Form 8-K PERNIX THERAPEUTICS HOLD For: Aug 01

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August 1, 2018 8:57 AM EDT

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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): August 1, 2018

PERNIX THERAPEUTICS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)


Maryland	001-14494	33-0724736
(State or other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

10 North Park Place, Suite 201, Morristown, NJ		07960
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code: (800) 793-2145

(Former name or former address if changed since last report.)

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:

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 1.01

Entry into Material Definitive Agreements

The Exchange Agreement

On August 1, 2018, Pernix Therapeutics Holdings, Inc. (“Pernix” or the “Company”) entered into an Exchange Agreement (the “Exchange Agreement”) by and among Pernix and certain holders (each, an “Exchange Holder,” and collectively the “Exchange Holders”) of Pernix’s outstanding 12% Senior Secured Notes due 2020 (the “Senior Secured Notes”). The Exchange Agreement governs the issuance by the Company of shares of its common stock (the “Common Stock”) and shares of a newly created class of convertible preferred stock, the terms of which are described below (the “Preferred Stock”) to the Exchange Holders in exchange for Senior Secured Notes held by such Exchange Holders (collectively, the “Exchange Transactions”). Subject to the satisfaction of certain closing conditions, the Exchange Transactions are expected to close on August 1, 2018, and include:

The exchange of approximately $2.7 million aggregate principal amount of Senior Secured Notes by the Exchange Holders for 1,204,739 shares of Common Stock, which includes accrued and unpaid interest on the Senior Secured Notes; and

The exchange of $8 million aggregate principal amount of Senior Secured Notes plus $100,000 of accrued and unpaid interest by the Exchange Holders for 81,000 shares of the Preferred Stock and the payment of $380,000 for accrued and unpaid interest on the Senior Secured Notes exchanged for Preferred Stock.

In addition, the Exchange Agreement permits additional exchanges, at the option of the Exchange Holders, of up to $65.1 million aggregate principal amount of Senior Secured Notes, plus accrued and unpaid interest, until February 1, 2020.

The Exchange Transactions are subject to a number of customary closing conditions, including the Common Stock being eligible for clearance through the facilities of DTC, the Common Stock and Preferred Stock being eligible for immediate resale pursuant to Rule 144 under the Securities Act, and the Common Stock being approved for listing, subject to notice of issuance, on the Nasdaq Global Market. The parties to the Exchange Agreement have made certain customary representations and warranties.

Convertible Preferred Stock

At the closing of the Exchange Transactions, the Company will file with the State Department of Assessments and Taxation of Maryland an Articles Supplementary (the “Articles Supplementary”) to the Company’s Articles of Incorporation setting out the form and terms of the Preferred Stock.

Exchange Holders of Preferred Stock will have the right to convert their shares of Preferred Stock, in whole or in part, at any time on or after August 1, 2018 (the “Initial Issue Date”). The Company will have the right, at its option, to automatically convert all shares of Preferred Stock, subject to the satisfaction of certain specified conditions. Upon any conversion of an Exchange Holder’s Preferred Stock, Pernix will deliver shares of Common Stock, calculated by multiplying the number of shares of Preferred Stock by 41.841 shares of Common Stock per share of

Preferred Stock (the “Conversion Rate”). The Conversion Rate is equal to the number of shares of Common Stock, such that the Preferred Stock shall be convertible into Common Stock at a price $0.01 above the consolidated closing bid price on the Initial Issue Date, which was $2.39.

Subsequent to the Initial Issue Date, an Exchange Holder shall not be able to convert Preferred Stock into Common Stock to the extent that the Common Stock held by such Exchange Holder and its affiliates would exceed 4.985% of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock.

Moreover, at any time on or after the Initial Issue Date, the Company will have the right to redeem the Preferred Stock, in whole or in part, at a redemption price equal to 100% of the liquidation preference of the shares to be redeemed, plus any accrued and unpaid dividends. Except as required by law or the Articles Supplementary, the Exchange Holders of Preferred Stock have no voting rights (other than with respect to certain matters regarding the Preferred Stock).

In accordance with the Articles Supplementary, the Company will not authorize, declare or pay regular or special dividends or other distributions (whether in the form of cash, shares, indebtedness or any other property or asset, but excluding any purchase, redemption or other acquisition of shares) on the shares of the Common Stock, unless simultaneously with the authorization, declaration or payment, it authorizes, declares or pays, as applicable, dividends or other distributions on the Preferred Stock.

Amended ABL Facility and Term Facility

On August 1, 2018 Pernix entered into an amendment (the “ABL Amendment”) of the asset-based revolving credit facility agreement by and among Pernix, the guarantors and lenders party thereto and Cantor Fitzgerald Securities, as agent (the “ABL Facility”), as well as an amendment (the “Term Amendment” and together with the ABL Amendment, the “Amendments”) to the delayed draw term loan facility by and among Pernix Ireland Pain Designated Activity Company (“PIP DAC”), the lenders party thereto and Cantor Fitzgerald Securities, as agent (the “Term Facility” and together with the ABL Facility”, the “Credit Facilities”). The Amendments were made to permit the exchange of the Senior Secured Notes into the Common Stock in the Exchange Transaction and Equitization Transaction, and to amend certain other terms of the Credit Facilities, including (i) a reduction in the commitments under the ABL Facility from $40,000,000 to $32,500,000, (ii) certain changes to the borrowing base calculation under the ABL Facility, which will permit the Company, among other things, to include certain recently acquired assets in the calculation of the borrowing base and (iii) changes to the interest payment provisions under the Term Facility increasing the minimum percentage of interest that must be paid in cash to 6.00% and (iv) changes to permit the use of subsequent draws under the Term Facility for working capital or other general corporate purposes.

The effectiveness of the Amendments is conditioned on the closing of the Equitization Transaction described below.

The Equitization Exchange Agreements

On August 1, 2018, Pernix entered into separate Equitization Exchange Agreements (the “Equitization Exchange Agreements”) by and among Pernix and certain holders (each, an “Equitization Holder,” and collectively the “Equitization Holders”) of Pernix’s Senior Secured Notes. The Equitization Exchange Agreements provide that the Company will issue 650,241 shares of its Common Stock in exchange for approximately $1.5 million aggregate principal amount of Senior Secured Notes held by such Equitization Holders (the “Equitization Transaction”). Subject to the satisfaction of certain closing conditions, the Equitization Transaction is expected to close on August 1, 2018.

The Equitization Transaction is subject to a number of customary closing conditions, including the Common Stock being eligible for clearance through the facilities of DTC, the Common Stock being eligible for immediate resale pursuant to Rule 144 under the Securities Act, and the Common Stock being approved for listing, subject to notice of issuance, on the Nasdaq Global Market. The parties to the Equitization Exchange Agreements have made certain customary representations and warranties.

The Exchange Agreement, the Articles Supplementary, the Amendments, and the Exchange Equitization Agreement (collectively, the “Agreements”) are filed as exhibits to this Current Report on Form 8-K and are incorporated herein by reference. This summary of the Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the Agreements attached as exhibits hereto. The summary of the Agreements and the summaries of the Exchange Transaction and Equitization Transaction contemplated thereby and contained herein are not intended to provide any other factual information about the Company or its subsidiaries. Any representations, warranties and covenants contained in the Agreements were made solely for purposes of the transactions governed thereby and as of specific dates and solely for the benefit of the parties thereto, may be subject to limitations agreed upon by the contracting parties, including being qualified by confidential disclosures made for the purposes of allocating contractual risk between the parties instead of establishing these matters as facts, and may be subject to standards of materiality applicable to the contracting parties that differ from those applicable to security holders. The Company’s other security holders are not third-party beneficiaries under any of the Agreements and should not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of the Company or its subsidiaries. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Agreements, which subsequent information may or may not be fully reflected in the Company’s public disclosures.

Item 3.02.

Unregistered Sales of Equity Securities.

The disclosure in Item 1.01 entitled “Exchange Agreement” and “Exchange Equitization Agreement” of this Current Report on Form 8-K is incorporated by reference into this Item 3.02. The Common Stock and Preferred Stock issued as part of the Exchange Transaction and Equitization Transaction will not be registered under the Securities Act and will be issued in reliance upon an exemption from registration provided by Section 3(a)(9) under the Securities Act. The issuance by Pernix of Common Stock upon the conversion of the Preferred Stock will be

made in reliance upon the exception from the registration requirements in Section 3(a)(9) of the Securities Act.

Item 8.01.

Other Events.

On August 1, 2018, the Company issued a press release announcing the Exchange Transaction and Equitization Transaction. A copy of the press release is attached as Exhibit 99.1 to this Form 8-K and is incorporated by reference into this Item 8.01.

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this Current Report on Form 8-K, including but not limited to statements set forth in the attached press release, may constitute forward-looking statements. These forward-looking statements involve a number of known and unknown risks, uncertainties and other factors that may cause such forward-looking statements not to be realized and that could cause actual results to differ materially from Pernix’s expectations in these statements. For more information about other risks that could affect the forward-looking statements herein or therein, please see Pernix’s most recent quarterly report on Form 10-Q, annual report on Form 10-K and other filings made with the Securities and Exchange Commission. Pernix expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements to reflect any changes in expectations, or any change in events or circumstances on which those statements are based, unless otherwise required by law.

We qualify all of the forward-looking statements in this Current Report on Form 8-K by these cautionary statements. Although we believe that the expectations reflected in our forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance or achievement. Given these uncertainties, you should not place undue reliance on these forward-looking statements.

Item 9.01.

Financial Statements and Exhibits.

(d) Exhibits


Exhibit No.		Description

4.1		Form of Articles Supplementary for 0% Series C Perpetual Convertible Preferred Stock

10.1		Form of Exchange Agreement, dated August 1, 2018, by and among Pernix Therapeutics Holdings, Inc., Deerfield Management L.P. and certain of its affiliates.

10.2		Form of Equitization Exchange Agreement, dated August 1, 2018, by and among Pernix Therapeutics Holdings, Inc. and 1992 Tactical Credit Master Fund, L.P.

10.3		Form of Equitization Exchange Agreement, dated August 1, 2018, by and among Pernix Therapeutics Holdings, Inc. and 1992 MSF International Ltd.

10.4		Form of Amendment No. 3 to the ABL Facility, August 1, 2018, by and among Pernix, the guarantors and lenders party thereto and Cantor Fitzgerald Securities, as agent.

10.5		Form of Amendment No. 2 to the Term Facility, dated August 1, 2018, by and among PIP DAC, the lenders party thereto and Cantor Fitzgerald Securities, as agent.

99.1		Press release, dated August 1, 2018, issued by Pernix Therapeutics Holdings, Inc.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 1, 2018

	PERNIX THERAPEUTICS HOLDINGS, INC.

	By:		/s/ John A. Sedor
	Name:		John A. Sedor
	Title:		Chief Executive Officer

EXHIBIT LISTING


Exhibit No.		Description

4.1		Form of Articles Supplementary for 0% Series C Perpetual Convertible Preferred Stock

10.1		Form of Exchange Agreement, dated August 1, 2018, by and among Pernix Therapeutics Holdings, Inc., Deerfield Management L.P. and certain of its affiliates.

10.2		Form of Equitization Exchange Agreement, dated August 1, 2018, by and among Pernix Therapeutics Holdings, Inc. and 1992 Tactical Credit Master Fund, L.P.

10.3		Form of Equitization Exchange Agreement, dated August 1, 2018, by and among Pernix Therapeutics Holdings, Inc. and 1992 MSF International Ltd.

10.4		Form of Amendment No. 3 to the ABL Facility, August 1, 2018, by and among Pernix, the guarantors and lenders party thereto and Cantor Fitzgerald Securities, as agent.

10.5		Form of Amendment No. 2 to the Term Facility, dated August 1, 2018, by and among PIP DAC, the lenders party thereto and Cantor Fitzgerald Securities, as agent.

99.1		Press release, dated August 1, 2018, issued by Pernix Therapeutics Holdings, Inc.

Exhibit 4.1

PERNIX THERAPEUTICS HOLDINGS, INC.

ARTICLES SUPPLEMENTARY ESTABLISHING AND FIXING THE
PREFERENCES, RIGHTS AND LIMITATIONS OF
0% SERIES C PERPETUAL CONVERTIBLE PREFERRED STOCK

Pernix Therapeutics Holdings, Inc., a Maryland corporation (the “Corporation”), hereby certifies to the State Department of Assessments and Taxation of Maryland (the “SDAT”) that:

FIRST: Pursuant to the authority conferred upon the Board of Directors of the Corporation (the “Board of Directors”) by Article IV of the articles of incorporation of the Corporation (the “Articles of Incorporation”) and Section 2-208 of the Maryland General Corporation Law (the “MGCL”), the Board of Directors (a) has reclassified and designated 1,500,000 shares of the authorized but unissued Preferred Stock of the Corporation, par value $0.01 per share (the “Preferred Stock”) as a series of Preferred Stock designated as “0% Series C Perpetual Convertible Preferred Stock”, with the following preferences, conversion or other rights, voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption and (b) has authorized the filing of these Articles Supplementary (the “Articles Supplementary”) with the SDAT containing the information determined by the Board of Directors.

