sc13d

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ik+KN1N5W+FN9tUbTwO6Tutba2DXtxhljkYZ0wZyud20IwDhGDMUp9YAihlTejN9 aHrKCMAetW13ZsYAlWtZTw== 0000950123-09-054253.txt : 20091028 0000950123-09-054253.hdr.sgml : 20091028 20091028171702 ACCESSION NUMBER: 0000950123-09-054253 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 9 FILED AS OF DATE: 20091028 DATE AS OF CHANGE: 20091028 GROUP MEMBERS: ANTHONY A. TAMER GROUP MEMBERS: HIG BAYSIDE ADVISORS II, LLC GROUP MEMBERS: HIG BAYSIDE DEBT & LBO FUND II, L.P. GROUP MEMBERS: HIG HEALTHCARE, LLC GROUP MEMBERS: HIG-GPII, INC. GROUP MEMBERS: SAMI W. MNAYMNEH SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ALLION HEALTHCARE INC CENTRAL INDEX KEY: 0000847935 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 112962027 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-40804 FILM NUMBER: 091142448 BUSINESS ADDRESS: STREET 1: 1660 WALT WHITMAN ROAD SUITE 105 CITY: MELVILLE STATE: NY ZIP: 11747 BUSINESS PHONE: 631-870-5100 MAIL ADDRESS: STREET 1: 1660 WALT WHITMAN ROAD SUITE 105 CITY: MELVILLE STATE: NY ZIP: 11747 FORMER COMPANY: FORMER CONFORMED NAME: CARE GROUP INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Brickell Bay Acquisition Corp. CENTRAL INDEX KEY: 0001475050 IRS NUMBER: 800494881 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1001 BRICKELL BAY DRIVE STREET 2: 27TH FLOOR CITY: MIAMI STATE: FL ZIP: 33131 BUSINESS PHONE: 305-379-2322 MAIL ADDRESS: STREET 1: 1001 BRICKELL BAY DRIVE STREET 2: 27TH FLOOR CITY: MIAMI STATE: FL ZIP: 33131 SC 13D 1 g20953sc13d.htm SC 13D sc13d

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

UNDER THE SECURITIES EXCHANGE ACT OF 1934
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED
PURSUANT TO RULE 13d-2(a)

Allion Healthcare, Inc.

(Name of Issuer)

Common Stock, $0.001 Par Value

(Title of Class of Securities)

019615103

(Cusip Number)

William J. Nolan
Richard H. Siegel, Esq.
Brickell Bay Acquisition Corp.
c/p H.I.G. Capital, L.L.C.
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131
(305) 379-2322

With copies to:
James S. Rowe
Michael H. Weed
Kirkland & Ellis LLP
300 North LaSalle Street
Chicago, Illinois 60654
(312) 862-2000

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

October 18, 2009

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).


CUSIP No.		019615103	13D

NAME OF REPORTING PERSON:

Brickell Bay Acquisition Corp.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) o

(b) þ

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

BK; AF; OO

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):

CITIZENSHIP OR PLACE OF ORGANIZATION:

Delaware

SOLE VOTING POWER

NUMBER OF

-0-

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

11,795,364 (see Introduction and Item 5)

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-0-

WITH

SHARED DISPOSITIVE POWER

-0-

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

11,795,364 (see Introduction and Item 5)

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

41.1%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):


CUSIP No.		019615103	13D

NAME OF REPORTING PERSON:

H.I.G. Healthcare, LLC
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) o

(b) þ

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

BK; AF; OO

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):

CITIZENSHIP OR PLACE OF ORGANIZATION:

Cayman Islands

SOLE VOTING POWER

NUMBER OF

-0-

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

11,795,364 (see Introduction and Item 5)

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-0-

WITH

SHARED DISPOSITIVE POWER

-0-

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

11,795,364 (see Introduction and Item 5)

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

41.1%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):


CUSIP No.		019615103	13D

NAME OF REPORTING PERSON:

H.I.G. Bayside Debt & LBO Fund II, L.P.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) o

(b) þ

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

BK; AF; OO

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):

CITIZENSHIP OR PLACE OF ORGANIZATION:

Delaware

SOLE VOTING POWER

NUMBER OF

-0-

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

11,795,364 (see Introduction and Item 5)

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-0-

WITH

SHARED DISPOSITIVE POWER

-0-

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

11,795,364 (see Introduction and Item 5)

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

41.1%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):


CUSIP No.		019615103	13D

NAME OF REPORTING PERSON:

H.I.G. Bayside Advisors II, LLC
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) o

(b) þ

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

BK; AF; OO

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):

CITIZENSHIP OR PLACE OF ORGANIZATION:

Delaware

SOLE VOTING POWER

NUMBER OF

-0-

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

11,795,364 (see Introduction and Item 5)

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-0-

WITH

SHARED DISPOSITIVE POWER

-0-

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

11,795,364 (see Introduction and Item 5)

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

41.1%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):


CUSIP No.		019615103	13D

NAME OF REPORTING PERSON:

H.I.G.-GPII, Inc.
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) o

(b) þ

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

BK; AF; OO

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):

CITIZENSHIP OR PLACE OF ORGANIZATION:

Delaware

SOLE VOTING POWER

NUMBER OF

-0-

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

11,795,364 (see Introduction and Item 5)

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-0-

WITH

SHARED DISPOSITIVE POWER

-0-

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

11,795,364 (see Introduction and Item 5)

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

41.1%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):


CUSIP No.		019615103	13D

NAME OF REPORTING PERSON:

Sami W. Mnaymneh
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) o

(b) þ

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

BK; AF; OO

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):

CITIZENSHIP OR PLACE OF ORGANIZATION:

Delaware

SOLE VOTING POWER

NUMBER OF

-0-

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

11,795,364 (see Introduction and Item 5)

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-0-

WITH

SHARED DISPOSITIVE POWER

-0-

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

11,795,364 (see Introduction and Item 5)

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

41.1%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):


CUSIP No.		019615103	13D

NAME OF REPORTING PERSON:

Anthony A. Tamer
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):

CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):

(a) o

(b) þ

SEC USE ONLY:

SOURCE OF FUNDS (SEE INSTRUCTIONS):

BK; AF; OO

CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E):

CITIZENSHIP OR PLACE OF ORGANIZATION:

Delaware

SOLE VOTING POWER

NUMBER OF

-0-

SHARED VOTING POWER

BENEFICIALLY

OWNED BY

11,795,364 (see Introduction and Item 5)

EACH

SOLE DISPOSITIVE POWER

REPORTING

PERSON

-0-

WITH

SHARED DISPOSITIVE POWER

-0-

AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:

11,795,364 (see Introduction and Item 5)

CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):

PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):

41.1%

TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):

Introduction

This statement on Schedule 13D (this “Schedule 13D”) relates to the Agreement and Plan of Merger, dated as of October 18, 2009 (the “Merger Agreement”), by and among Brickell Bay Acquisition Corp., a Delaware corporation (“Parent”), Brickell Bay Merger Corp., a Delaware corporation (the “Merger Sub”), and Allion Healthcare, Inc., a Delaware corporation (the “Company”), and the transactions contemplated thereby. The Merger Agreement contemplates that, subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into the Company, with the Company continuing after the merger as the surviving corporation (the “Merger”). Pursuant to the Merger Agreement, at the effective time of the Merger, each issued and outstanding share of the Company’s common stock, $.001 par value per share (the “Common Stock”), will be converted into the right to receive $6.60 in cash, without interest.

Parallex LLC (“Parallex”) is a stockholder of the Company that beneficially owns 7,903,488 shares, or approximately 27.5% of the outstanding Common Stock. In connection with the execution of the Merger Agreement, Parallex, along with certain other stockholders of the Company, each a former stockholder of Biomed America, Inc. which the Company acquired in April 2008 (together with Parallex, the “Stockholders”) entered into voting agreements with Parent (the “Voting Agreements”), pursuant to which, among other things, the Stockholders agreed to vote their shares of Common Stock, representing approximately 41.1% of the Company’s issued and outstanding Common Stock in the aggregate, in favor of the Merger and against any other acquisition proposal until termination of the Merger Agreement except in certain limited circumstances. None of the Stockholders, other than Parallex, is an affiliate of the Company.

The description of the Merger Agreement and the Voting Agreements is qualified in its entirety by the terms and conditions of the Merger Agreement and the form of Voting Agreement, which are filed as Exhibits 99.2 through 99.3 hereto, respectively, and are incorporated herein by reference.

Item 1. Security and Issuer

The class of equity security to which this statement relates is the Common Stock of the Company. The address of the principal executive offices of the Company is 1660 Walt Whitman Road, Suite 105, Melville, New York 11747.

Item 2. Identity and Background

This Schedule 13D is being filed by Parent, H.I.G. Healthcare, LLC, a Cayman Islands limited company (“HIG Healthcare”), H.I.G. Bayside Debt & LBO Fund II, L.P., a Delaware limited partnership (“Fund II”), H.I.G. Bayside Advisors II, LLC, a Delaware limited liability company (“Advisors II”), H.I.G.-GPII, Inc., a Delaware corporation (“GP II”), Sami W. Mnaymneh and Anthony A. Tamer (together with Parent, HIG Healthcare, Fund II, Advisors II, GP II and Mr. Mnaymneh, the “Reporting Persons”). The Reporting Persons have entered into a Joint Filing Agreement, dated as of the date hereof, a copy of which is filed with this Scheduled 13D as Exhibit 99.1 (which is hereby incorporated by reference) pursuant to which the Reporting Persons have agreed to file this statement jointly in accordance with the provisions of Rule 13d-1(k)(1) under the Exchange Act. The Reporting Persons are filing this Schedule 13D because they may be deemed to be a “group” within the meaning of Section 13(d)(3) of the Act with respect to the transaction described in Item 4 of this Schedule 13D. The Reporting Persons expressly disclaim that they have agreed to act as a group except as described herein.

Parent and HIG Healthcare were formed for the specific purpose of consummating the Merger and the other transactions contemplated by the Merger Agreement. Parent is a wholly-owned subsidiary of HIG Healthcare. The manager of HIG Healthcare is Fund II, the general partner of Fund II is Advisors II, the manager of Advisors II is GP II, and Messrs. Tamer and Mnaymneh are co-presidents of GP II.

Brickell Bay Acquisition Corp.

Parent is a Delaware corporation which was formed for the specific purpose of consummating the Merger and the other transactions contemplated by the Merger Agreement. Parent is a direct wholly owned subsidiary of HIG Healthcare. The principal office of Parent is located at 1001 Brickell Bay Drive, 27th Floor, Miami, Florida 33131.

The directors and executive officers of Parent are as follows:


Name	Positions with Parent	Principal Occupation or Employment
Brian D. Schwartz	President, Director	Executive Managing Director of H.I.G. Capital Management, Inc.

William J. Nolan	Secretary, Director	Principal of H.I.G. Capital Management, Inc.

Craig M. Kahler	Treasurer, Director	Senior Associate of H.I.G. Capital Management, Inc.

The business address for each director and executive officer is 1001 Brickell Bay Drive, 27th Floor, Miami, Florida 33131.

H.I.G. Healthcare, LLC

HIG Healthcare is a limited company organized under the laws of the Cayman Islands that was formed for the specific purpose of consummating the Merger and the other transactions contemplated by the Merger Agreement. Fund II is the manager and sole member of HIG Healthcare. The principal office of HIG Healthcare is located at 1001 Brickell Bay Drive, 27th Floor, Miami, Florida 33131.

H.I.G. Bayside Debt & LBO Fund II, L.P.

Fund II is a limited partnership organized under the laws of the State of Delaware. Its principal business is as a private equity investment company. The principal business address of Fund II, which also serves as its principal office, is 1001 Brickell Bay Drive, 27th Floor, Miami, Florida 33131.

H.I.G. Bayside Advisors II, LLC

Advisors II is a limited liability company organized under the laws of the State of Delaware and is the general partner of Fund II. Its principal business is as a private equity management company. The principal business address of Advisors II, which also serves as its principal office, is 1001 Brickell Bay Drive, 27th Floor, Miami, Florida 33131.

H.I.G. GP-II, Inc.

GP II is a corporation organized under the laws of Delaware and is the manager of Advisors II. Its principal business is to serve as an investment management company for several affiliates. The principal business address of GP II, which also serves as its principal office, is 1001 Brickell Bay Drive, 27th Floor, Miami, Florida 33131.

The directors and executive officers of GP II are as follows:


Name	Positions with GP II	Principal Occupation or Employment
Anthony A. Tamer	Co-President, Director	Managing Partner of H.I.G. Capital Management, Inc. since 1993

Sami W. Mnaymneh	Co-President, Director	Managing Partner of H.I.G. Capital Management, Inc. since 1993

The business address for each director and executive officer is 1001 Brickell Bay Drive, 27th Floor, Miami, Florida 33131.

Sami W. Mnaymneh and Anthony A. Tamer

Messrs. Mnaymneh and Tamer are the directors and sole shareholders of GP II.

Mr. Mnaymneh is a co-founding partner of H.I.G. Capital Management, Inc. (“H.I.G.”) and has served as a Managing Partner of the firm since 1993. Prior to co-founding H.I.G., Mr. Mnaymneh was a Managing Director in the Mergers & Acquisitions department at the Blackstone Group, a New York based merchant bank, where he specialized in providing financial advisory services to Fortune 100 companies.

Mr. Tamer is a co-founding partner of H.I.G. and has served as a Managing Partner of the firm since 1993. Prior to co-founding H.I.G., Mr. Tamer was partner at Bain & Company. His focus at Bain & Company was on developing business unit and operating strategies, improving clients’ competitive positions, implementing productivity improvement and cycle time reduction programs, and leading acquisition and divestiture activities for Fortune 500 clients.

None of the persons for whom information is provided in this Item 2: (1) was convicted in a criminal proceeding during the past five years (excluding traffic violations or similar misdemeanors) or (2) has been a party to any judicial or administrative proceeding during the past five years (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining the person from future violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws. Each natural person for whom information is provided in this Item 2 is a U.S. citizen.

Item 3. Source and Amount of Funds or Other Consideration

No funds were required in connection with the execution and delivery of the Voting Agreements. The total value of the Merger transaction, including the amount of funds required by Parent to pay the aggregate consideration pursuant to the Merger Agreement and the transactions contemplated thereby, and pay fees and expenses relating to the Merger, as well as the assumption or repayment of indebtedness, will be approximately $278 million. Parent currently intends to obtain all of such funds through a combination of (i) debt financing to be provided by one or more groups of lenders and (ii) equity financing to be provided by Fund II and certain rollover investors.

On October 18, 2009, Fund II provided Parent with an Equity Commitment Letter (the “Equity Commitment Letter”), pursuant to which Fund II agreed to provide certain funding in connection with the Merger. Subject to the terms and conditions of the Equity Commitment Letter, Fund II agreed to purchase equity interests of Parent for an aggregate amount of up to $165 million. The obligation of Fund II to fund its commitment will expire on the terms and conditions set forth in the Equity Commitment Letter.

Falcon Strategic Partners III, LP (“Falcon”) provided a financing commitment letter dated October 18, 2009 (the “Falcon Commitment Letter”) to Parent pursuant to which Falcon, subject to the terms and conditions therein, committed to purchase between $49 and $51 million of senior subordinated notes (the “Notes”), the net proceeds of which will be used for the purpose of funding a portion of the consideration payable in connection with the Merger, to pay certain fees and expenses of the Merger, and for general corporate purposes for the operation of the Company following the closing of the Merger.

Fifth Third Bank (“Fifth Third”) provided a commitment letter dated October 18, 2009 (the “Fifth Third Commitment Letter”) to Fund II pursuant to which Fifth Third, subject to the terms and conditions therein, agreed (i) to act as arranger and administrative agent for the a term loan in the principal amount of $95 million (the “Term Loan”) and a revolving credit facility in the principal amount of $15 million (the “Revolver” and, together with the Term Loan, the “Facilities”), (ii) to commit to provide a portion of the Facilities in an aggregate amount of $30 million (to be allocated pro rata between the Revolver and the Term Loan), and (iii) to use its best efforts to arrange additional lenders to provide financing commitments in the aggregate amount of $80 million to complete the Facilities, all on the terms and conditions set forth in Fifth Third Commitment Letter. The Facilities will be used for the purpose of funding a portion of the consideration payable in connection with the Merger, to pay certain fees and expenses of the Merger, and for general corporate purposes for the operation of the Company following the closing of the Merger.

The foregoing description of the Equity Commitment Letter, Falcon Commitment Letter and Fifth Third Commitment Letter is qualified in its entirety by reference to the Equity Commitment Letter, Falcon Commitment Letter and Fifth Third Commitment Letter, which are filed as Exhibits 99.6 through Exhibit 99.8 hereto, respectively, and are incorporated herein by reference.

Item 4. Purpose of Transaction

(a) - (j) On October 18, 2009, Parent, Merger Sub and the Company entered into the Merger Agreement, a copy of which is attached hereto as Exhibit 99.2, pursuant to which Merger Sub, a wholly owned subsidiary of Parent, will be merged with and into the Company, with the Company continuing as the surviving corporation (the “Merger”). Following the consummation of the Merger, the Company will be a wholly owned subsidiary of Parent. Under the terms of the Merger Agreement, each existing share of Common Stock, other than shares held by Parent or its affiliates, treasury shares and dissenting shares, will be converted into the right to receive $6.60 in cash, without interest (the “Merger Consideration”). In addition, all outstanding options for Common Stock will be converted into the right to receive the Merger Consideration less the exercise price of such options. The Merger remains subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement, including obtaining approval of the shareholders of the Company.

Pursuant to the Merger Agreement, the board of directors of Merger Sub at the effective time of the Merger will become the board of directors of the Company. In addition, at the effective time of the Merger, the certificate of incorporation and bylaws of the Company will be amended and restated at the effective time of the Merger to conform to the certificate of incorporation of Merger Sub. If the Merger is consummated, the Common Stock will no longer be traded on the NASDAQ Global Market and will be deregistered under the Exchange Act.

In connection with the execution of the Merger Agreement, the Stockholders, who currently hold in the aggregate approximately 41.1% of the Company’s issued and outstanding Common Stock, entered into the Voting Agreements with Parent, in the form attached hereto as Exhibit 99.3, dated as of October 18, 2009, pursuant to which, among other things, the Stockholders agreed to vote all the shares of Common Stock beneficially owned by such stockholders in favor of the Merger and against any other acquisition proposal at any meeting of the Company’s stockholders until termination of the Merger Agreement except in certain limited circumstances. Pursuant to the Voting Agreements, each Stockholder irrevocably appointed Parent as its true and lawful proxy and attorney-in-fact, with full power of substitution, to (x) vote their Common Stock for the matters expressly provided for in the Voting Agreement and (y) execute and deliver all written consents, conveyances and other instruments or documents appropriate or necessary to effect the matters expressly provided for in the Voting Agreement. Each Stockholder further agreed not to sell any shares of Common Stock that are subject to the Voting Agreements until the earlier of the effective time of the Merger or the termination of the Merger Agreement on its terms and agreed that any additional shares of Common Stock acquired would automatically become subject to the Voting Agreement.

Also in connection with the execution of the Merger Agreement, each of the Stockholders entered into an exchange agreement with Parent (the “Exchange Agreements”), attached hereto as Exhibit 99.4B with respect to Parallex and in the form attached hereto as Exhibit 99.4A with respect to the other Stockholders, each dated as of October 18, 2009, pursuant to which each such Stockholder agreed to surrender to Parent, immediately prior to the effective time of the Merger, a portion of the shares of Common Stock owned beneficially or of record by such Stockholder in exchange for equity interests in Parent. As a result, immediately following the Merger, the Stockholders are expected to hold approximately 29.2% of Parent, and indirectly, the Company.

Also in connection with the execution of the Merger Agreement, Parent, HIG Healthcare and the Stockholders entered into a Stockholders Agreement, dated as of October 18, 2009 (the “Stockholders Agreement”). The Stockholders Agreement will govern the rights and obligations of HIG Healthcare and the Stockholders as holders of equity interests in Parent following completion of the Merger. Pursuant to the Stockholders Agreement, immediately following the Merger, Parent’s board of directors will initially consist of nine members, five of which will be designated by HIG Healthcare, three of which will be designated by Parallex, and one of which will be the chief executive officer of Parent. The Stockholders Agreement also sets forth restrictions on transfer of the Stockholders’ equity interests in Parent and provides the Stockholders with certain veto rights, preemptive rights and tag-along rights.

The foregoing description of the Merger Agreement, Voting Agreements, Exchange Agreements and Stockholders Agreement is qualified in its entirety by reference to the Merger Agreement, the Form of Voting Agreement, Form of Exchange Agreement and Stockholders Agreement which are filed as Exhibits 99.2 through Exhibit 99.5 hereto, respectively, and are incorporated herein by reference.

Except as set forth in this Item 4, none of the Reporting Persons has any plans or proposals which relate to or would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D.

Item 5. Interest in Securities of the Issuer

(a) - (b) As a result of the Voting Agreements, the Reporting Persons may be deemed to be the beneficial owners of 11,795,364 shares of Common Stock, which represents in the aggregate approximately 41.1% of the outstanding shares of Common Stock, as follows: Parent, as party to the Voting Agreements; HIG Healthcare, as the sole stockholder of Parent; Fund II, as the manager and sole member of HIG Healthcare; Advisors II, as the general partner of Fund II, GP II, as the manager of Advisors II; and Messrs. Tamer and Mnaymneh as co-presidents, directors and sole shareholders of GP II.

All of the percentages calculated in this Schedule 13D are based upon an aggregate of 28,699,094 shares of Common Stock outstanding as of October 18, 2009, as disclosed in the Merger Agreement. The number of shares of Common Stock of the Company that may be deemed to be beneficially owned by each of the Reporting Persons with respect to which there is (i) sole voting power is none, (ii) shared voting power is 11,795,364, (iii) sole dispositive power is none, and (iv) shared dispositive power is none. The filing of this Schedule 13D by the Reporting Persons shall not be considered an admission that such Reporting Persons, for the purpose of Section 13(d) of the Exchange Act, are the beneficial owners of any of the shares of Common Stock covered in this report, and the Reporting Persons expressly disclaim such beneficial ownership.

	(c)		Not applicable.

	(d)		Not applicable.

	(e)		Not applicable.

Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer

The information set forth in Items 1, 3 and 4 above is incorporated herein by reference.

In connection with the Merger Agreement, the Company and Fund II entered into a limited guarantee (the “Guarantee”), dated as of October 18, 2009, whereby Fund II unconditionally guaranteed to the Company the punctual observance, performance and discharge of payment when due of certain amounts owing by either Parent or Merger Sub to the Company pursuant the Merger Agreement, up to an aggregate amount of $10 million (the “Obligations”). Pursuant to the Guarantee, the Company may, in its sole discretion, bring and prosecute a separate action or actions against Fund II for the full amount of the Obligations, regardless whether action is brought against Parent or Merger Sub. No recourse may be had under the Guarantee against any of the former, current and future equity holders, controlling persons, directors, officers, employees, agents, affiliates, members, managers, general or limited partners or assignees of Fund II, or any former, current or future stockholder, controlling person, director, officer, employee, general or limited partner, member, manager, affiliate, agent or assignee of any of the foregoing.

The foregoing description of the Guarantee is qualified in its entirety by reference to the Guarantee filed as Exhibit 99.9 hereto, which is incorporated herein by reference.

Item 7. Material to be Filed as Exhibits.


Exhibit 99.1		Schedule 13D Joint Filing Agreement, dated as of October 28, 2009, by and among each of the Reporting Persons

Exhibit 99.2		Agreement and Plan of Merger, dated as of October 18, 2009, by and among Brickell Bay Acquisition Corp., Brickell Bay Merger Corp and Allion Healthcare, Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by the Company on October 19, 2009)

Exhibit 99.3		Form of Voting Agreement, dated as of October 18, 2009, by and between Brickell Bay Acquisition Corp. and the Stockholder named therein (Incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by the Company on October 19, 2009)

Exhibit 99.4A		Form of Exchange Agreement with Stockholders other than Parallex, LLC, dated as of October 18, 2009, by and between Brickell Bay Acquisition Corp. and the Stockholder named therein

Exhibit 99.4B		Exchange Agreement with Parallex LLC, dated as of October 18, 2009, by and between Brickell Bay Acquisition Corp. and Parallex LLC

Exhibit 99.5		Stockholders Agreement, dated as of October 18, 2009, by and among Brickell Bay Acquisition Corp, H.I.G. Healthcare, LLC and the Stockholders named therein

Exhibit 99.6		Equity Commitment Letter, dated as of October 18, 2009, by and between H.I.G. Bayside Debt & LBO Fund II, L.P. and Brickell Bay Acquisition Corp.

Exhibit 99.7		Financing Commitment Letter, dated as of October 18, 2009, by and between Falcon Strategic Partners III, LP and Brickell Bay Acquisition Corp.

Exhibit 99.8		Commitment Letter, dated as of October 18, 2009, by and between Fifth Third Bank and H.I.G. Bayside Debt & LBO Fund II, L.P.

Exhibit 99.9		Limited Guarantee, dated as of October 18, 2009, by H.I.G. Bayside Debt & LBO Fund II, L.P. in favor of Allion Healthcare, Inc.

