Current Report Filing (8-k)
March 29 2017 - 5:05PM
Edgar (US Regulatory)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported):
March 29, 2017
PROPHASE
LABS, INC.
(Exact
name of registrant as specified in its charter)
Delaware
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0-21617
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23-2577138
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(State
or other jurisdiction
of
incorporation)
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(Commission
file
number)
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(I.R.S.
Employer
Identification
No.)
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621
N. Shady Retreat Road, Doylestown, PA, 18901
(Address
of principal executive offices)
(Registrant’s
telephone number, including area code):
(215) 345-0919
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
[ ]
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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[ ]
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-2)
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[ ]
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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[ ]
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c))
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Item
1.01. Entry into a Material Definitive Agreement.
The
information disclosed in Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 1.01.
Item
1.02. Termination of a Material Definitive Agreement.
On
March 29, 2017, in connection with the Asset Sale described in Item 2.01 below, ProPhase Labs, Inc., a Delaware corporation (the
“Company”), paid in full the remaining principal and accrued interest, in the total amount of $1,552,676.14, due under
the Company’s 12% Secured Promissory Notes – Series A (the “Notes”) issued in favor of John E. Ligums,
Jr. and Justin J. Leonard (the “Noteholders”), each dated as of December 11, 2015. Of the $1,552,667.14 paid to the
Noteholders, $68,850.00 was netted against the aggregate exercise price of warrants simultaneously being exercised by the Noteholders.
The
Notes bore interest at a rate of 12% per annum, payable semi-annually, and were scheduled to mature on June 15, 2017. The Notes
could be pre-paid at any time prior to maturity without penalty.
In
connection with the issuance of the Notes, the Company entered into a security agreement with John E. Ligums, Jr., as collateral
agent for the Noteholders (the “Security Agreement”) to secure the timely payment and performance in full of the Company’s
obligations under the Notes. Under the Security Agreement, the Company granted to the collateral agent, for the benefit of the
Noteholders a lien upon and security interest in the property and assets listed as collateral in the Security Agreement, including
without limitation, all of the Company’s personal property, inventory, equipment, general intangibles, cash and cash equivalents,
and proceeds. In connection with the payoff of the Notes, the Security Agreement was terminated.
Item
2.01. Completion of Acquisition or Disposition of Assets.
As
previously disclosed on a Current Report on Form 8-K filed on January 9, 2017, the Company entered into an Asset Purchase Agreement
(the “Asset Purchase Agreement”) with a wholly-owned subsidiary of Mylan N.V. (“Mylan”), on January 6,
2017, pursuant to which the Company agreed to sell substantially all of the assets of the Company, which are comprised of the
intellectual property and other assets related to the Company’s Cold-EEZE
®
brand and product line, to Mylan
for $50,000,000 (the “Asset Sale”). As described in Item 5.07 of this Current Report, the Company’s stockholders
approved the Asset Sale on March 29, 2017 at the special meeting of stockholders. Following its receipt of the requisite stockholder
approval on March 29, 2017, the Company completed the Asset Sale.
The
foregoing description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of the agreement filed as Exhibit 2.1 to this Current Report on Form 8-K. The Asset Purchase Agreement contains
representations and warranties made by the parties as of specific dates and solely for their benefit. The representations and
warranties reflect negotiations between the parties and are not intended as statements of fact to be relied upon by the Company’s
stockholders or any other person or entity other than the parties to the Asset Purchase Agreement and, in certain cases, represent
allocation decisions among the parties and are modified or qualified by correspondence or confidential disclosures made between
the parties in connection with the negotiation of the Asset Purchase Agreement (which disclosures are not reflected in the Asset
Purchase Agreement itself, may not be true as of any date other than the date made, or may apply standards of materiality in a
way that is different from what may be viewed as material by stockholders). Accordingly, the representations and warranties may
not describe the actual state of affairs at the date they were made or at any other time, and stockholders should not rely on
them as statements of fact. Moreover, information concerning the subject matter of the representations and warranties may change
after the date of the Asset Purchase Agreement.