SECOND: The preferences, conversion and other rights, voting powers, restrictions, limitations as to dividends, qualifications and terms and conditions of redemption as established by the Board of Directors for the 0% Series C Perpetual Convertible Preferred Stock which, upon any restatement of the Articles of Incorporation, shall become part of Article IV of the Articles of Incorporation (or any successor provision thereto), with any necessary or appropriate renumbering or relettering of the sections or subsections hereof, are as follows:

Section 1. Designation and Number of Shares. Pursuant to the Articles of Incorporation, a series of Preferred Stock, designated as the “0% Series C Perpetual Convertible Preferred Stock” (the “Perpetual Convertible Preferred Stock”), is hereby established. The par value of the Perpetual Convertible Preferred Stock is $0.01 per share. The number of shares of Perpetual Convertible Preferred Stock constituting such series shall be 1,500,000. Such number of shares may be decreased by resolution of the Board of Directors, subject to the terms and conditions hereof; provided that no decrease shall reduce the number of shares of the Perpetual Convertible Preferred Stock to a number less than the number of shares then outstanding. Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Articles of Incorporation.

Section 2. General Matters; Ranking. Each share of the Perpetual Convertible Preferred Stock shall be identical in all respects to every other share of the Perpetual Convertible Preferred Stock. The Perpetual Convertible Preferred Stock, with respect to rights upon the liquidation, winding-up or dissolution of the Corporation, shall rank (i) senior to all Junior Stock, (ii) on a parity with all Parity Preferred Stock and (iii) junior to all Senior Stock and the Corporation’s existing and future indebtedness.

Section 3. Standard Definitions. As used herein with respect to the Perpetual Convertible Preferred Stock:

“Affiliate” means, with respect to any Person, any other Person that directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with, the Person in question. As used herein, the term “control” means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a Person, whether through ownership of voting securities, by contract or otherwise.

“Articles Supplementary” shall have the meaning set forth in the recitals.

“Articles of Incorporation” shall have the meaning set forth in the recitals.

“Average VWAP” per share of the Common Stock over a specified period means the arithmetic average of the VWAPs per share of the Common Stock for each Trading Day in such period. Whenever any provision of these Articles Supplementary requires the Corporation or the Board of Directors (including any authorized committee thereof) to calculate the VWAP per share of Common Stock over a span of multiple days, the Board of Directors (or an authorized committee thereof) shall make appropriate adjustments to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date, Effective Date or expiration date, as the case may be, of the event occurs, at any time during the period when the VWAPs are to be calculated.

“Beneficial Ownership Limitation” shall have the meaning set forth in Section 24.

“Board of Directors” shall have the meaning set forth in the recitals.

“Business Day” means any day other than a Saturday or Sunday or other day on which commercial banks in New York City are authorized or required by law or executive order to close.

“Bylaws” means the Amended and Restated Bylaws of the Corporation, as they may be further amended or restated from time to time.

“Capital Stock” means, for any entity, any and all shares, interests or other equivalents of or interests in (however designated) stock issued by that entity and does not include convertible or exchangeable debt securities.

“Change of Control” shall have the meaning set forth in Section 15(a)(v).

“close of business” means 5:00 p.m., New York City time.

“Closing Sale Price” per share of Common Stock means, on any date of determination, the closing sale price (or if no closing sale price is reported, the average of the bid and ask prices or, if more than one in either case, the average of the average bid and the average ask prices) on that date as reported in composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is traded. If the Common Stock is not listed for trading on a U.S. national or regional securities exchange on the relevant date, the “Closing

Sale Price” shall be the last quoted bid price for the Common Stock in the over-the-counter market on the relevant date as reported by OTC Markets Group Inc. or a similar organization. If the Common Stock is not so quoted, the “Closing Sale Price” shall be the average of the mid-point of the last bid and ask prices for the Common Stock on the relevant date from each of at least three nationally recognized independent investment banking firms selected by the Corporation for this purpose.

“Code” means the U.S. Internal Revenue Code of 1986, as amended.

“Common Stock” means the common stock, par value $0.01 per share, of the Corporation, subject to ‎Section 15.

“Conversion Agent” means Computershare Trust Company, N.A., the Corporation’s duly appointed conversion agent for the Perpetual Convertible Preferred Stock, and any successor appointed under ‎Section 16.

“Conversion Date” means each of (i) the last Trading Day of the Mandatory Conversion Measurement Period (in respect of any Mandatory Conversion) and (ii) any Optional Conversion Date (in respect of an Optional Conversion).

“Conversion Obligation” means the amount and kind of consideration due upon an Optional Conversion or a Mandatory Conversion as described in Section 10.

“Conversion Price” means as of any time, $100 divided by the Conversion Rate as of such time.

“Conversion Rate” means, initially, 41.8410 shares of Common Stock per share of Perpetual Convertible Preferred Stock, subject to adjustment as provided in ‎Section 14.

“Corporation” shall have the meaning set forth in the recitals.

“Effective Date” means the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, reflecting the relevant share split or share combination, as applicable.

“Election Notice” shall have the meaning set forth in Section 15(e).

“Event” shall have the meaning set forth in Section 9(a).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“Exchange Agreement” means that certain Exchange Agreement among the Corporation and certain affiliates of Deerfield Partners, L.P., dated as of August 1, 2018.

“Ex-Dividend Date” means, with respect to any issuance, dividend or distribution, the first date on which shares of the Common Stock trade on the applicable exchange or in the applicable market, regular way, without the right to receive the issuance, dividend or distribution

in question, from the Corporation or, if applicable, from the seller of Common Stock on such exchange or market (in the form of due bills or otherwise) as determined by such exchange or market.

“Holder” means each person in whose name shares of the Perpetual Convertible Preferred Stock are registered, who shall be treated by the Corporation and the Registrar as the absolute owner of those shares of Perpetual Convertible Preferred Stock for the purpose of making payment and settling conversions and for all other purposes.

“Initial Issue Date” shall mean August 1, 2018.

“Junior Stock” means (i) the Common Stock and (ii) each other class or series of capital stock of the Corporation established after the Initial Issue Date, the terms of which do not expressly provide that such class or series ranks either (x) senior to the Perpetual Convertible Preferred Stock as to priority of payment of dividends and other distributions or rights upon voluntary or involuntary liquidation, winding-up or dissolution or (y) on a parity with the Perpetual Convertible Preferred Stock as to priority of payment of dividends and other distributions and rights upon voluntary or involuntary liquidation, winding-up or dissolution.

“Liquidation Preference” shall have the meaning set forth in Section 5(a).

“Mandatory Conversion” shall have the meaning set forth in Section 10(b).

“Mandatory Conversion Condition” shall have the meaning set forth in Section 10(c).

“Mandatory Conversion Date” means the last Trading Day of the Mandatory Conversion Measurement Period.

“Mandatory Conversion Measurement Period” shall have the meaning set forth in Section 10(c).

“Mandatory Conversion Settlement Amount” means a number of shares of Common Stock equal to the product of (i) the number of shares of Perpetual Convertible Preferred Stock to be converted, and (ii) the Conversion Rate on the Mandatory Conversion Date.

“Market Disruption Event” means (a) a failure by the primary U.S. national or regional securities exchange or market on which the Common Stock is listed or admitted for trading to open for trading during its regular trading session or (b) the occurrence or existence prior to 1:00 p.m. New York City time, on any Scheduled Trading Day for the Common Stock for more than one half-hour period in the aggregate during regular trading hours of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the relevant stock exchange or otherwise) in the Common Stock or in any options contracts or futures contracts relating to the Common Stock.

“Notice of Conversion” shall have the meaning set forth in Section 11(b)(i).

“Observation Period” means, with respect to any Optional Redemption of any share of Perpetual Convertible Preferred Stock, the 20 consecutive Trading Day Period beginning on, and including, the 23rd Scheduled Trading Day immediately preceding the Redemption Date.

“Officer” means the Chief Executive Officer, the Chief Financial Officer, the Chairman of the Board, any Executive Vice President or any Senior Vice President of the Corporation.

“Officer’s Certificate” means a certificate of the Corporation, signed by any duly authorized Officer of the Corporation.

“open of business” means 9:00 a.m., New York City time.

“Optional Conversion” shall have the meaning set forth in ‎Section 10(a).

“Optional Conversion Date” shall have the meaning set forth in ‎Section 11(b).

“Optional Redemption” shall have the meaning set forth in ‎Section 7(a).

“Parity Preferred Stock” means any class or series of capital stock of the Corporation, the terms of which expressly provide that such class or series shall rank on a parity with the Perpetual Convertible Preferred Stock as to the priority of payment of dividends and other distributions and rights upon voluntary or involuntary liquidation, winding-up or dissolution.

“Perpetual Convertible Preferred Stock” shall have the meaning set forth in ‎Section 1.

“Person” means any individual, partnership, firm, corporation, limited liability company, business trust, joint stock company, trust, unincorporated association, joint venture, governmental authority or other entity of whatever nature.

“Preferred Stock” shall have the meaning set forth in the recitals.

“Record Date” means, with respect to any dividend, distribution or other transaction or event in which the holders of Common Stock (or other applicable security) have the right to receive any cash, securities or other property or in which the Common Stock (or such other security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock (or such other security) entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors (or an authorized committee thereof), by statute, by the Articles of Incorporation (including these Articles Supplementary), by the Bylaws or otherwise).

“Redemption Date” shall have the meaning set forth in ‎Section 7(b).

“Redemption Notice” shall have the meaning set forth in ‎Section 7(b).

“Redemption Price” means, for each share of Perpetual Convertible Preferred Stock to be redeemed pursuant to ‎Section 7(a), 100% of the Liquidation Preference of such share, plus any accrued and unpaid dividends.

“Redemption Settlement Date” means, with respect to any Optional Redemption, the relevant Redemption Date.

“Reference Property” shall have the meaning set forth in ‎Section 15(a).

“Registrar” shall initially mean Computershare Trust Company, N.A., the Corporation’s duly appointed registrar for the Perpetual Convertible Preferred Stock and any successor appointed under ‎Section 16.

“Reorganization Event” shall have the meaning set forth in ‎Section 15(a).

“Rule 144” means Rule 144 as promulgated under the Securities Act.

“Scheduled Trading Day” means a day that is scheduled to be a Trading Day.

“SEC” means the U.S. Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

“Senior Stock” means each class or series of capital stock of the Corporation established after the Initial Issue Date, the terms of which expressly provide that such class or series shall rank senior to the Perpetual Convertible Preferred Stock as to priority of payment of dividends and other distributions or rights upon voluntary or involuntary liquidation, winding-up or dissolution.

“Specified Dollar Amount” means the cash amount per share of Perpetual Convertible Preferred Stock to be received in respect of the Redemption Price upon an Optional Redemption for which Redemption Combination Settlement applies as specified (or deemed to be specified) in the Redemption Notice for such Optional Redemption.

“Subsidiary” means, with respect to any Person, any corporation, association, partnership or other business entity of which more than 50% of the total voting power of shares of capital stock or other interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, general partners or trustees thereof is at the time owned or controlled, directly or indirectly, by (i) such Person; (ii) such Person and one or more Subsidiaries of such Person; or (iii) one or more Subsidiaries of such Person.

“Trading Day” means a day on which (x) there is no Market Disruption Event and (y) trading in the Common Stock generally occurs (and at least one share of the Common Stock has traded) on The NASDAQ Global Select Market or, if the Common Stock is not then listed on The NASDAQ Global Select Market, on the principal other U.S. national or regional securities exchange on which the Common Stock is then listed or, if the Common Stock is not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Common Stock is then listed or admitted for trading, except that if the Common Stock is not so listed or admitted for trading, “Trading Day” means a Business Day.

“Transfer Agent” shall initially mean Computershare Trust Company, N.A., the Corporation’s duly appointed transfer agent for the Perpetual Convertible Preferred Stock and any successor appointed under ‎Section 16.

“unit of Reference Property” shall have the meaning set forth in ‎Section 15(a).

