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.
 

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(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
 

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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
 

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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
 

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(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 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:

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(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 writing and such breach remains
uncured for thirty (30) days following the date such notice is given; (ii) the
Executive’s breach of any obligation of the Executive under Section 8; (iii) any
act by the Executive of fraud or theft; (iv) a conviction by a court of
competent jurisdiction that the Executive is guilty of a felony, or a
misdemeanor involving moral turpitude, deceit, dishonesty or fraud, or a plea of
nolo contendere thereto; or (v) engaging in reckless behavior (the failure to
use even the slightest amount of care) or willful misconduct by the Executive
with respect to the Employer or its business or assets that has had or is
reasonably likely to have a material adverse effect on the Employer or its
business or assets. No act or omission by the Executive reasonably believed to
be in or not adverse to the interests of the Employer shall constitute Cause.
For purposes of this Agreement, the Executive shall not be deemed to have been
terminated for Cause unless and until there shall has been delivered to the
Executive a copy of a resolution, duly adopted by the Board of Directors,
stating that, in the good faith opinion of the Board of Directors, Cause exists
and specifying the particulars thereof in reasonable detail. Before adopting any
such resolution, the Board of Directors shall offer the Executive, upon
reasonable prior written notice (which need not exceed five business days), an
opportunity for him, together with his counsel, to be heard by the Board of
Directors.
 
(b) “Good Reason” shall mean the occurrence of any of the events described below
that continues for, and for which the Employer has not cured within, thirty (30)
days after written notice thereof to the Employer from the Executive:

(i) Any material or significant adverse change in the nature or scope of the
authorities, powers, functions, responsibilities or duties of the Executive;

(ii) Any reduction in the amount of the Executive’s compensation or benefits as
set forth in Section 4 of this Agreement;

(iii) Any material loss of title or office;

(iv) Any material breach by the Employer or their successors of any other
provision of this Agreement;

(v) The relocation of the offices at which the Executive is principally employed
as of the Effective Date to a location not in Nassau or Suffolk counties, which
relocation is not approved by the Executive;

(vi) The failure to permit the Executive to adopt or implement procedures or
policies required or advisable for legal or regulatory reasons,

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other interference with the Executive’s compliance with legal obligations; or

(vii) A Change in Control (as defined in Section 4(c) below), provided that the
Executive has given the Employer notice of his termination for Good Reason
within thirty (30) days after such Change in Control.

(c) “Change in Control” shall mean the occurrence of one or more of the
following events:
 
(i) any “person” (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”)) becomes a
“beneficial owner” (as such term is defined in Rule 13d-3 promulgated under the
Exchange Act) (other than the Employer, any trustee or other fiduciary holding
securities under an employee benefit plan of the Employer, or any corporation
owned, directly or indirectly, by the stockholders of the Employer, in
substantially the same proportions as their ownership of stock of the Employer),
directly or indirectly, of securities of the Employer, representing fifty
percent (50%) or more of the combined voting power of the Employer’s then
outstanding securities; or
 
(ii) persons who, as of the Effective Date, constituted the Employer’s Board of
Directors (the “Incumbent Board”) cease for any reason including, without
limitation, as a result of a tender offer, proxy contest, merger or similar
transaction, to constitute at least a majority of the Board of Directors,
provided that any person becoming a director of the Employer subsequent to the
Effective Date whose election was approved by at least a majority of the
directors then comprising the Incumbent Board shall, for purposes of this
Section 7(c), be considered a member of the Incumbent Board; or
 

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(iii) the stockholders of the Employer approve a merger or consolidation of the
Employer with any other corporation or other entity, other than (1) a merger or
consolidation which would result in the voting securities of the Employer
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than fifty percent (50%) of the combined voting power of
the voting securities of the Employer or such surviving entity outstanding
immediately after such merger or consolidation or (2) a merger or consolidation
effected to implement a recapitalization of the Employer (or similar
transaction) in which no “person” (as hereinabove defined) acquires more than
fifty percent (50%) of the combined voting power of the Employer’s then
outstanding securities; or
 
(iv) the stockholders of the Employer approve a plan of complete liquidation of
the Employer or an agreement for the sale or disposition by the Employer of all
or substantially all of the Employer’s assets.
 
 
8. Confidential Information, Noncompetition and Cooperation.
 
(a) Confidential Information. As used in this Agreement, “Confidential
Information” means nonpublic (not as a result of Executive’s wrongful
disclosure) information belonging to the Employer which is of value to the
Employer in the course of conducting its business and the disclosure of which
could result in a competitive or other disadvantage to the Employer.
Confidential Information includes, without limitation, financial information,
reports, and forecasts; inventions, improvements and other intellectual
property, trade secrets, know-how, designs, processes or formulae, software,
market or sales information or plans, customer lists; and business plans,
prospects, strategies and opportunities (such as possible acquisitions or
dispositions of businesses or facilities) which have been discussed or
considered by the management of the Employer. Confidential Information includes
information developed by the Executive in the course of the Executive’s
employment by the Employer, as well as other information to which the Executive
may have access in connection with the Executive’s employment. Confidential
Information also includes the confidential information of others with which the
Employer has a business relationship. Notwithstanding the foregoing,
Confidential Information does not include information in the public domain,
unless due to breach of the Executive’s duties under Section 8(b).
 
