SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
(RULE 14A - 101)
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Filed by the Registrant |X|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For use of the Commission only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Exchange Act Rule 14a-11 or 14a-12
PACIFICHEALTH LABORATORIES, INC.
-------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
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and 0-11.
1) Title of each class of securities to which transaction
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|_| Check box if any part of the fee is offset as provided by Exchange Act
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was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
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4) Date Filed:
PACIFICHEALTH LABORATORIES, INC.
100 Matawan Road, Suite 420
Matawan, NJ 07747
--------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 8, 2005
TO THE STOCKHOLDERS OF PACIFICHEALTH LABORATORIES, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
PACIFICHEALTH LABORATORIES, INC. (the "Company") will be held at the Marriott
Courtyard, 245 Half Mile Road, Red Bank, NJ, 07701 on June 8, 2005 at 10:00
a.m., local time, for the following purposes:
1. To elect five (5) directors;
2. To ratify the appointment of Eisner LLP as independent auditors for the
Company for the fiscal year ending December 31, 2005; and
3. To transact such other business as may properly come before the meeting or
any adjournment or adjournments thereof.
The Board of Directors has established the close of business on May 9,
2005 as the record date for the determination of stockholders entitled to notice
of and to vote at the meeting or any adjournments or postponements thereof. In
order that the meeting can be held and a maximum number of shares can be voted,
whether or not you plan to be present at the meeting in person, please fill in,
date and sign, and promptly return the enclosed Proxy in the return envelope
provided for your use. No postage is required if mailed in the United States.
You are urged to review carefully the accompanying proxy statement and to
complete, sign, date and return the enclosed proxy card as promptly as possible
whether or not you plan to attend the meeting. You may revoke your proxy at any
time before it has been voted. You are cordially invited to attend the annual
meeting in person if it is convenient for you to do so.
By order of the Board of Directors,
Stephen P. Kuchen, Secretary
May 10, 2005
PACIFICHEALTH LABORATORIES, INC.
100 Matawan Road, Suite 420
Matawan, NJ 07747
(732) 739-2900
--------------------------------
PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS
JUNE 8, 2005
The enclosed Proxy is solicited on behalf of the Board of Directors of
PACIFICHEALTH LABORATORIES, INC. (the "Company") for use at the Annual Meeting
of Stockholders to be held at 10:00 a.m., local time, at the Marriott Courtyard,
245 Half Mile Road, Red Bank, NJ, 07701 on June 8, 2005 for the purposes set
forth in the accompanying Notice of Annual Meeting of Stockholders and in this
Proxy Statement. This meeting and any adjournments or postponements are referred
to in the Proxy Statement as the "Annual Meeting." This Proxy Statement and the
enclosed Proxy are being mailed to stockholders on or about May 10, 2005.
Proxies properly executed and timely returned will be voted at the
Annual Meeting in accordance with the directions on the Proxy. If no direction
is indicated on the Proxy, the shares will be voted FOR (1) the election of the
nominees named as directors of the Company, and (2) the ratification of the
appointment of Eisner LLP as independent auditors for the Company for the fiscal
year ending December 31, 2005, and on other matters presented for a vote, if
any, in accordance with the judgment of the persons acting as proxy. The persons
named as proxies were selected by the Board of Directors and are presently
executive officers of the Company.
VOTING SECURITIES AND VOTES REQUIRED
The holders of shares of the common stock, par value $.0025 per share
(the "Common Stock") and the Company's Series A Preferred Stock, par value $.01
per share (the "Series A Shares") of the Company (cumulatively, the "Shares") of
record at the close of business on May 9, 2005 (the "Record Date") are entitled
to receive notice of, and to vote at, the Annual Meeting. On that date, there
were 10,237,045 shares of Common Stock and 90,909 Series A Shares outstanding
and entitled to be voted at the Annual Meeting. Each share of Common Stock is
entitled to cast one vote on (1) the election of up to five nominees for the
Board of Directors, (2) the ratification of the appointment of Eisner LLP as
independent auditors for the Company for the year ending December 31, 2005, and
on each other matter that may be properly brought to before the meeting. Each
Series A Share is entitled to cast one vote on such matters for each share of
Common Stock into which such Series A Shares can be converted. At the Record
Date, each Series A Share was convertible into 10 shares of Common Stock so that
the Series A Shares will be entitled to an aggregate of 909,090 votes at the
Annual Meeting. At the Annual Meeting, Common Stock and Series A Shares will
vote together as one class.
The presence, in person or by proxy, of the holders of a majority of
outstanding Shares will constitute a quorum for the transaction of business at
the Annual Meeting. Votes withheld from any director, abstentions and broker
non-votes will be counted for purposes of determining the presence of a quorum
for the transaction of business at the Annual Meeting. A broker non-vote occurs
when a nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary voting power
with respect to that item and has not received instructions from the beneficial
owner. Votes cast in person or by proxy at the Annual Meeting will be tabulated
by a representative of StockTrans, Inc., who will serve as inspector of
elections. The five (5) nominees for the Board of Directors receiving the
highest number of affirmative votes of the shares present or represented and
entitled to be voted shall be elected as directors. Abstentions and broker
non-votes are not considered in the election of directors. Approval of the
ratification of appointment of independent auditors requires the affirmative
vote of the majority of the shares present at the meeting in person or by proxy.
On any matters other than the election of directors, abstentions will be counted
as negative votes, and broker non-votes will not be counted.
Stockholders whose shares are held in "street name" by a broker and who
have instructed the broker to vote the shares must follow the directions
received from the broker as to how to change their vote. Stockholders whose
shares are held in "street name" by a broker, and who wish to vote in person at
the Annual Meeting, must first obtain a legal proxy from their broker.
Stockholders do not have cumulative voting rights.
REVOCABILITY OF PROXY
Execution of the enclosed Proxy will not affect a stockholder's right
to attend the Annual Meeting and vote in person. A stockholder, in exercising
his right to vote in person at the Annual Meeting, effectively revokes all
previously executed Proxies. In addition, the Proxy is revocable at any time
prior to the effective exercise thereof by filing notice of revocation with the
Secretary of the Company or by filing a duly executed Proxy bearing a later
date.