Signatures

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: October 28, 2009


BRICKELL BAY ACQUISITION CORP
By:	/s/ Brian D. Schwartz
Name:		Brian D. Schwartz
Title:		President

H.I.G. HEALTHCARE, LLC
By:	H.I.G. Bayside Debt & LBO Fund II, L.P.
Its:	Manager

By:	H.I.G. Bayside Advisors II, LLC
Its:	General Partner

By:	H.I.G.-GPII, Inc.
Its:	Manager

By:	/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:	Vice President and General Counsel

H.I.G. BAYSIDE DEBT & LBO FUND II, L.P.
By:	H.I.G. Bayside Advisors II, LLC
Its:	General Partner

By:	H.I.G.-GPII, Inc.
Its:	Manager

By:	/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:	Vice President and General Counsel

H.I.G. BAYSIDE ADVISORS II, LLC
By:	H.I.G.-GPII, Inc.
Its:	Manager

By:	/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:	Vice President and General Counsel
H.I.G.-GPII, INC.
By:	/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:	Vice President and General Counsel

/s/ Sami W. Mnaymneh
Sami W. Mnaymneh

/s/ Anthony A. Tamer
Anthony A. Tamer

EXHIBIT INDEX


Exhibit Number		Exhibit Name

Exhibit 99.1		Schedule 13D Joint Filing Agreement, dated as of October 28, 2009, by and among each of the Reporting Persons

Exhibit 99.2		Agreement and Plan of Merger, dated as of October 18, 2009, by and among Brickell Bay Acquisition Corp., Brickell Bay Merger Corp and Allion Healthcare, Inc. (Incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed by the Company on October 19, 2009)

Exhibit 99.3		Form of Voting Agreement, dated as of October 18, 2009, by and between Brickell Bay Acquisition Corp. and the Stockholder named therein (Incorporated by reference to Exhibit 99.1 to the Current Report on Form 8-K filed by the Company on October 19, 2009)

Exhibit 99.4A		Form of Exchange Agreement with Stockholders other than Parallex, LLC, dated as of October 18, 2009, by and between Brickell Bay Acquisition Corp. and the Stockholder named therein

Exhibit 99.4B		Exchange Agreement with Parallex LLC, dated as of October 18, 2009, by and between Brickell Bay Acquisition Corp. and Parallex LLC

Exhibit 99.5		Stockholders Agreement, dated as of October 18, 2009, by and among Brickell Bay Acquisition Corp, H.I.G. Healthcare, LLC and the Stockholders named therein

Exhibit 99.6		Equity Commitment Letter, dated as of October 18, 2009, by and between H.I.G. Bayside Debt & LBO Fund II, L.P. and Brickell Bay Acquisition Corp.

Exhibit 99.7		Financing Commitment Letter, dated as of October 18, 2009, by and between Falcon Strategic Partners III, LP and Brickell Bay Acquisition Corp.

Exhibit 99.8		Commitment Letter, dated as of October 18, 2009, by and between Fifth Third Bank and H.I.G. Bayside Debt & LBO Fund II, L.P.

Exhibit 99.9		Limited Guarantee, dated as of October 18, 2009, by H.I.G. Bayside Debt & LBO Fund II, L.P. in favor of Allion Healthcare, Inc.

EX-99.1 2 g20953exv99w1.htm EX-99.1 exv99w1

Exhibit 99.1

SCHEDULE 13D JOINT FILING AGREEMENT

In accordance with the requirements of Rule 13d-1(k) under the Securities Exchange Act of 1934, as amended, and subject to the limitations set forth therein, the parties set forth below agree to jointly file the Schedule 13D to which this joint filing agreement is attached, and have duly executed this joint filing agreement as of the date set forth below.

Date: October 28, 2009


BRICKELL BAY ACQUISITION CORP
By:	/s/ Brian D. Schwartz
Name:		Brian D. Schwartz
Title:		President

H.I.G. HEALTHCARE, LLC
By:	H.I.G. Bayside Debt & LBO Fund II, L.P.
Its:	Manager

By:	H.I.G. Bayside Advisors II, LLC
Its:	General Partner

By:	H.I.G.-GPII, Inc.
Its:	Manager

By:	/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:	Vice President and General Counsel

H.I.G. BAYSIDE DEBT & LBO FUND II, L.P.

By:	H.I.G. Bayside Advisors II, LLC
Its:	General Partner

By:	H.I.G.-GPII, Inc.
Its:	Manager

By:	/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:	Vice President and General Counsel

H.I.G. BAYSIDE ADVISORS II, LLC
By:	H.I.G.-GPII, Inc.
Its:	Manager

By:	/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:	Vice President and General Counsel

H.I.G.-GPII, INC.
By:	/s/ Richard H. Siegel
Name:		Richard H. Siegel
Its:	Vice President and General Counsel

/s/ Sami W. Mnaymneh
Sami W. Mnaymneh

/s/ Anthony A. Tamer
Anthony A. Tamer

EX-99.4A 3 g20953exv99w4a.htm EX-99.4A exv99w4a

Exhibit 99.4A

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of October 18, 2009 by and among Brickell Bay Acquisition Corp., a Delaware corporation (the “Company”), and [_________] (the “Exchanger”). Certain definitions are set forth in Section 5 of this Agreement. Subject to Section 8 hereof, this Agreement shall become effective (the “Effective Date”) upon the Closing Date as defined in the Merger Agreement.

WHEREAS, the Company has entered into that certain Agreement and Plan of Merger (the “Merger Agreement”), dated as of October 18, 2009, by and among the Company, Brickell Bay Merger Corp. and Allion Healthcare, Inc. (“Allion”).

WHEREAS, in connection with the transactions contemplated by the Merger Agreement, the Exchanger desires to exchange shares of [Allion]’s Common Stock (as such term is defined in the Merger Agreement) as set forth on Exhibit A attached hereto (the “Exchange Shares”) having a per share purchase price for each such security as set forth on Exhibit A attached hereto (the aggregate purchase price for the shares of [Allion]’s Common Stock to be exchanged by the Exchanger shall be referred to herein as the “Rollover Amount”).

WHEREAS, the Exchanger believes that it is in his best interests to enter into this Agreement and consummate the transactions contemplated hereby and by the Merger Agreement.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Acquisition of Rollover Stock.

(a) Immediately prior to the Effective Time (as such term is defined in the Merger Agreement), the Exchanger shall surrender to the Company the Exchanger’s Exchange Shares (and the certificate(s) representing such Exchange Shares accompanied by duly executed stock powers), free and clear of all Liens (as defined in the Merger Agreement), and, simultaneously with such surrender, the Company shall issue to the Exchanger a certain number of shares of the Company’s Senior Preferred Stock, par value $0.01 per share (the “Senior Preferred Stock”), Junior Preferred Stock, par value $0.01 per share (the “Junior Preferred Stock,” and together with the Senior Preferred Stock, the “Preferred Stock”) and Common Stock, par value $0.01 per share (the “Common Stock,” and together with the Preferred Stock, with respect to the Exchanger, the Exchanger’s “Rollover Stock”), as set forth opposite the Exchanger’s name on Exhibit A attached hereto (the “Exchange”). Such Rollover Stock issued to the Exchanger shall have an aggregate value equal to the Rollover Amount.

(b) In connection with the acquisition of the Rollover Stock hereunder, and the execution, delivery and performance of this Agreement and the other agreements to which the Exchanger is a party (collectively, the “Documents”), the Exchanger represents and warrants to the Company that:

(i) The Exchanger is acquiring the Rollover Stock for investment for his own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. The Exchanger understands that the Rollover Stock has not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Exchanger’s representations as expressed herein. [The Exchanger is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission.]

(ii) The Exchanger has had an opportunity to ask questions and receive answers concerning the terms and conditions of the offering of Rollover Stock and has had full access to such other information concerning the Company as he has requested.

(iii) The Exchanger has had the opportunity to consult his own tax advisors with respect to the tax consequences to himself of the purchase, receipt or ownership of the Rollover Stock, including the tax consequences under federal, state, local, and other income tax laws of the United States or any other country and the possible effects of changes in such tax laws. The Exchanger acknowledges that none of the Company, its subsidiaries, affiliates, successors, beneficiaries, heirs and assigns and its and their past and present directors, officers, employees, and agents (including, without limitation, their attorneys) makes or has made any representations or warranties to the Exchanger regarding the tax consequences to the Exchanger of the purchase, receipt or ownership of the Rollover Stock, including the tax consequences under federal, state, local and other tax laws of the United States or any other country and the possible effects of changes in such tax laws.

(iv) The Exchanger is the legal and beneficial owner of the Exchange Shares as set forth opposite his or her name on Exhibit A attached hereto, free and clear of any Liens (as defined in the Merger Agreement).

(v) This Agreement constitutes the legal, valid and binding obligation of the Exchanger, enforceable in accordance with its terms (except as enforceability may be limited by principles of public policy, applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights and remedies generally or general principles of equity (regardless of whether considered and applied in a proceeding at law or in equity)), and the execution, delivery and performance of this Agreement by the Exchanger does not and will not conflict with, violate or cause a breach of any agreement, contract or instrument to which the Exchanger is a party or any judgment, order or decree to which the Exchanger is subject.

(vi) The Exchanger is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Rollover Stock.

(vii) The Exchanger acknowledges that none of the Company or any of its officers, directors, representatives or affiliates has given the Exchanger any investment

advice, credit information, or opinion on whether the exchange of the Exchange Shares for the Rollover Stock is prudent. The Exchanger has not relied on the Company to furnish or make available any documents or other information regarding the credit, affairs, financial condition or business of the Company, or any other matter concerning the Company. Except as set forth herein, the Company acknowledges none of the Company or any of its officers, directors, representatives or affiliates has made any representation or warranty to the Exchanger.

(viii) The Exchanger acknowledges and agrees that there may be additional issuances of shares of Preferred Stock, Common Stock or other equity securities of the Company after the date hereof and the Preferred Stock and Common Stock equity interest of the Exchanger may be diluted pro rata in connection with any such issuance.

(ix) The Exchanger is a resident of the State of [_________].

(c) As an inducement to the Company to issue the Rollover Stock to the Exchanger, and as a condition thereto, the Exchanger acknowledges and agrees that neither the issuance of the Rollover Stock to the Exchanger nor any provision contained herein shall entitle the Exchanger to remain in the employment of the Company or any of its Subsidiaries or affect the right of the Company or any such Subsidiary to terminate such the Exchanger’s employment at any time for any reason.

(d) Upon execution of this Agreement by the Exchanger, the Exchanger’s spouse shall execute the Consent in the form of Exhibit B attached hereto.

2. Restrictions on Transfer of Rollover Stock.

(a) Transfer of Rollover Stock. The holders of Rollover Stock shall not Transfer any interest in any shares of Rollover Stock, except pursuant to (i) the provisions of Sections 6 and 8(c) of the Stockholders Agreement or (ii) an Approved Sale (as defined in Section 4 of the Stockholders Agreement).

(b) Termination of Restrictions. The restrictions set forth in this Section 2 will continue with respect to each share of Rollover Stock (and will survive any Transfer thereof) until the earlier of (i) the Company’s initial Public Offering or (ii) the date on which such Rollover Stock has been Transferred in a transaction pursuant to any of clauses (i) through (ii) of Section 2(a) (provided that any transfer restrictions set forth in the Stockholders Agreement shall continue to apply to such Transferred shares of Rollover Stock to the extent set forth in the Stockholders Agreement).

3. Additional Restrictions on Transfer of Rollover Stock.

(a) Legend. The certificates representing the Rollover Stock will bear a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF [_________], 2009, HAVE NOT BEEN

REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN EXCHANGE AGREEMENT BETWEEN THE COMPANY AND A STOCKHOLDER OF THE COMPANY DATED AS OF [_________], 2009. A COPY OF SUCH AGREEMENTS MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.”

(b) Opinion of Counsel. No holder of Rollover Stock may Transfer any Rollover Stock (except pursuant to an effective registration statement under the Securities Act) without first delivering to the Company a written notice describing in reasonable detail the proposed Transfer, together with an opinion of counsel (reasonably acceptable in form and substance to the Company) that neither registration nor qualification under the Securities Act and applicable state securities laws is required in connection with such transfer. In addition, if the holder of the Rollover Stock delivers to the Company an opinion of counsel that no subsequent Transfer of such Rollover Stock shall require registration under the Securities Act, the Company shall promptly upon such contemplated Transfer deliver new certificates for such Rollover Stock that do not bear the Securities Act portion of the legend set forth in Section 3(a). If the Company is not required to deliver new certificates for such Rollover Stock not bearing such legend, the holder thereof shall not Transfer the same until the prospective transferee has confirmed to the Company in writing its agreement to be bound by the conditions contained in this Section 3.

4. Representations and Warranties of the Company. As a material inducement to the Exchanger to enter into this Agreement and acquire the Rollover Stock, the Company hereby represents and warrants to the Exchanger that:

(a) Organization and Corporate Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware and is qualified to do business in every jurisdiction in which the failure to so qualify might reasonably be expected to have a material adverse effect on the financial condition, operating results, assets, operations or business prospects of the Company and its Subsidiaries taken as a whole. The Company has all requisite corporate power and authority and all material licenses, permits and authorizations necessary to own and operate its properties, to carry on its businesses as now conducted and presently proposed to be conducted and to carry out the transactions contemplated by this Agreement. The copies of the Company’s Certificate of Incorporation and bylaws which have been furnished to the Exchanger’s counsel reflect all amendments made thereto at any time prior to the date of this Agreement and are correct and complete.

(b) Capital Stock and Related Matters.

(i) As of the Closing (as such term is defined in the Merger Agreement), the Company shall not have outstanding any stock or securities convertible or exchangeable for any shares of its capital stock or containing any profit participation features, nor shall it have outstanding any rights or options to subscribe for or to purchase its capital stock or any stock or securities convertible into or exchangeable for its capital stock or any stock appreciation rights or phantom stock plans other than pursuant to and as contemplated by this Agreement, the other Exchange Agreements (as such term is defined in the Stockholders Agreement), the Purchase Agreement, the Management Purchase Agreements (as such term is defined in the Stockholders Agreement) and the Company’s Certificate of Incorporation. As of the Closing, the Company shall not be subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options or other rights to acquire its capital stock, except pursuant to this Agreement, the other Exchange Agreements (as such term is defined in the Stockholders Agreement), the Purchase Agreement, the Management Purchase Agreements (as such term is defined in the Stockholders Agreement) and the Company’s Certificate of Incorporation. As of the Closing, all of the outstanding shares of the Company’s capital stock shall be validly issued, fully paid and nonassessable.

(ii) There are no statutory or, to the best of the Company’s knowledge, contractual stockholders preemptive rights or rights of refusal with respect to the issuance of the Rollover Stock hereunder, except as expressly contemplated in the Stockholders Agreement or provided in the Purchase Agreement. Based in part on the investment representations of the Investor in Section [___] of the Purchase Agreement and of the Exchanger in Section 1(c) hereof, the Company has not violated any applicable federal or state securities laws in connection with the offer, sale or issuance of any of its capital stock, and the offer, sale and issuance of the Rollover Stock hereunder do not and will not require registration under the Securities Act or any applicable state securities laws. To the best of the Company’s knowledge, there are no agreements between the Company’s stockholders with respect to the voting or transfer of the Company’s capital stock or with respect to any other aspect of the Company’s affairs, except for this Agreement, the other Exchange Agreements (as such term is defined in the Stockholders Agreement), the Stockholders Agreement, the Purchase Agreement, the Management Purchase Agreements (as such term is defined in the Stockholders Agreement) and the Registration Agreement.

(c) Authorization; No Breach. The execution, delivery and performance of the Transaction Documents to which the Company is a party have been duly authorized by the Company. Each Transaction Document and the Company’s Certificate of Incorporation constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms. The execution and delivery by the Company of the Transaction Documents to which the Company is a party, the offering, sale and issuance of the Rollover Stock hereunder and the fulfillment of and compliance with the respective terms hereof and thereof by the Company do not and will not (a) conflict with or result in a material breach of the terms, conditions or provisions of, (b) constitute a material default under, (c) result in the creation of any material lien, security interest, charge or encumbrance upon the Company’s capital stock or assets pursuant to, (d) give any third party the right to modify, terminate or accelerate any material obligation under, (e) result in a material violation of, or (f) require any material authorization, consent, approval, exemption or other material action by or notice to any court or administrative or governmental body pursuant to, the Certificate of Incorporation or bylaws of the Company, or any law, statute, rule or regulation to which the Company is subject, or any material agreement, instrument, order, judgment or decree to which the Company is a party or by which it is bound.

5. Definitions.

“Affiliate” means, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, “control” (including, with it correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership interests, by contract or otherwise).

“Board” means the Company’s board of directors.

“Family Group” means an individual’s spouse and descendants (whether natural or adopted) and any trust solely for the benefit of the Exchanger and/or the Exchanger’s spouse and/or descendants.

“Investor” means H.I.G. Healthcare, LLC.

“Person” means an individual, a partnership, a limited liability company, a corporation, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, investment fund, any other business entity and a governmental entity or any department, agency or political subdivision thereof.

“Public Offering” means the sale in an underwritten public offering registered under the Securities Act of shares of the Company’s Common Stock approved by the Board and managed by a nationally-recognized investment banking firm.

“Public Sale” means (i) any sale pursuant to a registered public offering under the Securities Act or (ii) any sale to the public pursuant to Rule 144 promulgated under the Securities Act effected through a broker, dealer or market maker (other than pursuant to Rule 144(k) prior to a Public Offering).

“Purchase Agreement” means that certain Purchase Agreement of even date herewith among the Company and the Investor.

“Registration Agreement” means that certain Registration Agreement of even date herewith among the Company and certain of its stockholders, as amended from time to time pursuant to its terms.

“Rollover Stock” means all Common Stock and Preferred Stock acquired by the Exchanger. Rollover Stock will continue to be Rollover Stock in the hands of any holder other than the Exchanger (except for the Company and the Investor and except for transferees in a Public Sale), and except as otherwise provided herein, each such other holder of Rollover Stock will succeed to all rights and obligations attributable to the Exchanger as a holder of Rollover Stock hereunder. Rollover Stock will also include equity of the Company (or a corporate successor to the Company) issued with respect to Rollover Stock (i) by way of a stock split, stock dividend, conversion, or other recapitalization or (ii) by way of reorganization or recapitalization of the Company in connection with the incorporation of a corporate successor prior to a Public Offering.

“Sale of the Company” means any transaction or series of transactions pursuant to which any person(s) or entity(ies) other than the Investor (including any Affiliate of the Investor) in the aggregate acquire(s) (i) capital stock of the Company possessing the voting power (other than voting rights accruing only in the event of a default, breach or event of noncompliance) to elect a majority of the Company’s board of directors (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company’s capital stock, shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii) all or substantially all of the Company’s assets determined on a consolidated basis.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Stockholders Agreement” means that certain Stockholders Agreement of even date herewith among the Company and certain of its stockholders, as amended from time to time pursuant to its terms.

“Subsidiary” means, with respect to any Person, any corporation, limited liability company, partnership, association, or business entity of which (i) if a corporation, a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers, or trustees thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person or a combination thereof, or (ii) if a limited liability company, partnership, association, or other business entity (other than a corporation), a majority of partnership or other similar ownership interest thereof is at the time owned or controlled, directly or indirectly, by that Person or one or more Subsidiaries of that Person or a combination thereof. For purposes hereof, a Person or Persons shall be deemed to have a majority ownership interest in a limited liability company, partnership, association, or other business entity (other than a corporation) if such Person or Persons shall be allocated a majority of limited liability company, partnership, association, or other business entity gains or losses or shall be or control any managing director or general partner of such limited liability company, partnership, association,

or other business entity. For purposes hereof, references to a “Subsidiary” of any Person shall be given effect only at such times that such Person has one or more Subsidiaries, and, unless otherwise indicated, the term “Subsidiary” refers to a Subsidiary of the Company.

“Transaction Documents” means this Agreement, the Stockholders Agreement, the Registration Agreement, the Purchase Agreement and each of the other agreements contemplated hereby and thereby.

“Transfer” means to directly or indirectly sell, transfer, assign, pledge or otherwise dispose of or grant any direct or indirect interest in (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) the applicable property.

6. Notices. Any notice provided for in this Agreement must be in writing and must be either personally delivered, mailed by first class mail (postage prepaid and return receipt requested) or sent by reputable overnight courier service (charges prepaid) to the recipient at the address below indicated:

If to the Company:

Brickell Bay Acquisition Corp.
c/o H.I.G. Capital, L.L.C.
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131

Facsimile: (305) 379-2013
Attention: Brian Schwartz

with a copy to:
(which shall not constitute notice to the Company)

H.I.G. Healthcare, LLC
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131

Facsimile: (305) 379-2013
Attention: Brian Schwartz

and

Kirkland & Ellis LLP
300 North LaSalle Street
Chicago, Illinois 60654

Facsimile:(312) 862-2200
Attention: Michael H. Weed

If to the Exchanger:

_______________
_______________

_______________

with a copy to:
(which shall not constitute notice to the Exchanger)
_______________
_______________
_______________

Facsimile: _______________

Attention: _______________

If to the Investor:

H.I.G. Healthcare, LLC
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131

Facsimile: (305) 379-2013
Attention: Brian Schwartz

with a copy to:

(which shall not constitute notice to the Investor)
Kirkland & Ellis LLP
300 North LaSalle Street
Chicago, Illinois 60654

Facsimile: (312) 862-2200
Attention: Michael H. Weed

or such other address or to the attention of such other Person as the recipient party shall have specified by prior written notice to the sending party. Any notice under this Agreement will be deemed to have been given when so delivered or sent or, if mailed, five days after deposit in the U.S. mail.

7. General Provisions.

(a) Tax Treatment. Each of the parties hereto intend that the transactions contemplated by Section 1 qualify as part of an exchange of property for stock under Section 351 of the Internal Revenue Code of 1986, as amended. Each of the parties hereto shall prepare and file all tax returns in a manner consistent with such treatment, including filing the statements required by Treasury Regulation §1.351-3 with his, her or its federal income tax return filed for the taxable year in which includes the date of the Closing (as such term is defined in the Merger Agreement).

Exchanger reaffirms the representations and warranties being made in the Merger Agreement with respect to the Company Stock, which include the Exchange Shares.

(c) Transfers in Violation of Agreement. Any Transfer or attempted Transfer of any Rollover Stock in violation of any provision of this Agreement shall be void, and the Company shall not record such Transfer on its books or treat any purported transferee of such Rollover Stock as the owner of such stock for any purpose.

(d) Severability. Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

(e) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith executed in connection with the Purchase Agreement embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

(f) Counterparts. This Agreement may be executed in separate counterparts (including by means of facsimile), each of which is deemed to be an original and all of which taken together constitute one and the same agreement. Any counterpart may be executed by facsimile signature and such facsimile signature shall be deemed an original.

(g) Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Exchanger, the Company, the Investor and their respective successors and assigns (including subsequent holders of Rollover Stock); provided that the rights and obligations of the Exchanger under this Agreement shall not be assignable except in connection with a permitted transfer of Rollover Stock hereunder.

(h) Choice of Law. The law of the State of Delaware will govern all questions concerning the relative rights of the Company and its stockholders. All other questions concerning the construction, validity and interpretation of this Agreement and the exhibits hereto will be governed by and construed in accordance with the internal laws of the State of Delaware, without giving effect to any choice of law or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

(i) Remedies. Each of the parties to this Agreement (and the Investor as a third-party beneficiary) will be entitled to enforce its rights under this Agreement specifically, to recover damages and costs (including attorney’s fees) caused by any breach of any provision of this Agreement and to exercise all other rights existing in its favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that any party may in its sole discretion apply to any court of

law or equity of competent jurisdiction (without posting any bond or deposit) for specific performance and/or other injunctive relief in order to enforce or prevent any violations of the provisions of this Agreement.

(j) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company (through its Board), the Exchanger and the Investor.

(k) No Inducement. The Exchanger hereby represents and warrants that he has not been induced to agree to and execute this Agreement by any statement, act or representation of any kind or character by anyone, except as contained herein. The Exchanger further represents that he has fully reviewed this Agreement and has full knowledge of its terms, and executes this Agreement of his or her own choice and free will, after having received the advice of his attorney(s).

(l) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company’s chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

(m) Code § 409A Amendment. The Company and the Exchanger agree to cooperate to amend this Agreement to the extent reasonably necessary to avoid imposition of any additional tax or income recognition prior to actual payment to the Exchanger under Code §409A and any temporary or final treasury regulations and Internal Revenue Service guidance thereunder, but only to the extent such amendment would not (and could not) have an adverse effect on the Company and would not provide the Exchanger with any additional rights, in each case as determined by the Company in its sole discretion.

(n) Adjustments of Numbers. All numbers set forth herein that refer to share prices or amounts will be appropriately adjusted to reflect stock splits, stock dividends, combinations of shares and other recapitalizations affecting the subject class of stock.

8. Effectiveness. This Agreement shall be a binding obligation of the parties as of the date it is executed but not effective until the Effective Date; provided that in the event that the Merger Agreement is terminated prior to the Effective Date, this Agreement shall be deemed void and of no further force and effect.

— Signature page follows —

IN WITNESS WHEREOF, the parties have executed this Exchange Agreement as of the date first written above.


	BRICKELL BAY ACQUISITION CORP.
	By:
		Name:
		Its:

	EXCHANGER:


	[_________]

Signature Page to Exchange Agreement

EXHIBIT A

Company Senior

Company Junior

Exchange

Per Share

Rollover

Company Common

Preferred

Exchanger

Shares

Purchase Price

Amount

Stock

[Exchanger]

[___] shares of Common Stock of [ALLION]

EXHIBIT B

SPOUSAL CONSENT

The undersigned spouse of such Exchanger hereby acknowledges that I have read the foregoing Exchange Agreement and the Stockholders Agreement referred to therein, each executed by the Exchanger and dated as of the date hereof, and that I understand their contents. I am aware that the foregoing Exchange Agreement and Stockholders Agreement impose certain restrictions on such securities (including, without limitation, the transfer restriction thereof). I agree that my spouse’s interest in these securities is subject to these restrictions and any interest that I may have in such securities shall be irrevocably bound by these agreements and further, that my community property interest, if any, shall be similarly bound by these agreements.

Spouse’s Name:

Date: , 2009

Witness’ Name:

EX-99.4B 4 g20953exv99w4b.htm EX-99.4B exv99w4b

Exhibit 99.4B

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (this “Agreement”) is made and entered into as of October 18, 2009 by and among Brickell Bay Acquisition Corp., a Delaware corporation (the “Company”), and Parallex LLC (the “Exchanger”). Certain definitions are set forth in Section 5 of this Agreement. Subject to Section 8 hereof, this Agreement shall become effective (the “Effective Date”) upon the Closing Date as defined in the Merger Agreement.

