Exhibit 10.2
EMPLOYMENT
AGREEMENT
This AGREEMENT (this “Agreement”) is
made as of October 1, 2006 (the “Effective Date”),
by and between Allion Healthcare, Inc., a
corporation with its headquarters located at 1660 Walt Whitman
Road, Melville, New York 11747 (the “Employer”), and
James G. Spencer (the “Executive”).
WHEREAS, the Employer and the Executive desire
to enter into an 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 has agreed to certain
confidentiality, non-competition and non-solicitation covenants
contained hereunder, in consideration of the additional 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
Chief Financial Officer. The Executive shall also serve the
Employer in such other or additional offices as the Executive may
reasonably be requested to serve by the Board of Directors of the
Company (the “Board of Directors”). In such capacity or
capacities, the Executive shall perform such services and duties in
connection with the business, affairs and operations of the
Employer, consistent with such positions, as may be assigned or
delegated to the Executive from time to time by or under the
authority of the Board of Directors.
3. Term .
Subject to the provisions of Section 6, the term of employment
pursuant to this Agreement (the “Term”) shall commence
on the Effective Date and terminate on the first anniversary of the
Effective Date; provided that the Term shall automatically be
renewed for successive periods of one (1) year unless either party
gives written notice to the other party, at least ninety (90) days
prior to the end date of the then Term, of that party’s
intent not to renew this Agreement, in which event the
Executive’s employment shall terminate at the end of the then
Term.
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 ninety
thousand dollars ($290,000.00) per annum, subject to increases
from time to time in the sole discretion of the
Compensation Committee of the Board of Directors
(the “Compensation Committee”).
Salary shall be payable in periodic installments in accordance with
the Employer’s usual practice for its senior
executives.
(b) Bonus . The Executive may be awarded performance
bonuses on an annual basis, commencing with a bonus that may be
awarded for the 2006 calendar year, as determined by the Board of
Directors or the Compensation Committee in the sole discretion of
the Board of Directors or Compensation Committee, respectively;
provided, however, that the bonus for any such year shall not
exceed forty percent (40%) of Salary for such year.
(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 of any Change
in Control occurs shall automatically vest upon such
occurrence.
(d) Regular Benefits . The Executive shall also be entitled to
participate in any employee benefit plans, medical insurance plans,
life insurance plans, disability income plans, retirement plans,
vacation plans, expense reimbursement plans and other benefit plans
which the Employer may from time to time have in effect for all or
most of its senior executives. Unless and until the Executive
relocates his primary residence to New York, he shall continue to
receive reimbursement for the health care plan in which he
currently participates in Baltimore. 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 . 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) Place of Performance and Relocation
Expenses. The Executive’s main office will be located at
the Employer’s main office in Melville, New York or at any
other location where such offices are moved. The Employer will
reimburse the Executive for travel and living expenses incurred by
the Executive in traveling from
his residence in Maryland to Melville, New York
or any other location where such offices are moved, and while
temporarily residing at or near such location in connection with
his employment with the Employer, during the period that the
Executive maintains a residence in Maryland and for at least two
(2) years from the date of this Agreement. If at any time
reimbursement for such expenses (whether paid before this Agreement
was entered into, or after) is characterized by the Internal
Revenue Service as compensation to the Executive, the Employer
shall pay to the Executive an additional amount equal to the tax
paid by the Executive on such compensation fully grossed up so that
the amount retained by the Executive after payment of taxes on such
amount equals the tax imposed on the reimbursement payments. If the
Executive determines to relocate his residence at any time while
this Agreement is in effect, the Executive will be reimbursed for
his relocation expenses, including but not limited to expenses
incurred to find a house near the Employer’s main office,
sales commissions payable to a real estate agent in connection with
the sale of the Maryland residence, moving expenses and other
expenses incurred incidental to the process of
relocation.
(h) Exclusivity of Salary and Benefits
. The Executive shall not be
entitled to any payments or benefits other than those provided
under this Agreement.
5. Extent of Service . During the Term, the Executive shall, subject
to the direction and supervision of the Board of Directors, devote
the Executive’s full business time, best efforts and business
judgment, skill and knowledge to the advancement of the
Employer’s interests and to the discharge of the
Executive’s duties and responsibilities under this Agreement.
