Document:

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 

 

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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

 

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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).

 

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“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.

 

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“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.

 

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“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.

 

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(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.

 

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(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

 

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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;

 

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(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

 

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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

 

    12 

     

    

(ii)           
deliver via electronic mail to asmith@pernixtx.com and kpina@pernixtx.com 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.

 

    13 

     

    

(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.

 

    14 

     

    

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

 

    15 

     

    

 

	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.

 

(c)           
Notwithstanding anything to the contrary in this ‎Section 14, the Conversion Rate shall not be adjusted:

 

(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-

 

    16 

     

    

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).

 

    17 

     

    

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

 

    18 

     

    

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 asmith@pernixtx.com
and kpina@pernixtx.com 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

 

    19 

     

    

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

 

    20 

     

    

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

 

    21 

     

    

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.

 

    22 

     

    

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.

 

    23 

     

    

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

 

 

	ATTEST:	 	PERNIX THERAPEUTICS HOLDINGS, INC.
	 	 
	 	 
	 	 	 By:  	 
	Name:	 	Name:
	Title:	 	Title:
	 	 	 	 

    

     

    

Exhibit
A

 

[FORM OF
FACE OF PERPETUAL CONVERTIBLE PREFERRED STOCK CERTIFICATE]

 

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.

 

     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.

 

     1

     

    

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.

 

     2

     

    

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:	 

 

 

 

     3Exhibit 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
1.1Exchanged 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
1.2Conditions 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
1.3Settlement. 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
2.1Power 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
2.2Valid 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
2.3Title 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
2.4Title 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
2.5Accredited 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
2.6No 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
2.7Adequate 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
2.8Investment 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
2.9Confidentiality. 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
2.10Exchange. 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
3.1Power 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
3.2Valid 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
3.3No 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
3.4The 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
3.6No 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
3.7Capitalization. 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
3.8Disclosure.

 

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
3.9No 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
3.10Compliance 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
3.11OFAC. 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
3.12Exchange. The terms of the Exchanges are the result of negotiations
among the parties hereto and their respective agents.

 

Section
3.13Listing, 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
3.14Payment 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
3.15Application 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
3.16Further 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
3.17Blue 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
3.18No 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
4.1Additional 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 asmith@pernixtx.com and kpina@pernixtx.com.

 

    

     

    

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
5.1Entire 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
5.2Construction. 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
5.3Governing 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
5.4Counterparts. 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
5.5No 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
5.6Amendment. This Agreement may be modified or amended only by written agreement
of each of the parties to this Agreement.

 

Section
5.7Waiver. 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
5.8Waiver 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
5.9Termination. 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
5.10Tax 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: :________________________

         

        Title:
        :________________________

         

 

 

 

 

	“HOLDERS”:

         

        Deerfield Partners, L.P.

         

        By: [Deerfield Management
        L.P., as trading manager]

         

         

         

        By: :________________________

         

        Name: :________________________

         

        Title: :________________________

        

	 

        Deerfield Special Situations
        Fund, L.P

         

        By: [Deerfield Management
        L.P., as trading manager]

         

         

         

        By: :________________________

         

        Name: :________________________

         

        Title: :________________________

         

Deerfield Private Design
        International II, L.P.

 

    

     

    

 

	

        By: [Deerfield Management
L.P., as trading manager]

         

         

        By: :________________________

         

        Name: :________________________

         

        Title: :________________________

         

	Deerfield Private Design
        Fund II, L.P.

         

        By: [Deerfield Management
        L.P., as trading manager]

         

         

        By: :________________________

         

        Name: :________________________

         

        Title: :________________________

        

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature
Page to Deerfield Exchange Agreement]

    

     

    

 

EXHIBIT
A

 

[Articles
supplementary establishing and fixing the

preferences, rights and limitations of

0% Series C Perpetual Convertible Preferred Stock]

 

 

 

 

 

    

     

    

Exhibit B

 

Number
of shares of Common Stock to be Issued in the Common Exchange shall be equal to
[          ], divided by the sum of (i) the closing bid price
per share of Common Stock displayed on Bloomberg for Tuesday, July 31, 2018 and (ii) $0.01.

 

Number of shares
of Preferred Stock to be Issued in the Preferred Exchange shall be equal to $8,100,000, divided by $100.

 

 

 

 

 

    

     

    

Exhibit
C

 

NOTICE
OF EXCHANGE

 

		To:	Pernix Therapeutics Holdings, Inc.