WHEREAS, in connection with the transactions contemplated by the Merger Agreement, the Exchanger desires to exchange shares of Allion’s Common Stock (as such term is defined in the Merger Agreement) as set forth on Exhibit A attached hereto (the “Exchange Shares”) having a per share purchase price for each such security as set forth on Exhibit A attached hereto (the aggregate purchase price for the shares of Allion’s Common Stock to be exchanged by the Exchanger shall be referred to herein as the “Rollover Amount”).

WHEREAS, the Exchanger believes that it is in his best interests to enter into this Agreement and consummate the transactions contemplated hereby and by the Merger Agreement.

NOW, THEREFORE, the parties hereto hereby agree as follows:

1. Acquisition of Rollover Stock.

Stock has not been, and will not be, registered under the Securities Act by reason of a specific exemption from the registration provisions of the Securities Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Exchanger’s representations as expressed herein. The Exchanger is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission.

(vi) The Exchanger is sophisticated in financial matters and is able to evaluate the risks and benefits of the investment in the Rollover Stock.

(vii) The Exchanger acknowledges that none of the Company or any of its officers, directors, representatives or affiliates has given the Exchanger any investment advice, credit information, or opinion on whether the exchange of the Exchange Shares for the Rollover Stock is prudent. The Exchanger has not relied on the Company to furnish or make available any documents or other information regarding the credit,

affairs, financial condition or business of the Company, or any other matter concerning the Company. Except as set forth herein, the Company acknowledges none of the Company or any of its officers, directors, representatives or affiliates has made any representation or warranty to the Exchanger.

(d) Upon execution of this Agreement by the Exchanger, the Exchanger’s spouse shall execute the Consent in the form of Exhibit B attached hereto.

2. Restrictions on Transfer of Rollover Stock.

3. Additional Restrictions on Transfer of Rollover Stock.

(a) Legend. The certificates representing the Rollover Stock will bear a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED AS OF OCTOBER ___, 2009, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE

SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND CERTAIN OTHER AGREEMENTS SET FORTH IN AN EXCHANGE AGREEMENT BETWEEN THE COMPANY AND A STOCKHOLDER OF THE COMPANY DATED AS OF OCTOBER 18, 2009. A COPY OF SUCH AGREEMENTS MAY BE OBTAINED BY THE HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.”

(b) Capital Stock and Related Matters.

as contemplated by this Agreement, the other Exchange Agreements (as such term is defined in the Stockholders Agreement), the Purchase Agreement, the Management Purchase Agreements (as such term is defined in the Stockholders Agreement) and the Company’s Certificate of Incorporation. As of the Closing, the Company shall not be subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options or other rights to acquire its capital stock, except pursuant to this Agreement, the other Exchange Agreements (as such term is defined in the Stockholders Agreement), the Purchase Agreement, the Management Purchase Agreements (as such term is defined in the Stockholders Agreement) and the Company’s Certificate of Incorporation. As of the Closing, all of the outstanding shares of the Company’s capital stock shall be validly issued, fully paid and nonassessable.

(ii) There are no statutory or, to the best of the Company’s knowledge, contractual stockholders preemptive rights or rights of refusal with respect to the issuance of the Rollover Stock hereunder, except as expressly contemplated in the Stockholders Agreement or provided in the Purchase Agreement. Based in part on the investment representations of the Investor in Section 4 of the Purchase Agreement and of the Exchanger in Section 1(c) hereof, the Company has not violated any applicable federal or state securities laws in connection with the offer, sale or issuance of any of its capital stock, and the offer, sale and issuance of the Rollover Stock hereunder do not and will not require registration under the Securities Act or any applicable state securities laws. To the best of the Company’s knowledge, there are no agreements between the Company’s stockholders with respect to the voting or transfer of the Company’s capital stock or with respect to any other aspect of the Company’s affairs, except for this Agreement, the other Exchange Agreements (as such term is defined in the Stockholders Agreement), the Stockholders Agreement, the Purchase Agreement, the Management Purchase Agreements (as such term is defined in the Stockholders Agreement) and the Registration Agreement.

5. Definitions.

“Board” means the Company’s board of directors.

“Investor” means H.I.G. Healthcare, LLC.

“Purchase Agreement” means that certain Purchase Agreement of even date herewith among the Company and the Investor.

“Registration Agreement” means that certain Registration Agreement of even date herewith among the Company and certain of its stockholders, as amended from time to time pursuant to its terms.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Stockholders Agreement” means that certain Stockholders Agreement of even date herewith among the Company and certain of its stockholders, as amended from time to time pursuant to its terms.

“Transaction Documents” means this Agreement, the Stockholders Agreement, the Registration Agreement, the Purchase Agreement and each of the other agreements contemplated hereby and thereby.

If to the Company:

Brickell Bay Acquisition Corp.
c/o H.I.G. Capital, L.L.C.
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131
Facsimile: (305) 379-2013
Attention: Brian Schwartz

with a copy to:
(which shall not constitute notice to the Company)

H.I.G. Healthcare, LLC
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131
Facsimile: (305) 379-2013
Attention: Brian Schwartz

and

Kirkland & Ellis LLP
300 North LaSalle Street
Chicago, Illinois 60654
Facsimile: (312) 862-2200
Attention: Michael H. Weed

If to the Exchanger:

with a copy to:
(which shall not constitute notice to the Exchanger)



Facsimile:
Attention:

If to the Investor:

H.I.G. Healthcare, LLC
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131
Facsimile: (305) 379-2013
Attention: Brian Schwartz

with a copy to:
(which shall not constitute notice to the Investor)

Kirkland & Ellis LLP
300 North LaSalle Street
Chicago, Illinois 60654
Facsimile: (312) 862-2200
Attention: Michael H. Weed

7. General Provisions.

(b) Agreements Unchanged. Nothing in this Agreement shall amend, modify, alter or change any of the parties rights or obligations under the Merger Agreement, including, without limitation, the Exchangers’ indemnification obligations hereunder, under the Merger Agreement or under any other agreements pursuant to which they are a party. For purposes of clarity, the Exchanger reaffirms the representations and warranties being made in the Merger Agreement with respect to the Company Stock, which include the Exchange Shares.

(e) Complete Agreement. This Agreement, those documents expressly referred to herein and other documents of even date herewith executed in connection with the Purchase

Agreement embody the complete agreement and understanding among the parties and supersede and preempt any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

(j) Amendment and Waiver. The provisions of this Agreement may be amended and waived only with the prior written consent of the Company (through its Board), the Exchanger and the Investor.

(l) Business Days. If any time period for giving notice or taking action hereunder expires on a day which is a Saturday, Sunday or holiday in the state in which the Company’s

chief executive office is located, the time period shall be automatically extended to the business day immediately following such Saturday, Sunday or holiday.

(o) The terms of Schedule 7(o) are incorporated by reference.

— Signature page follows —

IN WITNESS WHEREOF, the parties have executed this Exchange Agreement as of the date first written above.


BRICKELL BAY ACQUISITION CORP.
By:	/s/ Brian D. Schwartz
	Name:	Brian D. Schwartz
	Its:	President

Signature Page to Exchange Agreement


EXCHANGER: PARALLEX LLC
By:	/s/ Raymond A. Mirra, Jr.
	Name:	Raymond A. Mirra, Jr.
	Its:	Manager

Signature Page to Exchange Agreement

EXHIBIT A

Company Senior

Company Junior

Exchange

Per Share

Rollover

Company Common

Preferred

Exchanger

Shares

Purchase Price

Amount

Stock

Parallex LLC

5,295,047.23 shares of Common Stock of Allion

$6.60

34,947,311.74

23,424,835.54

11,522.48

21,082.35

The Parties agree to amend this Exhibit A as of the Closing to reflect any changes or events as may occur between the date of this Agreement and Closing.

Schedule 7(o)

From and after the Effective Date, the Company shall indemnify and hold harmless Parallex LLC and its members, directors, officers, employees and agents (collectively, “Indemnitees”) from and against all losses, damages, fees, expenses and costs (including Reasonable Attorneys’ Fees) (collectively, “Losses”) arising from claims asserted by Allion’s former stockholders and related to the transactions contemplated by the Merger Agreement (the “Potential Claims”); except if, and to the extent that, it is determined by the judgment of a court of competent jurisdiction which is no longer subject to appeal or further review that such claims are due primarily to the bad faith or willful misconduct by such Indemnitee.

The indemnities set forth herein are subject to the condition that (i) the Indemnitees promptly informs the Company on being notified or made aware of any claim, demand, suit or proceeding related to the Potential Claims brought against such Indemnitee, as well as to the contents of any communications or additional material information related thereto; and (ii) the Company has the sole and exclusive right to defend and control any related legal proceedings involving the Potential Claims (as well as any settlements or other disposition of any such proceedings). The Company’s counsel of choice (to be mutually determined with Parallex LLC) will represent and advise Parallex LLC and will direct and control Parallex LLC’s strategy and defense in the Potential Claims. Such attorneys’ fees and the attorneys’ fees of one counsel of Parallex LLC’s choice are the only “Reasonable Attorneys’ Fees” for which the Company will indemnify hereunder. The Indemnitees shall be entitled to participate in the defense of Potential Claims and to employ counsel of their choice for such purpose; provided however, that the fees and expenses of such separate counsel shall be borne by the Indemnitees (to the extent that such fees do not constitute Reasonable Attorneys’ Fees). Any settlement or voluntary consent judgment entered into by the Company with respect to the Potential Claims that would materially adversely effect any Indemnitee, that imposes any liability on any Indemnitee or requires an Indemnitee to make any payment shall not be entered into without the consent of Parallex LLC (such consent not to be unreasonably withheld or delayed). As a general matter, the Indemnitees shall cooperate fully with the Company in the defense of Potential Claims and otherwise in connection therewith, as may be requested by the Company. Parallex LLC will not bring any claims against the Company or participate with any other party directly or indirectly in any claims related to the subject matter of the Potential Claims, whether as a cross-claim in the current action or as an entirely new action, or in any other format, and hereby expressly waives its right to do so to the fullest extent permitted by law.

NOTWITHSTANDING ANYTHING CONTAINED IN THE EXCHANGE AGREEMENT OR THIS SCHEDULE 7(O) TO THE CONTRARY, IN NO EVENT SHALL THE COMPANY BE LIABLE TO ANY INDEMNITEE FOR ANY DIRECT, SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS), WHETHER BASED UPON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, STRICT TORT OR ANY OTHER LEGAL THEORY, BUT SHALL BE LIABLE FOR SUCH DAMAGES TO THE EXTENT ANY THIRD PARTY BRINGS A SUCCESSFUL CLAIM ALLEGING SUCH DAMAGES.

In the event of any payment hereunder, the Company shall be subrogated to the extent of such payment to all of the rights of contribution or recovery of Indemnitees against other persons, and Indemnitee shall take, at the request and expense of the Company, all reasonable action necessary to secure such subrogation rights, including the execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

Any indemnification of the Indemnitees pursuant to this Schedule 7(o) shall be effected by wire transfer of immediately available funds from the Company to an account designated by the applicable Indemnitee within 10 days after the determination thereof, or at the option of an Indemnitee shall be paid prior to such time directly to a third party in accordance with any settlement agreement or court order.

The amount of any Loss subject to indemnification under this Schedule 7(o) shall be calculated net of any insurance or other third party proceeds received or receivable by the Indemnitee on account of such Loss. The Indemnitee shall seek full recovery under all insurance policies covering any Loss to the same extent as they would if such Loss were not subject to indemnification hereunder. In the event that an insurance or other recovery is made by any Indemnitee with respect to any Loss for which any such Person has been indemnified hereunder, then a refund equal to the aggregate amount of the recovery shall be made promptly to the Person or Persons that provided such indemnity payments to such Indemnitee.

As of the date hereof, the Company will be entitled to draw funds from that certain escrow agreement dated on or about the date hereof which was originally funded with an amount in cash equal to $1,000,000.00 (the “Escrow Funds”). The Escrow Funds shall be used solely for purposes of paying Losses under this Schedule 7(o) and for no other purpose. Upon the Effective Time any remaining Escrow Funds shall be released to the Investor and the Investor shall be entitled to reimbursement from the Company for any amounts paid pursuant to this Schedule 7(o); provided that if any Potential Claims are not resolved at such time, Allion shall replenish the escrow account such that the Escrow Funds equal $1,000,000, and any such remaining Escrow Funds shall be released to Allion upon the settlement of all Potential Claims brought before the Closing Date or within twelve months thereafter.

The Indemnitees acknowledge and agree that they have no right of recovery against, and no personal liability shall attach to, in each case with respect to Losses, any member of the Company Group (other than the Company to the extent provided herein), through the Company or otherwise, whether by or through attempted piercing of the corporate, limited partnership or limited liability company veil, by or through a claim by or on behalf of the Company against any member of the Company Group, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable law, or otherwise, except for its rights to recover from the Company to the extent provided herein. The Indemnitees acknowledge that the Company is a newly-formed company and does not have any material assets except in connection with this Agreement as expressly set forth herein. The “Company Group” means, collectively, the Company, the Investor or any of their respective former, current or future directors, officers, employees, agents, general or limited partners, managers, members, stockholders, affiliates or assignees or any former, current or future director, officer, employee, agent, general or limited partner, manager, member, stockholder, affiliate or assignee of any of the foregoing.

Neither this Agreement nor any of the rights, interests or obligations hereunder will be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party.

EX-99.5 5 g20953exv99w5.htm EX-99.5 exv99w5

Exhibit 99.5

STOCKHOLDERS AGREEMENT

THIS STOCKHOLDERS AGREEMENT (the “Agreement”) is made as of October 18, 2009 by and among Brickell Bay Acquisition Corp., a Delaware corporation (the “Company”), H.I.G. Healthcare, LLC, a Cayman Islands limited company (the “Investor”), each Person executing this Agreement and listed as a Rollover Stockholder on the signature pages hereto (the “Rollover Stockholders”), and the individuals set forth from time to time on the Schedule of Executives attached hereto (each such individual, an “Executive” and collectively, the “Executives”). The Investor, the Rollover Stockholders and the Executives are collectively referred to herein as the “Stockholders” and individually as a “Stockholder.” Capitalized terms used but not otherwise defined herein are defined in Section 11 hereof. Subject to Section 36 hereof, this Agreement shall become effective (the “Effective Date”) upon the Closing Date as defined in the Merger Agreement.

WHEREAS, the Investor will purchase shares of the Company’s Common Stock, par value $0.01 per share (the “Common Stock”), and the Company’s Junior Preferred Stock, par value $0.01 per share (the “Junior Preferred Stock”), pursuant to a purchase agreement between the Investor and the Company dated as of the date hereof (the “Purchase Agreement”).

WHEREAS, the Rollover Stockholders will acquire shares of Common Stock, the Company’s Senior Preferred Stock, par value $0.01 per share (the “Senior Preferred Stock”) and Junior Preferred Stock (collectively, the “Rollover Stock”) pursuant to those certain Exchange Agreements, dated as of the date hereof, between the Company and each of the Rollover Stockholders (the “Exchange Agreements”).

WHEREAS, the Executives and certain employees of the Company or its Subsidiaries may acquire shares of Common Stock and/or Junior Preferred Stock (the “Executive Stock”) pursuant to the Management Purchase Agreements.

WHEREAS, the execution and delivery of this Agreement is a condition to the Investor’s purchase of Common Stock and Junior Preferred Stock pursuant to the Purchase Agreement.

NOW, THEREFORE, in consideration of the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties to this Agreement hereby agree as follows:

1. Board of Directors.

(a) From and after the date hereof and until the provisions of this Section 1 cease to be effective, each Stockholder shall vote all of his, her or its Stockholder Shares and any other voting securities of the Company over which such Stockholder has voting control and shall take all other necessary or desirable actions within his, her or its control (whether in his, her or its capacity as a stockholder, director, member of a board committee or officer of the Company or otherwise, and including, without limitation, attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings), and the Company shall take all necessary and desirable actions within its control (including, without limitation, calling special board and stockholder meetings), so that:

(i) the authorized number of directors on the Company’s board of directors (the “Board”) shall initially be established at nine (9) directors (or such greater or lesser number as determined from time to time by the holders of a majority of the Stockholder Shares then outstanding);

(ii) the following persons shall initially be elected to the Board:

(A) five (5) representatives designated by the Investor (the “Investor Directors”);

(B) three (3) representatives designated by Parallex, LLC (“Parallex”) (the “Parallex Directors”);

(iii) the composition of the board of directors of each of the Company’s subsidiaries, or the equivalent if the subsidiary is not a corporation, (a “Sub Board”) shall be the same as that of the Board, except as otherwise agreed by the Board;

(iv) the removal from the Board or a Sub Board (with or without cause) of any Investor Director, Parallex Director or the Executive Director shall be only upon the written request of the person or persons originally entitled to designate such director pursuant to Section 1(a)(ii) above; provided that if the Executive Director ceases to be an employee of the Company and its subsidiaries, he or she shall be removed as a director promptly after his employment ceases on a date specified by the Investor; and

(v) in the event that any representative designated hereunder for any reason ceases to serve as a member of the Board or a Sub Board during his or her term of office, the resulting vacancy on the Board or the Sub Board shall be filled by a representative designated by the person or persons originally entitled to designate such director pursuant to Section 1(a)(ii) above.

(b) There shall be at least three meetings of the Board during every fiscal year. The Company shall pay all out-of-pocket expenses incurred by each director in connection with attending regular and special meetings of the Board, any Sub Board and any committee thereof.

(c) If any party fails (but is otherwise entitled) to designate a representative to fill a directorship pursuant to the terms of this Section 1, the election of a person to such directorship shall be accomplished in accordance with the By—Laws and applicable law; provided that the parties shall take all necessary actions to remove such individual if the party or parties which failed (and are otherwise entitled) to designate such a representative so directs.

-2-

2. Irrevocable Proxy; Conflicting Agreements.

(a) In order to secure each Stockholder’s obligation to vote his, her or its Stockholder Shares and other voting securities of the Company in accordance with the provisions of Section 1 and Section 4 hereof, each Stockholder hereby appoints the Investor (“Proxy”), as his, her or its true and lawful proxy and attorney—in—fact, with full power of substitution, to vote all such Stockholder’s Stockholder Shares and other voting securities of the Company for the election and/or removal of directors and all such other matters as expressly provided for in Section 1 and Section 4. Proxy may exercise the irrevocable proxy granted to it hereunder at any time such Stockholder fails to comply with the provisions of this Agreement. The proxies and powers granted by each Stockholder pursuant to this Section 2 are coupled with an interest and are given to secure the performance of such Stockholder’s obligations to the Investor under this Agreement. Such proxies and powers shall be irrevocable for the term of this Agreement and shall survive the death, incompetency, disability, bankruptcy or dissolution of each such Stockholder and the subsequent holders of his, her or its Stockholder Shares.

(b) Each Stockholder represents that he has not granted and is not a party to any proxy, voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement, and no holder of Stockholder Shares shall grant any proxy or become party to any voting trust or other agreement which is inconsistent with or conflicts with the provisions of this Agreement.

3. Legend. Each certificate evidencing Stockholder Shares and each certificate issued in exchange for or upon the transfer of any Stockholder Shares (if such shares remain Stockholder Shares as defined herein after such transfer) shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON [ ], 2009, HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A STOCKHOLDERS AGREEMENT DATED AS OF OCTOBER 18, 2009, AMONG THE ISSUER OF SUCH SECURITIES (THE “COMPANY”) AND CERTAIN OF THE COMPANY’S STOCKHOLDERS. A COPY OF SUCH STOCKHOLDERS AGREEMENT WILL BE FURNISHED WITHOUT CHARGE BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN REQUEST.”

The Company shall imprint such legend on certificates evidencing Stockholder Shares outstanding prior to the date hereof. The legend set forth above shall be removed from the certificates evidencing any shares which cease to be Stockholder Shares.

-3-

4. Sale of the Company.

(a) Subject to Section 9, if the holders of a majority of the shares of Common Stock (voting as a single class) then outstanding approve a Sale of the Company (an “Approved Sale”), each holder of Stockholder Shares shall vote for, consent to and raise no objections against such Approved Sale. If the Approved Sale is structured as a (i) merger or consolidation, each holder of Stockholder Shares shall waive any dissenters’ rights, appraisal rights or similar rights in connection with such merger or consolidation, (ii) sale of stock, each holder of Stockholder Shares shall agree to sell all of his, her or its Stockholder Shares and rights to acquire Stockholder Shares on the terms and conditions approved by the holders of a majority of the shares of Common Stock (voting as a single class) then outstanding or (iii) a sale of assets, each holder of Stockholder Shares shall vote its Stockholder Shares to approve such sale and any subsequent liquidation of the Company or other distribution of the proceeds therefrom, whether by written consent or at a stockholders’ meeting (as requested by the Company). Each holder of Stockholder Shares shall take all necessary or desirable actions in connection with the consummation of the Approved Sale as requested by the Company (whether in his, her or its capacity as a stockholder, director, member of a board committee or other governing body or committee, and including attendance at meetings in person or by proxy for purposes of obtaining a quorum and execution of written consents in lieu of meetings). For the avoidance of doubt, the Stockholders agree that if any shares of Senior Preferred Stock are outstanding at the time an Approved Sale is consummated, no Stockholder shall receive any consideration on account of his, her or its shares of Junior Preferred Stock and/or Common Stock until the Liquidation Value (as such term is defined in the Certificate of Incorporation) plus any accrued but unpaid dividends have been paid to the holders of any outstanding shares of Senior Preferred Stock in accordance with the Certificate of Incorporation.

(b) Upon the consummation of the Approved Sale, each Stockholder shall receive in exchange for the Stockholder Shares held by such Stockholder the same portion of the aggregate consideration (taking into account all forms of consideration received by any Stockholder in connection with an Approved Sale) from such Approved Sale that such Stockholder would have received if such aggregate consideration had been distributed by the Company in complete liquidation pursuant to the rights and preferences set forth in the Certificate of Incorporation as in effect immediately prior to the consummation of such Approved Sale. All holders of Stockholder Shares represented by then currently exercisable options or warrants to acquire Common Stock shall be given an opportunity, at the Board’s discretion, to either (A) exercise such options or warrants prior to the consummation of the Approved Sale and participate in such sale as holders of Common Stock or (B) upon the consummation of the Approved Sale, receive in exchange for such options or warrants consideration equal to the amount determined by multiplying (1) the same amount of consideration per share of Common Stock received by the holders of Common Stock in connection with the Approved Sale less the exercise price per share of Common Stock of such options or warrants to acquire Common Stock by (2) the number of shares of Common Stock represented by such then currently exercisable options or warrants.

(c) If the Company or the holders of the Company’s securities enter into any negotiation or transaction for which Rule 506 (or any similar rule then in effect) promulgated by the Securities and Exchange Commission may be available with respect to such negotiation or transaction (including a merger, consolidation or other reorganization), each holder of Stockholder Shares will, at the request of the Company, appoint a “purchaser representative” (as such term is defined in Rule 501) reasonably acceptable to the Company. If any such holder of Stockholder Shares appoints a purchaser representative designated by the Company, then the Company shall pay the fees of such purchaser representative, but if such holder of Stockholder Shares declines to appoint the purchaser representative designated by the Company, such holder shall appoint another purchaser representative, and such holder shall be responsible for the fees of the purchaser representative so appointed.

-4-

(d) Generally, the Company shall pay all transaction costs associated with any Approved Sale to the extent such costs are incurred for the benefit of all holders of Stockholder Shares. To the extent such costs are not incurred by the Company prior to the distribution to the holders of Stockholder Shares of proceeds from any Approved Sale or by the acquiring company, such costs shall be borne by each holder according to his, her or its pro rata share (based upon the amount of consideration received by such holder for such Stockholder Shares in the Approved Sale) of the costs of any Approved Sale. Each holder of Stockholder Shares shall be obligated to join on a pro rata basis (based upon the amount of consideration received by such holder for such Stockholder Shares in the Approved Sale) in any indemnification or other obligations that the holders of a majority of the shares of Common Stock (voting as a single class) then outstanding agrees to provide in connection with such Approved Sale (other than any such obligations that relate specifically to a holder of Stockholder Shares such as indemnification with respect to representations and warranties given by a holder regarding such holder’s title to and ownership of Stockholder Shares); provided that such indemnification shall not exceed such holder’s net proceeds from such Approved Sale.

(e) Notwithstanding anything to the contrary contained herein, all of the Stockholders collectively irrevocably constitute and appoint the Investor, as their agent and representative to act from and after the date hereof and to do any and all things and execute any and all documents which may be necessary, convenient or appropriate to facilitate the consummation of an Approved Sale (including in their capacity as optionholders and/or warrantholders), including but not limited to: (i) execution of the documents and certificates pursuant to an Approved Sale; (ii) receipt and forwarding of notices and communications pursuant to an Approved Sale; (iii) administration of the provisions of any agreements entered into in connection with an Approved Sale; (iv) amending any agreement entered into in connection with an Approved Sale or any of the instruments to be delivered pursuant to such Approved Sale; and (v) engaging attorneys, accountants, agents or consultants on behalf of such Stockholders in connection with any Approved Sale or any other agreement contemplated thereby and paying any fees related thereto; provided that in each case, the Investor shall not take any action adverse to any Stockholder unless such action is also taken with respect to other similarly situated Stockholders (in terms of type/form of equity interest held). All acts of the Investor hereunder in its capacity as the agent and representative of the Stockholders shall be deemed to be acts on behalf of the Stockholders and not of the Investor individually. The Investor shall not be liable to the Stockholders in its capacity as agent and representative for any liability of a Stockholder or otherwise or for any error of judgment, any act done or step taken or for any mistake in fact or law, in each case to the extent taken or omitted by it in good faith. The Investor may seek the advice of legal counsel in the event of any dispute or question as to the construction of any of the provisions of this Agreement or its duties hereunder, and it shall incur no liability in its capacity as agent and representative to the Stockholders or the Company and shall be fully protected with respect to any action taken, omitted or suffered by it in good faith in accordance with the advice of such counsel. The Investor shall not by reason of this Agreement have a fiduciary relationship in respect of any Stockholder, except in respect of amounts received on behalf of the Stockholders. The appointment of the Investor as the agent and representative of the Stockholders is coupled with an interest and shall be irrevocable by any Stockholder in any manner or for any reason. This authority granted to the Investor shall not be affected by the death, illness, dissolution, disability, incapacity or other inability to act of the principal pursuant to any applicable law.

