AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This AMENDED AND RESTATED AGREEMENT (this “Agreement”) is made and entered into this 31st day
of December, 2008, by and between Allion Healthcare, Inc., a corporation with its
headquarters located at 0000 Xxxx Xxxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 (the “Employer”), and
Xxxxxxx X. Xxxxx (the “Executive”). This Agreement amends and restates the Employment Agreement
between the parties dated as of October 1, 2006 (the “Original Employment Agreement”).
WHEREAS, the Employer and the Executive entered into the Original Employment Agreement to
reflect the Executive’s duties and responsibilities and to provide for the Executive’s employment
by the Employer upon the terms and conditions set forth herein; and
WHEREAS, the Executive agreed to certain confidentiality, non-competition and non-solicitation
covenants contained hereunder, in consideration of the additional benefits provided to the
Executive under the Original Employment Agreement; and
WHEREAS, the Original Employment Agreement became effective as of October 1, 2006 (the
“Effective Date”) and for all purposes of this Agreement, the Effective Date shall remain October
1, 2006; and
WHEREAS, the Employer employs Executive as its Chief Executive Officer, President and Chairman
of the Board under terms and conditions as set forth in the Original Employment Agreement; and
WHEREAS, the Employer and the Executive desire to amend and restate the Original Employment
Agreement for the purpose of complying with Section 409A of the Internal Revenue Code of 1986, as
amended (the “Code”) and the Treasury Regulations and Internal Revenue Service guidance thereunder;
NOW THEREFORE, in consideration of the mutual covenants contained in this Agreement, and
intending to be legally bound, the Employer and the Executive agree as follows:
1. Employment. The Employer agrees to employ the Executive and the Executive agrees to
be employed by the Employer on the terms and conditions set forth in this Agreement.
2. Capacity. The Executive shall serve the Employer as its Chief Executive Officer,
President and Chairman of the Board. The Executive shall also serve the Employer in such other or
additional offices as the Executive may reasonably be requested to serve by the Board of Directors
of the Company (the “Board of Directors”). In such capacity or capacities, the Executive shall
perform such services and duties in connection with the business, affairs and operations of the
Employer, consistent with such positions, as may be assigned or delegated to the Executive from
time to time by or under the authority of the Board of Directors.
3. Term. Subject to the provisions of Section 6, the term of employment pursuant to
this Agreement (the “Term”) shall commence on the Effective Date and terminate on the first
anniversary of the Effective Date; provided that the Term shall automatically be renewed for
successive periods of one (1) year unless either party gives written notice to the other party, at
least ninety (90) days prior to the end date of the then Term, of that party’s intent not to
renew this Agreement.
4. Compensation and Benefits. The compensation and benefits payable to the Executive
during the Term shall be as follows:
(a) Salary. For all services rendered by the Executive under this Agreement, the Employer
shall pay the Executive a salary (“Salary”) at the annual rate of three hundred fifty thousand
dollars ($350,000.00) per annum, subject to increases from time to time in the sole
discretion of the Compensation Committee of the Board of Directors (the “Compensation Committee”).
Salary shall be payable in periodic installments in accordance with the Employer’s usual practice
for its senior executives.
(b) Bonus. The Executive may be awarded performance bonuses on an annual basis, commencing
with a bonus that may be awarded for the 2006 calendar year, as determined by the Board of
Directors or the Compensation Committee in the sole discretion of the Board of Directors or
Compensation Committee, respectively; provided, however, that the bonus for any such year shall not
exceed forty percent (40%) of Salary for such year. The performance bonus, if any, shall be paid to
the Executive in the following calendar year and within thirty (30) days after the Board of
Directors or the Compensation Committee determines whether and to what extent performance goals
were achieved, but no later than March 15 of the year following the year for which the performance
bonus, if any, was earned.
(c) Stock Options. The Executive has been issued options to purchase shares of common stock of
the Employer in accordance with the Employer’s stock option plan and the Executive’s stock option
agreement thereunder.
