ex10-1.htm


    
      

    

    Exhibit
      10.1

     

    
      EMPLOYMENT
        AGREEMENT

      


      This
        Employment Agreement ("Agreement")
        is entered into as of January 3, 2008 (“Effective Date”) by and between
        PacificHealth Laboratories, Inc. (hereinafter the "Company"), a Delaware
        corporation, and Jason Ash (hereinafter "Employee").

      


      NOW,
        THEREFORE, in
        consideration of their mutual promises, the parties agree as
        follows:

      


      1.  EMPLOYMENT:  The
        Company hereby employs Employee as its President and Chief Operating Officer
        reporting to the Chairman of the Board and Chief Executive Officer, and Employee
        accepts employment and shall render services in such capacities, under and
        subject to the conditions and terms set forth herein. During the period of
        his
        employment, Employee shall devote his full time, attention, energy, knowledge
        and skill to the business and interests of the Company. For 6 months following
        the Effective Date, three weeks per month Employee shall perform his duties
        in
        the United States based out of the offices of the Company in Central New
        Jersey
        and, at his option, Employee shall work 1 week per month in the United Kingdom
        (“UK”). After 6 months from the Effective Date, Employee shall perform his
        duties only from the offices of the Company. During the term of his employment
        Employee shall not have any other (a) employment or (b) business interests
        requiring his services, other than his current business interests which Employee
        has disclosed to the Chief Executive Officer in writing and which do not
        require
        a significant amount of his time. The Company shall be entitled to the profits
        and other benefits arising from or incident to the work, services and advice
        of
        Employee on behalf of the Company or which relate to the business of the
        Company. Employee will be named a member of Company’s Board of Directors
        (“Board”). During the term of this Agreement, the Board and/or nominating
        committee shall nominate Employee for re-election to the Board at each annual
        meeting of the Company’s stockholders.  If for any reason Employee is
        not re-elected to the Board by the stockholders during the term of this
        Agreement, Employee shall be entitled to terminate this Agreement upon 30
        days’
written notice; provided that such circumstances and termination shall be
        deemed
        an early expiration and not a breach of this Agreement by any
        party.

       

      2.  TERM:
        The term of this Agreement, and the term of employment of Employee
        hereunder, shall commence on the Effective Date, and shall end December 31,
        2009
        (the "Scheduled Termination Date"), provided:

       

      a.  Employee
        shall have the right to terminate his employment hereunder for Good Reason,
        upon
        written notice to the Company referring to this paragraph 2(a) and describing
        the condition relied upon by him in invoking the provisions hereof. Good
        Reason
        shall exist if, without Employee's written consent, (i) the Company fails
        to pay
        Employee any salary or other compensation or benefit required to be paid
        hereunder when due and for a period of thirty (30) days after demand therefore
        by Employee; (ii) there occurs any substantial diminution in the authorities,
        powers, functions or duties attached to Employee's positions or (iii) Employee
        is not elected to the Company’s Board of Directors during the first year of the
        Agreement or is not nominated to the Company’s Board of Directors in subsequent
        year.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
 

      b.  Employee
        shall have the right to terminate his employment hereunder without cause
        at any
        time upon not less than thirty (30) days written notice.

       

      c.  This
        Agreement will renew for an additional one-year term following the Scheduled
        Termination Date, unless either part notifies the other of non-renewal at
        least
        120 days prior to the Scheduled Termination Date. This Agreement shall continue
        to renew thereafter for successive one-year terms unless notice of non-renewal
        is given at least 90 days prior to the end of the then current term. The
        Base
        Salary, Benefits, and Termination provisions applicable to any renewal term
        shall be those in effect immediately prior to such renewal
        term.  Employees shall not be entitled to any options in any renewal
        term, unless otherwise agreed by the Board of Directors.  Notice by
        either party of a change in Base Salary, Benefits or Termination provisions
        shall be deemed a notice of non-renewal. In the event notice of non-renewal
        is
        given but Employee continues to be employed by the Company following the
        expiration of a term, Employee’s Base Salary and Benefits shall continue to be
        governed by Section 3(a) and Section 4, and either party may terminate this
        Agreement on not less than 90 days written notice to the other
        party.

       

      3.  COMPENSATION:

       

      a.  During
        the term of this Agreement, beginning as of the Effective Date Employee shall
        receive a base salary paid in equal, semi-monthly installments commencing
        with
        the first pay period immediately following the Effective Date, in the amount
        of
        $295,000 per annum. Annual base salary shall be adjusted with a market increase
        consistent with the position, Company performance, and responsibilities of
        Employee, which shall be no less than the change in the consumer price index
        for
        urban consumers in each year of renewal.

