific shall have furnished the Investor
with (i) a copy of all charter documents of Pacific certified by the Secretary
of State of Delaware; a certified copy of the resolutions of the Board of
Directors and, if required, the shareholders of Pacific evidencing approval of
this Agreement, the issuance of the Shares and all other matters contemplated
hereby; (ii) a certified copy of the Bylaws of Pacific and (iii) certified
copies of all documents evidencing other necessary corporate or other action and
governmental approvals, if any, with respect to this Agreement and the issuance
of the Shares.
(d) Incumbency. Pacific shall have furnished the Investor a
certificate of the Secretary or an Assistant Secretary of Pacific, dated as of
the date of the Closing which shall certify the names of the officers of Pacific
authorized to sign this Agreement and the other documents or certificates to be
delivered pursuant to this Agreement by Pacific or any of its officers, together
with the true specimen signatures of such officers.
(e) Consents and Approvals. Pacific shall have obtained all
consents or waivers, if any, necessary to execute and deliver this Agreement,
authorize and reserve the appropriate shares of Pacific Common Stock for
issuance at the Closing and to carry out the transactions contemplated hereby,
and all such consents and waivers shall be in full force and effect. All
corporate and governmental filings necessary to effectuate the terms of this
Agreement and the issuance of the Shares shall have been made or taken.
3. Representations and Warranties of Pacific. Except as set forth on
the Schedule of Exceptions attached hereto as Exhibit B, Pacific hereby
represents and warrants to the Investor as follows:
(a) Organization and Standing of Pacific. Pacific is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority for
the ownership and operation of its properties and for the carrying on of its
business as now conducted and as now proposed to be conducted. Pacific is duly
qualified and in good standing as a foreign corporation authorized to do
business in all jurisdictions wherein the character of the property owned or
leased, or the nature of the activities conducted, by it makes such
qualification necessary, except where the failure to be so qualified does not
have a material adverse effect on Pacific's financial condition, business
operations or property.
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(b) Corporate Action. This Agreement and any other agreements and
instruments executed in connection herewith and therewith are the valid and
binding obligations of Pacific, enforceable in accordance with their respective
terms, subject to bankruptcy, insolvency or similar laws of general application
affecting the enforcement of rights of creditors, and subject to equitable
principles limiting rights to specific performance or other equitable remedies,
and subject to the effect of federal and state securities laws on the
enforceability of indemnification provisions relating to liabilities arising
under such laws. The execution, delivery and performance of this Agreement and
the issuance of the Shares have been duly authorized by all necessary corporate
actions of Pacific. The issuance of the Shares will not require any further
corporate action and will not be subject to preemptive or other preferential
rights or similar statutory or contractual rights either arising pursuant to any
agreement or instrument to which Pacific is a party or which are otherwise
binding on Pacific. The Shares when issued under this Agreement shall be duly
authorized, validly issued, fully paid and nonassessable.
(c) Governmental Approvals. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, under any
applicable laws, rules or regulations presently in effect in the United States,
is or will be necessary for, or in connection with, the offer, issuance, sale,
execution or delivery by Pacific of the Shares or for the performance by Pacific
of its obligations under this Agreement except for filings under applicable
securities laws which will be made within the prescribed periods.
(d) Litigation. There is no litigation or governmental proceeding
or investigation pending or, to the best knowledge of Pacific, threatened
against Pacific materially and adversely affecting execution and delivery of
this Agreement or the performance by Pacific of its obligations under this
Agreement.
(e) Registration Rights. Except as set forth in Exhibit B, no
person has demand or other rights to cause Pacific to file any registration
statement under the U.S. Securities Act of 1933, as amended (the "Securities
Act"), relating to any securities of Pacific or any rights to participate in any
such registration statement.
(f) Public Information; Absence of Material Adverse Change. The
information contained in the reports (the "Reports") filed by Pacific pursuant
to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of
the date thereof, did not misrepresent a material fact or omit to state any
material fact required to be stated therein, Since the date of the most recent
Report, there has been no material adverse change to Pacific's business, assets
or financial condition or prospects.
