Document:

Exhibit
10.1

 

ProPhase
Labs, Inc.

Amended
and Restated

2015
EXECUTIVE EMPLOYMENT AGREEMENT

 

This
Employment Agreement (the “Agreement”) is made as of February 23, 2018 (“Effective Date”) by and between
ProPhase Labs, Inc., a corporation organized under the laws of the State of Delaware (“PPL” or the “Company”),
and Ted Karkus (“Executive”) and, subject to Section 1(b) below, amends and restates the May 29, 2015 Executive
Employment Agreement between PPL and Executive (“2015 Employment Agreement”).

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties
hereto agree as follows:

 

1.
Appointment, Title and Duties, Shareholder Approval.

 

(a)
Executive currently serves as its Chief Executive Officer and desires to continue in such position based upon the terms and conditions
set forth herein. In such capacity, Executive shall report solely to the Board of the Company (the “Board”), and shall
have such duties, powers and responsibilities as are customarily assigned to a Chief Executive Officer. In addition, Executive
shall have such other duties and responsibilities as the Board may reasonably assign him, but only with his consent, including
serving with the consent or at the request of the Board as an officer or on the board of directors of affiliated corporations,
provided that such duties are commensurate with and customary for a senior executive officer bearing Executive’s
experience, qualifications, title and position.

 

(b)
Approval By Shareholders. Notwithstanding any other provision in this Agreement, this Agreement will be null and void if
it is not approved by a majority of the shares voted to approve the Agreement (excluding the shares voted by Executive) at a meeting
of stockholders of the Company to be held no later than September 30, 2018 (“Approval”). In the event that this Agreement
is not so approved by the shareholders of the Company by September 30, 2018, the 2015 Employment Agreement shall be reinstated
in its entirety; and the Initial Base Salary under the 2015 Employment Agreement shall be reinstated, retroactive to the Effective
Date. In the event the 2015 Employment Agreement is thereby reinstated, any amounts of Initial Salary under the 2015 Employment
Agreement not previously paid to Executive shall be immediately paid to Executive.

 

2.
Term of Agreement. The term of this Agreement shall commence as of the Effective Date and shall extend and continue unless
and until it is terminated in accordance with the terms of this Agreement.

 

    	 

    	 

    

 

3.
Acceptance of Position. Executive accepts the position of Chief Executive Officer, and agrees that during the term of this
Agreement he will faithfully perform his duties and, except as expressly approved by the Board, will devote substantially all
of his business time to the business and affairs of PPL, and will not during the term of this agreement engage, for his own account
or for the account of any other person or entity, in a business which competes with PPL. It is acknowledged and agreed that Executive
may serve as an officer and/or director of companies in which PPL owns voting or non-voting stock or other securities. In addition,
it is acknowledged and agreed that Executive may, from time to time, serve as a member of the board of directors of other companies
which do not compete with PPL, provided that Executive has provided the Board with notice of election to any such board of directors.
Any compensation or remuneration which Executive receives in consideration of service on the board of directors of other companies
shall be the sole and exclusive property of Executive, and PPL shall have no right or entitlement at any time to any such compensation
or remuneration. Nothing herein shall preclude Executive from serving on the board of directors or similar governing body of any
not for profit or philanthropic organization. It is understood and agreed by the parties that Executive has in the past, and shall
be permitted during the term of this Agreement, to perform his services in part from the Company’s offices, and also in
part from an office Executive maintains at his home, consistent with the practices Executive and the Company have followed and
applied prior to the Effective Date.

 

4.
Salary and Benefits.

 

(a)
From the Effective Date through February 22, 2021, Executive voluntarily agrees to reduce his salary from the rate set forth in
the 2015 Employment Agreement (i.e., not less than six-hundred seventy five thousand dollars ($675,000) per annum) to a
base salary at a rate of one hundred twenty five thousand dollars ($125,000) per annum (“Term Base Salary”), paid
in approximately equal installments at intervals based on any reasonable Company policy. PPL agrees from time to time to consider
increases in the Term Base Salary in the discretion of the Board. Any increase in the Term Base Salary, once granted, shall automatically
amend this Agreement to provide that thereafter Executive’s Term Base Salary shall not be less than the annual amount of
his increased Term Base Salary.

 

Unless
otherwise determined by mutual agreement of the Company and Executive, on February 22, 2021 and thereafter, Executive’s
salary shall increase from the Term Base Salary to not less than six-hundred seventy five thousand dollars ($675,000) per annum
paid in approximately equal installments at intervals based on any reasonable Company policy (“Post-Term Base Salary”).
PPL agrees from time to time to consider increases in the Post-Term Base Salary in the discretion of the Board. Any increase in
the Post-Term Base Salary, once granted, shall automatically amend this Agreement to provide that thereafter Executive’s
Post-Term Base Salary shall not be less than the annual amount of the increased Post-Term Base Salary.

 

    	2

    	 

    

 

(b)
Equity Compensation; Stock Option.

 

(i)
In consideration of Executive’s voluntary reduction of his salary, the Company hereby grants to Executive a stock option
award to purchase shares of the Company’s common stock (the “Option”) in accordance with the notice of grant
and award agreement (the “Option Agreement”) attached hereto. As set forth in the Option Agreement, the number of
shares underlying the Option shall equal two million three hundred (2,300,000) shares of the Company’s common stock with
an exercise price of three dollars ($3) per share. The Option will vest and be exercisable in thirty-five (35) equal monthly installments
of sixty-three thousand eight hundred eighty eight (63,888) shares and one monthly installment of sixty-three thousand nine hundred
twenty (63,920) shares, on the 1st day of each month, commencing on March 1, 2018, and subject to Executive’s continued
employment with the Company. The Option shall be subject to accelerated vesting as set forth in this Agreement and the Option
Agreement. The Option shall be exercisable for a five (5) - year term commencing on the Effective Date. The Option will be subject
to the terms, definitions, and provisions of the Company’s 2018 Stock Incentive Plan and the Option Agreement.

 

(ii)
The Option shall terminate and be cancelled in the event Approval is not attained as set forth in Section 1(b) above. The Option
may not be exercised unless and until such Approval is attained.

 

(iii)
The income received pursuant to the Option shall be subject to applicable tax withholding (including federal, state, and local
taxes, as applicable), and other deductions as required by law or authorized by Executive.

 

(iv)
The Company intends that the Option will be exempt from or comply with the requirements of Section 409A of the Code.

 

(c)
During the term hereof, Executive shall participate in all health, retirement, Company-paid insurance, sick leave, disability,
expense reimbursement and other benefit programs which PPL makes available to any of its senior executives.

 

(d)
Executive shall be eligible to participate in and earn an annual bonus pursuant to the terms of the Company’s bonus plans
in effect during the term of his employment. Executive also shall be eligible to participate in any PPL incentive stock, option
or bonus plan offered by PPL to its senior executives, subject to the terms thereof and at the sole discretion of the Board.

 

(e)
Executive shall be entitled to a minimum of four (4) weeks paid vacation per year, or such greater amount as approved by the Compensation
Committee of the Board (the “Compensation Committee”) or, if there is no Compensation Committee, the Board, provided
that not more than two (2) weeks of such vacation time may be taken consecutively without prior notice to and non-objection by
the Compensation Committee or, if there is no Compensation Committee, the Board.