(b) Confidentiality. The Executive understands and agrees that the Executive’s
employment creates a relationship of confidence and trust between the Executive
and the Employer with respect to all Confidential Information. At all times,
both during the Executive’s employment with the Employer and after its
termination, the Executive will keep in confidence and trust all such
Confidential Information, and will not use or disclose any such Confidential
Information without the written consent of the Employer, except as may be
necessary in the ordinary course of performing the Executive’s duties to the
Employer.
 

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(c) Documents. Records. etc. All documents, records, data, apparatus, equipment
and other physical property, whether or not pertaining to Confidential
Information, which are furnished to the Executive by the Employer or are
produced by the Executive in connection with the Executive’s employment will be
and remain the sole property of the Employer. The Executive will return to the
Employer all such materials and property as and when requested by the Employer.
In any event, the Executive will return all such materials and property
immediately upon termination of the Executive’s employment for any reason. The
Executive will not retain with the Executive any such material or property or
any copies thereof after such termination.
 
(d) Noncompetition and Nonsolicitation. During Executive’s employment with the
Employer and for one (1) year thereafter, the Executive (i) will not, directly
or indirectly, whether as owner, partner, shareholder, consultant, agent,
employee, co-venturer or otherwise, engage, participate, assist or invest in any
Competing Business (as hereinafter defined), (ii) will refrain from directly or
indirectly employing, attempting to employ, recruiting or otherwise soliciting,
inducing or influencing any person to leave employment with the Employer (other
than terminations of employment of subordinate employees undertaken in the
course of the Executive’s employment with the Employer); and (iii) will refrain
from soliciting or encouraging any customer or supplier to terminate or
otherwise modify adversely its business relationship with the Employer. The
Executive understands that the restrictions set forth in this Section 8 are
intended to protect the Employer’s interest in its Confidential Information and
established employee, customer and supplier relationships and goodwill, and
agrees that such restrictions are reasonable and appropriate for this purpose.
For purposes of this Agreement, the term “Competing Business” shall mean a
business which consists of operating specialty HIV pharmacies anywhere within
the United States. Notwithstanding the foregoing, the Executive may own up to
one percent (1%) of the outstanding stock of a publicly-held corporation which
constitutes or is affiliated with a Competing Business. The Employer may extend
the period of noncompetition and nonsolicitation for an additional period not
exceeding one (1) year, provided that it extends and pays Termination Benefits
to the Executive for the duration of the extension. Notwithstanding the
foregoing, the Executive’s obligations under Section 8(d)(i) shall terminate and
be of no further force or effect upon termination of the Executive’s Employment
under any of the circumstances described in Section 6(b).
 
(e) Third-Party Agreements and Rights. The Executive hereby confirms that the
Executive is not bound by the terms of any agreement with any previous employer
or other party which restricts in any way the Executive’s use or disclosure of
information or the Executive’s engagement in any business. The Executive
represents to the Employer that the Executive’s execution of this Agreement, the
Executive’s employment with the Employer and the performance of the Executive’s
proposed duties for the Employer will not violate any obligations the Executive
may have to any such previous employer or other party. In the Executive’s work
for the Employer, the Executive will not disclose or make use of any information
in violation of any agreements with or rights of any such previous employer or
other party, and the Executive will not bring to the premises of the Employer
any copies or
 

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other tangible embodiments of non-public information belonging to or obtained
from any such previous employment or other party.
 
(f) Litigation and Regulatory Cooperation. During and after the Executive’s
employment, the Executive shall cooperate fully with the Employer in the defense
or prosecution of any claims or actions now in existence or which may be brought
in the future against or on behalf of the Employer which relate to events or
occurrences that transpired while the Executive was employed by the Employer.
The Executive’s full cooperation in connection with such claims or actions shall
include, but not be limited to, being available to meet with counsel to prepare
for discovery or trial and to act as a witness on behalf of the Employer at
mutually-convenient times. During and after the Executive’s employment, the
Executive also shall cooperate fully with the Employer in connection with any
investigation or review of any federal, state or local regulatory authority as
any such investigation or review relates to events or occurrences that
transpired while the Executive was employed by the Employer. The Employer shall
reimburse the Executive for any reasonable out-of-pocket expenses incurred in
connection with the Executive’s performance of obligations pursuant to this
Section 8(f).
 
(g) Injunction. The Executive agrees that it would be difficult to measure any
damages caused to the Employer which might result from any breach by the
Executive of the promises set forth in this Section 8, and that in any event
money damages would be an inadequate remedy for any such breach. Accordingly,
subject to Section 8 of this Agreement, the Executive agrees that if the
Executive breaches, or threatens to breach, any portion of this Agreement, the
Employer shall be entitled, in addition to all other remedies that it may have,
to an injunction or other appropriate equitable relief to restrain any such
breach without showing or proving any actual damage to the Employer.

(h) Definition of Employer. For purposes of this Section 8, “Employer” shall
include Allion Healthcare, Inc. and each of its subsidiaries.