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(g) Subsidiaries; Charter Documents. Except as set forth in Exhibit
B, Pacific has no subsidiaries and does not otherwise directly or indirectly
control any other business entity. Pacific has furnished the Investor with
certified copies of its Certificate of Incorporation and Bylaws, together with
any amendments thereto as of the date hereof.
4. Representations and Warranties of the Investor. hereby represents
and warrants to the Investor as follows:
(a) Organization and Standing of the Investor. The Investor is a
duly organized and validly existing corporation in good standing under the laws
of [The Netherlands] and has all requisite corporate power and authority for the
ownership and operation of its properties and for the carrying on of its
business as now conducted and as now proposed to be conducted.
(b) Corporate Action. This Agreement and any other agreements and
instruments executed in connection herewith and therewith are the valid and
binding obligations of the Investor, enforceable in accordance with their
respective terms, subject to bankruptcy, insolvency or similar laws of general
application affecting the enforcement of rights of creditors, and subject to
equitable principles limiting rights to specific performance or other equitable
remedies, and subject to the effect of federal and state securities laws on the
enforceability of indemnification provisions relating to liabilities arising
under such laws. The execution, delivery and performance of this Agreement and
execution and delivery of any other agreements an instruments executed in
connection herewith and therewith have been duly authorized by all necessary
corporate action.
(c) Governmental Approvals. No authorization, consent, approval,
license, exemption of or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, under any applicable laws, rules or regulations presently in effect, is
or will be necessary for, or in connection with, the performance by the Investor
of its obligations under this Agreement.
(d) Litigation. There is no litigation or governmental proceeding
or investigation pending or, to the best knowledge of the Investor, threatened
against the Investor affecting execution and delivery of this Agreement or the
performance by the Investor of its obligations under this Agreement.
(e) Investment Representations. The Investor represents that:
(i) The Investor is an "accredited investor" within the meaning
of Rule 501 under the Securities Act and was not organized for the specific
purpose of acquiring the Shares. It has sufficient knowledge and experience in
investing in companies similar to Pacific in terms of Pacific's stage of
development so as to be able to evaluate the risks and merits of its investment
in Pacific and it is able financially to bear the risks thereof.
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(ii) The Investor is acquiring the Shares for investment for
its own account and not with the view to, or for resale in connection with, any
distribution thereof. The Investor understands that the Shares have not been
registered under the Securities Act by reason of an exemption of the
registration provisions of the Securities Act which depends upon, among other
things, the bona fide nature of its investment intent as expressed herein.
(iii) The Investor acknowledges that the Shares must be held
indefinitely unless the Shares are subsequently registered under the Securities
Act or an exemption from such registration is available.
(iv) The Investor is an "Institutional Investor" within the
meaning of Section 203(c) of the Pennsylvania Securities Act and Section 102.111
of the Regulations of the Pennsylvania Securities Commission issued pursuant
thereto.
5. Covenants of Pacific. Without limiting any other covenants and
provisions hereof, Pacific covenants and agrees that it will perform and observe
the following covenants and provisions:
(a) Board Representation. Following the Closing, Investor shall be
entitled to designate a nominee to Pacific's Board of Directors. As soon as
practiable after Investor has designated a nominee to the Board of Directors of
Pacific, Pacific shall take such action as may be necessary to appoint such
nominee to the Board of Directors of Pacific. Thereafter, as long as the
Investor or its affiliates, in the aggregate, own shares constituting at least
10% of the outstanding Pacific Common Stock, Pacific shall take such actions as
may be necessary to cause a slate of Directors presented to the shareholders of
Pacific for election to the Board at any annual or other meeting to consist of
such nominees that, if elected would result in a Board that includes an
individual designated by the Investor. Pacific shall not be required to appoint
any particular individual nominated by Investor, or to present in its slate of
Directors any particular individual, if the Board of Directors, reasonably and
in good faith, believes that the election or nomination of such individual would
violate the Board's fiduciary duty or lead to the disparagement of the Board or
Pacific.
