UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of
report (Date of earliest event reported): November 28, 2007
PACIFICHEALTH
LABORATORIES, INC.
(Exact
Name of Registrant as Specified in Its Charter)
Delaware
(State
or
Other Jurisdiction of Incorporation)
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000-23495
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22-3367588
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(Commission
File Number)
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(IRS
Employer Identification No.)
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100
Matawan Road, Suite 420 Matawan, NJ
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07747-3913
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(Address
of Principal Executive Offices)
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(Zip
Code)
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(732)
739-2900
(Registrant’s
Telephone Number, Including Area Code)
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions (see General Instruction A.2. below):
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act
(17 CFR
240.14d-2(b))
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR
240.13e-4(c))
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Item
5.02. Departure of
Directors or Principal Officers; Election of Directors; Appointment of Principal
Officers; Compensatory Arrangements of Certain Officers.
On
November 29, 2007, PacificHealth
Laboratories, Inc. (the “Company”) announced the appointment of Jason Ash as the
Company’s President and Chief Operating Officer (“COO”) as well as a member of
the Company’s Board of Directors, effective January 3, 2008. Mr. Ash
will assume the role of President from Dr. Robert Portman, who will continue
to
serve as Chief Executive Officer, Chief Scientific Officer, and Chairman
of the
Board of Directors. Mr. Ash will also assume COO duties currently
held by Stephen Kuchen, who will continue to serve as Chief Financial Officer,
Treasurer, Secretary and a Director of the Company.
Immediately
prior to Mr. Ash’s
appointment to the Board of Directors, the Board of Directors of the Company
will increase the size of its Board from six to seven, with Mr. Ash to fill
the
vacancy thus created. During the term of Mr. Ash’s employment
agreement (described below), the Company agreed that that the Board of Directors
will nominate Mr. Ash for re-election to the Board at each annual meeting
of the
Company’s stockholders. If for any reason Mr. Ash is not re-elected
to the Board by the stockholders, Mr. Ash will be entitled to terminate his
employment agreement for “Good Reason” upon 30 days’ written
notice.
Since
2002, Mr. Ash, age 33, has served
in various positions at Cadbury Schwepps both in the USA and Europe, most
recently as the General Manager & Vice President of Cadbury Schwepps
Americas Beverages (“CSAB”) Sports, Energy & Water Category
Unit. During his tenure with Cadbury Schwepps, Mr. Ash was
responsible for the strategic development and commercialization of the Sports,
Energy and Water pipeline of CSAB in North America as well as a number of
key
business changing roles in the UK and Turkey and the Middle East. In
addition to his experience at Cadbury Schwepps, Mr. Ash has held positions
at
Masterfoods and Unilever.
In
connection with Mr. Ash’s
appointment as President, COO and Director of the Company, the Compensation
Committee of the Board of Directors recommended, and the Board of Directors
approved, the entry by the Company into an employment agreement with Mr.
Ash. The employment agreement’s initial term begins on January 3,
2008 and ends on December 31, 2009. The agreement automatically
extends for a successive one year period unless either the Company or Mr.
Ash
gives the other at least 120 days written notice prior to the end of the
initial
term. Thereafter, the agreement will automatically extend for
successive additional periods of one year unless either the Company or Mr.
Ash
gives the other at least 90 days written notice prior to the end of the then
current term. Notice by either party of a change in base salary,
benefits or termination provisions of the agreement will be deemed a notice
of
non-renewal. In the event notice of non-renewal is given, but Mr. Ash
continues to be employed by the Company following the expiration of a term,
Mr.
Ash’s base salary and benefits will continue to be governed by the terms of the
agreement, and either party may terminate the agreement on not less than
90 days
written notice to the other party.
Under
his employment agreement with the
Company, Mr. Ash will receive an initial base salary of $295,000. The
amount of Mr. Ash’s annual base salary will be adjusted with a market increase
consistent with the position, Company performance, and Mr. Ash’s
responsibilities, and such increase will be no less than the change in the
consumer price index for urban consumers in each year of renewal of his
employment agreement. Mr. Ash is also entitled to receive annual
bonus compensation, beginning with calendar year 2008, not to exceed 100%
of Mr.
Ash’s base salary, the eligibility for and amount of which shall be based upon
the attainment of certain milestones agreed upon by Mr. Ash and the Compensation
Committee of the Board of Directors. Mr. Ash is entitled to participate in
all
benefit plans offered from time to time to the Company’s senior
executives. In addition, the Company will provide Mr. Ash with an
all-inclusive relocation/travel/car stipend of $55,000 for his first year
of
employment and $40,000 for the second year of employment. The Company
also agreed to reimburse Mr. Ash for air travel to and from the UK for one
trip
per month during the first six months of his employment agreement up to a
maximum of $2,500 per trip and to pay for all legal costs associated with
obtaining a visa and through green card for Mr. Ash and his spouse.
