Exhibit 10.5
CONSULTING AGREEMENT
     This agreement dated this 1st day of July, 2008 (the “Effective Date”), is
executed by and between MiddleBrook Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), located at 20425 Seneca Meadows Parkway,
Germantown, MD 20876, and John S. Thievon (the “Consultant”), located in Denton
County, Texas (the “Agreement”).
     WHEREAS, Equity Group Investments, LLC (“EGI”) and the Company have entered
into a Securities Purchase Agreement of even date herewith (the “Purchase
Agreement”) pursuant to which the parties thereto have agreed, upon the terms
and subject to the conditions set forth therein, that the Company will sell to
EGI (i) 30,303,030 shares of the authorized but unissued shares of common stock,
$0.01 par value per share, of the Company (the “Common Stock”) and (ii) a
warrant to purchase an aggregate of 12,121,212 shares of Common Stock (such
transaction known as the “Transaction”);
     WHEREAS, the Consultant and the Company have entered into an employment
agreement (the “Employment Agreement”) of even date herewith contingent upon the
Closing (as defined in the Purchase Agreement) of the Transaction, and effective
as of the Closing Date (as defined in the Purchase Agreement) of the Transaction
(such effective date of the Employment Agreement referred to herein as the
“Commencement Date”);
     WHEREAS, the Company desires to obtain consulting services from Consultant
commencing on the Effective Date, which the parties intend to be provided
pursuant to such terms and conditions as are set forth in this Agreement; and
     WHEREAS, based on the nature of the relationship that the parties intend to
establish, the Company hereby engages the Consultant as an independent
contractor and the Consultant shall hereby provide consulting services on the
terms and conditions provided and described in this Agreement.
     NOW, THEREFORE, in consideration of the mutual promises and covenants of
the parties as herein contained, the parties hereto agree and contract as
follows:

1)   The term of this Agreement (the “Term”) shall commence on the Effective
Date and shall automatically terminate immediately and become null and void upon
the earlier to occur of (i) the Commencement Date, (ii) the termination of the
Purchase Agreement pursuant to Section 7 thereof, (iii) the Consultant’s
cessation of services to the Company provided hereunder, or (iv) a termination
of this Agreement pursuant to Paragraph 11.

2)   Commencing on the Effective Date, the Consultant shall provide such
consulting services with respect to the business of the Company as the Company
reasonably requests. The consulting services that may be requested of Consultant
shall be of a nature that reflects and is consistent with Consultant’s skills,
experience, expertise and services. The Consultant

 

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    shall perform such services in a thorough, efficient, and workmanlike
manner, promptly and with due diligence and care, and in accordance with that
standard of care and skill ordinarily exercised by members of the profession
performing similar services. In addition, Consultant shall comply with all
applicable federal, state and local statutes, ordinances and regulations in the
course of performing such objectives.

3)   Consistent with the parties’ intent that the relationship created by this
Agreement be that of service recipient and independent contractor, Consultant
shall retain the exclusive right to control and direct all details of the
services that Consultant performs hereunder, including where, when and how the
services are to be performed. Consultant’s failure to accomplish the services by
the applicable deadline, however, shall constitute a material breach of this
Agreement, unless the Company agrees to an extended deadline.

4)   During the Term, Consultant shall not be eligible to participate in any
benefit programs that the Company now or hereafter maintains for its employees
with respect to services performed hereunder, and Consultant hereby waives any
such right to participate in the programs. This waiver of any right to
participate in Company-sponsored employee benefit programs represents a material
component of the terms of compensation agreed to by these parties and is not in
any way conditioned on any representation or assumption concerning status of
Consultant with respect to the Company as an employee or independent contractor.

5)   For all purposes, including but not limited to the Federal Insurance
Contributions Act, the Social Security Act, the Federal Unemployment Tax Act,
income tax withholding and any and all other federal, state and local laws,
rules and regulations, Consultant shall be treated as an independent contractor
and not as an employee with respect to the Company.

6)   Consultant acknowledges and agrees that Consultant shall be responsible (as
a self-employed individual) for filing all tax returns, tax declarations and tax
schedules, and for the payment of all taxes required, when due, with respect to
any and all compensation earned by Consultant under this Agreement. The Company
will neither pay nor withhold any employment taxes with respect to the
compensation it pays Consultant. Rather, the Company will report the amounts it
pays Consultant on IRS Forms 1099, to the extent required to do so under
applicable Internal Revenue Code provisions.

7)   Consultant’s fees for services provided under this Agreement shall annually
be Five Hundred Thousand USD ($500,000) pro-rated and paid on a monthly basis
for the full and partial months during the Term, plus reasonable expenses as
approved in accordance with Company policies. The Company will not reimburse
Consultant for any other expenses incurred in connection with the performance of
services hereunder unless otherwise agreed by the Company. For purposes of
satisfying Section 409A of the Internal Revenue Code of 1986, as amended, the
parties agree that any amount reimbursed hereunder for one calendar year shall
not affect the amounts reimbursed for other calendar years, and all
reimbursement payments, if any, shall in all events be made no later than the
end of the calendar year following the calendar year in which the applicable
expense is incurred.

