Document:

ex10-1.htm

 

Exhibit 10.1

 

	

	 	
DST Systems, Inc.

333 West 11th Street

Kansas City, MO  64105

816.435.1000

www. dstsystems.com

 

 

 

September 12, 2012

 

Thomas A. McDonnell

Chief Executive Officer

DST Systems, Inc.

Dear Mr. McDonnell:

 

This retirement agreement (the “Retirement Agreement”) is entered into by and between you and DST Systems, Inc. (the “Company”), and confirms the agreement that has been reached with you in connection with your retirement. In consideration of the promises and the mutual covenants set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties, intending to be legally bound, hereby agree as follows:

 

1.           Transition.

 

(a)         Upon execution of this Agreement, you agree to retire as Chief Executive Officer of the Company, effective as of September 13, 2012 (the “Transition Date”), at which time your service as an executive officer of the Company shall cease.  Following the Transition Date and through December 31, 2012 (the “Retirement Date”), you shall continue to be employed and serve as the Non-Executive Chairman of the Company, and in such capacity your services to the Company shall be limited to a special advisory role, as more fully described in Section 1(b).  Your retirement as the Non-Executive Chairman and your separation from service with the Company shall be effective upon the Retirement Date.  It is acknowledged and agreed that you shall resign, and by executing this Retirement Agreement you shall be deemed to have resigned, as of the Transition Date, as a board member and officer of and from service in any capacity with each “DST Entity” or “DST Plan” (each as defined in Section 1(e)); provided, however, that through the Retirement Date you shall continue to be employed and to serve as the Non-Executive Chairman of the Company as provided herein and, subject to the

 

  

  

  

Company’s Corporate Governance Guidelines, you shall continue through the Retirement Date to serve as a member of the Company’s Board of Directors.  Effective as of the Retirement Date, you shall retire from service on the Company’s Board of Directors, at which time your service as a Director of the Company shall cease.  You hereby agree to execute any other documents and take all other actions necessary to fully effectuate the provisions of this Section 1(a).

 

(b)         From the Transition Date through the Retirement Date, you shall serve solely as the Company’s Non-Executive Chairman.  In such capacity, you shall provide transition services to the Company at the request of the Chief Executive Officer consistent with your position as Non-Executive Chairman and consisting primarily of assistance in the transition of duties to him and advice as to matters relating to DST Entities and DST Plans of which you have special knowledge arising from your prior duties as the Company’s Chief Executive Officer or from your services for or positions with DST Entities and DST Plans (the “Services”).  You will perform all Services with a level of skill and care generally exercised by others performing the same or similar services.  In performing the Services, you will make no commitments on behalf of any DST Entity or DST Plan unless approved in advance by the Company’s Board of Directors and comply fully with all applicable laws, and all applicable policies of the Company including without limitation the Company’s Business Ethics and Legal Compliance Policy, Communications and Acceptable Use Policy, Anti-Corruption Policy, and Insider Trading Prevention Policy (collectively, the “Ethics and HR Policies”). Notwithstanding anything to the contrary set forth above, the Retirement Date shall be accelerated to the date of written notice to you in the event that the Company terminates your employment “for cause” (as defined in Section 4(c) of your employment agreement entered into on December 31, 2008 (the “Employment Agreement”)) or by reason of your breach of this Retirement Agreement.

 

(c)         From the Transition Date through the Retirement Date, the Company will provide you with all compensation, benefits, perquisites and reimbursements provided to you immediately before your execution of the Retirement Agreement, including, without limitation, the following items and the items listed in Section 1(d): (i) your current office space (with a computer, messaging-equipped telephone, Bloomberg Anywhere access, and access to other standard office accoutrements) in the Company’s offices at 333 West 11th Street in Kansas City (such location subject to the discretion of the Chief Executive Officer of the Company); (ii) access to Company staff for purposes of benefits-related planning assistance; (iii) continued use of your Company cell phone (and the Company will transfer the cell phone number to you as of the Retirement Date); and (iv) continued business expense reimbursement.

 

  

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(d)         From the Transition Date through the Retirement Date, the Company will provide you with (i) continued use of your Company car, subject to standard Company policy; (ii) continued personal use of the Company airplane for you and your family on the same basis as the Company provided immediately before the execution of the Retirement Agreement; (iii) continued matching charitable contribution rights on the same basis as the Company provided immediately before the execution of the Retirement Agreement; (iv) continued reimbursement for professional services incurred by you in connection with income tax planning and income tax return preparation for taxable years ending December 31, 2011; and (v) reimbursement of legal fees incurred by you in connection with the Retirement Agreement in an amount not to exceed $25,000.

 

(e)         “DST Entity” shall mean the Company, its parents and their subsidiaries, joint ventures and affiliated entities and each of their predecessors, successors and assigns.  “DST Plan” shall mean each of the DST Entities’ benefit plans, awards, trusts and funds, each of the administrators, trustees, fiduciaries and committees of and any person associated with any of the foregoing, and each of their predecessors, successors and assigns.

 

2.        Payments and Benefits.  In consideration of your execution of this Retirement Agreement and your compliance with its terms and conditions, the Company agrees to pay or provide to you, subject to the terms and conditions set forth in this Retirement Agreement, with the benefits described in this Section 2.  You acknowledge and agree that the benefits below shall be in full satisfaction of the Company’s obligations under the terms of the Employment Agreement and all applicable cash or equity incentive compensation plans and agreements. You acknowledge that payments and benefits under this Retirement Agreement exceed payments and benefits to which you are otherwise entitled.

 

(a)         Provided that you execute this Retirement Agreement and comply at all times with its terms and conditions, the Company shall continue to pay you at your current rate of base salary and benefits through the Retirement Date, in accordance with the Company’s payroll practices. Effective as of the Retirement Date, you will be eligible for health plan continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.  You may arrange for the portability of your life insurance provided through the Company’s officer life benefit.

 

(b)         To the extent the applicable performance goals are achieved pursuant to the terms of the DST Annual Incentive Program, the Company shall pay you incentive compensation in respect of 2012, at the time bonuses for such year are paid to other executives of the Company, except as specified below.  For the avoidance of doubt, any 2012 incentive compensation that is earned shall be paid in

 

  

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currently payable cash, and no part of such 2012 incentive compensation shall be paid as deferred cash.  Any portion of the incentive compensation in respect of 2012 that would normally have been payable as deferred cash pursuant to the terms of the DST Annual Incentive Program shall be paid within sixty days of the date that is six months following the Retirement Date.

 

(c)         Provided that you execute this Retirement Agreement and comply at all times with its terms and conditions, the Company shall pay to you a special retirement payment equal to $1,150,000, which shall be paid to you on December 14, 2012, and which shall not be treated as covered compensation under any Company employee benefit plans.