 

    	3

    	 

    

 

5.
Certain Terms Defined. For purposes of this Agreement:

 

(a)
Executive shall be deemed to be “disabled” if both of the following conditions have been satisfied: (i) a physical
or mental condition shall occur and persist which, in the written opinion of a licensed and qualified physician selected by the
Board in good faith, has rendered Executive unable to perform the duties set forth in Section 1 hereof for a period of seventy-five
(75) consecutive days or more, or for sixty (60) days or more out of any (90) day period, and, (ii) in the written opinion of
such physician, the condition will continue for an indefinite and long-term period of time, rendering Executive unable to return
to his duties.

 

(b)
A termination of Executive’s employment by PPL shall be deemed for “Cause” if, and only if, it is based upon
(i) conviction of a felony; or (ii) material disloyalty to the Company such as embezzlement, misappropriation of corporate assets;
or (iii) breach of Executive’s agreement not to engage during the term of this Agreement in business for another enterprise
of the type engaged in by the Company, except as permitted pursuant to Section 3 of this Agreement; or (iv) the engaging in unethical
or illegal behavior which is of a public nature, brings PPL into disrepute, and results in material damage to the Company; or
(v) a material breach of this Agreement which causes material and demonstrable harm to the Company.

 

Cause
shall not exist to terminate the Executive’s employment unless the Company gives Executive written notice within thirty
(30) days after the discovery of the occurrence of the event which the Company believes constitutes the basis for Cause, specifying
in detail the particular act or failure to act which the Company believes constitutes the basis for Cause. If the Executive fails
to cure such act or failure to act within sixty (60) days after receipt of such notice, the Company may terminate Executive’s
employment for Cause. For the avoidance of doubt, if such act is not curable, the Company may terminate Executive’s employment
for Cause upon providing written notice of termination specifying the reasons therefore.

 

(c)
A resignation by Executive of his employment shall not be deemed to be voluntary and shall be deemed to be a resignation with
“Good Reason” if it is based upon (i) a diminution in Executive’s title, duties, responsibilities, privileges
or Term Base Salary; or (ii) a direction by PPL that Executive report to any person or group other than the Board; or (iii) a
geographic relocation of Executive’s place of work a distance of more than ten miles (10) from the Company’s offices
as of the Effective Date in Doylestown, PA (unless such relocation results in PPL’s offices being forty (40) miles or less
from Executive’s primary residence as of the date when the relocation occurs); or (iv) a direction by PPL that Executive
shall not be permitted to perform his services from such location or locations as Executive reasonably determines are appropriate;
or (v) the material breach of this agreement by PPL.

 

    	4

    	 

    

 

Good
Reason shall not exist unless the Executive gives the Company written notice within thirty (30) days after the discovery of the
occurrence of the event which the Executive believes constitutes the basis for Good Reason, specifying the particular act or failure
to act which the Executive believes constitutes the basis for Good Reason. If the Company fails to cure such act or failure to
act within thirty (30) days after receipt of such notice, the Executive may terminate his employment for Good Reason. However,
such termination must occur within two (2) years following the initial existence of the condition specified in Section 5(c) which
constitutes the basis for Good Reason.

 

(d)
“Affiliate” means with respect to any Person, a Person who, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control, with the Person specified.

 

(e)
“Beneficial Owner” shall have the meaning given to such term in Rule 13d-3 under the Exchange Act.

 

(f)
A “Change in Control” means the occurrence of any of the following events:

 

(i)
A change in the ownership of the Company that occurs on the date that any one Person, or more than one Person acting as a group
(for purposes of SEC Rule 13d), acquires ownership of the stock of the Company that, together with the stock held by such Person,
constitutes more than fifty percent (50%) of the total voting power of the stock of the Company. For purposes of this agreement,
no Change of Control shall have occurred in the event Executive or a group which includes Executive acquires more than fifty percent
(50%) of the voting control of the Company. The acquisition of additional stock by any one Person, who is considered to own more
than fifty percent (50%) of the total voting power of the stock of the Company will not be considered an additional Change of
Control; or

 

(ii)
A change in the effective control of the Company that occurs on the date that a majority of members of the Board is replaced during
any twelve (12) month period by directors whose appointment or election is not endorsed by one of either the Executive or a majority
of the members of the Board prior to the date of the appointment or election;

 

(iii)
A change in the ownership of a “substantial portion of the Company’s assets”, as defined herein. For this purpose,
a “substantial portion of the Company’s assets” shall mean assets of the Company having a total gross fair market
value equal to or more than fifty percent (50%) of the total gross fair market value of all of the assets of the Company immediately
prior to such change in ownership. For purposes of this subsection (iii), a change in ownership of a substantial portion of the
Company’s assets occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending
on the date of the most recent acquisition by such person or persons) assets from the Company that constitute a “substantial
portion of the Company’s assets.” For purposes of this subsection (iii), the following will not constitute a change
in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the
Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder
of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity,
fifty percent (50%) or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3)
a Person, that owns, directly or indirectly, fifty percent (50%) or more of the total value or voting power of all the outstanding
stock of the Company, or (4) an entity, at least fifty percent (50%) of the total value or voting power of which is owned, directly
or indirectly, by a Person described in this subsection (iii). For purposes of this subsection (iii), gross fair market value
means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities
associated with such assets.

 

    	5

    	 

    

 

For
purposes of this definition, Persons will be considered to be acting as a group if they are owners of a corporation that enters
into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company.

 

Notwithstanding
the foregoing, a transaction will not be deemed a Change of Control unless the transaction qualifies as a change of control event
within the meaning of Section 409A.

 

Further
and for the avoidance of doubt, a transaction will not constitute a Change of Control if its primary purpose is to: (1) change
the state of the Company’s incorporation, or (2) create a holding company that will be owned in substantially the same proportions
by the persons who held the Company’s securities immediately before such transaction.

 

(g)
“Code” means the Internal Revenue Code of 1986, as amended.

 

(h)
“Exchange Act” means the Exchange Act of 1934, as amended.

 

(i)
“Person” means any individual, corporation, partnership, limited liability company, trust, association or other entity.

 

(j)
“Related Person” means any immediate family member (spouse, partner, parent, sibling or child whether by birth or
adoption) of the Executive and any trust, estate or foundation, the beneficiary of which is the Executive and/or an immediate
family member of the Executive.

 

6.
Certain Benefits Upon Termination. Executive’s employment shall be terminated upon the earlier of (i) the voluntary
resignation of Executive with or without Good Reason; or (ii) Executive’s death or permanent disability; or (iii) upon the
termination of Executive’s employment by PPL for any reason at any time. In the event of any termination of employment,
Executive shall be entitled to receive all accrued and unpaid salary, expense reimbursements, Option vesting, and benefits through
the effective date of termination.

 

    	6

    	 

    

 

(a)
Certain Terminations. If Executive’s employment by PPL terminates for any reason other than as a result of (i) a
termination for Cause, or (ii) a voluntary resignation by Executive without a Good Reason ((i) and (ii) collectively, an “Ineligible
Termination”), then Executive also shall receive benefits and payments upon said termination of employment as described
in Appendix A attached hereto.

 

(b)
If Executive’s employment by PPL terminates for any reason, other than an Ineligible Termination, Executive and his then
covered dependents shall remain eligible to participate in all Company provided medical and dental plans to the extent Executive
elects and remains eligible for coverage under COBRA and for a maximum period of eighteen (18) months at the Company’s sole
expense.

 

(c)
In the event that Executive’s employment terminates by reason of his death, all benefits provided in this Section 6 shall
be paid to his estate or as his executor shall direct, but payment may be deferred until Executive’s executor or personal
representative has been appointed and qualified pursuant to the laws in effect in Executive’s jurisdiction of residence
at the time of his death.

 

(d)
PPL shall have no liability to Executive under subsections 6(a), (b), or (c) if Executive’s employment pursuant to this
Agreement terminates due to an Ineligible Termination.

