Employment Agreement - VP Sales

Exhibit 10.3

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 Anthony D. Luna (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, HIV Sales and Oris Health, Inc. 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 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. a7 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 ...