Document:

Exhibit 10.5

 

Registration Rights Agreement

 

AMENDMENT
AND WAIVER AGREEMENT, dated as of September 22, 2009, among MxEnergy
Holdings Inc., a Delaware corporation, Denham Commodity Partners LP, a Delaware
limited partnership, Charter Mx LLC, a Delaware limited liability company,
Greenhill Capital Partners, L.P., a Delaware limited partnership, Greenhill
Capital Partners (Cayman), L.P., a Cayman Islands limited partnership,
Greenhill Capital Partners (Executives), L.P., a Delaware limited partnership,
and Greenhill Capital, L.P., a Delaware limited partnership, Jeffrey A. Mayer,
Carol R. Artman-Hodge and Daniel P. Burke, Sr.

 

Preliminary statement

 

Certain
capitalized terms used herein are defined in section 1 hereof.

 

The
parties to the Registration Rights Agreement entered into the Registration
Rights Agreement as of June 25, 2004.

 

Section 14
of the Registration Rights Agreement provides that (a) the provisions of
the Registration Rights Agreement may be amended by an instrument in writing
signed by the Company, Lathi, Charter Mx and Holders holding a majority of the
then outstanding Registrable Securities, (b) the observance of any
provision of the Registration Rights Agreement may be waived with the written
consent of the Holders of a majority of the Registrable Securities then
outstanding and (c) any such amendment or waiver shall be binding upon
each Holder of Registrable Securities at the time outstanding, each future
Holder of all such securities and the Company.

 

Subsequent
to June 25, 2004, the Company became the successor in interest to MX
Energy under the Registration Rights Agreement and Denham became the successor
in interest to Lathi under the Registration Rights Agreement.

 

The
parties hereto now wish to amend the Registration Rights Agreement and to waive
certain provisions thereunder and accordingly, for good and valid
consideration, the sufficiency of which is acknowledged, agree as follows.

 

Agreement

 

1.                                       Definitions. 
The following terms have the indicated meanings when used herein.

 

(a)                                  “Charter Mx”
means Charter Mx LLC, a Delaware limited liability company.

 

(b)                                 “Company” means MxEnergy
Holdings Inc., a Delaware corporation.

 

(c)                                  “Denham” means
Denham Commodity Partners LP, a Delaware limited partnership.

 

 

(d)                                 “Effective Date”
means the first date as of which each of the following shall have occurred:

 

(i)                                     the Restructuring Effective Date shall
have occurred; and

 

(ii)                                  this agreement shall have been executed
and delivered by each of the Company, Denham, Charter Mx and Holders holding a
majority of the then outstanding Registrable Securities.

 

(e)                                  “Greenhill Entities”
means Greenhill Capital Partners, L.P., a Delaware limited partnership,
Greenhill Capital Partners (Cayman), L.P., a Cayman Islands limited
partnership, Greenhill Capital Partners (Executives), L.P., a Delaware limited
partnership, and Greenhill Capital, L.P., a Delaware limited partnership.

 

(f)                                    “Holders” has
the meaning give such term in the Registration Rights Agreement.

 

(g)                                 “Lathi” means
Lathi LLC, a Delaware limited liability company.

 

(h)                                 “MX Energy”
means MxEnergy Inc., a Delaware corporation.

 

(i)                                     “Registrable Securities”
has the meaning give such term in the Registration Rights Agreement.

 

(j)                                     “Registration Rights
Agreement” means that certain Registration Rights Agreement, dated
as of June 25, 2004, by and among MxEnergy, Lathi, the Greenhill Entities,
Jeffrey A. Mayer, Carol R. Artman-Hodge and Daniel P. Burke, Sr., as
amended prior to the date hereof.

 

(k)                                  “Restructuring”
means the pending restructuring of the Company’s outstanding debt pursuant to
which the Company expects issue to its current debt holders and others a
significant number of shares of common stock, as a result of which the total
number of shares of common stock outstanding will increase substantially,

 

(l)                                     “Restructuring Effective
Date” means the closing date of the Restructuring.