PERSONS MAKING THE SOLICITATION
The solicitation of Proxies is being made by the Company. The cost of
such solicitation, including the actual expenses incurred by brokerage houses,
nominees and fiduciaries in forwarding proxy materials to beneficial owners,
will be borne by the Company. In addition to solicitation by mail, certain
officers and other employees of the Company may solicit Proxies in person, by
mail, or by telephone, but such persons will not be separately compensated for
these services.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of May 9, 2005, the Company had 10,237,045 shares of Common Stock
outstanding and Series A Preferred Stock convertible into 909,090 Common shares.
The following table sets forth information concerning the ownership of the
Company's Common Stock as of such date by each person known to the Company to be
the beneficial owner of more than five percent of the Common Stock, by each of
the Company's directors and executive officers, and by the Company's directors
and executive officers, as a group.
COMMON STOCK (2) COMMON STOCK (2)
NAME AND ADDRESS (1) AMOUNT BENEFICIALLY OWNED PERCENTAGE OF CLASS
-------------------- ------------------------- -------------------
5% BENEFICIAL OWNERS
--------------------
Matthew Smith (3) 954,144 9.3%
241 Central Park West
New York, NY 10024
Hormel Health Labs, LLC (4) 909,090 8.2%
1 Hormel Place
Austin, MN 55912
Greg Horn (5) 718,538 6.3%
2971 Northeast 27th Ave.
Lighthouse Point, FL 33064
OFFICERS AND DIRECTORS
----------------------
Robert Portman (6) 3,111,051 24.5%
Chairman of the Board and
Chief Scientific Officer
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David Mastroianni (7) 137,500 1.2%
President, Chief Executive Officer and
a Director
Stephen P. Kuchen (8) 116,044 1.0%
Vice President, Chief Financial Officer,
and a Director
David I. Portman (9) 376,841 3.4%
Director
Michael Cahr (10) 58,194 *
Director
Executive Officers and 3,799,630 29.0%
Directors, as a group (5 persons)
* Less than one percent
(1) Except as otherwise indicated, the address of each person named in the
above table is c/o PacificHealth Laboratories, Inc., 100 Matawan Road,
Suite 420, Matawan, NJ 07747.
(2) Common Stock which is issuable upon the exercise of a stock option or
warrant which is presently exercisable or which becomes exercisable
within sixty days is considered outstanding for the purpose of
computing the percentage ownership (x) of persons holding such options
or warrants, and (y) of officers and directors as a group with respect
to all options and warrants held by officers and directors.
(3) Includes 318,048 shares that may be acquired by exercise of warrants
exercisable within 60 days of May 8, 2005.
(4) Includes 90,909 shares of Series A Preferred Stock (representing 100%
of the issued and outstanding preferred stock) convertible into 909,090
shares of Common Stock.
(5) Includes 243,071 shares that may be acquired by exercise of options and
warrants exercisable within 60 days of May 8, 2005.
(6) Includes 1,570,428 shares that may be acquired by exercise of options
and warrants exercisable within 60 days of May 8, 2005. Does not
include 200,000 shares of Common Stock owned by Jennifer Portman, Dr.
Portman's wife, individually and as Trustee for his and her minor
children, as to which Dr. Portman disclaims beneficial ownership.
(7) Includes 137,500 shares that may be acquired by exercise of options and
warrants exercisable within 60 days of May 8, 2005.
(8) Includes 105,348 shares that may be acquired by exercise of options
exercisable within 60 days of May 8, 2005.
(9) Includes 81,389 shares that may be acquired by exercise of options and
warrants exercisable within 60 days of May 8, 2005.
(10) Includes 58,194 shares that may be acquired by exercise of options
exercisable within 60 days of May 8, 2005.
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CHANGE OF CONTROL
There are no arrangements known to the Company the operation of which
may result in a change in control of the Company. The Company is prohibited from
entering into a merger, consolidation or sale of substantially all of its assets
without the consent of the holders of Series A Preferred Stock, unless the terms
of such transaction provide such holders with at least a 35% cumulative annual
return on investment.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Five directors are to be elected at the Annual Meeting. The persons
named as Proxies for this Annual Meeting intend to vote in favor of the election
of the following nominees as directors of the Company. If you do not wish your
shares to be voted for any of the nominees, you may so indicate on the Proxy.
All directors will be elected to hold office until the next annual meeting of
stockholders in 2006 and until their successors are duly elected and qualified.
All of the nominees are presently serving as directors of the Company. Each of
the nominees has consented to serve if elected. However, if any of the nominees
should become unavailable prior to the election, the holder of the Proxies may
vote the Proxies for the election of such other persons as the Board of
Directors may recommend, unless the Board of Directors reduces the number of
directors to be elected. At this time, the Board of Directors knows of no reason
why any nominee may be unavailable to serve.
The nominees of the Board of Directors are as follows:
DR. ROBERT PORTMAN, age 60, has served as Chairman of the Board of
Directors of the Company and Chief Scientific Officer since September 2004.
Prior to that, Dr. Portman served as President, Chief Executive Officer, and
Chairman of the Board of Directors of the Company since its inception. Dr.
Portman has a Ph.D. in Biochemistry and worked as a senior scientist at Schering
Laboratories before co-founding M.E.D. Communications in 1974 with his brother,
David Portman. In 1987, Dr. Portman started a consumer agency and, in 1993, he
merged both agencies to form C&M Advertising. C&M Advertising, with billings in
excess of $100 million, handled national advertising for such diverse accounts
as Berlex Laboratories, Ortho-McNeil Laboratories, Tetley Tea, Radisson Hotels,
and HIP of New Jersey. Effective June 1, 1995, Dr. Portman relinquished his
responsibilities as Chairman of C&M Advertising (which since has been renamed
"The Sawtooth Group") to assume his present positions with the Company on a full
time basis, and, in September 1996, Dr. Portman sold his interest in that
company.
DAVID MASTROIANNI, age 46, was named President, Chief Executive
Officer, and a member of the Board of Directors in September 2004. Mr.