(d) Regular Benefits. The Executive shall also be entitled to participate in any employee
benefit plans, medical insurance plans, life insurance plans, disability income plans, retirement
plans, vacation plans, expense reimbursement plans and other benefit plans which the Employer may
from time to time have in effect for all or most of its senior executives. Such participation shall
be subject to the terms of the applicable plan documents, generally applicable policies of the
Employer, applicable law and the discretion of the Board of Directors, the Compensation Committee
or any administrative or other committee provided for in or contemplated by any such plan. Nothing
contained in this Agreement shall be construed to create any obligation on the part of the Employer
to establish any such plan or to maintain the effectiveness of any such plan which may be in effect
from time to time.
(e) Automobile. During the Term, the Employer shall provide the Executive with an automobile
allowance of $800 per month to compensate the Executive for expenses related to the use of an
automobile and reasonable business-related expenses associated with such automobile and its
maintenance and operation.
(f) Taxation of Payment and Benefits. The Employer shall undertake to make deductions,
withholdings and tax reports with respect to payments and benefits under this Agreement to the
extent that it reasonably and in good faith believes that it is required to make such deductions,
withholdings and tax reports. Payments under this Agreement shall be in amounts net of any such
deductions or withholdings. Nothing in this Agreement shall be construed to require the Employer to
make any payments to compensate the Executive for any adverse tax effect associated with any
payments or benefits or for any deduction or withholding from any payment or benefit.
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(g) Exclusivity of Salary and Benefits. The Executive shall not be entitled to any payments or
benefits other than those provided under this Agreement.
5. Extent of Service. During the Term, the Executive shall, subject to the direction
and supervision of the Board of Directors, devote the Executive’s full business time, best efforts
and business judgment, skill and knowledge to the advancement of the Employer’s interests and to
the discharge of the Executive’s duties and responsibilities under this Agreement. The Executive
shall not engage in any other business activity, except as may be approved by the Board of
Directors; provided that nothing in this Agreement shall be construed as preventing the Executive
from (a) investing the Executive’s assets in any company or other entity in a manner not prohibited
by Section 8(d), or (b) engaging in religious, charitable or other community or non-profit
activities that, in the case of (a) or (b) above, do not in any way impair the Executive’s ability
to fulfill the Executive’s duties and responsibilities under this Agreement.
6. Termination and Termination Benefits. Notwithstanding any other provision of this
Agreement, (i) the Employer may terminate the Executive’s employment hereunder at any time with or
without Cause (as defined in Section 7(a)) at its election; (ii) the Executive may terminate the
Executive’s employment hereunder at any time with or without Good Reason (as defined in Section
7(b)) at the Executive’s election; (iii) Executive’s employment hereunder shall automatically
terminate upon the Executive’s death; and (iv) the Executive’s employment shall terminate upon the
Executive’s disability as provided in Section 6(c). The date of termination of the Executive’s
employment hereunder, whether upon scheduled termination of the then Term, termination by either
the Employer or the Executive as provided in this Agreement, or by reason of the Executive’s death
or disability, is the “Termination Date.” Any termination of employment hereunder shall be
effective upon the date of scheduled termination of the then Term, the date of receipt by the
non-terminating party of a notice of termination from the terminating party with or without Cause
(in the case of a termination by the Employer) or with or without Good Reason (in the case of a
termination by the Executive), the date of death, or after the onset of disability as provided in
Section 6(c), as the case may be; provided that, in the case of a termination by the Employer, the
Employer may specify in the notice of termination a later termination date (which date shall be no
later than thirty (30) days after the date of such notice of termination). The amounts payable to
the Executive and other benefits provided to the Executive under this Section 6 shall be referred
to as “Termination Benefits”. Payment of the Termination Benefits under this Section 6 shall be
subject to Section 22 of this Agreement.
(a) Termination by the Employer for Cause, by the Executive without Good Reason, Death, or
notice of nonrenewal by the Executive. If, during the Term, (i) the Employer terminates the
Executive’s employment for Cause, (ii) the Executive terminates his employment with the Employer
without Good Reason, or (iii) the Executive terminates his employment with the Employer by
providing the Employer with notice of non-renewal as provided in Section 3, the Executive shall be
entitled to:
(i) accrued but unpaid Salary through the Termination Date;
(ii) cash in lieu of any accrued but unused vacation through the Termination Date (the
payments provided in (i) and (ii) above are collectively referred to as the “Accrued Obligations”);
and
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(iii) any benefits accrued or payable to the Executive under the Employer’s benefit plans (in
accordance with the terms of such benefit plans and subject to Section 22 of this Agreement) (the
“Other Benefits”).