 

(d)         The parties acknowledge and agree that you are party to award agreements (the “Award Agreements”) pursuant to the terms of the DST Systems, Inc. 2005 Equity Incentive Plan (the “Plan”) under which you have been granted (i) stock options to purchase shares of common stock of the Company (the “Options”), (ii) time vesting restricted stock units (the “Time RSUs”), (iii) performance vesting restricted stock units (the “Performance RSUs”), and (iv) deferred cash (“Deferred Cash”).

 

(1)          The Company agrees that, in accordance with, and subject to, the terms and conditions of the Option Award Agreements and the Plan, you shall be entitled to exercise all vested Options held by you as of the Retirement Date until the expiration date of the Options as set forth in the Option Award Agreements.  As of December 31, 2012, and assuming you do not exercise any stock options between the date of this letter and that date, you will have: (i) 69,134 vested options with a strike price at $44.45 and an expiration date of 1/4/20 and (ii) 19,035 vested options with a strike price of $47.51 and an expiration date of 12/1/21.  All unvested Options will terminate on the Retirement Date and the Company will have no further obligation or responsibility with respect thereto.

 

(2)          The Company agrees that, in accordance with, and subject to, the terms and conditions of the Performance RSU Award Agreements and the Plan, you shall vest in the Performance RSUs based on the level of achievement for 2012 and prior years of goals set forth in the respective Award Agreements.  The original grant amounts were: (i) February 2010 Performance RSUs – 31,541, (ii) February 2011 Performance RSUs – 22,400, and (iii) December 2011 Performance RSUs – 13,630.  You have also received 1,258 dividend Performance RSUs credited in respect of the Performance RSUs.  To the extent the applicable performance goals are achieved, the Performance RSUs will vest on March 8, 2013 and shall be settled in shares of common stock of the Company as soon as practicable thereafter.  In the event that the Company declares dividend equivalents during the period from the Transition Date to the Retirement Date, you shall vest in additional Performance

 

  

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Units determined in accordance with the Performance RSU Award Agreements, and those vested Performance RSUs shall be settled in accordance with this Section 2(d)(2).  Any Performance RSUs that do not vest on or before March 8, 2013 will terminate and the Company will have no further obligation or responsibility with respect thereto.

 

(3)          The Company agrees that, in accordance with, and subject to, the terms and conditions of the Time RSU Award Agreements and the Plan, upon the Retirement Date, you shall vest in 1,434 Time RSUs (which represent a portion of Time RSUs that are scheduled to vest on March 8, 2013 as well as the dividend Time RSUs credited in respect of the Time RSUs (1,721 Time RSUs), pro-rated by multiplying such tranche of Time RSUs by 10/12), and those vested Time RSUs shall be settled on the first day following expiration of the six-month period following the Retirement Date in accordance with the requirements of Section 409A of the Internal Revenue Code of 1986, as amended, and applicable treasury regulations thereunder (“Code Section 409A”).  In the event that the Company declares dividend equivalents during the period from the Transition Date to the Retirement Date, you shall vest pro rata in additional Time RSUs determined in accordance with the Time RSU Award Agreements, and those vested Time RSUs shall be settled in accordance with this Section 2(d)(3).  All unvested Time RSUs will terminate on the Retirement Date and the Company will have no further obligation or responsibility with respect thereto.

 

(4)          The Company agrees that, in accordance with, and subject to, the terms and conditions of the Deferred Cash Award Agreements and the Plan, you shall be paid the full amount of your Deferred Cash award balances, adjusted as provided in the Award Agreements and Plan procedures for gains and losses pursuant to your hypothetical investment choices, with payment to be made (or, if subject to installment elections, shall commence) within sixty days of the date that is six months following the Retirement Date.

 

(5)          Notwithstanding anything in this Section 2(d) to the contrary, in the event that the Company terminates your employment “for cause” (as defined in Section 4(c) of your Employment Agreement) or by reason of your breach of this Retirement Agreement prior to the Retirement Date, then there shall be no additional vesting of your Options, Time RSUs, Performance RSUs or Deferred Cash and the awards will be governed by the provisions contained in your Award Agreements or the Plan relating to termination for cause.

 

(e)         The parties acknowledge and agree that you will be paid for any unreimbursed business expenses (in accordance with usual Company policies and practices, and in no event later than the calendar year following the year in which the expenses are incurred), to the extent not theretofore paid.  In addition,

 

  

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following the Retirement Date, you will receive any vested amounts payable to you under all of your accounts in the Company’s 401(k) Profit Sharing Plan, the Employee Stock Ownership Plan, the Supplemental Executive Retirement Plan, the Executive Plan, and the terminated Directors’ Deferred Fee Plan in each case in accordance with the terms of such plans and applicable law.  Except as specifically set forth herein, your participation in all Company plans shall remain subject to the terms and conditions of such plans as in effect from time to time and you agree that such terms and conditions are binding on you and the Company.

 

(f)         You will receive a payment under our vacation policy for amounts accrued through December 31, 2012 in an amount equal to $1,180,000, which will be paid to you on December 14, 2012, and which shall not be treated as covered compensation under any Company employee benefit plans.

 

(g)         The Company will make a contribution to the Greater Kansas City Community Foundation of $1,000,000 in the Company’s name and in your honor on or before December 31, 2012, to be donated by the Greater Kansas City Community Foundation over the period set forth on the schedule that you provide to Randy Young on or before the date hereof (the “Schedule”) and in such amounts as you direct to all or any combination of the charitable organizations listed on the Schedule. You will not be responsible for paying a fee for the ability to direct this donation.

 

3.           Consideration; Effective Date

 

(a)         You acknowledge that you have consulted with an attorney prior to executing this Retirement Agreement.  You have carefully read and fully understand all of the provisions of this Retirement Agreement.  You are entering into this Retirement Agreement knowingly, freely and voluntarily in exchange for good and valuable consideration to which you would otherwise not be entitled.

 

(b)         This Retirement Agreement shall become effective on the day upon which you sign it.

 

4.           Continuing Obligations and Duties Upon Retirement.

 

(a)         You shall comply at all times with any confidentiality, intellectual property, noncompetition, nonsolicitation and any other employment and post-employment obligations to any of the DST Entities, including, but not limited to, (i) Section 5 (Non-Disclosure) and Section 8 (Non-Solicitation and Non-Competition) of the Employment Agreement; (ii) Section 5 (Violation of Non-compete, Nonuse and Nondisclosure Provisions) of the Restricted Stock Unit Agreement of the DST Systems, Inc. 2005 Equity Incentive Plan; (iii) Section 8

 

  

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(Violation of Non-compete, Nonuse and Nondisclosure Provisions) of the Stock Option Award Agreement of the DST Systems, Inc. 2005 Equity Incentive Plan; and (iv) Section 5 (Violation of Non-compete, Nonuse and Nondisclosure Provisions) of the Deferred Cash Award Agreement of DST Systems Inc. 2005 Equity Incentive Plan, all of which are expressly incorporated by reference as if fully set forth in this Section 4.  The Company acknowledges and agrees that, for all purposes of the foregoing Agreements and Plans, the ownership interest that you hold in Mac-Per-Wolf Company and its subsidiaries, and any services that you may perform for Mac-Per-Wolf Company and its subsidiaries in their current lines of business, are not competitive with the Company or any of its subsidiaries or affiliates. The Company acknowledges and agrees that, for all purposes of the foregoing Agreements and Plans, action taken by Mac-Per-Wolf Company as a financial advisor or financial subadvisor, in each case solely for the purpose of rendering investment advice to mutual funds or managed investment structures, is not competitive with the Company or any of its subsidiaries or affiliates.  The Company acknowledges and agrees that, for all purposes of the foregoing Agreements and Plans, any services that you may perform for a section 501(c)(3) organization are not competitive with the Company or any of its subsidiaries or affiliates.

 

(b)         From the date upon which you execute this Agreement, through the three-year anniversary of the Retirement Date, you agree not to take any action to adversely and materially affect or negatively and materially influence the relationship of any DST Entity with any of its past, current or prospective clients, vendors or employees.  You further agree not to make any oral or written statements or engage in conduct of any kind that either directly or indirectly disparages, criticizes, defames, or otherwise casts a negative characterization upon any DST Entity or any employee thereof, any board of directors of any DST Entity or any member thereof, or any DST Plan, in each case whether the entity or person is currently or formerly affiliated with the Company, and you agree not to direct, encourage, or assist anyone else to do so. This prohibition includes, without limitation, making negative comments through emails, on the Internet, through social networking media, or in any other public or semi-public forum.  You agree to hold in confidence all circumstances, conversations, negotiations or events related in any way to your transition and retirement or to this Retirement Agreement; provided, however, that you may make comments that confirm the information contained in the Company’s public written announcement(s) of your transition and retirement.  The obligations set forth in Section 4(a) and this Section 4(b) shall be the “Restrictive Covenants.”

 

(c)         On the Retirement Date or at such earlier time as requested by the Company, (i) you shall fully comply with Section 6 (Duties Upon Termination) of the Employment Agreement, (ii) you shall return to the Company all business equipment provided to you by the Company and the originals and copies of business

 

  

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related files, documents, information and materials, and (iii) you shall return to the Company all Company-supplied credit cards, identification cards and equipment.

 

(d)         Until the Retirement Date, you agree to continue to abide by and conform to the terms and conditions of the Ethics and HR Policies and to comply with your duty of loyalty and other legal obligations.  Until the Retirement Date, you agree that you will continue to act in the best interests of DST Entities and DST Plans to the exclusion of your personal advantage, and will avoid and not engage in situations that involve a conflict between your personal interests and the interests of DST Entities and DST Plans.  You agree that you are solely responsible for compliance with federal and state securities, antitrust and other laws regarding your ownership of and transactions in the Company’s stock, including without limitation your  disgorgement of any short-swing profits, the continued reporting on Forms 4 and 5 for the required time of your stock ownership, your compliance with Rule 144, and, if and as it becomes applicable, the reporting of your stock ownership on Schedule 13 and compliance with Hart-Scott-Rodino procedures for planned transactions in the stock.

 

(e)         You acknowledge that: (i) the period of the Restrictive Covenants, for those that are restricted in time and to the extent permitted by applicable law, shall be tolled during any period of time during which you are not in compliance with such provisions, such that the aggregate duration of the restricted period shall be extended for a period of time equal to the aggregate period of time of any such non-compliance; and (ii) the Company may do all necessary things, and take all necessary action, in Company’s discretion, to protect its rights under this Retirement Agreement, including without limitation notifying any of your subsequent employers, partners or business associates and any boards of directors on which you serve of the existence of (and furnishing to any such entity or person) the provisions of this Section 4.

 

(f)         You acknowledge and agree that the Restrictive Covenants are fair and reasonable in view of the extent of your important client and vendor contacts, and the extent of your knowledge of trade secrets and other confidential information.

 

(g)         If the final judgment of a court or arbitrator with competent jurisdiction declares that any term or provision of this Section 4 is invalid or unenforceable, you agree that the court or arbitrator making the determination of invalidity or unenforceability will have the power to reduce the scope, duration, or geographic area of the applicable term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and that the terms and

 

  

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provisions of this Section 4 will be enforceable as so modified.  You further agree that if any part of this Section 4 is held by a court or arbitrator with competent jurisdiction to be invalid, illegal or incapable of being enforced in whole or in part by reason of any rule of law or public policy, and cannot be modified in accordance with this Section, such part shall be deemed to be severed from the remainder of this Section 4 for the purpose only of the particular legal proceedings in question, and all other covenants and provisions of this Retirement Agreement shall in every other respect continue in full force and effect, and no covenant or provision shall be deemed dependent upon any other covenant or provision.

 

5.           Cooperation.  You agree that you will cooperate to the fullest extent possible with all DST Entities regarding any pending or future litigation, claim, proceeding or other disputed issue involving any DST Entity, the board of any DST Entity (each, a “DST-Related Board”), or any DST Plan that relates to matters within your knowledge or relates to your responsibilities while employed (“DST Service Matters”).  Cooperation, as used herein, means you shall: (a) meet with DST Entity, DST-Related Board or DST Plan representatives and attorneys at reasonable times and places to answer questions regarding facts and other related issues (this includes travel to such locations as requested by such representatives and attorneys); (b) appear and provide testimony if requested by a DST Entity, DST-Related Board or DST Plan (this includes travel to such locations as requested); (c) provide full, complete and truthful testimony if you ever testify in deposition, trial or any other proceeding involving any DST Entity, DST-Related Board or DST Plan; (d) notify the General Counsel within three (3) business days if you are served with a subpoena relating to any litigation, claim or proceeding involving a DST Entity, DST-Related Board or DST Plan, or if you are contacted by any party adverse to a DST Entity, DST-Related Board or DST Plan or by any representative of such an adverse party; and (e) not engage in any discussions with or otherwise assist any adverse party or any adverse party’s representatives related to any claim against any DST Entity, DST-Related Board or any member thereof, or DST Plan, except as may be required by law.  Following the Retirement Date, the Company agrees to reimburse you, as allowed by applicable law, for reasonable expenses incurred with respect to your compliance with your obligations under this Section 5, and to compensate you at the rate of $2,500 for each day or part of a day for which your services are required.

 

6.           Injunctive Relief; Clawback.  You and the Company agree that upon a final determination by a court of competent jurisdiction of a material violation of your obligations in Sections 4 and 5 of this Retirement Agreement, such violation may cause irreparable injury to the relevant DST Entity or DST Plan that is not adequately remediable in damages and may entitle the DST Entity or DST Plan to temporary, preliminary and final injunctive relief against further breach of such obligations.  You acknowledge and agree that your compensation from the Company, including without limitation any payments or awards pursuant to the DST Annual Incentive Program and

 

  

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to the Plan and this Retirement Agreement, remain subject to any clawback policy in effect as of the date hereof or as may be required by law, including but not limited to the DST Systems, Inc. Compensation Recoupment Policy in effect as of the date hereof (the “Recoupment Policy”).

 

7.           Section 409A.  The intent of the parties is that payments and benefits under this Retirement Agreement (and all other Company plans and agreements) comply with Code Section 409A and, accordingly, to the maximum extent permitted, this Retirement Agreement shall be interpreted to be in compliance therewith.  Notwithstanding anything contained herein to the contrary, you shall not be considered to have terminated employment with the Company for purposes of any payments under this Retirement Agreement which are subject to Code Section 409A until you have incurred a “separation from service” from the Company within the meaning of Code Section 409A.  Each amount to be paid or benefit to be provided under this Retirement Agreement shall be construed as a separate identified payment for purposes of Code Section 409A.  Without limiting the foregoing and notwithstanding anything contained herein to the contrary, to the extent required in order to avoid an accelerated or additional tax under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided pursuant to this Retirement Agreement (or any plans or agreements referenced herein) during the six-month period immediately following your separation from service shall instead be paid as soon as administratively practical after the date that is six months following your separation from service (or, if earlier, your date of death).  To the extent required to avoid an accelerated or additional tax under Code Section 409A, amounts reimbursable to you shall be paid to you on or before the last day of the year following the year in which the expense was incurred and the amount of expenses eligible for reimbursement (and in kind benefits provided to you) during one year may not affect amounts reimbursable or provided in any subsequent year. In no event whatsoever shall the Company be liable for any additional tax, interest or penalty that may be imposed on you by Code Section 409A or damages for failing to comply with Code Section 409A.

 

8.           Press Release. Within four (4) business days following the date that you execute this Retirement Agreement, the Company will issue a press release substantially in the form attached hereto as Addendum A.

 

9.           Captions and Section Headings.  Captions and section headings used here are for convenience and are not a part of this Agreement and will not be used in its interpretation.

 

10.         Response to Subpoena, Court Order or Similar Legal Process.  Nothing in this Retirement Agreement shall prohibit any DST Entity, DST Plan, or any of the DST Entities’ or DST Plans’ shareholders, directors, officers, managers,

 

  

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partners, employees, attorneys, advisors and agents (each, a “DST Person”) or you from responding to a subpoena, court order or similar legal process or from cooperating, as required by law, with any governmental investigation; provided, however, that prior to making any disclosures required by a subpoena or other court order, the Company or you shall provide the other party with written notice of the subpoena, court order or similar legal process sufficiently in advance of such disclosure to afford the other party a reasonable opportunity to challenge the subpoena, court order or similar legal process.

 

11.         Successors and Assigns.  This Retirement Agreement shall inure to the benefit of and be binding upon each of the DST Entities and DST Plans and any successor organization which shall succeed to any of the DST Entities or DST Plans by acquisition, merger, consolidation or operation of law, or by acquisition of assets of any of the DST Entities or DST Plans and any assigns.  You may not assign any of your obligations under this Retirement Agreement.

 

12.         Waiver.  The failure of the Company or you to enforce any provision of this Retirement Agreement will not waive, in any way, that or any other provision of this Retirement Agreement in connection with any future violation, or prevent that party or any other party from thereafter enforcing every term of this Retirement Agreement.

 

13.         Withholding; Authorized Deductions.  The Company shall be entitled to withhold from amounts to be paid to you hereunder any federal, state or local withholding or other taxes which it is from time to time required by law to withhold and any deductions authorized by you.

 

14.         Each Party the Drafter.  This Retirement Agreement, and the provisions contained in it, shall not be construed or interpreted for, or against, any party to this Retirement Agreement because that party drafted or caused that party’s legal representatives to draft any of its provisions.

 

15.         Counterparts.  This Retirement Agreement may be executed simultaneously in counterparts, each of which shall be an original, but all of which shall constitute but one and the same agreement.  A faxed or PDF signature shall operate the same as an original signature.

 

  

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16.         Governing Law. This Retirement Agreement will be governed by and construed according to the laws of the State of Missouri without regard to the application of any choice-of-law rules that would result in the application of another state’s laws.

 

17.         Entire Agreement; No Admission of Wrongdoing.  This Retirement Agreement sets forth the entire agreement between you and the Company and any DST Entity or DST Plan and replaces or supersedes any other oral or written agreement, proposals, negotiations or understandings between you and the Company and any DST Entity or DST Plan, except as otherwise provided in the Retirement Agreement with respect to continuing obligations under any existing noncompete, nonsolicitation, nondisclosure and intellectual property protection obligations under the Employment Agreement and the Award Agreements, the Recoupment Policy, obligations under the Ethics and HR Policies, and obligations under the Arbitration Policy set forth on Addendum B hereto.  The Company has made no representations, agreements or promises other than the representations, agreements and promises specifically stated in this Retirement Agreement.  Any disputes between you and any DST Entity or DST Plan shall be resolved in accordance with the Arbitration policy set forth on Addendum B thereto, subject to the right of either party to seek injunctions in aid of arbitration.  This Retirement Agreement cannot be changed except by a written agreement signed by you and a duly authorized representative of the Company.  This Retirement Agreement and the consideration provided by the Company are not, and shall not be construed as, an admission of any liability whatsoever by any DST Entity, DST Plan or DST Person.

 

  

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If you voluntarily agree to the terms of this Retirement Agreement, please sign in the space provided below.

 

 

	  	
/s/ Randall D. Young

	  	
Randall D. Young

	  	
Vice President, General Counsel & Secretary

	  	  
	  	
On Behalf of DST Systems, Inc.

 

 

KNOWING AND VOLUNTARY AGREEMENT

 

I have read and fully understand the terms of this Retirement Agreement (which includes 20 pages including this signature page and the Addendums).  I knowingly and voluntarily agree to the terms set forth in this Retirement Agreement.

 

	
Signature:    

	
/s/ Thomas A. McDonnell     

	 	
Date:  

	
September 12  

	
, 2012

	  	
Thomas A. McDonnell

	 	  	  	  

  

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ADDENDUM A

DST SYSTEMS CHIEF EXECUTIVE OFFICER THOMAS MCDONNELL TO RETIRE;

BOARD OF DIRECTORS APPOINTS STEPHEN HOOLEY CHIEF EXECUTIVE OFFICER

Kansas City, Mo., September 12, 2012 – DST Systems, Inc. (NYSE: DST) today announced that Thomas A. McDonnell is retiring from the company on December 31, 2012.  The DST Board of Directors has unanimously appointed Stephen C. Hooley, currently President, Chief Operating Officer and a director of DST, to succeed Mr. McDonnell as Chief Executive Officer and President, effective immediately.  Mr. McDonnell will serve as non-executive Chairman through his planned retirement.

Mr. McDonnell said, “For more than 40 years, I have had the privilege of serving and leading DST.   Today DST is a leading global provider of information processing and software services and products with 13,000 employees around the world.  I am extremely proud of everything we have accomplished, including the company’s significant growth and leadership in innovation.”

Robert Jackson, Lead Independent Director of the DST Board of Directors, said, “On behalf of the Board of Directors and the entire DST organization, I want to thank Tom for his countless contributions to the company and the Kansas City community over the past 40 plus years. Tom has been instrumental to the success of DST and in all facets of our business.  His decision to retire was made with much thought and consideration, and we appreciate and respect his decision.  We thank Tom for his innumerable contributions to DST, and wish him all the best in retirement.  We appreciate that Tom will remain with DST through the end of the year, and look forward to continuing to benefit from his wisdom and energy.” 

Mr. McDonnell continued, “I have worked closely with the Board to plan for the right management succession at DST, and I am confident that Steve Hooley is the best person to lead DST through its next phase of growth and development.  Steve has the experience, talent and energy to drive DST to new successes, and I look forward to continuing to work closely with him at the Board level to ensure a smooth transition.”

Mr. Jackson added, “Steve has served with distinction in all his roles since joining DST in 2009.  Steve has deep industry experience, extensive knowledge of each of DST’s businesses, and well-established relationships with our customers, employees and partners.  The DST Board unanimously believes he is the right person to succeed Tom as CEO and we look forward to working closely with Steve in his new role.”

Mr. Hooley stated, “I am honored to have been chosen to succeed Tom as CEO and lead DST at this time of great opportunity.  I am excited to continue working closely with DST’s dedicated employees and valued customers around the globe to build upon our past successes in order to create new opportunities.    DST is a unique company with significant prospects for growth, and together with the Board and management team, I am confident we will achieve our objectives.”

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About Stephen C. Hooley

Mr. Hooley has served as DST’s President and Chief Operating Officer since 2009, responsible for overseeing Shareowner Accounting and Retirement Solutions, Automated Work Distributor products, DST Brokerage Solutions, DST Insurance Solutions, information systems, product sales and marketing, data centers and human resources. From 2004 through mid-2009, he served as President and Chief Executive Officer of Boston Financial Data Services, DST’s 50/50 joint venture with State Street Corporation.  Mr. Hooley is currently a member of the Board and a non-executive officer of Boston Financial.  Since May 2007, he has served as Chief Executive Officer of International Financial Data Services Limited Partnership, another 50/50 joint venture with State Street.  Mr. Hooley also serves in other roles in joint ventures between DST and State Street.  Mr. Hooley was appointed to the DST Board in August 2012.

About DST Systems, Inc.

DST Systems, Inc. provides sophisticated information processing solutions and services to support the global asset management, insurance, retirement, brokerage, and healthcare industries. In addition to technology products and services, DST also provides integrated print and electronic statement and billing solutions through DST Output. DST's world-class data centers provide technology infrastructure support for financial services and healthcare companies around the globe. Headquartered in Kansas City, MO., DST is a publicly traded company on the New York Stock Exchange.

******

The information and comments in this press release may include forward-looking statements respecting DST and its businesses. Such information and comments are based on DST’s views as of today, and actual actions or results could differ. There could be a number of factors, risks, uncertainties or contingencies that could affect future  actions or results, including but not limited to those set forth in DST’s periodic reports (Forms 10-K or 10-Q) filed  from time to time with the Securities and Exchange Commission. All such factors should be considered in evaluating any forward-looking statements. The Company undertakes no obligation to update any forward-looking statements in this press release to reflect future events. Brand, service or product names or marks in this press release are trademarks or service marks, registered or otherwise, of DST Systems, Inc., DST subsidiaries or affiliates, or third parties.

Contacts

DST:

Kenneth V. Hager, Vice President and Chief Financial Officer

(816) 435-8603

Media:

Matthew Sherman / Nicholas Lamplough

Joele Frank, Wilkinson Brimmer Katcher

(212) 355-4449

Investors:

Art Crozier / Jennifer Shotwell / Larry Miller

Innisfree M&A Incorporated

(212) 750-5833

A-2

  

  

  

ADDENDUM B

Arbitration Policy

 

For employment-related legal disputes not resolved through our Open Door Policy or Equal Employment Opportunity (EEO) Policy, the Company has implemented the following Arbitration Policy. We believe the Arbitration Policy provides a fair, efficient, private, and accessible process to resolve employment disputes relating to legal rights. If any employee, former employee, or applicant (all referred to herein as “Associate”) is not satisfied with the result of a complaint under the Open Door Policy and/or the Equal Employment Opportunity Policy, or if an Associate for any reason fails to pursue a complaint under those policies, any claim by the Associate related to legally-protected rights shall be subject to independent and neutral arbitration under the terms of this Arbitration Policy, unless the Associate has properly opted out of the policy by the deadline explained on page 5. This Policy also applies to claims by the Company against an Associate.

 

How Does the Arbitration Process Work?

 

The process will be administered by the American Arbitration Association (AAA) and conducted under AAA’s National Rules for the Resolution of Employment Related Legal Claims existing at the time proceedings are initiated, except as modified by this policy. The rules and information about AAA may be found at www.adr.org. AAA is a not-for-profit public service organization. Over 4,000,000 workers are covered by various types of plans administered by the AAA.

 

The Company will pay the Arbitrator fees and the costs charged by AAA, except that the Associate must pay an initial $125.00 fee to AAA if the Associate initiates a claim. (If an Associate is indigent, he/she may file the claim without a fee, pending a decision by the Arbitrator on a request for fee waiver based on the law and applicable AAA Rules.)

 

The Arbitrator shall be an independent, neutral, and licensed attorney selected from a list of all attorney members of the AAA Regional Employment Dispute Resolution Roster or any successor comparable AAA Roster who are: (1) former federal court judges and magistrates or former state court judges in appellate courts or trial courts of general jurisdiction; or (2) lawyers who have practiced law and/or served as Arbitrators in the field of employment law for at least 15 years and are rated “AV” by Martindale-Hubbell. The AV rating is for lawyers considered to have reached the height of professional excellence and recognized for the highest levels of skill and integrity. If the AAA Regional Roster for any reason does not provide the names of at least three Arbitrators who meet the qualifications of this policy, then additional qualified Arbitrators shall be added to the list from the AAA Regional Roster for the region that is closest geographically to the Associate’s place of employment or prospective employment.

 

The Company first and then the Associate shall in turn alternately strike one name from the list until there is only one name remaining, who shall be the Arbitrator. On the fourth business day after the day on which the striking is completed, the Company and the Associate shall jointly inform AAA of the Arbitrator selection; however, prior to the fourth

 

B-1

  

  

  

day and based on review of the importance and complexity of the case and/or the experience of the Arbitrator, either the Company or the Associate unilaterally may expand the number of Arbitrators from one to three by sending written notice to the other party. If either party elects to expand to three the number of Arbitrators, the additional two Arbitrators shall be the last two Arbitrators who were previously struck by the parties from the list of Arbitrators. The party electing to add two Arbitrators to the case shall be solely responsible for all fees and expenses of the two additional Arbitrators. In a case with three Arbitrators, the decision of the three Arbitrators must be unanimous. If only two of the three Arbitrators agree on a decision, they shall issue a written advisory decision which, if accepted in writing by both parties within ten calendar days, shall become a final and binding decision. If there is no unanimous decision or an advisory decision accepted in writing by both the Company and the Associate, the case shall be heard again before a new Arbitrator or Arbitrators under the terms of this policy except that if either the Associate or the Company elects to use three Arbitrators at the second hearing, two Arbitrators shall have the authority to issue a decision. In any case, the Associate and the Company also may agree on a mutually acceptable Arbitrator, and bypass the AAA arbitration selection and administration process.

 

The Arbitrator shall have the exclusive authority to resolve all disputes relating to the facts or the law, including the authority to grant summary disposition of claims and the authority to grant all relief that a court of competent jurisdiction could grant based on the claims asserted. The Arbitrator shall decide the case in the same manner as a federal district court judge hearing the case without a jury and shall apply the federal rules of evidence. The Arbitrator shall issue a signed written decision stating the findings of all material facts and conclusions of law that provide the basis for the decision. The Federal Arbitration Act governs the enforcement of this Arbitration Policy and proceedings under the policy, other than as modified by this policy. If the Arbitration Policy is found not enforceable under the Federal Arbitration Act, applicable state law shall apply. Other than as provided in this policy, the substantive law applied to claims shall be the state or federal substantive law that would be applied by a federal district court judge sitting at the place of the Associate’s employment or prospective employment.

 

The arbitration hearing shall be held in the community of the Associate’s principal place of employment or prospective employment, unless another location is agreed to by the parties. Prior to the hearing, the parties shall be entitled to reasonable discovery as determined by the Arbitrator consistent with the objective of fairness, speed and economy, including at a minimum two depositions, ten interrogatories and ten document requests by each party. Associates at their expense may be represented by an attorney. The following persons may be present at the hearing: the Arbitrator and any recorder of the hearing; the Associate and his/her spouse, attorneys, experts, and witnesses; and the Company’s attorneys, management, human resource personnel, experts, and witnesses. No one else may be present without good cause determined by the Arbitrator. The parties shall provide lists of the names and addresses of witnesses and copies of exhibits to each other at least 30 days prior to the hearing and may supplement this information up to 20 days prior to the hearing. The Arbitrator may resolve all discovery disputes, issue protective orders, and issue subpoenas pursuant to the law. Any party may arrange for a qualified court reporter to make a stenographic record of the hearing. The parties shall be entitled to file post-hearing briefs

 

B-2

  

  

  

and proposed findings of fact and conclusions of law. The Arbitrator shall set a briefing schedule under which the party with the burden of proof files first, the opposing party files next, and the burden of proof party may file a reply.

 

The Arbitration decision shall be binding on the Company and the Associate, and it may be enforced by a court of competent jurisdiction, subject to available legal grounds for vacating an arbitration award. However, any party also may: (1) within 30 days after the decision file a reconsideration motion or other motion with the Arbitrator or Arbitrators; or (2) within 60 days after the decision or 30 days after a decision on a reconsideration motion or other post-decision motion, serve written notice of an Arbitration Appeal. If a party serves notice of an Arbitration Appeal, the selection of an Arbitrator or Arbitrators to decide the appeal shall be under the procedure of this Arbitration Policy. In an Arbitration Appeal, the Arbitrator or Arbitrators shall apply the standard of review that a court of appeals would apply to the decision of a trial judge sitting without a jury. The Arbitrator or Arbitrators in an Arbitration Appeal shall issue a written decision after considering written briefs and oral argument. If three Arbitrators are selected for an Arbitration Appeal, two Arbitrators shall have the authority to issue a decision. The Arbitration Appeal decision shall be subject to review by a court of competent jurisdiction for error of law or any other available legal grounds for vacating an arbitration award. If the Arbitration Appeal or court review results in the direction of a new hearing or other further proceedings, any party shall have the right to require that a new Arbitrator or Arbitrators be selected under this Arbitration Policy to handle such new hearing or other further proceedings.

 

How to Assert a Claim

 

An Associate who wishes to assert a claim must submit a written request for arbitration by Certified Mail/Return Receipt Requested to the Vice President of Human Resources, 333 W. 11th Street, Kansas City, Missouri 64105, within 300 days, or within any longer time period established by the applicable statute of limitations under the law, from the date of the alleged act giving rise to the claim. The written request should include supporting documentation and a thorough description of the facts, the nature of the claim, and the damages and/or other remedies sought. If the Company wishes to assert a claim against an Associate, it also must submit such a written request for arbitration with supporting documentation to the Associate by Certified Mail/Return Receipt requested within 300 days, or within any longer time period established by the applicable statute of limitations under the law, from the date of the alleged act giving rise to the claim. The claim is waived if the Associate or the Company fails to submit a timely and proper written request for arbitration. After a request for arbitration, the parties shall cooperate on a joint submission of the claim to AAA, with the Company paying all fees above $125.00 and, if the Associate asserts indigent status, the Company advancing the initial $125.00 fee on behalf of the Associate. The Associate does not need to pay the $125.00 fee if only the Company asserts a claim.

 

All claims must be asserted, heard, and resolved on a single Associate basis, unless otherwise agreed to by all parties. All related claims by a party must be asserted in the same arbitration or the unasserted claims are waived. The Company may not assert claims against multiple Associates in the same arbitration. Claims by multiple Associates may not be joined together in the same arbitration. An Associate may not assert claims on behalf of

 

B-3

  

  

  

multiple Associates or as a class action or collective action either in court or under this Arbitration Policy, and an Associate may not have a claim asserted on his or her behalf by another person as a class representative or otherwise. However, if a final court decision holds this prohibition on class action, collective action, and multiple Associate claims is invalid, the Arbitration Policy is modified as follows for the subsequent resolution of a class or collective action claim or a multiple Associate claim. If any Associate wishes to attempt to assert such a claim after a final court decision holding the prohibition invalid, the claim must first be filed in a court of competent jurisdiction. Under all applicable laws, rules, and procedures, the court shall determine the question of whether the claim should be certified to proceed as a class or collective action or otherwise proceed on behalf of multiple Associates. After a final judicial decision on certification or on multiple Associate status, including all appeals of a trial court ruling, the court then shall refer the claim to arbitration under this policy for a decision on the merits of the claim.

 

Coverage of Arbitration Policy

 

This Arbitration Policy covers all legal claims arising out of or relating to employment, application for employment, or termination of employment, except for claims specifically excluded under the terms of the policy. The claims covered by the policy include, but are not limited to, the following types of claims: wrongful discharge under statutory law or common law; employment discrimination, retaliation and sexual or other harassment based on federal, state or local statute, ordinance or governmental regulations; retaliatory discharge or other unlawful retaliatory action; overtime or other compensation disputes; leave of absence disputes; tortuous conduct; defamation; violation of public policy; breach of contract; and other statutory or common law claims. It includes claims by an Associate against the Company and claims by an Associate against any fellow employee, supervisor, or manager based on alleged conduct within the scope of employment by the fellow employee, supervisor, or manager. It also includes claims based on events that occurred prior to the effective date of this policy or based on events that occur following the termination of employment. This Arbitration Policy also applies to any claims by the Company against an Associate.

 

The only claims excluded from this Arbitration Policy are claims by an Associate for workers’ compensation benefits, unemployment compensation benefits, Employee Retirement Income Security Act (ERISA) -related benefits provided under a Company sponsored benefit plan, or claims filed with the National Labor Relations Board. Additionally, either the Associate or the Company may file a court action seeking provisional equitable remedies available under the law, including but not limited to temporary or preliminary injunctive relief, either before the commencement of or during the arbitration process, to preserve the status quo or otherwise prevent damage or loss pending final resolution of the dispute pursuant to the terms of this Arbitration Policy. Also, this Arbitration Policy does not prevent or discourage an Associate from filing and pursuing an administrative proceeding before the Equal Employment Opportunity Commission or a state or local administrative agency; however, if an Associate chooses to pursue a legal claim in addition to and/or following completion of such administrative proceedings, or if there is some other legal proceeding related to the claim following completion of the administrative proceedings, the claim then shall be subject to the terms of this Arbitration Policy.

 

B-4

  

  

  

Agreeing to the Arbitration Policy

 

Effective March 12, 2007, the Company and each Associate who continues or starts employment after March 12, 2007 agree as a term and condition of employment, and as a binding contract, to resolve employment-related legal claims through this Arbitration Policy and not through a lawsuit with a judge or jury trial, unless the Associate timely exercises his or her right to voluntarily opt out of this Arbitration Policy by sending a letter by Certified Mail/Return Receipt Requested to the Vice President of Human Resources, DST Systems, Inc., 333 W. 11th Street, Kansas City, Missouri 64105, stating the desire to opt out of the policy. The letter may simply state the following: “I wish to opt out of the Company Arbitration Policy.” For any Associate employed as of March 12, 2007, the opt out letter must be received by the Vice President of Human Resources on or before April 11, 2007. For any Associate who starts employment after March 12, 2007 or who is on leave of absence on March 12, 2007, the opt out letter must be received by the Vice President of Human Resources on or before the date 30 days after the Associate’s first day of employment or 30 days after the Associate’s first day back to work following the leave of absence. There will be no retaliation against any Associate for opting out of the Policy. Associates may contact the Director of Employee Relations or the Vice President of Human Resources at (816) 435-8695 to ask any questions or seek further information regarding this Arbitration Policy. We also encourage Associates, if they desire, to secure advice from an attorney regarding the voluntary opt out option and the Arbitration Policy. Any Associate who does not provide a timely opt out letter by Certified Mail/Return Receipt Requested by the deadline established under this policy is automatically covered by this Arbitration Policy and is required to arbitrate employment-related legal claims under the terms of the Policy.

 

This Arbitration Policy creates a contract that binds the Company and each Associate to arbitrate employment-related legal claims, unless an Associate properly and timely opts out of the Policy . The Arbitration Policy does not in any way modify the employment-at-will status of any.

 

The provisions of this Arbitration Policy are severable. That means that if any provision is found invalid or unenforceable by a court, it shall not affect the application and enforcement of the rest of this Arbitration Policy. Also, whenever possible and consistent with the objective of this Arbitration Policy to arbitrate all covered claims, any otherwise invalid term should be reformed and enforced by a court.

 

 

B-5ptx_ex101.htm

Exhibit 10.1

 

FIRST AMENDMENT TO LOAN AGREEMENT

THIS FIRST AMENDMENT TO LOAN AGREEMENT (the “Amendment”) is dated September 8, 2012, to be effective as of September 8, 2012, by and among PERNIX THERAPEUTICS HOLDINGS, INC., a Maryland limited liability company, and PERNIX THERAPEUTICS, LLC, a Louisiana limited liability company (jointly and severally, the “Borrowers”), and REGIONS BANK, an Alabama banking corporation (together with its successors and assigns, the “Lender”) (Borrowers and Lender, collectively, the “Parties”).

R E C I T A L S

 

A.           Lender currently has a revolving line of credit loan in the original principal amount of up to $5,000,000 and a guidance line of credit loan in the original principal amount of up to $5,000,000 (together, the “Loans”) in place with Borrowers as evidenced by that certain Loan Agreement dated effective September 8, 2010 by and between the Parties (the “Loan Agreement”).

 

B.           The Loans mature on September 8, 2012.

 

C.           Borrowers have requested that Lender extend the maturity date of the Loans to December 31, 2012 on the terms and conditions contained in the Loan Agreement as amended by this Amendment.

 

D.           The Parties are entering into this Amendment to modify the terms and conditions of the Loan Agreement for the purposes described above.

 

NOW, THEREFORE, for and in consideration of the premises and the mutual terms and conditions contained herein, and for other good and valuable consideration, the receipt, adequacy and sufficiency of which are hereby acknowledged by the Parties hereto, the Parties agree as follows:

 

	
1.

	
Definitions.  All capitalized terms used in this Amendment shall have the same meaning as used in the Loan Agreement, unless expressly modified, replaced or amended herein.  From and after the effective date of this Amendment, all references to “Loan Agreement” or “Agreement” contained in the Loan Agreement shall mean the Loan Agreement, as modified and amended by this Amendment.

 

	
2.