(b) Current Information. During any period that a sale of the
Shares by the Investor may only be accomplished by compliance with Rule 144
under the Securities Act, Pacific shall assure that it meets the current public
information requirements of Rule 144.
6. Registration Rights.
(a) Restrictive Legend. (i) Each certificate representing the
Shares shall, except as otherwise provided in this Section 6(a)(i) or in Section
6(a)(ii), be stamped or otherwise imprinted with legends substantially in the
following form:
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"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) Pacific shall, at the request of the Investor (or any
affiliate of Investor to which any of the Shares may have been transferred as
contemplated by Section 6(b)), remove from each certificate evidencing the
Shares the legend described in Section 6(a)(i) if in the opinion of counsel
satisfactory to Pacific 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 Shares, the holder thereof shall give written notice to Pacific of its
intention to effect such transfer. Each such notice shall describe the manner of
the proposed transfer and, if requested by Pacific, shall be accompanied by an
opinion of counsel satisfactory to Pacific to the effect that the proposed
transfer may be effected without registration under the Securities Act,
whereupon the holder of such Shares shall be entitled to transfer such Shares in
accordance with the terms of its notice, subject in any event to the
restrictions in this Section 6; 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 Shares transferred as above provided shall bear the legend set
forth in Section 6(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 Pacific) would be entitled to transfer such
securities in a public sale without registration under the Securities Act. The
restrictions provided for in this Section 6(b) shall not apply to securities
that are not required to bear the legend prescribed by Section 6(a)(i) in
accordance with the provisions of Section 6(a).
(c) Incidental Registration. (i) Subject to Section 6(g), if at any
time Pacific determines that it shall file a registration statement under the
Securities Act for the registration of Pacific 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 Pacific'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 Pacific Common Stock to be sold for
cash, Pacific shall each such time promptly give the Investor written notice of
such determination setting forth the date on which Pacific proposes to file such
registration statement, which date shall be no earlier than 15 days from the
date of such notice, and advising the Investor of its right to have Shares
included in such registration. Upon the written request of any holder of the
Shares received by Pacific no later than 15 days after the date of the Pacific's
notice, Pacific shall use all reasonable efforts to cause to be registered under
the Securities Act all of the Shares that each such holder has so requested to
be registered.
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(ii) If, in the written opinion of the managing underwriter
(or, in the case of a non-underwritten offering, in the written opinion of
Pacific), the total amount of such securities to be so registered, including
such Shares, will exceed the maximum amount of Pacific'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 Pacific shall be entitled to reduce the number of shares
of Pacific Common Stock to be sold in such offering by the holders and any other
stockholder of Pacific hereafter granted incidental registration rights in
proportion (as nearly as practicable) to the amount of Pacific Common Stock
requested to be included by each holder of Shares and each other stockholder at
the time of filing the registration statement.
