Exhibit 10.1

 

CONSULTING AGREEMENT

 

This Agreement is made and entered into effective as of the 25th day of
September, 2020, by and between ProPhase Labs, Inc., a Delaware corporation (the
“Company”), and Predictive Laboratories, Inc., a Utah corporation (the
“Consultant”).

 

In consideration of and for the mutual promises and covenants contained herein,
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto hereby agree as follows:

 

1. Purpose. The Company hereby retains the Consultant during the term specified
in Section 2 hereof to render consulting advice to the Company as set forth in
Section 3 hereof.

 

2. Term. This Agreement shall be effective for a period commencing on the date
hereof and expiring on September 1, 2022; provided, however, that the Company
may terminate this agreement at any time on five (5) days prior written notice.

 

3. Duties of Consultant. During the term of this Agreement, the Consultant will
provide the Company with such regular and customary consulting advice as is
reasonably requested by the Company, provided that the Consultant shall not be
required to undertake duties not reasonably within the scope of the consulting
advisory service contemplated by this Agreement. In performance of these duties,
the Consultant shall provide the Company with the benefits of its best judgment
and efforts. The Consultant represents and warrants to the Company that it is
experienced and competent to provide the consulting duties indicated in this
Agreement and that the Company has agreed to enter into this Agreement in
reliance on this representation and warranty. The Consultant’s duties shall
include, but will not necessarily be limited to the following:

 

 (a)Identifying and introducing the Company to new opportunities in the medical
technology and testing fields.

 

 (b)Assisting and advising the Company in acquiring one or more Clinical
Laboratory Improvement Amendments (CLIA) certified labs suitable for Covid-19
and other testing (“Test Labs”), and assisting the Company in causing such Test
Labs to be validated and certified to process any test kits that Consultant and
Consultants’ affiliates are validated and certified to process.

 

 (c)Assisting the Company in equipping and staffing Test Labs, and advising and
assisting in the operation of Test Labs.

 

 (d)Validating and obtaining certification of the Test Labs, including
validating and certifying the Test Labs for processing of Covid-19 saliva sample
collection test kits (“Test Kits”) and other test kits provided by Spectrum
Solutions and other manufacturers of test kits.

 

 

 

 

 (e)Assisting the Company in obtaining a flow of business, orders and revenues
from multiple sources in the industry, including but not limited to at least one
significant, nation-wide manufacturer and distributor of Test Kits.

 

 (f)Making certain of its employees, consultants, representatives and other
relationships available to the Company during normal business hours for meetings
and teleconferences regarding the services contemplated in this Agreement.

 

 (g)Assisting the Company with respect to other matters generally consistent
with and/or related to the aforementioned items and this Agreement.

 

4. Expenses. Each party to this Agreement shall bear its own costs and expenses
in connection with entering into and performing this Agreement.

 

5. Compensation. Consultant shall be compensated as set forth in Schedule A
annexed hereto, which is incorporated herein by reference.

 

6. Non-Solicitation, Confidentiality and Non-Disparagement.

 

During the term of this Agreement and for a period of two (2) years following
the effective date of the termination of this Agreement, none of the Consultant
nor any officer, director, employee or agent of the Consultant shall, directly
or indirectly (a) solicit, entice, or induce any person who presently is, or at
any time during the term hereof shall be, an employee, independent contractor,
agent, director or officer of the Company or a Company affiliate to leave their
position at the Company and/or become employed by the Consultant; (b) encourage
any actual or prospective customer of the Company or an affiliate of the Company
to reduce the volume of business they are conducting or planning to conduct with
the Company, or divert such customer away from the Company; (c) disclose any
confidential or non-public information concerning the Company and its affiliates
to third parties or use such information for any purpose (except in providing
services hereunder to the Company) without the prior written approval of the
Company; or (d) trade in the securities of the Company.

 

Except as set forth in Section 7 below, During the term of this Agreement and
for a period of two (2) years following the effective date of the termination of
this Agreement, the Company shall not directly or indirectly, solicit, entice,
or induce any person who presently is, or at any time during the term hereof
shall be, an employee, independent contractor, agent, director or officer of the
Consultant or to leave their position with Consultant and become employed by the
Company. It is not contemplated that Consultant will provide the Company with
confidential information concerning the Company; however, if Consultant does
provide confidential, non-public information concerning Consultant to the
Company in connection with Consultant performing services pursuant to this
Agreement, for a period of two years from the effective date of the termination
of this Agreement, the Company will not use or disclose such information except
for the purpose of the Company pursuing and operating the businesses and
opportunities contemplated by this Agreement.

 

 

 

 

7. Other Agreements. The Consultant shall use commercially reasonable efforts to
encourage Jack Turner to become a part-time employee of or consultant to the
Company. The parties acknowledge that (a) the terms of any employment agreement
between the Company and Jack Turner will be negotiated exclusively between the
Company and Jack Turner, and (b) Jack Turner may also simultaneously be engaged
by the Consultant.

 

8. Key Service Providers. Consultant shall assure that the following agents or
employees of Consultant are assigned to provide the services contemplated by
this Agreement: Kenneth Ward, MD, Lesa Nelson and Allen Ward. Consultant may
staff these projects with additional agents or employees subject to the
Company’s prior written consent, which may be granted, conditioned or withheld
in the Company’s discretion.