       

      b.  In
        addition to his base salary, Employee shall be entitled to an annual bonus,
        beginning with calendar year 2008, not to exceed 100% of Employee’s base salary,
        the eligibility for and amount of which shall be based upon attainment of
        milestones by the Company and/or Employee to be agreed upon by Employee and
        the
        Company’s Compensation Committee of the Board of Directors.

       

      c.  In
        addition to base salary and bonus payable pursuant to (a) and (b) above,
        Employee will receive a one-time grant of options (“Options”), on the date prior
        to the day that a press release is issued announcing Employee's hiring, to
        purchase 600,000 shares of the Company’s Common Stock at an exercise price of
        the closing price on the date prior to the day that a press release is issued
        announcing Employee's hiring subject to the following terms and
        conditions:

       

      i)  The
        Options shall vest as to 150,000 shares on January 3, 2009; as to 150,000
        shares
        on January 3, 2010; as to 150,000 shares on January 3, 2011; and as to 150,000
        shares on January 3, 2012, and shall be exercisable by Employee only to the
        extent vested.

       

      
        
           

        

        
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      ii)  To
        the
        extent not previously vested, the Options shall terminate upon termination
        of
        Employee’s employment by (A) Employee, other than pursuant to paragraph 2a of
        this Agreement, or (B) by the Company with cause as defined in paragraph
        5e.

       

      iii)  To
        the
        extent not previously vested, the Options shall vest as to one-half of the
        annual vesting if Employee’s employment is terminated by the Company without
        cause as defined in paragraph 5e or with Good Reason as defined in paragraph
        2a
        in the first six months of a year or to the extent not previously vested,
        and
        the Options shall vest as to one full year of the annual vesting if Employee’s
        employment is terminated by the Company without cause as defined in paragraph
        5e
        or with Good Reason as defined in paragraph 2a in the last six months of
        a
        year.

       

      iv)  To
        the
        extent not previously vested, the Options shall vest in full immediately
        upon a
“Change in Control” as described in paragraph 3d.

       

      v)  To
        the
        extent not previously exercised, the Options shall terminate upon the earlier
        of
        (A) the fifth anniversary of the Effective Date or (B) 90 days following
        the
        termination of Employee’s employment with the Company.

       

      vi)  The
        Options are not intended to be  “Incentive Stock
        Options.”

      


      d.  In
        the
        event of a Change in Control, as defined below, and a contemporaneous or
        subsequent termination of Employee for Good Reason, or termination by the
        Company without cause, Employee shall be paid, as additional compensation,
        a
        lump sum equal to half the annual base salary in effect immediately prior
        to the
        Change in Control, payable at closing or completion of the Change in Control,
        which amounts shall not be offset by or reduce in any manner payments due
        to
        Employee under Section 5 of this Agreement, and at such time all of his unvested
        options shall vest. A “Change in Control” shall mean any Sale of the Company, as
        defined below, or the acquisition of beneficial ownership, by any stockholder
        or
        group of stockholders, not including stockholders who are officers or directors
        of the Company on the date of this Agreement or any affiliate of such officer
        or
        director, of shares of the Company’s capital stock entitled to cast at least 50%
        of all votes which may be cast in the election of the Company’s
        directors.  Sale of the Company shall mean (A) any merger or
        consolidation involving the Company if the stockholders of the Company prior
        to
        the merger hold less than 50% of the shares of the combined entity after
        the
        merger, or (B) transfer or sale of all or substantially all of the assets
        of the
        Company.

       

      
        
           

        

        
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      4.  OTHER
        BENEFITS: The Company shall pay Employee for ordinary and reasonable
        business expenses incurred by him in the performance of services pursuant
        to
        this Agreement. In addition, the Company shall provide Employee with an
        all-inclusive relocation/travel/car stipend of $55,000 for the first year
        and
        $40,000 for the second year of employment. The first year stipend will be
        paid
        in two equal payments, one on the Effective Date and the other 6 months after
        the Effective Date provided the Company still employs Employee on such date.
        The
        second year stipend will be paid in equal monthly installments provided that
        Employee is employed by the Company on the date an installment is payable.
        Both
        Employee and Company agree that the working arrangement during the period
        between the Effective Date and 6 months after the Effective Date is a special
        accommodation to the Employee. Employee will be responsible during this time
        for
        all living expenses incurred in either the United States or the UK, and will
        provide his own place of work and related office services during the periods
        he
        works in the UK (excepting company-related expenses) The Company will
        reimburse the Employee for air travel to and from the UK for one trip per
        month
        during the period starting on the Effective Date and ending 6 months after
        the
        effective Date up to a maximum of $2,500 per trip. Employee shall keep such
        records and shall render to the Company such accounts covering such expenses,
        as
        the Company shall reasonably require. The Company shall pay for all legal
        costs
        associated with obtaining a visa and through green card including commitment
        for
        expedited process for the Employee and his legal spouse.