 

2.                                       Waiver.  The
parties hereto agree to waive all rights and to release all obligations of
parties to the Registration Rights Agreement arising under the Registration
Rights Agreement, such waiver and release to become effective immediately prior
to the Effective Date.  The intention of
this section 2 is that all rights and obligations arising under the Registration
Rights Agreement shall be waived effective immediately prior to the Effective
Date.

 

3.                                       Amendment.  The
parties hereto agree to amend the Registration Rights Agreement by deleting all
provisions thereof, such amendment to become 

 

 

effective on the
Effective Date.  The intention of this
section 3 is to terminate all rights and obligations of all parties under the Registration
Rights Agreement effective as of the Effective Date.

 

4.                                       Effectiveness of this agreement; termination
of this agreement.

 

(a)                                  This agreement will become binding upon each
person or entity that executes this agreement upon such execution; provided
that sections 2 and 3 hereof shall become effective only when and as specified
in those sections.

 

(b)                                 This agreement shall terminate and cease
to be binding on any party hereto on December 31, 2009 if but only if the
Effective Date shall not have occurred on or prior to December 31, 2009.

 

5.                                       Miscellaneous provisions.

 

(a)                                  Further Assurances. 
Each party hereto shall do and perform or cause to be done and performed
all such further acts and things and shall execute and deliver all such other
agreements, certificates, instruments, and documents as any other party hereto
reasonably may request in order to carry out the intent and accomplish the
purposes of this agreement.

 

(b)                                 Governing Law.  This
agreement shall be governed by and construed under the laws of the State of
Delaware.

 

(c)                                  Jurisdiction and venue; waiver of
jury trial

 

(i)                                     The jurisdiction and venue in any action
brought by any party hereto pursuant to this agreement shall properly lie in
any federal or state court located in the City and State of New York.  By execution and delivery of this agreement,
each party hereto irrevocably submits to the jurisdiction of such courts for
himself, herself or itself and in respect of his, her or its property with
respect to such action.  The parties
irrevocably agree that venue would be proper in such court, and hereby waive
any objection that such court is an improper or inconvenient forum for the
resolution of such action.  The parties
further agree that the mailing by certified or registered mail, return receipt
requested, of any process required by any such court shall constitute valid and
lawful service of process against them, without necessity for service by any
other means provided by statute or rule of court.

 

(ii)                                  WAIVER OF JURY TRIAL. 
EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER OR 

 

 

IN CONNECTION WITH
THIS AGREEMENT, ANY OF THE OTHER AGREEMENTS OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE INVESTORS.

 

(d)                                 Entire Agreement; Amendment;
Waiver.  This agreement:  (a) contains the entire agreement among
the parties hereto with respect to the subject matter hereof, (b) supersedes
all prior written agreements and negotiations and oral understandings, if any,
with respect thereto, (c) may not be amended or supplemented except by an
instrument or counterparts thereof in writing signed by Holders holding a
majority of the then outstanding Registrable Securities, provided, however,
that any amendment which would affect any Holder materially and adversely in a
manner that is disproportionate to other similarly situated Holders shall
require the consent of such Holder.  Any
amendment effected in accordance with this section shall be binding upon each
Holder of Registrable Securities at the time outstanding, each future Holder of
all such securities and the Company.

 

(e)                                  Binding Effect; Assignment. 
This agreement shall be binding on and inure to the benefit of the
parties hereto and their respective legal representatives, successors and
assigns.

 

(f)                                    Headings; Execution in
Counterparts.  The headings and captions contained herein
are for convenience of reference only and shall not control or affect the
meaning or construction of any provision hereof.  Facsimile counterpart signatures to this
agreement are valid.

 

(g)                                 Pronouns. 
Whenever the context may require, any pronouns used in this agreement
shall include the corresponding masculine, feminine or neuter forms, and the
singular form of nouns and pronouns shall include the plural, and vice versa.

 

(h)                                 Attorneys’ Fees. 
If any action at law or in equity is necessary to enforce or interpret
the terms of this agreement, the prevailing party shall be entitled to
reasonable attorneys’ fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.

 

 

IN
WITNESS WHEREOF, the undersigned has caused this agreement to be executed on
its behalf as of the date first written above.