“VWAP” per share of Common Stock on any Trading Day means the per share volume-weighted average price as displayed on Bloomberg page “PTX <Equity> AQR” (or its equivalent successor if such page is not available) in respect of the period from 9:30 a.m. to 4:00 p.m., New York City time, on such Trading Day; or, if such price is not available, “VWAP” means the market value per share of Common Stock on such Trading Day as determined, using a volume-weighted average method, by a nationally recognized independent investment banking firm retained by the Corporation for this purpose. The “VWAP” shall be determined without regard to after-hours trading or any other trading outside of the regular trading session trading hours.

Section 4. Dividends. (a) The Corporation shall not authorize, declare or pay regular or special dividends or other distributions (whether in the form of cash, shares, indebtedness or any other property or asset, but excluding any purchase, redemption or other acquisition of shares) on the shares of the Common Stock, unless simultaneously with the authorization, declaration or payment, it authorizes, declares or pays, as applicable, dividends or other distributions on the Perpetual Convertible Preferred Stock as set forth in this Section 4. The amount of such dividends or other distributions payable per share of Perpetual Convertible Preferred Stock shall equal the product of the Conversion Rate on the date the Corporation announces the dividend or other distribution payable on the Common Stock times the amount of such dividend or other distribution per share of Common Stock. To the extent provided under Maryland law, any dividend on the Perpetual Convertible Preferred Stock of the Corporation authorized and declared under this Section 4 shall be a liability of the Corporation enforceable by the holder of the Perpetual Convertible Preferred Stock.

(b) The Corporation shall not commence, support or approve any tender offer, share purchase or similar transaction available to all or substantially all holders of the Common Stock, unless such tender offer, share purchase or similar transaction is also simultaneously made on the same terms to the Holders of Perpetual Convertible Preferred Stock, allowing such Holders to participate and receive, in exchange for such Holders’ shares of Perpetual Convertible Preferred Stock, the consideration such Holders would have received had they tendered a number of shares of Common Stock equal to the Conversion Rate times the number of shares of Perpetual Convertible Preferred Stock so exchanged.

Section 5. Liquidation, Dissolution or Winding Up.

(a) Upon any liquidation (voluntary or otherwise), dissolution or winding up (including by way of merger, consolidation, reorganization or sale of all or substantially all of the assets) of the Corporation, no distribution shall be made to the holders of Junior Stock unless, prior thereto, the Holders shall have received an amount of cash equal to $100 per share of Perpetual Convertible Preferred Stock (the “Liquidation Preference”), plus any declared and unpaid dividends.

(b) If, upon the voluntary or involuntary liquidation, winding-up or dissolution of the Corporation, the amounts payable with respect to (1) the Liquidation Preference and any accrued and unpaid dividends on the Perpetual Convertible Preferred Stock and (2) the liquidation preference of, and the amount of accrued and unpaid dividends (if any) to, but excluding, the date fixed for liquidation, dissolution or winding up, on, all Parity Preferred Stock are not paid in full, the Holders and all holders of any Parity Preferred Stock shall share equally and ratably in any distribution of the Corporation’s assets in proportion to the respective liquidation preferences and amounts equal to the accrued and unpaid dividends to which they are entitled.

(c) After the payment to any Holder of the full amount of the Liquidation Preference and any accrued and unpaid dividends for each of such Holder’s shares of Perpetual Convertible Preferred Stock, such Holder as such shall have no right or claim to any of the remaining assets of the Corporation in respect of such Holder’s shares of Perpetual Convertible Preferred Stock.

(d) In determining whether a distribution (other than upon voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation) by dividend, redemption or other acquisition of shares of stock of the Corporation or otherwise is permitted under the MGCL, no effect shall be given to amounts that would be needed, if the Corporation were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of Holders of the Perpetual Convertible Preferred Stock.

Section 6. No Maturity. The Perpetual Convertible Preferred Stock has no maturity date.

Section 7. Optional Redemption. (a) Notwithstanding anything herein to the contrary, the Corporation may redeem the Perpetual Convertible Preferred Stock (each, an “Optional Redemption”) on or after the Initial Issue Date, in whole or in part, at the Redemption Price, payable as described in ‎Section 7(d). No distribution by redemption or other acquisition of shares of Perpetual Convertible Preferred Stock may be made unless permitted under the provisions of the MGCL pertaining to distributions. Any such Optional Redemption in part shall be for an integral number of shares of Perpetual Convertible Preferred Stock.

(b) (i) In case the Corporation exercises its Optional Redemption right to redeem all or, as the case may be, any part of the Perpetual Convertible Preferred Stock pursuant to ‎Section 7(a), it shall fix a date for redemption, which must be a Business Day (each, a “Redemption Date”) and it shall deliver by electronic mail an irrevocable notice of such Optional Redemption (a “Redemption Notice”) not less than 45 nor more than 60 calendar days prior to the Redemption Date to each Holder; provided the Corporation may not exercise its redemption right from any period following the entry into any transaction or agreement that would result in a Reorganization Event until the later of (A) the conclusion of the Reorganization Event and (B) the date on which Holders of Perpetual Convertible Preferred Stock electing to receive the Reorganization Event consideration have been paid the Reorganization Event consideration.

(ii) The Redemption Notice, if delivered in the manner herein provided, shall be conclusively presumed to have been duly given, whether or not the Holders receive such notice.

(iii) Each Redemption Notice shall specify:

(A) the Redemption Date;

(B) the Redemption Price;

(C) that on the Redemption Settlement Date, the Redemption Price will become due and payable upon each share of Perpetual Convertible Preferred Stock;

(D) (1) that Holders may surrender their Perpetual Convertible Preferred Stock for conversion at any time on or after the Initial Issue Date prior to the close of business on the Scheduled Trading Day immediately preceding the Redemption Date; (2) the procedures a converting Holder must follow to convert its Perpetual Convertible Preferred Stock; and (3) the Conversion Rate; and

(E) in case the Perpetual Convertible Preferred Stock is to be redeemed in part only, the number of shares of Perpetual Convertible Preferred Stock to be redeemed.

A Redemption Notice shall be irrevocable.

(iv) If fewer than all of the outstanding shares of Perpetual Convertible Preferred Stock are to be redeemed pursuant to ‎Section 7(a), the Transfer Agent shall select the shares of Perpetual Convertible Preferred Stock to be redeemed (which such number shall be an integer) by lot, on a pro rata basis or by another method the Transfer Agent considers to be fair and appropriate (or as required by the procedures of the Transfer Agent, if applicable). If any Perpetual Convertible Preferred Stock selected for partial redemption is submitted for conversion in part after such selection, the shares of Perpetual Convertible Preferred Stock submitted for conversion shall be deemed (so far as may be possible) to be the portion selected for redemption.

(v) On and after the Redemption Settlement Date, upon surrender of a share certificate representing any Perpetual Convertible Preferred Stock redeemed in part, the Corporation shall execute and instruct the Registrar and Transfer Agent to countersign and deliver to the Holder thereof, at the expense of the Corporation, a certificate evidencing a number of shares of Perpetual Convertible Preferred Stock equal to the unredeemed portion thereof, or, if the Perpetual Convertible Preferred Stock is held in book-entry form, the Corporation shall cause the Transfer Agent and Registrar to reduce the number of shares of Perpetual Convertible Preferred Stock represented by the global certificate by making a notation on Schedule I attached to the global certificate.

(c) If any Redemption Notice has been given in respect of any Perpetual Convertible Preferred Stock in accordance with ‎Section 7(b), the Perpetual Convertible Preferred Stock to be redeemed shall become due and payable on the Redemption Settlement Date at the place or places stated in the Redemption Notice and at the applicable Redemption Price. Upon the payment of the Redemption Price, (i) the Perpetual Convertible Preferred Stock to be redeemed

will cease to be outstanding and (ii) all other rights of the Holders in respect of the Perpetual Convertible Preferred Stock to be redeemed will terminate (other than the right to receive the Redemption Price).

(d) Upon any Optional Redemption of any share of Perpetual Convertible Preferred Stock, the Corporation shall pay to the Holder of such share, in respect of each share being redeemed, an amount, in cash out of funds legally available for such distribution, equal to the Redemption Price per share of Perpetual Convertible Preferred Stock.

(e) The Corporation shall pay the consideration due in respect of any Optional Redemption on the relevant Redemption Settlement Date.

(f) No sinking fund is provided for the Perpetual Convertible Preferred Stock.

Section 8. Voting Rights. Holders shall not have any voting rights except as set forth in Section 9 or as otherwise from time to time specifically required by Maryland law.

Section 9. Changes Affecting Perpetual Convertible Preferred Stock.

(a) So long as any shares of Perpetual Convertible Preferred Stock are outstanding, the Corporation shall not, without first obtaining the affirmative vote or written consent of the Holders of at least a majority of the total number of shares of Perpetual Convertible Preferred Stock then outstanding, voting as a separate class:

(i) amend, alter or repeal (A) these Articles Supplementary or (B) any other provision of the Articles of Incorporation, in the case of Clause (B) in any manner that would adversely affect in any respect the preferences, conversion or other rights (including repurchase rights), voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of the Perpetual Convertible Preferred Stock, in each case, including whether by recapitalization, reorganization, reclassification, merger, consolidation, transfer or conveyance of all or substantially all of its assets or otherwise (an “Event”); provided however, with respect to the occurrence of any of the foregoing Events, so long as the Perpetual Convertible Preferred Stock remains outstanding with the terms thereof unchanged or the Holders receive stock of the successor with substantially identical powers, preferences, privileges and rights as the Perpetual Convertible Preferred Stock, taking into account that, upon the occurrence of such Event, the Corporation may not be the surviving entity, the occurrence of such Event shall not be deemed to adversely affect such powers, preferences, privileges or rights of the Perpetual Convertible Preferred Stock, and in such case such Holders shall not have any voting rights with respect to the occurrence of any such Event, and, provided further, that the creation or issuance, or any increase in the amounts authorized, of any class or series of Junior Stock or Parity Preferred Stock that the Corporation may issue shall not be deemed to adversely affect the powers, preferences, privileges or rights of the Perpetual Convertible Preferred Stock;

(ii) designate or issue any Senior Stock, or create, authorize or issue any obligation or security convertible into or evidencing the right to purchase any such stock; or

(iii) enter into, amend or alter any provision of any agreement or other instrument binding upon the Corporation or any of its subsidiaries in a manner that could reasonably be expected to be material and adverse to the powers, preferences, privileges or rights of the Perpetual Convertible Preferred Stock under these Articles Supplementary.

(b) On each matter on which Holders are entitled to vote, each share of Perpetual Convertible Preferred Stock will be entitled to one vote.

(c) To the extent permitted by Maryland law, the Holders shall have exclusive voting rights on any Articles of Incorporation amendment that would alter the contract rights, as expressly set forth in the Articles of Incorporation, of only the Perpetual Convertible Preferred Stock.

(d) The Corporation shall not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities, or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Corporation, but shall at all times in good faith assist in the carrying out of all the provisions of these Articles Supplementary of Perpetual Convertible Preferred Stock and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holders against impairment.

(e) Without the consent or action of the Holders, so long as such action is made pursuant to an amendment to the Corporation’s Articles of Incorporation duly adopted in accordance with Maryland law, and does not adversely affect in any respect any of the preferences, conversion or other rights (including repurchase rights), voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption of the Perpetual Convertible Preferred Stock, a majority of the entire Board of Directors may change the name or other designation or the par value of such stock of the Corporation.

Section 10. Conversion of Perpetual Convertible Preferred Stock.

(a) Conversion Privilege. Holders shall have the right to convert their shares of Perpetual Convertible Preferred Stock, in whole or in part (but in no event less than one share of Perpetual Convertible Preferred Stock), at any time on or after the Initial Issue Date (“Optional Conversion”), as described in this Section 10 and subject to satisfaction of the conversion procedures set forth in ‎Section 11, in each case, for the amount and kind of consideration as described in this Section 10.

(b) Mandatory Conversion at Option of Corporation. So long as the Mandatory Conversion Condition (as defined in Section 10(c) hereto) has been satisfied, the Corporation shall have the right, at the option of the Corporation, to automatically convert all shares of Perpetual Convertible Preferred Stock (unless previously converted at the option of the Holder in accordance with Section 10(a) or redeemed by the Corporation pursuant to Section 7), at any

time on or after the Initial Issue Date, for the amount and kind of consideration as described in Section 10(d) (“Mandatory Conversion”). The Mandatory Conversion shall be effective on the Mandatory Conversion Date.