The Executive shall not engage in any other business activity,
except as may be approved by the Board of Directors; provided that
nothing in this Agreement shall be construed as preventing the
Executive from (a) investing the Executive’s assets in any
company or other entity in a manner not prohibited by Section 8(d),
or (b) engaging in religious, charitable or other community or
non-profit activities that, in the case of (a) or (b) above, do not
in any way impair the Executive’s ability to fulfill the
Executive’s duties and responsibilities under this
Agreement.
6. Termination and Termination Benefits
. Notwithstanding any other
provision of this Agreement, (i) the Employer may terminate the
Executive’s employment hereunder at any time with or without
Cause (as defined in Section 7(a)) at its election; (ii) the
Executive may terminate the Executive’s employment hereunder
at any time with or without Good Reason (as defined in Section
7(b)) at the Executive’s election; (iii) Executive’s
employment hereunder shall automatically terminate upon the
Executive’s death; and (iv) the Executive’s employment
shall terminate upon the Executive’s disability as provided
in Section 6(c). The date of termination of the Executive’s
employment hereunder, whether upon scheduled termination of the
then Term, termination by either the Employer or the Executive as
provided in this Agreement, or by reason of the Executive’s
death or disability, is the “Termination Date.” Any
termination of employment hereunder shall be effective upon the
date of scheduled termination of the then Term, the date of receipt
by the non-terminating party of a notice of termination from the
terminating party with or without Cause (in the case of a
termination by the Employer) or with or without Good Reason (in the
case of a termination by the Executive), the date of death, or
after the onset of disability as provided in Section 6(c), as the
case may be; provided that, in the case
of a termination by the Employer, the Employer
may specify in the notice of termination a later termination date
(which date shall be no later than thirty (30) days after the date
of such notice of termination). The amounts payable to the
Executive and other benefits provided to the Executive under this
Section 6 shall be referred to as “Termination
Benefits”.
(a) Termination by the Employer for Cause, by the
Executive without Good Reason, Death, or notice of nonrenewal by
the Executive . If the
Employer terminates the Executive’s employment for Cause, if
the Executive terminates his employment with the Employer without
Good Reason, or if the Executive provides the Employer with notice
of non-renewal as provided in Section 3, the Executive shall be
entitled to:
(i) accrued but unpaid Salary through the
Termination Date;
(ii) cash in lieu of any accrued but unused vacation
through the Termination Date; 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).
Upon payment or
provision of (i) through (iii) above (collectively, the
“Accrued Benefits”), the Employer shall have no further
obligations to the Executive under this Agreement.
(b) Termination by the Executive for Good Reason, by
the Employer Without Cause, or by notice of nonrenewal by the
Employer. If the
Executive terminates his employment with the Employer for Good
Reason or if the Employer terminates the Executive’s
employment with the Employer without Cause, or if the Employer
terminates the Executive’s employment by reason of having
delivered a notice of nonrenewal, the Executive shall be entitled
to:
(i) the Accrued Benefits;
(ii) continuation of Salary, at the rate in effect
on the Termination Date, that would have been paid to the
Executive, as if there had been no termination described in this
Section 6(b), through the expiration of the then Term, payable
according to the normal payroll policies of the Employer for senior
executives;
(iii) $290,000, payable in a lump sum within five (5)
business days after the Termination Date;
(iv) continuation of group health plan benefits to
the extent authorized by and consistent with 29 U.S.C. § 1161
et seq. (commonly known as “COBRA”), with the cost of
the regular premium for such benefits shared in the same relative
proportion by the Employer and the Executive as in effect on the
Termination Date, provided that the Executive’s entitlements
under this clause (iv) shall terminate as of the date of
commencement of eligibility for health insurance pursuant to other
employment or self-employment; and
(v) if termination is for Good Reason under Section
7(b)(vii), accelerated vesting of all options to purchase shares of
common stock of the Employer referred to in Section
4(c).
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 continue to receive Salary (less any
disability pay or sick pay benefits to which the Executive may be
entitled under the Employer’s plans and policies) and other
compensation and benefits under Section 4 of this Agreement (except
to the extent that the Executive may be ineligible for one or more
such benefits under applicable plan terms) until the earlier of (i)
the date that is six (6) months after the onset of the disability
and (ii) the termination of the then Term, at which time this
Agreement shall terminate and the Executive shall be entitled only
to those Termination Benefits set forth in Section 6(a). If any
question shall arise as to whether