 

 

	
   

  	
  MXENERGY HOLDINGS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey A. Mayer

  
	
   

  	
  Name:  Jeffrey A. Mayer

  
	
   

  	
  Title:    President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  DENHAM COMMODITY PARTNERS LP

  
	
   

  	
   

  
	
   

  	
  By: Denham Commodity
  Partners GP LP

  
	
   

  	
   

  
	
   

  	
  By:  Denham GP LLC

  
	
   

  	
  By:

  	
  /s/ Paul Winters

  
	
   

  	
  Name:  Paul Winters

  
	
   

  	
  Title:  Authorized Person

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CHARTER MX LLC

  
	
   

  	
  By: Charterhouse Equity
  Partners IV, L.P., its managing member

  
	
   

  	
   

  
	
   

  	
  By: CHUSA Equity
  Investors IV, L.P., its general partner

  
	
   

  	
   

  
	
   

  	
  By: Charterhouse Equity
  IV, LLC, its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William M. Landuyt

  
	
   

  	
  Name: William M.
  Landuyt

  
	
   

  	
  Title: Authorized
  Signer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GREENHILL CAPITAL PARTNERS,
  L.P.

  
	
   

  	
   

  
	
   

  	
  By: GCP Managing
  Partner, L.P., a managing general partner of each of the foregoing
  partnerships

  
	
   

  	
   

  
	
   

  	
  By: Greenhill Capital
  Partners, LLC, its general partner

  

 

[Signature Page To
Amendment & Waiver (RRA)]

 

 

	
   

  	
  By:

  	
  /s/ Scott L. Bok

  
	
   

  	
  Name: Scott L. Bok

  
	
   

  	
  Title: Managing Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GREENHILL CAPITAL PARTNERS
  (CAYMAN), L.P.

  
	
   

  	
   

  
	
   

  	
  By: GCP Managing
  Partner, L.P., a managing general partner of each of the foregoing
  partnerships

  
	
   

  	
   

  
	
   

  	
  By: Greenhill Capital
  Partners, LLC, its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott L. Bok

  
	
   

  	
  Name: Scott L. Bok

  
	
   

  	
  Title: Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GREENHILL CAPITAL PARTNERS
  (EXECUTIVES), L.P.

  
	
   

  	
   

  
	
   

  	
  By: GCP Managing
  Partner, L.P., a managing general partner of each of the foregoing
  partnerships

  
	
   

  	
   

  
	
   

  	
  By: Greenhill Capital
  Partners, LLC, its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott L. Bok

  
	
   

  	
  Name: Scott L. Bok

  
	
   

  	
  Title: Managing
  Director

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GREENHILL CAPITAL, L.P.

  
	
   

  	
   

  
	
   

  	
  By: GCP Managing
  Partner, L.P., a managing general partner of each of the foregoing
  partnerships

  
	
   

  	
   

  
	
   

  	
  By: Greenhill Capital
  Partners, LLC, its general partner

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Scott L. Bok

  
	
   

  	
  Name: Scott L. Bok

  
	
   

  	
  Title: Managing
  Director

  

 

[Signature Page To
Amendment & Waiver (RRA)]

 

 

	
   

  	
  /s/ Jeffrey A. Mayer

  
	
   

  	
  Jeffrey A. Mayer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Carole R.
  Artman-Hodge

  
	
   

  	
  Carole R. Artman-Hodge

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Blank]

  
	
   

  	
  Daniel P. Burke, Sr.

  

 

[Signature Page To
Amendment & Waiver (RRA)]Exhibit
10.11

 

EMPLOYMENT
AGREEMENT

 

This Employment Agreement (“Agreement”) is entered
into as of this 8th Day of September, 2009 (“Effective Date”) between Lannett
Company, Inc. (“Company”) and Stephen J. Kovary (Executive).

 

RECITALS

 

Company wishes to employ Executive as its Vice
President of Operations; and Executive wishes to accept such employment under
the terms and conditions set forth in this Agreement.

 

IT IS AGREED as follows:

 

1.                                  Employment. Company hereby employs Executive as its Vice
President of Operations; and Executive accepts such employment.