Mastroianni, who has a B.S. in Nutritional Science from The University of
Arizona and has worked in this field since graduating in 1981, held various
executive positions for Weider Nutrition, a major branded consumer nutrition
products company, from 1991 to 1998 including his last responsibility there as
Executive Vice President of Sales and Marketing. During this time, Weider grew
from revenues of $47 million to over $320 million and executed a successful IPO
in May 1997. From 1999 to 2003, Mr. Mastroianni was President of Unicity Network
(created from the merger of Enrich International and Rexall Showcase), a global
network marketing division of Royal Numico, where revenues increased from $118
million to over $300 million during that time. Unicity sold and distributed
nutritional and personal care products through independent distributors
worldwide. Most recently, Mr. Mastroianni was President of NaturalGrowth, a
company he founded to consult with senior management of natural health companies
in developing all aspects of their business.
STEPHEN P. KUCHEN, age 44, has served as Chief Financial Officer, Chief
Operating Officer, Treasurer, Secretary and a Director, of the Company since
September 2004. Prior to that, Mr. Kuchen served as the Vice President -
Finance, Chief Financial Officer, Treasurer, Assistant Secretary and a Director,
of the Company since June 2000. Mr. Kuchen initially joined the Company in
February of 2000 as Controller. Prior to joining the Company, Mr. Kuchen was
employed from 1996 to 1999 as the Controller of Able Laboratories, a public
company located in South Plainfield, New Jersey that manufactures and sells
generic pharmaceuticals. Prior to his employment by Able Laboratories, Mr.
Kuchen was the Controller of Jerhel Plastics, a privately owned manufacturer of
women's compact cases from 1993 to 1996. Mr. Kuchen is a graduate of Seton Hall
University in South Orange, NJ, and is a Certified Management Accountant.
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DAVID I. PORTMAN, age 64, has served as a Director of the Company from
its inception. Mr. Portman has a BS in Pharmacy and an MBA. He worked as a sales
representative and marketing manager for Eli Lilly, Beecham-Massengill, Winthrop
Laboratories and Sandoz Pharmaceuticals before co-founding M.E.D. Communications
in 1974. In 1988, Mr. Portman sold his interest in M.E.D. Communications to
Robert Portman, and became President of TRIAD Development, a real estate company
that has numerous commercial and rental properties in New Jersey, a position
that he still holds. Mr. Portman served as a director of First Montauk
Securities Corp. from 1993 through December 31, 2002.
MICHAEL CAHR, age 65, was appointed to the Board of Directors in April
2002. Since April 1999, Mr. Cahr has served as President of Saxony Consultants,
a company that provides financial and marketing expertise to organizations in
the United States and abroad. Mr. Cahr was Chairman of Allscripts, Inc., the
leading developer of hand-held devices that provide physicians with real-time
access to health, drug and other critical information from September 1997
through March 1999 and President, CEO and Chairman from June 1994 to September
1997. Prior to Allscripts, Mr. Cahr was Venture Group Manager for Allstate
Venture Capital where he oversaw investments in technology, healthcare services,
biotech and medical services from October 1987 to June 1994. Mr. Cahr serves as
a director of Lifecell Corporation, a Branchburg, New Jersey-based, publicly
traded tissue engineering company where he has been a board member since 1991.
He is also a director of Truswal Systems, an Arlington, Texas-based software
engineering firm.
ARRANGEMENTS AND RELATIONSHIPS
Pursuant to an Amended and Restated Investor Rights Agreement, as long
as at least 50% of the original shares of the Series A Preferred Stock remain
outstanding, the holders of the Series A Preferred Stock have the right to
designate an individual to be nominated to the Company Board of Directors,
provided that such designee would be considered an independent director under.
All of the shares of Series A Preferred Stock are currently held by Hormel
Health Labs, LLC ("Hormel"). Hormel has not exercised this right with respect to
this Annual Meeting.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
ELECTION OF THE SLATE OF NOMINEES SET FORTH IN THIS PROPOSAL. PROXIES RECEIVED
BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE ON THEIR
PROXY CARDS. THE FIVE NOMINEES RECEIVING THE HIGHEST NUMBER OF AFFIRMATIVE VOTES
OF THE SHARES PRESENT OR REPRESENTED AND ENTITLED TO BE VOTED SHALL BE ELECTED
AS DIRECTORS.
EXECUTIVE OFFICERS
The executive officers of the Company as of the date of this Proxy
Statement are as follows:
Name Position with the Company
---- -------------------------
Robert Portman, Ph.D. Chairman of the Board of Directors and Chief Scientific Officer
David Mastroianni President and Chief Executive Officer
Stephen P. Kuchen Chief Financial Officer, Chief Operating Officer, Secretary, Treasurer
Information concerning Dr. Portman, Mr. Mastroianni, and Mr. Kuchen is
included above in the biographical summaries of the nominees for director
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
The business affairs of the Company are managed under the direction of
the Board of Directors. During 2004, the Board of Directors met via telephonic
conference call five times, and met four times in person. In 2004, David Portman
attended five of these meetings. No other incumbent Director attended fewer than
75% of the total number of Board meetings and meetings of committees upon which
he served during the period for which he served as a director. Former director
Joseph Harris resigned from the Board of Directors effective April 11, 2005,
former Director Gregory Horn resigned from the Board of Directors effective
March 3, 2005 and former director T. Colin Campbell, Ph.D. resigned from the
Board of Directors effective March 1, 2004.
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DIRECTOR ATTENDANCE AT COMPANY ANNUAL MEETINGS
We currently expect all the Company's directors to be in attendance at
the Annual Meeting. It has been customary for our directors to attend our annual
meetings of stockholders. All of the directors then in office attended the 2004
Annual Meeting of Stockholders.
The Board of Directors has established three standing committees: the
Compensation Committee, the Audit Committee and the Nominating Committee.
DIRECTOR INDEPENDENCE
Mr. Cahr is an independent director as defined under NASDAQ rules.
NASDAQ rules are not now directly applicable to the Company. Mr. Cahr is
currently our only independent director.
COMPENSATION COMMITTEE
The Board of Directors of the Company has established a separately
designated standing Compensation Committee. The Compensation Committee, which
was formed in June 2002, took action by unanimous consent one time during the
fiscal year ended December 31, 2004. The Compensation Committee was formed to
set policies for compensation of the Chief Executive Officer and the other
executive officers of the Company. The Compensation Committee periodically
compares the Company's executive compensation levels with those of companies
with which the Company believes that it competes for attraction and retention of
senior caliber personnel. The Compensation Committee either determines or
recommends to the Board of Directors the compensation of all executive officers.