The Accrued Obligations shall be paid in a lump sum in cash within five (5) days after the
Termination Date. Upon payment or provision of the Accrued Obligations and the Other Benefits, if
any, the Employer shall have no further obligations to the Executive under this Agreement.
(b) Termination by the Executive for Good Reason, by the Employer Without Cause, or by notice
of nonrenewal by the Employer. If, during the Term, (i) the Executive terminates his employment
with the Employer for Good Reason within a period of 90 days after the occurrence of an uncured
event of Good Reason or (ii) the Employer terminates the Executive’s employment with the Employer
without Cause, the Executive shall be entitled to:
(i) the Accrued Obligations, payable in a lump sum in cash within five (5) days after the
Termination Date;
(ii) an amount equal to the Salary, at the rate in effect on the Termination Date, that would
have been paid to the Executive as if there had been no termination described in this Section 6(b)
through the expiration of the then-current Term, payable in a lump sum in cash within five (5)
business days following the Termination Date;
(iii) $350,000, payable in a lump sum in cash within five (5) business days after the
Termination Date; and
(iv) continuation of group health plan benefits to the extent authorized by and consistent
with 29 U.S.C. § 1161 et seq. (commonly known as “COBRA”) during the period that Executive is
entitled to such coverage under COBRA (such period of continuation, the “Termination Benefits
Period”), with the cost of the regular premium for such benefits shared in the same relative
proportion by the Employer and the Executive as in effect on the Termination Date, provided that
the Executive’s entitlements under this clause (iv) shall terminate as of the date of commencement
of eligibility for health insurance pursuant to other employment or self-employment.
Notwithstanding the foregoing, nothing in this Section 6(b) shall be construed to affect the
Executive’s right to receive COBRA continuation entirely at the Executive’s own cost to the extent
that the Executive may continue to be entitled to COBRA continuation after the Executive’s right to
cost sharing under Section 6(b)(iv) ceases. The Executive shall be obligated to give prompt notice
of the date of commencement of any employment or self-employment and shall respond promptly to any
reasonable inquiries concerning any employment or self-employment in which the Executive engages
during the Termination Benefits Period.
(c) Disability. If the Executive shall be physically or mentally disabled so as to be unable
to perform substantially all of the essential functions of the Executive’s then existing position
or positions under this Agreement with or without reasonable accommodation, the Board of Directors
may remove the Executive from any responsibilities and/or reassign the Executive to another
position with the Employer for the remainder of the Term or during the period of such disability.
Notwithstanding any such removal or reassignment, the Executive shall continue to be employed by
the Employer and shall receive a payment equal to the lesser of (i) the Salary that he would have
received through the date that is six (6) months after the onset of the disability, or (ii)
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the Salary that he would have received through the termination of the then Term (less any
disability pay or sick pay benefits to which the Executive may be entitled under the Employer’s
plans and policies), payable in a lump sum in cash within five (5) days following the date on which
the Executive is determined to be disabled. In addition, Executive shall be entitled to any annual
bonus that is earned within the period described in the foregoing sentence, which bonus shall be
payable at the normal time for payment of bonuses, as prescribed in Section 4(b). Executive also
shall continue to receive other benefits under Section 4 of this Agreement (except to the extent
that the Executive may be ineligible for one or more such benefits under applicable plan terms)
until the earlier of (i) the date that is six (6) months after the onset of the disability and (ii)
the termination of the then Term, at which time this Agreement shall terminate and the Executive
shall be entitled only to those Termination Benefits set forth in Section 6(a). If any question
shall arise as to whether Executive is disabled so as to be unable to perform substantially all of
the essential functions of the Executive’s then existing position or positions with or without
reasonable accommodation, the Executive may, and at the request of the Employer shall, submit to
the Employer a certification in reasonable detail by a physician selected by the Employer to whom
the Executive or the Executive’s guardian has no reasonable objection as to whether the Executive
is so disabled or how long such disability is expected to continue, and such certification shall
for the purposes of this Agreement be conclusive of the issue. The Executive shall cooperate with
any reasonable request of the physician in connection with such certification. If such question
shall arise and the Executive shall fail to submit such certification, the Employer’s determination
of such issue shall be binding on the Executive. Nothing in this Section 6(c) shall be construed to
waive the Executive’s rights, if any, under existing law including, without limitation, the Family
and Medical Leave Act of 1993, 29 U.S.C. §2601 et seq. and the Americans with Xxxxxxxxxxxx Xxx, 00
X.X.X. §00000 et seq.
