AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETE AGREEMENT

 

THIS AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETE AGREEMENT (this “Agreement”) is entered into and effective as of the 14th day of March, 2011 (the “Effective Date”), by and among Macoven Pharmaceuticals, LLC, a Louisiana limited liability company (“Employer”), Pernix Therapeutics Holdings, Inc., a Maryland corporation and sole member of Employer (“Parent”) and John McMahon, a resident of the lawful age of majority of the Commonwealth of Kentucky (“Employee”), who hereby agree as follows:

WHEREAS, Employer, Employee and Parent entered into an Employment and Non-Compete Agreement on September 8, 2010 (the “Original Agreement”) as an inducement to Employee joining Employer as its Vice President of Sales;

WHEREAS, the parties agree and acknowledge that no equity award was payable to Employee for the quarter ended December 31, 2010 under the terms of the Original Agreement; and

WHEREAS, the parties desire to amend and restate the Original Agreement for the purpose of creating an incentive component of Employee’s compensation package that better aligns the interests of Parent, Employer and Employee.

NOW, THEREFORE, in consideration of the premises and the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Employer, Parent and Employee, intending to be legally bound, hereby agree as follows:

1. Period of Employment.  Employer shall employ Employee, and Employee shall serve Employer during the period commencing on the Effective Date, and continuing through and including June 30, 2016 (the “Term”).  The Term shall automatically renew each year thereafter in accordance with the terms of this Agreement unless otherwise terminated by either Employer or Employee.

2. Duties and Responsibilities.  Employee shall be employed by Employer as Vice President of Sales of Employer.  As such, Employee shall provide services typically provided by a Vice President of Sales in the Business of the Employer (as defined in Section 10(b)), including, without limitation, overseeing and managing the sales and marketing activities of Employer and such other duties and responsibilities as may from time to time be assigned to or vested in Employee by Parent’s Board of Directors (the “Board”) or by any officer of Employer or Parent superior to Employee.  Employee shall have no authority to contractually bind Employer or Parent, and shall not be considered an executive officer of Employer or Parent within the meaning of the Securities Exchange Act of 1934, as amended.  Additionally, Employee’s employment by Employer shall be subject to, and limited by, the following conditions:

(a) Employee shall be available to provide a minimum of forty-five (45) hours and a maximum of sixty (60) hours per week of services to Employer.  Employee shall provide such services upon request of Employer, but Employer shall not be obligated to request that such services be provided.  So long as Employee is employed by Employer, Employee shall devote Employee’s full time, attention, skill and ability during normal and usual business hours (and outside those hours when reasonably necessary to fulfill Employee’s duties hereunder) to the faithful and diligent performance of the duties and responsibilities described herein.

 

(b) Employee shall (i) devote his full time, energy and attention during regular business hours (and outside those hours when reasonably necessary to fulfill Employee’s duties hereunder) solely to the benefit and the Business of the Employer; (ii) not be employed by any other person or entity, whether on a full-time or part-time basis, or otherwise act as a consultant or independent contractor for the benefit of any other person or entity; and (iii) not undertake any other activities (individually or collectively), that conflict or materially interfere with the performance of Employee’s duties hereunder, provided that in no event shall Employee be prohibited from performing personal and/or charitable activities and any other activities as may be approved by Employer.

(c) Employee’s services shall be performed from Employee’s home located at Louisville, Kentucky or such other location as may be requested from time to time by Employer, as well as at such other locations and subject to such travel requirements as may be reasonably necessary to the performance of Employee’s duties hereunder, provided that Employee’s main work location shall not be moved from Louisville, Kentucky without Employee’s prior written consent.

3. Compensation.  As compensation to the Employee for the services to be rendered pursuant to this Agreement:

(a) Employer shall pay to Employee an annual base salary of Two Hundred and Eight Thousand Dollars ($208,000) (the “Salary”), payable in accordance with Employer’s normal salary payment schedule.