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8)   The Consultant reserves the right to, and intends to, perform services for
others, so long as the performance of such services does not interfere with the
performance of services hereunder.   9)   The Consultant recognizes and
acknowledges that the Proprietary Information (as hereinafter defined) is a
valuable, special and unique asset of the Company. As a result, both during the
Term and thereafter, the Consultant shall not, without the prior written consent
of the Company, for any reason either directly or indirectly divulge to any
third-party or use for his own benefit, or for any purpose other than the
exclusive benefit of the Company, any confidential, proprietary, business and
technical information or trade secrets of the Company or of any subsidiary or
affiliate of the Company (the “Proprietary Information”) revealed, obtained or
developed during the Term of the Agreement. Proprietary Information shall
include any confidential or proprietary information or trade secrets relating to
any patents or other intellectual property assigned by the Consultant to the
Company. Proprietary Information also shall include, but shall not be limited to
the intangible personal property described in Paragraph 10 hereof and, in
addition, technical information, including research design, results, techniques
and processes; apparatus and equipment design; computer software; technical
management information, including project proposals, research plans, status
reports, performance objectives and criteria, and analyses of areas for business
development; and business information, including project, financial, accounting
and personnel information, business strategies, plans and forecasts, customer
lists, customer information and sales and marketing plans, efforts, information
and data. In addition, Proprietary Information shall include all information and
materials received by the Company or Consultant from a third party subject to an
obligation of confidentiality and/or non-disclosure. Nothing contained herein
shall restrict Consultant’s ability to make such disclosures during the Term of
the Agreement as may be necessary or appropriate to the effective and efficient
discharge of the duties required by the Agreement or as such disclosures may be
required by law. Furthermore, nothing contained herein shall restrict Consultant
from divulging or using for his/her own benefit or for any other purpose any
Proprietary Information that is readily available to the general public so long
as such information did not become available to the general public as a direct
or indirect result of Consultant’s breach of this Paragraph 10. Failure by the
Company to mark any of the Proprietary Information as confidential or
proprietary shall not affect its status as Proprietary Information under the
terms of this Agreement. The obligations of this Paragraph 10 shall survive the
termination of this Agreement.   10)   All right, title and interest in and to
Proprietary Information shall be and remain the sole and exclusive property of
the Company. During the Term, Consultant shall not remove from the Company’s
offices or premises any documents, records, notebooks, files, correspondence,
reports, memoranda or similar materials of or containing Proprietary
Information, or other materials or property of any kind belonging to the
Company, unless necessary or appropriate for the performance of Consultant’s
duties under this Agreement and, in the event that such materials or property
are removed, all of the foregoing shall be returned to their proper files or
places of safekeeping as promptly as possible after the removal shall serve its
specific

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    purpose. Consultant shall not make, retain, remove and/or distribute any
copies of any of the foregoing for any reason whatsoever, except as may be
necessary in the discharge of the assigned duties and shall not divulge to any
third person the nature of and/or contents of any of the foregoing or of any
other oral or written information to which he may have access or with which for
any reason he may become familiar, except as disclosure shall be necessary in
the performance of the duties; and upon the expiration of the Term of this
Agreement, Consultant shall return to the Company all originals and copies of
the foregoing then in his/her possession or under his/her control, whether
prepared by Consultant or by others.

    The Consultant acknowledges that all right, title and interest in and to any
and all writings, documents, inventions, discoveries, ideas, developments,
information, computer programs or instructions (whether in source code, object
code, or any other form), algorithms, formulae, plans, memoranda, tests,
research, designs, innovations, systems, analyses, specifications, models, data,
diagrams, flow charts, and/or techniques (whether patentable or non-patentable
or whether reduced to written or electronic form or otherwise) that Consultant
creates, makes, conceives, discovers or develops, either solely or jointly with
any other person, at any time during the Term, whether during working hours or
at the Company’s facility or at any other time or location, and whether upon the
request or suggestion of the Company or otherwise, (collectively, “Intellectual
Work Product”) shall be the sole and exclusive property of the Company.
Consultant shall promptly disclose to the Company all Intellectual Work Product,
and Consultant shall have no claim for additional compensation for the
Intellectual Work Product, except for any excluded Intellectual Work Product
that is wholly unrelated to the pharmaceutical industry, in the broadest sense,
provided that such Intellectual Work Product is not conceived, discovered or
developed, either solely or jointly with any other person during working hours
or at the Company’s facility or using any other Company resource.