7. Definitions. For purposes of this Agreement, the following terms shall have the
following meanings:
(a) “Cause” shall mean (i) the failure of the Executive to perform the Executive’s duties for
the Employer in accordance with Section 2 above, including without limitation, the Executive’s
failure to follow the directives of the Board of Directors, consistent with Section 2, or any other
material breach by the Executive of this Agreement, provided that the Employer gives notice of such
breach to the Executive in writing and such breach remains uncured for thirty (30) days following
the date such notice is given; (ii) the Executive’s breach of any obligation of the Executive under
Section 8; (iii) any act by the Executive of fraud or theft; (iv) a conviction by a court of
competent jurisdiction that the Executive is guilty of a felony, or a misdemeanor involving moral
turpitude, deceit, dishonesty or fraud, or a plea of nolo contendere thereto; or (v) engaging in
reckless behavior (the failure to use even the slightest amount of care) or willful misconduct by
the Executive with respect to the Employer or its business or assets that has had or is reasonably
likely to have a material adverse effect on the Employer or its business or assets. No act or
omission by the Executive reasonably believed to be in or not adverse to the interests of the
Employer shall constitute Cause. For purposes of this Agreement, the Executive shall not be deemed
to have been terminated for Cause unless and until there shall has been delivered to the Executive
a copy of a resolution, duly adopted by the Board of Directors, stating that, in the good faith
opinion of the Board of Directors, Cause exists and specifying the particulars thereof in
reasonable detail. Before adopting any such resolution, the Board of Directors shall offer the
Executive, upon reasonable prior written notice (which need not exceed five business days), an
opportunity for him, together with his counsel, to be heard by the Board of Directors.
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(b) “Good Reason” shall mean the occurrence of any of the events described below that
continues for, and which the Employer has not cured within, thirty (30) days after written notice
thereof to the Employer from the Executive:
(i) Any material diminution in the nature or scope of the authorities, powers, functions,
responsibilities or duties of the Executive;
(ii) Any material reduction in the amount of the Executive’s
Salary;
(iii) Any material diminution in the authority, duties, or responsibilities of the
supervisor to whom the Executive is required to report, including a requirement that the Executive
report to a corporate officer or employee instead of reporting directly to the Board of Directors;
(iv) Any material breach by the Employer or its successors of any other provision of this
Agreement;
(v) The material change (without the approval of the Executive) in the geographic location at
which the Executive is required to perform services, it being agreed that a relocation of the
Executive’s principal employment to a location outside of Nassau or Suffolk counties, New York, is
a material relocation for this purpose.
Notwithstanding the foregoing, an event described in clauses (i) through (v) above shall constitute
Good Reason only if (i) the Executive gives written notice thereof to the Employer within 30 days
after such event occurs, and (ii) the Employer fails to cure such event within 30 days after
receipt from the Executive of such notice. If the Employer fails to cure such event of Good
Reason, the Executive must resign within 90 days of the occurrence of the Good Reason event in
order to be entitled to the Termination Benefits of Section 6(b) of this Agreement.