(c) Conditions to Mandatory Conversion. The Mandatory Conversion Condition shall be satisfied if the Closing Sale Price for the Common Stock exceeds 150% of the Conversion Price for each Trading Day during any ten consecutive Trading Day period following the Initial Issue Date (such period, the “Mandatory Conversion Measurement Period” and such condition, the “Mandatory Conversion Condition”).

(d) Settlement Upon Conversion. Subject to this Section 10(d), upon conversion of any share of Perpetual Convertible Preferred Stock, the Corporation shall deliver to the converting Holder, shares of Common Stock, together with cash, if applicable, in lieu of delivering any fractional share of Common Stock in accordance with ‎Section 13, as set forth in this Section 10(d), in satisfaction of its Conversion Obligation.

(i) The Corporation shall satisfy its Conversion Obligation in connection with Optional Conversions made pursuant to Section 10(a) by delivering to the converting Holder of Perpetual Convertible Preferred Stock being converted a number of shares of Common Stock equal to the product of (1) the number of shares of Perpetual Convertible Preferred Stock to be converted, and (2) the Conversion Rate on the Optional Conversion Date.

(ii) The Corporation shall satisfy its Conversion Obligation in connection with Mandatory Conversions made pursuant to Section 10(b) by delivering to the converting Holder of Perpetual Convertible Preferred Stock being converted a number of shares of Common Stock equal to the Mandatory Conversion Settlement Amount for such converting Holder.

Section 11. Conversion Procedures.

(a) If the Corporation exercises its Mandatory Conversion right pursuant to Section 10(b), any outstanding shares of Perpetual Convertible Preferred Stock so converted shall automatically convert in accordance with Section 10(b) on the Mandatory Conversion Date. The Person or Persons entitled to receive any shares of Common Stock issuable on the Mandatory Conversion Date shall be treated for all purposes as the record holder(s) of such shares of Common Stock immediately following delivery by the Corporation of the Notice of Conversion (as defined below).

(b) To effect an Optional Conversion pursuant to Section 10(a), any Holder who holds shares of Perpetual Convertible Preferred Stock must:

(i) complete and sign a conversion notice in the form attached to the stock certificate hereto in Exhibit A (the “Notice of Conversion”); and

(ii) deliver via electronic mail to [email protected] and [email protected] during regular business hours, the completed and executed Notice of Conversion to the Corporation.

The Optional Conversion shall be effective on the date on which a Holder has delivered the Notice of Conversion to the Corporation (such date, the “Optional Conversion Date”); provided that if a Holder so indicates in a Notice of Conversion delivered in connection with the consummation of a Reorganization Event or any tender offer, share purchase or similar transaction available to all or substantially all with respect to the Common Stock, then such Notice of Conversion shall not become effective until the date on which such Reorganization Event, tender offer, share purchase or similar transaction closes or becomes effective. Any Holder shall be treated for all purposes as the record holder(s) of such shares of Common Stock upon the delivery of the Notice of Conversion and upon such delivery shall be deemed not to hold the shares of Perpetual Convertible Stock being converted. The Holders shall not be required to physically surrender certificates upon the delivery of the Notice of Conversion for such conversion to be effective.

Except as set forth in ‎‎Section 15(a), the Corporation shall pay or deliver, as the case may be, the consideration due in respect of the Conversion Obligation for any Optional Conversion on the second Business Day immediately following the last Trading Day of the relevant Observation Period (or such earlier date as comprises the standard settlement period on the Corporation’s primary trading market with respect to the Common Stock). A Holder shall not be required to pay any transfer or similar taxes or duties relating to the issuance or delivery of any Common Stock if such Holder exercises its conversion rights, but such Holder shall be required to pay any transfer or similar tax or duty that may be payable relating to any transfer involved in the issuance or delivery of any Common Stock in a name other than the name of such Holder. A certificate representing the shares of Common Stock, if any, issuable upon conversion shall be issued and delivered to the converting Holder.

Execution and delivery of a Notice of Conversion with respect to a partial conversion shall have the same effect as cancellation of the original certificate(s) representing such Perpetual Convertible Preferred Stock and issuance of a certificate representing such remaining Perpetual Convertible Preferred Stock. In accordance with the preceding sentence, upon the written request of the Holder and the surrender of certificate(s) representing Perpetual Convertible Preferred Stock, the Corporation shall, within three Trading Days of such request, deliver to the Holder certificate(s) (as specified by the Holder in such request) representing such remaining Perpetual Convertible Preferred Stock.

(c) In the event that a Holder shall not by written notice designate the name in which any shares of Common Stock to be issued upon conversion of such Perpetual Convertible Preferred Stock should be registered or, if applicable, the address to which the certificate or certificates representing such shares of Common Stock should be sent, the Corporation shall be entitled to register such shares, and make such payment, in the name of the Holder as shown on the records of the Corporation and, if applicable, to send the certificate or certificates representing such shares of Common Stock to the address of such Holder shown on the records of the Corporation.

(d) Shares of Perpetual Convertible Preferred Stock shall cease to be outstanding on the applicable Optional Conversion Date or Mandatory Conversion Date, subject to the right of Holders of such shares to receive the cash payable and/or the shares of Common Stock issuable upon conversion of such shares of Perpetual Convertible Preferred Stock to which they are entitled pursuant to Section 10.

(e) Not later than two Business Days after the applicable Conversion Date, the Corporation shall electronically transfer the shares of Common Stock by crediting the account of the applicable Holder’s broker through its Deposit Withdrawal Agent Commission system.

(f) Nothing herein shall limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Corporation’s failure to timely deliver certificates representing shares of Common Stock upon conversion of the shares of Perpetual Convertible Preferred Stock as required pursuant to the terms hereof; provided, however, that the Holder shall not be entitled to both (i) require the reissuance of the shares of Perpetual Convertible Preferred Stock submitted for conversion for which such conversion was not timely honored and (ii) receive the number of shares of Common Stock that would have been issued if the Corporation had timely complied with its delivery requirements under this Agreement.

Section 12. Reservation of Common Stock. (a) The Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock of the Corporation, solely for issuance upon the conversion, or redemption of shares of Perpetual Convertible Preferred Stock as herein provided, free from any preemptive or other similar rights, a number of shares of Common Stock equal to the applicable Conversion Rate multiplied by the number of shares of Perpetual Convertible Preferred Stock.

(a) All shares of Common Stock delivered upon any conversion or redemption of the Perpetual Convertible Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable, free and clear of all liens, claims, security interests and other encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).

(b) Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Perpetual Convertible Preferred Stock, the Corporation shall use reasonable best efforts to comply with all U.S. federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority; provided that this ‎Section 12(c) shall not obligate the Corporation to register the offer and sale of such securities under the Securities Act or any other applicable securities laws. Assuming the Holder to which the shares of Common Stock is to be issued is not as of the date of issuance, and for a period of three months prior to the date of issuance has not been, an Affiliate of the Corporation (which the Corporation shall assume (and the applicable Holder shall be deemed to represent) unless such Holder has otherwise advised the Corporation in writing), the shares of Common Stock will be freely tradeable by such Holder without restriction or limitation (including volume limitation), pursuant to Rule 144 under the Securities Act, and will not contain or be subject to any legend or stop transfer instructions restricting the sale or transferability thereof.

Section 13. Fractional Shares. (a) No fractional shares of Common Stock shall be issued as a result of any conversion or redemption of shares of Perpetual Convertible Preferred Stock.

(b) In lieu of any fractional share of Common Stock otherwise issuable in respect of the aggregate number of shares of Perpetual Convertible Preferred Stock that are redeemed pursuant to Section 7 or converted pursuant to ‎Section 10, as the case may be, the Corporation shall pay an amount in cash (computed to the nearest cent) equal to the product of (i) that same fraction and (ii) the VWAP per share of the Common Stock on the last Trading Day of the relevant Observation Period (in the case of a redemption of the Perpetual Convertible Preferred Stock) or on the Conversion Date (in the case of a conversion of the Perpetual Convertible Preferred Stock).

(c) If more than one share of the Perpetual Convertible Preferred Stock is surrendered for conversion or redemption at one time by or for the same Holder, the number of full shares of Common Stock issuable upon conversion or redemption thereof, as the case may be, shall be computed on the basis of the aggregate number of shares of the Perpetual Convertible Preferred Stock so surrendered.

Section 14. Adjustments to the Conversion Rate. The Conversion Rate shall be adjusted from time to time by the Corporation if any of the following events occurs, except that the Corporation shall not make any adjustments to the Conversion Rate if Holders of the Perpetual Convertible Preferred Stock participate, at the same time and upon the same terms as holders of the Common Stock and solely as a result of holding the Perpetual Convertible Preferred Stock, in any of the transactions described in this ‎Section 14, without having to convert their Perpetual Convertible Preferred Stock, as if they held a number of shares of Common Stock equal to the Conversion Rate, multiplied by the number of shares of Perpetual Convertible Preferred Stock held by such Holder.

(a) If the Corporation effects a share split or share combination, the Conversion Rate shall be adjusted based on the following formula:

where,

CR₀	=	the Conversion Rate in effect immediately prior to the open of business on the Effective Date of such share split or share combination, as applicable;

CR'	=	the Conversion Rate in effect immediately after the close of business on such Record Date or immediately after the open of business on such effective date, as applicable;

OS₀	=	the number of shares of Common Stock outstanding immediately prior to the close of business on such record date or immediately prior to the open of business on such effective date, as applicable; and

OS'

the number of shares of Common Stock outstanding immediately after giving effect to such share split or share combination.

Any adjustment made under this ‎Section 14(a) shall become effective immediately after the close of business on the Record Date for such dividend or distribution, or immediately after the open of business on the Effective Date for such share split or share combination, as applicable. If any dividend or distribution of the type described in this ‎Section 14(a) is declared but not so paid or made, the Conversion Rate shall be immediately readjusted, effective as of the date the Board of Directors (or an authorized committee thereof) determines not to pay such dividend or distribution, to the Conversion Rate that would then be in effect if such dividend or distribution had not been declared.

(b) Except as stated herein, the Corporation shall not adjust the Conversion Rate for the issuance of shares of the Common Stock or any securities convertible into or exchangeable for shares of the Common Stock or the right to purchase shares of the Common Stock or such convertible or exchangeable securities.

(i) upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on the Corporation’s securities and the investment of additional optional amounts in shares of Common Stock under any plan;

(ii) upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Corporation or any of the Corporation’s Subsidiaries;

(iii) upon the issuance of any shares of the Common Stock pursuant to any option, warrant, right or exercisable, exchangeable or convertible security not described in clause ‎(ii) of this subsection and outstanding as of the Initial Issue Date;

(iv) upon the repurchase of any shares of Common Stock pursuant to an open-market repurchase program or other buy-back transaction;

(v) solely for a change in the par value of the Common Stock;

(vi) upon any dividend or distribution on the Common Stock that is a regular, quarterly dividend, whether payable in cash, shares of Common Stock or a combination of cash and shares of Common Stock (including at the election of a holder of the Common Stock); or

(vii) for unpaid dividends, whether accumulated or declared, if any.

(d) All calculations and other determinations under this ‎Section 14 shall be made by the Board of Directors (or an authorized committee thereof) and shall be made to the nearest one-

ten thousandth (1/10,000th) of a share of Common Stock. The Corporation shall not adjust the Conversion Rate pursuant to this ‎‎Section 14 unless the adjustment would result in a change of at least 1% in the then-effective Conversion Rate. However, the Corporation shall carry forward any adjustment that it would otherwise have had to make and take that adjustment into account in any subsequent adjustment. Notwithstanding the foregoing, all such carried-forward adjustments shall be made with respect to the Perpetual Convertible Preferred Stock (i) in connection with any subsequent adjustment to the Conversion Rate of at least 1%, (ii) on each Conversion Date related to the conversion of Perpetual Convertible Preferred Stock and (iii) on each Trading Day of any Observation Period related to the redemption of Perpetual Convertible Preferred Stock.

(e) Whenever the Conversion Rate is adjusted as herein provided, the Corporation shall promptly prepare a notice of such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate, the method of calculation thereof in reasonable detail and the date on which each adjustment becomes effective and shall mail such notice of such adjustment of the Conversion Rate to each Holder in the manner set forth in ‎Section 18. Failure to deliver such notice shall not affect the legality or validity of any such adjustment.

(f) For purposes of this ‎Section 14, the number of shares of Common Stock at any time outstanding shall not include shares of Common Stock held in the treasury of the Corporation so long as the Corporation does not pay any dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation, but shall include shares of Common Stock issuable in respect of scrip certificates issued in lieu of fractions of shares of Common Stock.