 

(e)
To the extent that any or all of the payments and benefits provided for in this Agreement constitute “parachute payments”
within the meaning of Section 280G of the Code and, but for this paragraph, would be subject to the excise tax imposed by Section
4999 of the Code, then, either: (i) Executive shall receive all such payments and benefits Executive is entitled to receive hereunder,
and any liability for taxes pursuant to any payments included herein shall be Executive’s liability alone; or (ii) the aggregate
amount of such payments and benefits shall be reduced such that the present value thereof (as determined under the Code and applicable
regulations) is equal to 2.99 times Executive’s “base amount” (as defined in Section 280G of the Code), whichever
of (i) and (ii) yields the greatest after-tax amount to Executive. The determination of any reduction or increase of any payment
or benefits under this paragraph pursuant to the foregoing provision shall be made by a nationally recognized public accounting
firm chosen by the Company in good faith, and such determination shall be conclusive and binding on the Company and Executive.
If a reduction in payments is required by the foregoing provisions of this Section 6(h), the reduction shall occur in the following
order: (i) first, any future cash payments (if any) shall be reduced (if necessary, to zero); (ii) second, any current cash payments
shall be reduced (if necessary, to zero); (iii) third, all non-cash payments (other than equity or equity derivative related payments)
shall be reduced (if necessary, to zero); and (iv) fourth, all equity or equity derivative payments shall be reduced, except if,
and only if, a different order of reduction is required to avoid the imposition of an additional tax under Section 409A of the
Code. As expressly permitted by Q/A-32 of the final regulations under Section 280G of the Code, with respect to performing any
present value calculations that are required in connection with the foregoing calculations, the parties affirmatively elect to
utilize the Applicable Federal Rates that are in effect as of the date of this letter, and the accounting firm shall therefore
use such Applicable Federal Rates in its determinations and calculations.

 

    	7

    	 

    

 

7.
Clawback Provision. In the event that all of the following conditions are satisfied:

 

(a)
A mandatory restatement of the Company’s financial results occurs and is released to the public at a time when the Company’s
securities are traded on any United States securities exchange (a “Restatement”); and

 

(b)
The Restatement is attributable to misconduct or wrongdoing by the Executive; and

 

(c)
Executive has received payment of a cash bonus or has been issued any shares of PPL as a bonus within three (3) years preceding
the date of the issuance and release to the public of such restatement; and

 

(d)
The amount of such cash bonus or share grant has been calculated and awarded pursuant to a specific financial formula; and

 

(e)
Such bonus or share grant would have been diminished based on the restated financial results had the financial formula pursuant
to which the bonus or share grant has been calculated (the “Formula”) been applied to the restated financial results
(the amount of such diminution, is the “Clawback Amount”);

 

then,
upon written demand from the Company setting forth in detail the basis for such demand, the Executive shall remit to the Company
the Clawback Amount less the amount of any taxes paid or payable by Executive in respect of such bonus or share grant. Provided,
however, that if and to the extent that (x) the Restatement results in the Company increasing expenses or reducing income, revenues
or another component of the Formula during the measurement period during which the applicable bonus or share grant was calculated,
but also results in (y) the Company increasing or shifting such income, revenues or expenses into a different fiscal period, such
that the net effect of the Restatement is effectively neutral to the Company over the applicable time periods, then no Clawback
Amount shall be due from the Executive.

 

    	8

    	 

    

 

8.
Indemnification. PPL shall indemnify, defend and hold Executive harmless from and against all claims, losses, damages,
expense or liabilities, including expenses of defense and settlement, and advancement of defense costs as such costs are incurred,
(collectively, “Indemnified Losses”) to the fullest extent allowable by law and as provided in any of the PPL by-laws,
charter, any indemnification agreement with the Executive, or as otherwise agreed between the parties and under any applicable
laws, where such claims or Indemnified Losses are based upon or in any way arise from or are connected with his employment by
PPL or his service as an officer or director of PPL or any PPL Affiliate. To the fullest extent permitted by law, PPL shall advance
to or on behalf of Executive all expenses incurred in connection with the defense of any indemnified action or claim pursuant
to this Section 8. PPL shall investigate in good faith the availability and cost of directors’ and officers’ insurance
and shall include Executive as an insured in any directors’ and officers’ insurance policy it maintains. The provisions
of this Section 8 shall survive any termination or expiration of this Agreement. Executive shall have the right to elect either
(a) to arbitrate in accordance with Section 13 of this Agreement any claim by Executive to enforce the provisions of Section 8
of this Agreement, or (b) to litigate any such claim in any court of competent jurisdiction.

 

9.
Attorney Fees. In the event that any action or proceeding is brought to enforce the terms and provisions of this Agreement,
each party shall bear its own attorney’s fees, except that the Company shall bear all attorney’s fees
and litigation costs incurred by Executive in successfully enforcing the provisions of this Agreement or in successfully defending
any claim brought by the Company against the Executive arising pursuant to this Agreement.

 

10.
Notices. All notices and other communications provided to either party hereto under this Agreement shall be in writing
and delivered by hand, or by certified or registered mail to such party at its/his address set forth below its/his signature hereto,
or at such other address as may be designated with postage prepaid, shall be deemed given when received.

 

11.
Construction. In constructing this Agreement, if any portion of this Agreement shall be found to be invalid or unenforceable,
the remaining terms and provisions of this Agreement shall be given effect to the maximum extent permitted without considering
the void, invalid or unenforceable provisions. In construing this Agreement, the singular shall include the plural, the masculine
shall include the feminine and neuter genders as appropriate, and no meaning in effect shall be given to the captions of the sections
in this Agreement, which is inserted for convenience of reference only. Without limitation to the foregoing, nothing in this Agreement
is intended to violate the Sarbanes-Oxley Act of 2002, the Dodd–Frank Wall Street Reform and Consumer Protection Act of
2010, the rules and regulations of the Securities and Exchange Commission or the applicable listing standards of NASDAQ or the
NYSE, and to the extent that any provision of this Agreement would constitute such a violation, such provision shall be modified
to the extent required by such Act, rule, regulation or standard, or, to the extent that such provision cannot be so modified
and is found to be invalid or unenforceable, the remaining terms and provisions shall be given effect to the maximum extent permitted
without considering the void, invalid or unenforceable provision.

 

    	9

    	 

    

 

This
Agreement is intended to comply with the requirements of Section 409A of the Code, including the exceptions thereto, and shall
be construed and administered in accordance with such intent. For purposes of Section 409A of the Code, each installment payment
provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement in connection
with a termination of employment shall only be made if such termination of employment constitutes a “separation from service”
under Section 409A of the Code.

 

Notwithstanding
any other provision of the Agreement, to the extent that (i) any amount paid pursuant to the Agreement is treated as nonqualified
deferred compensation pursuant to Section 409A of the Code and is provided to the Executive on account of his separation from
service and (ii) the Executive is a “specified employee” pursuant to Section 409A(2)(B) of the Code, then such payments
shall be made on the date which is six (6) months after the date of the Executive’s separation from service. In connection
with the payment of any obligation that is delayed pursuant to this section, the Company shall establish an irrevocable trust
to hold funds to be used for payment of such obligations. Upon the date that such amount would otherwise be payable, the Company
shall deposit into such irrevocable trust an amount equal to the obligation. However, notwithstanding the establishment of the
irrevocable trust, the Company’s obligations under the Agreement upon the Executive’s termination of employment shall
constitute a general, unsecured obligation of the Company and any amount payable to the Executive shall be paid solely out of
the Company’s general assets, and the Executive shall have no right to any specific assets of the Company. The funds, if
any, contained or contributed to the irrevocable trust shall remain available for the claims of the Company’s general creditors.