       

      a.  During
        the term of his employment and during any restricted period during which
        Employee is entitled to receive payments pursuant to subparagraph 5(c) below,
        Employee shall be entitled to participate in any medical, health, disability
        and
        accident or other hospitalization or insurance plan established by the Company
        for its executive employees generally.

       

      b.  During
        the first full year of Employment, Employee shall be entitled to three (3)
        weeks
        paid vacation time. For each subsequent year, Employee shall be entitled
        to four
        (4) weeks paid vacation time.

       

      5.  COMPENSATION
        UPON TERMINATION:  If Employee's employment is terminated at
        any time during the term hereof, the following provisions shall
        apply:

       

      a.  If
        Employee’s employment is terminated for any reason, the Company shall pay
        employee all base salary accrued through the effective date of termination.
        If
        Employee's employment is terminated by the Company prior to the expiration
        or
        non-renewal of this Agreement without cause, as defined in subparagraph (e)
        below, or Employee terminates employment for Good Reason, the Company shall,
        in
        addition, continue to pay to Employee as severance, his Base Salary in effect
        on
        the date of termination for a period of one year following termination
        (“Severance Period”), in accordance with the Company’s normal payroll dates and
        practices. In the event the Employee continues to receive any other cash
        compensation from the Company following such termination in any other capacity,
        or commences any substantially full-time employment during the Severance
        Period,
        the remaining amount of severance pay due pursuant to this Section 5(a)
        shall be reduced dollar-for-dollar, as received by the Employee, by the amount
        of such cash compensation received in connection with such substantially
        full-time employment. These payments shall be in lieu of any other severance
        or
        post-employment benefits except as otherwise expressly provided for in this
        Agreement.

       

      
        
           

        

        
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      b.  If
        Employee's employment is terminated by the Company for any reason other than
        Employee's death, the Company, at its election, by notice to Employee given
        not
        later than ten (10) days after such termination and referring specifically
        to
        this subparagraph, shall have the right to require for one (1) year from
        the
        date of termination (the "restricted period") that Employee, except as provided
        in this paragraph b., not become employed by, become an officer, director,
        partner, member, manager or agent of, serve as an advisor or consultant to,
        or
        become an investor in, any business engaged in the manufacture or sale of
        sports
        nutrition or diet/weight loss products, or any other products which the Company
        was manufacturing or selling at the effective date of termination that
        contribute greater than 5% of the business’ total revenues, or had planned in
        writing to manufacture or sell, prior to the date of termination with the
        exception of Cadbury Schweppes or a Cadbury Schweppes-owned company (all
        of the
        foregoing collectively referred to as “Restricted Activities”). As a condition
        to Employee’s observance of this paragraph b,  (i) the Company shall
        pay to Employee during the restricted period when payment of Employee's base
        salary would otherwise be due and without interruption, an amount equal to
        one
        hundred (100%) percent of Employee's base salary in effect immediately prior
        to
        termination and (ii) the Company honors and timely performs its obligations
        to
        Employee under the first sentence of subparagraph (a) above. Payments, if
        any,
        to Employee under the second sentence of paragraph (a) above shall be applied
        to
        the payments required under this paragraph, and no additional payment shall
        be
        required except to the extent the restricted period exceeds the Severance
        Period. In addition, in the event Employee obtains compensation from other
        substantially full-time employment during the Severance Period, the Company
        shall have the option to continue the severance payments in full notwithstanding
        the provisions of subparagraph (a), in which event Employee will continue
        to be
        bound by this subparagraph (b). Employee shall not be deemed to violate the
        restrictions contained in this paragraph b if, prior to commencing service
        with
        a business organization that engages in a Restricted Activity as well as
        activities which are not Restricted Activities, (x) Employee provides the
        Company with the name and address of such organization, his prospective title
        and a description of his prospective duties and responsibilities, (y) Employee
        certifies to the Company that he will not engage in, or render advice with
        respect to, any Restricted Activity and that Employee has informed his superiors
        in the new organization of his obligations under this Agreement and any
        confidentiality or similar agreement between Company and Employee, and (z)
        the
        Board of Directors of the Company does not determine, in its good faith and
        reasonable discretion, that Employee’s duties and responsibilities with the new
        organization are Restricted Activities.

       

      c.  Nothing
        in subparagraph (c) above or elsewhere in this Agreement shall prohibit Employee
        from acquiring a passive equity stake representing less then five (5%) of
        any
        class of an issuer’s outstanding securities.