(c) “Change in Control” shall mean the occurrence of one or more of the following events:
(i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”)) becomes a “beneficial owner” (as such term
is defined in Rule 13d-3 promulgated under the Exchange Act) (other than the Employer, any trustee
or other fiduciary holding securities under an employee benefit plan of the Employer, or any
corporation owned, directly or indirectly, by the stockholders of the Employer, in substantially
the same proportions as their ownership of stock of the Employer), directly or indirectly, of
securities of the Employer, representing fifty percent (50%) or more of the combined voting power
of the Employer’s then outstanding securities; or
(ii) persons who, as of the Effective Date, constituted the Employer’s Board of Directors (the
“Incumbent Board”) cease for any reason including, without limitation, as a result of a tender
offer, proxy contest, merger or similar transaction, to constitute at least a majority of the Board
of Directors, provided that any person becoming a director of the Employer subsequent to the
Effective Date whose election was approved by at least a majority of the directors then comprising
the Incumbent Board shall, for purposes of this Section 7(c), be considered a member of the
Incumbent Board; or
(iii) the stockholders of the Employer approve a merger or consolidation of the Employer with
any other corporation or other entity, other than (1) a merger or consolidation
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which would result in the voting securities of the Employer outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Employer or such surviving entity outstanding immediately after such
merger or consolidation or (2) a merger or consolidation effected to implement a recapitalization
of the Employer (or similar transaction) in which no “person” (as hereinabove defined) acquires
more than fifty percent (50%) of the combined voting power of the Employer’s then outstanding
securities; or
(iv) the stockholders of the Employer approve a plan of complete liquidation of the Employer
or an agreement for the sale or disposition by the Employer of all or substantially all of the
Employer’s assets.
8. Confidential Information, Noncompetition and Cooperation.
(a) Confidential Information. As used in this Agreement, “Confidential Information” means
nonpublic (not as a result of Executive’s wrongful disclosure) information belonging to the
Employer which is of value to the Employer in the course of conducting its business and the
disclosure of which could result in a competitive or other disadvantage to the Employer.
Confidential Information includes, without limitation, financial information, reports, and
forecasts; inventions, improvements and other intellectual property, trade secrets, know-how,
designs, processes or formulae, software, market or sales information or plans, customer lists; and
business plans, prospects, strategies and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or considered by the management
of the Employer. Confidential Information includes information developed by the Executive in the
course of the Executive’s employment by the Employer, as well as other information to which the
Executive may have access in connection with the Executive’s employment. Confidential Information
also includes the confidential information of others with which the Employer has a business
relationship. Notwithstanding the foregoing, Confidential Information does not include information
in the public domain, unless due to breach of the Executive’s duties under Section 8(b).
(b) Confidentiality. The Executive understands and agrees that the Executive’s employment
creates a relationship of confidence and trust between the Executive and the Employer with respect
to all Confidential Information. At all times, both during the Executive’s employment with the
Employer and after its termination, the Executive will keep in confidence and trust all such
Confidential Information, and will not use or disclose any such Confidential Information without
the written consent of the Employer, except as may be necessary in the ordinary course of
performing the Executive’s duties to the Employer.
(c) Documents. Records. etc. All documents, records, data, apparatus, equipment and other
physical property, whether or not pertaining to Confidential Information, which are furnished to
the Executive by the Employer or are produced by the Executive in connection with the Executive’s
employment will be and remain the sole property of the Employer. The Executive will return to the
Employer all such materials and property as and when requested by the Employer. In any event, the
Executive will return all such materials and property immediately upon termination of the
Executive’s employment for any reason. The Executive will not retain with the Executive any such
material or property or any copies thereof after such termination.
(d) Noncompetition and Nonsolicitation. During Executive’s employment with the Employer and
for one (1) year thereafter, the Executive (i) will not, directly or indirectly, whether
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as owner, partner, shareholder, consultant, agent, employee, co-venturer or otherwise, engage,
participate, assist or invest in any Competing Business (as hereinafter defined), (ii) will refrain
from directly or indirectly employing, attempting to employ, recruiting or otherwise soliciting,
inducing or influencing any person to leave employment with the Employer (other than terminations
of employment of subordinate employees undertaken in the course of the Executive’s employment with
the Employer); and (iii) will refrain from soliciting or encouraging any customer or supplier to
terminate or otherwise modify adversely its business relationship with the Employer. The Executive
understands that the restrictions set forth in this Section 8 are intended to protect the
Employer’s interest in its Confidential Information and established employee, customer and supplier
relationships and goodwill, and agrees that such restrictions are reasonable and appropriate for
this purpose. For purposes of this Agreement, the term “Competing Business" shall mean a
business which consists of operating specialty HIV pharmacies anywhere within the United States.
Notwithstanding the foregoing, the Executive may own up to one percent (1%) of the outstanding
stock of a publicly-held corporation which constitutes or is affiliated with a Competing Business.