-5-

(f) The provisions of this Section 4 shall terminate upon the consummation of the Company’s initial Public Offering.

5. Initial Public Offering. In the event that the holders of a majority of the shares of Common Stock then outstanding approve an initial Public Offering, the holders of Stockholder Shares shall take all necessary or desirable actions in connection with the consummation of the initial Public Offering. In the event that such initial Public Offering is an underwritten offering and the managing underwriters advise the Company in writing that in their opinion the capital stock structure of the Company would adversely affect the marketability of the offering, each holder of Stockholder Shares shall consent to and vote for a recapitalization, reorganization and/or exchange of his, her or its capital stock into securities that the managing underwriters, the Board and holders of a majority of the shares of Common Stock then outstanding find acceptable and shall take all necessary or desirable actions in connection with the consummation of the recapitalization, reorganization and/or exchange; provided that the resulting securities must reflect and be substantially consistent with the rights, preferences and obligations set forth in the Certificate of Incorporation as in effect immediately prior to such initial Public Offering.

6. Restrictions on Transfer of Stockholder Shares.

(a) Transfer of Stockholder Shares. Subject to Section 8(c), no Stockholder shall sell, transfer, assign, pledge or otherwise dispose of (whether with or without consideration and whether voluntarily or involuntarily or by operation of law) any interest in his, her or its Stockholder Shares (a “Transfer”), except (i) pursuant to the provisions of Sections 4, 5 and 6 hereof, (ii) with the prior written consent of the Investor and (iii) to Permitted Transferees as contemplated in Section 6(c) hereof.

(b) Participation Rights. At least 30 days prior to any Transfer of Stockholder Shares (other than pursuant to a Public Offering) by any Investor, such Investor making such Transfer (the “Transferring Investor”) shall deliver a written notice (the “Sale Notice”) to the Company and the other Stockholders (the “Other Stockholders”), specifying in reasonable detail the identity of the prospective transferee(s), the number and class of shares to be transferred and the terms and conditions of the Transfer. The Other Stockholders may elect to participate in the contemplated Transfer at the same price per share (whether voting or non-voting stock) and on the same terms by delivering written notice to the Transferring Investor within 30 days after delivery of the Sale Notice. If any Other Stockholders have elected to participate in such Transfer, the Transferring Investor and such Other Stockholders shall be entitled to sell in the contemplated Transfer, at the same price and on the same terms, a number of such class of Stockholder Shares equal to the product of (i) the quotient determined by dividing the percentage of such class of Stockholder Shares owned by such Person by the aggregate percentage of such class of Stockholder Shares owned by the Transferring Investor and the Other Stockholders participating in such sale and (ii) the number of Stockholder Shares of such class to be sold in the contemplated Transfer.

-6-

For example, if the Sale Notice contemplated a sale of 100 shares of Common Stock by the Transferring Investor, and if the Transferring Investor at such time owns 30% of all shares of Common Stock and if one Other Stockholder elects to participate and owns 20% of all shares of Common Stock, the Transferring Investor would be entitled to sell 60 shares (30% ÷ 50% x 100 shares) and the Other Stockholder would be entitled to sell 40 shares (20% ÷ 50% x 100 shares).

Each Transferring Investor shall use best efforts to obtain the agreement of the prospective transferee(s) to the participation of the Other Stockholders in any contemplated Transfer. If any prospective transferee refuses to purchase Stockholder Shares from any Other Stockholder, the Transferring Investor, may, at its option, purchase such Stockholder Shares from such Other Stockholder. No Transferring Investor shall transfer any of its Stockholder Shares to any prospective transferee if such prospective transferee declines to allow the participation of any Other Stockholder or if the Transferring Investor has not purchased the Stockholder Shares from an Other Stockholder in accordance with the immediately preceding sentence. Each Stockholder transferring Stockholder Shares pursuant to this Section 6(b) shall pay its pro rata share (based on the number of Stockholder Shares to be sold) of the expenses incurred by the Stockholders in connection with such transfer and shall be obligated to join on a pro rata basis (based on the number of Stockholder Shares to be sold) in any indemnification or other obligations that the Transferring Investor agrees to provide in connection with such transfer (other than any such obligations that relate specifically to a particular Stockholder such as indemnification with respect to representations and warranties given by a Stockholder regarding such Stockholder’s title to and ownership of Stockholder Shares; provided that no holder shall be obligated in connection with such Transfer to agree to indemnify or hold harmless the transferees with respect to an amount in excess of the net cash proceeds paid to such holder in connection with such Transfer).

(c) Permitted Transfers. The restrictions set forth in this Section 6 shall not apply with respect to any Transfer of Stockholder Shares by a Stockholder (i) in the case of an individual, pursuant to applicable laws of descent and distribution or among such individual’s Family Group, (ii) in the case of the Investor and Parallex, among its Affiliates, or (iii) in the case of any Rollover Stockholder, to Parallex (collectively referred to herein as “Permitted Transferees”); provided that the restrictions contained in this Section 6 shall continue to be applicable to the Stockholder Shares after any such Transfer; and provided further that the transferees of such Stockholder Shares shall have agreed in writing to be bound by the provisions of this Agreement and the Registration Agreement affecting the Stockholder Shares so transferred. For purposes of this Agreement, “Family Group” means an individual’s spouse and descendants (whether natural or adopted) and any trust solely for the benefit of the Executive and/or the Executive’s spouse and/or descendants.

-7-

7. Preemptive Rights.

(a) If the Company issues or sells or authorizes the issuance or sale of any New Securities (as defined below) to the Investor or any of its Affiliates, the Company shall offer to each other Stockholder a portion of such New Securities (and if more than one class of securities is included in the New Securities, then a portion of the amount of each such class of securities included in the New Securities) equal to the quotient determined by dividing (A) the number of shares of Common Stock on a fully diluted basis held by such Stockholder, by (B) the aggregate amount of shares of Common Stock on a fully diluted basis, in each case determined before giving effect to the issuance of New Securities.

(b) Each such Stockholder shall be entitled to purchase such New Securities at the most favorable price and on the most favorable economic terms as such New Securities are offered and sold; provided that if a Person participating in such purchase of New Securities is required in connection therewith also to purchase other securities of the Company, each Stockholder exercising its rights pursuant to this Section 7 shall also be required to purchase such other securities on the same economic terms and conditions as those on which the offeree or purchaser of the New Securities is or was required to purchase such other securities (e.g., such holder shall be required to purchase the same types and classes of other securities, in the same proportions relative to their purchases of New Securities and at the same unit prices). For example, if the Company offers to sell shares of Common Stock to the Investor and requires that, as part of such purchase, the offeree of such Common Stock must also purchase shares of Company preferred stock, each Stockholder exercising rights to purchase shares of Common Stock pursuant to this Section 7 would be obligated also to purchase the corresponding proportionate amount of Company preferred stock at the same price per share reflected in the Company’s offer. Each Stockholder participating in such purchase shall also be obligated to execute agreements in the form presented to such holder by the Company, so long as such agreements (including any representations or warranties contained therein) are substantially similar to those to be or previously executed by other purchasers of New Securities (without taking into consideration any rights which do not entitle such other purchaser(s) to a higher economic return on the New Securities than the economic return to which the Stockholders exercising rights pursuant to this Section 7 and thereby participating in such transaction will be entitled with respect to New Securities). The purchase price for all New Securities offered to each Stockholder shall be payable in cash by wire transfer of immediately available funds to an account designated by the Company. If any Rollover Stockholder declines to exercise its rights pursuant to this Section 7, Parallex shall be entitled to exercise such declining Rollover Stockholder’s preemptive rights as if Parallex were the owner of such Rollover Stockholder’s Stockholder Shares.

(c) For purposes hereof, “New Securities” means any equity securities of the Company, or any securities containing options or rights to acquire Company equity securities, other than (i) securities issued as a dividend on the then outstanding Common Stock, (ii) securities issued pursuant to exercise, conversion or exchange of securities or rights outstanding on the date hereof or previously issued by the Company subject to this Section 7 (including pursuant to an exclusion from the definition of New Securities in any of clauses (i) through (vi) of this definition of New Securities), (iii) securities issued as consideration for the acquisition of or investment in another company or business or in support of other strategic transactions (whether through a purchase of securities, a merger, consolidation, purchase of assets or otherwise), (iv) securities issued in a Public Offering, (v) issuances of Common Stock or options to acquire Common Stock to employees, directors and consultants of the Company or its Subsidiaries on terms approved by the Board or (vi) securities issued as additional yield or return in respect of institutional indebtedness for borrowed money.

-8-

(d) The rights set forth in this Section 7 shall terminate upon a Public Offering.

8. Senior Preferred Stock Approval Rights. For so long as any shares of Senior Preferred Stock remain outstanding, without the prior written consent of the majority of the outstanding shares of Senior Preferred Stock:

(a) the Company shall not pay any dividends to the holders of Junior Preferred Stock or Common Stock;

(b) the Company and its Subsidiaries shall not increase the amount of indebtedness for borrowed money to an amount greater than (i) $25,000,000 plus (ii) the amount of such indebtedness for borrowed money available to the Company and its Subsidiaries as of the Effective Date pursuant to financing arrangements entered into in connection with the transactions contemplated by the Merger Agreement; and

(c) no Stockholder (including the Investor) shall Transfer any of his, her or its Stockholder Shares, other than Transfers to Permitted Transferees and repurchases of Stockholder Shares by the Company from Executives no longer employed by the Company or its Subsidiaries in accordance with the terms of any Management Purchase Agreement.

9. Affiliate Transactions. The Investor shall not enter into any Affiliate Transaction (including pursuant to Section 4) following the closing of the transactions contemplated by that certain Agreement and Plan of Merger, dated as of October 18, 2009, by and among the Company, Brickell Bay Merger Corp. and Allion Healthcare, Inc. (the “Merger Agreement”) without the consent of a majority of the then outstanding Rollover Stock. The Rollover Stockholders shall not enter into any Affiliate Transaction following the closing of transactions contemplated by the Merger Agreement without the approval of the Investor.

10. Representations and Warranties of the Company. As a material inducement to the Investor, the Rollover Stockholders and the Executives to enter into this Agreement and to acquire the Senior Preferred Stock, Junior Preferred Stock and/or the Common Stock, the Company hereby represents and warrants to the Stockholders that:

(a) The Company is a corporation duly organized, validly existing and in good standing under the laws of Delaware and is qualified to do business in every jurisdiction in which the failure to so qualify might reasonably be expected to have a material adverse effect on the financial condition, operating results, assets, operations or business prospects of the Company and its Subsidiaries taken as a whole. The Company has all requisite corporate power and authority and all material licenses, permits and authorizations necessary to own and operate its properties, to carry on its businesses as now conducted and presently proposed to be conducted and to carry out the transactions contemplated by this Agreement. The copies of the Company’s Certificate of Incorporation and bylaws which have been furnished to the Stockholders reflect all amendments made thereto at any time prior to the date of this Agreement and are correct and complete.

-9-

(b) As of the Closing (as such term is defined in the Merger Agreement), the Company shall not have outstanding any stock or securities convertible or exchangeable for any shares of its capital stock or containing any profit participation features, nor shall it have outstanding any rights or options to subscribe for or to purchase its capital stock or any stock or securities convertible into or exchangeable for its capital stock or any stock appreciation rights or phantom stock plans other than pursuant to and as contemplated by this Agreement, the Purchase Agreement, the Exchange Agreements and the Certificate of Incorporation. As of the Closing, the Company shall not be subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock or any warrants, options or other rights to acquire its capital stock, except pursuant to this Agreement, the Purchase Agreement, the Exchange Agreements and the Certificate of Incorporation. As of the Closing, all of the outstanding shares of the Company’s capital stock shall be validly issued, fully paid and nonassessable.

(c) The execution, delivery and performance of the Transaction Documents to which the Company is a party have been duly authorized by the Company. Each Transaction Document and the Company’s Certificate of Incorporation constitutes a valid and binding obligation of the Company, enforceable in accordance with its terms. The execution and delivery by the Company of the Transaction Documents to which the Company is a party, the offering, sale and issuance of the Senior Preferred Stock, Junior Preferred Stock and Common Stock hereunder and the fulfillment of and compliance with the respective terms hereof and thereof by the Company do not and will not (a) conflict with or result in a material breach of the terms, conditions or provisions of, (b) constitute a material default under, (c) result in the creation of any material lien, security interest, charge or encumbrance upon the Company’s capital stock or assets pursuant to, (d) give any third party the right to modify, terminate or accelerate any material obligation under, (e) result in a material violation of, or (f) require any material authorization, consent, approval, exemption or other material action by or notice to any court or administrative or governmental body pursuant to, the Certificate of Incorporation or bylaws of the Company, or any law, statute, rule or regulation to which the Company is subject, or any material agreement, instrument, order, judgment or decree to which the Company is a party or by which it is bound.

11. Definitions.

“Additional Executive” means any employee of the Company or its subsidiaries who becomes a “Stockholder” in accordance with Section 13 of this Agreement.

“Affiliate” shall mean, as to any Person, any other Person which directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, “control” (including, with it correlative meanings, “controlled by” and “under common control with”) shall mean possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership interests, by contract or otherwise).

-10-

“Affiliate Transaction” shall mean any agreement, contract, arrangement or other transaction or series of related transactions (including, without limitation, any purchase, sale, transfer, assignment, lease, license, conveyance or exchange of assets or property, any merger, consolidation or similar transaction or any provision of any service) between or among (i) the Company or any Affiliate controlled by the Company (a “Company-Controlled Affiliate”), on the one hand, and (ii) either (x) the Investor or any of its Affiliates or any director or officer of thereof (other than the Company or a Company-Controlled Affiliate) or (y) any Rollover Stockholder or any of their Affiliates or any director or officer thereof (other than the Company or a Company-Controlled Affiliate), on the other hand; provided, however, that Affiliate Transactions shall not include transactions effected pursuant to any Transaction Document.

“By-Laws” means the Company’s By-Laws as in effect from time to time.

“Certificate of Incorporation” means the Company’s Certificate of Incorporation as in effect from time to time.

“Contributed Stock” means the capital stock in Allion Healthcare, Inc., a Delaware corporation, which the Rollover Stockholders and the Executives are contributing to the Company pursuant to the Exchange (as defined in the Exchange Agreements).

“Management Purchase Agreements” means the management purchase agreements that may be entered into between the Company and certain employees of the Company or its Subsidiaries from time to time in a form mutually acceptable to the Purchaser and the Company pursuant to which such employees will purchase common stock of the Company.

“Person” means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Registration Agreement” means that certain Registration Agreement dated as of the date hereof, by and among the Company, the Investor, the Rollover Stockholders and certain Executives, as amended from time to time.

“Restricted Securities” means (i) the Senior Preferred Stock, the Junior Preferred Stock and the Common Stock, and (ii) any securities issued with respect to the securities referred to in clause (i) above by way of a stock dividend or stock split or in connection with a combination of stock, recapitalization, merger, consolidation or other reorganization. As to any particular Restricted Securities, such securities shall cease to be Restricted Securities when they have (a) been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) been distributed to the public through a broker, dealer or market maker pursuant to Rule 144 (or any similar provision then in force) under the Securities Act or (c) been otherwise transferred and new certificates for them not bearing the Securities Act legend set forth in Section 3 have been delivered by the Company in accordance with Section 14(b). Whenever any particular securities cease to be Restricted Securities, the holder thereof shall be entitled to receive from the Company, without expense, new securities of like tenor not bearing a Securities Act legend of the character set forth in Section 3.

-11-

“Sale of the Company” means any transaction or series of transactions pursuant to which any person(s) or entity(ies) other than the Investor (including any Affiliate of the Investor) in the aggregate acquire(s) (i) capital stock of the Company possessing the voting power (other than voting rights accruing only in the event of a default, breach or event of noncompliance) to elect a majority of the Board (whether by merger, consolidation, reorganization, combination, sale or transfer of the Company’s capital stock, shareholder or voting agreement, proxy, power of attorney or otherwise) or (ii) all or substantially all of the Company’s assets determined on a consolidated basis; provided that the term “Sale of the Company” shall not include a Public Offering.

“Securities Act” means the Securities Act of 1933, as amended from time to time.

“Stockholder Shares” means (i) any Senior Preferred Stock, Junior Preferred Stock or Common Stock purchased or otherwise acquired by any Stockholder, (ii) any equity securities issued or issuable directly or indirectly with respect to the Senior Preferred Stock, the Junior Preferred Stock or the Common Stock referred to in clause (i) above by way of stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization, and (iii) any other shares of any class or series of capital stock of the Company held by a Stockholder. As to any particular shares constituting Stockholder Shares, such shares will cease to be Stockholder Shares when they have been (x) effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them or (y) sold to the public through a broker, dealer or market maker pursuant to Rule 144 (or any similar provision then in force) under the Securities Act.

“Subsidiary” means, with respect to any Person, any corporation of which a majority of the total voting power of shares of stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of such Person or a combination thereof, or any partnership, association or other business entity of which a majority of the partnership or other similar ownership interest is at the time owned or controlled, directly or indirectly, by such Person or one or more Subsidiaries of such Person or a combination thereof. For purposes of this definition, a Person is deemed to have a majority ownership interest in a partnership, association or other business entity if such Person is allocated a majority of the gains or losses of such partnership, association or other business entity or is or controls the managing director or general partner of such partnership, association or other business entity.

“Transaction Documents” means this Agreement, the Registration Agreement, the Purchase Agreement, the Exchange Agreements, the Management Purchase Agreements and each of the other agreements contemplated hereby and thereby.

-12-

12. Transfers; Transfers in Violation of Agreement. Prior to effecting a Transfer of any Stockholder Shares to any person or entity, the transferring Stockholder shall cause the prospective transferee to execute and deliver to the Company and the other Stockholders a counterpart of this Agreement. A transferee of Stockholder Shares held by an Investor shall not be considered an Investor hereunder without the prior written consent of the holders of a majority of the shares of Common Stock then held by the Investors, provided that a Permitted Transferee of an Investor shall be considered an Investor hereunder. Any Transfer or attempted Transfer of any Stockholder Shares in violation of any provision of this Agreement shall be void, and the Company shall not record such transfer on its books or treat any purported transferee of such Stockholder Shares as the owner of such shares for any purpose.

13. Additional Stockholders. In connection with the issuance of any additional equity securities of the Company, the Company may permit such person to become a party to this Agreement and to obtain all of the rights and obligations of a “Stockholder” under this Agreement by obtaining an executed counterpart signature page to this Agreement, and, upon such execution, such person shall for all purposes be a “Stockholder” party to this Agreement.

14. Transfer of Restricted Securities.

(a) General Provisions. In addition to the restrictions set forth in Sections 6 and 8(c), Restricted Securities are transferable only pursuant to (i) Public Offerings, (ii) Rule 144 or Rule 144A of the Securities and Exchange Commission (or any similar rule or rules then in force) if such rule is available and (iii) subject to the conditions specified in Section 14(b) below, any other legally available means of transfer.

(b) Opinion Delivery. In connection with the Transfer of any Restricted Securities (other than a transfer described in Section 14(a)(i) or (ii) above), the holder thereof shall deliver written notice to the Company describing in reasonable detail the Transfer or proposed Transfer, together with an opinion of Kirkland & Ellis LLP or other counsel which (to the Company’s reasonable satisfaction) is knowledgeable in securities law matters to the effect that such Transfer of Restricted Securities may be effected without registration of such Restricted Securities under the Securities Act. In addition, if the holder of the Restricted Securities delivers to the Company an opinion of Kirkland & Ellis LLP or such other approved counsel that no subsequent Transfer of such Restricted Securities shall require registration under the Securities Act, the Company shall promptly upon such contemplated Transfer deliver new certificates for such Restricted Securities which do not bear the Securities Act legend set forth in Section 3. If the Company is not required to deliver new certificates for such Restricted Securities not bearing such legend, the holder thereof shall not Transfer the same until the prospective transferee has confirmed to the Company in writing its agreement to be bound by the conditions contained in this Section 14(b).

15. Holdback Agreement. Subject to the terms and conditions of the Registration Agreement, each holder of Stockholder Shares shall not effect any public sale or distribution (including sales pursuant to Rule 144) of equity securities of the Company, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and the 180-day period beginning on the effective date of an initial Public Offering, unless the underwriters managing such initial Public Offering otherwise agree.

-13-

16. No Right to Employment. As an inducement to the Company to issue the Executive Stock to each Executive, and as a condition thereto, each Executive acknowledges and agrees that neither the issuance of the Executive Stock to such Executive nor any provision contained herein shall entitle such Executive to remain in the employment of the Company or any of its Subsidiaries or affect the right of the Company or any such Subsidiary to terminate such Executive’s employment at any time for any reason.

17. Stock Powers. Concurrently with the execution of this Agreement, each Executive shall execute in blank five stock transfer powers in the form of Exhibit A attached hereto (the “Stock Powers”) with respect to the Executive Stock and shall deliver such Stock Powers to the Company. The Stock Powers shall authorize the Company to assign, transfer and deliver the Executive Stock to the appropriate acquiror thereof pursuant to Section 4 and Section 6.

18. Spousal Consent. Upon execution of this Agreement by each Executive, each Executive’s spouse shall execute the Consent in the form of Exhibit B attached hereto.

19. Tax Treatment. Each of the parties hereto intend that the Exchange (as defined in the Exchange Agreements) and the related transactions contemplated by the Exchange Agreements qualify as part of an exchange of property for stock under Section 351 of the Internal Revenue Code of 1986, as amended (the “Code”). Each of the parties hereto shall prepare and file all tax returns in a manner consistent with such treatment, including filing the statements required by Treasury Regulation § 1.351-3 with his, her or its federal income tax return filed for the taxable year in which includes the date of the Closing (as such term is defined in the Merger Agreement).

20. Agreements Unchanged. Nothing in this Agreement shall amend, modify, alter or change any of the parties rights or obligations under the Merger Agreement, including, without limitation, Executives’ indemnification obligations hereunder or under any other agreements pursuant to which they are a party.

21. No Inducement. Each Executive hereby represents and warrants that he or she has not been induced to agree to and execute this Agreement, the applicable Management Purchase Agreement, the Registration Agreement and the other agreements contemplated hereby and thereby to which such Executive is a party by any statement, act or representation of any kind or character by anyone, except as contained herein. Each Executive further represents that he or she has fully reviewed this Agreement, the applicable Management Purchase Agreement, the Registration Agreement and the other agreements contemplated hereby and thereby to which such Executive is a party and has full knowledge of their respective terms, and executes this Agreement, the applicable Management Purchase Agreement, the Registration Agreement and the other agreements contemplated hereby and thereby to which such Executive is a party of his or her own choice and free will, after having received the advice of his or her attorney(s).

-14-

22. Indemnification and Reimbursement of Payments on Behalf of Executive. Notwithstanding anything contained in this Agreement (or any other agreement between Executive and the Company or any of its Subsidiaries) to the contrary, the Company or its Subsidiaries shall be entitled to deduct and withhold from any amounts distributable to or with respect to the Executive Stock or any proceeds from the sale or other disposition of the Executive Stock (or from any other amounts due to Executive from the Company or any of its Subsidiaries, including from Executive’s wages, compensation, or benefits) as may be required by the Code, or under any foreign, state, or local law or, in connection with Executive’s compensation or the issuance, vesting, modification, adjustment, disposition or otherwise with respect to the Executive Stock. In the event that the Company or any of its Subsidiaries does not make such deductions or withholdings, Executive shall indemnify the Company and its Subsidiaries for any amounts paid or payable by the Company or any of its Subsidiaries with respect to any such taxes, together with any interest, penalties and additions to tax and any related expenses thereto. Without limiting the generality of the foregoing, Executive hereby agrees and acknowledges that neither the Company nor any of its Subsidiaries makes any representations with respect to the application of Code §409 to Executive’s compensation or the Executive Stock and, by the acceptance of the Executive Stock, Executive agrees to accept the potential application of Code §409A to Executive’s compensation or the Executive Stock and the other tax consequences of the issuance, vesting, ownership, modification, adjustment, and disposition of the Executive Stock. Executive agrees to hold harmless and indemnify the Company and its Subsidiaries from any adverse tax consequences to Executive with respect to Executive’s compensation or the Executive Stock, any withholding or other tax obligations of the Company and its Subsidiaries with respect to Executive’s compensation or the Executive Stock and from any action or inaction or omission of the Company and its Subsidiaries that may cause such compensation or Executive Stock to be or become subject to Code §409A.

23. Code §409A Amendment. The Company and Executive agree to cooperate to amend this Agreement to the extent reasonably necessary to avoid imposition of any additional tax or income recognition prior to actual payment to you under Code §409A and any temporary or final treasury regulations and Internal Revenue Service guidance thereunder, but only to the extent such amendment would not (and could not) have an adverse effect on the Company and would not provide Executive with any additional rights, in each case as determined by the Company in its sole discretion.

24. Amendment and Waiver. Except as otherwise provided herein, no modification, amendment or waiver of any provision of this Agreement shall be effective against the Company or the Stockholders unless such modification, amendment or waiver is approved in writing by the holders of a majority of the shares of Common Stock; provided that Sections 1, 4, 6, 7, 8, 9, or 19 may not be amended without the prior written consent of a majority of the outstanding Rollover Stock. The failure of any party to enforce any of the provisions of this Agreement shall in no way be construed as a waiver of such provisions and shall not affect the right of such party thereafter to enforce each and every provision of this Agreement in accordance with its terms.

25. Severability. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or any other jurisdiction, but this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision had never been contained herein.

-15-

26. Entire Agreement. Except as otherwise expressly set forth herein, this document embodies the complete agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes and preempts any prior understandings, agreements or representations by or among the parties, written or oral, which may have related to the subject matter hereof in any way.

27. Successors and Assigns. Except as otherwise provided herein, this Agreement shall bind and inure to the benefit of and be enforceable by the Company and its successors and assigns and the Stockholders and any subsequent holders of Stockholder Shares and the respective successors and assigns of each of them, so long as they hold Stockholder Shares.

