EXHIBIT 10.4

 

EXECUTION VERSION

 

STOCK PURCHASE AGREEMENT

 

This STOCK PURCHASE AGREEMENT (this “Agreement”), is entered into as of June 12,
2017 by and between ProPhase Labs, Inc., a Delaware corporation (the “Company”),
and The Bonnybrook Trust, a Massachusetts trust (“Seller”, and together with the
Company, the “Parties” and each a “Party”).

 

WHEREAS, Seller owns 130,000 shares of common stock of the Company (such 130,000
shares, the “Stock”);

 

WHEREAS, Seller desires to sell, and the Company desires to purchase, the Stock
pursuant to the terms and conditions of this Agreement (the “Repurchase”);

 

WHEREAS, the Parties intend that upon consummation of the purchase and sale of
the Stock pursuant to the terms and conditions of this Agreement (i) the Company
shall own all of the Stock and (ii) Seller will cease to own any of the Stock.

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties, intending to be legally bound,
agree as follows:

 

ARTICLE I
SALE OF STOCK

 

Section 1.1 Sale of Stock. Subject to the terms and conditions of this
Agreement, Seller hereby agrees to sell, assign, transfer and convey to the
Company on the Closing Date (as hereinafter defined) the Stock, and the Company
hereby agrees to purchase from Seller the Stock. The purchase price for the
Stock shall be an amount equal to the product of (i) $1.75, multiplied by (ii)
the number of shares of the Stock (the product of (i) and (ii), the “Purchase
Price” which is agreed to be $227,500.00).

 

Section 1.2 Closing. The closing of the Repurchase (the “Closing”) shall take
place at the offices of the Company, 621 N. Shady Retreat Road, Doylestown,
Pennsylvania 18901, on June 13, 2017 (the “Closing Date”), or at such other time
and place as the Parties hereto shall mutually agree.

 

Section 1.3 Closing Deliverables. At the Closing:

 

(a) Seller shall deliver to the Company all stock certificates representing the
Stock, endorsed to the Company or accompanied by duly executed stock powers or
such other instrument of assignment transferring the Stock to the Company as the
Company shall reasonably request; and

 

(b) Upon receipt by the Company of the Stock from Seller, as provided in Section
1.3(a), the Company shall pay to Seller the Purchase Price via wire transfer of
immediately available funds to an account designated in writing by Seller, or by
certified or official bank check.

 

   

 

 

ARTICLE II

REPRESENTATIONS AND WARRANTIES OF THE COMPANY

 

The Company hereby makes the following representations and warranties to Seller,
each of which is true and correct on the date hereof and shall survive the
Closing Date.

 

Section 2.1 Existence and Power. The Company has been duly formed and is
existing as a corporation in good standing under the laws of the state of its
formation and has the requisite power, authority and capacity to execute and
deliver this Agreement, to perform its obligations hereunder, and to consummate
the transactions contemplated hereby.

 

Section 2.2 Valid and Enforceable Agreement; Authorization. This Agreement has
been duly executed and delivered by the Company and, assuming the due execution
and delivery of this Agreement by Seller, constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws of
general application affecting enforcement of creditors’ rights generally and
general principles of equity. The Company has duly taken all necessary corporate
action to authorize the execution, delivery and performance of this Agreement
and the transactions contemplated hereby, including, without limitation,
compliance with (i) the provisions of Section 160 of the Delaware General
Corporation Law and (ii) the Company’s related party transaction policies and
procedures. The execution, delivery and performance of this Agreement and the
transactions contemplated hereby have been approved by a fully informed vote of
the disinterested members of the Company’s board of directors (the “Board”).

 

Section 2.3 No Consents Required. No application, notice, order, registration,
qualification, waiver, consent, approval or other action is required to be
filed, given, obtained or taken by the Company by virtue of the execution,
delivery and performance of this Agreement or the consummation of the
transactions contemplated hereby, other than the Company’s disclosure and
reporting obligations under the Securities Exchange Act of 1934, as amended,
with which the Company has complied or will comply in a timely manner. The
execution, delivery and performance by the Company of this Agreement, and the
consummation of the transactions contemplated hereby, does not require any
consent or other action by any individual, trust, estate, partnership,
corporation or other entity under any provision of any agreement or other
instrument under which the Company is bound.