(b) For each calendar year beginning with 2011 and continuing during the term of this Agreement, Employee shall be eligible for an annual cash bonus based on the performance of Employee’s duties at the conclusion of each calendar year, up to 100% of Salary, with the determination of whether to award any annual bonus and the amount of any such bonus to be made by Employer in its sole and absolute discretion.  The Employee must be employed with the Employer, the Parent, or another subsidiary of the Parent on the last day of the performance year in order to be eligible for any such bonus.  Payment of any such bonus shall be made on or after January 1 and on or before March 15 of the year following the performance year.

(c) Upon execution of this Agreement, Employer shall pay or cause to be paid to Employee a cash bonus in the amount of Two Hundred Thousand Dollars ($200,000).

(d) The Employee shall be eligible to earn additional quarterly bonuses subject to the following terms and conditions:

(i) Beginning with the quarterly period ended June 30, 2011 and for each of the nineteen quarterly periods thereafter, if the Employer’s Net Income (as defined below) for such quarter is in excess of One Million Dollars ($1,000,000), the Employer shall pay Two Hundred Thousand Dollars ($200,000) to Employee, provided that, as of the last day of such fiscal quarter, Employer is employed by Parent, Employer, or another affiliate of Parent (the “Employee Quarterly Bonus”).

 

(ii) The payment of the Employee Quarterly Bonus must be made no later than three (3) business days following the completion and filing of Parent’s quarterly or annual report with the Securities Exchange Commission (“SEC”) for the relevant quarterly period.  Notwithstanding the foregoing, any Employee Quarterly Bonus earned for a quarterly period ending on December 31 shall be paid by March 15 of the following year.

(iii) Notwithstanding anything contained herein to the contrary, during any calendar year in which the Net Income of Employer exceeds Four Million Dollars ($4,000,000) and Employee did not earn an Employee Quarterly Bonus in either the second or third quarter of such calendar year, Employee shall, in addition to the Employee Quarterly Bonus payable to Employee under Section 3(d)(i) for the fourth quarter of such calendar year, be entitled to any Employee Quarterly Bonus not previously earned by Employee under Section 3(d)(i) for that second and/or third quarter.  Any award made pursuant to this Section 3(d)(iii) shall be made no later than March 15 of the following year.

(iv) The compensation committee of the Board (the “Committee”), in its sole discretion, may elect to pay any Employee Quarterly Bonus in cash; shares of the Parent’s common stock, $0.01 par value per share (the “Common Stock”); or a combination of cash and shares of Common Stock.  If the Committee elects to pay any Employee Quarterly Bonus in shares of Common Stock, all such shares shall be issued from Parent’s 2009 Stock Incentive Plan or such other employee stock incentive plan of Parent as may be approved by its stockholders, the shares of which are registered under the Securities Act of 1933 (all such plans together, the Parent’s “Stock Incentive Plans”).  Any such shares may only be issued in compliance with the terms of the applicable Stock Incentive Plan.  All such determinations under this Section 3 shall be made in accordance with the Committee’s charter and the terms of the applicable Stock Incentive Plan.

(v) As used in this Agreement, “Net Income” shall mean Employer’s net sales (gross sales net of all estimates and provisions for sales returns, discounts, customer rebates and chargebacks, Medicaid rebates, and any other gross to net deductions from sales) plus any other income from operations less cost of product sales, selling expenses, general and administrative expenses, research and development expenses, depreciation and amortization expenses, interest expenses, tax expenses and any other non-cash expenses.  Notwithstanding anything contained herein to the contrary, for purposes of determining whether an Employee Quarterly Bonus has been earned in, or a Quarterly Bonus Pool (as defined in Section 4(a)) will be established for, a given quarterly period, the related award expense and any Required Withholding (as defined in Section 7(a)) paid by Parent on behalf of the recipient shall be expressly excluded from the calculation of Net Income.  Net Income shall include 100% of net sales of Zema-Pak by Employer, regardless of any contractual provision to the contrary.  Notwithstanding anything contained herein to the contrary, if Employer’s Net Income for any quarter during the Term results in a negative (loss) amount (a “Net Loss”), Employer shall (for purposes of this Agreement) reduce the amount of Net Income in one or more subsequent quarterly periods by the amount of such Net Loss for the purpose of determining the Net Income for such current quarterly period.  The Employee agrees and understands that the determination of Employer’s Net Income for all such periods shall be made by Parent, in its sole and absolute discretion, in accordance with generally accepted accounting principles and the terms of this Agreement.

