EMPLOYMENT AGREEMENT
Exhibit 10.4
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 Xxxxxxx X.
Xxxx (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, HIV Sales. 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 two hundred thousand dollars ($200,000.00) 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]
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/ Xxxxxxx
X.
Xxxx
Xxxxxxx X. Xxxx
ALLION HEALTHCARE, INC.
By: /s/
Xxxxxxx X.
Xxxxx
Xxxxxxx X.
Xxxxx
Chief
Executive Officer
