Item 1.01. Entry into a Material Definitive Agreement.
On June 10, 2022, ProPhase Diagnostics, Inc. (“ProPhase Diagnostics”), a
wholly-owned subsidiary of ProPhase Labs, Inc. (the “Company”), entered into a
Lease Agreement (the “Lease”) with BRG Office L.L.C. and Unit 2 Associates
L.L.C. (as tenants in common, the “Landlord”), pursuant to which ProPhase
Diagnostics has agreed to lease approximately 4,516 sq. feet located on the
first floor (the “Leased Premises”) of 711 Stewart Avenue, Garden City, New York
(the “Building”). ProPhase Diagnostics currently leases space on the second
floor of the Building. The Leased Premises will be used to expand ProPhase
Diangostic’s in-house lab capabilities to include traditional clinical testing
across multiple specialty areas and Next Generation Sequencing (NGS) to perform
Whole Genome Sequencing (WGS) and an array of genetic diagnostic test offerings
for both clinical and research purposes.
The Lease is effective as of June 10, 2022 and will commence upon the date of
the Landlord’s substantial completion of certain improvements to the Leased
Premises (the “Commencement Date”), as set forth in the Lease, targeted to be
approximately five months from the execution of the Lease. The initial term of
the Lease will expire on July 15, 2031, unless sooner terminated as provided in
the Lease. The Company may extend the term of the Lease for one additional
option period of five years pursuant to the terms described in the Lease. The
Company has the option to terminate the Lease effective July 31, 2027 (the
“Early Termination Date”), provided the Company gives the Landlord written
notice not less than nine months and not more than 12 months prior to the Early
Termination Date and pays the Landlord a termination fee as more particularly
described in the Lease.
For the first year of the Lease, the Company will pay a base rent of $11,290 per
month (subject to an eight month abatement period), with a gradual rental rate
increase of approximately 2.75% for each 12 month period thereafter, culminating
in a monthly base rent of $14,026 during the final months of the initial term of
the Lease. In addition to the monthly base rent, the Company is responsible for
its proportionate share of real estate tax escalations in accordance with the
terms of the Lease. The Landlord will provide a construction allowance to the
Company in an aggregate amount not to exceed $203,220, to reimburse the Company
for the cost of certain improvements to be made by the Company to the Leased
The Lease contains customary representations, warranties, covenants,
indemnification provisions, default provisions, and termination provisions for a
lease of this nature.
The Company has guaranteed ProPhase Diagnostics’ obligations under the Lease
pursuant to that certain Guaranty, dated as of June 10, 2022 (the “Guaranty
Also on June 10, 2022, ProPhase Diagnostics entered into a First Amendment to
the Lease dated December 8, 2021 (the “Second Floor Lease”), by and between
ProPhase Diagnostics and the Landlord (the “Lease Amendment”), pursuant to which
ProPhase Diagnostics currently leases approximately 25,795 square feet located
on the second floor of the Building. The Lease Amendment amends the Second Floor
Lease to provide that any uncured default by ProPhase Diagnostic or any
affiliate of ProPhase Diagnostic under the Lease will constitute a default by
ProPhase Diagnostics under the Second Floor Lease.
The foregoing description of the Lease, the Guaranty Agreement and the Lease
Amendment does not purport to be complete and is qualified in its entirety by
reference to the full text of the Lease, the Guaranty Agreement and the Lease
Amendment, which are attached hereto as Exhibits 10.1, 10.2 and 10.3,
respectively, and incorporated by reference into this Item 1.01.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The disclosure set forth under Item 1.01 of this Current Report on Form 8-K is
incorporated into this Item 2.03 by reference.
Item 7.01 Regulation FD Disclosure.
On June 13, 2022, the Company issued a press release announcing the Lease and
other related matters. A copy of the press release is furnished as Exhibit 99.1
to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits No. Description 10.1 Lease Agreement by and between ProPhase Diagnostics, Inc. and BRG Office L.L.C. and Unit 2 Associates L.L.C., as tenants in common, dated June 10, 2022 10.2 Guaranty dated June 10, 2022 10.3 First Amendment of Lease, dated June 10, 2022, by and between ProPhase Diagnostics, Inc. and BRG Office L.L.C. and Unit 2 Associates L.L.C., as tenants in common 99.1 Press Release dated June 13, 2022 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
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.
ProPhase Labs, Inc. By: /s/ Monica Brady Monica Brady Chief Accounting Officer
Date: June 13, 2022
© Edgar Online, source Glimpses