EMPLOYMENT AGREEMENT
Exhibit 10.46
This
employment agreement is made and entered into as of this 26 day of July, 2010, by and between
Unilife Corporation (“Unilife”) and Xxxxxx Xxxxx (“Xxxxx”). The term “Unilife” shall include its
subsidiaries, affiliates, assigns and successors in interest under Sections 7, 8, and 13.
WHEREAS, Unilife wishes to employ Xxxxx as Vice President and Controller, and Xxxxx wishes to enter
into this agreement to formalize his employment agreement; 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, Xxxxx will develop valuable relationships by virtue of his employment with Unilife, and
Xxxxx will have access to valuable confidential and proprietary information and trade secrets
belonging to Unilife; and
WHEREAS, Unilife and Xxxxx 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 counter-execution of this agreement
and is for an initial multi-year term commencing on the effective date and expiring on June 30,
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 of Unilife under Section 6
below shall remain in full force and effect until all appropriate payments have been made to Xxxxx
and the rights and obligations of Xxxxx 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.
(a) Unilife will employ Xxxxx as Vice President and Controller, and Xxxxx agrees to serve in
such capacity for Unilife with responsibility for Unilife’s accounting department and such other
duties as are assigned to him by the Chief Financial Officer of Unilife, and shall have vested in
him the authority and duties typically held by an employee in such position. Xxxxx shall report to
the Chief Financial Officer, with respect to the performance of these duties. In the performance
of these duties, Xxxxx shall devote his knowledge, skill, attention, energies and all of his
business time, and shall
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comply with all of Unilife’s policies, rules, and procedures, as they may be amended from time
to time. Xxxxx 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;
provided, however, Xxxxx may participate in civic, charitable, educational, industry and
professional organizations, to the extent that such participation does not interfere with the
performance of his duties hereunder; and Xxxxx may also serve on corporate boards and committees,
but only with the prior written consent of Unilife.
(b) Notwithstanding the responsibilities and duties contained in Section 2(a) above, Xxxxx
acknowledges that all material decisions relating to the management of Unilife’s business will be
made by the Board of Directors of Unilife. In addition, any decisions which have the capacity to
affect significantly the financial standing of Unilife must be referred to the Board of Directors
of Unilife which will have ultimate control in respect of these matters.
3. Compensation.
(a) Base Salary. Xxxxx shall be paid an annual base salary of One Hundred Eighty-Five
Thousand Dollars ($185,000.00) payable in accordance with Unilife’s standard payroll practices.
Xxxxx’ base salary 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. At the discretion of the
Board of Directors of Unilife, Xxxxx shall be eligible for increases in base salary. Further,
Unilife will not reduce Xxxxx’ base salary to less than what is agreed to herein.
(b) Bonus. Xxxxx shall be eligible to participate in Unilife’s Incentive Bonus Plan
in amounts and percentages as annually determined by Unilife’s Board of Directors and Chief
Executive Officer. For calendar year 2010, the potential cash bonus amount will be twenty-five
percent (25%) of base salary, prorated based on the number of days employed in 2010. For calendar
years 2011 and 2012, Xxxxx’ annual target cash bonus shall be a minimum of twenty-five percent
(25%) of base salary. Bonuses are subject to achievement of such goals and objectives as the
Compensation Committee of the Board of Directors, upon recommendation of the Chief Executive
Officer, determines in a set of Key Performance Indicators. Any bonus payable for a calendar year
shall be paid in a lump-sum payment in the following calendar year on or before March 15. Xxxxx’
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.
4. Benefits.
(a) Benefits Generally Available to Unilife Employees. Xxxxx 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 Xxxxx 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
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contracts. For further information, Xxxxx should review any applicable benefit plan
documents, which will govern the terms of the benefits.
(b) Vacation. Xxxxx shall also receive four (4) weeks of paid vacation per calendar
year. Any unused vacation days may be carried over or paid in lieu thereof, to the extent allowed
by Unilife’s policy for similarly situated employees.
(c) Equity Plans. All incentive compensation and stock-based compensation that Xxxxx
may receive from Unilife shall be subject to any policy adopted by Unilife, now or hereafter
existing, that imposes on Xxxxx’ stock ownership requirements, stock holding requirements, stock
liquidation restrictions or recoupment provisions provided that such requirements, restrictions and
recoupment provisions also apply to similarly situated members of senior management. Any stock
options and other stock-based awards that Xxxxx may receive from Unilife shall be governed by the
applicable, underlying award agreement.
(d) Expenses. Unilife shall reimburse Xxxxx for all reasonable and necessary expenses
incurred by him in carrying out his duties under this Agreement in accordance with Unilife’s
business expense policies, including without limitation, requirements with respect to
reporting, documentation and payment of such expenses. All such expenses shall be paid no later
than December 31st of the calendar year following the year in which such expenses were
incurred.
5. Indemnification. Unilife agrees to provide Xxxxx with indemnification equivalent to
that provided to other members of senior management and pursuant to Unilife’s Directors and
Officers insurance policies, as amended from time to time.