During fiscal 2004, the Compensation Committee was composed of former
director Joseph Harris and Mr. Cahr, each of who are deemed independent under
NASDAQ standards. As Mr. Harris resigned in April 2005, Mr. Cahr is currently
the sole member of the Compensation Committee.
AUDIT COMMITTEE
The Board of Directors of the Company has established a separately
designated, standing Audit Committee. The Audit Committee met five times during
fiscal year ended December 31, 2004. The Audit Committee performs the role
described in section 3(a)(58)(A) of the Securities Exchange Act of 1934, and
reviews and discusses with the Company's management and its independent auditors
the audited and unaudited financial statements contained in the Company's Annual
Reports on Form 10-KSB and Quarterly reports on Form 10-QSB, respectively.
Although the Company's management has the primary responsibility for the
financial statements and the reporting process, including the system of internal
controls and disclosure controls and procedures, the Audit Committee reviews and
discusses the reporting process with management on a regular basis. The Audit
Committee also discusses with the independent auditor their judgments as to the
quality of the Company's accounting principles, the reasonableness of
significant judgments reflected in the financial statements and the clarity of
disclosures in the financial statements as well as such other matters as are
required to be discussed with the Audit Committee under generally accepted
auditing standards. The Audit Committee amended its written charter on March 16,
2004. The Audit Committee Charter is available on the Company's website -
www.pacifichealthlabs.com.
During 2004, the Audit Committee was composed of Joseph Harris, Michael
Cahr and T. Colin Campbell (through February 28, 2004). Because of Dr.
Campbell's resignation on March 1, 2004 and Mr. Harris' resignation effective
April 11, 2005, Mr. Cahr is currently the sole member of the Audit Committee.
Mr. Cahr meets, and Mr. Harris met, the criteria for independence set forth in
applicable SEC rules relating to audit committee members, and under NASDAQ
rules, although NASDAQ rules are not applicable to the Company at this time. Mr.
Harris was the "Audit Committee Financial Expert" as that term is defined in
Item 401 of Regulation S-B. The Board has not yet determined if Mr. Cahr meets
the criteria for "Audit Committee Financial Expert."
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AUDIT COMMITTEE REPORT
To the Board of Directors of
PacificHealth Laboratories, Inc.:
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the year ended December 31, 2004 with management. The
Audit Committee has discussed with Eisner LLP, the Company's independent
auditors for 2004, the matters required to be discussed by Statement on Auditing
Standards No. 61, as modified or supplemented. The Audit Committee has received
the written disclosures and the letter from Eisner LLP required by Independence
Standards Board Standard No. 1 (Independence Discussions with Audit Committees),
as modified or supplemented, and has discussed with Eisner LLP that firm's
independence. The Audit Committee has also discussed with the Company's
management and with the auditing firm such other matters and received such
assurances from them, as we deemed appropriate.
Based on the review and discussions described above, among other
things, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company's Annual Report on Form
10-KSB for fiscal 2004 for filing with the Securities and Exchange Commission.
Submitted by the Audit Committee:
Michael Cahr
The foregoing report of the Audit Committee shall not be deemed to be
soliciting material, to be filed with the Securities and Exchange Commission
("SEC") or to be incorporated by reference into any of the Company's future
filings with the SEC, except as may be explicitly specified by the Company in
any future filing.
NOMINATING COMMITTEE AND NOMINATION OF DIRECTORS
The Nominating Committee was formed on March 16, 2004. The Nominating
Committee will be responsible for identifying and recommending qualified
candidates to serve as directors of the Company, considering nominees for
director recommended by stockholders and other Board members and to recommend
selection and qualification criteria for directors. Former director Mr. Harris
and current director Michael Cahr were the members of the Nominating Committee
for 2004 and were independent under relevant NASDAQ rules, although the NASDAQ
rules are not directly applicable to the Company. Prior to formation of the
Nominating Committee, nominations for the election of directors at annual
meetings have generally been handled by the full Board of Directors. Other than
Mr. Cahr, no other members of the Board of Directors are deemed to be
independent.
The Nominating Committee does not have a charter. Generally, the
Company and the Nominating Committee believe nominees for director should
possess the highest personal and professional ethics, integrity and values, and
must be committed to representing the long-term interests of the stockholders.
The Nominating Committee will seek candidates having experience in business,
management, marketing, finance, regulatory matters, the sports nutrition and
nutritional and dietary supplement industries, the pharmaceutical industry and
in other areas that are relevant to the Company's activities. Additionally,
director nominees should have sufficient time to effectively carry out their
duties.
The Nominating Committee will consider candidates that are put forward
by Company stockholders. The proposed candidate's name, and the information
described below, should be sent to Stephen Kuchen, Vice-President-Finance, Chief
Financial Officer, and Assistant Secretary, at the Company's principal executive
offices located at 100 Matawan Road, Suite 420, Matawan, New Jersey, 07747-3913.
Mr. Kuchen will then submit such information to the Nominating Committee for
review and consideration. The process for determining whether to nominate a
director candidate put forth by a stockholder is the same as that used for
reviewing candidates developed internally. Other than candidates submitted by
its directors and executive officers, the Company has not, in the past 5 years,
received a proposed candidate for nomination from any large long-term
shareholder.
7
Under the Company's bylaws, notice of a proposed candidate must be
received at the principal executive offices of the Company not less than 60 days
nor more than 90 days prior to the meeting; provided, however, that in the event
that less than 70 days' notice or prior public disclosure of the date of the
meeting is given or made to stockholders, notice must be received by the Company
not later than the close of business on the 10th day following the day on which
notice of the date of the meeting was mailed or made public. The stockholder's
notice must state
o the name, age, business address and residence address of the
candidate;
o the principal occupation or employment of the candidate;
o the class and number of shares of the Company which are
beneficially owned by the candidate;
o any other information relating to the Candidate that is
required to be disclosed under the SEC's proxy rules
(including without limitation such persons' written consent to
being named in any proxy statement as a nominee and to serving
as a Director if elected);
o the name and address, as they appear on the Company's books,
of the stockholder making the proposal; and
o the class and number of shares of the Company which are
beneficially owned by the stockholder making the proposal.