(d) Obligations of Pacific. Whenever required under Section 6(c) to
use all reasonable efforts to effect the registration of any Shares, Pacific
shall, as expeditiously as possible:
(i) prepare and file with the U.S. Securities and Exchange
Commission (the "Commission") a registration statement with respect to such
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 Pacific shall not be
required to keep any registration statement effective more than 120 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 Pacific 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 Shares covered by the registration
statement of any stop order issued or, to Pacific'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 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;
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(iv) use all reasonable efforts to register or qualify the
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 Shares covered by
the registration statement; provided, however, that Pacific 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
6(d)(iv) be obligated to do so; and provided, further, that Pacific shall not be
required to qualify such Shares in any jurisdiction in which the securities
regulatory authority requires that any holder submit any Shares to the terms,
provisions and restrictions of any escrow, lockup or similar agreement(s) for
consent to sell shares of Pacific 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 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 Pacific shall give such notice, Pacific shall extend the period during
which such registration statement shall be maintained effective as provided in
Section 6(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 Pacific shall make available
to the holders such supplemented or amended prospectus;
(vi) furnish, at the request of any holder requesting
registration of Shares pursuant to Sections 6(c), if the method of distribution
is by means of an underwriting, on the date that the Shares are delivered to the
underwriters for sale pursuant to such registration, or if such Shares are not
being sold through underwriters, on the date that the registration statement
with respect to such Shares becomes effective, (x) a signed opinion, dated such
date, of the independent legal counsel representing Pacific for the purpose of
such registration, addressed to the underwriters, if any, and if such 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
Pacific 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 Pacific, addressed to the underwriters, if any,
and if such 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 Pacific (i) stating that they are independent certified
public accountants within the meaning of the Securities Act and that, in the
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opinion of such accountants, the financial statements and other financial data
of Pacific 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 Pacific 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 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 Shares covered by
such registration statement with any securities exchange on which Pacific Common
Stock is then listed.
For purposes of Sections 6(d)(i) and 6(d)(ii), the period of distribution of
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 Shares in any other
registration shall be deemed to extend until the earlier of the sale of all
Pacific 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 Pacific to take any action pursuant to this Agreement that the
holders of the Shares shall furnish to Pacific such information regarding
themselves, the Shares held by them, and the intended method of disposition of
such securities as Pacific shall reasonably request and as shall be required in
connection with the action to be taken by Pacific.
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(f) Expenses of Registration. All expenses incurred in connection
with each registration pursuant to Sections 6(c) 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 Pacific, shall be paid by Pacific. 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.
(g) Underwriting Requirements. In connection with any underwritten
offering, Pacific shall not be required under Section 6(c) to include Shares in
such underwritten offering unless the holders of such Shares accept the terms of
the underwriting of such offering that have been reasonably agreed upon between
Pacific and the underwriters.
(h) Indemnification. In the event any Shares are included in a
registration statement under this Agreement:
(i) Pacific shall indemnify and hold harmless each holder, such
holder's directors and officers, each person who participates in the offering of
such 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 6(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 Pacific; provided, further, that Pacific 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.
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(ii) Each holder requesting or joining in a registration
severally and not jointly shall indemnify and hold harmless Pacific, each of its
directors and officers, each person, if any, who controls Pacific within the
meaning of the Securities Act, and each agent and any underwriter for Pacific
(within the meaning of the Securities Act) against any losses, claims, damages
or liabilities, joint or several, to which Pacific 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 Pacific 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 6(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 Shares covered by such
registration statement.
(iii) Promptly after receipt by an indemnified party under this
Section 6(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 6(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
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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 6(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 6(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.
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(i) Lockup. Each holder shall, in connection with any
registration of Shares, upon the request of Pacific or the underwriters managing
any underwritten offering of Pacific Common Stock, agree in writing not to
effect any sale, disposition or distribution of any Shares (other than that
included in the registration) without the prior written consent of Pacific 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 Pacific shall also have agreed not to effect any sale, disposition
or distribution of any Pacific Common Stock under the circumstances and pursuant
to the terms set forth in this Section 6(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 6(i) shall terminate on the second anniversary of
the date of this Agreement.
7. Miscellaneous.
(a) No Waiver; Cumulative Remedies. No failure or delay on the part
of the Investor or Pacific in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
(b) Amendments, Waivers and Consents. Except as otherwise expressly
provided in this Agreement, changes in or additions to this Agreement may be
made, and compliance with any covenant or provision herein or therein set forth
may be omitted or waived, so long as the parties so agree in writing. Any waiver
or consent may be given subject to satisfaction of conditions stated therein and
any waiver or consent shall be effective only to the extent expressly set forth
therein.
(c) Addresses for Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and mailed or telegraphed or telecopied or delivered to the
applicable party at the addresses indicated below:
If to Pacific:
Pacific Health Laboratories Inc.