       

      d.  For
        the
        purposes of this Agreement, "cause" for termination of Employee's employment
        shall exist only in the event of (i) Employee's gross negligence or intentional
        malfeasance in the performance of his duties as an officer of the
        Company  (ii) Employee’s conviction of any felony or of a misdemeanor
        involving fraud, theft or moral turpitude provided that, if such conviction
        is
        appealed by Employee, the conviction is upheld by the appellate courts, (iii)
        any final determination by any governmental agency, court or any securities
        exchange or by The Nasdaq Stock Market, Inc. (“Nasdaq”) that Employee has
        violated any securities laws or exchange or Nasdaq rules, (iv) Employee’s
        material breach of this Agreement which is not completely cured within 30
        days
        after Employee has received written notice of such breach or (v) Employee
        enters
        into a consent order with respect to any matter referenced in clause
        (iii).

       

      
        
           

        

        
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      6.  ASSIGNMENT:  This
        Agreement is personal in its nature and neither of the parties hereto shall,
        without the consent of the other, assign or transfer this Agreement or any
        rights or obligations hereunder, except that, subject to the provisions hereof,
        including but not limited to the Change in Control and related provisions,
        the
        Company may assign or transfer this Agreement to a successor organization
        in the
        event of merger, consolidation, or transfer of sale of all or substantially
        all
        of the assets of the Company, in which case the term Company shall mean such
        successor, provided that in the case of any such assignment or transfer,
        the
        obligations of this Agreement are assumed by such successor or are binding
        upon
        and inure to the benefit of such successor as a matter of law.

       

      7.  NOTICES:  All
        notices hereunder shall be in writing and shall be deemed to have been given
        at
        the time when mailed in any general or branch United States Post Office enclosed
        in a certified post-paid envelope, addressed to the respective parties stated
        below, or to such changed address as such party may fix by notice as
        aforesaid:

       

      
        	
                To
                  the Company:

              
	 	 	 
	 	
                PacificHealth
                  Laboratories, Inc.

              	 
	 	
                Attn:
                  Board of Directors

              	 
	 	
                100
                  Matawan Road, Suite 420

              	 
	 	
                Matawan,
                  NJ  07747

              	 
	 	 	 
	
                With
                  a copy to: 

              
	 	 	 
	 	
                Eckert
                  Seamans Cherin & Mellott, LLC

              	 
	 	
                Attention:
                  Gary Miller

              	 
	 	
                2
                  Liberty Place, 22nd
                  Floor

              	 
	 	
                50
                  S. 16th
                  Street

              	 
	 	
                Philadelphia,
                  PA  19102

              	 
	 	 	 
	
                To
                  Employee: 

              
	 	 	 
	 	
                Jason
                  Ash

              	 
	 	
                TBD

              	 
	 	
                TBD

              	 


      

       

      
        
           

        

        
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      in
        each
        case with copies of such notice to each director of the Company then in
        office.

      


      8.  GOVERNING
        LAW: This Agreement and all performance under this Agreement shall be
        governed by the laws of the State of New Jersey.

       

      9.  WAIVER,
        MODIFICATION:  No waiver or modification of this Agreement or
        of any covenant, condition or limitation contained herein shall be valid
        or
        effective unless it is in writing and duly executed by Employee and the
        Company.

       

      10.  RESOLUTION
        OF DISPUTES:  Any controversy or claim arising out of or
        relating to this Agreement or the breach thereof, including without limitation
        a
        claim for declaratory relief or relief which is equitable in nature, shall
        be
        settled by arbitration in either Philadelphia, Pennsylvania or Newark, New
        Jersey, by an arbitrator selected by Employee and the Company.  If the
        Company and Employee cannot agree on the appointment of an arbitrator within
        ten
        (10) days after a request for arbitration, then such arbitrator shall be
        an
        attorney-at-law with no prior professional association with any of the parties
        or their affiliates who is selected in accordance with procedures established
        and implemented by the American Arbitration Association.  The
        arbitration shall be conducted in accordance with the rules of the American
        Arbitration Association, except as otherwise provided in this paragraph
        10.  Except as otherwise provided herein, all costs of the arbitration
        shall be borne by the Company.  Judgment upon any award rendered by
        the arbitrator may be entered in any court having jurisdiction over the parties.
        Any award of the arbitrator shall include interest at a rate or rates considered
        just under the circumstances by the arbitrator and may include, in the
        discretion of the arbitrator, an award of legal expenses and costs to the
        prevailing party.

       

      IN
        WITNESS WHEREOF,
        Employee has signed his name and the Company, by the signatures of its duly
        authorized officers, has executed this Agreement, as of the date and year
        mentioned at the top of page one.

      


      


      
        	 	 	PACIFICHEALTH
                LABORATORIES, INC.	 
	 	 	 	 	 
	
                /s/
                  Jason Ash

              	 	By:	
                /s/
                  Robert Portman

              	 
	
                Jason
                  Ash

              	 	 	
                Robert
                  Portman, CEO

              	 


      

      


    

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