RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENTPrivate Equity CoSale Agreement |
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<PAGE>
[DRAFT
- 01/11/2005
FOR
DISCUSSION PURPOSES ONLY]
EXHIBIT 4.5
RIGHT OF FIRST REFUSAL AND
CO-SALE AGREEMENT
THIS RIGHT OF FIRST REFUSAL AND
CO-SALE AGREEMENT (the
"Agreement")
is made as
of the 28th day of
January, 2005 by
and among PacificHealth
Laboratories, Inc., a Delaware corporation (the
"Company"), the stockholders of
the Company
listed on Schedule A hereto (together
with any transferee who
becomes subject
to the provisions hereof
pursuant to Section
4, the "Key
Holders") and the
investors listed on Schedule B
hereto and each other person
who
hereafter may become a party hereto pursuant to Sections 5(k) or 5(i) hereof
(each,
an "Investor" and, collectively, the "Investors").
WHEREAS, the Key Holders are the beneficial owners of
the number of
shares
of Common Stock of the Company set forth opposite their respective names
on
Schedule A hereto;
WHEREAS, the Company and certain of the Investors
(the "Series A
Investors")
are parties to the Series A Preferred Stock Purchase Agreement,
of
even
date herewith (the "Purchase Agreement"), pursuant to which the Series A
Investors have agreed to purchase shares of the
Company's Series A Preferred
Stock;
and
WHEREAS, the Key Holders and the Company desire to further induce
the
Series A Investors to purchase the Series A Preferred Stock;
NOW, THEREFORE,
in consideration of the mutual covenants set forth
herein, and
for other good
and valuable consideration, the
receipt and
sufficiency of which are
acknowledged, the Company,
the Key Holders and the
Investors
agree as follows:
1. Definitions.
(a) "Capital Stock" means (i) shares of Common Stock
(whether
now
outstanding or hereafter issued in any context), (ii) shares of Common Stock
issued
or issuable upon conversion of Preferred Stock and (iii) shares of Common
Stock
issued or issuable upon exercise or conversion,
as applicable, of stock
options, warrants or other convertible securities of the Company, in each case
now
owned or subsequently acquired by any Key Holder, any Investor,
or their
respective
successors or permitted transferees or assigns.
(b) "Common
Stock" means shares
of Common Stock
of the
Company.
(c) "Company Notice"
means written notice from the Company
notifying
the selling Key Holders that it intends to exercise its Right of First
Refusal
as to some or all of the Transfer Stock with respect to any Proposed Key
Holder
Transfer.
(d) "Investor Notice"
means written notice from an
Investor
notifying
the Company and the selling Key Holder that such Investor
intends to
exercise
its Secondary Refusal Right as to a
portion of the Transfer Stock with
respect
to any Proposed Key Holder Transfer.
<PAGE>
(e)
"Investors" means the persons
named on Schedule B hereto,
each
person to whom the rights of an Investor are
assigned pursuant to Section
5(k)
and each person who
hereafter becomes a
signatory to this Agreement
pursuant
to Section 5(i) and
"Investor" means any
one of them, as the context
requires.
(f) "Key Holder
Stock" means any Common Stock now owned or
subsequently
acquired by any Key Holder or his permitted transferees or assigns.
(g) "Key Holders"
means the persons named on Schedule A hereto
and
the respective transferees
of such persons' Key Holder Stock
pursuant to
Section
4(a) hereof.
(h) "Preferred Stock" means shares of Preferred Stock of the
Company.
(i) "Proposed Key
Holder Transfer" means
any proposed
assignment,
sale, offer to sell, pledge, mortgage,
hypothecation, encumbrance,
disposition of or any other like transfer or encumbering
of any Capital Stock
(or
any interest therein)
proposed by any of the Key Holders;
provided that
Proposed
Key Holder Transfer shall not include any merger, consolidation or like
transfer effected
pursuant to a vote of the holders of Capital Stock of the
Company.
(j) "Proposed Transfer
Notice" means written notice from a Key
Holder
setting forth the terms and conditions of a Proposed Key Holder Transfer.
(k) "Prospective Transferee" means any person to whom a Key
Holder
proposes to make a Proposed Key Holder Transfer.
(l) "Right of
Co-Sale" means the right, but not an obligation,
of an
Investor to participate in a Proposed Key Holder Transfer on the terms and
conditions
specified in the Proposed Transfer Notice.