 

2.                                  Term. The term of employment under this Agreement shall
commence on the Effective Date and shall continue, unless otherwise terminated
earlier under Section 8, until the day before the one-year anniversary of
the Effective Date, i.e., September 8, 2009 (the “Term”), provided that on
the day before the one-year anniversary of the Effective Date and the day
before the anniversary of any one-year renewal of such Agreement the Term shall
be automatically extended for successive additional one (1) year periods
unless at least ninety (90) days prior to such anniversary date, either Company
or Executive furnishes the other with written notice that the term is not to be
so extended.

 

3.                                  Duties. Executive shall devote his full-time efforts to the
proper and faithful performance of all duties customarily discharged by a Vice
President of Operations for a company doing the type of business engaged in by
Company and any additional duties assigned to him from time to time by the
President and Chief Executive Officer of Company and/or the Board of Directors
of Company. Executive shall report directly to the President and CEO of the
Company. Executive agrees to use his best efforts and comply with all fiduciary
and professional standards in the performance of his duties hereunder.
Executive shall provide services to any subsidiary or affiliate of Company
without additional compensation and benefits beyond those set forth in this
Agreement, and any compensation and benefits provided to Executive for such
services shall be a credit with regard to amounts due from Company under this
Agreement. Executive represents and warrants to Company that, at all times
prior to the Effective Date when he has served as Vice President of Operations
of the Company and at all times during the Term, he has either fulfilled or
will fulfill his duty of loyalty to Company; and he has either acted or will
act in the best interests of the Company’s shareholders.

 

1

 

4.           Base Salary. Executive shall
be paid a base salary of Two Hundred Thousand and no cents ($200,000.00) per
annum for the Term, payable, less applicable withholdings, in proportional
monthly payments or more frequently in accordance with Company’s regular
practice. Salary for a portion of any period will be prorated. The Compensation
Committee of the Board of Directors and the President and CEO will conduct an
annual performance review of Executive and, as part of such review, will consider
adjustments to the base salary set forth herein based on the performance of
both Executive and Company.

 

5.           Annual
Bonus. Executive shall be eligible to participate in the Management Incentive
Bonus Plan (the “MIB”) administered by the Compensation Committee, or any
successor annual bonus plan or arrangement generally made available to the
executive officers of Company. The MIB shall provide Executive with a target
bonus opportunity for each fiscal year of Company (i.e. July 1 to
June 30), regardless of whether or not a bonus is declared for any fiscal
year.

 

6.           Benefits.

 

During the Term Executive
shall have the following benefits:

 

(a)                                  Executive may
participate in all Company sponsored stock option plans, retirement plans,
401(k) plans, life insurance plans, medical insurance plans, disability
insurance plans, executive stock ownership plans and such other benefit plans
generally available from time to time to other executive employees of Company
for which he qualifies under the terms of the plans. Executive’s participation
in and benefits under any benefit plan shall be on the terms and subject to the
conditions specified in such plan.

 

(b)                                 Vacation days
or personal time off (PTO) granted to Executive in accordance with the
Company’s published vacation or PTO policy generally afforded to salaried
management employees.

 

7.           Reimbursement
of Expenses. Company will reimburse Executive for the reasonable and
necessary expenses incurred by him in the performance of his duties under this
Agreement in accordance with Company’s policies in effect from time to time.

 

8.           Termination
of Employment.

 

(a)                                  Executive’s
employment under this Agreement may be terminated at any time by the President
and Chief Executive Officer, and/or the Board of Directors of Company, with or
without Cause (as defined below). Executive’s employment is “at-will.”

 

(b)                                 Executive’s
employment under this Agreement shall terminate upon his resignation or death.

 

2

 

(c)                                  Executive’s
employment under this Agreement shall terminate upon thirty (30) days written
notice by Company to Executive of a termination due to Disability, provided
such notice is delivered during the period of Disability. The term “Disability”
shall mean, for purposes of this Agreement, the inability of Executive, due to
injury, illness, disease or bodily or mental infirmity to engage in the
performance of his material duties of employment with Company as contemplated
by Section 3 herein for (i) any period of ninety (90) consecutive
days or (ii) a period of one hundred fifty days (150) in any consecutive
twelve (12) months, provided that if the Executive returns to work in the
consecutive 12 month period for a period of less than ten (10) consecutive
business days in duration, such return to work shall not be deemed to interfere
with a determination of consecutive absent days if the reason for absence
before and after the interim return are the same. Benefits to which Executive
is entitled under any disability policy or plan provided by Company shall
reduce the base salary paid to Executive during any period of Disability on a
dollar-for-dollar basis.