The Employer may extend the period of noncompetition and nonsolicitation for an additional period
not exceeding one (1) year, provided that it extends and pays Termination Benefits to the Executive
for the duration of the extension, such Termination Benefits to be payable, in each case, in the
same form as provided in Section 6 but as if the Date of Termination were the last day of the
extended covenant period. Notwithstanding the foregoing, the Executive’s obligations under Section
8(d)(i) shall terminate and be of no further force or effect upon termination of the Executive’s
Employment under any of the circumstances described in Section 6(b).
(e) Third-Party Agreements and Rights. The Executive hereby confirms that the Executive is not
bound by the terms of any agreement with any previous employer or other party which restricts in
any way the Executive’s use or disclosure of information or the Executive’s engagement in any
business. The Executive represents to the Employer that the Executive’s execution of this
Agreement, the Executive’s employment with the Employer and the performance of the Executive’s
proposed duties for the Employer will not violate any obligations the Executive may have to any
such previous employer or other party. In the Executive’s work for the Employer, the Executive will
not disclose or make use of any information in violation of any agreements with or rights of any
such previous employer or other party, and the Executive will not bring to the premises of the
Employer any copies or other tangible embodiments of non-public information belonging to or
obtained from any such previous employment or other party.
(f) Litigation and Regulatory Cooperation. During and after the Executive’s employment, the
Executive shall cooperate fully with the Employer in the defense or prosecution of any claims or
actions now in existence or which may be brought in the future against or on behalf of the Employer
which relate to events or occurrences that transpired while the Executive was employed by the
Employer. The Executive’s full cooperation in connection with such claims or actions shall include,
but not be limited to, being available to meet with counsel to prepare for discovery or trial and
to act as a witness on behalf of the Employer at mutually-convenient times. During and after the
Executive’s employment, the Executive also shall cooperate fully with the Employer in connection
with any investigation or review of any federal, state or local regulatory authority as any such
investigation or review relates to events or occurrences that transpired while the Executive was
employed by the Employer. The Employer shall reimburse the Executive for any reasonable
out-of-pocket expenses incurred in connection with the Executive’s performance of obligations
pursuant to this Section 8(f).
(g) Injunction. The Executive agrees that it would be difficult to measure any damages caused
to the Employer which might result from any breach by the Executive of the
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promises set forth in this Section 8, and that in any event money damages would be an
inadequate remedy for any such breach. Accordingly, subject to Section 8 of this Agreement, the
Executive agrees that if the Executive breaches, or threatens to breach, any portion of this
Agreement, the Employer shall be entitled, in addition to all other remedies that it may have, to
an injunction or other appropriate equitable relief to restrain any such breach without showing or
proving any actual damage to the Employer.
(h) Definition of Employer. For purposes of this Section 8, “Employer” shall include Allion
Healthcare, Inc. and each of its subsidiaries.
9. Arbitration of Disputes. Any controversy or claim arising out of or relating to
this Agreement or the breach thereof or otherwise arising out of the Executive’s employment or the
termination of that employment (including, without limitation, any claims of unlawful employment
discrimination whether based on age or otherwise) shall, to the fullest extent permitted by law, be
settled by arbitration under the auspices of the American Arbitration Association (“AAA”) in New
York, New York in accordance with the Employment Arbitration and Mediation Procedures of the AAA,
including, but not limited to, the rules and procedures applicable to the selection of arbitrators.
In the event that any person or entity other than the Executive or the Employer may be a party with
regard to any such controversy or claim, such controversy or claim shall be submitted to
arbitration subject to such other person or entity’s agreement. Judgment upon the award rendered by
the arbitrator may be entered in any court having jurisdiction thereof. This Section 9 shall be
specifically enforceable. Notwithstanding the foregoing, this Section 9 shall not preclude either
party from pursuing a court action for the sole purpose of obtaining a temporary restraining order
or a preliminary injunction in circumstances in which such relief is appropriate; provided that any
other relief shall be pursued through an arbitration proceeding pursuant to this Section 9.
10. Consent to Jurisdiction. To the extent that any court action is permitted
consistent with or to enforce Section 8 of this Agreement, the parties hereby consent to the
jurisdiction of the Supreme Court of the State of New York, Suffolk County, and the United States
District Court for the Eastern District of New York. Accordingly, with respect to any such court
action, the Executive (a) submits to the personal jurisdiction of such courts; (b) consents to
service of process; and (c) waives any other requirement (whether imposed by statute, rule of
court, or otherwise) with respect to personal jurisdiction or service of process.