(g) Whenever any provision of these Articles Supplementary requires the Corporation to calculate the Average VWAPs over a span of multiple days (including an Observation Period), the Board of Directors (or an authorized committee thereof) shall in good faith make appropriate adjustments to each to account for any adjustment to the Conversion Rate that becomes effective, or any event requiring an adjustment to the Conversion Rate where the Ex-Dividend Date, Effective Date or expiration date, as the case may be, of the event occurs, at any time during the period when the Average VWAPs are to be calculated.

(h) If the Corporation has a stockholder rights plan in effect upon conversion of the Perpetual Convertible Preferred Stock, each share of Common Stock, if any, issued upon such conversion shall be entitled to receive the appropriate number of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as may be provided by the terms of any such stockholder rights plan, as the same may be amended from time to time.

(i) Notwithstanding anything to the contrary herein, the Corporation may delay the settlement of any conversion of the Perpetual Convertible Preferred Stock to the extent necessary to calculate the amount of consideration due upon conversion in connection with any adjustment of the Conversion Rate pursuant to this ‎Section 14 (including, for the avoidance of doubt, to calculate any readjustment of the Conversion Rate pursuant to this ‎Section 14), and, in respect of any such delay, the Corporation shall be deemed not to have breached its obligation to deliver the consideration due upon conversion by the date specified in ‎Section 11(b).

Section 15. Reorganization Events.

(a) In the case of:

(i) any recapitalization, reclassification or change of the Common Stock (other than changes resulting from a subdivision or combination),

(ii) any consolidation, merger, combination or similar transaction involving the Corporation,

(iii) any sale, lease or other transfer to a third party of the consolidated assets of the Corporation and the Corporation’s Subsidiaries substantially as an entirety,

(iv) any statutory share exchange,

(v) a “person” or “group” within the meaning of Section 13(d) of the Exchange Act, other than the Corporation, its wholly owned Subsidiaries and the employee benefit plans of the Corporation and its wholly owned Subsidiaries, becomes the direct or indirect “beneficial owner,” as defined in Rule 13d-3 under the Exchange Act, of the Common Stock representing more than 50% of the voting power of the Common Stock (a “Change of Control”), or

(vi) any transaction having the same effect as any transaction set forth in clauses (i)-(v).

in each case whether directly or indirectly in one or more related transactions, as a result of which the Common Stock would be converted into, or exchanged for, stock, other securities, other property or assets (including cash or any combination thereof) (any such event, a “Reorganization Event”), then, at and after the effective time of such Reorganization Event, the right to convert each share of Perpetual Convertible Preferred Stock at the Conversion Rate shall be changed into a right to convert such share into the kind and amount of shares of stock, other securities or other property or assets (including cash or any combination thereof) that a holder of a number of shares of Common Stock equal to the Conversion Rate immediately prior to such Reorganization Event would have owned or been entitled to receive (the “Reference Property,” with each “unit of Reference Property” meaning the kind and amount of Reference Property that a holder of one share of Common Stock is entitled to receive) upon such Reorganization Event, without regard to the Beneficial Ownership Limitation; provided, however, that at and after the effective time of the Reorganization Event (A) the number of shares of Common Stock otherwise deliverable upon conversion of the Perpetual Convertible Preferred Stock in accordance with Section 11 shall instead be deliverable in the amount and type of Reference Property that a holder of that number of shares of Common Stock would have received in such Reorganization Event and (B) the VWAP shall be calculated based on the value of a unit of Reference Property. In the case of a Change of Control, the parties (other than the Corporation, its wholly owned Subsidiaries, and any employee benefit plan of the Corporation and its wholly owned subsidiaries), as a condition of effecting the Change of Control shall make all necessary provisions such that, following the Change of Control and for so long thereafter as the Perpetual Convertible Preferred Stock remains outstanding, the holders of the Perpetual Convertible

Preferred Stock shall have the right to obtain the applicable amount of Refereince Property upon exercise of the conversion right.

If Holders of Common Stock are given any choice as to the securities, cash or property to be received in a Reorganization Event, then the Holders shall be given the same choice as to the Reference Property it receives upon any conversion of the Perpetual Convertible Preferred Stock following such Reorganization Event.

(b) The above provisions of this Section 15 shall similarly apply to successive Reorganization Events and the provisions of this Section 15 shall apply to any Reference Property.

(c) The Corporation (or any successor thereto) shall, as soon as reasonably practicable (but in any event within 3 calendar days) after the occurrence of any Reorganization Event, provide written notice to the Holders of such occurrence and of the kind and amount of the stock, other securities, other property or assets that constitute the Reference Property. Failure to deliver such notice shall not affect the operation of this ‎Section 15.

(d) The Corporation shall not enter into or consummate any transaction or become a party to any agreement, in each case, with respect to any transaction that would constitute a Reorganization Event, unless its terms require that any successor or surviving entity comply with the provisions of Section 15(a) and insuring that the Perpetual Convertible Preferred Stock (or any such replacement security) will receive the Reference Property upon conversion (without giving effect to the Beneficial Ownership Limitation) and as applicable, be similarly adjusted upon any subsequent transaction analogous to a Reorganization Event.

(e) Following the announcement of the entry into a transaction that will result in a Reorganization Event, a Holder of the Perpetual Convertible Preferred Stock may (i) effect an Optional Conversion or (ii) elect prior to the consummation of the Reorganization Event to receive, at the same time as the Holders of the Common Stock, the amount of Reference Property with respect to each share of Perpetual Convertible Preferred Stock subject to such election that such Holders would have received had they held a number of shares of Common Stock equal to the Conversion Rate immediately prior to such Reorganization Event (in the case of clause (ii), without giving effect to the Beneficial Ownership Limitation). To make the election described in clause (ii) above, any Holder who holds shares of Perpetual Convertible Preferred Stock must complete and sign an election notice in the form attached to the stock certificate hereto in Exhibit A (the “Election Notice”) and deliver via electronic mail to [email protected] and [email protected] during regular business hours, the completed and executed Election Notice to the Corporation.

Section 16. Transfer Agent, Registrar and Conversion Agent. The duly appointed Transfer Agent, Registrar and Conversion Agent for the Perpetual Convertible Preferred Stock shall be Computershare Trust Company, N.A.. The Corporation may, in its sole discretion, remove the Transfer Agent, Registrar or Conversion Agent in accordance with the agreement between the Corporation and the Transfer Agent, Registrar or Conversion Agent, as the case may be; provided that if the Corporation removes Computershare Trust Company, N.A., the Corporation shall appoint a successor transfer agent, registrar or conversion agent, as the case

may be, who shall accept such appointment prior to the effectiveness of such removal. Upon any such removal or appointment, the Corporation shall send notice thereof by first-class mail, postage prepaid, to the Holders.

Section 17. Record Holders. To the fullest extent permitted by applicable law, the Corporation and the Transfer Agent may deem and treat the Holder of any shares of Perpetual Convertible Preferred Stock as the true and lawful owner thereof for all purposes.

Section 18. Notices. All notices or communications in respect of the Perpetual Convertible Preferred Stock shall be sufficiently given if given in writing and delivered in person or by first class mail, postage prepaid, electronic mail or if given in such other manner as may be permitted in these Articles Supplementary, in the Articles of Incorporation or the Bylaws and by applicable law.

Section 19. No Preemptive Rights. The Holders shall have no preemptive or preferential rights to purchase or subscribe to any stock, obligations, warrants or other securities of the Corporation of any class.

Section 20. Other Rights. The shares of the Perpetual Convertible Preferred Stock shall not have any preferences, conversion or other rights (including, but not limited to, any relative, participating, optional or other special rights), voting powers, restrictions, limitations as to dividends, qualifications, or terms or conditions of redemption thereof, other than as set forth herein or in the Articles of Incorporation or as provided by applicable law.

Section 21. Stock Certificates.

(a) Shares of Perpetual Convertible Preferred Stock shall be represented by stock certificates substantially in the form set forth as Exhibit A hereto.

(b) Stock certificates representing shares of the Perpetual Convertible Preferred Stock shall be signed by an authorized Officer of the Corporation and attested by the Secretary, any assistant secretary, the Treasurer or any assistant treasurer, in accordance with the Bylaws and applicable Maryland law, by manual or facsimile signature.

(c) If any Officer of the Corporation who has signed a stock certificate no longer holds that office at the time the Transfer Agent and Registrar countersigns the stock certificate, the stock certificate shall be valid nonetheless.

Section 22. Replacement Certificates. If physical certificates are issued, and any of the Perpetual Convertible Preferred Stock certificates shall be mutilated, lost, stolen or destroyed, the Corporation shall, at the expense of the Holder, issue, in exchange and in substitution for and upon cancellation of the mutilated Perpetual Convertible Preferred Stock certificate, or in lieu of and substitution for the Perpetual Convertible Preferred Stock certificate lost, stolen or destroyed, a new Perpetual Convertible Preferred Stock certificate of like tenor and representing an equivalent Liquidation Preference of shares of Perpetual Convertible Preferred Stock, but only upon receipt of evidence of such loss, theft or destruction of such Perpetual Convertible

Preferred Stock certificate and indemnity, if requested, reasonably satisfactory to the Corporation and the Transfer Agent.

Section 23. Transfer Restrictions. Holders shall not be permitted to transfer any shares of the Perpetual Convertible Preferred Stock to any Person unless the Person to whom such shares are transferred is an Affiliate of the transferring Holder. As used in this Section 23, the term “transfer” encompasses any sale, pledge, transfer or other disposition whatsoever of any Perpetual Convertible Preferred Stock.

Each stock certificate evidencing the Perpetual Convertible Preferred Stock (and every security issued in exchange therefor or substitution thereof, except any shares of Common Stock issued upon conversion or redemption thereof) shall bear a legend in substantially the following form:

THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO RESTRICTIONS ON TRANSFER OF SHARES AS SET FORTH IN ARTICLE FOUR OF THE CHARTER OF PERNIX THERAPEUTICS HOLDINGS, INC. (THE “CORPORATION”), AS SUPPLEMENTED BY SECTION 23 OF THE ARTICLES SUPPLEMENTARY THAT HAVE BEEN FILED IN RESPECT TO THE CLASS OF PREFERRED STOCK OF WHICH SUCH SHARES ARE A PART, AND THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, PLEDGED, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH TRANSFER IS MADE TO AN AFFILIATE OF THE HOLDER IN COMPLIANCE WITH THE PROVISIONS OF THE CHARTER OF THE CORPORATION.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS THE TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

Section 24. Provisions Relating To Ownership Limit. Notwithstanding anything herein to the contrary, the Corporation shall not effect any conversion, including any Mandatory Conversion, of the Perpetual Convertible Preferred Stock, and a Holder shall not have the right to convert any portion of the Perpetual Convertible Preferred Stock, to the extent that, after giving effect to an attempted conversion set forth on the applicable Notice of Conversion, such Holder (together with such Holder’s Affiliates, and any other person or entity whose beneficial ownership of Common Stock would be aggregated with the Holder’s for purposes of Section 13(d) of the Exchange Act and the applicable regulations of the Commission, including any “group” of which the Holder is a member) would beneficially own a number of shares of Common Stock in excess of the Beneficial Ownership Limitation (as defined below). For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by such Holder and its Affiliates shall include the number of shares of Common Stock issuable upon conversion of the Perpetual Convertible Preferred Stock subject to the Notice of Conversion with respect to which such determination is being made, but shall exclude the number of shares of Common Stock which are issuable upon (A) conversion of the remaining, unconverted Perpetual Convertible Preferred Stock beneficially owned by such Holder or any of its Affiliates, and (B) exercise or conversion of the unexercised or unconverted portion of any

other securities of the Corporation subject to a limitation on conversion or exercise analogous to the limitation contained herein (including any warrants) beneficially owned by such Holder or any of its Affiliates. Except as set forth in the preceding sentence, for purposes of this Section 24, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. In addition, a determination as to any “group” status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For purposes of this Section 24, in determining the number of outstanding shares of Common Stock, a Holder may rely on the number of outstanding shares of Common Stock as stated in the most recent of the following: (A) the Corporation’s most recent periodic or annual filing with the Commission, as the case may be, (B) a more recent public announcement by the Corporation that is filed with the Commission or (C) a more recent notice by the Corporation or the Corporation’s transfer agent to the Holder setting forth the number of shares of Common Stock then outstanding. Upon the written request of a Holder ( which may be via electronic mail), the Corporation shall within two Trading Days thereof, confirm in writing via electronic mail to such Holder the number of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to any actual conversion or exercise of securities of the Corporation, including Perpetual Convertible Preferred Stock, by such Holder or its Affiliates since the date as of which such number of outstanding shares of Common Stock was last publicly reported. The “Beneficial Ownership Limitation” shall be 4.985% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon conversion of Perpetual Convertible Preferred Stock held by the applicable Holder.