 

(d)                                 Company shall
have the right to terminate Executive’s employment for Cause. For purposes of
this Agreement, “Cause” shall consist of any of the following:

 

(i)                                     Executive’s
willful commission of an act constituting fraud, embezzlement, breach of any
fiduciary duty owed to the Company or its stockholders or other material
dishonesty with respect to the Company;

 

(ii)                                  Gross
negligence or willful misconduct in the performance of Executive’s duties;

 

(iii)                               Willful or
reckless conduct of Executive which has an adverse impact (economic or
otherwise) on Company;

 

(iv)                              Executive’s
willful violation of any law, rule or regulation relating to the operation
of Company or any of its subsidiaries or affiliates;

 

(v)                                 The order of
any court or supervising governmental agency with jurisdiction over the affairs
of Company or any subsidiary or affiliate;

 

(vi)                              Executive’s
willful violation of any provision of this Agreement, including without
limitation violation of Sections 9, 10, 11 or 12;

 

3

 

(vii)                           Executive’s
conviction or plea of nolo contendere (or its equivalent) with respect to a
felony or any other crime involving dishonesty or moral turpitude;

 

(viii)                        Abuse of
illegal drugs or other controlled substances or habitual intoxication;

 

(ix)                                Willful
violation by Executive of Company’s published business conduct guidelines, code
of ethics, conflict of interest or other similar policies; or

 

(x)                                   Executive
becoming under investigation by or subject to any disciplinary charges by any
regulatory agency having jurisdiction over the Company (including but not
limited to the Drug Enforcement Administration (DEA), Food and Drug
Administration (FDA) or the Securities and Exchange Commission (SEC)) or if any
complaint is filed against Executive by any such regulatory agency.

 

(e)                                  If Executive’s
employment terminates for Cause or for any reason other than as set forth in
Section 8(f), Company shall be obligated only to continue to pay
Executive’s salary and, to the extent earned, accrued and unpaid, annual cash
bonus and long term incentive compensation and furnish the then existing
benefits under Section 6 up to the date of termination (except as
otherwise set forth in this Agreement).

 

(f)                                    If Executive’s
employment is terminated by Company without Cause following the completion of
two (2) full years of employment with Company, in addition to the amounts
payable under Section 8(e), Executive shall be entitled to receive the
following: (i) his base salary for a period of eighteen (18) months after
the termination date, (ii) insurance coverage provided to him equal to
such coverage provided to him on the date of termination at no cost or, if
ineligible for continued coverage under Company policies, reimbursement of the
cost of comparable coverage for a period of eighteen (18) months, (iii) a
pro rated annual cash bonus for the then current fiscal year calculated as if
all base targets and base goals are achieved (but no other incentive
compensation beyond the date of termination), if it is more likely than not,
within the Company’s discretion, that the bonus will be earned by Executive, to
be paid at the times and frequency regularly paid, and (iv) the Company
shall cause all outstanding Company stock options awarded Executive prior to
termination of his employment to be one hundred percent (100%) vested at
termination. As a condition to the salary, insurance continuation, under this
Section 8(f), Executive must first execute and deliver to Company, in a
form prepared by Company, a release of all claims against Company and other
appropriate parties, excluding Company’s performance under this
Section 8(f) and Executive’s vested rights under Company sponsored
retirement plans, 401(k) plans and stock ownership plans. The obligation
of Company to pay Executive’s salary as required by Subsection (i) of this
Section 8(f) shall not be subject to offset for earnings from
Executive’s subsequent employment, 

 

4

 

provided however, that, if
and to the extent required under Section 409A of the Internal Revenue
Code (“Section 409A”), payments required under Section 8(f)(i) shall
be made in twenty-six (26) equal biweekly installments commencing as of
the first biweekly pay period immediately following the end of the six-month
period commencing on the Termination Date and ending six months following the
Termination Date. Neither the Company nor the Executive shall have the right
hereunder to alter the payment schedule applicable to the Severance Package.