On
November 28, 2007, the date Mr.
Ash’s employment agreement was executed, and pursuant to Mr. Ash’s employment
agreement, the Board of Directors approved the issuance of options to purchase
600,000 shares of the Company’s common stock (the “Options”) at an exercise
price of $0.65 per share, the closing price on the day of the Board’s approval,
to vest as follows: 150,000 shares on January 3, 2009, 150,000 shares on
January
3, 2010, 150,000 shares on January 3, 2011 and 150,000 shares on January
3,
2012. To the extent not previously exercised, the Options will
terminate upon the earlier of (i) January 3, 2013 or (ii) 90 days following
the
termination of Mr. Ash’s employment with the Company. The Options
were issued pursuant to the Company’s 2000 Stock Option Plan.
The
Company may terminate the
employment agreement (i) for “Cause” as defined in the employment agreement or
(ii) upon notice to Mr. Ash if without Cause. Mr. Ash may terminate
his employment agreement (x) for “Good Reason” as defined in the employment
agreement or (y) upon 30 days written notice to the Company for any
reason.
In
the event that (i) the Company
terminates Mr. Ash’s employment without Cause or (ii) the Executive terminates
his employment agreement for Good Reason, Mr. Ash is entitled to receive
twelve
months base salary at the then current rate, payable in accordance with the
Company’s usual practices. In the event that Mr. Ash continues to
receive any other cash compensation from the Company following such termination
or if Mr. Ash commences any substantially full-time employment during such
twelve month period, the remaining amount of severance pay due shall be reduced
dollar-for-dollar.
In
the event of a “Change in Control”
(as defined in the employment agreement), and a contemporaneous or subsequent
termination of the employment by Mr. Ash for Good Reason or termination by
the
Company without cause, Mr. Ash will be paid, in addition to any other severance
payments due to Mr. Ash, a lump sum equal to half his annual base salary
in
effect immediately prior to the Change in Control. In addition, upon
such a termination, all unvested stock options held by Mr. Ash shall immediately
become accelerated and vested. Any payment due in the event of a
Change in Control shall be paid upon the completion of the Change in
Control.
If
Mr. Ash’s employment is terminated
by the Company for any reason other than Mr. Ash’s death, the Company, at its
election, by notice to Mr. Ash given not later than ten days after such
termination, shall have the right to require Mr. Ash to agree to a restrictive
covenant prohibiting Mr. Ash from competing with the Company for a period
of one
year. As a condition to Mr. Ash’s observance of this restrictive
covenant, the Company will pay Mr. Ash twelve months base salary at the then
current rate, payable in accordance with the Company’s usual
practices. Such payment shall be in lieu of, rather than in addition
to, any other severance payments, other than the Change in Control Payment,
due
under the employment agreement. In addition, in the event that Mr.
Ash receives compensation from any other substantially full-time employment,
the
Company shall have the option to continue such payments in full without any
dollar-for-dollar reduction.
THE
ABOVE DESCRIPTION OF, AMONG OTHER
THINGS, THE TERMS OF THE EMPLOYMENT AGREEMENT IS QUALIFIED IN ITS ENTIRETY
BY
THE EMPLOYMENT AGREEMENT WHICH IS INCORPORATED BY REFERENCE
HEREIN. THE COMPANY IS FILING THE EMPLOYMENT AGREEMENT AS EXHIBIT
10.1 TO THIS CURRENT REPORT ON FORM 8-K.
The
press release announcing the
appointment of Mr. Ash as the Company’s President and COO as well as a member of
the Company’s Board of Directors is attached hereto as Exhibit
99.1.
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Item
9.01.
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Financial
Statements and Exhibits. |
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(d)
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Exhibits.
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Exhibit
Number
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Description
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10.1
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Employment
Agreement, effective January 3, 2008, by and between PacificHealth
Laboratories, Inc. and Jason Ash.
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99.1
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Press
Release dated November 29, 2007.
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SIGNATURE
Pursuant
to the requirements of the
Securities Exchange Act of 1934, the registrant has duly caused this report
to
be signed on its behalf by the undersigned hereunto duly
authorized.
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PACIFICHEALTH
LABORATORIES, INC.
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Dated:
December 3, 2007
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By:
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/s/
Stephen P. Kuchen
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Stephen
P. Kuchen
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Chief
Financial Officer
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Exhibit
Index
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Exhibit
Number
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Description
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10.1
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Employment
Agreement, effective January 3, 2008, by and between PacificHealth
Laboratories, Inc. and Jason Ash.
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99.1
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Press
Release dated November 29, 2007.
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