11. Integration. This Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof and supersedes all prior agreements between the parties
with respect to any related subject matter.
12. Assignment; Successors and Assigns; etc. Neither the Employer nor the Executive
may make any assignment of this Agreement or any interest herein, by operation of law or otherwise,
without the prior written consent of the other party; provided that the Employer may assign its
rights under this Agreement without the consent of the Executive in the event that the Employer
shall effect a reorganization, consolidate with or merge into any other corporation, partnership,
organization or other entity, or transfer all or substantially all of its properties or assets to
any other corporation, partnership, organization or other entity. This Agreement shall inure to the
benefit of and be binding upon the Employer and the Executive, their respective successors,
executors, administrators, heirs and permitted assigns.
13. Enforceability. If any portion or provision of this Agreement (including, without
limitation, any portion or provision of any section of this Agreement) shall to any extent be
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declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of
this Agreement, or the application of such portion or provision in circumstances other than those
as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
14. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of any party to require the performance of any
term or obligation of this Agreement, or the waiver by any party of any breach of this Agreement,
shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of
any subsequent breach.
15. Notices. Any notices, requests, demands and other communications provided for by
this Agreement shall be sufficient if in writing and delivered in person or sent by a
nationally-recognized overnight courier service or by registered or certified mail, postage
prepaid, return receipt requested, to the Executive at the last address the Executive has filed in
writing with the Employer or, in the case of the Employer, at its main offices, attention of the
Chairman of the Board of Directors, and shall be effective on the date of delivery in person or by
courier or three (3) days after the date mailed.
16. Amendment. This Agreement may be amended or modified only by a written instrument
signed by the Executive and by a duly authorized representative of the Employer.
17. Construction. This Agreement has been drafted and reviewed jointly by the parties,
and no presumption of construction as to the drafting of this Agreement shall be applied against or
in favor of any party.
18. Governing Law. This is a New York contract and shall be construed under and be
governed in all respects by the laws of the State of New York, without giving effect to the
conflict of laws principles of New York. With respect to any disputes concerning federal law, such
disputes shall be determined in accordance with the law as it would be interpreted and applied by
the United States Court of Appeals for the Second Circuit.
19. Indemnification. The provisions of Article VII (Indemnification) of the Second
Amended and Restated By Laws dated June 24, 2002 of the Employer as in effect on the date hereof
are deemed incorporated herein by reference and any amendment to such By Laws after the date hereof
shall not be incorporated by reference herein if the effect thereof is to reduce the rights
conferred on the Executive.
20. Legal Fees. The parties acknowledge that the Employer has reimbursed the Executive
for legal fees incurred in connection with the preparation of this Agreement and has no further
obligation in connection therewith. If there is an arbitration or court proceeding between the
Executive and the Employer in connection with Executive’s enforcement of the terms of this
Agreement and it has been determined in such arbitration or proceeding that the Executive has
substantially prevailed in such arbitration or proceeding, the Employer shall reimburse the
Executive’s reasonable fees and expenses incurred in connection with such arbitration or proceeding
in an amount not to exceed $100,000 (the “Enforcement Legal Expenses”). If the Executive is awarded
the right to recover Enforcement Legal Expenses, the reimbursement of an eligible expense shall be
made within ten (10) business days after delivery of Executive’s written request for payment
accompanied with such evidence of fees and expenses incurred as the
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Employer reasonably may require, but in no event later than March 15 of the year after the
year in which such rights are established.
21. Counterparts. This Agreement may be executed in any number of counterparts, each
of which when so executed and delivered shall be taken to be an original; but such counterparts
shall together constitute one and the same document.
22. Code Section 409A.
(a) This Agreement shall be interpreted and administered in a manner so that any amount or
benefit payable hereunder shall be paid or provided in a manner that is either exempt from or
compliant with the requirements Section 409A of the Code and applicable Internal Revenue Service
guidance and Treasury Regulations issued thereunder (and any applicable transition relief under
Section 409A of the Code). Nevertheless, the tax treatment of the benefits provided under the
Agreement is not warranted or guaranteed. Neither the Company nor its directors, officers,
employees or advisers shall be held liable for any taxes, interest, penalties or other monetary
amounts owed by Executive as a result of the application of Section 409A of the Code.