6. Termination and Pay Upon Termination.
(a) General Rule. In the event that Unilife terminates this agreement and Xxxxx’
employment without Cause as defined herein, including employment termination due to Unilife’s
election not to renew this agreement where Xxxxx was willing and able to continue performing
services under the terms of this agreement, Unilife will pay Xxxxx:
(i) his base salary, at the rate in effect immediately before the date that Xxxxx’
employment terminates, for six (6) months, in accordance with Unilife’s standard payroll
practices then in effect, commencing on the fifteenth (15th) day after the date
that Xxxxx’ employment terminates and the General Release provided for in Section 10 of this
Agreement becomes irrevocable; and
(ii) provided that Xxxxx is eligible for and timely elects to receive COBRA health care
continuation coverage, the cost of Xxxxx’ COBRA health care continuation coverage premiums
for six (6) months, commencing on the first of the month immediately after the month which
includes the date that Xxxxx’
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employment terminates and the General Release provided for in Section 10 of this
Agreement becomes irrevocable.
In the event that Xxxxx terminates this agreement for any reason, including Xxxxx’ election not to
renew the agreement, Xxxxx shall not receive any compensation or benefits from the time that he
ceases to devote full time and attention to Unilife’s business. In addition, Xxxxx 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 of Unilife under this Section 6(a) shall remain in full force and effect until all
appropriate payments have been made to Xxxxx and the rights and obligations of Xxxxx 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. Upon termination of
this agreement, Xxxxx shall not have any further contact with any customers of Unilife until the
expiration of the conditions of Section 8 of this Agreement.
(b) Termination Following a Change in Control.
(i) Termination Pay. Notwithstanding paragraph (a) immediately above, in the
event that Xxxxx’ employment is terminated coincident with a Change in Control as defined in
subparagraph (iii) immediately below, then Unilife in lieu of and not in duplication of the
severance compensation provided for in paragraph (a) immediately above, shall pay Xxxxx:
(A) his base salary, at the rate in effect immediately before the date that
Xxxxx’ employment terminates, for eighteen (18) months, in accordance with Unilife’s
standard payroll practices then in effect, commencing on the fifteenth
(15th) day after the date that Xxxxx’ employment terminates and the
General Release provided for in Section 10 of this Agreement becomes irrevocable,
(B) provided that Xxxxx is eligible for and timely elects to receive COBRA
health care continuation coverage, the cost of Xxxxx’ COBRA health care continuation
coverage premiums for eighteen (18) months, commencing on with the first of the
month immediately after the month which includes the date that Xxxxx’ employment
terminates and the General Release provided for in Section 10 of this Agreement
becomes irrevocable,
(C) payment of a lump-sum amount, equal to the amount of the bonus, if any,
earned by and paid to Xxxxx for the last completed fiscal year prior to the year in
which his employment terminates, which will be payable on the fifteenth
(15th) day after the date that Xxxxx’ employment terminates and the
General Release provided for in Section 10 of this Agreement becomes irrevocable,
and
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(D) notwithstanding anything to the contrary, all of his outstanding and
unvested options and other stock-based awards shall vest immediately upon such
termination of employment following the Change in Control.
(ii) Definition of “Cause”. “Cause” will mean any one or more of the
following:
(A) material 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 Financial Officer, specifying
the scope and nature of the deficiency;
(B) an act of dishonesty or any act that results in the loss of status as a
Certified Public Accountant;
(C) engaging in illegal conduct;
(D) committing a crime relating to an act of dishonesty or fraud;
(E) engaging in any act of moral turpitude that causes material harm to Unilife
or its reputation;
(F) breaching, in any material respect, the terms of any agreement with
Unilife; or
(G) 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.
(iii) Definition of “Change in Control”. “Change in Control” means a: (i)
Change in Ownership of Unilife Corporation, (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”).
(A) 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
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than fifty percent (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 fifty percent (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.
(B) 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 twelve (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.
(C) 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 twelve (12)-month period ending on the date of the most
recent acquisition by such Person or Persons), assets (including tangible/real
property and intangible property (such as goodwill)) from Unilife Corporation the
total gross fair market value of which is more than fifty percent (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.
(D) The following rules of construction apply in interpreting the definition of
Change in Control:
(I) 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.
(II) 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
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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.
(III) For purposes of this Section 6(b), fair market value shall be
determined in accordance with Code Section 409A.
(IV) 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 6(b), 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.
7. Confidential Information.
(a) Xxxxx 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 Xxxxx’
work with Unilife, Xxxxx 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) Xxxxx 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.
Xxxxx agrees that, following the termination of his
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employment with Unilife for any reason, he will never use secret and confidential information to
compete with Unilife in any manner, and he will never disclose any secret and confidential
information to any other business or individual, unless such secret or confidential information is:
(i) publicly known through no breach of the provisions of this Section 7 by either party, (ii)
lawfully disclosed by a third party, or (iii) disclosed pursuant to legal requirement or court
order. In no event shall any disclosure made to investment banking firms or private equity firms
at the request of Unilife and as part of Xxxxx’ duties ever be considered a violation of this
Section 7.
(c) Upon termination of this agreement, Xxxxx 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,
Xxxxx agrees to be bound by the covenant not to compete as set forth in Section 8 of this agreement
below.
