AMENDED AND RESTATED EMPLOYMENT AGREEMENT
Exhibit 10.4
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 Xxxxxx X. Xxxxxxxxxxxx, X.Xx. (the “Executive”). This Agreement
amends and restates the Employment Agreement between the parties dated as of July 20, 2007 (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 July 20, 2007 (the
“Effective Date”) and for all purposes of this Agreement, the Effective Date shall remain
July 20, 2007; and
WHEREAS, the Employer employs Executive as its Vice President, Pharmacy Operations, 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 Vice President, Pharmacy
Operations. 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 Employer (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
second anniversary of the Effective Date. Expiration of the Term shall not constitute termination
of Executive’s employment during the Term for purposes of termination benefits under Section 6 of
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 one hundred eighty
thousand dollars ($180,000.00) per annum, less normal withholdings, effective beginning July 20,
2007, and 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 2007 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 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
next following the end of the calendar 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. All options issued to the Executive, which have not been vested as of
the time any Change in Control (as defined in Section 7(c)) occurs, shall automatically vest upon
such occurrence.
(d) Regular Benefits. The Executive shall also be eligible 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, unless otherwise approved by the Board
of Directors.
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 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 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 20 of this Agreement.
(a) Termination by the Employer for Cause, by the Executive without Good Reason or Death. If,
during the Term, (i) the Employer terminates the Executive’s employment for Cause or (ii) the
Executive terminates his employment with the Employer without Good Reason, or upon the Executive’s
death, 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 collectively referred to as the “Accrued
Obligations”); and
(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 20 hereof)
(the “Other Benefits”).
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The Accrued Obligations shall be paid to the Executive 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 or by the Employer Without Cause. 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, then 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) for a period of one (1) year after the Termination Date, including a
termination by the Executive for Good Reason or by the Employer without Cause within twelve
(12) months following a Change in Control. Such severance payment shall be payable in a
lump sum in cash within five (5) days following the Termination Date;
(iii) 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”),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 (iii) shall terminate as of the earlier of (x)
one (1) year from the Termination Date or (y) the date of commencement of eligibility for
health insurance pursuant to other employment or self-employment;
(iv) accelerated vesting of all of the Executive’s options to purchase shares of
common stock of the Employer referred to in Section 4(c); and
(v) the timely payment or provision of the Other Benefits, if any.
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)(iii) 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 Term, at which time this Agreement shall terminate and the Executive shall
be entitled only to the Accrued Obligations, and the Employer shall have no further obligations to
the Executive under this Agreement. If any question shall arise as to whether the 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.
(b) “Good Reason” shall mean, without Executive’s written consent:
(i) Any material diminution in the nature or scope of the authorities,
responsibilities or duties of the Executive;
(ii) Any material reduction in the amount of the Executive’s Salary;
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(iii) Any material breach by the Employer or its successors of any other provision of
this Agreement, including without limitation the obligation to provide the compensation and
benefits as set forth in Section 4 of this Agreement; or
(iv) A material change in the geographic location of the Executive’s principal place
of employment with the Employer, and for purposes of this Agreement, a change of 35 miles
or more from the current location will be considered material.
Notwithstanding the foregoing, an event described in clauses (i) through (iv) 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 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
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(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 the 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 prior 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 the Executive’s employment with the Employer
and for one (1) year thereafter, the Executive (i) will not, directly or indirectly, whether 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
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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). If the Executive is entitled to reimbursement of expenses hereunder,
the amount 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. The Executive’s rights
and obligations pursuant to this Section 8(f) shall expire at the end of six (6) years after the
Effective Date and shall not be subject to liquidation or exchange for another benefit.
(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 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
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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. 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.
11. 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.
12. 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
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.
13. 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
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Agreement, shall not prevent any subsequent enforcement of such term or obligation or
be deemed a waiver of any subsequent breach.
14. 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.
15. 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.
16. 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.
17. 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.
18. Indemnification. The provisions of Article VII (Indemnification) of the Third
Amended and Restated By Laws 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. To the extent the Executive is covered by any Director’s and Officer’s insurance
maintained by the Employer for the period during which the Executive provides services hereunder,
the Employer will undertake reasonable efforts to make available to the Executive the benefit of
such insurance.
19. 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.
20. 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 of 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 Employer 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
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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
(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 Director 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
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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.
[Signatures on Following Page]
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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/ Xxxxxx X. Xxxxxxxxxxxx |
||
ALLION HEALTHCARE, INC.
By:
|
/s/ Xxxxxxx X. Xxxxx
|
|||
Name:
|
Xxxxxxx X. Xxxxx | |||
Title:
|
Chief Executive Officer |
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