                                         10 North Park Place

                                         Morristown, NJ 07690

                                         Attention: Kenneth R. Piña

 

In
accordance with the terms of Article 4.1 of the Exchange Agreement, dated August 1, 2018, among Pernix Therapeutics Holdings,
Inc. and _____________________, as holder (the “Holder”) of the Company’s 12% Senior Secured Notes due
2020 (the “Exchange Agreement”), the undersigned Holder hereby notifies the Company of its intent to exchange
$____________________________ aggregate principal amount of Existing Securities (the “Additional Exchanged Securities”),
including accrued but unpaid interest on such Additional Exchanged Securities to but excluding the Additional Settlement Date
into shares of Preferred Stock of the Company at the exchange ratio set forth in the Exchange Agreement (the “Additional
Exchange”). For the avoidance of doubt, the Holder shall receive shares of Preferred Stock in exchange for the accrued
but unpaid interest on such Additional Exchanged Securities. The Additional Settlement Date shall be _____________________, which
is two business days after the date of delivery of this Notice of Exchange to Pernix Therapeutics Holdings, Inc. Capitalized terms
used herein but not defined shall have the meanings ascribed to such terms in the Exchange Agreement.

 

In
connection with the Additional Exchange, the Holder 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 Additional Settlement Date, to the Company, and all
such covenants, representations and warranties shall survive the Additional Settlement Date:

 

		1)	The
                                         Holder is duly organized, validly existing and in good standing, and has the power, authority
                                         and capacity to execute and deliver this Notice of Exchange and to consummate the Additional
                                         Exchange contemplated hereby.

 

		2)	The
                                         Holder is, and on the Additional Settlement Date will be, the sole legal and beneficial
                                         owner of all of the Additional Exchanged Securities. The Holder has good, valid and marketable
                                         title to the Additional Exchanged Securities, free and clear of any Liens (other than
                                         pledges or security interests that the Holder may have created in favor of a prime broker
                                         under and in accordance with its prime brokerage agreement with such broker). The 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 the Additional
                                         Exchanged Securities or its rights in the Additional 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 the Additional Exchanged Securities. Upon the Holder’s
                                         delivery of the Additional Exchanged Securities to the Company pursuant to the exchange
                                         of the Additional Exchanged Securities, such Additional Exchanged Securities shall be
                                         free and clear of all Liens created by the Holder and the Company will acquire record
                                         and beneficial ownership thereof, free and clear of any Liens.

 

		3)	The
                                         Holder is an “accredited investor” as such term is defined in Regulation
                                         D promulgated under the Securities Act.

 

		4)	The
                                         Holder acquired the Additional Exchanged Securities more than one year prior to the date
                                         hereof, at which time the full consideration was paid by the Holders, as set forth in
                                         Rule 144(b)(1) 

 

    

     

    

under
the Securities Act, and the Holder has continued to hold the beneficial ownership in the Existing Securities at all times since
such Existing Securities were acquired.

 

		5)	The
                                         Holder is not, and has not been during the consecutive three month period preceding the
                                         date hereof, a director, officer or 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.

 

		6)	On
                                         the basis that there are outstanding _____________ shares of Common Stock as of the date
                                         hereof, immediately after each receipt by the Holder of the shares of Preferred Stock
                                         on the Additional Settlement Date, (i) the aggregate number of shares of Common Stock
                                         owned by the Aggregated Persons will not exceed 9.985%, and (ii) the aggregate number
                                         of shares of Common Stock that would be treated as beneficially owned by the Aggregated
                                         Persons (as determined in accordance with the applicable rules under section 382 of the
                                         Internal Revenue Code of 1986, as amended) assuming conversion of all shares of Preferred
                                         Stock beneficially owned by the Aggregated Persons at the then-applicable conversion
                                         rate(s), will not exceed 20.0% of the outstanding shares of Common Stock of the Company.
                                         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.

 

		7)	The
                                         Holder acknowledges and agrees that (a) the Holder has been furnished with all materials
                                         it considers relevant to making an investment decision to enter into the Additional Exchange
                                         and has had the opportunity to review (and has carefully reviewed) the Company’s
                                         filings and submissions with the SEC, including, without limitation, the Public Filings,
                                         (b) the Holder has all information that it considers necessary in making an informed
                                         investment decision, (c) the 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 Additional Exchange and to make an informed investment decision with respect to
                                         such Additional Exchange, (d) the 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 the Public Filings, and (e) the 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 Preferred Stock and has the ability to
                                         bear the economic risks of its investment and can afford the complete loss of such investment.

 

		8)	The
                                         Holder is not acquiring Preferred Stock with a view to, or for resale in connection with,
                                         any distribution (as defined in the Securities Act and related rules and regulations,
                                         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.

 

Dated:

 

Signed
on behalf of __________________ by:

 

Name:

Title:

 

    

     

    

Schedule
2.3

 

	Holder	Amount
    of Existing Securities 
	Deerfield
    Partners, L.P.	[           ]
	Deerfield
    Special Situations Fund, L.P.	[           ]
	Deerfield
    Private Design International II, L.P. 	[           ]
	Deerfield
    Private Design Fund II, L.P.	[           ]

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