Section 25. Miscellaneous. (a) The Corporation shall pay any and all stock transfer and documentary stamp taxes that may be payable in respect of any issuance or delivery of shares of Perpetual Convertible Preferred Stock or shares of Common Stock or other securities issued on account of Perpetual Convertible Preferred Stock pursuant hereto or certificates representing such shares or securities. The Corporation shall not, however, be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Common Stock or other securities in a name other than that in which the shares of Perpetual Convertible Preferred Stock with respect to which such shares or other securities are issued or delivered were registered, and shall not be required to make any such issuance or delivery unless and until the Person otherwise entitled to such issuance or delivery has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid or is not payable.

(b) The Liquidation Preference shall be subject to equitable adjustment whenever there shall occur a stock split, combination, reclassification or other similar event involving the Perpetual Convertible Preferred Stock. Such adjustments shall be determined in good faith by the Corporation and submitted by the Corporation to the Transfer Agent.

(c) All shares of Perpetual Convertible Preferred Stock redeemed or otherwise acquired in any manner by the Corporation shall be retired and shall be restored to the status of authorized but unissued Preferred Stock, without designation as to series or class.

THIRD: The 0% Series C Perpetual Convertible Preferred Stock has been re-classified and designated by the Board of Directors under the authority contained in the Articles of Incorporation.

FOURTH: These Articles Supplementary have been approved by the Board of Directors in the manner and by the vote required by law.

FIFTH: The undersigned acknowledges these Articles Supplementary to be the corporate act of the Corporation and, as to all matters or facts required to be verified under oath, the undersigned acknowledges that, to the best of his knowledge, information and belief, these matters and facts are true in all material respects and that this statement is made under the penalties of perjury.

IN WITNESS WHEREOF, these Articles Supplementary are executed on behalf of the Corporation by its Officer and attested to on this 1^stday of August, 2018.

ATTEST:		PERNIX THERAPEUTICS HOLDINGS, INC.


	By:
Name:		Name:
Title:		Title:

Exhibit A

[FORM OF FACE OF PERPETUAL CONVERTIBLE PREFERRED STOCK CERTIFICATE]

A-1

Certificate Number [__]

Number of Shares of Perpetual Convertible Preferred Stock [_____]

CUSIP [__]
ISIN [__]

PERNIX THERAPEUTICS HOLDINGS, INC.

0% Series C Perpetual Convertible Preferred Stock
(par value $0.01 per share)
(Liquidation Preference as specified below)

PERNIX THERAPEUTICS HOLDINGS, INC., a Maryland corporation (the “Corporation”), hereby certifies that [_______] (the “Holder”), is the registered owner of [_______] fully paid and non-assessable shares of the Corporation’s designated 0% Series C Perpetual Convertible Preferred Stock, with a par value of $0.01 per share and a Liquidation Preference of $100.00 per share (the “Perpetual Convertible Preferred Stock”). The shares of Perpetual Convertible Preferred Stock are transferable in accordance with the terms of the Articles Supplementary (as defined below) on the books and records of the Registrar, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer. The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Perpetual Convertible Preferred Stock represented hereby are and shall in all respects be subject to the provisions of the Articles Supplementary establishing the 0% Series C Perpetual Convertible Preferred Stock of Pernix Therapeutics Holdings, Inc. dated August 1, 2018 as the same may be amended from time to time (the “Articles Supplementary”). Capitalized terms used herein but not defined shall have the meaning given them in the Articles Supplementary. The Corporation will provide a copy of the Articles Supplementary to the Holder without charge upon written request to the Corporation at its principal place of business. In the case of any conflict between this Certificate and the Articles Supplementary, the provisions of the Articles Supplementary shall control and govern.

Reference is hereby made to the provisions of the Perpetual Convertible Preferred Stock set forth on the reverse hereof and in the Articles Supplementary, which provisions shall for all purposes have the same effect as if set forth at this place.

Upon receipt of this executed certificate, the Holder is bound by the Articles Supplementary and is entitled to the benefits thereunder.

Unless the Transfer Agent and Registrar have properly countersigned, these shares of Perpetual Convertible Preferred Stock shall not be entitled to any benefit under the Articles Supplementary or be valid or obligatory for any purpose.

A-2

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Corporation by an Officer of the Corporation and attested this [__] of [______] [____].

ATTEST:		PERNIX THERAPEUTICS HOLDINGS, INC.


	By:
Name:		Name:
Title:		Title:

A-3

COUNTERSIGNATURE

These are shares of Perpetual Convertible Preferred Stock referred to in the within-mentioned Articles Supplementary.

Dated: [_______], [____]

Computershare Trust Company, N.A., as Registrar and Transfer Agent


By:
	Name:
	Title:

A-4

[FORM OF REVERSE OF CERTIFICATE FOR PERPETUAL CONVERTIBLE PREFERRED STOCK]

The shares of Perpetual Convertible Preferred Stock shall be convertible and are subject to redemption at the option of the Corporation in the manner and accordance with the terms set forth in the Articles Supplementary.

The Corporation shall furnish without charge to each Holder who so requests a summary of the authority of the Board of Directors to determine variations for future series within a class of stock and the designations, limitations, preferences and relative, participating, optional or other special rights of each class or series of share capital issued by the Corporation and the qualifications, limitations or restrictions of such preferences and/or rights.

A-5

NOTICE OF CONVERSION

(To be Executed by the Holder
in order to Convert the Perpetual Convertible Preferred Stock)

The undersigned hereby irrevocably elects (unless otherwise indicated below) to convert (the “Conversion”) [_______] shares of 0% Series C Perpetual Convertible Preferred Stock (the “Perpetual Convertible Preferred Stock”), of Pernix Therapeutics Holdings, Inc. (hereinafter called the “Corporation”), represented by stock certificate No(s). [______] (the “Perpetual Convertible Preferred Stock Certificates”), into common stock, par value $0.01 per share, of the Corporation (the “Common Stock”), according to the conditions of the Articles Supplementary establishing the Perpetual Convertible Preferred Stock (the “Articles Supplementary”), as of the date written below. If Common Stock is to be issued in the name of a person other than the undersigned, the undersigned shall pay all transfer taxes payable with respect thereto, if any.

Capitalized terms used but not defined herein shall have the meanings ascribed thereto in or pursuant to the Articles Supplementary.

Date of Conversion:

Number of Shares of Perpetual Convertible Preferred Stock to be Converted:

Signature:

Name:

Address:^*

Fax No.:

If the undersigned’s election is contingent on the closing or effectiveness of a Reorganization Event, tender offer, share repurchase or similar transaction, so indicate below:

^* Address where Common Stock and any other payments or certificates shall be sent by the Corporation.

ELECTION NOTICE

(To be Executed by the Holder
in order to make the election described in Section 15(e)(ii) of the Articles Supplementary referred to below)

With respect to [_______] shares of 0% Series C Perpetual Convertible Preferred Stock (the “Perpetual Convertible Preferred Stock”), of Pernix Therapeutics Holdings, Inc. (hereinafter called the “Corporation”), represented by stock certificate No(s). [______] (the “Perpetual Convertible Preferred Stock Certificates”), the undersigned makes the election described in Section 15(e)(ii) of the Articles Supplementary establishing the Perpetual Convertible Preferred Stock (the “Articles Supplementary”), as of the date written below.

Capitalized terms used but not defined herein shall have the meanings ascribed thereto in or pursuant to the Articles Supplementary.

Date of Election:

Number of Shares of Perpetual Convertible Preferred Stock subject to be election:

Signature:

Name:

Address:^*

Fax No.:

^* Address where Reference Property shall be sent by the Corporation.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of Perpetual Convertible Preferred Stock evidenced hereby to:

(Insert assignee’s social security or taxpayer identification number, if any)

(Insert address and zip code of assignee)

and irrevocably appoints:

as agent to transfer the shares of Perpetual Convertible Preferred Stock evidenced hereby on the books of the Transfer Agent. The agent may substitute another to act for him or her.

Date:

Signature:

(Sign exactly as your name appears on the other side of this Certificate)

Signature Guarantee:

Exhibit 10.1

EXCHANGE AGREEMENT

Deerfield Partners, L.P. (“DP”), Deerfield Special Situations Fund, L.P. (“DSSF”), Deerfield Private Design International II, L.P. (“DPDI”) and Deerfield Private Design Fund II, L.P. (“DPDF”, together with DP, DSSF and DPDI, the “Holders” and each, a “Holder”) enter into this Exchange Agreement (the “Agreement”) with Pernix Therapeutics Holdings, Inc. (the “Company”) on August 1, 2018 whereby the Holders will (a) exchange the principal amount of the Company’s 12% Senior Secured Notes due 2020 (the “Existing Securities”) set forth in Section 1.1 for shares of common stock of the Company (the “Common Stock”) (such exchange transaction to be called the “Common Exchange”) and (b) exchange the Existing Securities set forth in Section 1.1 for shares of perpetual convertible preferred stock of the Company as set forth in the articles supplementary establishing and fixing the preferences, rights and limitations of 0% Series C Perpetual Convertible Preferred Stock attached as Exhibit A to this Agreement (the “Preferred Stock”), (such exchange transaction to be called the “Preferred Exchange,” and together with the Common Exchange, the “Exchanges”).

On and subject to the terms and conditions set forth in this Agreement, the parties hereto agree as follows:

Article I: The Exchanges

Section 1.1 Exchanged Securities. At the Closing (as defined herein), the Holders shall exchange and deliver to the Company the following Existing Securities, and in exchange therefor the Company shall issue to the Holders the number of shares of Common Stock and Preferred Stock described below:

Principal Amount of Existing Securities to be Exchanged in the Common Exchange:	[ ] (the “Common Exchange Exchanged Securities”).

	DP= [ ] DSSF= [ ] DPDI= [ ] DPDF= [ ]

Accrued but Unpaid Interest on the Existing Securities to be Included in the Common Exchange	[ ] DP= [ ] DSSF= [ ] DPDI= [ ] DPDF= [ ]

Number of shares of Common Stock to be Issued in Satisfaction of the Common Exchange Exchanged Securities and accrued but unpaid interest on the Common Exchange Exchanged Securities to but excluding the Settlement Date (as defined herein):	[ ] (the “Common Shares Consideration”), calculated as set forth on Exhibit B hereto.

	DP= [ ] DSSF= [ ] DPDI= [ ] DPDF= [ ]

Principal Amount of Existing Securities to be Exchanged in the Preferred Exchange:	$8,000,000 (the “Preferred Exchange Exchanged Securities,” and together with the Common Exchange Exchanged Securities, the “Exchanged Securities”).

	DP= [ ] DSSF= [ ] DPDI= [ ] DPDF= [ ]

Accrued but Unpaid Interest on the Existing Securities to be Included in the Preferred Exchange	$100,000 DP= [ ] DSSF= [ ] DPDI= [ ] DPDF= [ ]

Number of Preferred Shares to be Issued in Satisfaction of the Preferred Exchange Exchanged Securities and accrued but unpaid interest on Preferred Exchange Exchanged Securities to but excluding the Settlement Date (as defined herein):	81,000 (the “Preferred Shares Consideration” and together with the Common Shares Consideration, the “Shares”), calculated as set forth on Exhibit B hereto.
	DP= [ ] DSSF= [ ] DPDI= [ ] DPDF= [ ]

Section 1.2 Conditions to Closing. The closing of the Exchanges (the “Closing”) shall occur on August 1, 2018, or such other date as the parties hereto may mutually agree (the “Settlement Date”), subject to the satisfaction (or waiver by the Holders) of the following conditions:

(a) The representations and warranties of the Company in this Agreement shall be true and correct in all material respects (except for those qualified by materiality, which shall be

true and correct) on and as of the Settlement Date, with the same effect as if made on the Settlement Date, and the Company shall have complied with all the covenants to be performed by it pursuant to the terms hereof at or prior to the Settlement Date, and the Company shall have furnished to the Holders a certificate, in form reasonably satisfactory to the Holders, signed by an authorized officer of the Company, dated as of the Settlement Date, to the foregoing effect.

(b) No statute, rule, regulation, executive order, decree, judgment, temporary restraining order, preliminary or permanent injunction or other order enacted, entered, promulgated, enforced or issued by any governmental entity shall be in effect preventing the consummation of the Exchanges.

(c) The shares of Common Stock received by the Holders at the Closing will be eligible for immediate resale by the Holders without any restrictive legend.

(d) The Holder (or its counsel) shall have received customary legal opinions from Hogan Lovells LLP and Davis Polk & Wardwell LLP, as counsel to the Company.