(b) Notwithstanding anything in this Agreement to the contrary, to the extent that any amount
or benefit that would constitute non-exempt “deferred compensation” for purposes of Section 409A of
the Code would otherwise be payable or distributable hereunder by reason of the Executive’s
disability or termination of employment, such amount or benefit will not be payable or
distributable to the Executive by reason of such circumstance unless (i) the circumstances giving
rise to such disability or termination of employment, as the case, may be, meet any description or
definition of “disability” or “separation from service”, as the case may be, in Section 409A of the
Code and applicable regulations (without giving effect to any elective provisions that may be
available under such definition), or (ii) the payment or distribution of such amount or benefit
would be exempt from the application of Section 409A of the Code by reason of the short-term
deferral exemption or otherwise. This provision does not prohibit the vesting of any amount upon a
disability or termination of employment, however defined. If this provision prevents the payment
or distribution of any amount or benefit, such payment or distribution shall be made on the date,
if any, on which an event occurs that constitutes a Section 409A-compliant “disability” or
“separation from service,” as the case, may be, or such later date as may be required by subsection
(c) below.
(c) Notwithstanding anything in this Agreement to the contrary, if any amount or benefit that
would constitute non-exempt “deferred compensation” for purposes of Section 409A of the Code would
otherwise be payable or distributable under this Agreement by reason of the Executive’s separation
from service during a period in which he is a Specified Employee (as defined below), then, subject
to any permissible acceleration of payment by the Employer under Treas. Reg. Section
1.409A-3(j)(4)(ii) (domestic relations order), (j)(4)(iii) (conflicts of interest), or (j)(4)(vi)
(payment of employment taxes):
(i) if the payment or distribution is payable in a lump sum, the Executive’s right to receive
payment or distribution of such non-exempt deferred compensation will be delayed until the earlier
of (A) a date no later than thirty (30) days following the Executive’s death, or (B) the first day
of the seventh month following the Executive’s separation from service; and
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(ii) if the payment or distribution is payable over time, the amount of such non-exempt
deferred compensation that would otherwise be payable during the six-month period immediately
following the Executive’s separation from service will be accumulated and the Executive’s right to
receive payment or distribution of such accumulated amount will be delayed until the earlier of (A)
a date no later than thirty (30) days following the Executive’s death, or (B) the first day of the
seventh month following the Executive’s separation from service, whereupon the accumulated amount
will be paid or distributed to the Executive and the normal payment or distribution schedule for
any remaining payments or distributions will resume.
For purposes of this Agreement, the term “Specified Employee” has the meaning given such term
in Code Section 409A and the final regulations thereunder, provided, however, that, as permitted in
such final regulations, the Employer’s Specified Employees and its application of the six-month
delay rule of Code Section 409A(a)(2)(B)(i) shall be determined in accordance with rules adopted by
the Board of Directors or the Compensation Committee, which shall be applied consistently with
respect to all nonqualified deferred compensation arrangements of the Employer, including this
Agreement.
(d) If Executive is entitled to be paid or reimbursed for any taxable expenses under this
Agreement, and such payments or reimbursements are includible in Executive’s federal gross taxable
income, the amount of such expenses reimbursable in any one calendar year shall not affect the
amount reimbursable in any other calendar year, and the reimbursement of an eligible expense must
be made no later than December 31 of the year after the year in which the expense was incurred.
Except as otherwise provided in this Agreement, Executive’s rights to payment or reimbursement of
expenses shall expire at the end of six (6) years after the Effective Date. No right of Executive
to reimbursement of expenses shall be subject to liquidation or exchange for another benefit.
IN WITNESS WHEREOF, this Agreement has been executed by the Employer, by its duly authorized
officer, and by the Executive, as of December 31, 2008.
| /s/ Xxxxxxx X. Xxxxx | ||||
| Xxxxxxx X. Xxxxx | ||||
| ALLION HEALTHCARE, INC. | ||||
By: Name: |
/s/ Flint X. Xxxxxxxx
|
|||
Title:
|
Director | |||
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