 

(g)                                 The termination
of Executive’s employment with Company, for any reason and irrespective as to
whether initiated by Executive or Company, shall be considered a
contemporaneous resignation by Executive from the position of Company’s Vice
President of Operations; and shall be deemed a termination from employment with
all entities related to Company.

 

(h)                                 The Executive
may terminate his employment hereunder at any time for any reason by giving the
Company prior written notice not less than thirty (30) days prior to such
termination. Termination by the Executive pursuant to this Clause shall be
deemed a termination entitling the Executive to compensation Pursuant to
Section 8(e) above.

 

9.                                  Confidential Information. During Executive’s
employment with Company and at all times after the termination of such
employment, regardless of the reason for such termination, Executive shall hold
all Confidential Information relating to Company in strict confidence and in
trust for Company and shall not disclose or otherwise communicate, provide or
reveal in any manner whatsoever any of the Confidential Information to anyone
other than Company without the prior written consent of Company. “Confidential
Information” includes, without limitation, financial information, related trade
secrets (including, without limitation, Company’s business plan, methods and/or
practices) and other proprietary business information of Company which may
include, without limitation, market studies, customer and client lists,
referral lists and other items relative to the business of Company. “Confidential
Information” shall not include information which is or becomes in the public
domain through no action by Executive or information which is generally
disclosed by Company to third parties without restrictions on such third
parties.

 

10.                           Solicitation of Customers. During his employment with
Company and for a period of eighteen (18) months after the termination of
Executive’s employment, regardless of the reason for the termination (the “Non-Competition
Period”), Executive shall not, whether directly or indirectly, for his own
benefit or for the benefit of any other person or entity, or as a partner,
stockholder, member, manager, officer, director, proprietor, employee,
consultant, representative, agent of any entity other than Company, solicit,
directly or indirectly, any customer of Company, or induce any customer of
Company to terminate any association with Company, in connection with those
certain products being offered for sale by Company or in its research and
development pipeline on the date of termination of Executive’s employment (the “Restricted
Products”) or otherwise attempt to provide services to any customer of Company
in connection with the Restricted Products. Executive shall prevent such
solicitation to the 

 

5

 

extent he has authority to prevent same and
otherwise shall not interfere with the relationship between Company and its
customers. This provision shall not be interpreted to prohibit, prevent or
otherwise impair the Executive’s ability and right to seek and obtain
employment from a competitor of the Company, even if said competitor is
currently selling products to the Company’s customers that are the same as
Company products. While the Executive shall be unrestricted in seeking to sell
products to the Company’s customers that are different than the Company’s
products, it is the intent of this paragraph to preclude the Executive from
having said competitor replace the Company as a supplier of a product or
otherwise take existing sales from the Company for the period in question.

 

11.                           Solicitation of Executives and Others. During his employment with
Company and during the Non-Competition Period, Executive shall not, whether
directly or indirectly, for his own benefit or for the benefit of any other
person or entity, or as a partner, stockholder, member, manager, officer,
director, proprietor, employee, consultant, representative, agent of any entity
other than Company, solicit, for purposes of employment or association, any
Executive or agent of Company (“Solicited Person”), or induce any Solicited
Person to terminate such employment or association for purposes of becoming
employed or associated elsewhere, or hire or otherwise engage any Solicited
Person as an Executive or agent of an entity with whom Executive may be
affiliated or permit such, or otherwise interfere with the relationship between
Company and its employees and agents. For purposes of this Agreement, an
employee or agent of Company shall mean an individual employed or retained by
Company during the Term and/or who terminates such association with Company
within a period of six (6) months after the termination of Executive’s
employment with Company.

 

12.                           Non-Competition. Without the written consent of the President
and Chief Executive Officer, during his employment with Company and during the
Non-Competition Period, Executive shall not directly or indirectly, as an
officer, director, shareholder, member, partner, joint venturer, Executive,
independent contractor, consultant, or in any other capacity:

 

	
  (a)

  	
  Engage, own or have any interest in;

  
	
  (b)

  	
  Manage, operate, join, participate in, accept employment with, render
  advice to, or become interested in or be connected with;

  
	
  (c)

  	
  Furnish consultation or advice to; or

  
	
  (d)

  	
  Permit his name to be used in connection with;

  

 

Any person or entity engaged in a business in the United States or
Canada which is engaged in the manufacture, distribution or sale of the
Restricted Products or which otherwise competes with the business of Company as
it exists from time to time and, in the case of termination of this Agreement,
as it exists on the termination date. Notwithstanding the foregoing, holding
one percent (1%) or less of an interest in the equity, stock options or debt of
any publicly traded company shall not be considered a violation of this Section 12.