 

(e) Employer shall provide Employee and eligible dependents with health insurance coverage (having such terms and scope of coverage as may be provided to the executive officers of Parent) paid by Employer during the Term, and thereafter, the Employee has the right to make COBRA insurance payments for health coverage for the maximum period permissible by law.  Additionally, Employee shall be entitled to two (2) weeks paid vacation annually, the unused portion of which can be rolled over from year to year in accordance with the Parent’s Employee Handbook.

(f) Subject to Section 8, Employer shall reimburse Employee for all reasonable, ordinary, and necessary business expenses incurred in the performance of Employee’s duties hereunder in accordance with and subject to the terms and conditions of Employer’s then prevailing standard expense policy, a copy of which has been provided to Employee.  As a condition precedent to obtaining such reimbursement, Employee shall provide to Employer any and all statements, bills or receipts evidencing the expenses for which Employee seeks reimbursement, and such other related information or materials as Employer may from time to time reasonably require.

(g) In the event a Business Combination (as such term is defined in Parent’s 2009 Stock Incentive Plan) resulting in a Change of Control (as such term is defined in Parent’s 2009 Stock Incentive Plan) of Parent whereby all shares of outstanding Common Stock are exchanged for consideration in the form of cash or securities of another entity on or before March 31, 2013, Parent shall cause to be paid to Employee two times (2X) Employee’s base salary within fifteen days of such occurrence, provided such Change of Control qualifies as a change of control under Section 409A (as defined in Section 8(a)).

4. Establishment of Quarterly Bonus Pool.  Parent, acting through the Committee, agrees to establish a quarterly bonus pool, subject to the following terms and conditions:

(a) Beginning with the quarterly period ended June 30, 2011 and for each of the nineteen quarterly periods thereafter, if the Employer’s Net Income for such quarter is in excess of One Million Dollars ($1,000,000), the Employer shall establish or cause to be established a pool of Two Hundred Thousand Dollars ($200,000) to be paid to such full or part-time employees of Parent, Employer, or another affiliate of Parent as the Committee may determine in accordance with this Section 4 (the “Quarterly Bonus Pool”).

(b) Within thirty (30) days following the completion and filing of Parent’s quarterly or annual report with the SEC for a period for which a Quarterly Bonus Pool has been established, the Committee shall approve a list of the participants that includes an allocation of  all Quarterly Bonus Pool amounts among the participants (the “Bonus Allocation”).  Only full-time or part-time employees of the Parent, Employer, or another affiliate of the Parent who were employed on the last day of the applicable quarter are eligible to participate in the Quarterly Bonus Pool.  No employee has any right to any amount from the Quarterly Bonus Pool until selected for participation by the Committee through inclusion on the Bonus Allocation for that quarter.  Except as provided otherwise herein, the determination of the participant(s) and the extent of their participation in a Quarterly Bonus Pool shall be based on the contributions of such individuals to the success of the Parent or the Employer during such quarterly period, as determined by the Committee in its discretion.  The entire balance of any Quarterly Bonus Pool must be paid out in accordance with the Bonus Allocation no later than ten (10) days following the Committee’s approval of that Bonus Allocation.