(m) "Right
of First Refusal" means the
right, but not an
obligation,
of the Company, or its permitted transferees or assigns, to purchase
some or all of the
Transfer Stock with
respect to a Proposed
Key Holder
Transfer,
on the terms and conditions specified in the Proposed Transfer Notice.
(n) "Secondary Notice" means written notice from the
Company
notifying the Investors and the Key Holders that the
Company does not intend to
exercise its Right of First Refusal
as to all shares of Transfer Stock with
respect
to any Proposed Key Holder Transfer.
(o)
"Secondary Refusal Right"
means the right, but not an
obligation, of each Investor to purchase up to its pro
rata portion (based upon
the
total number of shares of Capital Stock
then held by all Investors) of any
Transfer Stock not
purchased pursuant to the Right
of First Refusal, on the
terms
and conditions specified in the Proposed Transfer Notice.
(p) "Transfer Stock" means shares of Capital Stock
subject to
a
Proposed Key Holder Transfer.
<PAGE>
(q)
"Undersubscription
Notice" means written notice
from an
Investor notifying
the Company and the selling Key
Holder that such Investor
intends
to exercise its option to purchase a portion of the Transfer
Stock not
purchased
pursuant to the Right of First Refusal or the Secondary Refusal Right.
2. Agreement Among the Company, the
Investors and the Key Holders.
(a) Right of First Refusal.
(1) Grant. Each Key Holder hereby unconditionally and
irrevocably grants to the Company a Right of First Refusal to purchase all or
any
portion of Transfer Stock that such Key
Holder may propose to transfer in a
Proposed Key
Holder Transfer, at the same
price and on the same terms and
conditions
as those offered to the Prospective Transferee.
(2) Notice. Each Key
Holder proposing to make a Proposed
Key
Holder Transfer must deliver a
Proposed Transfer Notice to the Company
and
each
Investor not later than fifteen (15) days prior to the consummation of such
Proposed
Key Holder Transfer. Such Proposed
Transfer Notice shall contain the
material terms and
conditions of the Proposed
Key Holder Transfer and the
identity
of the Prospective Transferee. The Company must exercise its Right of
First
Refusal under this Section 2 by giving a Company Notice to the selling Key
Holder
within fifteen (15) days after delivery of the Proposed Transfer Notice.
In the
event of a conflict between this
Agreement and any other agreement that
may
have been entered into by a Key Holder with the Company that
contains a
preexisting right of first refusal, the terms of this Agreement shall control
and
the preexisting right
of first refusal
shall be deemed satisfied
by
compliance
with this Section 2(a)(1) and (2).
Notwithstanding the foregoing, in
the
event of a contemplated private
sale which would be within the
volume
limitations
of Rule 144(e) if it were a public sale, the fifteen (15) day period
shall
be reduced to two (2)
business days and the
name of the Prospective
Transferee
need not be provided.
(3) Grant of Secondary
Refusal Right to Investors. Each
Key
Holder hereby unconditionally and
irrevocably grants to the Investors
a
Secondary
Refusal Right to purchase all or any portion of the Transfer Stock not
purchased
by the Company pursuant to the Right of First Refusal, as provided in
this subparagraph
(3). If the Company does not intend to exercise its Right of
Refusal with
respect to all Transfer Stock
subject to a Proposed Key Holder
Transfer, the Company must deliver a Secondary Notice to each Investor to that
effect
no later than fifteen (15) days after the selling Key Holder delivers the
Proposed Transfer
Notice to the Company. To exercise its Secondary
Refusal
Right,
an Investor must deliver an Investor Notice to the selling Key Holder and
the Company
within ten (10) days
after the deadline for
delivery of the
Secondary
Notice. Notwithstanding the foregoing,
in the event of a contemplated
private
sale which would be within the volume
limitations of Rule 144(e) if it
were a
public sale, the
fifteen (15) day period shall be reduced to two (2)
business
days and the name of the Prospective Transferee need not be provided.
<PAGE>
(4) Forfeiture of
Rights. Notwithstanding the foregoing,
if the
total number of
shares of Transfer Stock
that the Company and the
Investors indicate an interest in purchasing in the Company Notice,
Investor
Notices
and Undersubscription Notices is less than the total number of shares of
Transfer Stock,
then the Company and the
Investors shall be deemed to have
forfeited
any right to purchase the Transfer
Stock, and the selling Key Holder
shall
be free to sell all, but not less than all, of the Transfer
Stock to the
Prospective Transferee
(subject to the other terms
and restrictions of this
Agreement, including
without limitation the
provisions of Section
2(b)),
provided, that such sale shall be consummated
within 45 days after receipt of
the
Proposed Transfer Notice by the Company.