28. Counterparts; Facsimile Transmission. This Agreement may be executed simultaneously in two or more counterparts, any one of which need not contain the signatures of more than one party, but all such counterparts taken together will constitute one and the same Agreement. Delivery of executed signature pages hereof by facsimile transmission, telecopy or portable document format (pdf) shall constitute effective and binding execution and delivery of this Agreement.

29. Remedies. The Company, the Investor, the Executives and each Additional Executive shall be entitled to enforce their rights under this Agreement specifically to recover damages by reason of any breach of any provision of this Agreement and to exercise all other rights existing in their favor. The parties hereto agree and acknowledge that money damages may not be an adequate remedy for any breach of the provisions of this Agreement and that the Company, the Investor, the Executives and each Additional Executive may in its sole discretion apply to any court of law or equity of competent jurisdiction for specific performance and/or injunctive relief (without posting a bond or other security) in order to enforce or prevent any violation of the provisions of this Agreement.

30. Notices. Any notice provided for in this Agreement shall be in writing and shall be either personally delivered, or mailed first class mail (postage prepaid) or sent by reputable overnight courier service (charges prepaid) to the Company at the address set forth below and to any other recipient and to any subsequent holder of Stockholder Shares subject to this Agreement at such address as indicated by the Company’s records, or at such address or to the attention of such other person as the recipient party has specified by prior written notice to the sending party. Notices will be deemed to have been given hereunder when delivered personally, three days after deposit in the U.S. mail and one day after deposit with a reputable overnight courier service.

If to the Company:


		Brickell Bay Acquisition Corp. c/o H.I.G. Capital, L.L.C. 1001 Brickell Bay Drive, 27th Floor Miami, Florida 33131 Attention: Brian Schwartz Facsimile: (305) 379-2013

-16-

If to the Investor:


		H.I.G. Healthcare, LLC c/o H.I.G. Capital, L.L.C. 1001 Brickell Bay Drive, 27th Floor Miami, Florida 33131 Attention: Brian Schwartz Facsimile: (305) 379-2013

with a copy to:


		Kirkland & Ellis LLP 300 North LaSalle Street Chicago, Illinois 60654 Attention: Michael H. Weed Facsimile: (312) 862-2200

31. Governing Law. The law of the State of Delaware shall govern all issues concerning the relative rights of the Company and its stockholders and all other questions concerning the construction, validity and interpretation of this Agreement.

32. Consent to Jurisdiction. EACH OF THE PARTIES IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY OR THEREBY. EACH OF THE PARTIES HERETO FURTHER AGREES THAT SERVICE OF ANY PROCESS, SUMMONS, NOTICE OR DOCUMENT BY U.S. REGISTERED MAIL TO SUCH PARTY’S RESPECTIVE ADDRESS SET FORTH ABOVE SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTERS TO WHICH IT HAS SUBMITTED TO JURISDICTION IN THIS PARAGRAPH. EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY OBJECTION TO THE LAYING OF VENUE OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT, ANY RELATED DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE, AND HEREBY AND THEREBY FURTHER IRREVOCABLY AND UNCONDITIONALLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION, SUIT OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

33. WAIVER OF JURY TRIAL. AS A SPECIFICALLY BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS CONTEMPLATED HEREBY.

-17-

34. Descriptive Headings. The descriptive headings of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

35. No Strict Construction. The parties hereto have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any of the provisions of this Agreement.

36. Effectiveness. This Agreement shall be a binding obligation of the parties as of the date it is executed but not effective until the Effective Date; provided that in the event that the Merger Agreement is terminated prior to the Effective Date, this Agreement shall be deemed void and of no further force and effect.

* * * * *

-18-

IN WITNESS WHEREOF, the parties hereto have executed this Stockholders Agreement on the day and year first above written.


	BRICKELL BAY ACQUISITION CORP.
	/s/ Brian D. Schwartz
	By: Brian D. Schwartz
	Its: President


	H.I.G. HEALTHCARE, LLC
	By: H.I.G. Bayside Debt & LBO Fund II, L.P.
	Its: Manager



	By: H.I.G. Bayside Advisors II, LLC
	Its: General Partner



	By: H.I.G.-GPII, Inc.
	Its: Manager



By:	/s/ Richard H. Siegel
	Name:	Richard H. Siegel
	Its: Vice President and General Counsel

-19-


ROLLOVER STOCKHOLDERS PARALLEX LLC
By:
	Name:
	Title:	Manager




	[Other Rollover Stockholders]

-20-

Schedule of Executives

None as of October 18, 2009.

EXHIBIT A

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, [Executive] does hereby sell, assign and transfer unto , a , of Brickell Bay Acquisition Corp., a Delaware corporation (the “Company”), standing in the undersigned’s name on the books of the Company represented by Certificate Nos. herewith and does hereby irrevocably constitute and appoint each principal of (acting alone or with one or more other such principals) as attorney to transfer the said stock on the books of the Company with full power of substitution in the premises.



Dated:

EXHIBIT B

SPOUSAL CONSENT

The undersigned spouse of such Executive hereby acknowledges that I have read the foregoing Stockholders Agreement, executed by Executive and dated as of the date hereof, and that I understand its contents. I am aware that the foregoing Stockholders Agreement imposes certain restrictions on such securities (including, without limitation, the transfer restriction thereof). I agree that my spouse’s interest in these securities is subject to these restrictions and any interest that I may have in such securities shall be irrevocably bound by these agreements and further, that my community property interest, if any, shall be similarly bound by these agreements.

Date: , 200

Spouse’s Name:

Date: , 200

Witness’ Name:

EX-99.6 6 g20953exv99w6.htm EX-99.6 exv99w6

Exhibit 99.6

EQUITY COMMITMENT LETTER

H.I.G. Bayside Debt & LBO Fund II, L.P.
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131
October 18, 2009

Brickell Bay Acquisition Corp.
c/o H.I.G. Capital LLC
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131

Ladies and Gentlemen:

This letter agreement sets forth the commitment of H.I.G. Bayside Debt & LBO Fund II, L.P. (“Sponsor”), subject to the terms and conditions contained herein, to purchase certain equity interests of Brickell Bay Acquisition Corp., a newly formed Delaware corporation (“Parent”). It is contemplated that, pursuant to an Agreement and Plan of Merger (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”) to be entered into among Allion Healthcare, Inc., a Delaware corporation (the “Company”), Parent and Brickell Bay Merger Corp., a wholly-owned subsidiary of Parent (“Merger Sub”), Merger Sub will merge with and into the Company (the “Merger”), with the Company surviving the Merger as a wholly-owned subsidiary of Parent. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Merger Agreement.

1. Commitment. Sponsor hereby commits, subject to the terms and conditions set forth herein, that, simultaneous with the Closing, it shall purchase, or shall cause the purchase of, equity interests of Parent for an aggregate amount equal to $165 million (the “Commitment”), solely for the purpose of funding, and to the extent necessary to fund, a portion of the aggregate Merger Consideration pursuant to and in accordance with the Merger Agreement, together with related expenses. Sponsor may effect the purchase of the equity interests of Parent directly or indirectly through one or more affiliated entities. The amount of the Commitment to be funded under this letter agreement simultaneous with the Closing may be reduced in an amount specified by Parent but only to the extent that Parent has consummated the transactions contemplated by the Merger Agreement with Sponsor contributing less than the full amount of its Commitment.

2. Conditions. The Commitment shall be subject to (i) the execution and delivery of the Merger Agreement by the Company, (ii) the satisfaction or waiver at the Closing of each of the conditions to Parent’s and Merger Sub’s obligations to consummate the transactions contemplated by the Merger Agreement, (iii) the substantially concurrent funding of the financing transactions contemplated under the Debt Commitment Letters (as may be amended or replaced in accordance with Section 5.18 of the Merger Agreement) and (iv) the contemporaneous consummation of the Closing.

3. Limited Guarantee. Concurrently with the execution and delivery of this letter agreement, Sponsor is executing and delivering to the Company a limited guarantee, dated as of the date hereof, related to Parent’s and Merger Sub’s payment obligations of the Parent Break-Up Fee and Parent’s obligation to pay Company Damages and Parent Default Fee, in each case pursuant to the terms and conditions of, and subject to the limitations of, Section 8.01 of the Merger Agreement (the “Limited Guarantee”). The Company’s remedies against Sponsor under the Limited Guarantee shall be, and are intended to be, the sole and exclusive direct or indirect remedies available to the Company and its affiliates against (i) Sponsor, Parent or Merger Sub and (ii) any former, current and future equity holders, controlling persons, directors, officers, employees, agents, affiliates, members, managers, general or limited partners or assignees of Sponsor, Parent or Merger Sub or any former, current or future stockholder, controlling person, director, officer, employee, general or limited partner, member, manager, affiliate, agent or assignee of any of the foregoing (other than Parent and Merger Sub to the extent provided in the Merger Agreement) (those persons and entities described in clause (ii) including Parent and Merger Sub, each being referred to as a “Non-Recourse Party”) in respect of any liabilities or obligations arising under, or in connection with, this letter agreement or the Merger Agreement and the transactions contemplated thereby, including in the event Parent or Merger Sub breaches its obligations under the Merger Agreement, whether or not Parent’s or Merger Sub’s breach is caused by Sponsor’s breach of its obligations under this letter agreement.

4. Enforceability. This letter agreement may only be enforced by Parent at the direction of Sponsor. Parent’s creditors shall have no right to enforce this letter agreement or to cause Parent to enforce this letter agreement.

5. No Modification; Entire Agreement. This letter agreement may not be amended or otherwise modified without the prior written consent of Parent and Sponsor. Together with the Limited Guarantee, this letter agreement constitutes the sole agreement, and supersedes all prior agreements, understandings and statements, written or oral, between Sponsor or any of its affiliates, on the one hand, and Parent or any of its affiliates, on the other, with respect to the transactions contemplated hereby. No transfer of any rights or obligations hereunder shall be permitted without the consent of Parent and Sponsor. Any transfer in violation of the preceding sentence shall be null and void.

6. Governing Law; Jurisdiction; Venue. This letter agreement, and all claims and causes of action arising out of, based upon, or related to this letter agreement or the negotiation, execution or performance hereof, shall be governed by, and construed, interpreted and enforced in accordance with, the Laws of the State of Delaware, without regard to choice or conflict of law principles that would result in the application of any Laws other than the Laws of the State of Delaware. Any legal action, suit or proceeding arising out of, based upon or relating to this letter agreement or the transactions contemplated hereby shall be brought solely in any state or federal court within the State of Delaware and any direct appellate court therefrom. Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of such courts in respect of any legal action, suit or proceeding arising out of, based upon or relating to this letter agreement and the rights and obligations arising hereunder and agrees that it will not bring any action arising out of, based upon or related to this letter agreement in any other court. Each of the parties hereto hereby irrevocably waives, and agrees not to assert as a defense, counterclaim or otherwise, in any legal action, suit or proceeding arising out of, based upon or relating to this

letter agreement, (a) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process as set forth below, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by applicable Law, any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this letter agreement, or the subject mater hereof, may not be enforced in or by such courts. Each of the parties hereto agrees that notice or the service of process in any action, suit or proceeding arising out of, based upon or relating to this letter agreement or the rights and obligations arising hereunder shall be properly served or delivered if delivered in the manner contemplated by Section 7 of the Limited Guarantee, with respect to Sponsor, and Section 8.08 of the Merger Agreement, with respect to Parent.

7. Waiver of Jury Trial. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY AND ALL RIGHT SUCH PARTY MAY HAVE TO TRIAL BY JURY IN ANY LEGAL ACTION, SUIT OR PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF, BASED UPON OR RELATING TO THIS LETTER AGREEMENT OR THE NEGOTIATION, EXECUTION OR PERFORMANCE HEREOF.

8. Counterparts. This letter agreement may be executed by facsimile and in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

9. No Third Party Beneficiaries. This letter agreement shall inure to the benefit of and be binding upon Parent and Sponsor. Nothing in this letter agreement, express or implied, is intended to confer upon any person other than Parent and Sponsor any rights or remedies under, or by reason of, or any rights to enforce or cause Parent to enforce, the Commitment or any provisions of this letter agreement or to confer upon any person any rights or remedies against any person other than Sponsor (but only at the direction of Sponsor as contemplated hereby) under or by reason of this letter agreement. Without limiting the foregoing, Parent’s creditors shall have no right to specifically enforce this letter agreement or to cause Parent to enforce this letter agreement.

10. Termination. The obligation of Sponsor to fund the Commitment will terminate automatically and immediately upon the earliest to occur of (a) the valid termination of the Merger Agreement in accordance with its terms, (b) the Closing, at which time the obligation will be fulfilled, and (c) the Company or any of its affiliates, directly or indirectly, asserting a claim against Sponsor or any of the Non-Recourse Parties under the Limited Guarantee or in connection with the Merger Agreement or any of the transactions contemplated thereby.

11. No Recourse. Notwithstanding anything that may be expressed or implied in this letter agreement or any document or instrument delivered in connection herewith, and notwithstanding the fact that Sponsor may be a partnership or limited liability company, by its acceptance of the benefits of this letter agreement, Parent acknowledges and agrees that no

Person other than Sponsor has any obligations hereunder and that no recourse shall be had hereunder, or for any claim based on, in respect of, or by reason of, such obligations or their creation, against, and no personal liability shall attach to, any Non-Recourse Party, through Parent, Merger Sub or otherwise, whether by or through attempted piercing of the corporate veil, by or through a claim by or on behalf of Parent against any Non-Recourse Party, by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any statute, regulation or applicable Law, or otherwise.

* * * * *

(signature page follows)


Sincerely, H.I.G. BAYSIDE DEBT & LBO FUND II, L.P.
By:	H.I.G. Bayside Advisors II, LLC
Its:	General Partner

By:	H.I.G.-GPII, Inc.
Its:	Manager

By:	/s/ Richard H. Siegel
	Name:	Richard H. Siegel
	Its: Vice President and General Counsel

[Signature Page to Equity Commitment Letter]


Agreed to and accepted: BRICKELL BAY ACQUISITION CORP.
By:	/s/ Craig M. Kahler
	Name:	Craig M. Kahler
	Title:	Treasurer

[Signature Page to Equity Commitment Letter]

EX-99.7 7 g20953exv99w7.htm EX-99.7 exv99w7

Exhibit 99.7

EXECUTION VERSION

Falcon Strategic Partners III, LP
21 Custom House Street, 10th Floor
Boston, Massachusetts 02110

October 18, 2009

Brickell Bay Acquisition Corp.
c/o H.I.G. Bayside Debt & LBO Fund II, L.P.
1001 Brickell Bay Drive
32nd Floor
Miami, Florida 33131
Attn: Mr. Craig Kahler

Project Liberty
Financing Commitment Letter

Ladies and Gentlemen:

Falcon Strategic Partners III, LP (“Purchaser,” “we” or “us”) has been advised that Brickell Bay Acquisition Corp., a Delaware corporation (“Newco” or “you”) formed by H.I.G. Bayside Debt & LBO Fund II, L.P. (“Sponsor”), proposes to finance, among other things, the merger of a newly formed corporation (“MergerCo”), to be one hundred percent (100%) owned by Newco, with and into Allion Healthcare, Inc., a Delaware corporation (the “Target” or the “Issuer”), with the Target as the surviving corporation (the “Acquisition”). MergerCo shall be the issuer of the Notes (as defined below) immediately prior to the merger, and following the merger, the Issuer shall be the issuer of the Notes. Unless otherwise indicated, all references to “dollars” or “$” in this agreement and the attachments hereto (this “Commitment Letter”) are references to United States dollars. All capitalized terms used in this Commitment Letter and not defined herein having the respective meaning assigned thereto in the Term Sheet (as hereinafter defined) and the Additional Terms (as hereinafter defined), as applicable.

We understand that the sources of funds required to fund the Acquisition consideration, to repay existing indebtedness of Target (the “Refinancing”) and to pay fees, commissions and expenses in connection with the Transactions (as defined below) will consist of (a) senior secured credit facilities of the Issuer of up to $110,000,000 (the “Bank Facilities”), consisting of a term loan (the “Term Facility”) which will be fully drawn on the Closing Date (as defined below) and a revolving facility (the “Revolving Facility”) which will be fully undrawn on the Closing Date, (b) the issuance by the Issuer of not less than $49,000,000 and not more than $51,000,000 (as the Issuer may elect) aggregate gross proceeds of senior subordinated notes (the “Notes”) pursuant to a private placement, which Notes will be issued with detachable warrants (the “Warrants” and, together with the Notes, the “Securities”), as described in the Sum-

mary of Principal Terms and Conditions of Securities attached hereto as Annex I (the “Term Sheet”) (the “Mezzanine Financing”), (c) minimum preferred and common equity contributions of not less than $85,000,000 from the Sponsor and its Controlled Investment Affiliates (as defined below) in cash (the “Sponsor Equity Financing”); provided that in the event the aggregate principal amount of loans and undrawn commitments under the Bank Facilities is less than $110,000,000 on the Closing Date (as defined below) the minimum aggregate dollar amount of the Equity Financing shall be increased on a dollar-for-dollar basis in an amount equal to such shortfall, (d) minimum preferred and common equity contributions from certain existing investors in the aggregate amount of not less than $51,000,000 (the “Rollover Equity Financing” and, together with the Sponsor Equity Financing, the “Equity Financing”) and (e) cash on the balance sheet of the Target immediately prior to the consummation of the Acquisition (the “Existing Cash”). No other financing will be required for the uses described above. As used herein, the term “Transactions” means the Acquisition, the Refinancing, the initial borrowings under the Bank Facilities, the issuance of the Securities, the Sponsor Equity Financing, the Rollover Equity Financing, the application of the Existing Cash and the payments of fees, commissions and expenses in connection with each of the foregoing. “Controlled Investment Affiliate” means, with respect to the Sponsor, any fund or investment vehicle that (i) is organized by Sponsor for the purpose of making equity or debt investments in one or more companies and (ii) is controlled by Sponsor. For purposes of this definition “control” means the power to direct or cause the direction of management and policies of a person, whether by contract or otherwise.

1. Commitment.

You have requested that Purchaser commit to purchase from the Issuer and Newco, as the case may be, in order to provide financing for the Transactions, not less than $49,000,000 and not more than $51,000,000 (as the Issuer may elect) aggregate gross proceeds of Notes having terms consistent with those described in the Term Sheet, which is incorporated in and made a part of this Commitment Letter. Purchaser hereby commits to you (the “Commitment”) to purchase not less than $49,000,000 and not more than $51,000,000 (as the Issuer may elect) in aggregate gross proceeds of the Notes (together with Warrants to purchase the aggregate number of shares of preferred and common stock equal to 3.0% of the fully diluted stock of Newco, which Warrants shall be exercisable for shares of common stock and preferred stock of Newco (x) of the same class and having the same rights and preferences as that being issued to the investors in the Sponsor Equity Financing and (y) in the same proportion of common stock to preferred stock as is being received by the investors in the Sponsor Equity Financing (which Warrants shall be issued for no additional consideration)) pursuant to one or more purchase agreements, warrant agreements, stockholders and registration rights agreements and any other requisite agreements or documentation in our customary forms (together, the “Purchase Agreements”) which shall include the terms, conditions and other provisions set forth on the Term Sheet and Additional Terms (as defined below), each as attached hereto, and such other provisions as are customary for financings of this kind and otherwise reasonably satisfactory to us and you in all material respects. You and we agree that the closing date of the Acquisition and the concurrent closing and funding of the Mezzanine Financing and the other aspects of the Transac-

tion (the “Closing Date”) shall be the date the conditions precedent specified in Section 4 hereof have been satisfied or waived.

Unless Purchaser’s Commitment hereunder shall have been terminated in accordance with the terms of this Commitment Letter, Purchaser shall have the exclusive right to provide the Mezzanine Financing represented by the Commitment and that prior to the expiration of the Commitment there shall be no issues of debt securities, preferred stock, common stock or commercial bank facilities of Newco or the Issuer or any of their respective subsidiaries or affiliates (other than the Bank Facilities, the Rollover Equity Financing and the Sponsor Equity Financing) being offered, placed or arranged in connection with the Transactions. In addition, should the Transactions not be consummated and thereafter you or any of your affiliates enter into within one year of the termination of the Transactions an alternative transaction involving the acquisition of at least a majority of the stock or assets of the Target, Purchaser shall, except in the event we have committed any material breach hereof, have a right of first refusal to provide the mezzanine debt financing of such transaction on the same terms on which such mezzanine debt portion is being offered.

2. Information.

You agree that it is a condition precedent to the funding of the Mezzanine Financing on the Closing Date that (a) all material written information provided by you and the Sponsor, other than Projections (as defined below) (and other forward looking information concerning the Target and its Subsidiaries), is and will be, when taken as a whole, complete and correct in all material respects and does not and will not, when taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading in any material respect in light of the circumstances under which such statements have been made, and (b) all financial projections concerning Newco, the Target and its subsidiaries that have been or are hereafter made available to the Purchaser by Sponsor, the Target and/or you or any of your or their respective representatives (the “Projections”) have been or will be prepared in good faith based on assumptions that are believed by you and Target to be reasonable at the time such projections were prepared; provided further that Purchaser acknowledges that (i) any such projections are subject to significant uncertainties and contingencies which are beyond your or the Target’s control, (ii) no assurance is given by you or the Target that the results forecast in any such projections will be realized, and (iii) the actual results may differ from such projections and such differences may be material.

3. Compensation.

As consideration for the commitments of Purchaser hereunder with respect to the Mezzanine Facilities, you agree to pay, or cause to be paid, the fees set forth in the Fee Letter dated the date hereof among Falcon Investment Advisors, LLC (“FIA”) and Newco (the “Fee Letter”).

4. Conditions.

Notwithstanding anything in this Commitment Letter, the Term Sheet, the Additional Terms, the Fee Letter, the Financing Documentation (as defined in the Additional Terms) or any other letter agreement or other undertaking concerning the financing of the Acquisition to the contrary, the conditions precedent to the Commitment shall be limited to the following: (a) the satisfaction or written waiver by Purchaser of the conditions precedent set forth in Section 2 and (b) satisfaction or written waiver by Purchaser of the conditions precedent set forth in the Additional Terms attached hereto as Annex II which is incorporated in and made a part of this Commitment Letter (the “Additional Terms”).

Notwithstanding anything in this Commitment Letter, the Term Sheet, the Additional Terms, the Fee Letter, the Financing Documentation or any other letter agreement or other undertaking concerning the financing of the Acquisition to the contrary, (a) the only representations the making of which shall be a condition to the availability of the Mezzanine Facilities on the closing date shall be (i) such of the representations and warranties made by the Target in the Agreement and Plan of Merger dated as of the date hereof by and among Newco, MergerCo, and the Target (the “Merger Agreement”), to the extent that Newco or MergerCo have a right not to consummate the transactions contemplated by the Merger Agreement or to terminate your or its obligations under the Merger Agreement as a result of a breach of such representations and warranties, and (ii) the Specified Representations (defined below) and (b) the terms of the Mezzanine Facilities shall contain no condition precedent to the funding of the Mezzanine Facilities on the Closing Date other than those set forth above in this paragraph or in the Additional Terms, the satisfaction of which shall obligate Purchaser to provide the Mezzanine Facilities on the terms set forth in this Commitment Letter and the Term Sheet. For purposes hereof, “Specified Representations” means the representations and warranties set forth in the Financing Documentation relating to organization, existence, power and authority, due authorization, execution, delivery, enforceability and non-contravention of the Financing Documentation with the Issuer’s or the Guarantors’ governing documents, applicable law, or any order, judgment, or decree of any court or other governmental authority binding on the Issuer, any other Guarantor or their respective subsidiaries, receipt of governmental approvals in connection with the Mezzanine Facilities, use of proceeds, solvency, Federal Reserve Bank margin regulations and the Investment Company Act.

5. Indemnity; Expense Reimbursement.

(a) Without duplication of paragraph 5(b) below, by your acceptance below, you hereby agree, jointly and severally, to indemnify and hold harmless each of Purchaser and its affiliates (including, without limitation, controlling persons) and the directors, officers, employees, advisors and agents of Purchaser (each, an “Indemnified Person”) from and against any and all losses, claims, costs, expenses, damages or liabilities (or actions or other proceedings commenced or threatened in respect thereof), joint or several, that arise out of, result from or in any way relate to this Commitment Letter, the Fee Letter, the Mezzanine Financing, the Securities, or

any of the transactions contemplated hereby, and to reimburse each Indemnified Person upon its demand for any costs or other expenses (including, without limitation, the fees and disbursements of legal counsel) incurred in connection with investigating, preparing to defend or defending against, or participating in, any such loss, claim, cost, expense, damage, liability or action or other proceeding (whether or not such Indemnified Person is a party to any action or proceeding), except that you shall not be liable for any such obligations in respect of any Indemnified Person to the extent any such loss, claim, damage, cost, expense or liability (a) has arisen in connection with a dispute solely among the Indemnified Persons unrelated to any dispute involving the Target or you or (b) is found in a final judgment by a court of competent jurisdiction to have arisen from (i) the gross negligence, bad faith or willful misconduct of any such Indemnified Person or any of its affiliates or their respective officers, employees, agents or directors seeking such indemnity, or (ii) a material breach of any such Indemnified Person’s obligations under this Commitment Letter (except to the extent such breach of such Indemnified Person’s obligations is a direct result of your failure to comply with the terms of this Commitment Letter and the Fee Letter or Sponsor’s failure to comply with the Sponsor Letter). You shall not be liable for any settlement of any such proceeding effected without your written consent, but if settled with such consent or if there shall be a final judgment for the plaintiff, you shall indemnify the Indemnified Persons from and against any loss or liability by reason of such settlement or judgment subject to your rights in this paragraph to claim exemption from your indemnity obligations. You shall not, without the prior written consent of any Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Person is a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability or claims that are the subject matter of such proceeding. You also agree that no Indemnified Person will have any liability (whether direct or indirect, in contract, tort or otherwise) to you or any person asserting claims on your behalf arising out of or in connection with any transactions contemplated by this Commitment Letter, the Fee Letter, the Mezzanine Financing, the Securities or the transactions contemplated hereby except to the extent that any losses, claims, costs, expenses, damages or liabilities are found in a final non-appealable judgment by a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Indemnified Person. Notwithstanding the foregoing, none of Purchaser, Sponsor, Newco, the Issuer or any of their respective subsidiaries, affiliates or stock holders shall be responsible or liable to any person or entity for any special, indirect, consequential or punitive damages (including, without limitation, any loss of profits, business or anticipated savings) which may be alleged as a result of this Commitment Letter, the Mezzanine Financing, the Securities or the transactions contemplated hereby.