 

(c) Notwithstanding anything contained herein to the contrary, during any calendar year in which Net Income of Employer exceeds Four Million Dollars ($4,000,000) and no Quarterly Bonus Pool was established for either the second or third quarter of such calendar year, the Committee shall establish, in addition to the Quarterly Bonus Pool established under this Section 4 for the fourth quarter of such calendar year, any Quarterly Bonus Pool not previously established under this Section 4 for that second and/or third quarter.  The Committee shall approve the Bonus Allocation for all such Quarterly Bonus Pools established under this Section 4(c) within thirty (30) days following the completion and filing of the Parent’s quarterly or annual report with the SEC for the fourth quarter of that calendar year, and the entire balance of any such Quarterly Bonus Pool must be paid out to participants no later than ten (10) days following the Committee’s approval of the applicable Bonus Allocation.

(d) The Committee, in its sole discretion, may elect to pay the bonuses from any Quarterly Bonus Pool in cash, shares of Common Stock, or a combination of cash and shares of Common Stock.  If the Committee elects to pay any Quarterly Bonus Pool bonuses in shares of Common Stock, all such shares shall be issued from the Parent’s Stock Incentive Plans.  Any such shares may only be issued in compliance with the terms of the applicable Stock Incentive Plan.  All such determinations under this Section 4 shall be made in accordance with the Committee’s charter and the terms of the applicable Stock Incentive Plan.

5. Limitations on the Employee’s Sale of Common Stock.

(a) During the term of this Agreement, Employee shall not, during any calendar week, Transfer shares of Common Stock, regardless whether Employee received such shares as compensation under this Agreement, that exceed 15% of the average weekly trading volume of the Common Stock (as reported on NYSE Amex or such other exchange on which Common Stock may be listed) for the previous twelve completed calendar weeks prior to the proposed Transfer.  As used in this Section 5, “Transfer” means the direct or indirect assignment, sale, transfer, tender, exchange, pledge, hypothecation, or the grant, creation or suffrage of a lien, security interest or encumbrance in or upon, or the gift, placement in trust or other disposition of such security, and each agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing.

(b) If Employee proposes to Transfer, whether voluntarily or by operation of law, any shares of Common Stock issued to Employee pursuant to the terms of this Agreement, whether during or after the Term, Employee agrees that prior to such Transfer, Employee shall first provide written notice to Parent of his intention to Transfer such shares, specifying the number of shares desired to be Transferred.  For a period of five (5) business days from Parent’s receipt of such notice, Parent shall have the option to purchase from Employee all or a portion of the Common Stock he proposes to Transfer at the most recent closing price of a share of Common Stock as listed on NYSE Amex (or such other exchange on which the Common Stock may be listed) immediately prior to Parent’s exercise of the option.

6. Termination.  Unless Employee’s employment is terminated pursuant to this Section 6, Employer shall continue to employ Employee and Employee shall continue to serve Employer through the Term.

(a) This Agreement shall terminate automatically upon Employee’s death.  In the event of such termination, Employer shall pay to Employee’s heirs or estate an amount equal to the balance of the then earned but unpaid portion of the Salary and/or earned but unpaid Employee Quarterly Bonus, net of Required Withholding, within thirty (30) days following his death (unless a lesser period of time is required by applicable law or a greater period of time is required by Section 409A).

 

(b) For purposes of this Agreement, Employee shall be deemed to be under a disability if Employee shall be unable, by virtue of illness or physical or mental incapacity or disability (from any cause or causes whatsoever), to perform Employee’s essential job functions hereunder, whether with or without reasonable accommodation, in substantially the manner and to the extent required hereunder prior to the commencement of such disability, for a period exceeding thirty (30) days (a “Disability”).  In light of the unique nature of Employee’s services, and the undue burden on Employer that would result from Employee’s long term absence, Employer shall have the right to terminate Employee’s employment hereunder in the event Employee shall remain under a Disability for a period exceeding two (2) months, such termination to occur at the end of any calendar month during the continuance of such disability, upon at least thirty (30) days’ prior written notice to Employee.  In the event of such termination, Employer shall pay to Employee an amount equal to the balance of the then earned but unpaid portion of the Salary and/or earned but unpaid Employee Quarterly Bonus (through the effective date of termination), net of all Required Withholding, within thirty (30) days of termination (unless a lesser period of time is required by applicable law or a greater period of time is required by Section 409A).  Employee’s salary will continue uninterrupted during all periods prior to termination.