 

12.
Headings. The section headings hereof have been inserted for convenience of reference only and shall not be construed to
affect the meaning, construction or effect of this Agreement.

 

13.
Governing Law. The provisions of this Agreement shall be construed and interpreted in accordance with the internal laws
of the State of Pennsylvania as at the time in effect and without regard to conflict of laws provisions, except that the
provisions of Section 8 of this Agreement shall be construed and interpreted in accordance with the laws of the state in which
PPL is incorporated at the time that any claim under Section 8 is asserted. The parties agree that any dispute arising under this
Agreement shall be determined by binding arbitration before the American Arbitration Association (“AAA”) under the
AAA’s commercial arbitration rules. Such arbitration shall be conducted in New York, New York, before a single, impartial
arbitrator selected by the AAA; provided, however, the parties may mutually agree after the commencement of a proceeding to hold
the arbitration in another jurisdiction. In any such arbitration, the Company shall bear and shall be solely responsible for the
costs and fees imposed by the AAA and the arbitrator. The parties agree to abide by all decisions and awards rendered in such
proceedings. All decisions and awards rendered by the arbitrator shall be final, binding and conclusive. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction thereof, and the parties consent to the non-exclusive
jurisdiction of the federal and state courts in New York and Pennsylvania for this purpose. If at the time any dispute or controversy
arises with respect to this Agreement the AAA is no longer providing arbitration services, then JAMS shall be substituted for
the AAA for purposes of this paragraph, and the arbitration will be conducted in accordance with the then-existing and applicable
rules and procedures of JAMS.

 

14.
Entire Agreement. Except as otherwise provided herein, this Agreement constitutes the entire agreement and supersedes all
other prior employment agreements and undertakings, both written and oral, among Executive and the Company, with respect to the
subject matter hereof, except that the separate Indemnification Agreement dated August 19, 2009 between the parties shall survive
the execution of this Agreement. This Agreement may not be modified or amended except in writing, manually signed in pen and ink
by each of the parties hereto.

 

[SIGNATURE
PAGE TO FOLLOW]

 

    	10

    	 

    

 

IN
WITNESS WHEREOF, this Agreement shall be effective as of the date specified in the first paragraph of this Agreement.

 

	 	ProPhase
    Labs, Inc., a Delaware corporation
	 	Address:
    

 

	 	By:	/s/
    Monica Brady
	 	 	Monica Brady,
    Chief Accounting Officer

 

	 	Executive:
	 	 
	 	 /s/
    Ted Karkus
	 	Ted
    Karkus
	 	Address:

 

    	11

    	 

    

 

APPENDIX
A

Certain
Benefits Upon Termination

 

	I.	For
    the time period from the Effective Date until February 22, 2021, Executive shall be eligible to receive the following benefits
    and cash payments upon a Termination of Employment other than an Ineligible Termination:

 

	 	A.	Executive
    shall receive a combination of accelerated vesting of the outstanding and unvested stock options granted to him under Section
    4(b) of the Agreement and a cash severance payment as set forth in the chart below:

 

	Month
    in which Executive’s

    employment is terminated 

    other than an Ineligible 

    Termination	 	Ratio
    of Option subject to

    acceleration of vesting	 	Cash
    severance payment 

    (based upon a total potential

    cash severance payment of

    $1,687,500)	 
	February
    2018	 	1	 	$	0	 
	March
    2018	 	35/36	 	$	46,875	 
	April
    2018	 	34/36	 	$	93,750	 
	May
    2018	 	33/36	 	$	140,625	 
	June
    2018	 	32/36	 	$	187,500	 
	July
    2018	 	31/36	 	$	234,375	 
	August
    2018	 	30/36	 	$	281,250	 
	September
    2018	 	29/36	 	$	328,125	 
	October
    2018	 	28/36	 	$	375,000	 
	November
    2018	 	27/36	 	$	421,875	 
	December
    2018	 	26/36	 	$	468,750	 
	January
    2019	 	25/36	 	$	515,625	 
	February
    2019	 	24/36	 	$	562,500	 
	March
    2019	 	23/36	 	$	609,375	 
	April
    2019	 	22/36	 	$	656,250	 
	May
    2019	 	21/36	 	$	703,125	 
	June
    2019	 	20/36	 	$	750,000	 
	July
    2019	 	19/36	 	$	796,875	 
	August
    2019	 	18/36	 	$	843,750	 
	September
    2019	 	17/36	 	$	890,625	 
	October
    2019	 	16/36	 	$	937,500	 
	November
    2019	 	15/36	 	$	984,375	 
	December
    2019	 	14/36	 	$	1,031,250	 
	January
    2020	 	13/36	 	$	1,078,125	 
	February
    2020	 	12/36	 	$	1,125,000	 
	March
    2020	 	11/36	 	$	1,171,875	 
	April
    2020	 	10/36	 	$	1,218,750	 
	May
    2020	 	9/36	 	$	1,265,625	 
	June
    2020	 	8/36	 	$	1,312,500	 
	July
    2020	 	7/36	 	$	1,359,375	 
	August
    2020	 	6/36	 	$	1,406,250	 
	September
    2020	 	5/36	 	$	1,453,125	 
	October
    2020	 	4/36	 	$	1,500,000	 
	November
    2020	 	3/36	 	$	1,546,875	 
	December
    2020	 	2/36	 	$	1,593,750	 
	January
    2021 – February 22, 2021	 	1/36	 	$	1,640,625	 

 

    	 

    	 

    

 

	II.	On
    or after February 23, 2021, Executive shall be eligible to receive the following benefits and cash payments upon a Termination
    of Employment other than an Ineligible Termination:

 

1.
Certain Benefits Upon Termination. Executive’s employment shall be terminated upon the earlier of (i) the voluntary
resignation of Executive with or without Good Reason; or (ii) Executive’s death or permanent disability; or (iii) upon the
termination of Executive’s employment by PPL for any reason at any time. In the event of any termination of employment,
Executive shall be entitled to receive all accrued and unpaid salary, expense reimbursements, and benefits through the effective
date of termination. In addition, the following provisions of this Section also shall apply:

 

(a)
Certain Terminations. If Executive’s employment by PPL terminates for any reason other than as a result of (y) a
termination for Cause, or (z) a voluntary resignation by Executive without a Good Reason ((y) and (z) collectively, an “Ineligible
Termination”), then Executive also shall receive:

 

(i)
a cash severance payment equal to two and one-half (2.5) times his Base Salary (i.e., two hundred fifty percent (250%)
of his Post-Term Base Salary). Such cash severance payment shall be paid as follows: (x) one-half (.5) of the cash severance payment
shall be paid in a lump sum within five (5) business days following the effective date of the termination; and (y) the remaining
one-half of the cash severance payment shall be paid in twelve (12) equal, consecutive, monthly installments commencing on the
first business day of the month following the effective date of the termination; and

 

(ii)
all of Executive’s stock options and/or restricted stock shall automatically vest concurrently upon such termination of
employment, regardless of any prior existing vesting schedules;

 

    	2

    	 

    

 

(iii)
Provided, however, that if his employment terminates by reason of his death or disability, then such cash payments shall be paid
only to the extent of the proceeds payable to the Company through a “key man” life, disability or similar insurance
relating to the death or disability of Executive.