0000 Xxxxx 0 Xxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
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with a copy to:
Xxxx X. Xxxxxx, Esquire
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxx, LLC
0000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxxxxx, XX 00000
If to the Investor:
Glaxo Wellcome International B.V.
Huis ter Xxxxxxxx 00
X.X. Xxx 000
Xxxxx 0000 XX
Xxxxxxxxxxx
with copies to:
Xx. Xxxxx X. Hand
GlaxoSmithKline Consumer Healthcare
Business Development
One Franklin Plaza (FP1370)
Xxxxxxxxxxxx, XX 00000
and
Xxxxxx X. Xxxxxx, Esquire
GlaxoSmithKline
One Franklin Plaza (FP2355)
Xxxxxxxxxxxx, XX 00000
Either party may change its address by written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall, when mailed or telecopied or
telegraphed, respectively, be effective when received or when delivery is
refused.
(d) Costs, Expenses and Taxes. Each party shall bear its own costs
and expenses in connection with the preparation, execution and delivery of this
Agreement, the Shares and other instruments and documents to be delivered
hereunder. Pacific shall pay any and all stamp and other similar taxes payable
or determined to be payable in connection with the execution and delivery of
this Agreement the Shares and the other instruments and documents to be
delivered hereunder or thereunder and agrees to save the Investor harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes and filing fees.
Page 14
(e) Agents or Brokers. Each party represents and warrants to the
other that it has incurred no liabilities for any brokerage commission, finders'
fees or the like in connection with the purchase and sale transactions described
in this Agreement. Pacific hereby agrees to indemnify and hold the Investor
harmless against and in respect of any claim for brokerage commissions, finders'
fees or the like relating to this Agreement or the transactions contemplated
hereby which may arise as a result of any actions taken by or on behalf of
Pacific. The Investor hereby agrees to indemnify and hold Pacific harmless
against and in respect of any claim for brokerage commissions, finders' fees or
the like relating to this Agreement or the transactions contemplated hereby
which may arise as a result of any actions taken by or on behalf of the
Investor.
(f) Binding Effect; Assignment. Except as otherwise specifically
provided for herein, this Agreement shall be binding upon and inure to the
benefit of Pacific, the Investor and their respective successors and assigns.
(g) Survival of Representations and Warranties. All representations
and warranties made in this Agreement shall survive the execution and delivery
hereof.
(h) Prior Agreements. This Agreement constitutes the entire
agreement between the parties and supersedes any prior understandings or
agreements concerning the specific subject matter hereof.
(i) Severability. The invalidity or unenforceability of any
provision hereof shall in no way affect the validity or enforceability of any
other provision.
(j) Public Disclosure. No public announcement or other disclosure
to third parties concerning the existence of or terms of this Agreement shall be
made, either directly or indirectly, by any party to this Agreement without
first obtaining the approval of the other party and agreement upon the nature
and text of such announcement or disclosure. The party desiring to make any such
public announcement or other disclosure shall inform the other party of the
proposed announcement or disclosure at least three (3) business days prior to
public release, and shall provide the other party with a written copy thereof,
in order to allow such other party to comment upon such announcement or
disclosure. Each party agrees that it shall cooperate fully with the other with
respect to all disclosures regarding this Agreement to the Commission and any
other governmental or regulatory agencies, including requests for confidential
treatment of proprietary information of either party included in any such
disclosure.
(k) Governing Law. This Agreement shall be governed by and
construed in accordance with, the laws of the Commonwealth of Pennsylvania
without giving effect to principles of conflict of laws.
(l) Headings. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
Page 15
(m) Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and either of the parties hereto may execute this Agreement by
signing any such counterpart.
IN WITNESS WHEREOF, Pacific and the Investor have caused this
Agreement to be executed by their respective representatives thereunto duly
authorized, on the date first above written.
Pacific Health Laboratories Inc.
By: /s/
---------------------------------
Glaxo Wellcome International B.V.
By: /s/
---------------------------------
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