(c) Additionally, Employer shall have the right to terminate Employee’s employment for Cause at any time and without prior notice and without payment of any severance allowance or further compensation beyond the date of termination.  Any amount owed to the Employee shall be paid to him within thirty (30) days following the termination of his employment (unless a lesser period of time is required by applicable law or a greater period of time is required by Section 409A).  For purposes of this Agreement, “Cause” shall consist of: (i) fraud, libel, slander, dishonesty, or any other willful and deliberate act by Employee that is detrimental to Employer or its good will or damaging to its relationships with its members, customers, suppliers, or employees, including, without limitation, (A) use of alcohol or illegal drugs such as to interfere with the performance of Employee’s obligations hereunder, and (B) conviction of, or entry of a plea of guilty or no contest to, a felony or any crime involving moral turpitude, dishonesty, or theft; (ii) failure by Employee to comply with applicable laws or governmental regulations with respect to Employer’s operations or the performance of Employee’s duties; and (iii) failure by Employee to perform the reasonable duties and responsibilities typically associated with Employee’s position as Vice President of Sales as may be assigned or delegated, from time to time, to Employee by Employer.

(d) Employer may terminate Employee’s employment without Cause at any time and without prior notice.  In the event of such termination, Employer shall pay to Employee an amount equal to one year’s annual Salary and health insurance coverage to Employee and eligible dependents for one year, as well as any earned but unpaid Employee Quarterly Bonus.  Subject to Section 8 (including, if applicable, any six-month delay in payment), this severance payment of one year’s annual Salary shall be paid to the Employee in equal installments over a one-year period beginning with the first regular payroll date of the Employer following his termination of employment, and continuing thereafter at such intervals as other salaried employees of the Employer are paid.

 

 

 

(b) All reimbursements and in-kind benefits provided under this Agreement shall be made or provided in accordance with the requirements of Section 409A, including, where applicable, the requirement that (i) any reimbursement is for expenses incurred during the Employee’s lifetime (or during a shorter period of time specified in this Agreement); (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a single calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year; (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

 

(c) No payments or benefits to be made to the Employee under this Agreement upon a termination of employment under Section 6 and that are subject to Section 409A shall be made unless such termination of employment constitutes a “separation from service” as defined in Section 409A.

 

(d) Notwithstanding any provision of this Agreement to the contrary, if the Employee is a “specified employee” at the time of separation from service, no payment or benefits to which he becomes entitled under this Agreement as a result of his termination of employment shall be made or paid to him prior to the earlier of (i) the first day of the seventh month following the date of his separation from service due to such termination of employment or (ii) the date of his death, to the extent that such a delay in payment or benefits is required in order to avoid a prohibited distribution under Section 409A(a)(2).  Upon the expiration of the applicable Section 409A(a)(2) deferral period, the first payment to the Employee will include all payments deferred under this Section 8 by reason of his status as a “specified employee.”

 