 

(b)
Additional Payment if Termination Occurs in Connection with a Change in Control. In the event that Employee has received
the payments described in Section II.1(a), and it is determined that the provisions of Section II.1(c) also are applicable (termination
in connection with a Change in Control), then Employee shall be entitled to receive an additional payment equal to the amounts
due to Employee pursuant to Section II.1(c), less the amount of payments previously received by Employee pursuant to Section II.1(a).

 

(c)
Payment if Termination Occurs in Connection with a Change in Control. Notwithstanding the provisions of Section II.1(a)
above, in the event Executive’s employment terminates due to a reason other than an Ineligible Termination, death or disability,
and if such termination occurs within (a) eighteen (18) months following a Change in Control, or (b) prior to a Change in Control
but in contemplation of a Change in Control which Change in Control actually occurs, then, in lieu of the severance payment described
in Section II.1(a) above, Executive shall instead receive a one-time severance payment in cash equal to two million five hundred
thousand dollars ($2,500,000). In addition, in such event, all of Executive’s stock options and/or restricted stock shall
automatically vest concurrently upon such termination of employment, regardless of any prior existing vesting schedule.

 

(i)
For purposes of this Section II.1(c), the involuntary termination of Executive’s employment within one hundred eighty (180)
days preceding a Change of Control (due to a reason other than an Ineligible Termination, death or disability) will be deemed
to have been a termination of employment in contemplation of a Change in Control.

 

(ii)
In determining whether a termination of Executive’s employment occurring more than one hundred eighty (180) days preceding
a Change of Control (due to a reason other than an Ineligible Termination, death or disability) constitutes a termination of employment
in contemplation of a Change in Control, the court or other tribunal making such determination shall consider the totality of
facts and circumstances surrounding such termination of employment. 

 

    	3

    	 

    

 

Schedule A

Form of Employment Release

 

SEPARATION
AGREEMENT AND GENERAL RELEASE

 

This
SEPARATION AGREEMENT AND GENERAL RELEASE (“Agreement”) is made and entered into by and among ProPhase Labs, Inc. (the
“Company”) and [INSERT EMPLOYEE NAME] (“Employee”). The Company and Employee shall be referred to as the
“Parties” or, each separately, a “Party.”

 

WHEREAS,
Employee and the Company have agreed that Employee shall permanently separate from employment with the Company effective on _____________,
20__; and

 

WHEREAS,
Employee and the Company wish to agree on matters relating to the end of Employee’s employment with the Company on the terms
included in this Agreement.

 

NOW,
THEREFORE, for good and valuable consideration, receipt of which is acknowledged, and fully intending to be legally bound, Employee
and the Company AGREE as follows:

 

1.
Separation Date. Employee’s employment with the Company shall terminate at the close of business on _______________,
20__ (“Separation Date”). To the extent he has not already, Employee shall receive his regular pre-separation compensation
and benefits through the Separation Date, consistent with Company policy. Employee confirms that he shall relinquish all titles
and positions with the Company

 

2.
Separation Benefits. If Employee signs, complies with, and does not revoke this Agreement, the Company shall provide the
following compensation and benefits to Employee. Employee acknowledges and agrees that such compensation and benefits constitute
valid consideration for this Agreement and that he would not be entitled to such compensation and benefits but for his execution
(and non-revocation) of this Agreement.

 

a.
Severance Payment. The Company shall pay Employee the severance payments and other severance benefits (collectively, the
“Benefits”) set forth in his Employment Agreement dated as of January _ 2018 (the “Employment Agreement”).
The Employee shall not receive the first cash payment until the first regular payroll date that falls at least ten (10) business
days after the Effective Date (as defined below).

 

b.
Accrued Vacation. The Company shall pay Employee __________ Dollars ($______) as payment for his [INSERT NUMBER] weeks
of accrued, unused vacation days, such payment being based on Employee’s base salary as of the Separation Date, less all
tax withholdings and other applicable deductions, which shall be paid to Employee in a single lump-sum payment. The Employee shall
not receive payment until the first regular payroll date that falls at least ten (10) business days after the Effective Date (as
defined below).

 

    	 

    	 

    

 

c.
Other Benefits. For the avoidance of doubt, this will confirm that Employee shall receive all of the severance payments
and other post-employment benefits set forth in his ____ and has not waived _____

 

3.
Consideration. Employee acknowledges: (i) the sufficiency of the consideration included in Section 2 above for the release
of Employee’s claims; (ii) that the Company is not, in the absence of this Agreement, otherwise required to make any such
payment to Employee; (iii) that such payment is being made to Employee because of his agreement to fulfill the promises and to
provide the releases stated in this Agreement; and (iv) that such payment is in excess of any payment or benefit, to which Employee
might otherwise be entitled.

 

4.
Taxes. Employee is responsible for paying any taxes on amounts he receives because he signed this Agreement. As to payments
made pursuant to this Agreement, Employee is responsible for determining and paying any required taxes. Employee agrees to indemnify
the Company and Released Parties (as defined below) for all expenses, penalties, or interest charges it incurs as a result of
not paying payroll taxes on, or withholding taxes from, amounts paid under this Agreement. Employee further agrees not to make
any claims against the Company or any other Released Party or other person based on how the Company or Released Parties report
amounts paid under this Agreement. In addition, Employee understands and agrees that the Released Parties have no duty to try
to prevent such an adverse determination.

 

5.
Benefits. Except as stated in this Agreement, the Employment Agreement, or otherwise required by law, all medical and health
benefits from the Company ceased as of Employee’s Separation Date.

 

    	2

    	 

    

 

6.
Release by Employee and Acknowledgement by Company. In consideration of the compensation and benefits provided in this
Agreement and intending to be legally bound, Employee, for himself, his heirs, executors, administrators, successors, assigns,
and legal and personal representatives, unconditionally and irrevocably releases and forever discharges the Company, each of the
Company’s current and former employees, agents, officers, directors, shareholders, members, managers, partners, and attorneys
(collectively, the “Released Parties”) from any and all claims, causes of action, liabilities, obligations, controversies,
damages, lawsuits, debts, demands, costs, charges and/or expenses (including attorneys’ fees and costs) arising solely out
of Employee’s employment relationship with the Company or the termination of that relationship of any nature whatsoever,
asserted or unasserted, known or unknown, suspected or unsuspected, that Employee ever had, now has or hereafter may have against
the Company and/or any of the other Released Parties that arose at any time regarding any matter up to and including the date
of this Agreement (together, the “Claims”). Without in any way limiting the generality of the foregoing, Employee
specifically acknowledges and agrees that the Claims released include all claims based on events occurring up to the date of Employee’s
execution of this Agreement under any federal, state or local statute, ordinance, or regulation, governing solely his employment
with the Company including, including but not limited to, the Civil Rights Acts of 1866 and 1867, Title VII of the Civil Rights
Act of 1964, the Civil Rights Act of 1991, the Employee Retirement Income Security Act, the Fair Labor Standards Act, the Family
and Medical Leave Act, the Americans with Disabilities Act, the National Labor Relations Act, Workers’ Compensation law,
the Rehabilitation Act, the Equal Pay Act, the Age Discrimination in Employment Act (“ADEA”), as amended by the Older
Workers Benefit Protection Act (“OWBPA”), any claims under the Pennsylvania Human Relations Act (PHRA), the Pennsylvania
Wage Payment and Collection Law (WPCL), the Pennsylvania Minimum Wage Act (PMWA), or under any common law, such as claims for
wrongful discharge, constructive discharge, defamation, unjust enrichment, breach of contract, or negligent or intentional infliction
of emotional distress. Employee does not release the Company from any claims that may arise (i) as a result of any failure by
the Company to comply with this Agreement or (ii) after the date of Employee’s execution of this Agreement.