Although the Company is not currently required to have a majority of
independent directors on its Board of Directors, the Company continues to search
for additional, highly qualified, individuals, who would be deemed independent,
to appoint to its Board of Directors.
As a small company, the Company has generally used an informal process
to identify and evaluate director candidates. Although the Company believes that
identifying and nominating highly skilled and experienced director candidates is
critical to its future, the Company has not engaged, nor does it believe that it
is necessary at this time to engage, any third party to assist it in identifying
director candidates. The Company has encouraged both independent directors and
directors that are not independent to identify nominees for the Board of
Directors. The Company believes that as a result, it is presented with a more
diverse and experienced group of candidates for discussion and consideration.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Company has not, to date, implemented a policy or procedure by
which its stockholders can communicate directly with its directors. The Company
is currently reviewing alternative policies and procedures for such
communication and intends to have a policy in place before the end of fiscal
year 2005. It has been management's policy, however, to forward to the directors
any communication received by the Company that is addressed to the directors.
DIRECTORS' COMPENSATION
For the year ended December 31, 2004, the Company compensated
independent directors and committee members Cahr and Harris by granting each
options to purchase 50,000 shares at $0.72 per share in lieu of cash director's
fees. For the year ended December 31, 2004, the Company compensated directors D.
Portman and Horn, who were not members of management but were not considered
independent under NASDAQ standards, by granting each options to purchase 15,000
shares at $0.72 per share in lieu of cash director's fees.
EXECUTIVE COMPENSATION
EMPLOYMENT AGREEMENTS
Through the end of 2004, Dr. Portman's employment terms were governed
by a 2003 Employment Agreement effective as of January 1, 2003, terminating
December 31, 2004. Under the 2003 Employment Agreement, Dr. Portman received a
salary of $275,000 per year. Also pursuant to the 2003 Employment Agreement, Dr.
Portman received options to purchase up to 300,000 shares of Common Stock under
the Company's 2000 Stock Option Plan priced at $2.79 per share (the market price
of the Company's common stock at December 24, 2002). One-third of the options
vested on January 1, 2003, and one-third vested on January 1, 2004, and the
remaining one-third vested on January 1, 2005. Since January 1, 2005, the
Company has been compensating Dr. Portman on the basis of a $225,000 annual
salary.
8
Mr. Mastroianni is employed by the Company under a 2004 Employment
Agreement that was effective as of September 1, 2004. Under the 2004 Employment
Agreement, Mr. Mastroianni receives a salary of $275,000 per year. In addition,
Mr. Mastroianni is entitled to a bonus of 5% of the Company's pre-tax annual net
income. Also pursuant to the 2004 Employment Agreement, Mr. Mastroianni received
options to purchase up to 550,000 shares of Common Stock not covered under any
Stock Option Plan priced at $0.65 per share (the market price of the Company's
common stock at September 1, 2004). One-fourth of the options vested
immediately; one-fourth vest on September 1, 2005; one-fourth vest on September
1, 2006; and one-fourth vest on September 1, 2007, provided that Mr. Mastroianni
is employed by the Company at such dates. To the extent not previously vested,
the options also will vest if Mr. Mastroianni's employment is terminated by the
Company without cause or by Mr. Mastroianni with cause or if there is a change
in control of the Company. The 2004 Employment Agreement has a term of two
years, and will terminate on August 31, 2006 unless terminated earlier by either
Mr. Mastroianni or the Company. Mr. Mastroianni has the right to terminate the
2004 Employment Agreement without cause on thirty days prior written notice, or
with cause (as defined in the 2004 Employment Agreement). The Company has the
right to terminate the 2004 Employment Agreement for cause (as defined in the
2004 Employment Agreement). In addition, if Mr. Mastroianni's employment is
terminated for any reason whatsoever (except by the Company with cause), Mr.
Mastroianni will be entitled to receive a lump sum payment of an amount equal to
the base salary which would have been paid during the period beginning on the
date of termination of employment and ending on the earlier of (1) the scheduled
termination date or (2) the first anniversary date of the termination date. Upon
Mr. Mastroianni's termination for any reason, including his voluntary
termination, Mr. Mastroianni will not be bound by any non-competition agreement
unless we continue to pay his salary, in which case he will be subject to a
one-year non-competition agreement.
Under the Company's arrangement with Mr. Kuchen, in the event of a
sale, merger or change in control of the Company, Mr. Kuchen will receive
one-half of his annual salary and all of his options would become immediately
vested. If Mr. Kuchen were subsequently terminated, Mr. Kuchen would receive
one-half of his annual salary as severance.
SUMMARY COMPENSATION OF EXECUTIVE OFFICERS
The table below sets forth information concerning compensation paid to
Dr. Robert Portman, David Mastroianni, Stephen Kuchen, and Bruce Bollinger in
2004, 2003, and 2002. No executive officers of the Company other than Dr.
Portman, Mr. Kuchen, and Mr. Bollinger received compensation of $100,000 or more
in fiscal 2004, 2003, and 2002.
SUMMARY COMPENSATION TABLE
--------------------------- -------- ---------------------------------------- ----------------------------------------- ------------
Annual Compensation Long Term Compensation
---------------------------------------- -----------------------------------------
Awards Payouts
------------------------------ ----------
Securities
Other Under-
Annual Restricted lying All Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Award(s) SARs Payouts sation
Position Year ($) ($) ($) ($) (#) ($) ($)
(a) (b) (c) (d) (e) (f) (g) (h) (i)
--------------------------- -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
Dr. Robert Portman, 2004 275,000 -0- (1) -0- 450,000 -0- -0-
Chairman and Chief -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
Scientific Officer 2003 275,000 -0- (1) -0- -0- -0- -0-
-------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
2002 275,000 -0- (1) -0- 300,000 -0- -0-
--------------------------- -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
9
--------------------------- -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
David Mastroianni, 2004 91,667 (2) -0- (1) -0- 550,000 -0- -0-
President and CEO
--------------------------- -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
Stephen Kuchen, 2004 119,192 -0- (1) -0- 120,000 -0- -0-
VP - Finance & CFO -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
2003 115,000 500 (1) -0- 20,000 -0- -0-
-------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
2002 100,000 500 (1) -0- -0- -0- -0-
--------------------------- -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
Bruce Bollinger, 2004 123,160 (3) -0- (1) -0- -0- -0- -0-
Executive VP- Marketing -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
2003 150,000 500 (1) -0- -0- -0- -0-
--------------------------- -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
2002 25,000 (4) 250 (1) -0- 105,000 -0- -0-
--------------------------- -------- ------------- ------------ ------------- ------------- ---------------- ---------- ------------
(1) Less than 10% of annual salary and bonus.
