Exhibit 10.4
EMPLOYMENT AGREEMENT
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 1660 Walt Whitman Road, Melville, New York 11747 (the
“ Employer ”), and Anthony D. Luna (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
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 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 writ