 

Nothing
in this Agreement shall affect, terminate or discharge Employee’s rights to indemnification and advancement of expenses
pursuant to the Employment Agreement, the August 19, 2009 Indemnity Agreement, the Company’s by-laws, and applicable laws.

 

7.
No Other Claims or Proceedings by Employee. Employee warrants, covenants, and represents that he has not assigned or transferred
or purported to assign or transfer to any person any of the Claims. Employee also warrants, covenants, and represents that, as
of the date of this Agreement, neither he nor anyone acting on his behalf has made or filed any lawsuit, complaint, charge, action
or proceeding against any of the Company Released Parties with any federal, state, or local court agency or authority, or any
other regulatory authority.

 

8.
Unemployment Benefits. Should Employee apply for unemployment benefits following the Separation Date, the Company will
not actively seek to contest Employee’s application.

 

9.
Return of Documents and Things. On or before the Separation Date, Employee shall return to the Company, all electronic
and hard copy data, documents, and other materials, equipment and other property of the Company and the other Released Parties
in his possession or under his control. Such property includes, but is not limited to, any and all (1) company car; (2) cell phone,
computers, computer tablets, computer-related devices, computer storage media and other portable media, personal digital assistants
(PDAs), and other equipment; (3) hard copy and electronic documents, records, data, files, memoranda, reports, drawings, and plans.
and (4) keys and credit cards, in all cases that were provided by the Company or any other Company Released Parties that relate
to the Company or the other Company Released Parties, or that Employee has used, prepared or come into contact with during the
course of his employment with the Company.

 

    	3

    	 

    

 

10.
Full Compensation. Employee acknowledges that, other than (i) as stated in Section 2 of this Agreement, and (ii) as set
forth in his Employment Agreement, he has received payment in full of all of the compensation, benefits and/or payments due to
him from the Company by virtue of his status as an employee through the Separation Date, including all wages, bonuses, equity,
expense reimbursements, payments to benefit plans and any other payment under a compensation plan, compensation program, compensation
practice or compensation promise of the Company. Employee further acknowledges that he shall not be entitled to any post-separation
compensation or benefits by virtue of his status as an employee, including any severance or separation payments, except as specifically
stated in this Agreement and in his Employment Agreement. [** Note: Before signing this Agreement, parties need to confirm
that all salary and reimbursements that were due to Employee for periods prior to Separation Date were paid in full.]

 

11.
Non-Disparagement. Neither the Company, nor Employee shall disparage to any third party the professional or personal reputation
or character of the other. This Non-Disparagement provision applies to comments made verbally, in writing, electronically or by
any other means, including, but not limited to blogs, postings, message boards, texts, video or audio files and all other forms
of communication.

 

12.
References. The Company agrees to provide neutral references upon request, which is to only provide dates of employment,
position(s) held and employment status.

 

13.
Non-Admission. Employee agrees that the payments made and other consideration received pursuant to this Agreement are not
to be construed as an admission of legal liability by the Company and that no person or entity shall utilize this Agreement or
the consideration received pursuant to this Agreement as evidence of any admission of liability or obligation.

 

14.
Knowing and Voluntary Waiver. Employee acknowledges that he has carefully reviewed this Agreement with the benefit of counsel
and that he enters into such documents knowingly and voluntarily. Employee understands and acknowledges that, under this Agreement,
he is receiving compensation and benefits in addition to anything to which Employee is already entitled and that, by this Section,
the Company has hereby advised Employee in writing to consult with an attorney of his choosing prior to executing this Agreement,
which he has done. Employee acknowledges that neither the Company nor any of its employees, representatives or attorneys have
made any representations or promises concerning the terms or effects of this Agreement other than those contained in this Agreement.

 

    	4

    	 

    

 

15.
Notices. All notices shall be in writing and shall be sufficiently given if hand-delivered, sent by documented overnight
delivery service or registered or certified mail, postage prepaid, return receipt requested, or by telegram or telecopy (confirmed
by U.S. mail), receipt acknowledged, addressed below. Any such notice shall be deemed to have been given as of the date received,
in the case of personal delivery, or on the date shown on the receipt or confirmation, in all other cases. Any and all notice
as provided for in this Agreement may be given as follows:

 

	 	a.	If
    to the Company:
	 	 	 
	 	 	[INSERT
    NAME/ADDRESS]
	 	 	 
	 	b.	If
    to Employee:
	 	 	 
		 	[INSERT
    NAME/ADDRESS]

 

16.
Consideration Period; Right to Revoke Agreement; Effective Date. Employee acknowledges that he has been given a period
of 21 days within which to consider the Agreement (although he need not take all 21 days if he does not wish to do so), and the
Parties agree that any changes to this Agreement, whether material or immaterial, have not re-started the running of this period.
Employee may revoke or cancel this Agreement within seven days after his execution of it by notifying the Company of his desire
to do so in writing delivered to [INSERT NAME] at the Company. To be effective, notice must be given in the manner specified in
this Agreement before the close of business on the seventh day following Employee’s execution of this Agreement. Employee
understands and agrees that he shall not be entitled to any payments or benefits under this Agreement if he revokes this Agreement.
This Agreement shall be effective on the eighth day after Employee’s execution of it, assuming that he has not first validly
revoked the Agreement (the “Effective Date”).

 

17.
Interpretation and Governing Law. This Agreement shall be construed as a whole according to their fair meaning. It shall
not be construed strictly for or against Employee or the Company. This Agreement shall be governed by the statutes and common
law of the Commonwealth of Pennsylvania. The Parties irrevocably submit to the exclusive jurisdiction and venue of the United
States federal courts or the courts of the Commonwealth of Pennsylvania in any action or proceeding brought with respect to or
in connection with this Agreement. Each Party waives any objection based on forum non conveniens and waives any objection to venue
of any action instituted hereunder in such courts.

 

18.
Enforceability and Waiver. If any provision of this Agreement is determined to be invalid or unenforceable by a court of
competent jurisdiction by reason of the nature of the covenants contained in this Agreement, such terms shall be deemed changed
or reduced to enforceable terms, but only to the extent necessary to cure such invalidity. Further, whenever possible, each provision
of this Agreement shall be interpreted in such a manner to be effective and valid under applicable law. No waiver by either Party
of any breach of this Agreement shall be a waiver of any preceding or succeeding breach. No waiver by either Party of any right
under this Agreement shall be construed as a waiver of any other right.

 

    	5

    	 

    

 

19.
Headings/Counterparts. The headings of the sections in this Agreement are for convenience only and shall not be deemed
to control or affect the meaning or construction of any of the provisions of this Agreement. This Agreement may be executed in
two or more counterparts.

 

20.
Entire Agreement. This Agreement constitutes the entire agreement between Employee and the Company. Amendments to this
Agreement shall not be effective unless they are in writing signed by Employee and a duly authorized representative of the Company.

 

By
signing this Agreement, [insert employee name] acknowledges that he DOES SO Voluntarily after carefully reading and fully understanding
EACH provision and all of the effects of this agreement AND THE MUTUAL RELEASE, which includes a release of known and unknown
claims and Restricts future legal action against [INSERT COMPANY NAME] and Other released parties AS PROVIDED in this agreement.

 

IN
WITNESS WHEREOF, and intending to be legally bound, the Parties have executed this Agreement on this  day of ________,
2015.

 

	[INSERT
    EMPLOYEE NAME]	 	[INSERT
    COMPANY NAME]
	 	 	 	 	 
	By:	 	 	By:	 
	Date:	 	 	Date:	 

 

    	6Exhibit 10.2

 

ProPhase
Labs, Inc.