 

Section 2.4 No Conflicts. The execution, delivery and performance by the Company
of this Agreement, and the consummation of the transactions contemplated hereby,
will not result in a violation or breach of any provision of any law, rule,
regulation, judgment, order or decree of any governmental authority as of the
date hereof by the Company.

 

Section 2.5 Brokers and Finders. The Company has not otherwise entered into any
arrangement regarding the payment of any brokerage fees, commissions or finder’s
fees in connection with the purchase of the Stock that will result in any
liability on the part of Seller.

 

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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby makes the following representations and warranties to the Company,
each of which is true and correct on the date hereof and shall survive the
Closing Date.

 

Section 3.1 Existence and Power. Seller has been duly organized and is validly
existing as a statutory trust in good standing under the laws of the
jurisdiction of its organization and has the requisite power, authority and
capacity to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby.

 

Section 3.2 Title to Shares. Seller has good and valid title to the Stock free
and clear of any lien, encumbrance, pledge, charge, security interest, mortgage,
title retention agreement, option, equity or other adverse claim, and has not,
in whole or in part, (a) assigned, transferred, hypothecated, pledged or
otherwise disposed of the Stock or its ownership rights in such Stock or (b)
given any person or entity any transfer order, power of attorney or other
authority of any nature whatsoever with respect to such Stock.

 

Section 3.3 Valid and Enforceable Agreement; Authorization. This Agreement has
been duly executed and delivered by Seller and, assuming the due execution and
delivery of this Agreement by the Company, constitutes a legal, valid and
binding obligation of Seller, enforceable against Seller in accordance with its
terms, except as limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws of general application
affecting enforcement of creditors’ rights generally and general principles of
equity. Seller has duly taken all necessary action to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.

 

Section 3.4 Sophistication; Due Diligence. Seller acknowledges and agrees that
the Company is not making any express or implied representations or warranties
about the Company or in connection with the Repurchase. Seller has such
knowledge and experience in financial and business matters and in making
investment decisions of this type that it is capable of evaluating the merits
and risks of making its investment decision regarding the Repurchase and of
making an informed investment decision. Seller and/or Seller’s advisor(s) have
had a reasonable opportunity to (a) evaluate all information and documents filed
by the Company with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, and/or the Securities Exchange Act of 1934,
as amended, and (b) ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning the Stock and the Company and
all such questions have been answered to Seller’s full satisfaction. Seller is
not relying on the Company with respect to the tax and other economic
considerations of the Repurchase, and Seller has relied on the advice of, or has
consulted with, Seller’s own advisors.

 

Section 3.5 No Solicitation by Company. Seller acknowledges and agrees that the
Company did not solicit Seller with respect to the Repurchase and that Seller
contacted the Company concerning the Repurchase.

 

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Section 3.6 Certain Information. Seller acknowledges and understands that the
Company may possess material non-public information not known to Seller that may
impact the value of the Stock that the Company has not disclosed to Seller,
including, without limitation (i) certain financial and operational reports from
management, (ii) information received by principals and employees of the Company
in their capacities as directors, officers, significant stockholders and/or
affiliates of the Company, (iii) information otherwise received on a
confidential basis, and (iv) information received on a privileged basis from the
attorneys and financial advisers representing the Company and the Board. Seller
acknowledges that (a) the Company is under no obligation, fiduciary or
otherwise, to disclose any information to Seller other than such information
that the Company discloses publicly to all stockholders at such times as that
information is in fact publicly disclosed by the Company and (b) the Company is
relying on the representations, warranties and acknowledgments in this Section
3.6 in entering into this Agreement and engaging in the transactions
contemplated hereby, and would not execute or deliver this Agreement or engage
in such transactions in the absence of such representations, warranties and
acknowledgements. Seller understands, based on its experience, the disadvantage
to which Seller is subject due to the disparity of information between the
Company and Seller, but nevertheless acknowledges that Seller has deemed it
appropriate to engage in the Repurchase. Without limitation to the foregoing,
Seller acknowledges that Mark Leventhal, the beneficiary of Seller, was a member
of the Board until June 5, 2017, and therefore, in addition to any publicly
available information and information available to it as a stockholder of the
Company, Seller had access to the same information with respect to the Company
as was generally available to the Company’s directors through June 5, 2017.