9. Arbitration of Disputes. Any controversy or claim arising out of or relating
to this Agreement or the breach thereof or otherwise arising out of the
Executive’s employment or the termination of that employment (including, without
limitation, any claims of unlawful employment discrimination whether based on
age or otherwise) shall, to the fullest extent permitted by law, be settled by
arbitration under the auspices of the American Arbitration Association (“AAA”)
in New York, New York in accordance with the Employment Arbitration and
Mediation Procedures of the AAA, including, but not limited to, the rules and
procedures applicable to the selection of arbitrators. In the event that any
person or entity other than the Executive or the Employer may be a party with
regard to any such controversy or claim, such controversy or claim shall be
submitted to arbitration subject to such other person or entity’s agreement.
Judgment upon the award rendered by the arbitrator may be entered in any court
having jurisdiction thereof. This Section 9 shall be specifically enforceable.
Notwithstanding the foregoing, this Section 9 shall not preclude either party
from pursuing a court action for the sole purpose of obtaining a temporary
restraining order or a preliminary injunction in circumstances in which such
relief is appropriate; provided that any other relief shall be pursued through
an arbitration proceeding pursuant to this Section 9.
 

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10. Consent to Jurisdiction. To the extent that any court action is permitted
consistent with or to enforce Section 8 of this Agreement, the parties hereby
consent to the jurisdiction of the Supreme Court of the State of New York,
Suffolk County, and the United States District Court for the Eastern District of
New York. Accordingly, with respect to any such court action, the Executive (a)
submits to the personal jurisdiction of such courts; (b) consents to service of
process; and (c) waives any other requirement (whether imposed by statute, rule
of court, or otherwise) with respect to personal jurisdiction or service of
process.
 
11. Integration. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior
agreements between the parties with respect to any related subject matter.
 
12. Assignment; Successors and Assigns; etc. Neither the Employer nor the
Executive may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party; provided that the Employer may assign its rights under this Agreement
without the consent of the Executive in the event that the Employer shall effect
a reorganization, consolidate with or merge into any other corporation,
partnership, organization or other entity, or transfer all or substantially all
of its properties or assets to any other corporation, partnership, organization
or other entity. This Agreement shall inure to the benefit of and be binding
upon the Employer and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns.
 
13. Enforceability. If any portion or provision of this Agreement (including,
without limitation, any portion or provision of any section of this Agreement)
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.
 
14. Waiver. No waiver of any provision hereof shall be effective unless made in
writing and signed by the waiving party. The failure of any party to require the
performance of any term or obligation of this Agreement, or the waiver by any
party of any breach of this Agreement, shall not prevent any subsequent
enforcement of such term or obligation or be deemed a waiver of any subsequent
breach.
 
15. Notices. Any notices, requests, demands and other communications provided
for by this Agreement shall be sufficient if in writing and delivered in person
or sent by a nationally-recognized overnight courier service or by registered or
certified mail, postage prepaid, return receipt requested, to the Executive at
the last address the Executive has filed in writing with the Employer or, in the
case of the Employer, at its main offices, attention of the Chairman of the
Board of Directors, and shall be effective on the date of delivery in person or
by courier or three (3) days after the date mailed.
 
16. Amendment. This Agreement may be amended or modified only by a written
instrument signed by the Executive and by a duly authorized representative of
the Employer.
 

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17. Construction. This Agreement has been drafted and reviewed jointly by the
parties, and no presumption of construction as to the drafting of this Agreement
shall be applied against or in favor of any party.
 
18. Governing Law. This is a New York contract and shall be construed under and
be governed in all respects by the laws of the State of New York, without giving
effect to the conflict of laws principles of New York. With respect to any
disputes concerning federal law, such disputes shall be determined in accordance
with the law as it would be interpreted and applied by the United States Court
of Appeals for the Second Circuit.
 
19. Indemnification. The provisions of Article VII (Indemnification) of the
Second Amended and Restated By Laws dated June 24, 2002 of the Employer as in
effect on the date hereof are deemed incorporated herein by reference and any
amendment to such By Laws after the date hereof shall not be incorporated by
reference herein if the effect thereof is to reduce the rights conferred on the
Executive.

20. Legal Fees. The Employer shall reimburse the Executive for legal fees
incurred in connection with the preparation of this Agreement in the amount of
$4,000. If there is an arbitration or court proceeding between the Executive and
the Employer in connection with Executive’s enforcement of the terms of this
Agreement and it has been determined in such arbitration or proceeding that the
Executive has substantially prevailed in such arbitration or proceeding, the
Employer shall reimburse the Executive’s reasonable fees and expenses incurred
in connection with such arbitration or proceeding in an amount not to exceed
$100,000.

21. Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be taken to be an original;
but such counterparts shall together constitute one and the same document.

IN WITNESS WHEREOF, this Agreement has been executed by the Employer, by its
duly authorized officer, and by the Executive, as of the Effective Date.

                 _/s/ James G. Spencer___________   ALLION HEALTHCARE, INC.
            James G. Spencer     

        By: _/s/ Michael P. Moran_____
    Name: Michael P. Moran
    Title: Chief Executive Officer