NOTICE
OF GRANT OF STOCK OPTION

 

The
Participant has been granted an option (the “Option”) to purchase certain Stock of ProPhase Labs, Inc.
(the “Company”) pursuant to ProPhase Labs, Inc. 2018 Stock Incentive Plan (the “Plan”),
as set forth below. The Option will be null and void if the Amended and Restated 2015 Executive Employment Agreement effective
February 23, 2018 between the Company and Participant (“2015 Employment Agreement”) is not approved
by a majority of the shares voted to approve the 2015 Employment Agreement (excluding the shares voted by Executive) at a meeting
of stockholders of the Company to be held no later than September 30, 2018 (the “Approval”).

 

	Participant:	Ted
    Karkus
	 	 
	Grant
    Date:	February
    23, 2018
	 	 
	Number
    of Option Stock:	2,300,000
	 	 
	Exercise
    Price:	$3.00
	 	 
	Initial
    Vesting Date:	March
    1, 2018
	 	 
	Option
    Expiration Date:	February
    22, 2023
	 	 
	Tax
    Status of Option:	Nonstatutory
    Stock Option
	 	 
	Vested
    Stock:	Except
    as provided in the Award Agreement and subject to Participant’s continuous Service, the number of Vested Stock (disregarding
    any resulting fractional share) as of any date is determined based upon the following schedule: 

 

	 	 	Number
    of Vested Stock
	 	 	 
	 	On
    the 1st day of each month beginning on the Initial Vesting Date and continuing for the following 35 months	

    63,888 shares
	 	 	 
	 	Plus	 
	 	 	 
	 	On
    the 1st day the 36th month following the Initial Vesting Date, an additional	

    63,920 shares

 

Capitalized
terms not defined herein shall have the meaning as set forth in the Plan.

 

If
Participant’s Service terminates for any reason other than as a result of (i) a termination by the Company not for Cause,
(ii) resignation by Executive with Good Reason, or (iii) due to Participant’s death or Disability, any portion of the Option
that is not vested and exercisable as of such date of termination of Service shall automatically expire in accordance with the
Award Agreement. The terms “Cause” and “Good Reason” are defined in the 2015 Employment Agreement.

 

If
Participant’s Service terminates as a result of (i) a termination by the Company not for Cause or (ii) resignation by Participant
with Good Reason, all of Participant’s outstanding and unvested Option shall automatically vest and become exercisable concurrently
upon such termination of Service, regardless of any prior existing vesting schedules.

 

If
Participant’s Service terminates due to his death or Disability, vesting of the Option for three (3) additional months following
the termination of Service shall be accelerated concurrently upon such of termination of Service.

 

The
vested portion of the Option upon a termination of Service for any reason shall remain exercisable up to the Option Expiration
Date.

 

    	 

    	 

    

 

The
Exercise Price represents an amount the Company believes to be no less than the Fair Market Value of a share of Stock as of the
Grant Date, determined in good faith in compliance with the requirements of Section 409A of the Code. However, there is no guarantee
that the Internal Revenue Service will agree with the Company’s determination. A subsequent IRS determination that the Exercise
Price is less than such fair market value could result in adverse tax consequences to the Participant. By signing below, the Participant
agrees that the Company, its Directors, Officers and stockholders shall not be held liable for any tax, penalty, interest or cost
incurred by the Participant as a result of such determination by the IRS. The Participant is urged to consult with his or her
own tax advisor regarding the tax consequences of the Option, including the application of Section 409A.

 

In
the event of any conflict or inconsistency between the terms set forth in (i) this Notice of Grant of Stock Option, the Plan,
and the Award Agreement and (ii) the 2018 Executive Employment Agreement between Company and Participant, as amended, or any subsequent
consulting or service agreement between Company and Participant (collectively referred to as “Participant’s Service
Agreement”), the terms and provisions of Participant’s Service Agreement, as may be amended from time to time, shall
prevail and be given priority.

 

The
Participant acknowledges receipt of copies of this Notice of Grant of Stock Option, the Plan, and the Award Agreement, represents
that the Participant has read and is familiar with their provisions, and hereby accepts the Option subject to all of the terms
and conditions therein.

 

	ProPhase
    Labs, Inc.	 	TED
    KARKUS
	 	 	 	 
	By:
    	/s/
    Monica Brady	 	 /s/
    Ted Karkus
	Name:	Monica
    Brady	 	Signature
	Title:	Chief Accounting Officer	 	Date:
    2/18/2018
	Date:	2/19/2018	 	
			 	 
	Address:	Prophase
    Labs, Inc.	 	Address:

                                                         

	 	621 N. Shady Retreat Road	 	
	 	Doylestown, PA 18901	 	 

 

ATTACHMENTS:
ProPhase Labs, Inc. 2018 Stock Incentive Plan, as amended to the Grant Date; Award Agreement and Exercise Notice

 

    	 

    	 

    

 

PROPHASE
LABS, INC.

AWARD
AGREEMENT

 

ProPhase
Labs, Inc. has granted to the Participant named in the Notice of Grant of Stock Option (the “Grant Notice”)
to which this Award Agreement is attached an Option to purchase certain Stock upon the terms and conditions set forth in the Grant
Notice and this Award Agreement. The Option has been granted pursuant to and shall in all respects be subject to the terms and
conditions of ProPhase Labs, Inc. 2018 Stock Incentive Plan (the “Plan”), as amended to the Grant Date,
the provisions of which are incorporated herein by reference. By signing the Grant Notice, the Participant: (a) acknowledges receipt
of, and represents that the Participant has read and is familiar with the terms and conditions of, the Grant Notice, this Award
Agreement and the Plan, (b) accepts the Option subject to all of the terms and conditions of the Grant Notice, this Award Agreement
and the Plan, and (c) agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee upon
any questions arising under the Grant Notice, this Award Agreement or the Plan.

 

		1.	Definitions
                                         and Construction.

 

1.1. Definitions. Unless
otherwise defined herein, capitalized terms shall have the meanings assigned to such terms in the Grant Notice or the
Plan.

 

1.2. Construction. Captions
and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of
this Award Agreement. Except when otherwise indicated by the context, the singular shall include the plural and the plural
shall include the singular. Use of the term “or” is not intended to be exclusive, unless the context clearly
requires otherwise.

 

		2.	Tax
                                         Status of Option.

 

This
Option is intended to be a Nonstatutory Stock Option and shall not be treated as an Incentive Stock Option within the meaning
of Section 422(b) of the Code.

 

		3.	Administration.

 

All
questions of interpretation concerning the Grant Notice, this Award Agreement, the Plan or any other form of agreement or other
document employed by the Company in the administration of the Plan or the Option shall be determined by the Committee. All such
determinations by the Committee shall be final, binding and conclusive upon all persons having an interest in the Option, unless
fraudulent or made in bad faith.

 

		4.	Exercise
                                         of the Option.

 

4.1. Right
to Exercise. Except as otherwise provided herein, the
Option shall be exercisable on and after the Initial Vesting Date and prior to the termination of the Option (as provided in
Section 6) in an amount not to exceed the number of Vested Stock less the number of Stock previously acquired upon exercise
of the Option. In no event shall the Option be exercisable for more Stock than the Number of Option Stock, as adjusted
pursuant to Section 4.3 of the Plan. The Option may not be exercised unless and until the Approval is obtained.