(b) In addition, you hereby agree to reimburse Purchaser from time to time upon demand for all reasonable and documented out-of-pocket costs and expenses (including, without limitation, such legal fees and expenses of Purchaser’s counsel (consisting of legal fees of one firm of counsel to Purchasers plus such additional local or specialty counsel as Purchaser reasonably determines is necessary), appraisal, consulting (including such fees of Wilke, Fleury, Hoffelt, Gould & Birney, LLP, reimbursement risk consultant to Purchaser) and audit fees, and

printing, reproduction, document delivery, travel, communication and publicity costs) incurred in connection with the preparation, review, negotiation, execution and delivery of this Commitment Letter, the Financing Documentation, whether or not the Closing Date occurs or the Financing Documentation is executed and delivered or any issuances of Securities are made under the Mezzanine Financing.

6. Confidentiality.

This Commitment Letter and the Fee Letter are furnished for your benefit, and may not be relied on by any other person or entity. This Commitment Letter and the Fee Letter are delivered to you upon the condition that neither the existence of this Commitment Letter and the Fee Letter, nor any of their contents shall be disclosed by you or any of your affiliates, directly or indirectly, to any other person, except that such existence and contents of the Commitment Letter (but not the Fee Letter) may be disclosed (i) as may be compelled in a judicial or administrative proceeding or as otherwise required by law and (ii) to your directors, officers, employees, advisors and agents, and to the agents and lenders and prospective lenders under the Bank Facilities, in each case on a confidential and “need-to-know” basis and only in connection with the transactions contemplated hereby. In addition, this Commitment Letter may be disclosed to Target and its directors, officers, employees, advisors and agents, in each case on a confidential and “need-to-know” basis and only in connection with the transactions contemplated hereby. Any reference to Purchaser or any of its affiliates in any press release or public communication prepared, issued or transmitted by you or on your behalf is subject to Purchaser’s prior written approval.

Purchaser agrees to keep confidential, and not to publish, disclose or otherwise divulge, information obtained from or on behalf of you or the Target in the course of the transactions contemplated hereby, except that Purchaser shall be permitted to disclose such confidential information (a) to their respective directors, officers, agents, employees, attorneys, accountants and advisors, and to its affiliates who are directly involved in the consideration of the transactions contemplated hereby and are made aware of and agree to comply with the provisions of this paragraph, in each case on a confidential and need-to-know basis; (b) as required by applicable law, regulation or compulsory legal or administrative process (in which case we agree to inform you promptly thereof to the extent lawfully permitted to do so); (c) to the extent requested by any bank regulatory authority (in which case we agree to inform you promptly thereof to the extent lawfully permitted to do so); (d) to the extent such information: (i) becomes publicly available other than as a result of a breach of this Commitment Letter or other arrangement subject to confidentiality restrictions or (ii) becomes available to us on a non-confidential basis from a source other than you or on your behalf; (e) to the extent you shall have consented to such disclosure in writing; (f) in protecting and enforcing the our rights with respect to this Commitment Letter; (g) to rating agencies on a confidential basis; (h) for purposes of establishing a “due diligence” defense; or (i) to the limited partners of Purchaser disclosed to you and Sponsor prior to the execution and delivery hereof (and who have executed and delivered confidentiality agreements reasonably satisfactory to you and Sponsor prior to receipt of such confidential information) and

any affiliates thereof (collectively, the “Disclosed Limited Partners”); provided that no such disclosure shall be made by us to any of our affiliates that are (x) engaged as principals primarily in venture capital or (y) a control buyout fund (other than “above the wall” individuals at any such venture capital or control buyout funds) (each, an “Excluded Party”); and provided, further, that Purchaser may make such disclosures to an Excluded Party to the extent that (i) you have consented to such disclosure (such consent not to be unreasonably withheld) or (ii) such disclosure would be otherwise permitted to be made pursuant to this paragraph; and provided further that no such disclosure shall be made to any Competitor or any Competitor Affiliate.

7. Governing Law, Etc.

This Commitment Letter may not be amended or any provision hereof waived or modified except by an instrument in writing signed by Purchaser and you. This Commitment Letter, the Fee Letter and the Sponsor Letter constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. No party has been authorized by Purchaser to make any oral or written statements or agreements that are inconsistent with this Commitment Letter, the Fee Letter and the Sponsor Letter. This Commitment Letter, the Fee Letter and the Sponsor Letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an executed counterpart of a signature page of this Commitment Letter, the Fee Letter and the Sponsor Letter by facsimile transmission shall be effective as delivery of a manually executed counterpart of this Commitment Letter, the Fee Letter and the Sponsor Letter, respectively. Headings are for convenience only. This Commitment Letter shall not be assignable by you without the prior written consent of Purchaser (and any purported assignment without such consent shall be null and void). This Commitment Letter and the Fee Letter is intended to be for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any rights in favor of, any person other than the parties hereto, Purchaser and, with respect to (x) the Fee Letter and the fee provision of Section 3, FIA and (y) the indemnification provided under Section 5, each Indemnified Person. This Commitment Letter shall be governed by, and construed and interpreted in accordance with, the laws of the State of New York without regard to principles of conflicts of law to the extent that the application of the laws of another jurisdiction would be required thereby. Any right to trial by jury with respect to any claim or action arising out of this Commitment Letter or the Fee Letter is hereby waived. Each party hereto and each Indemnified Person hereby submits to the exclusive jurisdiction of the federal and New York State courts located in the Borough of Manhattan in The City of New York (and appellate courts thereof) in connection with any dispute related to this Commitment Letter, the Fee Letter or any of the matters contemplated hereby or thereby, and agree that service of any process, summons, notice or document by registered mail addressed to you shall be effective service of process against you for any suit, action or proceeding relating to any such dispute. Each party hereto and each Indemnified Person irrevocably and unconditionally waives any objection to the laying of such venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. Each of the par-

ties hereto and each Indemnified Person agrees that a final judgment in any such suit, action or proceeding may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law.

Please indicate your acceptance of the terms hereof by returning to us executed counterparts of this Commitment Letter, the Fee Letter and the Sponsor Letter not later than 11:59 p.m. New York City time, on October 18, 2009. This Commitment Letter, the Fee Letter and the Sponsor Letter and the commitment of Purchaser hereunder are conditioned upon your acceptance of this Commitment Letter and the Fee Letter and Sponsor’s acceptance of the Sponsor Letter and our receipt of executed counterparts hereof and thereof. Upon the earlier to occur of (A) the execution and delivery of the Financing Documentation by all of the parties thereto, or (B) February 18, 2010 (provided, however, that such date shall be extended to April 1, 2010 solely in the event that, prior to such date, each of the following shall have occurred: (i) it shall have been determined by the Sponsor, Target or the Securities and Exchange Commission (the “SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that the Acquisition is subject to Rule 13e-3 under the Exchange Act; (ii) a Schedule 13e-3 shall have been filed with the SEC in connection with the Acquisition; (iii) the SEC shall have notified Newco and/or the Target that the SEC has elected to review the Proxy Statement (as defined in the Merger Agreement); and (iv) the Sponsor shall have provided evidence reasonably satisfactory to the Purchaser of the satisfaction of the foregoing clauses (i), (ii) and (iii)), if the Financing Documentation shall not have been executed and delivered by all such parties prior to that date, or (C) if earlier than (B), the date of termination of the Merger Agreement, this Commitment Letter and the commitment of Purchaser hereunder shall automatically terminate unless Purchaser shall, in its sole discretion, agree to an extension. The provisions of the Fee Letter and the provisions under Sections 3, 5, 6 and 7 hereof shall survive termination of this Commitment Letter (or any portion hereof) or the commitment of Purchaser hereunder; provided however, notwithstanding the foregoing, this Commitment Letter shall be replaced and superseded in its entirety by and upon the effectiveness of the Financing Documentation.

[Signature Page Follows]

We are pleased to have been given the opportunity to assist you in connection with the financing for the Transactions.


Very truly yours, FALCON STRATEGIC PARTNERS III, LP
By:	Falcon Strategic Investments III, LP, its General Partner

By:	Falcon Strategic Investments GP III, LLC, its General Partner

By:	/s/ Eric Y. Rogoff
	Name:	Eric Y. Rogoff
	Title:	Director


Accepted and agreed to as of the date first written above: BRICKELL BAY ACQUISITION CORP.
By:	/s/ William J. Nolan
	Name:	William J. Nolan
	Title:	Secretary

[Project Liberty Mezzanine Commitment Letter Signature Page]

ANNEX I

SUMMARY OF PRINCIPAL TERMS AND CONDITIONS OF SECURITIES¹

Mezzanine Financing


Mezzanine Financing:		Principal amount of senior subordinated notes of the Issuer of not less than $49,000,000 and not more than $51,000,000 (as the Issuer may elect) (the “Notes”), together with detachable warrants (the “Warrants” and together with the Notes, the “Securities” or the “Mezzanine Financing”) representing the right to purchase the aggregate number of shares of common stock and preferred stock of Newco equal to 3.0% of the equity of Newco on a fully diluted basis (after giving effect to dilution for all present and future management options) which Warrants shall be exercisable for shares of common stock and preferred stock of Newco (x) of the same class and having the same rights and preferences as that being issued to the investors in the Sponsor Equity Financing and (y) in the same proportion of common stock to preferred stock as is being received by the investors in the Sponsor Equity Financing.

Purpose:		Proceeds of the Mezzanine Financing will be used to finance a portion of the Acquisition, including the Refinancing and to pay fees and expenses in connection therewith.

Closing Date:		The date of consummation of the Acquisition and the concurrent closing of the Mezzanine Financing and the other aspects of the Transactions (the “Closing Date”).


¹		All capitalized terms used but not defined herein shall have the meanings provided in the Commitment Letter to which this summary is attached.

I-1

Terms of the Notes


Issuer:		MergerCo shall be the issuer of the Notes (as defined below) immediately prior to the merger with and into Allion Healthcare, Inc. (the “Issuer”), and following the merger, Issuer shall be the issuer of Notes under a purchase agreement (the “Purchase Agreement”) and related documentation.

Principal Amount:		Not less than $49,000,000 and not more than $51,000,000 (as the Issuer may elect) principal amount.

Purchase Price:		100% of principal amount.

Maturity Date:		The Notes will mature on the 5.5 year anniversary of the Closing Date.

Interest Rate:		The Notes will bear interest at a rate equal to 16.0% per annum of which 13.0% shall be payable in cash and, at the option of Issuer, 3.0% shall be payable in cash or in-kind or capitalized quarterly in arrears and added to the principal amount of the Notes. Cash interest will be payable quarterly in arrears.

		Calculation of interest shall be on the basis of a 360 day year comprised of twelve, 30 day months.

		Customary AHYDO “catch-up” payment provision will be included in the of definitive documentation for the purchase of the Notes.

Default Interest:		During the continuation of certain events of default on the Notes to be mutually agreed, (i) the interest rate applicable to the outstanding principal amount of the Notes shall immediately increase by a rate of 2.0% per annum and (ii) interest on overdue payments of principal and interest on the Notes will, in each case, accrue at a rate of 2.0% per annum in excess of the rate of interest applicable to the outstanding principal amount of the Notes as set forth under “Interest Rate” above.

I-2


Ranking:		The Notes and any put rights in respect of the Warrants will be subordinated to the Bank Facilities and senior in respect of payment to all other obligations of the Issuer and the Guarantors. Purchaser and the administrative agent under the Bank Facilities (the “Senior Agent”) will enter into a customary subordination agreement with respect to the subordination of the Notes and any put rights in respect of the Warrants to the Bank Facilities and reasonably acceptable to Issuer, to the extent party thereto, the Senior Agent and Purchaser in all material respects.

Collateral:		None.

Optional Redemption:		The Notes may be redeemed, in whole or in part, at the option of the Issuer, with prior written notice, from and after the 2.5 year anniversary of the Closing Date at the purchase prices set forth below together with accrued and unpaid interest to the date of redemption:


Period Commencing		Redemption Price
Year 2.5		106.0%
Year 3		103.0%
Year 4 and thereafter		100.0%


Change of Control Offer:		Upon the occurrence of a change of control (to be defined in a manner acceptable to Purchaser and the Issuer), the holders of Notes will have the option to require the Issuer to purchase all or any portion of their Notes at a purchase price equal to the purchase price applicable to an optional redemption occurring on any such date after the 2.5 year anniversary of the Closing Date as provided under “Optional Redemption” above, plus accrued and unpaid interest to the date of repurchase. In the case of a change of control (as so to be defined) occurring prior to the 2.5 year anniversary of the Closing Date the premium shall equal a make-whole premium calculated using a discount rate to the first call date equal to

I-3


		the yield on comparable Treasury securities plus 100 basis points.

Mandatory Offers to Repurchase:		Subject to the priority payment rights under the Bank Facilities and, only with respect to clause (i) below, subject to waiver effective automatically upon waiver of such rights under the Bank Facilities, the Issuer will be required to offer to purchase the Notes promptly upon receipt thereof, in an amount equal to 100% of the net cash proceeds of (i) each equity issuance by Newco (other than equity issuances (A) to Sponsor, any Controlled Investment Affiliate of Sponsor or any other shareholder of Newco prior to such equity issuance, (B) to management and other employees of the Issuer or a Guarantor under any employee stock option or stock purchase plan or agreement or other employee benefits plan or agreement in existence from time to time, or (C) the proceeds of which are used by the Issuer to finance a permitted acquisition, (ii) indebtedness for borrowed money incurred by the Issuer or any Guarantor (other than indebtedness permitted to be incurred under the Purchase Agreement), and (iii) each sale or other disposition of any property or assets of the Issuer or any Guarantor outside the normal course, including, without limitation, proceeds received as a result of a casualty or condemnation event, in each case (x) subject to customary carve-outs, baskets and other exceptions to be agreed upon by the Issuer and Purchaser and (y) net of amounts reinvested in replacement assets within 180 days (or, within 270 days in the event Issuer has entered into a binding agreement for reinvestment within 180 days), in each case, at a purchase price equal to the purchase price applicable to an optional redemption occurring on any such date after the 2.5 year anniversary of the Closing Date as provided under “Optional Redemption.”) In the case of an offer to purchase occurring prior to the 2.5 year anniversary of the Closing Date there shall be applied a make-whole premium calculated using a discount rate to the first call date equal to the yield

I-4


		on comparable Treasury securities plus 100 basis points.

Guarantees:		Guaranteed on a senior subordinated basis by each of the Issuer’s existing and future subsidiaries, and Newco, and together with such subsidiaries, (the “Guarantors”). Newco will be a newly formed corporation controlled, directly or indirectly, by the Sponsor or its Controlled Investment Affiliates (or any of them or any combination thereof). Newco will be a single purpose entity and conduct no business other than ownership of the equity interests in the Issuer and activities ancillary or related thereto, and incur no indebtedness except as permitted under the Notes.

Affirmative Covenants:		Affirmative covenants customary for transactions of this type and otherwise reasonably acceptable to Purchaser and Issuer will apply to Newco and its subsidiaries and will, except as customary for a mezzanine financing of the type contemplated hereby, be substantially consistent with the affirmative covenants applicable to the Bank Facilities as of the Closing Date (to the extent the affirmative covenants applicable to the Bank Facilities are reasonably satisfactory to the Purchaser), subject to customary step-backs in baskets.

Negative Covenants:		Negative covenants customary for transactions of this type and otherwise reasonably acceptable to Purchaser and Issuer will apply to Newco and its subsidiaries and will, except as customary for a mezzanine financing of the type contemplated hereby, be substantially consistent with the negative covenants applicable to the Bank Facilities as of the Closing Date (to the extent the negative covenants applicable to the Bank Facilities are reasonably satisfactory to the Purchaser), subject to customary step-backs in baskets.

Financial Covenants:		Financial covenants will be substantially consistent with the financial covenants applicable to the Bank Facilities as of the Closing Date (to the extent the

I-5


		financial covenants applicable to the Bank Facilities are reasonably satisfactory to the Purchaser) and otherwise reasonably acceptable to Purchaser, subject to customary cushion in covenant levels; provided any changes to the definition of EBITDA shall not apply to the Financing Documentation without the consent of the Purchaser and Issuer, such consent not to be unreasonably withheld.

Events of Default:		Events of default in respect of the Notes customary for transactions of this type and otherwise reasonably acceptable to Purchaser and Issuer in all material respects will apply to Newco and its subsidiaries and will, except as customary for a mezzanine financing of the type contemplated hereby, be substantially consistent with the events of default applicable to the Bank Facilities as of the Closing Date (to the extent the events of default applicable to the Bank Facilities are reasonably satisfactory to the Purchaser), subject to customary step-backs in baskets, provided, that there will be no cross-default to the Bank Facilities (with respect to which, cross-payment default only at final scheduled maturity and cross-acceleration will apply).

		Upon the occurrence of an event of default, holders of not less than a majority of the Notes will have the right to accelerate all of the Notes. Notwithstanding the foregoing, each holder of Notes will have the absolute right to receive payments of principal and interest on such holder’s Notes when due (subject to the subordination provisions with respect to the Bank Facilities).

Amendments and Modifications:		Modifications to the Financing Documentation relating to the Notes may be made with the consent of the holders of a majority in aggregate principal amount of the Notes then outstanding, except that without the consent of each holder of Notes affected thereby, no modification or change may, among other things, (1) extend the maturity of or due date of payment of interest or principal of any Notes, (2) reduce the rate of interest (other than waivers of de-

I-6


		fault or default interest) or the principal amount of any Notes, (3) alter the redemption or repurchase provisions of the Notes in a matter adverse to the holders of the Notes, (4) reduce the percentage of holders necessary to modify or change the Notes or (5) release any Guarantor from its guarantee of the Notes.

I-7

Terms of the Warrants


Ownership Percentage:		An amount that equals the aggregate number of shares of common stock and preferred stock of Newco equal to 3.0% of the equity of Newco on the Closing Date, after giving effect to the Transactions on a fully diluted basis (after giving effect to the issuance of the Warrants, all other warrants, options and convertible securities outstanding on the Closing Date, and after giving effect to dilution for all present and future management options) which Warrants shall be exercisable for shares of common stock and preferred stock of Newco (x) of the same class and having the same rights and preferences as that being issued to the investors in the Sponsor Equity Financing and (y) in the same proportion of common stock to preferred stock as is being received by the investors in the Sponsor Equity Financing.

Exercise Price:		$0.01 per share.

Expiration Date:		The tenth anniversary of the Closing Date.

Antidilution Provisions:		The Warrants will contain mutually agreeable weighted average anti-dilution provisions, including, without limitation, adjustment for (with customary exclusions to be agreed upon): (1) the payment of dividends, splits, or other distributions in common or preferred stock of Newco; (2) subdivisions, combinations and reclassifications of common or preferred stock of any class of Newco; (3) mergers, consolidations, recapitalizations and other similar events; (4) dividends of cash or property (with a right to select to receive a proportionate amount of such payments); and (5) the issuance or sale of warrants, convertible securities or common or preferred stock at an effective price per share less than the fair market value thereof.

Dividends:		The Warrants will share in any dividends on the common or preferred stock of Newco, with each holder entitled to the dividend payment correspond-

I-8


		ing to the number of shares of common or preferred stock into which the Warrants are then exercisable.

Put Right:		The holders of the Warrants will have the right to require the Company to purchase the Warrants at their fair market value upon and after the 8-year anniversary of the Closing Date.

I-9


Stockholder Agreements:		Purchaser in connection with its investment in the Warrants will be granted customary information rights, tag-along rights and preemptive rights on issuances of equity (subject to customary exclusions) to the extent the Warrant exercise price or number of warrant shares shall not be adjusted pursuant to anti-dilution provisions and will agree to customary drag along provisions.

Voting:		The holders of the Warrants shall not be entitled to vote until exercise.

Registration Rights:		In connection with and following the consummation of an initial public offering of equity securities of Newco, Purchaser and its transferees will have unlimited piggy-back registration rights (subject to pro rata cutbacks among all participants other than those exercising demand rights, if any).

I-10

Terms Applicable to the Securities


Representations and Warranties:		The Financing Documentation will include representations and warranties relating to Newco and its subsidiaries as are customary for financings of this kind and otherwise reasonably acceptable to Purchaser and Issuer in all material respects and will, except as customary for a mezzanine financing of the type contemplated hereby, be substantially consistent with the representations and warranties applicable to the Bank Facilities as of the Closing Date (to the extent the representations and warranties applicable to the Bank Facilities are reasonably satisfactory to the Purchaser).

Transferability:		Except as set forth below, Purchaser will be free to sell or transfer all or any part of its Notes, Warrants or common or preferred stock to (i) any Disclosed Limited Partner, (ii) any holder of the Notes and (iii) any third party, subject to applicable law; provided that in the case of clause (iii) only, the consent of the Issuer shall be required (not to be unreasonably withheld) unless an event of default shall have occurred and be continuing.

		Issuer’s consent shall be required (and may be withheld in Issuer’s discretion, notwithstanding the foregoing) with respect to a transfer of Notes, Warrants or common or preferred stock to any entity whose principal business is in direct competition with the Issuer or its Subsidiaries (a “Competitor”) or, with respect to any Competitor, any other entity which directly or indirectly, is in control of, is controlled by, or is under common control with, such Competitor (a “Competitor Affiliate”).

Expenses and Indemnification:		All reasonable and documented out-of-pocket expenses (including but not limited to legal fees and expenses (of one firm of counsel to all purchasers plus such additional local or specialty counsel for all purchasers as is reasonably necessary; provided, that if the representation by any one such law firm on behalf of all purchaser would be inappropriate

I-11


		due to the existence of an actual conflict between any purchaser and any other purchaser, then in addition to the forgoing, the Issuer shall be required to pay legal fees of one law firm on behalf of such conflicted purchaser in addition to the forgoing) and expenses incurred in connection with due diligence and travel, courier, reproduction, printing and delivery expenses) of Purchaser associated with the preparation, execution and delivery, administration, amendment, waiver or modification (including proposed amendments, waivers or modifications) of the documentation contemplated hereby are to be paid by the Issuer.

		Issuer and the Guarantors will jointly and severally indemnify and hold harmless Purchaser (solely in its capacity as a holder of the Notes) and, solely with respect to Purchaser’s holdings of the Notes, its affiliates (including, without limitation, control persons) and the directors, officers, employees and agents of Purchaser (each, an “Indemnified Person”) from and against any and all losses, claims, costs, expenses, damages or liabilities, out-of-pocket costs, expenses (including but not limited to legal fees and expenses (of one firm of counsel to all Indemnified Persons plus such additional local or specialty counsel for all Indemnified Persons as is reasonably necessary; provided, that if the representation by any one such law firm on behalf of all Indemnified Persons would be inappropriate due to the existence of an actual conflict between any Indemnified Person and any other Indemnified Person, then in addition to the forgoing, the Issuer shall be required to pay legal fees of one law firm on behalf of such conflicted Indemnified Person in addition to the forgoing)) arising out of or relating to the transactions, including but not limited to the Notes or any transactions related thereto and any use of the proceeds of any financing made under the Notes, except that Issuer and Guarantors shall not be liable for any such obligations in respect of any Indemnified Person to the extent any such loss, claim, damage, cost, expense or liability (a) has

I-12


		arisen in connection with a dispute solely among the Indemnified Persons unrelated to any dispute involving the Issuer or any Guarantor or (b) is found in a final judgment by a court of competent jurisdiction to have arisen from (i) the gross negligence, bad faith or willful misconduct of any such Indemnified Person or any of its affiliates or their respective officers, employees, agents or directors seeking such indemnity, or (ii) a material breach of such Indemnified Person’s obligations under the Notes (except to the extent such breach of such Indemnified Person’s obligations is a direct result of your failure to comply with the terms of the Notes).

Assignability:		Only with the prior written consent of Sponsor (not to be unreasonably withheld) shall Purchaser have the right to assign its commitment represented by the Commitment Letter; provided that such consent shall not be required for any assignment to a Disclosed Limited Partner; provided, further, that in any event, any such assignment shall not relieve the Purchaser of its Commitment (including, upon the failure of any such assignee to purchase Securities on the Closing Date, to purchase any such assigned portion thereof) in accordance with the terms of the Commitment Letter and this Term Sheet. Notwithstanding the foregoing, Sponsor’s consent shall be required (and may be withheld in Sponsor’s discretion, notwithstanding the foregoing) with respect to any such assignment of commitment to any Competitor or any Competitor Affiliate.

Board Observer:		So long as Falcon Strategic Partners III, LP (“Falcon”) or any of its affiliates or limited partners or any affiliates of its limited partners holds any investment in Newco or its subsidiaries, Falcon shall, subject to customary limitations (to consist of confidentiality, privilege, conflict of interest and other such exceptions as may be reasonably mutually agreed), have the right to designate one person to attend meetings of Newco’s Board of Directors (which meetings may be by teleconference or vid-

I-13


		eoconference and if such meetings are in person, such observer shall be entitled to attend in person) as an observer without voting rights and to receive notice of such meetings in the same manner as Newco’s Board of Directors receive such notice in accordance with Newco’s bylaws or other applicable organizational documents and copies of Board of Directors’ materials distributed to any member of the Board of Directors in connection with such meetings. Newco shall reimburse Falcon’s observer for all reasonable and documented out-of-pocket costs and expenses incurred in attending each Board meeting.

VCOC Provisions:		The Financing Documentation will include provisions granting Purchaser with such other rights as may be determined by Purchaser to be necessary to qualify its investment in the Securities as a “venture capital investment” for purposes of the United States Department of Labor Regulations.

Governing Law and Forum:		The laws of the State of New York. The corporate stockholder, rights of holders of common or preferred stock will be governed by the laws of Delaware. The Purchase Agreement will provide that the parties thereto will waive the right to trial by jury and will consent to jurisdiction of the state and federal courts located in The City of New York.

