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Exhibit
10.2
EMPLOYMENT AGREEMENT
This
AGREEMENT (this “ Agreement ”) is made
effective as of July 20, 2007 (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 Robert
E. Fleckenstein, R.Ph. (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 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 . 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; 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).
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 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 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), for a period of
one (1) year after the Termination Date, including termination
within twelve (12) months following a Change in
Control. Such severance payments
shall be payable according to the normal payroll policies of
the Employer for senior executives;
(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;
and
(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).
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 Term, at which time this Agreement shall terminate and
the Executive shall be entitled only to the Accrued Benefits,
and the Employer shall have no further obligations to the
Executive under this Agreement. If any question shall arise
as to whether during any period 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
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