 

    	1

    	 

    

 

4.2. Method
of Exercise. Exercise of the Option shall be by means of
electronic or written notice (the “Exercise Notice”) in a form authorized by the Company, which as
of the Grant Date is the Stock Option Exercise Notice attached to this Award Agreement. An electronic Exercise Notice must be
digitally signed or authenticated by the Participant in such manner as required by the notice and transmitted to the Company
or an authorized representative of the Company (including a third-party administrator designated by the Company). In the
event that the Participant is not authorized or is unable to provide an electronic Exercise Notice, the Option shall be
exercised by a written Exercise Notice addressed to the Company, which shall be signed by the Participant and delivered in
person, by certified or registered mail, return receipt requested, by confirmed facsimile transmission, or by such other
means as the Company may permit, to the Company, or an authorized representative of the Company (including a third-party
administrator designated by the Company). Further, each Exercise Notice must be received by the Company prior to the
termination of the Option as set forth in Section 6 and must be accompanied by full payment of the aggregate Exercise Price
for the number of Stock being purchased. The Option shall be deemed to be exercised upon receipt by the Company of such
electronic or written Exercise Notice and the aggregate Exercise Price.

 

4.3.
Beneficial Ownership of Stock; Certificate Registration. The Participant hereby authorizes the Company, in its sole
discretion, to deposit for the benefit of the Participant with a broker of the Company’s choosing any or all Stock
acquired by the Participant pursuant to the exercise of the Option. Except as provided by the preceding sentence, a
certificate for the Stock as to which the Option is exercised shall be registered in the name of the Participant, or, if
applicable, in the names of the heirs of the Participant.

 

		5.	Termination
                                         of the Option.

 

The
vested portion of the Option shall terminate and may no longer be exercised after the close of business on the Option Expiration
Date.

 

		6.	Effect
                                         of Termination of Service – Option Exercisability.

 

Except
as set forth in the Grant Notice, the Option shall terminate immediately upon the Participant’s termination of Service to
the extent that it is then unvested and shall be exercisable after the Participant’s termination of Service to the extent
it is then vested up to the close of business on the Option Expiration Date.

 

		7.	Miscellaneous
                                         Provisions.

 

7.1.
Termination or Amendment. The Committee may terminate or amend the Plan or the Option at any time; provided, however,
that except as provided in Section 9 of the Plan in connection with a Change of Control, no such termination or amendment may
adversely affect the Option or any unexercised portion hereof without the consent of the Participant unless such termination
or amendment is necessary to comply with any applicable law or government regulation, including, but not limited to Section
409A of the Code. No amendment or addition to this Award Agreement shall be effective unless in writing.

 

7.2.
Compliance with Section 409A. The Company intends that income realized by the Participant pursuant to the Plan and this
Award Agreement will not be subject to taxation under Section 409A of the Code. The provisions of the Plan and this Award
Agreement shall be interpreted and construed in favor of satisfying any applicable requirements of Section 409A of the Code.
The Company, in its reasonable discretion, may amend (including retroactively) the Plan and this Agreement in order to
conform to the applicable requirements of Section 409A of the Code, including amendments to facilitate the
Participant’s ability to avoid taxation under Section 409A of the Code. However, the preceding provisions shall not be
construed as a guarantee by the Company of any particular tax result for income realized by the Participant pursuant to the
Plan or this Award Agreement. In any event, the Company shall be responsible for the payment of any applicable taxes on
income realized by the Participant pursuant to the Plan or this Award Agreement.

 

    	2

    	 

    

 

7.3.
Further Instruments. The parties hereto agree to execute such further instruments and to take such further action as may
reasonably be necessary to carry out the intent of this Award Agreement.

 

7.4.
Binding Effect. Subject to the restrictions on transfer set forth herein, this Award Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective heirs, executors, administrators, successors and
assigns.

 

7.5.
Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to
current or future participation in the Plan by electronic means. The Participant hereby consents to receive such documents by
electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained
by the Company or a third party designated by the Company.

 

7.6.
No Rights as a Stockholder or Employee. The Participant shall have no rights as a stockholder with respect to any Stock
covered by the Option until the date of the issuance of the Stock for which the Option has been exercised (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). No adjustment shall
be made for dividends, distributions or other rights for which the record date is prior to the date the Stock are issued,
except as provided under the Plan. If the Participant is an Employee, the Participant understands and acknowledges that,
except as otherwise provided in a separate, written employment agreement between the Company and the Participant, the
Participant’s employment is “at will” and is for no specified term. Nothing in this Award Agreement shall
confer upon the Participant any right to continue in the Service of the Company or interfere in any way with any right of the
Company to terminate the Participant’s Service as a Director, an Employee or Consultant, as the case may be, at any
time.

 

7.7.
Applicable Law. This Award Agreement shall be governed by the laws of the State of Delaware as such laws are applied to
agreements between Delaware residents entered into and to be performed entirely within the State of Delaware.

 

7.8.
Counterparts. The Grant Notice may be executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

 

    	3

    	 

    

 

	Nonstatutory
Stock Option	Participant:
    	 
	 	Date:
    	 

 

STOCK
OPTION EXERCISE NOTICE

 

	ProPhase Labs, Inc.	 
	 	 	 
	Attention:
    	 	 
	 	 
	 	 

 

Ladies
and Gentlemen:

 

1. Option. I
was granted an option (the “Option”) to purchase Stock of ProPhase Labs, Inc. (the “Company”)
pursuant to the Company’s 2018 Stock Incentive Plan (the “Plan”), my Notice of Grant of
Stock Option (the “Grant Notice”) and my Award Agreement as follows:

 

	Grant
    Date: 	 
	Number
    of Option Stock: 	 
	Exercise
    Price per Share: $ 	 

 

2. Exercise
of Option. I hereby elect to exercise the Option to purchase the following number of Stock, all of which are Vested
Stock, in accordance with the Notice of Grant of Stock Option and the Award Agreement:

 

	Total
    Stock Purchased: 	 
	 	 
	Total
    Exercise Price (Total Stock X Price per Share)	$
    

 

3. Payments. I
enclose payment in full of the total exercise price for the Stock in the following form(s), as authorized by my Award
Agreement:

 

	 	__
    Cash:	 	$
	 
	 	 	 	 	 
	 	__
    Check:	 	$
    	            
	 	 	 	 	 
	 	__
    Tender of Company Stock:	Contact Plan Administrator 

 

4. Tax
Withholding. I authorize payroll withholding and otherwise will make adequate provision for the federal, state,
local and foreign tax withholding obligations of the Company, if any, in connection with the Option. If I am exercising a
Nonstatutory Stock Option, I enclose payment in full of my withholding taxes, if any, as follows:

 

(Contact
Plan Administrator for amount of tax due.)

 

	 	__
    Cash:	$
    	 
	 	__
    Check:	$
    	 

 

5. Participant
Information.

 

	 	My
    address is:	 
	 	 	 
	 	My
    Social Security Number is:	 

 

6. Binding
Effect. I agree that the Stock is being acquired in accordance with and subject to the terms, provisions and
conditions of the Notice of Grant of Stock Option, the Award Agreement to all of which I hereby expressly assent. This
Agreement shall inure to the benefit of and be binding upon my heirs, executors, administrators, successors and
assigns.

 

    	 

    	 

    

 

I
understand that I am purchasing the Stock pursuant to the terms of the Plan, the Notice of Grant of Stock Option and my Award
Agreement, copies of which I have received and carefully read and understand.

 

	 	Very
    truly yours,	 
	 	 	 
	 	 	 
	 	(Signature)	 

 

Receipt
of the above is hereby acknowledged.

 

	ProPhase Labs, Inc.	 
	 	 	 
	By:
    	 	 
	Title:
    	     	 
	Dated:

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