Section 1.3 Settlement. At the Closing,

(a) (i) the Holders shall assign and transfer all right, title and interest in and to its Preferred Exchange Exchanged Securities to the Company, and deliver or cause to be delivered the Preferred Exchange Exchanged Securities to U.S. Bank National Association, as Trustee for the Existing Securities, by book-entry transfer through the facilities of The Depositary Trust Company from the account(s) of the Holders, free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto (collectively, “Liens”) together with any customary documents of conveyance or transfer that the Company or Trustee may reasonably deem necessary or desirable to transfer to and confirm in the Company all right, title and interest in and to the Preferred Exchange Exchanged Securities; and (ii) the Company shall deliver to the Holders the Preferred Shares Consideration specified in Section 1.1; and

(b) (i) the Holders shall assign and transfer all right, title and interest in and to its Common Exchange Exchanged Securities to the Company, and deliver or cause to be delivered the Common Exchange Exchanged Securities to U.S. Bank National Association, as Trustee for the Existing Securities, by book-entry transfer through the facilities of The Depositary Trust Company from the account(s) of the Holders, free and clear of any Liens, together with any customary documents of conveyance or transfer that the Company or Trustee may reasonably deem necessary or desirable to transfer to and confirm in the Company all right, title and interest in and to the Common Exchange Exchanged Securities; and (ii) the Company shall deliver to the Holders the Common Shares Consideration specified in Section 1.1.

Upon the consummation of the Exchanges at the Closing, (i) each Holder shall be deemed for all corporate purposes to have become the legal, beneficial and record holder of the Shares specified in Section 1.1;

The parties acknowledge and agree that accrued and unpaid interest due to the Holders on the Preferred Stock being exchanged for the Existing Securities on the date hereof is $480,000, $100,000 of which is being paid as specified in Section 1.1 above and the remaining $380,000 shall be paid in cash to the Holders on the Closing Date in accordance with the Indenture (as defined below). For the avoidance of doubt, this Agreement does not affect any Existing Securities not exchanged in the Preferred Exchange

and any obligation of the Company to pay cash interest on such Existing Securities on the date hereof in accordance with the Indenture.

Article II: Covenants, Representations and Warranties of the Holders

Each Holder hereby covenants (solely as to itself) as follows and makes the following representations and warranties (solely as to itself), each of which is and shall be true and correct on the date hereof and on the Settlement Date, to the Company, and all such covenants, representations and warranties shall survive the Closing.

Section 2.1 Power and Authorization. Such Holder is duly organized, validly existing and in good standing, and has the power, authority and capacity to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the Exchanges contemplated hereby.

Section 2.2 Valid and Enforceable Agreement; No Violations. This Agreement has been duly executed and delivered by the Holders and constitutes a valid and legally binding obligation of the Holders, enforceable against the Holders in accordance with its terms, except that such enforcement may be subject to (a) bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting or relating to enforcement of creditors’ rights generally, and (b) general principles of equity, whether such enforceability is considered in a proceeding at law or in equity (the “Enforceability Exceptions”). This Agreement and consummation of the Exchanges will not conflict with (i) the Holders’ organizational documents, (ii) any material agreement or instrument to which any Holder is a party or by which any Holder or any of its assets are bound, or (iii) any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to any Holder, except in the case of clauses (ii) or (iii) where such conflicts would not affect in any material respect any Holder’s ability to consummate the Exchanges.

Section 2.3 Title to the Existing Securities. Such Holder is, and on the Settlement Date, immediately prior to the Closing, will be, the sole legal and beneficial owner of the principal amount of Existing Securities set forth next to such Holder’s name on Schedule 2.3 (collectively, the “Holder Existing Securities”).

Section 2.4 Title to the Exchanged Securities. Such Holder is, and on the Settlement Date will be, the sole legal and beneficial owner of all of its Exchanged Securities. Such Holder has good, valid and marketable title to its Exchanged Securities, free and clear of any Liens (other than pledges or security interests that such Holder may have created in favor of a prime broker under and in accordance with its prime brokerage agreement with such broker). Such Holder has not, in whole or in part, except as described in the preceding sentence, (a) assigned, transferred, hypothecated, pledged, exchanged or otherwise disposed of any of its Exchanged Securities or its rights in its Exchanged Securities, or (b) given any person or entity any transfer order, power of attorney or other authority of any nature whatsoever with respect to its Exchanged Securities. Upon such Holder’s delivery of its Exchanged Securities to the Company pursuant to the respective Exchanges, such Exchanged Securities shall be free and clear of all Liens created by such Holder and the Company will acquire record and beneficial ownership thereof, free and clear of any Liens.

Section 2.5 Accredited Investor. Such Holder is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D under the Securities Act of 1933, as amended (the “Securities Act”). Such Holder understands the economic risk of its investment in the Shares, and has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of an investment in the Shares.

Section 2.6 No Affiliate Status; Etc.

(a) The Holder is not, and has not been during the consecutive three month period preceding the date hereof, a director, officer or “affiliate” within the meaning of Rule 144 promulgated under the Securities Act (an “Affiliate”) of the Company. Such Holder acquired the Existing Securities more than one year prior to the date of this Agreement, at which time the full consideration was paid by such Holder, as set forth in Rule 144(b)(1) under the Securities Act, and such Holder has continued to hold the beneficial ownership in the Existing Securities at all times since such Existing Securities were acquired. Other than the Existing Securities, such Holder does not own as of the date hereof any securities of the Company.

(b) On the basis that, on each relevant date, there are outstanding [ ] shares of Common Stock,

(i) such Holder or any of its directors, officers or any of its Affiliates do not own, as of the Settlement Date (without giving effect to the Exchanges contemplated by this Agreement), (i) 9.985% or more of the outstanding shares of Common Stock or (ii) 9.985% or more of the aggregate number of votes that may be cast by holders of those outstanding securities of the Company that entitle the holders thereof to vote generally on all matters submitted to the Company’s stockholders for a vote (the “Voting Power”); and

(ii) immediately after receipt by such Holder of the Common Shares Consideration in the Common Exchange, the aggregate number of shares of Common Stock owned by such Holder and its Affiliates, together with the aggregate number of shares of Common Stock equal to the notional value of any “long” derivative transaction relating to such shares of Common Stock to which such Holder or any of its Affiliates is a party (excluding derivative transactions relating to broad based indices), will not exceed 9.985% of the outstanding shares of Common Stock.

Section 2.7 Adequate Information; No Reliance. Such Holder acknowledges and agrees that (a) such Holder has been furnished with all materials it considers relevant to making an investment decision to enter into the Exchanges and has had the opportunity to review (and has carefully reviewed) (i) the Company’s filings and submissions with the Securities and Exchange Commission (the “SEC”), including, without limitation, all information filed or furnished pursuant to the United States Securities Exchange Act of 1934, as amended (collectively, the “Public Filings”) and (ii) this Agreement (including the exhibits hereto), (b) such Holder has had an opportunity to submit questions to the Company concerning the Company, its business, operations, financial performance, financial condition and prospects, and the terms and conditions of the Exchanges, and has all information that it considers necessary in making an informed investment decision, (c) such Holder has had the opportunity to consult with its accounting, tax, financial and legal advisors to be able to evaluate the risks involved in the Exchanges and to make an informed investment decision with respect to such Exchanges, (d) such Holder is not relying, and has not relied, upon any statement, advice (whether accounting, tax, financial, legal or other), representation or warranty made by the Company or any of its affiliates or representatives or any other entity or person, except for (A) the Public Filings, (B) this Agreement and (C) the representations and warranties made by the Company in this Agreement, (e) any disclosure documents provided in connection with the Exchanges are the responsibility of the Company and (f) such Holder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of the prospective investment in the Shares and has the ability to bear the economic risks of its investment and can afford the complete loss of such investment.

Section 2.8 Investment in the Shares. Such Holder is not acquiring the Shares with a view to, or for resale in connection with, any distribution (as defined in the Securities Act and related rules and

regulations) of the Shares (excluding, for the avoidance of doubt, resales effected pursuant to Rule 144 under the Securities Act); provided, however, that by making the representations herein, such Holder does not agree to hold any of the Shares for any minimum or other specific term and reserves the right to dispose of the Shares at any time in accordance with securities laws.

Section 2.9 Confidentiality. Such Holder has complied with its confidentiality undertaking as set forth in that certain email between Sullivan & Cromwell LLP, representing Deerfield Management Company, and Davis Polk & Wardwell LLP, representing the Company, dated July 19, 2018 (the “Wall-Cross Agreement”). For the avoidance of doubt, the foregoing undertaking will terminate upon the filing of the Form 8-K contemplated in Section 3.7 below.

Section 2.10 Exchange. The terms of the Exchanges are the result of negotiations among the parties and their agents.

Article III: Covenants, Representations and Warranties of the Company

The Company hereby covenants as follows and makes the following representations and warranties, each of which is and shall be true and correct on the date hereof and on the Settlement Date, to the Holders, and all such covenants, representations and warranties shall survive the Closing.

Section 3.1 Power and Authorization. The Company is duly incorporated, validly existing and in good standing under the laws of its state of incorporation, and has the power, authority and capacity to carry on its business as now conducted and as proposed to be conducted, to execute and deliver this Agreement, to perform its obligations hereunder, and to consummate the Exchanges contemplated hereby.

Section 3.2 Valid and Enforceable Agreement; No Violations. This Agreement has been duly authorized, executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforcement may be subject to the Enforceability Exceptions. This Agreement and consummation of the Exchanges will not (a) violate or conflict with the certificate of incorporation, bylaws or other organizational documents of the Company, (b) violate or conflict with the Indenture, dated as of August 19, 2014 by and among the Company, the guarantors party thereto and U.S. Bank National Association, as trustee (as amended, modified or supplemented prior to the date hereof, including by the First Supplemental Indenture, dated as of April 21, 2015, the Second Supplemental Indenture, dated as of July 21, 2017 and the Third Supplemental Indenture, dated as of December 29, 2017, the “Indenture”) related to the Existing Securities, (c) require any approval or consent of any person under, or result in a breach of or a default under, any material agreement or instrument to which the Company is a party or by which the Company or any of its assets are bound, (d) result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company, (e) violate, or be subject to, any preemptive or similar rights of any Person or (e) result in a violation of any laws, regulations or governmental or judicial decrees, injunctions or orders applicable to the Company.

Section 3.3 No Preemptive Rights. There are no preemptive rights, rights of first refusal, put or call rights or obligations created by or to which the Company is subject with respect to the issuance of the Shares.

Section 3.4 The Shares. The Shares have been duly authorized by the Company and, when issued and delivered by the Company pursuant to this Agreement, will be validly issued, fully paid and non-assessable. The Shares will not, at the Settlement Date and each Additional Settlement Date, be issued in violation of, or subject to, any preemptive or participation rights, rights of first refusal or other

similar rights and will be free from all taxes, liens and charges with respect to the issue thereof with the Holders being entitled to all rights accorded to a holder of Shares.

Section 3.5 Reservation of Shares. On and after the date hereof, the Company shall at all times reserve and keep available, free of preemptive or similar rights, a sufficient number of shares of Common Stock and Preferred Stock for the purpose of enabling the Company to issue the Shares and Common Stock pursuant to which the Shares are convertible.

Section 3.6 No Registration. Assuming the accuracy of the covenants, representations and warranties of the Holders pursuant to Article II hereof on the date hereof, no registration under the Securities Act or any state securities laws is required for the issuance of the Shares as contemplated hereby. The transactions contemplated hereby, including the issuance of the Shares hereunder, do not contravene, or require stockholder approval pursuant to, the rules and regulations of the Nasdaq Global Market (“Nasdaq”). Assuming the Holder to which the Shares are to be issued is not as of the date of issuance, and for a period of three (3) months prior to the date of issuance has not been, an Affiliate of the Company, the Shares will be freely tradeable by such Holder without restriction or limitation (including volume limitation), pursuant to Rule 144 under the Securities Act, and will not contain or be subject to any legend or stop transfer instructions restricting the sale or transferability thereof. The Shares will (i) in the case of the shares of Common Stock to be issued as Common Shares Consideration, be credited to such Holder’s or its designee’s balance account with The Depository Trust Company (“DTC”) through its Deposit/Withdrawal At Custodian system per the account information provided by such Holder via electronic mail at least forty-eight (48) hours in advance, (ii) in the case of the shares of Preferred Stock to be issued as Preferred Shares Consideration, be issued as restricted certificates with a restricted CUSIP issued to the Holder, and (iii) shall not be issued in violation of any applicable state and federal laws concerning their issuance.