 

9. Severability. Every provision of this Agreement is intended to be severable.
If any term or provision hereof is deemed unlawful or invalid for any reason
whatsoever, such unlawfulness or invalidity shall not affect the validity of the
remainder of this Agreement.

 

10. Miscellaneous.

 

 (a)Any notice or other communication between the parties hereto shall be sent
by certified or registered mail, postage prepaid, or by email:

 

(i) If to the Company, to:

 

ProPhase Labs, Inc.

621 N. Shady Retreat Road

Doylestown, Pennsylvania 18901

Attention: Ted Karkus, Chief Executive Officer

Email: karkus@prophaselabs.com

 

(ii) If to the Consultant, to:

 

Predictive Laboratories, Inc.

2749 East Parleys Way, Suite 100

Salt Lake City, Utah 84109

Email: brobinson@predtechgroup.com

 

Either party may change the foregoing address by notice given pursuant to this
Section 9(a). Such notice or other communication shall be deemed to be given on
the date of mailing or transmissions via email if during normal business hours
(and the next day if after business hours).

 

 (b)This Agreement has been duly authorized, executed and delivered by and on
behalf of the Company and the Consultant.

 

 

 

 

 

 (c)This Agreement shall be construed and interpreted in accordance with the
laws of the State of Delaware, without giving effect to conflicts of laws rules
of such states. Each of the parties hereto hereby agrees that any action,
proceeding, or claim against it arising out of, or in any way relating to, this
Agreement shall be brought and enforced exclusively in the state or federal
courts located in the state of Delaware, and irrevocably submit to the exclusive
jurisdiction and venue of such courts.

 

 (d)Nothing herein shall constitute Consultant as an employee or agent of the
Company. Consultant shall not have the authority to obligate, bind or commit the
Company in any manner whatsoever.

 

 (e)The provisions of Sections 4, 5, 6, 7, 9 and 10 shall survive the
termination or expiration of this Agreement.

 

 (f)This Agreement calls for the specialized services and experience of
Consultant and therefore shall not be assignable by Consultant without the prior
written consent of the Company, which consent may be granted or withheld by the
Company in its discretion. Consultant is aware that Company intends to form one
or more subsidiaries to pursue, operate and hold the business opportunities
contemplated hereby, and Consultant consents to the assignment of this Agreement
to such subsidiaries.

 

 (g)This Agreement contains the entire understanding between the parties hereto
with respect to the subject matter hereof and may not be modified or amended
except by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought. No party has relied on any promise,
statement or representation in entering into this Agreement except as set forth
herein.

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date hereof.

 

PROPHASE LABS, INC.         By: /s/ Ted Karkus     Ted Karkus, Chief Executive
Officer         Predictive Laboratories, Inc.         By: /s/ Bradley C.
Robinson     Bradley C. Robinson, Chief Executive Officer  

 

 

 

 

SCHEDULE A - CONSULTANT COMPENSATION

 

1.The parties agree that the compensation that Consultant is entitled to earn or
receive pursuant to this Agreement shall be entirely based on and subject to
attaining the following milestones:

 

a.At such time as the Company completes the acquisition of its first Test Lab
that has been validated and certified to process Test Kits manufactured by
Spectrum Solutions, the Consultant shall receive a consulting fee of $250,000;

 

b.At such time as the Company has processed 50,000 Test Kits from Spectrum
Solutions, the Consultant shall receive a consulting fee of $500,000;

 

c.At such time as the Company has processed 50,000 Covid-19 Test Kits from a
second source introduced by the Consultant (i.e., a source other than Spectrum
Solutions) the Consultant shall receive a consulting fee of $250,000; and

 

d.The Consultant shall receive consulting fees equal to five percent (5%) of the
net revenues the Company generates from processing Test Kits in the Test Labs
where such revenues are from Spectrum Solutions Test Kits or from other sources
introduced to the Company by the Consultant (excluding the revenues from the
Test Kits set forth in sections 1b and 1c above).

 

2.All compensation earned by the Consultant shall be first applied to the
acceleration and prepayment of all sums due to the Company, including but not
limited to sums due pursuant to the Promissory Note dated September 25th, 2020,
in the initial principal amount of $3,000,000, entered into by the Company, as
lender, and the Consultant, as borrower (the “Note”). Consultant acknowledges
that it shall not be entitled to receive any payments pursuant to this Agreement
unless and until the Note has been paid in full.

 

3.Notwithstanding any other provision of this Agreement, Consultant acknowledges
and agrees that the total compensation which the Consultant is entitled to earn
or to receive pursuant to this Agreement and the transactions contemplated
hereby (inclusive of amounts credited against the Note) is capped at $4,000,000.

 

4.The Company has not made any representations, promises or commitments to
Consultant with respect to the ability of the Company to attain any of the
milestones set forth in Section 1 above, or as the amounts, if any, that
Consultant may earn or receive pursuant to this Agreement. Consultant
acknowledges that the decision of the Company whether and how to pursue any
business opportunity contemplated by this Agreement shall be entirely in the
discretion of the Company and the Company shall not be liable to Consultant as a
consequence of any such decision. The parties expressly agree that the
consummation of any transactions to use or acquire any Test Labs, testing
facilities or consummate any other transaction related hereto with any third
parties shall be negotiated and decided by the Company in its sole discretion.