 

6

 

13.                           Disclosure and Ownership of Work product and Information.

 

(a)                              Executive
agrees to disclose promptly to Company all ideas, inventions (whether
patentable or not), improvements, copyrightable works of original authorship
(including but not limited to computer programs, compilations of information,
generation of data, graphic works, audio-visual materials, technical reports
and the like), trademarks, know-how, trade secrets, processes and other
intellectual property, developed or discovered by Executive in the course of
his employment relating to the business of Company, or to the prospective
business of Company, or which utilizes Company’s information or staff services
(collectively, “Work product”).

 

(b)                             Work product
created by Executive within the scope of Executive’s employment, on Company
time, or using Company resources (including but not limited to facilities,
staff, information, time and funding), belongs to Company and is not owned by
Executive individually. Executive agrees that all works of original authorship
created during his employment are “works made for hire” as that term is used in
connection with the U.S. Copyright Act. To the extent that, by operation of
law, you retain any intellectual property rights in any Work product, Executive
hereby assigns to Company all right, title and interest in all such Work
product, including copyrights, patents, trade secrets, trademarks and know-how.

 

(c)                              Executive
agrees to cooperate with Company, at Company’s expense, in the protection of
Company’s information and the securing of Company’s proprietary rights,
including signing any documents necessary to secure such rights, whether during
or after your employment with Company, and regardless of the fact of any
employment with a new company.

 

14.                           Enforcement of Agreement; Injunctive Relief; Attorneys’ Fees and
Expenses. Executive acknowledges that violation of this
Agreement will cause immediate and irreparable damage to Company, entitling it
to injunctive relief. Executive specifically consents to the issuance of
temporary, preliminary, and permanent injunctive relief to enforce the terms of
this Agreement. In addition to injunctive relief, Company is entitled to all
money damages available under the law. If Executive violates this Agreement, in
addition to all other remedies available to Company at law, in equity, and
under contract, Executive agrees that Executive is obligated to pay all Company’s
costs of enforcement of this Agreement, including attorneys’ fees and expenses.

 

15.                           Severability and Savings. Each provision in this
Agreement is separate. If necessary to effectuate the purpose of a particular
provision, the Agreement shall survive the termination of Executive’s
employment with Company. If any provision of this Agreement, in whole or in
part, is held to be invalid or unenforceable, the parties agree that any such
provision shall be deemed modified to make such provision enforceable to the
maximum extent permitted by applicable law. As to any provision held to be
invalid or unenforceable, the remaining provisions of this Agreement shall
remain in effect.

 

16.                           Binding Effect. This Agreement shall be binding upon and
shall inure to the benefit of Company and its successors and assigns. This
Agreement 

 

7

 

shall be binding upon and inure to the benefit of
Executive, his heirs and personal representatives. This Agreement is not
assignable by Executive.

 

17.                           Statute of Limitations. Executive agrees not to
initiate any action or suit relating directly or indirectly to employment with
Company or the termination of such employment more than one (1) year after
the effective date of termination of employment. Executive expressly waives any
other longer statute of limitations. However, Executive agrees that any shorter
statute(s) of limitations remain in effect.

 

18.                           Indemnification. To the fullest extent permitted by
applicable law, the Company shall indemnify, defend, and hold harmless the
Executive from and against any and all claims, demands, actions, causes of
action, liabilities, losses judgments, fines, costs and expenses (including
reasonable attorneys’ fees and settlement expenses) arising from or relating to
his service or status as an officer, director, employee, agent or
representative of the Company or any affiliate of the Company or in any other
capacity in which the Executive serves or has served at the request of, or for
the benefit of, the Company or its affiliates. The Company’s obligations under
this section shall be in addition to, and not in derogation of, any rights the
Executive may have against the Company to indemnification or advancement of
expenses, whether by statute, contract or otherwise, and the Company’s
obligation pursuant to this Section 18 shall survive termination of the
Executive’s employment.