I-14

Annex II

Additional Terms

Additional Conditions to Mezzanine Financing: Conditions precedent to the Mezzanine Financing shall be limited to those set forth under the headings “2. Information” and “4. Conditions” in the Commitment Letter and the following (with all capitalized terms used and not defined herein having the respective meaning assigned thereto in the Commitment Letter and the Term Sheet attached as Annex I to the Commitment Letter):

1. The Acquisition shall be completed (such condition to be satisfied by receipt by Purchaser of the file stamped certificate of merger evidencing the effectiveness of the merger of the Target with and into MergerCo certified by the Secretary of State of the State of Delaware) in accordance with the terms and conditions of the Agreement and Plan of Merger dated as of the date hereof by and among Newco, MergerCo, and the Target (as such agreement is in effect on the date hereof or modified in accordance herewith the “Merger Agreement”) and no covenants, conditions or other terms of the Merger Agreement (as such agreement is in effect on the date hereof) shall have been waived, modified or amended from the form delivered to the Purchaser prior to the date hereof other than with the consent of the Purchaser or other than waivers, modifications, or amendments, which would not be (individually or in the aggregate) materially adverse to the interests of the holders of the Notes. Purchaser acknowledges that it has reviewed the version of the Merger Agreement labeled as the “EXECUTION COPY” and the schedules thereto and finds them acceptable.

2. Purchaser shall be reasonably satisfied with the corporate and capital structure of Newco, the Issuer and their respective subsidiaries in all material respects (it being understood that the preferred stock being issued in connection with the Equity Financing will not be redeemable, or otherwise require any cash payments (including in respect of a default thereunder), prior to the 91st day following the maturity of the Notes, unless all principal, accrued and unpaid interest, premium and all other amounts outstanding in respect of the Notes shall have been paid in full), including, without limitation: (i) borrowings made by the Issuer on the Closing Date under the Bank Facilities in an amount not to exceed $95,000,000, which Bank Facilities shall be pursuant to definitive documentation on the terms set forth in that certain commitment letter dated the date hereof relating to the Bank Facilities (the “Bank Facilities Commitment Letter”) in the form previously provided to Purchaser, and to the extent any terms of the Bank Facilities are not as set forth in such commitment letter, such terms shall be customary for transactions of this type and otherwise reasonably acceptable to Purchaser in all material respects, (ii) minimum preferred and common equity contributions of not less than $85,000,000 from the Sponsor and its Controlled Investment Affiliates in cash; provided that in the event less than $95,000,000 is borrowed under the Bank Facilities on the Closing Date, the minimum required equity contributions in respect of the Equity Financing shall be increased on a dollar-for-dollar basis in an amount equal to such shortfall, (iii) preferred and common equity contributions from certain existing investors in an aggregate amount not less than $51,000,000. Purchaser acknowledges that it has reviewed the version of the Bank Facilities Commitment Letter executed on the

II-1

date hereof and the term sheet thereto and finds the identity of such lender acceptable and the terms described therein acceptable. Immediately following the Transactions, none of Newco, Target or any of their subsidiaries will have any indebtedness for borrowed money or common or preferred equity issued and outstanding other than in respect of the Bank Facilities, the Securities, the Rollover Equity Financing and the Sponsor Equity Financing, other than ordinary course indebtedness (to the extent permitted under the Merger Agreement) in an aggregate amount not to exceed $1,000,000 and consistent with past practice and equity of Newco in a de minimis amount that may be issued to management of the Target on the Closing Date.

3. There shall have occurred reasonably satisfactory completion in all material respects of background checks of such persons agreed to by Senior Agent and Sponsor prior to the date hereof to be performed by Strategic Insight Group, the results of which shall have been shared with, and shall be reasonably satisfactory to, Purchaser in all material respects.

4. Purchaser shall have received customary evidence of corporate authority (including the Target, after giving effect to the Acquisition) and certificates of status (including certified copies of the governing documents) with respect to each of Newco, Issuer and Guarantors issued by the jurisdictions of organizations of each of them.

5. The Acquisition shall have been approved by the Target’s and MergerCo’s board of directors and shareholders, as required pursuant to Delaware law. The closing and funding of the Mezzanine Financing shall have been approved by board of directors of MergerCo, Newco and, immediately after giving effect to the Acquisition, the Target and its subsidiaries.

6. Purchaser shall have received unaudited quarterly financial statements of the Target and its consolidated subsidiaries (including an income statement, a balance sheet, and a cash flow statement) for the most recent quarter ending immediately prior to closing (provided that at least 45 days have passed since the end of such quarter), and a closing balance sheet adjusted to give effect to the consummation of the Acquisition.

7. Adjusted EBITDA (as such term is defined below), for the trailing twelve month period ending immediately prior to closing for which quarterly financial statements of the Target are available (provided that at least 45 days have passed since the end of such quarter), shall be at least $38,200,000. Adjusted EBITDA shall mean EBITDA of the Target and its subsidiaries taking into account, without duplication, (i) the pro forma adjustments set forth in the Ernst & Young quality of earnings report dated as of July 17, 2009 (the “E&Y Report”) for quarters ended prior to October 1, 2009, as provided to the Senior Agent and Purchaser, (ii) the pro forma adjustments permitted under Regulation S-X, (iii) other pro forma adjustments agreed upon by Issuer, Purchaser and Senior Agent prior to the date hereof, including, without limitation, as agreed upon, an addback in the amount of $2,600,000 representing 1% of the Cost of Goods Sold of the HIV business, (iv) the pro forma adjustments set forth in the roll forward of the E&Y Report for quarter ended September 30, 2009, as provided to the Senior Agent and Purchaser and (v) the pro forma adjustments for periods occurring after September 30, 2009 sub-

II-2

stantially consistent with the categories of adjustments and calculated using the methodology set forth in the most recent roll forward of the E&Y Report received by the Senior Agent and Purchaser with respect to the most recent quarter then ended (provided, that, in the event the Closing Date is more than 60 days following December 31, 2009, there shall have been delivered to Purchaser a roll forward of the E&Y Report for quarter ended December 31, 2009).

8. The multiple of total indebtedness of Issuer and its subsidiaries on a consolidated basis (including the Bank Facilities and the Mezzanine Financing and after giving effect thereto) to Adjusted EBITDA for the trailing twelve month period ending immediate prior to closing for which quarterly financial statements of the Target are available shall be no greater than 3.90x, as of the closing and after giving effect thereto.

9. The multiple of total indebtedness of the Issuer and its subsidiaries (as calculated in clause (8) above) minus subordinated indebtedness of the Issuer and its subsidiaries to Adjusted EBITDA for the trailing twelve month period ending immediate prior to closing for which quarterly financial statements of the Target are available shall be no greater than 2.5x, as of the closing and after giving effect thereto.

10. Payment in cash of all costs, fees, expenses (including, without limitation, legal fees and expenses and the fees and expenses of appraisers, consultants and other advisors) and other compensation owing to the Purchaser pursuant to the terms of the Commitment Letter, the Fee Letter and the Sponsor Letter (it being understood and agreed that any such amounts outstanding on the Closing Date may, at Sponsor’s election, be paid out of the funding proceeds for the Bank Facilities and paid to Purchaser substantially simultaneously with the satisfaction of the Commitment).

11. Immediately after giving effect to the funding on the Closing Date, if any, and payment of all costs and expenses related to the closing, Issuer shall have minimum availability of $15,000,000 under the revolving line of credit under the Revolving Facility.

12. Purchaser shall have received certification on behalf of the Issuer of the solvency of the Issuer and the Guarantors on a consolidated basis after giving effect to the consummation of the Acquisition from the chief financial officer of the Issuer.

13. Receipt of the other customary closing documentation, including the legal opinions of the Issuer’s counsel reasonably acceptable to the Purchasers.

14. On the closing date, both before and immediately after giving effect to the funding of the purchase of the Notes (i) no event of default or unmatured event of default shall have occurred under the Notes (other than an event of default or unmatured event of default resulting from a breach of any such representation or warranty that is not a Specified Representation) and (ii) the accuracy in all material respects of the Specified Representations.

II-3

15. Preparation, execution and delivery of definitive documentation, including, without limitation, the Purchase Agreements customary for transactions of this type, which will reflect the terms set forth in the Term Sheet and will be reasonably acceptable to the Purchaser and the Issuer (the “Financing Documentation”).

16. Repayment and cancellation of the Target’s existing credit facilities and delivery of payoff letters in form and substance reasonably acceptable to the Purchaser.

17. No Closing Date Material Adverse Effect shall have occurred. “Closing Date Material Adverse Effect”, for purposes of the Commitment Letter, this Additional Term and the funding of the purchase price for the Notes on the closing date, shall mean a “Material Adverse Effect” as defined in the Merger Agreement (as in effect on the date hereof).

II-4

EX-99.8 8 g20953exv99w8.htm EX-99.8 exv99w8

Exhibit 99.8

October 18, 2009

H.I.G. Bayside Debt & LBO Fund II, L.P.
1001 Brickell Bay Drive, 32nd Floor
Miami, FL 33131
Attn: Craig Kahler

Re: Commitment Letter

Ladies and Gentlemen:

H.I.G. Bayside Debt & LBO Fund II, L.P. (the “Sponsor”) has requested a term loan in the principal amount of $95,000,000 (the “Term Loan”), and a revolving credit facility in the principal amount of $15,000,000 (the “Revolver” and, together with the Term Loan, the “Facilities”), in each case as described in the Confidential Summary of Terms (the “Summary of Terms”) attached hereto and made a part hereof, to finance, among other things, the merger of a newly formed corporation (“MergerCo”), to be one hundred percent (100%) owned by a newly formed holding company controlled, directly or indirectly, by the Sponsor (“Parent”), with and into Allion Healthcare, Inc., a Delaware corporation (the “Target”) with the Target as the surviving corporation (the “Acquisition Transaction”). MergerCo shall be the borrower under the Credit Facilities Documentation (as such term is defined in the Summary of Terms) immediately prior to the Acquisition Transaction and, immediately following the Acquisition Transaction, Target shall be the borrower under the Credit Facilities Documentation. The proceeds of the Facilities shall also be used by the Target and the Subsidiaries of the Target for general corporate purposes, including, without limitation, to fund certain fees and expenses associated with the negotiation, documentation and closing of the Facilities and the Acquisition Transaction, to refinance existing indebtedness of the Target, to finance working capital needs and to finance permitted acquisitions.

The Facilities

Fifth Third Bank, an Ohio banking corporation (in its individual capacity, “Fifth Third”), is pleased to confirm its agreement (i) to act as arranger (in such capacity, “Arranger”) and administrative agent (in such capacity, the “Administrative Agent”) for the Facilities, (ii) to commit to provide a portion of the Facilities in an aggregate amount of $30,000,000 (the “Fifth Third Commitment”) (to be allocated pro rata between the Revolver and the Term Loan), and (iii) to use its best efforts to arrange additional lenders to provide financing commitments in the aggregate amount of $80,000,000 to complete the Facilities, all on the terms and conditions set forth in this letter agreement (the “Commitment Letter”) and the Summary of Terms (Fifth Third and the other lenders providing such additional financing commitments are collectively referred to in this Commitment Letter as the “Lenders”). The Arranger intends to commence syndication efforts promptly after your execution and delivery of this Commitment Letter. If Arranger receives financing commitments from Lenders other than Fifth Third in excess of $80,000,000 and such other Lenders fund such commitments on the closing date, then the Administrative Agent reserves the right to reduce the Fifth Third Commitment on the closing date by an amount

not to exceed such excess; provided, that, Fifth Third shall in no event reduce the Fifth Third Commitment at the closing of the Facilities to an amount less than $25,000,000.

The Arranger will act as Sole Lead Arranger and Sole Book Runner for the Facilities. No other agents, co agents or arrangers will be appointed, no other titles will be rewarded and no compensation (other than that expressly contemplated by the Summary of Terms and the fee letter dated the date hereof and delivered in connection herewith (the “Fee Letter”)), will be paid in connection with the Facilities unless the Sponsor and the Arranger agree. The Arranger will, in consultation with the Sponsor, manage all aspects of the arrangement and syndication, including, without limitation, deciding which financial institutions will be approached, when they will join in the syndication, and how the financing commitments will be allocated among the Lenders; provided, that, solely with respect to the financial institutions that join the syndication on or prior to the closing date of the Facilities, such financial institutions shall be reasonably acceptable to the Sponsor and shall exclude, in any event, (a) those financial institutions, including in each case any of their respective affiliates, separately identified for purposes of this clause (a) to Administrative Agent in writing by Sponsor prior to the date hereof and (b) any entity whose primary business competes directly with the Target and its Subsidiaries (a “Competitor”) or, with respect to any Competitor, any other entity which directly or indirectly, is in control of, is controlled by, or is under common control with, such Competitor).

The Sponsor agrees to use commercially reasonable efforts to assist the Arranger in forming the syndicate of Lenders and to provide the Arranger, the Administrative Agent and other potential syndicate members, upon reasonable request, with all material information necessary to successfully complete the syndication. The Sponsor agrees to make its appropriate officers and representatives (and to use commercially reasonable efforts to make the chief executive officer or chief financial officer of the Target and its subsidiaries) available to participate in informational meetings (which, if agreed to by the Administrative Agent, may be held by telephone or video-conference) with potential syndicate members at such times and places as mutually agreed to by the Administrative Agent, the Arranger and the Sponsor. The Arranger and the Administrative Agent (acting in such capacities) will not have any responsibility other than to arrange the syndication described in this Commitment Letter and will not be subject to any fiduciary or other implied duties.

Information

The Sponsor agrees that it is a condition precedent to the funding of the Facilities on the Closing Date that (a) all material written information provided by it, other than Projections (and other forward looking information concerning the Target and its Subsidiaries), is and will be, when taken as a whole, complete and correct in all material respects and does not and will not, when taken as a whole, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein not misleading in any material respect in light of the circumstances under which such statements have been made, and (b) all financial projections concerning the Target and its subsidiaries that have been or are hereafter made available to the Arranger, the Administrative Agent or the other Lenders by the Target and/or the Sponsor or any of their respective representatives (the “Projections”) have been or will be prepared in good faith based on assumptions that are believed by Sponsor or Target to be reasonable at the time such projections were prepared; provided further that each of Arranger and

the Administrative Agent acknowledges that (i) any such projections are subject to significant uncertainties and contingencies which are beyond Sponsor’s or the Target’s control, (ii) no assurance is given by Sponsor or the Target that the results forecast in any such projections will be realized, and (iii) the actual results may differ from such projections and such differences may be material. In issuing this Commitment Letter and in arranging and syndicating the Facilities, the Arranger and the Administrative Agent are and will be using and relying on such information and the Projections without independent verification thereof.

The Sponsor and its affiliates shall not attempt (and shall use commercially reasonable efforts to cause the Target and its Subsidiaries not to attempt) to obtain, place, arrange or renew any other sort of debt financing (other than the Required Mezzanine Debt, as defined in the Summary of Terms) in connection with the financing of the Acquisition Transaction while the Arranger and the Administrative Agent are in the process of working on syndicating and closing the Facilities.

Indemnification and Expense Reimbursement

The Sponsor agrees to reimburse the Arranger and the Administrative Agent for all reasonable and documented out-of-pocket costs and expenses incurred in conjunction with the negotiation, preparation, execution and delivery of the Credit Facilities Documentation, the syndication of the Facilities and the performance of their due diligence in connection with the Facilities, whether or not the Facilities are closed, including, without limitation, the reasonable and documented legal fees of Katten Muchin Rosenman LLP and, solely to the extent consented to by the Sponsor (which such consent shall not be unreasonably conditioned, withheld or delayed), each additional counsel in each relevant jurisdiction, if any ( “Additional Counsel”), that Fifth Third deems necessary to the negotiation, preparation, execution and delivery of the Credit Facilities Documentation, the syndication of the Facilities and the performance of their due diligence in connection with the Facilities.

Without duplication of the reimbursement obligation set forth in the paragraph above, and whether or not the Facilities are closed, the Sponsor agrees to indemnify and hold harmless the Arranger, the Administrative Agent, the Lenders, their affiliates and their respective officers, employees, agents and directors (each an “Indemnified Party”) against any and all actual out of pocket losses, claims, damages, costs, expenses or liabilities of every kind whenever arising (collectively, the “Indemnified Obligations”) to which an Indemnified Party may become subject at any time, that arise out of, in any way relate to, or result from a claim in respect of the financings contemplated by this Commitment Letter or the transactions that are the subject of, or related to, this Commitment Letter, including, without limitation, reasonable out-of-pocket expenses incurred in connection with investigating or defending against any liability or action (whether or not such Indemnified Party is a party to such action or other proceedings), except that the Sponsor shall not be liable for any Indemnified Obligations of any Indemnified Party to the extent any such loss, claim, damage, cost, expense or liability (a) has arisen in connection with a dispute solely among the Indemnified Parties unrelated to any dispute involving the Target or the Sponsor or (b) is found in a final judgment by a court of competent jurisdiction to have arisen from (i) the gross negligence, bad faith or willful misconduct of such Indemnified Party or any of its affiliates or their respective officers, employees, agents or directors seeking such indemnity, or (ii) a material breach of such Indemnified Party’s obligations under this

Commitment Letter (except to the extent such breach of such Indemnified Party’s obligations is a direct result of Sponsor’s failure to comply with the terms of this Commitment Letter and the Fee Letter or Sponsor’s failure to agree to reimburse Fifth Third for the reasonable and documented legal fees of Additional Counsel that Fifth Third deems necessary to close on the Facilities). Notwithstanding the foregoing, neither you nor any Indemnified Party shall be liable for any indirect, special consequential or punitive damages in connection with its activities relating to the Facilities.

The obligations of the Arranger, the Administrative Agent and the other Lenders under this Commitment Letter are solely for the benefit of the Sponsor and MergerCo and may not be relied upon by any other person.

Conditions

Notwithstanding anything in this Commitment Letter, the Summary of Terms, the Fee Letter, the Credit Facilities Documentation or any other letter agreement or other undertaking concerning the financing of the Acquisition Transaction to the contrary, (a) the only representations the making of which shall be a condition to the availability of the Facilities on the closing date shall be (i) such of the representations and warranties made by the Target in the Agreement and Plan of Merger dated as of the date hereof by and among Parent, MergerCo, and the Target (the “Merger Agreement”), but only if you, Parent or MergerCo have a right not to consummate the transactions contemplated by the Merger Agreement or to terminate your or its obligations under the Merger Agreement as a result of a breach of such representations and warranties, and (ii) the Specified Representations (defined below), and (b) the terms of the Facilities contain no condition precedent to the funding of the Facilities on the closing date other than those set forth above in this paragraph or in the Closing Conditions section of the Summary of Terms, the satisfaction of which shall obligate the Lenders to provide the Facilities on the terms set forth in this commitment letter and the Summary of Terms (it being understood that, to the extent documentation and instruments required for perfection over any collateral is not provided on the closing date after use of commercially reasonable efforts to do so (other than (x) the delivery of Uniform Commercial Code financing statements, (y) the delivery (but not filing of) intellectual property security agreements for intellectual property that is registered as of the closing date, and (z) the delivery of stock certificates), the providing of such documents and instruments shall not constitute a condition precedent to the availability of the Facilities on the closing date but shall be required to be provided after the closing date pursuant to arrangements to be mutually agreed). For purposes hereof, “Specified Representations” means the representations and warranties set forth in the Credit Facilities Documentation relating to organization, existence, power and authority, due authorization, execution, delivery, enforceability and non-contravention of the Credit Facilities Documentation with the Borrower’s

or the Guarantors’ governing documents, applicable law, or any order, judgment, or decree of any court or other governmental authority binding on the Borrower, any other Guarantor or their respective subsidiaries, receipt of governmental approvals in connection with the Facilities, use of proceeds, solvency, Federal Reserve Bank margin regulations, the Investment Company Act and, subject to the clause (b) above, the perfection of the security interests granted in the collateral as of the closing date.

Confidentiality

This Commitment Letter, the Summary of Terms and the Fee Letter and the contents hereof and thereof are confidential and, except for disclosure on a confidential basis to the Target, prospective lenders (the “Mezzanine Lenders”) in respect of the Required Mezzanine Debt (as defined in the Summary of Terms), and Sponsor’s, the Target’s and the Mezzanine Lenders’ officers and directors, accountants, attorneys and other professional advisors (other than commercial lenders which are not Mezzanine Lenders) retained by the Sponsor and/or the Target in connection with the Facilities or as otherwise required by law, may not be disclosed in whole or in part to any person or entity without the Arranger’s or the Administrative Agent’s prior written consent. The foregoing notwithstanding, you and the Target may, following your acceptance of this Commitment Letter in accordance herewith and your return of an executed counterpart of this Commitment Letter to us, file or make such other public disclosures of the terms and conditions hereof (including the Summary of Terms) to the extent you or the Target are required by law, in the opinion of your counsel or the Target’s counsel, to make.

The Administrative Agent agrees to keep confidential, and not to publish, disclose or otherwise divulge, information obtained from or on behalf of you or the Target in the course of the transactions contemplated hereby, except that the Administrative Agent and each prospective Lender shall be permitted to disclose such confidential information (a) to their respective directors, officers, agents, employees, attorneys, accountants and advisors, and to their respective affiliates who are directly involved in the consideration of the transactions contemplated hereby and are made aware of and agree to comply with the provisions of this paragraph, in each case on a confidential and need-to-know basis; (b) on a confidential basis to any bona fide prospective Lender that agrees to keep such information confidential in accordance with the provisions of this paragraph; (c) as required by applicable law, regulation or compulsory legal or administrative process (in which case we agree to inform you promptly thereof to the extent lawfully permitted to do so); (d) to the extent requested by any bank regulatory authority (in which case we agree to inform you promptly thereof to the extent lawfully permitted to do so); (e) to the extent such information: (i) becomes publicly available other than as a result of a breach of this Commitment Letter or other arrangement subject to confidentiality restrictions or (ii) becomes available to the Administrative Agent or prospective Lenders on a non-confidential basis from a source other than you or on your behalf; (f) to the extent you shall have consented to such disclosure in writing; (g) in protecting and enforcing the Administrative Agent’s or prospective Lenders’ rights with respect to this Commitment Letter; (h) to rating agencies on a confidential basis; or (i) for purposes of establishing a “due diligence” defense; provided that, no such disclosure shall be made by the Administrative Agent or any prospective Lender to (x) any of its affiliates that are engaged as principals primarily in private equity, mezzanine financing or venture capital (a “Private Equity Affiliate”) or (y) any members of the deal team (other than an “above the wall” individuals) or professionals from the Administrative Agent or any prospective

Lender or its respective affiliates that are providing advisory services to the Target and its shareholders in connection with the sale of the Target (a “Sell Side Person” and together with the Private Equity Affiliates, the “Excluded Parties”); and provided, further, that the Administrative Agent may make such disclosures to its Excluded Parties to the extent (i) that you have consented to such disclosure; (ii) required by applicable law, regulation or compulsory legal or administrative process (in which case we agree to inform you promptly thereof to the extent lawfully permitted to do so); (iii) requested by any bank regulatory authority (in which case we agree to inform you promptly thereof to the extent lawfully permitted to do so); (iv) such disclosure would be otherwise permitted to be made pursuant to this paragraph; or (v) the information was made generally available by such Sell Side Person on behalf of the seller to bidders and their financing source in connection with the sale of the Target. The restrictions set forth in clause (y) above shall cease to apply upon the execution of the respective merger agreement.

Miscellaneous

The Administrative Agent hereby notifies the Sponsor that pursuant to the requirements of the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Act”), the Administrative Agent is required to obtain, verify and record information that identifies the Sponsor and the Target, which information includes the Sponsor’s and Target’s name and address and other information that will allow the Administrative Agent to identify the Sponsor and the Target in accordance with the Act.

The Sponsor acknowledges that the Fee Letter, this Commitment Letter, the Summary of Terms and that certain Expense Reimbursement Letter date as of October 6, 2009 (the “Expense Reimbursement Letter”) among the Arranger, the Administrative Agent and the Sponsor with respect to the Facilities set forth the entire understanding of the parties with respect to the Facilities as of the date hereof. Only a writing signed by the Arranger, the Administrative Agent and the Sponsor may amend the Fee Letter, this Commitment Letter, the Summary of Terms and the Expense Reimbursement Letter. The Fee Letter, this Commitment Letter, the Summary of Terms and the Expense Reimbursement Letter shall be governed by the laws of the State of New York, without regard to the conflict of laws principles thereof. Each of the undersigned hereby consent and agree that the state or federal courts located in New York County, State of New York shall have exclusive jurisdiction to hear and determine any claims pertaining to this Commitment Letter, the Summary of Terms, the Fee Letter or the Expense Reimbursement Letter or any transaction relating hereto, any other financing related thereto, and any investigation, litigation or proceeding related to or arising out of any such matters, provided that the parties acknowledge that any appeals from those courts may, to the extent required by law, have to be by a court located outside of such jurisdiction. Each of the undersigned hereby expressly submit and consent in advance to such jurisdiction in any action or suit commenced in any such court, and hereby waive any objection which any of them may have based on lack of personal jurisdiction, improper venue or inconvenient forum. The Arranger, the Administrative Agent and the Sponsor hereby irrevocably waive any and all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Commitment Letter, the Summary of Terms, the Fee Letter, the Expense Reimbursement Letter, the transactions contemplated hereby and thereby and the actions of the Arranger and the Administrative Agent in the negotiation, performance or enforcement hereof.