9. Confidential Information.  Both during and after the Term, Employee shall not, directly or indirectly, or as otherwise required by law, divulge, publish, communicate, or make available to any person, corporation, governmental agency, or other entity (except in performing Employee’s duties hereunder), or use for Employee’s own or any other person or entity’s purposes or benefit, any trade secret, confidential business information, intellectual property or any other information, know how, designs, specifications, techniques, methods, concepts, inventions, developments, discoveries, improvements, knowledge, or data of Employer, Parent or any other subsidiary of Parent which is not generally known to the public (separately and collectively, “Confidential Information”) (including, but not limited to, Confidential Information relating to research, product development or design, manufacturing or manufacturing processes, maintenance or repair processes, purchasing, product or material costs, sales or sales strategies or prospects, pricing or pricing strategies, advertising or promotional programs, product information, or mailing or customer lists, finances (including prices, costs, and revenues), and other business arrangements, plans, procedures and strategies), and shall use Employee’s best efforts to prevent the publication or disclosure by any other person or entity of any such Confidential Information.  Employer shall not be under any obligation to identify specifically by any notice or other action any Confidential Information to which this Section shall apply.  The confidentiality obligations of Employee hereunder shall specifically apply to any such Confidential Information obtained by Employee prior to the Effective Date as a result of (a) Employee’s former ownership interest in the Employer, or (b) Employee’s employment with Employer prior to the Effective Date.  While Employee is employed by Employer, all documents and Confidential Information compiled, received, held or used by Employee in connection with the business and affairs of Employer shall remain Employer’s property, and shall be delivered by Employee to Employer upon the termination of Employee’s employment, for whatever reason, or at any earlier time requested by Employer.

 

10. Unfair Competition.

(a) Employee agrees and acknowledges that, by virtue of Employee’s employment and position with Employer, Employee shall have access to and maintain an intimate knowledge of Employer’s activities and affairs, including Confidential Information, trade secrets, confidential business information, and other confidential matters.  As a result of such access and knowledge, and because of the special, unique, and extraordinary services that Employee is capable of performing for Employer or one of its competitors, Employee acknowledges that the services to be rendered by Employee pursuant to this Agreement are of a character giving them a peculiar value, the loss of which cannot adequately or reasonably be compensated solely by money damages.  Consequently, Employee agrees that any breach or threatened breach by Employee of Employee’s obligations under this Section, or of Section 9 of this Agreement, would cause irreparable injury to Employer, and that Employer shall be entitled to (i) preliminary and permanent injunctions enjoining Employee from violating such provisions, and (ii) money damages in the amount of fees, compensation, benefits, profits or other remuneration earned by Employee or any competitor as a result of any such breach, together with interest, and costs and attorneys’ fees and paralegals’ fees expended to collect such damages or secure such injunctions.  Nothing in this Agreement, however, shall be construed to prohibit Employer from pursuing any other remedy, the parties having agreed that all such remedies shall be cumulative.

(b) For purposes of this Agreement, the term “Business of the Employer” shall mean the development, marketing, sale, and/or licensing of generic versions of branded pharmaceutical products, including, without limitation, generic versions of pharmaceutical products developed, manufactured, licensed and/or sold by Parent or a subsidiary of Parent during the Employee’s employment with Employer, and the related intellectual property rights and Confidential Information with respect thereto.

(c) As a condition of employment with Employer, and as a further material inducement to Employer to employ Employee hereunder, Employee agrees that, while Employee is employed by Employer, and for a period of twelve (12) months thereafter, Employee shall not, directly or indirectly, solicit, hire or induce the termination from employment with Employer of any person who was employed by Employer, or induce or otherwise influence such person to accept employment other than with Employer.

(d) Employee understands and agrees that the relationship between Employer and its customers constitutes a valuable asset and may not be converted to Employee’s own use.  Accordingly, Employee hereby agrees that, during the effectiveness of this Agreement and for a period of twelve (12) months following Employee’s termination of employment with Employer (the “Restricted Period”) in the territories set forth on Exhibit A (the “Restricted Territories”), Employee  shall not, without the prior written consent of the Employer, directly or indirectly, on Employee’s own behalf or as a principal or representative of any other person or entity, solicit, divert, take away or attempt to solicit, divert or take away a customer of Employer that Employee communicated with in any way during his employment with Employer for the purpose of competing with the Business of the Employer; provided, however, that the prohibition of this covenant shall not apply to the conduct of general advertising activities.