(2) Mr. Mastroianni joined the Company in September 2004.
(3) Mr. Bollinger left the Company in June 2004 and this amount
includes severance pay.
(4) Mr. Bollinger joined the Company in November 2002.
The following table sets forth certain information regarding options granted in
fiscal 2004:
OPTION/SAR GRANTS IN FISCAL-YEAR 2004
(INDIVIDUAL GRANTS)
--------------------------------------- -------------------- -------------------- ----------------- ------------------
Percent Of Total
Number of Options/SARs
Securities Granted to
Underlying Employees In Exercise Or
Options/SARs Fiscal Year Base Price Expiration Date
Name Granted (#) (c) ($/Share) (e)
(a) (b) (d)
--------------------------------------- -------------------- -------------------- ----------------- ------------------
Dr. Robert Portman 450,000 (1) 35.2% $0.65 09/01/09
--------------------------------------- -------------------- -------------------- ----------------- ------------------
David Mastroianni 550,000 (2) 43.1% $0.65 09/01/09
--------------------------------------- -------------------- -------------------- ----------------- ------------------
Stephen Kuchen 120,000 (3) 9.4% $0.70 10/01/09
--------------------------------------- -------------------- -------------------- ----------------- ------------------
(1) Dr. Portman's options vest as to 150,000 shares at September 1,
2004; 150,000 shares at September 1, 2005; and 150,000 shares at
September 1, 2006.
(2) Mr. Mastroianni's options vest as to 137,500 shares at September
1, 2004; 137,500 shares at September 1, 2005; 137,500 shares at
September 1, 2006; and 137,500 shares at September 1, 2007.
(3) Mr. Kuchen's options vest as to 30,000 shares at October 1, 2004;
30,000 shares at October 1, 2005; 30,000 shares at October 1,
2006; and 30,000 shares at October 1, 2007.
The following table sets forth information with respect to the number of
unexercised options and the value of unexercised "in-the-money" options held by
Dr. Robert Portman, David Mastroianni, and Stephen Kuchen at December 31, 2004:
AGGREGATED OPTION/SAR EXERCISES IN FISCAL-YEAR 2004 AND
OPTION/SAR VALUES AT 12/31/04
------------------------------ ------------ ----------- ------------------------------- ------------------------------
Number of Securities $ Value of Unexercised
Underlying Unexercised In-the-Money Options/SARs
Shares Options/SARs At 12/31/04 At 12/31/04
Acquired Value Exercisable/ Exercisable/
On Exercise Realized Unexercisable Unexercisable
Name (#) ($) (#) ($)
(a) (b) (c) (d) (e)
------------------------------ ------------ ----------- -------------- ---------------- -------------- ---------------
Exercisable Unexercisable Exercisable Unexercisable
------------------------------ ------------ ----------- -------------- ---------------- -------------- ---------------
Robert Portman -0- -0- 1,460,000 100,000 $ 322,870 -0-
------------------------------ ------------ ----------- -------------- ---------------- -------------- ---------------
David Mastroianni -0- -0- 137,500 412,500 $ 4,125 $ 12,375
------------------------------ ------------ ----------- -------------- ---------------- -------------- ---------------
Stephen Kuchen -0- -0- 60,000 20,000 $ 6,970 -0-
------------------------------ ------------ ----------- -------------- ---------------- -------------- ---------------
10
For the purpose of computing the value of "in-the-money" options at
December 31, 2004, in the above table, the fair market value of the Company's
common stock at such date is deemed to be $0.68 per share, the closing sale
price of the Common Stock on such date as reported by the OTC Bulletin Board.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the last two fiscal years, the Company has not entered into any
material transactions or series of transactions which, in the aggregate, would
be considered material in which any officer, director or beneficial owner of 5%
or more of any class of capital stock of the Company had a direct or indirect
material interest, nor are any such transactions presently proposed, except as
follows:
(a) In December 2003, the Company acquired all of the outstanding
capital stock of Strong Research Corp. ("STRONG") from the Company's director,
Gregory T. Horn. In exchange, the Company issued to Mr. Horn 150,000 shares of
the Company's common stock. The Company also will issue an additional 150,000
shares to Mr. Horn if certain milestones are achieved. In addition, the Company
issued 52,000 shares of its common stock to satisfy obligations of STRONG for
services rendered by consultants. All of the Company's independent directors
present at the board meeting where this transaction was approved, constituting 2
of the Company's 3 independent directors in office at the time, considered the
potential conflicts of interest and, based on information provided by the
officers, concluded that the transaction was in the best interest of the
Company, and that the terms of the transaction were fair and reasonable to the
Company and as favorable to the Company as if STRONG were controlled by an
unaffiliated party. On December 29, 2003, the Company filed with the SEC a
Current Report on form 8-K discussing this transaction.
(b) In an August and September 2003 private placement, the Company
issued an aggregate of 3,208,556 shares of its common stock, together with
warrants exercisable for an aggregate of 1,604,278 shares of its common stock.
The shares and warrants were issued in units of two shares and one warrant. Each
warrant is exercisable for one share of common stock. Investors paid $0.935 for
each unit, which price represented a 15% discount from the market price of two
shares, calculated over a ten day period as of the initial closing. Certain of
the Company's executive officers and directors participated in this transaction.
Dr. Robert Portman, David Portman and Stephen Kuchen, respectively, purchased
320,856, 106,952 and 10,696 shares, together with 160,428, 53,476 and 5,348
warrants, in this private placement, on the same price and terms as
non-affiliated investors. In addition, Mr. Horn, the Company's new director,
purchased 427,807 shares and 213,903 warrants on the same terms as other
investors. Mr. Horn committed to the purchase of such shares at approximately
the same time as he was elected director.