Section 3.7 Capitalization. The authorized capital stock of the Company is 140,000,000 shares of Common Stock, of which [ ] shares of Common Stock are outstanding and 10,000,000 shares of preferred stock, of which zero shares of preferred stock are outstanding. All of the outstanding capital stock of the Company has been duly authorized and validly issued and is fully paid and nonassessable.

Section 3.8 Disclosure.

Prior to the opening of trading on the date of this Agreement, the Company shall file a Current Report on Form 8-K describing all the material terms of the transactions contemplated by this Agreement, attaching this Agreement (including Exhibit A) and disclosing any other presently material non-public information (if any) provided or made available to any Purchaser (or any Purchaser’s agents or representatives) on or prior to the date hereof (the “8-K Filing”). From and after the filing of the 8-K Filing, the Company shall have disclosed all material, non-public information (if any) provided or made available to the Holders (or the Holders’ agents or representatives) by the Company or any of its respective officers, directors, employees, Affiliates or agents in connection with the transactions contemplated by this Agreement or otherwise on or prior to the date hereof. Notwithstanding anything contained in this Agreement to the contrary and without implication that the contrary would otherwise be true, after giving effect to the 8-K Filing, the Company expressly acknowledges and agrees that beyond the terms of the Wall-Cross Agreement, the Holders shall not have any duty of trust or confidence with respect to, or a duty not to trade on the basis of, any information regarding the Company.

Notwithstanding any affirmative disclosure obligations of the Company pursuant to the terms of this Agreement or anything else to the contrary contained herein, (a), subject to clause (b) below, the Company shall not, and shall cause each of its officers, directors, employees, Affiliates and agents to not, provide any Holder with any material non-public information with respect to the Company from and after

the filing of the Form 8-K Filing with the SEC without the express prior written consent of such Holder, and (b) in the event that the Company believes that a notice or communication to any Holder contains material, nonpublic information with respect to the Company, the Company shall so indicate to such Holder prior to the delivery of such notice or communication, and such indication shall provide such Holder the means to refuse to receive such notice or communication (in which case any obligation of the Company under this Agreement shall be deemed waived), and in the absence of any such indication, such Holder shall be allowed to presume that all matters relating to such notice or communication do not constitute material non-public information with respect to the Company and shall have no duty of trust or confidence with respect thereto.

Section 3.9 No Unlawful Payments. Neither the Company nor any of its directors or officers or, to the knowledge of the Company, any employee, agent, Affiliate, representative of or other person associated with or acting on behalf of the Company, has (a) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense relating to political activity, (b) made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds, (c) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or (d) made any bribe, unlawful rebate, payoff, influence payment, kickback or other unlawful payment.

Section 3.10 Compliance with Money Laundering Laws. The operations of the Company are and have been conducted at all times in compliance with all financial recordkeeping and reporting requirements applicable to the Company, including those of the Bank Secrecy Act, as amended by Title III of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT) Act of 2001, and the money laundering and any related or similar laws of all jurisdictions in which the Company conducts business (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any governmental authority involving the Company with respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.

Section 3.11 OFAC. The Company is not (a) a country, the government of a country, or an agency of the government of a country, (b) an organization directly or indirectly controlled by a country or its government, or (c) a person resident in or determined to be resident in a country, in each case, that is subject to a comprehensive country sanctions program administered and enforced by the Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”), and the Company is not a person named on the list of Specially Designated Nationals maintained by OFAC.

Section 3.12 Exchange. The terms of the Exchanges are the result of negotiations among the parties hereto and their respective agents.

Section 3.13 Listing, Shareholder Approval. At the Settlement Date, the shares of Common Stock issued as Common Shares Consideration will be listed on Nasdaq. For so long as any Holder Existing Securities remain outstanding, the Company shall use commercially reasonable efforts to maintain the Common Stock’s listing on Nasdaq. After the Settlement Date, the Company will take, or cause to be taken, all actions, or do or cause to be done all things, reasonably necessary, proper or advisable on its part to cause any shares of Common Stock that have been converted from the Preferred Stock or the Additional Preferred Shares (as defined below) to be approved for listing on Nasdaq. The Company shall not take any action which could reasonably be expected to result in the delisting or suspension of trading the Common Stock on Nasdaq. It is understood and agreed that the Company is under no obligation to list, and the shares of Preferred Stock issued as Preferred Shares Consideration or the Additional Preferred Shares will not be listed, on any securities exchange. The transactions contemplated hereby, including the issuance of the Shares hereunder, do not contravene, or require shareholder approval, pursuant to the rules and regulations of Nasdaq.

Section 3.14 Payment of Fees and Expenses. On or promptly after the Settlement Date, the Company shall pay all reasonable and documented legal and advisor fees and expenses of the Holders incurred in connection with the Exchanges including, without limitation, the fees and expenses of Sullivan & Cromwell LLP up to the amount previously agreed.

Section 3.15 Application of Takeover Protections. The Company and its board of directors have taken all necessary action, if any, in order to render inapplicable the Company’s issuance of the Shares and the Holders’ ownership of such securities from the provisions of any control share acquisition, interested stockholder, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the organizational documents of the Company or the laws of the state of its incorporation which is or could become applicable to the Holders as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of Shares and the Holders’ ownership of such securities.

Section 3.16 Further Action. The Company agrees that it will, upon request, execute and deliver any additional customary documents and perform additional customary actions reasonably deemed by the Holders to be reasonably necessary to complete the Exchanges and to cause the Company’s representations and warranties contained in this Agreement to be true and correct as of the Settlement Date (including, without limitation, the payment of listing and other fees and causing its counsel to render any necessary legal opinions).

Section 3.17 Blue Sky Filings. The Company shall take such action as is necessary in order to obtain an exemption for, or to qualify the Shares for, issuance and sale to the Holders under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of any of the Holders.

Section 3.18 No Integrated Offering. Neither the Company, nor any of its affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made, or will make, any offers or sales of any security or solicited, or will solicit, any offers to buy any security, under circumstances that would cause this offering and issuance of the Shares to be integrated with prior offerings by the Company (i) for purposes of the Securities Act and which would require the registration of any such securities under the Securities Act, or (ii) for purposes of any applicable stockholder approval provisions of Nasdaq and which would require stockholder approval for the issuance of such securities.

Article IV: Additional Exchanges

Section 4.1 Additional Exchanges. The Holders and the Company agree that any Holder may in the future exchange additional Existing Securities not exchanged at the Closing (“Additional Exchanged Securities”) and accrued interest on such Additional Exchanged Securities for Preferred Stock, at its option, on or prior to February 1, 2020, provided that the price per share of Common Stock displayed on Bloomberg at the close of business on the day prior to any such exchange is less than or equal to $9.00. The Holders may exchange up to an aggregate of $65.1 million principal amount of Additional Exchanged Securities, plus accrued interest thereon.

In order to exchange such Additional Exchanged Securities for Preferred Stock, such Holder must deliver a duly completed written notice to the Company in the form of Exhibit B to this Agreement (the “Notice of Exchange”) by 3:00 p.m. on the second business day prior to the closing of such exchange (the date of each such closing, an “Additional Settlement Date”) via email to [email protected] and [email protected].

The number of shares of Preferred Stock to be issued in exchange for the Additional Exchanged Securities on each Additional Settlement Date shall be the aggregate principal amount of Additional Exchanged Securities to be exchanged on such date, as specified on the Notice of Exchange, plus shares of Preferred Stock for the accrued interest thereon to but excluding the Additional Settlement Date, divided by $100 (the “Additional Preferred Shares”).

At each Additional Settlement Date, (i) such Holder shall assign and transfer all right, title and interest in and to its Additional Exchanged Securities to be exchanged to the Company, and deliver or cause to be delivered such Additional Exchanged Securities to U.S. Bank National Association, as Trustee for the Existing Securities, by book-entry transfer through the facilities of The Depositary Trust Company from the account(s) of such Holder, free and clear of any mortgage, lien, pledge, charge, security interest, encumbrance, title retention agreement, option, equity or other adverse claim thereto (collectively, “Liens”) together with any customary documents of conveyance or transfer that the Company or Trustee may reasonably deem necessary or desirable to transfer to and confirm in the Company all right, title and interest in and to such Additional Exchanged Securities; and (ii) the Company shall deliver to such Holder applicable number of Additional Preferred Shares.

Notwithstanding the foregoing, no Holder shall be entitled to receive Preferred Stock in exchange for Additional Exchanged Securities pursuant to this provision to the extent that, immediately following such an exchange, the Holders and their respective Affiliates (collectively, the “Aggregated Persons”) would be treated as beneficially owning shares of Common Stock (as determined in accordance with the applicable rules under section 382 of the Internal Revenue Code of 1986, as amended) that in the aggregate exceeded 20.0% of the total outstanding shares of Common Stock, assuming, for the purpose of this provision, the conversion of all shares of Preferred Stock owned by the Aggregated Persons into Common Stock at the then-applicable conversion rates. For purposes of the foregoing, Holders shall not be treated as beneficially owning shares of Common Stock as a result of their ownership of the Existing Securities. The Company shall provide to a Holder any information that it reasonably requests in order to determine whether an exchange of Existing Securities for Preferred Stock satisfies the requirements set forth in this paragraph.

The Company shall take all action necessary to effect the Additional Exchanges, subject to the requirements of this provision and the Notice of Exchange. Upon the consummation of an Additional Exchange, (i) each Holder shall be deemed for all corporate purposes to have become the legal, beneficial and record holder of the Additional Preferred Shares issued on the Additional Settlement Date; and (ii) the aggregate principal amount of the Additional Exchanged Securities exchanged on the Additional Settlment Date shall be deemed cancelled, and payment of the interest accrued but unpaid thereon shall be deemed satisfied.

Article V: Miscellaneous

Section 5.1 Entire Agreement; No Third-Party Beneficiaries. This Agreement and any documents and agreements executed in connection with the Exchanges embody the entire agreement and understanding of the parties hereto with respect to the subject matter hereof and supersede all prior and contemporaneous oral or written agreements, representations, warranties, contracts, correspondence, conversations, memoranda and understandings between or among the parties or any of their agents, representatives or affiliates relative to such subject matter, including, without limitation, any term sheets, emails or draft documents. No provision of this Agreement shall confer upon any person other than the parties hereto any rights or remedies hereunder.

Section 5.2 Construction. References in the singular shall include the plural, and vice versa, unless the context otherwise requires. References in the masculine shall include the feminine and neuter,

and vice versa, unless the context otherwise requires. Headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meanings of the provisions hereof. Neither party, nor its respective counsel, shall be deemed the drafter of this Agreement for purposes of construing the provisions of this Agreement, and all language in all parts of this Agreement shall be construed in accordance with its fair meaning, and not strictly for or against either party.

Section 5.3 Governing Law. This Agreement shall in all respects be construed in accordance with and governed by the substantive laws of the State of New York, without reference to its choice of law rules.

Section 5.4 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. Any counterpart or other signature hereon delivered by facsimile or other electronic means shall be deemed for all purposes as constituting good and valid execution and delivery of this Agreement by such party.

Section 5.5 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to or shall confer upon any person (other than the parties to this Agreement) any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement; provided, however, that Davis Polk & Wardwell LLP and Hogan Lovells LLP shall be entitled to rely on the representations and warranties made by the parties to this Agreement to provide the legal opinions required by this Agreement.

Section 5.6 Amendment. This Agreement may be modified or amended only by written agreement of each of the parties to this Agreement.

Section 5.7 Waiver. No delay in exercising any right, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any waiver of any right, power or privilege under this Agreement operate as a waiver of any other right, power or privilege of such party under this Agreement, nor shall any single or partial exercise of any right, power or privilege under this Agreement preclude any other or further exercise thereof or the exercise of any other right, power or privilege under this Agreement.

Section 5.8 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE EXCHANGES (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 5.9 Termination. The Company may terminate this Agreement if there has occurred any material breach or withdrawal by any Holder of any covenant, representation or warranty set forth in Article II. Each Holder may terminate this Agreement if (i) there has occurred any breach or withdrawal by the Company of any covenant, representation or warranty set forth in Article III or (ii) the Closing has not occurred on or prior to August 15, 2018. Any termination shall be without liability of any party to any other party.

Section 5.10 Tax Treatment. The parties hereto intend that the Exchanges will qualify as a tax-free “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal, and applicable state and local, income tax purposes. The parties hereto shall not take any action that is inconsistent with the tax treatment set forth in this Section 5.10, and shall prepare and file all tax returns in a manner consistent with such treatment.

[Signature Page Follows]

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed as of the date first above written.

“company”:

Pernix Therapeutics Holdings, Inc.

By:________________________

Name: :________________________