In
connection with the closing of the transactions contemplated by the Asset Purchase Agreement, the Company and its wholly-owned
subsidiary, Pharmaloz Manufacturing, Inc. (“PMI”), entered into a Manufacturing Agreement (the “Manufacturing
Agreement”) with Mylan. Pursuant to the terms of the Manufacturing Agreement, Mylan (or an affiliate or designee) will purchase
the current inventory of the Company’s Cold-EEZE
®
brand and product line and PMI will manufacture certain
products for Mylan, as described in the Manufacturing Agreement. Unless terminated sooner by the parties, the Manufacturing Agreement
will remain in effect until March 29, 2022. Thereafter, the Manufacturing Agreement may be renewed by Mylan for up to five successive
one year periods by providing notice of its intent to renew not less than 90 days prior to the expiration of the then-current
term.
The
foregoing description of the Manufacturing Agreement does not purport to be complete and is qualified in its entirety by reference
to the full text of the agreement filed as Exhibit 2.2 to this Current Report on Form 8-K and is incorporated by reference herein.
On
March 29, 2017, the Company issued a press release announcing the completion of the Asset Sale. The press release is filed as
Exhibit 99.1 to this Current Report and is incorporated herein by reference.
Item
5.07. Submission of Matters to a Vote of Security Holders.
A
special meeting of the stockholders of the Company was held on March 29, 2017 (the “Special Meeting”). As of the record
date, the Company had 17,080,776 shares of common stock, par value $0.0005 per share, outstanding and entitled to vote at the
Special Meeting. The following is a description of the votes cast for and against, as well as abstentions and broker non-votes,
with respect to each matter voted upon at the Special Meeting. At the Special Meeting, the Company’s stockholders (i) approved
the Asset Sale and the transactions contemplated by the Asset Purchase Agreement (Proposal No. 1), and (ii) granted the persons
named as proxies discretionary authority to vote to adjourn the special meeting, if necessary, to solicit additional proxies to
vote in favor of Proposal No. 1 (Proposal No. 2).
Proposal
No. 1
– To consider and act upon a proposal to sell substantially all of the assets of the Company, which are comprised
of the intellectual property and other assets relating to its Cold-EEZE
®
brand and product line, to Mylan, for
cash, pursuant to the Asset Purchase Agreement, and the other transactions contemplated thereby.
For
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Against
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Abstentions
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Broker
Non-Votes
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11,375,970
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167,390
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700
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N/A
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Proposal
No. 2
– To consider and act upon a proposal to grant the persons named as proxies discretionary authority to vote to
adjourn the special meeting, if necessary, to solicit additional proxies to vote in favor of Proposal No. 1.
For
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Against
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Abstentions
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Broker
Non-Votes
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11,335,744
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206,515
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1,801
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N/A
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Item
9.01 Financial Statements and Exhibits
(d)
Exhibits
No.
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Description
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2.1†+
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Asset
Purchase Agreement, dated January 6, 2017, by and between ProPhase Labs, Inc., Meda Consumer Healthcare Inc. and Mylan Inc.,
as Buyer Guarantor.
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2.2†+
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Manufacturing
Agreement, dated March 29, 2017, by and between Meda Consumer Healthcare Inc., Pharmaloz Manufacturing, Inc. and Prophase
Labs, Inc.
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99.1
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Press
Release, dated March 29, 2017, entitled “ProPhase Labs, Inc. Completes Sale Of Cold-EEZE
®
Business To
Mylan.”
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†
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Confidential
treatment granted as to portions of the exhibit. Confidential materials omitted and filed separately with the Securities and
Exchange Commission.
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+
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Certain
schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally
a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.
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Pursuant
to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
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ProPhase
Labs, Inc.
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By:
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/s/
Robert V. Cuddihy, Jr.
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Robert
V. Cuddihy, Jr.
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Chief
Operating Officer and
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Chief
Financial Officer
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Date:
March 29, 2017
Exhibits
Index
No.
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Description
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2.1†+
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Asset
Purchase Agreement, dated January 6, 2017, by and between ProPhase Labs, Inc., Meda Consumer Healthcare Inc. and Mylan Inc.,
as Buyer Guarantor.
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2.2†+
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Manufacturing
Agreement, dated March 29, 2017, by and between Meda Consumer Healthcare Inc., Pharmaloz Manufacturing, Inc. and Prophase
Labs, Inc.
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99.1
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Press
Release, dated March 29, 2017, entitled “ProPhase Labs, Inc. Completes Sale Of Cold-EEZE
®
Business To
Mylan.”
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†
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Confidential
treatment granted as to portions of the exhibit. Confidential materials omitted and filed separately with the Securities and
Exchange Commission.
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+
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Certain
schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally
a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request.
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