(5) Consideration; Closing.
If the consideration
proposed
to be paid for the Transfer Stock is in
property, services or other
non-cash consideration, the fair market value of the
consideration shall be
determined
in good faith by the Company's Board of Directors. If the Company or
any
Investor cannot for any reason pay for
the Transfer Stock in the same form
of
non-cash consideration, the Company or such Investor may pay the cash
value
equivalent
thereof, as determined by the Board of Directors. The closing of the
purchase
of Transfer Stock by the Company and
the Investors shall take place,
and all
payments from the Company and the Investors shall have been delivered to
the
selling Key Holder, by the later of (i)
the date specified in the Proposed
Transfer Notice as the intended date of the
Proposed Key Holder Transfer and
(ii)
forty-five (45) days after delivery of the Proposed Transfer Notice.
(b) Right of Co-Sale.
(1) If any Transfer
Stock subject to a Proposed
Key
Holder Transfer is not purchased pursuant to Section 2(a) above and thereafter
is to
be sold to a Prospective Transferee, each respective Investor may elect to
exercise its
Right of Co-Sale and
participate on a pro-rata
basis in the
Proposed
Key Holder Transfer on the same terms
and conditions specified in the
Proposed Transfer
Notice. Each Investor who desires to exercise its Right of
Co-Sale
must give the selling Key Holder
written notice to that
effect within
five
(5) days after the deadline for delivery of the Investor Notice
described
above, and upon
giving such notice
such Investor shall be
deemed to have
effectively
exercised the Right of Co-Sale.
(2) Each Investor who
timely exercises his, her or its
Right
of Co-Sale by delivering the written notice
provided for above in Section
2(b)(1)
may include in the Proposed Key Holder
Transfer all or any part of his,
her or
its Capital Stock equal to the product
obtained by multiplying (i) the
aggregate number of shares of Key Holder
Stock subject to the Proposed
Key
Holder Transfer
(excluding shares purchased by the Company or the Investors
pursuant
to the Right of First Refusal or the Secondary Refusal Right) by (ii) a
fraction, the numerator of which is the number of
shares of Capital Stock owned
by
such Investor immediately
before consummation of the Proposed Key Holder
Transfer (including any shares purchased by such time
pursuant to the Secondary
Refusal Right) and the denominator
of which is the total number of
shares of
Capital
Stock owned, in the aggregate, by all Investors immediately prior to the
consummation
of the Proposed Key Holder Transfer (including any shares purchased
by such
time pursuant to the Secondary Refusal
Right) plus the number of shares
of
Capital Stock held by the selling Key Holder.
To the extent one or more of
the
Investors exercise such right of
participation in accordance with the terms
and
conditions set
<PAGE>
forth
herein, the number of shares of Capital
Stock that the selling Key Holder
may sell
in the Proposed Key Holder Transfer shall be correspondingly reduced.
(3) Each Investor shall
effect its participation in the
Proposed
Key Holder Transfer by delivering to the
transferring Key Holder, no
later
than fifteen (15) days after such Investor's
exercise of the Right of
Co-Sale, one or more stock certificates, properly endorsed for transfer to the
Prospective
Transferee, representing:
(i) the number of
shares of Common Stock that such
Investor elects to include in the
Proposed Key Holder Transfer; or
(ii) the number
of shares of Preferred Stock that
is at such time convertible into the
number of shares of Common Stock that
such
Investor elects to include in the
Proposed Key Holder Transfer;
provided,
however, that if the Prospective
Transferee objects to the
delivery of convertible
Preferred Stock in lieu of
Common Stock, such
Investor
shall first convert the Preferred
Stock into Common Stock and
deliver
Common Stock as provided
above. The Company agrees to make any
such conversion concurrent with and
contingent upon the actual transfer of
such shares to the Prospective Transferee.
(4) The terms and conditions
of any sale pursuant to
this
Section 2(b) will be memorialized in,
and governed by, a written purchase
and
sale agreement with customary terms and provisions for such a transaction.
(5) Each stock certificate an Investor delivers to the
selling
Key Holder pursuant to subparagraph (3) above will be transferred to the
Prospective Transferee
against payment therefor in consummation of the sale of
the Transfer
Stock pursuant to the terms
and conditions specified
in the
Proposed Transfer Notice and the purchase and
sale agreement, and the selling
Key Holder shall concurrently






