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 1660 Walt
Whitman Road, Melville, New York 11747 (the “ Employer
”), and Robert E. Fleckenstein, R.Ph. (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
Disabilities Act, 42 U.S.C. §12101 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
limitati
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