    The Consultant acknowledges that all the Intellectual Work Product that is
copyrightable shall be considered a work made for hire under United States
Copyright Law. To the extent that any copyrightable Intellectual Work Product
may not be considered a work made for hire under the applicable provisions of
the United States Copyright Law, or to the extent that, notwithstanding the
foregoing provisions, Consultant may retain an interest in any Intellectual Work
Product, Consultant hereby irrevocably assigns and transfers to the Company any
and all right, title, or interest that Consultant may have in the Intellectual
Work Product under copyright, patent, trade secret and trademark law, in
perpetuity or for the longest period otherwise permitted by law, without the
necessity of further consideration. The Company shall be entitled to obtain and
hold in its own name all copyrights, patents, trade secrets, and trademarks with
respect thereto. Consultant shall reveal promptly all information relating to
any such Intellectual Property to the board of directors of the Company, and, at
the Company’s expense, shall cooperate with the Company and execute such
documents as may be necessary or appropriate (i) in the event that the Company
desires to seek copyright, patent or trademark protection, or other analogous
protection, thereafter relating to the Intellectual Work Product, and when such
protection is obtained, renew and

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    restore the same, or (ii) to defend any opposition proceedings in respect of
obtaining and maintaining such copyright, patent or trademark protection, or
other analogous protection.       In the event the Company is unable after
reasonable effort to secure Consultant’s signature on any of the documents
referenced in this Paragraph 13, whether because of Consultant’s physical or
mental incapacity or for any other reason whatsoever, Consultant hereby
irrevocably designates and appoints the Company and its duly authorized officers
and agents as Consultant’s agent and attorney-in-fact, to act for and on the
behalf and stead to execute and file any such documents and to do all other
lawfully permitted acts to further the prosecution and issuance of any such
copyright, patent or trademark protection, or other analogous protection, with
the same legal force and effect as if executed by Consultant.       Consultant
represents that the innovations, designs, systems, analyses, ideas, and all
copyrights, patents, trademarks and trade names, or similar intangible personal
property (collectively, the “Pre-existing Property”) identified on Schedule I
hereof comprise all of the innovations, designs, systems, analyses, ideas and
all copyrights, patents, trademarks and trade names, or similar intangible
personal property that Consultant has made or conceived of prior to the date
hereof, and same are excluded from the operation of the other provisions of this
Paragraph 13. In the event that Consultant learns of any Pre-existing Property
that he inadvertently failed to include in Schedule I, and the circumstances
surrounding the failure of such inclusion are reasonably satisfactory to the
Company, Consultant and the Company shall jointly amend Schedule I to include
such property. The obligations of this Paragraph 12 shall survive the
termination of this Agreement.   11)   This Agreement may be terminated (i) by
one party hereto upon a material breach of the Agreement by the other party
hereto (the “Breaching Party”) and notice of such breach given by the first
party to the Breaching Party, in which case the termination shall be effective
on the date the notice is received by the Breaching Party, or (ii) upon mutual
written agreement of the parties hereto.   12)   This Agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of Delaware. Any and all disputes arising out of, relating to the performance of
services contracted for under, this Agreement, shall be settled by arbitration
in accordance with the Commercial Arbitration Rules of the American Arbitration
Association, or any successor thereto then prevailing. Such arbitration shall be
final and binding upon the parties, and shall be the sole and exclusive remedy
of the parties with respect to any dispute arising out of, relating to, or
resulting from the interpretation of the terms of this Agreement, or any breach
thereof. The costs of such arbitration shall be borne equally by the parties.
Notwithstanding the foregoing provisions of this Paragraph 12 to the contrary,
matters in which an equitable remedy or injunctive relief is sought by a party,
shall not be required to be submitted to arbitration, if the party seeking such
remedy or relief objects thereto, but instead shall be submitted to a court of
law having appropriate jurisdiction. This Paragraph 12 shall survive the
termination of this Agreement.

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13)   This Agreement shall constitute the entire written agreement between the
parties, and shall supersede any and all agreements or understandings in effect
between the parties hereto; provided, however, that this Agreement shall not
affect in any way the rights and obligations of the Company and Consultant under
the Employment Agreement. This Agreement may not be modified except by written
agreement executed by the parties hereto.

14)   Each provision of this Agreement shall be treated as a separate and
independent clause, and the unenforceability of any one clause shall in no way
impair the enforceability of any of the other clauses herein. Moreover, if one
or more of the provisions contained in this Agreement shall for any reason be
held to be excessively broad as to scope, activity, subject or otherwise so as
to be unenforceable at law, such provision or provisions shall be construed by
the appropriate judicial body by limiting or reducing such provision or
provisions, so as to be enforceable to the maximum extent comparable with the
applicable law as such law shall then be.

15)   No breach of any provision hereof can be waived unless in writing. Waiver
of any breach of any provision hereof shall not be deemed to be a waiver of any
other breach of the same, or any other provision.

16)   Any notice required or permitted under this Agreement shall be in writing
and shall be deemed given upon the earlier of (a) when it is personally
delivered, (b) three (3) days after having been mailed by certified mail,
postage prepaid, return receipt requested or (c) two (2) days after having been
sent by recognized overnight delivery service, in all cases sent to the address
first set forth above, or to such other address as the person to whom notice is
to be given may have previously furnished to the other in writing in the manner
set forth herein.

[signatures on following page]

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     IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.

                      MIDDLEBROOK PHARMACEUTICALS, INC.       CONSULTANT    
 
                    By:   /s/ Edward M. Rudnic       /s/ John S. Thievon        
             
Name:
  Edward M. Rudnic, Ph.D.       Name:   John S. Thievon    
Title:
  President & Chief Executive Officer       TIN: