EMPLOYMENT AGREEMENT
Exhibit 10.14
This employment agreement is made and entered into as of this 10th day of November, 2009, by and
between Unilife Medical Solutions, Inc. (“Unilife”) and Xxxxxx Xxxxxxxx (“Xxxxxxxx”) The term
“Unilife” shall include its subsidiaries, affiliates, assigns and successors in interest under
Sections 7, 8, and 14.
WHEREAS, Unilife wishes to continue to employ Xxxxxxxx as Senior Vice President, RTFS, and Xxxxxxxx
wishes to enter into this agreement to formalize his previous employment arrangements; and
WHEREAS, Unilife is engaged in the business of designing, developing, manufacturing and supplying
innovative healthcare safety products for medical device and pharmaceutical industries; and
WHEREAS, Xxxxxxxx will develop valuable relationships by virtue of his employment with Unilife, and
Xxxxxxxx will have access to valuable confidential and proprietary information and trade secrets
belonging to Unilife; and
WHEREAS, Unilife and Xxxxxxxx desire to set forth the terms of their employment relationship in
this agreement.
NOW, THEREFORE, in consideration of the promises and covenants set forth herein, and intending to
be legally bound hereby, the parties agree as follows:
1. Term. This agreement shall be effective upon the mutual execution of this agreement
and is for an initial multi-year term commencing on the effective date and expiring on December 31,
2012. This agreement will automatically renew for one-year periods annually thereafter, unless
either party gives the other party thirty (30) days written notice in advance of the relevant
expiration date of its intention not to renew the agreement. Upon expiration or earlier
termination of this employment relationship, the parties will be relieved of their duties and
obligations under this agreement, except that the rights and obligations set forth in Sections 7
and 8 below shall remain in full force and effect and shall survive the expiration or termination
of this agreement, regardless of the reason(s) for termination.
2. Position and Duties. Unilife has employed Xxxxxxxx as Senior Vice President, RTFS, and
Xxxxxxxx agrees to serve in such capacity for Unilife on the terms and conditions hereafter set
forth, until such time as Unilife may change Xxxxxxxx’x responsibilities, as the needs of the
organization change from time to time. Xxxxxxxx shall report to the Chief Executive Officer, with
respect to the performance of these duties. In the performance of these duties, Xxxxxxxx shall
devote his knowledge, skill, attention, energies and all of his business time, and shall comply
with all of Unilife’s policies, rules, and procedures, as they may be amended from time to time.
Xxxxxxxx shall not engage in any endeavor that would conflict with the rendition of his services to
Unilife, either directly or indirectly, without the prior written consent of Unilife.
3. Compensation. Xxxxxxxx shall be paid an annual base salary of Two Hundred Forty
Thousand Dollars ($240,000), subject to the customary payroll deductions and withholdings, and
payable in accordance with Unilife’s standard payroll practices. In addition, Xxxxxxxx shall be
eligible to participate in Unilife’s Incentive Bonus Plan in amounts and percentages as determined
by Unilife’s Board of Directors. For the calendar year ending December 31, 2009, the potential
cash bonus amount will be fifty percent (50%) of base salary. This bonus is discretionary and
subject to achievement of such goals and objectives as the Chief Executive Officer, in his sole
discretion, determines in a set of Key Performance Indicators. Any bonus payable for all or part
of a calendar year shall be paid in a lump-sum payment for each relevant performance period but in
all events by no later than March 15 of the following calendar year. This bonus will be paid
quarterly based on the accomplishment of key milestones for the RTFS project. Xxxxxxxx’x salary
and any bonuses will be subject to the customary withholding and employment taxes as required by
law with respect to compensation paid by an employer to an employee. Salary increases and annual
bonus levels will be determined by the Chief Executive Officer and Unilife’s Board of Directors
based upon Xxxxxxxx’x and Unilife’s performance.
4. Benefits. Xxxxxxxx shall be eligible to participate in Unilife’s benefits programs
(including any equity incentive plan of Unilife or its affiliates), as they may change from time to
time. The benefits provided to Xxxxxxxx will be the same as the benefits provided to other
similarly situated Unilife employees, and may be changed upon expiration or other termination of
the current benefits contracts. For further information, Xxxxxxxx should review any applicable
benefit plan documents, which will govern the terms of the benefits. Xxxxxxxx shall also receive
four (4) weeks of paid vacation per year with no carry-over for unused vacation days or payment in
lieu thereof, except as allowed by Unilife standard employment policies.
5. Indemnification. Unilife agrees to provide Xxxxxxxx with indemnification equivalent to
that provided to other senior management and pursuant to Unilife’s Directors and Officers insurance
policies, as amended from time to time.
6. Termination. In the event that Unilife terminates this agreement and Xxxxxxxx’x
employment without Cause as defined herein, including employment termination due to Unilife’s
election not to renew this agreement where Xxxxxxxx was willing and able to continue performing
services under the terms of this agreement, Unilife will pay Xxxxxxxx his base salary, at the rate
in effect immediately before the date that Xxxxxxxx’x employment terminates, for six (6) months,
commencing within 45 days after the date that Xxxxxxxx’x employment terminates, in accordance with
Unilife’s standard payroll practices then in effect and will pay the cost of Xxxxxxxx’x COBRA
health care continuation coverage for six (6) months. In the event that Xxxxxxxx terminates this
agreement for any reason, including Xxxxxxxx’x election not to renew the agreement, Xxxxxxxx shall
not receive any compensation or benefits from the time that he ceases to devote full time and
attention to Unilife’s business, and, if Xxxxxxxx terminates this agreement prior to the expiration
of the initial term Xxxxxxxx shall repay Unilife an amount
equal to the cost of relocation to Pennsylvania. This provision may be waived by the Chief
Executive Officer in his sole discretion. Nevertheless, Unilife shall pay the cost of returning
Xxxxxxxx and his family to Kuwait as provided below. In addition, Xxxxxxxx agrees to provide
Unilife with thirty (30) days advance written notice of his intent to terminate his employment,
whether during the initial term or any renewal thereof. Upon termination of this agreement, the
parties will be relieved of their duties and obligations, except that the rights and obligations
set forth in Sections 7 and 8 shall remain in full force and effect and shall survive the
expiration and termination of this agreement, regardless of the reasons for termination or
expiration. Upon termination of this agreement, Xxxxxxxx shall not have any further contact with
any customers of Unilife.
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7. Confidential Information.
(a) Xxxxxxxx acknowledges that Unilife has a valuable property interest in all aspects of its
business relationships with its customers, clients, vendors and suppliers. In the course of
Xxxxxxxx’x work with Unilife, Xxxxxxxx has become aware of and familiar with secret and
confidential information of Unilife relating to its customers, clients, vendors and suppliers, and
its internal business operations. Secret and confidential information includes, but is not limited
to, Unilife’s business plans, customer lists, customer data, marketing plans, supplier and vendor
lists and cost information, software and computer programs, data processing systems and information
contained therein, financial statements, financial data, acquisition and divestiture plans, and any
other trade secrets or confidential or proprietary information, documents, reports, plans, or data,
of or about Unilife that is not already available to the public.
(b) Xxxxxxxx agrees that he will not, without the written consent of Unilife, during the term
of this agreement or thereafter, disclose or make any use of secret and confidential information,
except as may be required in the performance of his duties under Section 2 of this agreement.
Xxxxxxxx agrees that, following the termination of his employment with Unilife for any reason, he
will not ever disclose any secret and confidential information to any other business or individual,
and he will never use secret and confidential information to compete with Unilife in any manner.
(c) Upon termination of this agreement, Xxxxxxxx shall surrender to Unilife all records and
all paper and/or electronic copies made of those records that pertain to any aspect of the business
of Unilife, including all secret and confidential information.
8. Agreement Not To Compete.
(a) In consideration for continued employment by Unilife and the benefits of this agreement,
Xxxxxxxx agrees to be bound by the covenant not to compete as set forth in Section 8 of this
agreement below.
(b) Xxxxxxxx agrees that during the term of this agreement and for a period of two (2) years
following the termination of this agreement for any reason, he will not, directly or indirectly:
(i) render services to, become employed by, be engaged as a consultant by, own, or
have a financial or other interest in (either as an individual, partner, joint venture,
owner, manager, employee, partner, officer, director, independent contractor, or other
similar role) any business that is engaged in any business activity that is in competition
with the activities of Unilife.
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(ii) induce, offer, assist, encourage, or suggest that another business or enterprise
offer employment to or enter into a consulting arrangement with any individual who is
employed by Unilife, or induce, offer, assist, encourage, or suggest that any Unilife
employee terminate her or her employment with Unilife, or accept employment with any other
business or enterprise.
(c) In the event that Xxxxxxxx commits any breach of Section 8(b) above, Xxxxxxxx acknowledges
that Unilife would suffer substantial and irreparable harm and damages. Accordingly, Xxxxxxxx
hereby agrees that in such event, Unilife shall be entitled to temporary and/or permanent
injunctive relief, without the necessity of proving damage, to enforce the provisions of this
Section, all without prejudice to any and all other remedies that Unilife may have at law or in
equity and that Unilife may elect or invoke. Xxxxxxxx agrees that if any of the provisions of this
Section are or become unenforceable, the remainder hereof shall nevertheless remain binding upon
him to the fullest extent possible, taking into consideration the purposes and spirit of this
agreement. Any invalid or unenforceable provision is to be reformed to the maximum time,
geographic and/or business limitations permitted by applicable laws, so as to be valid and
enforceable.
(d) Xxxxxxxx expressly acknowledges and agrees that the restrictive covenants set forth in
Sections 7 and 8 above are absolutely necessary to protect the legitimate business interests of
Unilife, because he is employed in a position of trust and confidence and is provided with
extensive access to Unilife’s most confidential and proprietary trade secrets, and has significant
involvement in important business relationships, which constitute the goodwill of Unilife.
Xxxxxxxx further agrees and acknowledges that these restrictive covenants are reasonable, will not
restrict him from earning a livelihood following the termination of employment, and are intended by
the parties to be enforceable following termination of employment for any reason.
(e) In the event that Unilife must bring legal action to enforce or seek a remedy for any
breach of the provisions of Sections 7 or 8 of this agreement and Xxxxxxxx is found by a court to
have breached any of these provisions, Xxxxxxxx agrees to reimburse Unilife for any and all
expenses, including attorneys’ fees and court costs, incurred by it in enforcing the terms of these
Sections of the agreement.
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9. Relocation Benefits. In recognition that Xxxxxxxx will relocate himself and his
dependents to Pennsylvania from France and Kuwait, Unilife shall reimburse Xxxxxxxx for:
(a) all reasonable relocation expenses incurred by Xxxxxxxx and his dependents, including
moving expenses (other than home decorating expenses, differences in mortgage rates, differences in
costs of comparable housing, etc.), and closing costs and fees, including up to 1.5 mortgage
points;
(b) all costs associated with obtaining travel to Pennsylvania and employment visas for
Xxxxxxxx and his dependents; and
(c) the purchase of airline tickets for Xxxxxxxx and his dependents to return to Kuwait at the
termination of employment, as well as reasonable relocation expenses, as determined in accordance
with Unilife’s standard relocation policy then in effect, incurred to relocate Xxxxxxxx back to
Kuwait at the termination of his employment in the United States with Unilife, provided that such
return trip and relocation occurs within 12 months after Xxxxxxxx’x termination of employment.
10. Extraordinary Terminations.
(a) In the event Unilife terminates this agreement and Xxxxxxxx’x employment prior to the
expiration of the initial term or any written extension thereof, other than for Cause as defined
herein, Xxxxxxxx will receive severance compensation as provided in Section 6 above. In the event
that Xxxxxxxx’x employment is terminated by Unilife and, as applicable, its successor coincident
with or following a Change in Control as defined herein of Unilife, then, in lieu of and not in
duplication of the severance compensation provided for in Section 6 above, Xxxxxxxx shall receive
(a) severance in the form of continued payment of his base salary, at the rate in effect
immediately before the date that Xxxxxxxx’x employment terminates, for eighteen (18) months,
commencing within 45 days after the date that Xxxxxxxx’x employment terminates, in accordance with
Unilife’s or its successor’s standard payroll practices then in effect, (b) payment of the cost of
Xxxxxxxx’x COBRA health care continuation coverage for eighteen (18) months, (c) payment of an
amount equal to the amount of the bonus, if any, earned by and paid to Xxxxxxxx for the last
completed fiscal year prior to the year in which his employment terminates, and (d) all of his
outstanding options and other stock-based awards shall vest immediately upon such termination of
employment. Except for severance paid pursuant to a Change in Control, if Xxxxxxxx is re-employed
by another employer at any time during the severance period, all further severance payments shall
immediately cease.
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(b) “Cause” will mean any one or more of the following: (i) neglect of assigned duties,
willful misconduct in connection with the performance of duties, or refusal to perform assigned
duties (other than by reason of disability) which continues uncured for thirty (30) days following
receipt of written notice of such deficiency from the Chief Executive Officer, specifying the scope
and nature of the deficiency; (ii) an act of
dishonesty; (iii) engaging in illegal conduct; (iv) committing a crime relating to an act of
dishonesty or fraud; (v) engaging in any act of moral turpitude that causes material harm to
Unilife or its reputation; (vi) breaching, in any material respect, the terms of any agreement with
Unilife; or (vii) commencement of employment with any other employer while an employee of Unilife
without the prior written consent of the Chief Executive Officer. Any determination of “Cause” as
used herein will be made in good faith by the Chief Executive Officer.
(c) “Change in Control” means: a (i) Change in Ownership of Unilife Corporation, the ultimate
parent company of Unilife, (ii) Change in Effective Control of Unilife Corporation, or (iii) Change
in the Ownership of Assets of Unilife Corporation, all as described herein and construed in
accordance with section 409A of the Internal Revenue Code of 1986, as amended (the “Code”);
provided, however, that a Change in Control shall not include the re-domiciliation of Unilife
Medical Solutions Limited and its subsidiaries into the United States pursuant to certain schemes
of arrangement as set forth in the Merger Implementation Agreement dated as of September 1, 2009
between Unilife Medical Solutions Limited and Unilife Corporation (the “Redomiciliation”).
(i) A Change in Ownership of Unilife Corporation shall occur on the date that
any one Person acquires, or Persons Acting as a Group (or Group) acquire, ownership
of the capital stock of Unilife Corporation that, together with the stock held by
such Person or Group, constitutes more than 50% of the total fair market value or
total voting power of the capital stock of Unilife Corporation. However, if any one
Person is, or Persons Acting as a Group are, considered to own more than 50% of the
total fair market value or total voting power of the capital stock of Unilife
Corporation, the acquisition of additional stock by the same Person or Persons
Acting as a Group is not considered to cause a Change in Ownership of Unilife
Corporation or to cause a Change in Effective Control of Unilife Corporation. An
increase in the percentage of capital stock owned by any one Person, or Persons
Acting as a Group, as a result of a transaction in which Unilife Corporation
acquires its stock in exchange for property will be treated as an acquisition of
stock.
(ii) A Change in Effective Control of Unilife Corporation shall occur on the
date a majority of members of the Board of Directors of Unilife Corporation is
replaced during any 12-month period by directors whose appointment or election is
not endorsed by a majority of the members of the Board of Directors of Unilife
Corporation before the date of the appointment or election.
(iii) A Change in the Ownership of Assets of Unilife Corporation shall occur on
the date that any one Person acquires, or Persons Acting as a Group acquire (or has
or have acquired during the 12-month period ending on the date of the most recent
acquisition by such Person or Persons), assets from Unilife Corporation the total
gross fair market value
of which is more than 50% of the total gross fair market value of all of the
assets of Unilife Corporation immediately before such acquisition or acquisitions.
For this purpose, gross fair market value means the value of the assets of Unilife
Corporation, or the value of the assets being disposed of, determined without regard
to any liabilities associated with such assets.
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The following rules of construction apply in interpreting the definition of Change
in Control:
(A) A Person means any individual, entity or group within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended,
other than employee benefit plans sponsored or maintained by Unilife Corporation and
by entities controlled by Unilife Corporation or an underwriter of the capital stock
of Unilife Corporation in a registered public offering.
(B) Persons will be considered to be Persons Acting as a Group if they are
owners of a corporation that enters into a merger, consolidation, purchase or
acquisition of stock, or similar business transaction with the corporation. If a
Person owns stock in both corporations that enter into a merger, consolidation,
purchase or acquisition of stock, or similar transaction, such shareholder is
considered to be acting as a Group with other shareholders only with respect to the
ownership in that corporation before the transaction giving rise to the change and
not with respect to the ownership interest in the other corporation. Persons will
not be considered to be acting as a Group solely because they purchase assets of the
same corporation at the same time or purchase or own stock of the same corporation
at the same time, or as a result of the same public offering.
(C) For purposes of this Section 10, fair market value shall be determined by
the Board of Directors.
(D) A Change in Control shall not include a transfer to a related person as
described in Code section 409A or a public offering of capital stock of Unilife
Corporation.
(E) For purposes of this Section 10, Code section 318(a) applies to determine
stock ownership. Stock underlying a vested option is considered owned by the
individual who holds the vested option (and the stock underlying an unvested option
is not considered owned by the individual who holds the unvested option). For
purposes of the preceding sentence, however, if a vested option is exercisable for
stock that is not substantially vested (as defined by Treasury Regulation §1.83-3(b)
and (j)), the stock underlying the option is not treated as owned by the individual
who holds the option.
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11. General Release. As a condition of receiving the severance compensation and benefits
described in Section 6 or Section 10, Xxxxxxxx will be required to execute a general release of
claims against Unilife and its officers, directors, agents and shareholders. Such general release
would not include rights to previously vested options or claims for any compensation earned
(including, without limitation, accrued vacation), or reimbursement of expenses incurred, through
the date of termination. Severance compensation will be paid in accordance with normal payroll
procedures, so long as the general release becomes irrevocable before the payments are due or
scheduled to begin.
12. Dispute Resolution. Any controversy, claim or dispute involving the parties (or their
affiliated persons) directly or indirectly concerning this agreement shall be finally settled by
binding arbitration held in Harrisburg, Pennsylvania by one arbitrator in accordance with the rules
of employment arbitration then followed by the American Arbitration Association or any successor to
the functions thereof. The arbitrator shall apply Pennsylvania law in the resolution of all
controversies, claims and disputes and shall have the right and authority to determine how his or
her decision or determination as to each issue or matter in dispute may be implemented or enforced.
Any decision or award of the arbitrator shall be final and conclusive for both Xxxxxxxx and Unilife
(and its affiliates), and there shall be no appeal there from other than causes of appeal allowed
by the Federal Arbitration Act. Unilife shall bear all costs of the arbitrator in any action
brought under this agreement. The arbitrator shall have the power to award attorney’s fees and
arbitration costs to the prevailing party, if the award of attorney’s fees and litigation costs
would be permitted by a court. The parties hereto agree that any action to compel arbitration may
be brought in the appropriate Pennsylvania state or federal court, and in connection with such
action to compel, the laws of the Commonwealth of Pennsylvania and the Federal Arbitration Act
shall control. Application may also be made to such court for confirmation of any decision or
award of the arbitrator, for an order of the enforcement and for any other remedies, which may be
necessary to effectuate such decision or award. The parties hereto hereby consent to the
jurisdiction of the arbitrator and of such court and waive any objection to the jurisdiction of
such arbitrator and court.
13. Non-waiver. A waiver of any provision of this agreement by either party shall not
prevent either party from enforcing that provision or any other provision hereof.
14. Assignment. This agreement is personal and may not be assigned by Xxxxxxxx. Any
assignment of this agreement between Unilife (or its successor) and its affiliates (and their
successors) shall not constitute a termination of Xxxxxxxx’x employment hereunder. This agreement
(including the Restrictive Covenants set forth in Sections 7 and 8) shall inure to the benefit of
and be binding upon any successor to Unilife. The parties specifically understand and agree that
the non-compete provisions of Section 8 will inure to the benefit of a successor and that Xxxxxxxx
will remain bound by these provisions in the event of a sale or corporate reorganization of
Unilife.
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15. Severability. Each provision of this agreement is severable and distinct from, and
independent of, every other provision hereof. If one provision hereof is declared void, the
remaining provisions shall remain in effect. Any provision of this agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective only to the
extent of such prohibition or unenforceability without invalidating or affecting the remaining
provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
16. Entire Agreement. This agreement contains the entire agreement of the parties
concerning the employment relationship and supersedes any prior agreements or understandings
between the parties concerning the terms and conditions of Xxxxxxxx’x employment, whether oral or
written; provided however, that any stock options or other stock-based awards provided to Xxxxxxxx
shall be governed by Unilife’s stock incentive plans as they are amended from time to time, except
as provided herein. The parties acknowledge, in entering into this agreement that they have not
relied upon any promise or inducement not specifically set forth herein. Any changes to this
agreement must be in writing and signed by both parties.
17. Tax Advice. Unilife agrees to provide Xxxxxxxx with international tax advice and
assistance in completing Kuwaiti, French and USA tax returns.
18. Immigration. In order to comply with the Immigration Reform and Control Act of 1986,
it will be necessary for Xxxxxxxx to provide documentation verifying his identity and employment
eligibility. Should Xxxxxxxx require Unilife’s sponsorship for an employment-based visa,
Xxxxxxxx’x employment and start date with Unilife in the U.S. are contingent upon Xxxxxxxx
obtaining the requisite permission to work in the U.S. and Xxxxxxxx’x availability to work in the
U.S. consistent with Unilife’s business needs. Unilife will bear the cost of obtaining these work
authorizations as provided above. Until such time as these U.S. work authorizations are obtained,
Xxxxxxxx will be employed by Unilife in France.
19. Section 409A.
(a) This agreement is intended to comply with, or otherwise be exempt from, Code section 409A
and any regulations and Treasury guidance promulgated thereunder.
(b) Unilife shall undertake to administer, interpret, and construe this agreement in a manner
that does not result in the imposition on Xxxxxxxx of any additional tax, penalty, or interest
under Code section 409A.
(c) Unilife and Xxxxxxxx agree that they will execute any and all amendments to this agreement
permitted under applicable law as they mutually agree in good faith may be necessary to ensure
compliance with the distribution provisions of Code
section 409A or as otherwise needed to ensure that this agreement complies with that section.
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(d) The preceding provisions, however, shall not be construed as a guarantee by Unilife of any
particular tax effect to Xxxxxxxx under this agreement. Unilife shall not be liable to Xxxxxxxx
for any payment made under this agreement that is determined to result in an additional tax,
penalty, or interest under Code section 409A, nor for reporting in good faith any payment made
under this agreement as an amount includible in gross income under that section.
(e) For purposes of Code section 409A, the right to a series of installment payments under
this agreement shall be treated as a right to a series of separate payments.
(f) With respect to any reimbursement of expenses of, or any provision of in-kind benefits to,
Xxxxxxxx, as specified under this agreement, such reimbursement of expenses or provision of in-kind
benefits shall be subject to the following conditions: (i) the expenses eligible for reimbursement
or the amount of in-kind benefits provided in one taxable year shall not affect the expenses
eligible for reimbursement or the amount of in-kind benefits provided in any other taxable year,
except for any medical reimbursement arrangement providing for the reimbursement of expenses
referred to in Code section 105(b); (ii) the reimbursement of an eligible expense shall be made no
later than the end of the year after the year in which such expense was incurred; and (iii) the
right to reimbursement or in-kind benefits shall not be subject to liquidation or exchange for
another benefit. Any tax gross-up payment shall be made by no later than the end of the calendar
year following the year in which Xxxxxxxx remits the taxes.
(g) “Termination of employment,” “resignation,” or words of similar import, as used in this
agreement means, for purposes of any payments under this agreement that are payments of deferred
compensation subject to Code section 409A, Xxxxxxxx’x “separation from service” as defined in that
section.
(h) If a payment obligation under this agreement arises on account of Xxxxxxxx’x separation
from service while Xxxxxxxx is a “specified employee” (as defined under Code section 409A and
determined in good faith by the Unilife), any payment of “deferred compensation” (as defined under
Treasury regulation section 1.409A-1(b)(1), after giving effect to the exemptions in Treasury
regulation sections 1.409A-1(b)(3) through (b)(12)) that is scheduled to be paid within six (6)
months after such separation from service shall accrue without interest and shall be paid within 15
days after the end of the six-month period beginning on the date of such separation from service
or, if earlier, within 15 days after the appointment of the personal representative or executor of
Xxxxxxxx’x estate following his death.
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20. Excise Tax on Parachute Payments. Xxxxxxxx shall bear all expense of, and be solely
responsible for, all federal, state, local or foreign taxes due with respect to any payment
received hereunder, including, without limitation, any excise tax imposed by
Code section 4999; provided, however, that any payment or benefit received or to be received by
Xxxxxxxx in connection with a Change in Control or the termination of Xxxxxxxx’x employment
(whether payable pursuant to the terms of this Agreement (“Contract Payments”) or any other plan,
arrangements or agreement with Unilife or any affiliate (collectively with the Contract Payments,
the “Total Payments”) shall be reduced to the extent necessary so that no portion thereof shall be
subject to the excise tax imposed by Code section 4999 but only if, by reason of such reduction,
the net after-tax benefit received by Xxxxxxxx shall exceed the net after-tax benefit that would be
received by Xxxxxxxx if no such reduction was made.
For purposes of this Section 20, “net after-tax benefit” shall mean (i) the total of all
payments and the value of all benefits which Xxxxxxxx receives or is then entitled to receive from
Unilife that would constitute “excess parachute payments” within the meaning of Code section 280G,
less (ii) the amount of all federal, state, local and foreign income taxes payable with respect to
the foregoing calculated at the maximum marginal income tax rate for each year in which the
foregoing shall be paid to Xxxxxxxx (based on the rate in effect for such year as set forth in the
Code or other applicable tax law as in effect at the time of the first payment of the foregoing),
less (iii) the amount of excise taxes imposed with respect to the payments and benefits described
in (i) above by Code section 4999.
The foregoing determination shall be made by a nationally recognized accounting firm (the
“Accounting Firm”) selected by Unilife and reasonably acceptable to Xxxxxxxx (which may be, but
will not be required to be, Unilife’s independent auditors). The Accounting Firm shall submit its
determination and detailed supporting calculations to both Xxxxxxxx and Unilife within fifteen (15)
days after receipt of a notice from either Unilife or Xxxxxxxx that Xxxxxxxx may receive payments
which may be “parachute payments.” If the Accounting Firm determines that a reduction is required
by this Section 20, the Contract Payments consisting of cash severance shall be reduced to the
extent necessary so that no portion of the Total Payments shall be subject to the excise tax
imposed by Code section 4999, and Unilife shall pay such reduced amount to Xxxxxxxx in accordance
with the terms of this agreement. If the Accounting Firm determines that none of the Total
Payments, after taking into account any reduction required by this Section 20, constitutes a
“parachute payment” within the meaning of Code section 280G, it will, at the same time as it makes
such determination, furnish Xxxxxxxx and Unilife an opinion that Xxxxxxxx has substantial authority
not to report any excise tax under Code section 4999 on his federal income tax return.
Xxxxxxxx and Unilife shall each provide the Accounting Firm access to and copies of any books,
records, and documents in the possession of Xxxxxxxx or Unilife, as the case may be, reasonably
requested by the Accounting Firm, and otherwise cooperate with the Accounting Firm in connection
with the preparation and issuance of the determinations and calculations contemplated by this
Section 20. The fees and expenses of the Accounting Firm for its services in connection with the
determinations and calculations contemplated by this Section 20 shall be borne by Unilife.
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21. Counterparts. This agreement may be executed on separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and the same agreement.
22. Interpretation. The captions and headings of this agreement are not part of the
provisions hereof and shall have no force or effect.
23. Notices. Any notices, requests, demands and other communications provided for by this
agreement shall be sufficient if in writing and if hand delivered, sent by overnight courier, or
sent by registered or certified mail to Xxxxxxxx at the last address he has filed in writing with
Unilife or, in the case of Unilife, to Unilife’s secretary at Unilife’s principal executive
offices.
24. Governing Law. The terms of this agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Pennsylvania without giving effect to provisions
thereof regarding conflict of laws.
IN WITNESS WHEREOF, and wishing to be legally bound, the parties have executed this agreement
as of the date first above written.
| UNILIFE MEDICAL SOLUTIONS, INC.: | Xxxxxx Xxxxxxxx: | |||||||||
By: |
/s/ Xxxx Xxxxxxxx | /s/ Xxxxxx Xxxxxxxx | ||||||||
| Name: | Xxxx Xxxxxxxx | |||||||||
| Title: | Chief Executive Officer | |||||||||
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