	
Amendments to Loan Agreement:  The Parties hereby agree that, effective as of the effective date of this Amendment, the Loan Agreement shall be amended as follows:

 

	
  

	
(a)

	
Section 1.21, “Guidance LOC Maturity Date” or “Maturity Date”, is amended to change the date stated therein from September 8, 2012, to December 31, 2012.

 

	
  

	
(b)

	
Section 1.39, “RLOC Maturity Date” or “Maturity Date”, is amended to change the date stated therein from September 8, 2012, to December 31, 2012.

 

	
3.

	
Conditions Precedent.  As conditions precedent to the effectiveness of this Amendment, Borrowers shall furnish to Lender (i) duly authorized resolutions of its board of directors or managers and members, as appropriate, evidencing their authority to enter into this Amendment and transactions described herein, (ii) an executed officer or member/manager certificate certifying as to the good standing of such company in its state of organization or incorporation, as appropriate, and certifying that no change has been made to its articles of incorporation, articles of organization, bylaws or operating agreement that has not been previously provided to Lender and (iii) such other documentation as Lender shall request in connection with the execution of this Amendment.

 

	
4.

	
Indemnification.  Borrowers agree to release, indemnify, and hold harmless the Lender from any claims or causes of actions that may arise in connection with the execution and consummation of this Amendment and transaction contemplated hereby, except to the extent such claims or causes of action arise from or directly result from the gross negligence or willful misconduct of Lender, its agents or representatives.

 

  

  

  

 

	
5.

	
Representations and Warranties.  In order to induce Lender to enter into this Amendment, Borrowers represent and warrant to Lender as follows:

 

	
  

	
(a)

	
The representations and warranties made by Borrowers in Section 3 of the Loan Agreement are true and correct on and as of the date hereof and Borrowers are in compliance with all covenants contained in the Loan Agreement on and as of the date hereof;

 

	
  

	
(b)

	
There has been no material adverse change in the condition, financial or otherwise, of Borrowers since the most recent financial statements of Borrowers received by Lender under Section 4.1(b) of the Loan Agreement;

 

	
  

	
(c)

	
The business and properties of Borrowers are not, and since the most recent financial statement of Borrowers received by Lender under Section 4.1(b) of the Loan Agreement, have not been, materially adversely affected in any substantial way as the result of any fire, explosion, earthquake, accident, strike, lockout, combination of workers, flood, embargo, riot, activities of armed forces, war or acts of God or the public enemy, or cancellation or loss of any major contracts;

 

	
  

	
(d)

	
Borrowers have paid all taxes due and owing and no dispute with any tax or revenue authority, whether the State of South Carolina, the State of Maryland, the State of Louisiana, the Internal Revenue Service, or otherwise, exists as of the date of this Amendment; and

 

	
  

	
(e)

	
No event has occurred and is continuing which constitutes, and no condition exists which upon the consummation of the transaction contemplated hereby would constitute, a default or Event of Default on the part of Borrowers under the Loan Agreement, as amended hereby.

 

	
6.

	
Ratification.  Borrowers hereby ratify and affirm the Loan Documents, as modified and amended by this Amendment, and agree that they are and shall continue to be fully bound and obligated by the terms thereof.

 

	
7.

	
Entire Agreement.  This Amendment sets forth the entire understanding and agreement of the Parties hereto in relation to the subject matter hereof and supersedes any prior negotiations and agreements among the Parties relative to such subject matter.  No promise, condition, representation or warranty, express or implied, not herein set forth shall bind any party hereto, and not one of them has relied on any such promise, condition, representation or warranty. Each of the Parties hereto acknowledges that, except as in this Amendment otherwise expressly stated, no representations, warranties or commitments, express or implied, have been made by any party to the other.  None of the terms or conditions of this Amendment may be changed, modified, waived or cancelled orally or otherwise, except by writing, signed by all of the Parties hereto, specifying such change, modification, waiver or cancellation of such terms or conditions, or of any other proceeding or succeeding breach thereof.

 

	
8.

	
Successors and Assigns.  This Amendment shall be binding upon and inure to the benefit of Borrowers and Lender and their respective successors and assigns and legal representatives, heirs and devisees, as applicable, provided however, that Borrowers, without the prior written consent of Lender, may not assign any rights, powers, duties or obligations hereunder.

 

	
9.

	
Full Force and Effect of Loan Documents.  Except as hereby specifically amended, waived or supplemented, the Loan Agreement and other Loan Documents are hereby confirmed and ratified in all respects and shall remain in full force and effect according to their respective terms.

 

  

2

  

 

	
10.

	
Counterparts.  This Amendment may be executed in any number of counterparts, each of which shall be deemed an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument.

 

	
11.

	
Enforceability.  Should any one or more of the provisions of this Amendment be determined to be illegal or unenforceable as to one or more of the parties hereto, all other provisions shall nevertheless remain effective and binding upon the parties hereto.

 

	
12.

	
Governing Law.  The laws and judicial decisions of the State of South Carolina shall in all respects govern this Amendment.  PROVIDED HOWEVER, to the extent that the creation, validity, perfection, enforceability or priority of any lien or security interest, or the rights and remedies with respect to any lien or security interest, in the Collateral (as defined in the Loan Agreement) are governed by the laws of a jurisdiction other than the State of South Carolina, then the laws of such jurisdiction shall govern, except as superseded by applicable United States Federal Law.

 

	
13.

	
Fees.  Borrowers agree to pay at the execution of this Amendment, all costs and expenses arising from this Amendment, including, without limitation, all Lender fees and expenses, including, but not limited to, all reasonable fees and expenses of Lender’s legal counsel.

 

IN WITNESS WHEREOF, the Parties have caused this Amendment to be duly executed to be effective as of the date first above written.

 

	 	BORROWERS:	 
	 	 	 
	 	PERNIX THERAPEUTICS HOLDINGS, INC. (Seal)	 
	 	 	 	 
	
 

	
By: 

	/s/ Tracy Clifford	 
	 	Print Name: 	Tracy Clifford	 
	 	Title:	Corporate Secretary	 
	 	 	 	 
	 	 	 	 

	 	PERNIX THERAPEUTICS, LLC (Seal)	 
	 	 	 
	 	By: 	PERNIX THERAPEUTICS HOLDINGS, INC.,	 
	 	Its:	Manager	 
	 	 	 	 
	
 

	
By: 

	/s/ Tracy Clifford	 
	 	Print Name: 	Tracy Clifford	 
	 	Title:	Corporate Secretary	 
	 	 	 	 
	 	 	 	 

	 	LENDER:	 
	 	 	 
	 	REGIONS BANK  (Seal)	 
	 	 	 	 
	
 

	
By: 

	/s/ Alicia McCory	 
	 	Print Name: 	Alicia NcCory	 
	 	Title:	Vice President	 
	 	 	 	 

 

3

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