EMPLOYMENT AGREEMENT
Exhibit
10.3
This
EMPLOYMENT AGREEMENT (this “Agreement”) is made
and entered into this 6th day of
August, 2009, 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”).
WHEREAS,
the Employer and the Executive previously entered into an agreement providing
for the Executive’s employment by the Employer, which expired July 20,
2009;
WHEREAS,
the Employer and the Executive desire to enter into a new 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;
WHEREAS,
the Employer and the Executive desire for this Agreement to be effective as of
July 20, 2009 (the “Effective Date”),
upon the expiration of the previous employment agreement; and
WHEREAS,
the Executive has agreed to certain confidentiality, non-competition and
non-solicitation covenants contained hereunder, in consideration of the benefits
provided to the Executive under this Agreement;
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 as of the Effective Date, 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 2009 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 previously been issued, and may be issued in the future, 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.
(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”).
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 ninety (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) 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;
(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 thirty (30) days after such event occurs, and (ii) the
Employer fails to cure such event within thirty (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 ninety (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
(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 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 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 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 Fourth 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
Internal Revenue Code of 1986, as amended (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
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 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]
LEGAL02/31444872v1
IN
WITNESS WHEREOF, this Agreement has been executed by the Employer, by its duly
authorized officer, and by the Executive, as of the date first written
above.
/s/ Xxxxxx X.
Xxxxxxxxxxxx,
X.Xx.
Xxxxxx X.
Xxxxxxxxxxxx, X.Xx.
ALLION
HEALTHCARE, INC.
By: /s/ Xxxxxxx X.
Xxxxx
Xxxxxxx
X. Xxxxx
Chief
Executive Officer
- -
LEGAL02/31444872v1