 

(e) In consideration of the compensation and benefits being paid and to be paid by Employer to Employee hereunder, Employee understands and agrees that, during the Restricted Period and within the Restricted Territories, he shall not, directly or indirectly, carry on or engage in activities that compete with the Business of the Employer on his own or on behalf of any other person or entity.  Employee acknowledges that the Restricted Territory is reasonable because the Business of the Employer is carried out throughout the Restricted Territory and that in the performance of his duties for the Employer he is charged with operating on Employer’s behalf throughout the Restricted Territory.

11. Inventions.  Employee hereby agrees that any and all improvements, inventions, discoveries, developments, creations, formulae, processes, methods, or designs, and any documents, things, or information relating thereto, whether patentable or not (individually and collectively, “Work Product”) within the scope of or pertinent to any field of business or research in which Employer is engaged or (if such is known to or ascertainable by Employee) considering engaging, which Employee may conceive or make, or may have conceived or made during Employee’s employment with Employer or during Employee’s former ownership in Employer, whether alone or with others, at any time within or without normal working hours, shall be and remain the sole and exclusive property of Employer.  Employer shall have the full right to use, assign, license or transfer all rights to or relating to Work Product.  Employee shall, whenever requested to do so by Employer (whether during Employee’s employment or thereafter), at Employer’s expense, execute any and all applications, assignments, or other instruments, and do all other things (including giving testimony in any legal proceeding) which Employer may deem necessary or appropriate in order to (a) apply for, obtain, maintain, enforce, or defend letters patent or copyright registrations of the United States or any other country for any Work Product, or (b) assign, transfer, convey, or otherwise make available to Employer any right, title or interest which Employee might otherwise have in any Work Product.  Employee shall promptly communicate, disclose, and, upon request, report upon and deliver all Work Product to Employer, and shall not use or permit any Work Product to be used for any purpose other than on behalf of Employer, whether during Employee’s employment or thereafter.

12. Additional Obligations.  Both during and after the Term, Employee shall, upon reasonable notice, furnish Employer with such information as may be in Employee’s possession, and cooperate with Employer, as may reasonably be requested by Employer (and, after the Term, with due consideration for Employee’s obligations with respect to any new employment or business activity) in connection with any litigation in which Employer is or may become a party.  Employer shall reimburse Employee for all reasonable expenses incurred by Employee in fulfilling Employee’s obligations under this Section unless Employee is a party to such litigation adverse to Parent or Employer.

13. Policies and Procedures.  Employer shall have the authority to establish from time to time the policies and procedures to be followed by Employee in handling the Business of the Employer.  A copy of all said policies and procedures, including all updates, revisions and amendments, shall be provided or made available to Employee without the necessity of a request.

14. Mediation.  With respect to any disputes arising out of or related to this Agreement, the parties will first submit any such matter to non-binding mediation.  The parties shall share equally all initial costs of mediation.  If mediation is not successful, the parties may thereafter bring any additional legal action or proceeding with respect to this Agreement in accordance with the terms and conditions of Section 15 below.

 

15. Waiver of Right to Jury Trial.  The parties hereto hereby waive the right to a jury trial in any action, proceeding or counterclaim arising out of, or related to, the terms, conditions or enforcement of this Agreement, or any other aspect of the acts, transactions or occurrences described herein, or the transactions contemplated by or related to this Agreement.  The prevailing party (upon the issuance of a final, non-appealable judgment or order) shall be required to be reimbursed by the other party adverse to it or him for its or his reasonable attorneys’ and paralegals’ fees, experts’ fees and costs and fees related to the dispute, including costs of mediation or other legal proceeding, in addition to any other relief to which that party may be entitled.

16. Governing Law.  This Agreement shall be construed in accordance with, and governed by, the Laws of the Commonwealth of Kentucky applicable to agreements to be performed entirely in the Commonwealth of Kentucky without regard to its conflicts of law rules.

17. Headings.  The subject headings of the sections of this Agreement are included for purposes of convenience only, and shall not control or affect the meaning, construction or interpretation of any of its provisions.