(c) On January 12, 2005, six directors of the Company loaned the
Company an aggregate amount of $60,000, which amount was intended to be a bridge
loan pending financing. This amount was repaid with the proceeds of the sale of
preferred stock described below. All of the Company's directors participated in
this loan except Mr. David Portman.
(d) On January 28, 2005, the Company entered into a Series A Preferred
Stock Purchase Agreement and related agreements with Hormel Health Labs, LLC
("Hormel") pursuant to which the Company issued and sold 90,909 shares of Series
A Preferred Stock for an aggregate purchase price of $1,000,000 or $11.00 per
share. The shares Series A Preferred Stock issued to Hormel are convertible into
an aggregate 909,090 shares of common stock, subject to adjustment. In
connection with the Series A Stock Purchase Agreement, the Company and Hormel
entered into an Investors' Rights Agreement on the same date. Under the
Investors Rights Agreement, the Company agreed, upon request by the holders of
the Series A Preferred Stock, and subject to customary terms and conditions, to
file a registration statement with the SEC registering for resale the shares of
common stock issuable upon conversion of the Series A Preferred Stock. Under the
Investors' Rights Agreement, the Company also agreed to include the common stock
issuable upon conversion of the Series A Preferred Stock in any other
registration statement the Company may file with the SEC. The Investors' Rights
Agreement prohibits the Company from granting registration rights superior to
those under the Investors Rights Agreement. Under the Investors' Rights
Agreement, the holders of the Series A Preferred Stock also are granted a right
to participate on a pro rata basis in future sales of equity securities (or
11
securities exercisable for or convertible into equity securities). As long as at
least 50% of the original shares of the Series A Preferred Stock remain
outstanding, the holders have the right to designate an individual to be
nominated to the Company Board of Directors, provided that such designee would
be considered an independent director under the Exchange Act. Hormel has not yet
indicated whether it will exercise this right or the identities of proposed
designees. Also in connection with this transaction, the Company, Hormel and Dr.
Robert Portman, the Chairman of the Company's Board of Directors and Chief
Scientific Officer, entered into a Right of First Refusal and Co-Sale Agreement
on January 28, 2005. Under this agreement, the Company and Hormel have the right
of first refusal to purchase shares of the Company's common stock, which are
held by Dr. Portman and which he wishes to sell, at the price and terms offered
by a third party. In addition, if the right of first refusal is not exercised in
connection with any sale by Dr. Portman, Hormel will have the right to require a
portion of its shares to be included with Dr. Portman's sale to a third party.
Certain sales by Dr. Portman will be exempt from these restrictions, including
public sales by Dr. Portman pursuant to Rule 144.
(e) On January 28, 2005, the Company entered into an Exclusive Custom
Manufacturing Agreement (the "Manufacturing Agreement") with an affiliate of
Hormel. The Manufacturing Agreement provides for the exclusive manufacturing and
processing of the Company's powered sports drinks at fixed prices. The initial
term of the Manufacturing Agreement was one year.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No executive officer of the Company has served on the board of
directors or compensation committee of any other entity that has or has had one
or more executive officers serving as a director of the Company (excluding
entities that are wholly owned by one or more of the executive officers). The
Compensation Committee, since formation, has consisted solely of independent
directors.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires that the
Company's directors and executive officers, and any persons who own more than
ten percent of the Company's common stock, file with the Securities and Exchange
Commission ("SEC") initial reports of ownership and reports of changes in
ownership of the common stock and other equity securities of the Company. Such
persons are required by SEC regulations to furnish the Company with copies of
all such reports that they file. To the knowledge of the Company, based upon its
review of these reports, all Section 16 reports required to be filed by
directors, executive officers and beneficial owners of the Company during the
fiscal year ended December 31, 2004 were filed on a timely basis.
PROPOSAL NO. 2: RATIFICATION OF APPOINTMENT OF AUDITORS
Eisner LLP ("Eisner") served as the Company's independent auditors for
the audit of the Company's financial statements for the fiscal year ended
December 31, 2004. Eisner has no relationship with the Company other than that
arising from its employment as independent auditors. The Audit Committee has
appointed Eisner as independent auditors for the Company for the fiscal year
ending December 31, 2005. A proposal to ratify that appointment will be
presented at the Annual Meeting. Representatives of Eisner are expected to be
present at the Annual Meeting, will have an opportunity to make a statement if
they desire to do so, and will be available to respond to appropriate questions
from the stockholders.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT YOU VOTE FOR
RATIFICATION OF THE APPOINTMENT OF EISNER LLP AS THE COMPANY'S INDEPENDENT
AUDITORS. PROXIES RECEIVED BY THE BOARD WILL BE SO VOTED UNLESS STOCKHOLDERS
SPECIFY OTHERWISE ON THEIR PROXY CARDS.
If the stockholders do not ratify the appointment of Eisner, the
Company is not obligated to appoint other auditors, but the Audit Committee will
give consideration to such unfavorable vote.
12
FEES PAID TO AUDITORS
During the fiscal years ended December 31, 2003 and 2004, Eisner LLP,
the Company's independent auditors, billed the Company the fees set forth below
in connection with services rendered by the independent auditors to the Company:
Fee Category Fiscal 2003 Fiscal 2004
------------ ----------- -----------
Audit Fees(1) $ 44,500 $ 56,500
Audit-Related Fees(2) $ 1,500 $ - 0 -
Tax Fees(3) $ 4,000 $ 8,500
All Other Fees(4) $ - 0 - $ - 0 -
----------- -----------
TOTAL $ 50,000 $ 65,000
=========== ===========
(1) Audit fees consisted of fees for the audit of the Company's annual
financial statements and review of quarterly financial statements as well as
services normally provided in connection with statutory and regulatory filings
or engagements, consents, and assistance with and review of Company documents
filed with the SEC.
(2) Audit-related fees consisted of fees for assurance and related
services, including primarily employee benefit plan audits, due diligence
related to acquisitions, accounting consultations in connection with
acquisitions, consultation concerning financial accounting and reporting
standards and consultation concerning matters related to Section 404 of the
Sarbanes Oxley Act of 2002.