(b) Xxxxx 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.
(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 Xxxxx commits any breach of Section 8(b) above, Xxxxx acknowledges that
Unilife would suffer substantial and irreparable harm and damages. Accordingly, Xxxxx 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. Xxxxx 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
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and/or business limitations permitted by applicable laws, so as to be valid and enforceable.
(d) Xxxxx 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. Xxxxx
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 Xxxxx is found by a court to have
breached any of these provisions, Xxxxx 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.
9. Continuing Education and Membership Reimbursement. Unilife agrees to reimburse Xxxxx
for all the costs associated with maintaining his Certification as a Certified Public Accountant,
including but not limited to licensing fees, membership fees, the cost of continuing education (and
time off with pay to attend such seminars).
10. General Release. As a condition of receiving the severance compensation and benefits
described in Section 6, Unilife and Xxxxx will execute a mutual general release of claims (which is
in a form acceptable to Unilife). 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. Such release
must be agreed to, executed and irrevocable no later than 30 days following Xxxxx’ termination
date.
11. 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 (who is mutually acceptable
to both parties, as well as licensed to practice law in the Commonwealth of Pennsylvania) 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 Xxxxx 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
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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.
12. 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.
13. Assignment. This agreement is personal and may not be assigned by Xxxxx. Any
assignment of this agreement between Unilife (or its successor) and its affiliates (and their
successors) shall not constitute a termination of Xxxxx’ 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 Xxxxx
will remain bound by these provisions in the event of a sale or corporate reorganization of
Unilife.
14. 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.
15. 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 Xxxxx’ employment, whether oral or
written; provided, however, that Xxxxx’ equity grants shall be governed by the equity grant
documents and will be in such amounts as stated in Xxxxx’ offer letter dated July 14, 2010;
provided further, that any stock options or other stock-based awards provided to Xxxxx 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.
16. Section 409A.
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(a) This agreement is intended to comply with, or otherwise be exempt from, Code section 409A
and any regulations and Treasury guidance promulgated thereunder, and Unilife shall be required to
interpret the terms of this agreement as necessary to comply with the requirements of Code section
409A.
(b) Unilife shall undertake to administer, interpret, and construe this agreement in a manner
that does not result in the imposition on Xxxxx of any additional tax, penalty, or interest under
Code section 409A.
(c) Unilife and Xxxxx 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.
(d) The preceding provisions, however, shall not be construed as a guarantee by Unilife of any
particular tax effect to Xxxxx under this agreement. Unilife shall not be liable to Xxxxx 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 future expenses of, or any provision of in-kind
benefits to, Xxxxx, 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 Xxxxx 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, Xxxxx’ “separation from service” as defined in that
section.
(h) If a payment obligation under this agreement arises on account of Xxxxx’ separation from
service while Xxxxx is a “specified employee” (as defined under Code
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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 Xxxxx’ estate following his death.
17. Excise Tax on Parachute Payments. Xxxxx 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 Xxxxx in connection
with a Change in Control or the termination of Xxxxx’ 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 Xxxxx shall exceed the net after-tax benefit that would be received by Xxxxx if no such
reduction was made.
For purposes of this Section 17, “net after-tax benefit” shall mean (i) the total of all
payments and the value of all benefits which Xxxxx 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 Xxxxx (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 Xxxxx (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 Xxxxx and Unilife within fifteen (15)
days after receipt of a notice from either Unilife or Xxxxx that Xxxxx may receive payments which
may be “parachute payments.” If the Accounting Firm determines that a reduction is required by
this Section 17, 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 Xxxxx 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 17, constitutes a “parachute payment” within
the meaning of Code section 280G, it will, at
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the same time as it makes such determination, furnish Xxxxx and Unilife an opinion that
Xxxxx has substantial authority not to report any excise tax under Code section 4999 on his
federal income tax return.
Xxxxx and Unilife shall each provide the Accounting Firm access to and copies of any books,
records, and documents in the possession of Xxxxx 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 17. The fees and expenses of the Accounting Firm for its services in connection with the
determinations and calculations contemplated by this Section 17 shall be borne by Unilife.
18. 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.
19. Interpretation. The captions and headings of this agreement are not part of the
provisions hereof and shall have no force or effect.
20. 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 Xxxxx at the last address he has filed in writing with
Unilife or, in the case of Unilife, to Unilife’s Chief Financial Officer at Unilife’s principal
executive offices.
21. 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.
22. Representation. Xxxxx represents and warrants to Unilife that he is not bound by any
restrictive covenants and has no prior or other obligations or commitments of any kind that would
in any way prevent, restrict, hinder or interfere with Xxxxx’ acceptance of employment or the
performance of all duties and services hereunder to the fullest extent of Xxxxx’ ability and
knowledge.
IN WITNESS WHEREOF, and wishing to be legally bound, the parties have executed this agreement
as of the date first above written.
| UNILIFE CORPORATION: | Xxxxxx Xxxxx: | |||||||
By: Name: |
/s/ Xxxx Xxxxxxxx
|
/s/ Xxxxxx X. Xxxxx
|
||||||
Title:
|
Chief Executive Officer | |||||||
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