 

Section 3.7 No Consents Required. No application, notice, order, registration,
qualification, waiver, consent, approval or other action is required to be
filed, given, obtained or taken by Seller by virtue of the execution, delivery
and performance of this Agreement or the consummation of the transactions
contemplated hereby, other than Seller’s disclosure and reporting obligations
under the Securities Exchange Act of 1934, as amended, with which Seller has
complied or will comply in a timely manner. The execution, delivery and
performance by Seller of this Agreement, and the consummation of the
transactions contemplated hereby, does not require any consent or other action
by any individual, trust, estate, partnership, corporation or other entity under
any provision of any agreement or other instrument under which the Seller is
bound.

 

Section 3.8 No Conflicts. The execution, delivery and performance by Seller of
this Agreement, and the consummation of the transactions contemplated hereby,
will not result in a violation or breach of any provision of any law, rule,
regulation, judgment, order or decree of any governmental authority as of the
date hereof by the Seller.

 

Section 3.9 Brokers and Finders. Seller has not otherwise entered into any
arrangement regarding the payment of any brokerage fees, commissions or finder’s
fees in connection with the purchase of the Stock that will result in any
liability on the part of the Company.

 

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ARTICLE IV
MUTUAL RELEASE

 

Section 4.1 Mutual Release. Each Party, for itself and its affiliates, and their
respective directors, officers, employees, shareholders, agents, professionals,
successors and assigns, hereby irrevocably waives, releases, indemnifies, holds
harmless and forever discharges the other party and its affiliates, and their
respective directors, officers, employees, shareholders, agents, professionals,
successors and assigns, from any and all past, present, and future actions,
liabilities, and all other claims whatsoever, whether in contract or in tort or
pursuant to statute, whether known now or at any other time, and whether pending
on, or asserted after, the date hereof, relating in each case to the other
Party’s possession of material non-public information or the failure of the
other Party to disclose any material non-public information in connection with
the transactions contemplated by this Agreement.

 

ARTICLE V
MISCELLANEOUS

 

Section 5.1 Expenses. Each Party hereto shall pay its own expenses in connection
with the transactions contemplated hereby, whether or not such transactions
shall be consummated, except as otherwise expressly provided in this Agreement
or any other agreement entered into between the Parties.

 

Section 5.2 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement and any
other documents executed in connection herewith shall be in writing and shall be
deemed to have been duly given if (i) delivered personally, (ii) mailed,
certified or registered mail, with postage prepaid or (iii) sent by next-day or
overnight mail or delivery or sent by facsimile (upon written confirmation of
receipt) as follows:

 

If to Company:

 

ProPhase Labs, Inc.

621 N. Shady Retreat Road

Doylestown, Pennsylvania 18901

Attention: Ted Karkus
Fax: (215) 345-5920

 

with a copy (which shall not constitute notice) to:

 

Reed Smith, LLP
599 Lexington Avenue
New York, New York 10022
Attention: Herbert Kozlov, Esq.
Fax: (212) 521-5450

 

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If to Seller:

 

The Bonnybrook Trust
800 Boylston Street, 16th Floor

Boston, Massachusetts 02199

Attention: Rebecca Leventhal, Emily Leventhal and Sara Fleiss

 

with a copy (which shall not constitute notice) to:

 

J. Robert Casey

Goulston & Storrs

400 Atlantic Ave.

Boston, MA 02110
Email: jrcasey@goulston

 

or to such other Person or address as either Party shall specify by notice in
writing in accordance with this Section 5.3 to the other Party hereto. All such
notices, requests, demands, waivers and other communications shall be deemed to
have been received (i) if by personal delivery on the day after such delivery,
(ii) if by certified or registered mail, on the fifth business day after the
mailing thereof, (iii) if by next-day or overnight mail or delivery, on the day
delivered and (iv) if by fax, on the next day following the day on which such
fax was sent.

 

Section 5.3 Governing Law; Consent to Exclusive Jurisdiction.

 

(a) This Agreement shall be construed in accordance with and governed by the
laws of the State of New York applicable to agreements made and to be performed
wholly within such jurisdiction.