18. Notice.  Any notice or other communication required or permitted under this Agreement by either party hereto to the other shall be in writing, and shall be deemed effective upon (a) personal delivery, if delivered by hand, (b) three days after the date of deposit in the mails, postage prepaid, if mailed by certified or registered mail, or (c) the next business day, if sent by a prepaid overnight courier service, and in each case addressed as follows:

If to Employee, to:                John McMahon

6204 Crystal Point Drive

Louisville, Kentucky 40299

If to Employer, to:                 Macoven Pharmaceuticals, LLC

33219 Forest West Street

Magnolia, Texas 77354

Attn: Cooper Collins

If to Parent, to:                      Pernix Therapeutics Holdings, Inc.

33219 Forest West Street

Magnolia, Texas 77354

Attn: Cooper Collins

Any party may change the address or addresses to which notices are to be sent by giving notice of such change of address in the manner provided by this Section.

 

19. Binding Effect; Successors.  This Agreement shall be binding upon and shall inure to the benefit of Employer and Parent and their respective successors and assigns, and shall inure to the benefit of and be binding upon Employee and his executors, administrators, heirs and legal representatives.  Because Employee’s services hereunder are special, personal and unique in nature, Employee may not transfer, sell or otherwise assign his rights, obligations or benefits under this Agreement.  Nothing in this Agreement shall preclude Employer and/or Parent from assigning, in full or part, this Agreement to any affiliate of Employer, or preclude Employer or Parent from consolidating or merging into or with, or transferring all or substantially all of its assets to, another entity which assumes its obligations under this Agreement in full.

20. Waiver.  No waiver of a default by either party of any term, covenant or condition hereof to be performed or observed by the other party shall be construed as, or operate as, a waiver of any subsequent default of the same or any other term, covenant or condition hereof.  No provision of this Agreement can be waived unless such waiver is expressed in writing and signed by all of the parties hereto.

21. No Conflict.  Employee represents and warrants that Employee is not subject to any agreement, order, judgment or decree of any kind which would prevent Employee from entering into this Agreement or performing fully Employee’s obligations hereunder.

22. Construction.  The language of this Agreement shall be construed as a whole, according to its fair meaning and intent and not strictly for or against any party, regardless of who drafted or was principally responsible for drafting the Agreement or any specific term or condition hereof.  The parties to this Agreement have had sufficient time to consult legal counsel and negotiate changes regarding the terms hereof.  This Agreement shall be deemed to have been drafted by both parties to this Agreement, and neither shall urge otherwise.

23. Severability.  The provisions of this Agreement are severable.  The parties intend that if any provision of this Agreement should be adjudged invalid or unenforceable in any jurisdiction, then such provision shall, as to such jurisdiction only, be ineffective to the extent of such invalidity or unenforceability without invalidating the remaining provisions hereof, provided such invalidity does not materially prejudice either party in its or his rights and obligations contained in the valid provisions of this Agreement, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

24. Counterparts; Entire Agreement; Modification.  This Agreement may be executed in multiple counterparts, all of which together shall constitute one and the same instrument.  Signatures by facsimile shall be considered valid and binding on the parties hereto.  This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous oral or written agreements, representations, and understandings of the parties.  No supplement, modification or amendment to this Agreement shall be binding unless executed in writing by all parties to this Agreement.

 

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

 

EMPLOYEE:		EMPLOYER:
		MACOVEN PHARMACEUTICALS, LLC
/s/ John McMahon		By: PERNIX THERAPEUTICS, LLC
John McMahon
		By: PERNIX THERAPEUTICS HOLDINGS, INC.
AGREED AND ACKNOWLEDGED:		By: /s/ Cooper Collins
		Name: Cooper Collins
EMPLOYEE’S SPOUSE:		Its: President and Chief Executive Officer
/s/ Kimberly McMahon
Name: Kimberly McMahon
		PARENT:
		PERNIX THERAPEUTICS HOLDINGS, INC.
		By: /s/ Cooper Collins
		Name: Cooper Collins
		Its: President and Chief Executive Officer

                      

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