 

19.                           Section 409A
Compliance. No payment shall be made under this Agreement in a
form or at a time that would subject the recipient to interest or penalties
under Section 409A. It is the intention of the Parties to make all payments
hereunder in compliance with Section 409A and the provisions of this
Agreement should be interpreted and applied to give effect to this intention.
Neither Executive nor Company, nor any provision of this Agreement, shall be
permitted to cause the acceleration of payments hereunder, except as permitted
under Section 409A, nor shall either of the Parties be permitted to defer
the payment of any payments hereunder.

 

20.                           Miscellaneous.

 

	
  (a)

  	
  No provision of this Agreement may be modified, waived or discharged
  unless such waiver, modification or discharge is agreed to in writing and
  signed by Company and Executive. The waiver or nonenforcement by Company of a
  breach by Executive of any provision of this Agreement shall not be construed
  as a waiver of any subsequent breach by Executive. This Agreement is the
  parties’ entire agreement relating to the subject matter hereof and any and
  all prior agreements, representations or promises, oral or otherwise, express
  or implied, are superseded by and/or merged into this Agreement.

  
	
   

  	
   

  
	
  (b)

  	
  Notices and all other
  communications provided for in this Agreement shall be in writing and shall
  be delivered personally or sent by registered or certified mail, return
  receipt requested, postage prepaid, or sent by facsimile or prepaid overnight
  courier to the parties at the addresses set forth below (or such other
  addresses as shall be specified by the 

  

 

8

 

	
   

  	
  parties by like notice): To Company, Lannett Company, Inc., 9000
  State Road, Philadelphia, PA 19136 Attn.: President/Chief Executive Officer;
  To the Executive: Stephen J. Kovary, 22 Heritage Court, Randolph, New Jersey
  07869. All notices shall be deemed effective upon receipt. The failure to
  accept mail forwarded through the U.S. Postal Service, certified, return
  receipt requested, shall be deemed received as of the earlier of the first
  date such delivery is refused or, alternatively, if notices are provided of
  attempts to deliver, the date on which said first notice was provided to the
  Company.

  
	
   

  	
   

  
	
  (c)

  	
  This Agreement shall be governed by the laws of the Commonwealth of
  Pennsylvania without regard to choice of law rules. Any action to enforce
  this Agreement shall be filed in the state or federal courts located in
  Pennsylvania

  
	
   

  	
   

  
	
  (d)

  	
  Although this Agreement was drafted by Company, the parties agree
  that it accurately reflects the intent and understanding of each party and
  should not be construed against Company for the sole reason that it was the
  drafter if there is any dispute over the meaning or intent of any provisions.

  
	
   

  	
   

  
	
  (e)

  	
  Executive agrees that this Agreement is confidential and Executive
  will not disclose the terms and conditions of this Agreement to any Company
  employee or other third party, other than Executive’s attorney, accountant,
  professional advisors and members of his immediate family, except as may be
  permitted by applicable law.

  
	
   

  	
   

  
	
  (f)

  	
  This Agreement may be executed in counterparts, which together shall
  constitute one Agreement.

  
	
   

  	
   

  
	
  (g)

  	
  Executive agrees that this Agreement is the sole Employment Agreement
  between Company and Executive and supersedes any and all prior Employment
  Agreements, Letters of Understandings, Verbal understandings or commitments.

  
	
   

  	
   

  
	
  (h)

  	
  By their signatures below, the parties acknowledge that they have had
  sufficient opportunity to read and consider, and that they have carefully
  read and considered, each provision of this Agreement and that they are
  voluntarily signing this Agreement intending to be legally bound hereby. The
  parties have executed this Agreement as of the Effective Date.

  

 

	
  WITNESS

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Daniel Sell

  	
   

  	
  /s/ Stephen J. Kovary

  
	
   

  	
   

  	
  Stephen J. Kovary

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  LANNETT COMPANY INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
  /s/ Arthur Bedrosian

  
	
   

  	
   

  	
  Arthur Bedrosian

  
	
   

  	
   

  	
  Its President and CEO 

  

 

9

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