 

(b) The state or federal courts located within the State of New York shall have
exclusive jurisdiction over any and all disputes between the Parties hereto,
whether in law or equity, arising out of or relating to this Agreement and the
agreements, instruments and documents contemplated hereby and the Parties
consent to and agree to submit to the exclusive jurisdiction of such courts.
Each of the Parties hereby waives and agrees not to assert in any such dispute,
to the fullest extent permitted by applicable law, any claim that (i) such Party
is not personally subject to the jurisdiction of such courts, (ii) such Party
and such Party’s property is immune from any legal process issued by such courts
or (iii) any litigation or other proceeding commenced in such courts is brought
in an inconvenient forum. The Parties hereby agree that the mailing of process
or other papers in connection with any such action or proceeding in the manner
provided in Section 5.3, or in such other manner as may be permitted by law,
shall be valid and sufficient service thereof and hereby waive any objections to
service accomplished in the manner herein provided.

 

Section 5.4 WAIVER OF JURY TRIAL. THE PARTIES TO THIS AGREEMENT IRREVOCABLY
WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM,
COUNTERCLAIM OR CROSS-COMPLAINT IN ANY ACTION OR OTHER PROCEEDING BROUGHT BY ANY
PARTY TO THIS AGREEMENT AGAINST ANY OTHER PARTY TO THIS AGREEMENT WITH RESPECT
TO ANY MATTER ARISING OUT OF, OR IN ANY WAY CONNECTED WITH OR RELATED TO THIS
AGREEMENT OR ANY PORTION OF THIS AGREEMENT, WHETHER BASED UPON CONTRACTUAL,
STATUTORY, TORTIOUS OR OTHER THEORIES OF LIABILITY. EACH PARTY REPRESENTS THAT
IT HAS CONSULTED WITH COUNSEL REGARDING THE MEANING AND EFFECT OF THE FOREGOING
WAIVER OF ITS RIGHT TO A JURY TRIAL.

 

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Section 5.5 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties hereto and their respective successors,
permitted assigns, representatives, heirs and beneficiaries, as applicable.

 

Section 5.6 No Third Party Beneficiaries. Nothing in this Agreement shall confer
any rights upon any person or entity other than the Parties hereto and their
respective successors.

 

Section 5.7 Further Assurances. Each Party agrees to execute such further
documents and instruments as shall be necessary to fully carry out the terms of
this Agreement. Any consent or approval required of Seller or the Company by
this Agreement shall not be unreasonably withheld. Each Party agrees that for a
reasonable period of time after the date hereof, each will reasonably cooperate
with the other Party by making available through its respective officers,
agents, employees and counsel such information and other cooperation as is
reasonably requested by the other Party.

 

Section 5.8 Headings. Section headings are inserted herein for convenience only
and do not form a part of this Agreement.

 

Section 5.9 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument. The reproduction of signatures
by means of fax, portable document format (.pdf) or other electronic means shall
be treated as though such reproductions are executed originals.

 

Section 5.10 Entire Agreement. This Agreement constitutes the entire agreement
between Company and Seller and supersedes all prior agreements and
understandings, both written and oral, among the Parties with respect to the
subject matter hereof.

 

Section 5.11 Amendments. No amendment, modification or discharge of this
Agreement, and no waiver hereunder, shall be valid or binding unless set forth
in writing and duly executed by the Party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the Party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
Parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the Parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder.

 

Section 5.12 Severability. If any term, provision or restriction of this
Agreement shall be held invalid, void, illegal or unenforceable, the remainder
of the terms, provisions and restrictions of this Agreement will remain in full
force and effect and will in no way be affected, impaired or invalidated.

 

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

 

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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first written above.

 

  PROPHASE LABS, INC.         By: /s/ Ted Karkus   Name: Ted Karkus   Title:
Chairman of the Board of Directors and Chief Executive Officer

 

  THE BONNYBROOK TRUST           /s/ Rebecca Leventhal   Name: Rebecca Leventhal
  Title: Trustee           /s/ Emily Leventhal   Name: Emily Leventhal   Title:
Trustee           /s/ Sara Fleiss   Name: Sara Fleiss   Title: Trustee

 

[Signature Page to Stock Purchase Agreement]