(3) Tax fees consisted primarily of fees for tax compliance, tax advice
and tax planning services.
(4) Other fees consisted of transitional costs in connection with
changing auditors.
The Audit Committee has reviewed the above information and determined
that Eisner's provision of services billed under "All Other Fees" is compatible
with maintaining Eisner's independence.
POLICY FOR PRE-APPROVAL OF AUDIT AND NON-AUDIT SERVICES
The Audit Committee's policy is to pre-approve all audit services and
all non-audit services that the Company's independent auditor is permitted to
perform for the Company under applicable federal securities regulations. As
permitted by the applicable regulations, the Audit Committee's policy utilizes a
combination of specific pre-approval on a case-by-case basis of individual
engagements of the independent auditor and general pre-approval of certain
categories of engagements up to predetermined dollar thresholds that are
reviewed annually by the Audit Committee. Specific pre-approval is mandatory for
the annual financial statement audit engagement, among others.
The pre-approval policy was implemented effective as of March 16, 2004.
All engagements of the independent auditor to perform any audit services and
non-audit services since that date have been pre-approved by the Audit Committee
in accordance with the pre-approval policy. The policy has not been waived in
any instance. All engagements of the independent auditor to perform any audit
services and non-audit services prior to the date the pre-approval policy was
implemented were approved by the Audit Committee in accordance its normal
functions.
ANNUAL REPORT
The Company delivered copies of its Annual Report for the year ended
December 31, 2004 with this Proxy Statement. Stockholders are referred to the
report for financial and other information about the Company, but the report is
not incorporated into this Proxy Statement and is not a part of the proxy
soliciting material. STOCKHOLDERS MAY OBTAIN A COPY OF THE FULL ANNUAL REPORT TO
STOCKHOLDERS AND/OR THE COMPANY'S ANNUAL REPORT TO THE SEC ON FORM 10-KSB,
WITHOUT CHARGE, BY WRITING TO THE SECRETARY OF THE COMPANY AT 100 MATAWAN ROAD,
SUITE 420, MATAWAN, NEW JERSEY, 07747-3913.
13
CORPORATE GOVERNANCE DOCUMENTS
The Company' Audit Committee Charter and Code of Ethics have been
posted on the Company's Internet website - www.pacifichealthlabs.com
OTHER MATTERS
The Company is not aware of any other business to be presented at the
Annual Meeting. If any other matters should properly come before the Annual
Meeting, however, the enclosed Proxy confers discretionary authority with
respect thereto.
STOCKHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
Any proposal by a stockholder intended to be presented at the 2006
Annual Meeting of stockholders must be received by the Company at the Company's
principal executive offices, 100 Matawan Road, Matawan, NJ 07747, attention:
Secretary, no later than January 10, 2006 in order to be included in the proxy
materials and form of proxy relating to the 2006 Annual Meeting. Such proposals
must meet the requirements set forth in the rules and regulations of the SEC in
order to be eligible for inclusion in the proxy materials.
For business to be properly brought before the 2006 Annual Meeting by a
stockholder in a form other than a stockholder proposal, any stockholder who
wishes to bring such business before the 2006 Annual Meeting of stockholders
must give notice of such business in writing to the Company's Secretary at the
address stated in the previous paragraph, not less than 60 nor more than 90 days
prior to the 2006 Annual Meeting. In the event that less than 70 days notice or
prior disclosure of the date of the meeting is given or made to stockholders,
notice of such business to be timely must be received by the Company not later
than the close of business on the 10th day following the day on which such
notice of the date of the meeting was mailed or such public disclosure was made.
The stockholder's notice of such business must provide information about the
stockholder proposing such business and the nature the business, as required by
the Company's Amended and Restated Bylaws. A copy of these Bylaw requirements
will be provided upon request in writing to the principal offices of Company.
BY ORDER OF THE BOARD OF DIRECTORS
Stephen P. Kuchen, Secretary
Dated: May 10, 2005
14
PACIFICHEALTH LABORATORIES, INC.
100 MATAWAN ROAD, SUITE 420
MATAWAN, NJ 07747
PROXY - ANNUAL MEETING OF SHAREHOLDERS - WEDNESDAY, JUNE 8, 2005
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Robert Portman, David Mastroianni, and Stephen
P. Kuchen, or any of them, proxy, with the power to appoint his substitute, and
hereby authorizes each to represent and to vote, as designated below, all the
Common Shares of PacificHealth Laboratories, Inc. held of record by the
undersigned on May 9, 2005 at the Annual Meeting of Shareholders to be held on
Wednesday, June 8, 2005 or at any adjournment thereof.
1. ELECTION OF DIRECTORS.
FOR all nominees listed WITHHOLD AUTHORITY to vote
below (except as marked to for all nominees listed below
the contrary below)
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
STRIKE A LINE THROUGH THE NOMINEE'S NAME IN THE LIST BELOW:
Robert Portman, David Mastroianni, Stephen P. Kuchen, David Portman,
Michael Cahr
2. PROPOSAL TO RATIFY THE APPOINTMENT OF EISNER , LLP AS THE INDEPENDENT
PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE FISCAL YEAR ENDING DECEMBER 31,
2005.
FOR AGAINST ABSTAIN
(Continued, and to be signed, on Reverse Side)
(Continued from other side)
3. In their discretion, the Proxies are authorized, to the extent permitted by
the rules of the Securities and Exchange Commission, to vote upon such other
business as may properly come before the meeting or any adjournment.
INSTRUCTIONS: TO WITHHOLD SUCH AUTHORITY, CHECK THE FOLLOWING BOX.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
IN FAVOR OF ALL NOMINEES LISTED FOR ELECTION AS DIRECTORS; FOR THE RATIFICATION
OF EISNER, LLP AS THE INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY; AND IN
ACCORDANCE WITH THE PROXIES' JUDGMENT UPON OTHER MATTERS PROPERLY COMING BEFORE
THE MEETING AND ANY ADJOURNMENTS THEREOF.
Please sign exactly as your name appears below. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
ENVELOPE.
Date _______________________________
____________________________________
Signature
____________________________________
Signature, if held jointly