The Fifth Third Commitment and the obligations of the Arranger hereunder shall terminate, and none of the Administrative Agent, the Arranger or any other Lender shall have any obligation to extend any portion of the Facilities if (1) the Arranger and the Administrative Agent have not received the accepted copy of this Commitment Letter and the Fee Letter on or before 5:00 p.m. (New York time) on October 19, 2009 (this Commitment Letter shall be deemed to have been rejected in the event that the Sponsor purports to accept it subject to any change in its terms, the terms in the Fee Letter or those terms set forth in the Summary of Terms); or (2) the Facilities do not close by 5:00 p.m., Central time on February 18, 2010 (the “Termination Date”), provided, however, that the Termination Date shall be extended to April 1, 2010 solely in the event that, prior to February 18, 2010, each of the following shall have occurred: (i) it shall have been determined by the Sponsor, Target or the Securities and Exchange Commission (the “SEC”) pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that the Acquisition Transaction is subject to Rule 13e-3 under the Exchange Act; (ii) a Schedule 13e-3 shall have been filed with the SEC in connection with the Acquisition Transaction; (iii) the SEC shall have notified MergerCo and/or the Target that the SEC has elected to review the Proxy Statement (as defined in the Merger Agreement); and (iv) the Sponsor shall have provided evidence reasonably satisfactory to the Administrative Agent of the satisfaction of the foregoing clauses (i), (ii) and (iii).

Upon execution and delivery of the Credit Facilities Documentation, closing of the transactions contemplated thereby and funding of the Facilities, the obligations of Sponsor (other than with respect to the confidentiality requirement set forth in the section titled “Confidentiality”) under this Commitment Letter shall automatically terminate.

[remainder of page intentionally left blank;
signature page follows]

This Commitment Letter and the Fee Letter may be executed in counterparts which, taken together, shall constitute an original. Delivery of an executed signature page to this Commitment Letter by facsimile, email or similar electronic transmission shall be as effective as delivery of a manually executed counterpart hereof and shall be fully admissible in any enforcement proceedings regarding this letter agreement.


Sincerely, FIFTH THIRD BANK, an Ohio banking corporation
By:	/s/ Jeffrey A. Thieman
	Name:	Jeffrey A. Thieman
	Title:	Vice President

ACCEPTED AND AGREED TO:

H.I.G. BAYSIDE DEBT & LBO FUND II, L.P.

H.I.G. BAYSIDE DEBT & LBO FUND II, L.P.

By: H.I.G. Bayside Advisors II, LLC
Its: General Partner

By: H.I.G.-GPII, Inc.
Its: Manager



By:	/s/ Richard H. Siegel
	Name:	Richard H. Siegel
	Its: Vice President and General Counsel

Confidential Summary of Terms
October 18, 2009

This Confidential Summary of Terms outlines the principal terms of the senior secured revolving credit and term loan facilities referred to in the commitment letter dated October 18, 2009 (the “Commitment Letter”), delivered to Sponsor (as defined herein) by Fifth Third Bank (in its individual capacity, “Fifth Third”) and is part of and subject to the Commitment Letter.


Borrower:		A newly formed corporation (“MergerCo”) to be controlled, directly or indirectly, by H.I.G. Bayside Debt & LBO Fund II, L.P. (the “Sponsor”), and Allion Healthcare, Inc., a Delaware corporation (the “Target”), immediately following the receipt of the file stamped certificate of merger evidencing the effectiveness of the merger of the Target with and into MergerCo (such merger transaction is referred to herein as the “Acquisition Transaction”).

Guarantors:		Each of the Borrower’s existing and future subsidiaries, and the Borrower’s direct parent corporation (the “Parent”, and together with such subsidiaries, (the “Guarantors”). Parent will be a newly formed corporation controlled, directly or indirectly, by the Sponsor or its Controlled Investment Affiliates (or any of them or any combination thereof). The Parent will be a single purpose entity and conduct no business other than ownership of the equity interests in the Borrower and activities ancillary or related thereto, and incur no indebtedness except as permitted by the Credit Facilities Documentation (as defined herein).


Type and Amount of Facilities:	A.	a $15,000,000 revolving credit facility, with a sublimit of (x) $5,000,000 for standby letters of credit and (y) $2,000,000 for swing line loans (the “Revolver”).

	B.	a $95,000,000 term loan (the “Term Loan”) fully funded on the closing date.


		The Revolver (including the letter of credit and swingline sublimits) and the Term Loan together are referred to as the “Facilities”.

Administrative Agent:		Fifth Third (in such capacity, the “Administrative Agent”).

Sole Lead Arranger and Sole Bookrunner:		Fifth Third (in such capacity, the “Arranger”).


Lenders:		A syndicate of banks, financial institutions and other entities (“Lenders”) arranged by the Arranger and reasonably acceptable to the Sponsor (on the terms set forth in the Commitment Letter).

Letters of Credit:		$5,000,000 of the Revolver shall be available for the issuance of letters of credit (the “Letters of Credit”) by Fifth Third (Fifth Third, acting in its capacity as the issuer of the Letters of Credit, the “LC Issuer”). No Letter of Credit shall expire later than the earlier of one (1) year from the date of issuance or thirty (30) days prior to the Facilities Termination Date. Outstanding Letters of Credit will reduce availability under the Revolver on a dollar-for-dollar basis with the credit risk on the Letters of Credit allocated ratably among the Revolver Lenders.

Swing Line Facility:		$2,000,000 of the Revolver shall be available for swing line loans from Fifth Third (Fifth Third, acting in its capacity as the Lender of swing line loans, the “Swing Loan Lender”). Outstanding swing line loans will reduce availability under the Revolver on a dollar-for-dollar basis, with the credit risk on swing line loans allocated ratably among the Revolver Lenders. No swing line loan will be outstanding longer than five (5) days. At the option of the Borrower, outstanding swing line loans will bear interest prior to maturity at (a) the rate offered by the Administrative Agent at its discretion or (b) the rate applicable to loans under the Revolver that bear interest with reference to the Base Rate.

Purpose:		Proceeds under the Term Loan borrowed on the closing date will be used (a) first, to refinance existing indebtedness of the Target, (b) second, to fund certain fees and expenses associated with the closing of the Facilities and the Acquisition Transaction, and (c) third, to finance the Acquisition Transaction. Proceeds of the Facilities will also be used by the Target to finance general working capital and for general corporate purposes, including, without limitation, the financing of permitted acquisitions. No loans shall be made or Letters of Credit issued under the Revolver at closing. In the event any dissenting shareholders are awarded a per share sale price in excess of the per share sale price paid at closing (such excess, the “Excess Purchase Price”), the Borrower must have minimum availability of not less than $5,000,000 immediately before and after giving effect to any borrowing of the Revolver to pay such Excess Purchase Price.

Facilities Termination Date:		Five (5) years from closing (the “Facilities Termination Date”).

-2-


Amortization Of Term Loan:		The Term Loan will amortize quarterly in accordance with the following amortization schedule:

		Loan Year One 10.0% Loan Year Two 12.5% Loan Year Three 15.0% Loan Year Four 17.5% Loan Year Five 45.0%

		Payments during each Loan Year (other than Loan Year 5) shall be equal and shall be due on the last day of each consecutive calendar quarter commencing with the last day of the first full fiscal quarter to occur after closing. In Loan Year 5 payments shall consist of three quarterly payments of 5% and a fourth and final payment on the Facility Termination Date of the entire remaining unpaid balance then outstanding.

Security:		The Facilities, together with any interest rate, foreign currency and commodity hedging provided by, and ACH, funds transfer and deposit account liability owed to, any Lender or its affiliates, will be secured by a first priority, valid and perfected security interest in and lien upon substantially all of the tangible and intangible existing and after-acquired property (other than leased real property) and assets of the Borrower and each of the Guarantors, including, but not limited to, all accounts receivable, inventory, equipment, fee owned real estate and the outstanding equity interests in the Borrower and each Guarantor (other than equity interests in the Parent) (collectively, the “Collateral”).

		The Administrative Agent’s liens and security interests shall be evidenced by documentation customary for transactions of this type and otherwise reasonably satisfactory to the Administrative Agent and Borrower, including, without limitation, to the extent Borrower is able to obtain using commercially reasonable efforts, landlord waivers from landlords of leased real property and bailee waivers, and in the case of fee owned real estate collateral, if any, title insurance policies (supported by surveys) in amount, form and from an issuer reasonably satisfactory to the Administrative Agent, provided, that, with respect to each parcel of leased real property for which Borrower has failed to deliver a landlord waiver, in form and substance reasonably acceptable to the Agent, within forty five (45) days following the closing date, the Agent shall have the right (acting in its sole discretion) to establish a three month rent reserve against the Revolver with respect to each such property.

-3-


Availability:		Availability under the Revolver would be subject to delivery of required borrowing requests and there being no default or event of default under the Credit Facilities Documentation and truth and correctness of all representations and warranties (in all material respects, without duplication of any materiality qualifiers contained in the Credit Facility Documentation), in each case as of the date of funding both before and immediately after giving effect to such funding.

Interest Rates:		At the Borrower’s option, each loan will bear interest at either (a) the Base Rate plus the Applicable Margin or (b) the reserve adjusted LIBOR Rate plus the Applicable Margin. The Base Rate will be the greatest of (i) the prime rate announced by Fifth Third from time to time, (ii) the Fed Funds rate plus one-half of one percent (0.50%), and (iii) for any day, the reserve adjusted LIBOR rate for a one month interest period on such day, calculated on an actual day/365 day year basis and payable quarterly in arrears on the first day of each quarter. The reserve adjusted LIBOR Rate will have the meaning, and will be calculated in a manner, customary and appropriate for financings of this type and will be subject at all times to a floor of two percent (2.00%) per annum. The reserve adjusted LIBOR Rate plus the LIBOR Applicable Margin will be fixed for interest periods of one (1) month, three (3) months or, solely to the extent available to each relevant Lender, six (6) months, (as selected by the Borrower) calculated on an actual day/360 day year basis and payable on the last day of the applicable interest period (or, with respect to LIBOR Rate loans having interest periods of six (6) months, the last day of each three (3) month interval). At the election of the Administrative Agent or the Required Lenders, no LIBOR Rate loans will be available when a default shall have occurred and be continuing.

Applicable Margins:		The Applicable Margin for Base Rate loans shall be five percent (5.00%). The Applicable Margin for LIBOR Rate loans shall be six percent (6.00%). At the election of the Administrative Agent or the Required Lenders upon the occurrence and during the continuation of specified events of default, the Applicable Margins on all loans will increase by two percent (2.00%).

-4-


Commitment Fee:		A commitment fee in an amount equal to one-half of one percent (0.50%) per annum on the average daily unused amount of the Revolver (reduced by (i) the aggregate amount of Revolver attributable to the non-funding lenders (to be defined in the Credit Facilities Documentation), and (ii) the aggregate face amount of outstanding Letters of Credit but not reduced by the aggregate outstanding principal balance of any swing line loans), such fee to be payable to the Revolver Lenders (other than non-funding lenders) quarterly in arrears on the first day of each calendar quarter.

Letter of Credit Fees:		A fronting fee of one-quarter of one percent (0.25%) of the face amount of each letter of credit issued shall be payable to the LC Issuer. A per annum participation fee equal to the Applicable Margin then in effect for LIBOR loans under the Revolver on the undrawn face amount of each letter of credit is payable to the Revolver Lenders monthly in arrears on the first day of each calendar month. The Borrower shall also pay the LC Issuer’s standard letter of credit documentary and processing charges.

Voluntary Prepayments:		The Borrower may voluntarily prepay any loans outstanding under the Facilities, in each case subject to concurrent payments of any customary applicable LIBOR breakage costs. All of such voluntary prepayments shall be applied in the manner set forth below with respect to Mandatory Prepayments.

Mandatory Prepayments:		In addition to the regularly scheduled payments of principal thereon, the Borrower will be required to make the following prepayments of the loans:

		(a) promptly upon receipt thereof, in an amount equal to 100% of the net cash proceeds of (i) each equity issuance by Parent (other than equity issuances to (a) Sponsor, any Controlled Investment Affiliate of Sponsor or any other shareholder of Parent prior to such equity issuance, (b) management and other employees of the Borrower or a Guarantor under any employee stock option or stock purchase plan or agreement or other employee benefits plan or agreement in existence from time to time, or (c) the proceeds of which are used by the Borrower to finance a permitted acquisition, (ii) indebtedness for borrowed money incurred by the Borrower or any Guarantor (other than indebtedness permitted to be incurred under the Credit Facilities Documentation), and (iii) each sale or other disposition of any property or assets of the Borrower or any Guarantor outside the normal course, including, without limitation, proceeds received as a result of a casualty or condemnation event, in each case (x) subject to customary carve-outs, baskets and other exceptions to be agreed upon by the Borrower and the Administrative Agent and (y) net of amounts reinvested in replacement assets within 180 days (or, within 270 days in the event Borrower has entered into a binding agreement for reinvestment within 180 days). “Controlled Investment Affiliate” means, with respect to the Sponsor, any fund or investment vehicle that (i) is organized by Sponsor for the purpose of making equity or debt investments in one or more companies and (ii) is controlled by Sponsor. For purposes of this definition “control” means the power to direct or cause the direction of management and policies of a Person, whether by contract or otherwise.

-5-


		(b) on or prior to the date that is ninety (90) days after closing (the “Testing Date”), a prepayment (the “Sponsor Escrow Prepayment”) in an amount equal to the lesser of (i) the Sponsor Escrow Proceeds (as defined herein) and (ii) 2.5x the Target Savings Amount Shortfall (as defined herein below), if any (which such amount shall not be less than zero). The “Target Savings Amount Shortfall” shall mean an amount equal to $2,600,000 minus the projected annualized savings during the one year period commencing on the closing date by the Borrower and its subsidiaries resulting from the renegotiation, execution and delivery and continued effectiveness of agreements entered into between Borrower and Borrower’s suppliers prior to the Testing Date (such amount to be determined and confirmed in writing to the Administrative Agent and the Lenders by Ernst & Young or another independent third party accounting firm selected by the Borrower and reasonably acceptable to the Administrative Agent). The Sponsor Escrow Prepayment shall be made on the date required pursuant to the terms hereof by the application by the Administrative Agent on such date of Sponsor Escrow Proceeds (as such term is defined below). In the event the Target Savings Amount Shortfall is less than the Sponsor Escrow Proceeds (such excess amount, the “Excess Escrow Proceeds”), then upon the making of the required Sponsor Escrow Prepayment in accordance with the forgoing, if any, the Administrative Agent shall promptly refund the Excess Escrow Proceeds to the Sponsor,

		(c) within one hundred twenty (120) days of the end of each fiscal year (commencing with the fiscal year ending December 31, 2010) of the Parent, in an amount equal to (x) seventy five percent (75%) of “Excess Cash Flow” (to be defined in the Credit Facilities Documentation) less (y) voluntary prepayments of the Term Loan and, to the extent accompanied by a permanent reduction in revolving loan commitments, voluntary prepayments of revolving loans, which percentage amount set forth in clause (x) above will be reduced to fifty percent (50%) for the relevant fiscal year in the event (i) the Total Leverage Ratio (as such term is defined below) as of the last day of the most recent two (2) fiscal quarters of any fiscal year is less than 2.5x and (ii) no to be specified events of default are then in existence (or have been in existence during the most recent two (2) fiscal quarters of such fiscal year).

-6-


		All mandatory prepayments shall be applied first to the Term Loan until paid in full (such payments being applied pro rata to the scheduled installments of principal under the Term Loan) and then to the Revolver, without a concurrent permanent reduction of the amount thereof.

Conditions Precedent:		Shall be the following:

		(a) Reasonably satisfactory completion in all material respects of background checks of such persons agreed to by Fifth Third and Sponsor prior to the date hereof to be performed by Strategic Insight Group.

		(b) Receipt of unaudited quarterly financial statements of the Target and its consolidated subsidiaries (including an income statement, a balance sheet, and a cash flow statement) for the most recent quarter ending immediately prior to closing (provided that at least 45 days have passed since the end of such quarter), and a closing balance sheet adjusted to give effect to the consummation of the Acquisition Transaction.

		(c) Receipt of customary evidence of corporate authority with respect to each of Borrower (including the Target, after giving effect to the Acquisition Transaction) and Guarantors and certificates of status (including certified copies of the governing documents) with respect to each of Borrower and Guarantors issued by the jurisdictions of organizations of each of them.

		(d) The Acquisition Transaction shall have been approved by the Target’s and MergerCo’s board of directors and shareholders, as required pursuant to Delaware law. The closing and funding of the Facilities shall have been approved by board of directors of MergerCo, Parent and, immediately after giving effect to the Acquisition Transaction, the Target and its subsidiaries.

-7-


		(e) The Administrative Agent shall have received certification on behalf of the Borrower of the solvency of the Borrower and the Guarantors on a consolidated basis after giving effect to the consummation of the Acquisition Transaction from a responsible officer of the Borrower.

		(f) The Acquisition Transaction shall be completed (such condition to be satisfied by receipt by Administrative Agent of the file stamped certificate of merger evidencing the effectiveness of the merger of the Target with and into MergerCo certified by the Secretary of State of the State of Delaware) in accordance with the terms and conditions of the Agreement and Plan of Merger dated as of the date hereof by and among Parent, MergerCo, and the Target (as such agreement is in effect on the date hereof or modified in accordance herewith, the “Merger Agreement”), and no covenants, conditions or other terms of the Merger Agreement (as such agreement is in effect on the date hereof) shall have been waived, modified or amended other than with the consent of the Administrative Agent or other than waivers, modifications, or amendments, which would not be (individually or in the aggregate) materially adverse to the interests of the Lenders. Administrative Agent acknowledges that it has reviewed the Merger Agreement (as in effect on the date hereof) and finds the Merger Agreement (as in effect on the date hereof) acceptable.

		(g) On the closing date, both before and immediately after giving effect to the funding of the Term Loan (i) no event of default or unmatured event of default shall have occurred under the Credit Agreement (other than an event of default or unmatured event of default resulting from a breach of any representation or warranty contained in the Credit Facilities Documentation that is not a Material Representation) and (ii) the accuracy in all material respects of the Material Representations. For purposes hereof, “Material Representation” shall mean (i) the representations and warranties made by the Target in the Merger Agreement, but only if Sponsor, Parent or MergerCo have a right not to consummate the transactions contemplated by the Merger Agreement or to terminate their respective obligations under the Merger Agreement as a result of a breach of such representations and warranties, and (ii) the representations and warranties set forth in the Credit Facilities Documentation relating to organization, existence, power and authority, due authorization, execution, delivery, enforceability and non-contravention of the Credit Facilities Documentation with the Borrower’s or the Guarantors’ governing documents, applicable law, or any order, judgment, or decree of any court or other governmental authority binding on the Borrower, any other Guarantor or their respective subsidiaries, receipt of governmental approvals in connection with the Facilities, use of proceeds, solvency, Federal Reserve Bank margin regulations, the Investment Company Act and, subject to the following clause (h), the perfection of the security interests granted in the collateral as of the closing date.

-8-


		(h) Preparation, execution and delivery of credit and security documentation customary for transactions of this type, which will reflect the terms set forth in this Summary of Terms and will be reasonably acceptable to the Administrative Agent, the Lenders and Borrower (the “Credit Facilities Documentation”); it being understood that, to the extent documentation and instruments required for perfection over any collateral is not provided on the closing date after use of commercially reasonable efforts to do so (other than (x) the delivery of Uniform Commercial Code financing statements, (y) the delivery (but not the filing) of intellectual property security agreements for intellectual property that is registered as of the closing date, and (z) the delivery of stock certificates), the providing of such documents and instruments shall not constitute a condition precedent to the availability of the Facilities on the closing date but shall be required to be provided after the closing date pursuant to arrangements to be mutually agreed (or as set forth in the Security Section of this Summary of Terms).

		(i) Listing of the Administrative Agent as an additional insured, as lender’s loss payee and/or mortgagee, as appropriate, with respect to those insurance policies customary for transactions of this type and reasonably requested by the Administrative Agent.

		(j) Receipt of the other customary closing documentation, including the legal opinions of the Borrower’s counsel reasonably acceptable to the Administrative Agent.

-9-


		(k) Repayment and cancellation of the Target’s existing credit facilities and delivery of payoff letters in form and substance reasonably acceptable to the Administrative Agent.

		(l) Payment of all fees owing to the Administrative Agent and the Lenders pursuant to the terms of the Commitment Letter, the Fee Letter and the Expense Reimbursement Letter (it being understood and agreed that any such amounts outstanding on the closing date may, at Sponsor’s election, be netted out of the funding proceeds for the Facilities).

		(m) No Closing Date Material Adverse Effect shall have occurred. “Closing Date Material Adverse Effect”, for purposes of the Commitment Letter, this Term Sheet and the initial borrowing under the Facilities on the closing date, shall mean a “Material Adverse Effect” as defined in the Merger Agreement (as in effect on the date hereof).

		(n) Corporate and capital structure of Parent and its subsidiaries reasonably satisfactory to the Administrative Agent in all material respects (it being understood that any preferred equity being issued will not be redeemable, or otherwise require any cash payments (including in respect of a default thereunder), prior to the 180th day following the maturity of the Facilities and shall otherwise be on terms reasonably acceptable to the Administrative Agent in all material respects), including, without limitation: (i) minimum preferred and common equity contributions of not less than $85,000,000 from the Sponsor and its Controlled Investment Affiliates in cash, and not less than $51,000,000 from existing shareholders of Target who are rolling over their investment in Target into Parent, and (ii) an aggregate unsecured subordinated debt contribution of not less than $49,000,000, but not greater than $51,000,000 (the “Required Mezzanine Debt”) from a third party institutional mezzanine lender reasonably acceptable to the Administrative Agent, which such subordinated debt shall be issued by the Borrower on such terms and conditions (including, without limitation, subordination terms) customary for transactions of this type and otherwise reasonably acceptable to the Administrative Agent in all material respects. Administrative Agent acknowledges that it has reviewed the term sheet and commitment letter regarding the Required Mezzanine Debt dated as of the date hereof and finds the identity of such lender acceptable and the terms described therein are acceptable.

-10-


		(o) Receipt of commitments to purchase no less than $80,000,000 of the Facilities from other financial institutions (the “Additional Commitments”) acceptable to the Administrative Agent and the funding of such commitments on the closing date; provided, that, in the event the Borrowers have failed to obtain Additional Commitments, the condition set forth in this clause (o) may be satisfied with a commitment from the Sponsor to provide additional cash equity (in addition to the cash equity requirement set forth in clause (n) above), on terms and conditions reasonably satisfactory to the Administrative Agent, in an aggregate amount not less than $80,000,000 minus the Additional Commitments, and the funding of such equity commitment on the closing date.

		(p) Adjusted EBITDA (as such term is defined below), for the trailing twelve month period ending immediately prior to closing for which quarterly financial statements of the Target are available (provided that at least 45 days have passed since the end of such quarter), shall be at least $38,200,000. Adjusted EBITDA shall mean EBITDA of the Target and its subsidiaries taking into account, without duplication, (i) the pro forma adjustments set forth in the Ernst & Young quality of earnings report dated as of July 17, 2009 (the “E&Y Report”) for quarters ended prior to October 1, 2009, as provided to the Administrative Agent, (ii) the pro forma adjustments permitted under Regulation S-X, (iii) other pro forma adjustments agreed upon by Borrower and Administrative Agent prior to the date hereof, including, without limitation, as agreed upon, an addback in the amount of $2,600,000 representing 1% of the Cost of Goods Sold of the HIV business, (iv) the pro forma adjustments set forth in the roll forward of the E&Y Report for quarter ended September 30, 2009, as provided to the Administrative Agent and (v) the pro forma adjustments for periods occurring after September 30, 2009 substantially consistent with the categories of adjustments and calculated using the methodology set forth in the most recent roll forward of the E&Y Report received by the Administrative Agent with respect to the most recent quarter then ended (provided, that, in the event the Facilities close more than 60 days following December 31, 2009, there shall have been delivered to Administrative Agent a roll forward of the E&Y Report for quarter ended December 31, 2009).

-11-


		(q) The multiple of total indebtedness of Borrower and its subsidiaries on a consolidated basis (including the Facilities and the Required Mezzanine Debt and after giving effect thereto) to Adjusted EBITDA for the trailing twelve month period ending immediate prior to closing for which quarterly financial statements of the Target are available shall be no greater than 3.90x, as of the closing and after giving effect thereto.

		(r) The multiple of total indebtedness of the Borrower and its subsidiaries (as calculated in clause (q) above) minus subordinated indebtedness of the Borrower and its subsidiaries to Adjusted EBITDA for the trailing twelve month period ending immediate prior to closing for which quarterly financial statements of the Target are available shall be no greater than 2.5x, as of the closing and after giving effect thereto.

		(s) The Administrative Agent shall have received from the Sponsor in immediately available funds an amount equal to $5,000,000 (the “Sponsor Escrow Proceeds”), such amount to be held by the Administrative Agent in an interest bearing escrow account until the earlier to occur of (i) application thereof by the Administrative Agent in payment of the Sponsor Escrow Prepayment, if any, and (ii) the date on which it is determined by the Administrative Agent and the Borrower that no Sponsor Escrow Prepayment is required to be made.

		(t) the closing date shall have occurred no later than February 18, 2010 (the “Termination Date”), provided, however, that the Termination Date shall be extended to April 1, 2010 solely in the event that, prior to February 18, 2010, each of the following shall have occurred: (i) it shall have been determined by the Sponsor, Target or the SEC pursuant to the Exchange Act, that the Acquisition Transaction is subject to Rule 13e-3 under the Exchange Act; (ii) a Schedule 13e-3 shall have been filed with the SEC in connection with the Acquisition Transaction; (iii) the SEC shall have notified MergerCo and/or the Target that the SEC has elected to review the Proxy Statement (as defined in the Merger Agreement); and (iv) the Sponsor shall have provided evidence reasonably satisfactory to the Administrative Agent of the satisfaction of the foregoing clauses (i), (ii) and (iii).

-12-


Representations & Warranties:		In respect of periods subsequent to the closing date, those customary for similar credit facilities (in each case, subject to customary materiality qualifiers, monetary baskets and other carve-outs to be agreed upon), including, but not limited to, organization and qualification, corporate and governmental authority and approval, enforceability, financial reporting, no material adverse change (or, on the closing date, no Closing Date Material Adverse Effect), compliance with laws and agreements, no material litigation, payment of taxes, full disclosure, environmental and ERISA matters, title to properties, affiliate transactions, solvency and absence of default.

Financial Covenants:		Shall consist of the following financial covenants which shall be measured on a consolidated basis in accordance with GAAP for the Borrower and its subsidiaries as of the last day of each fiscal quarter ending after the closing date:

		Maximum Total Leverage Ratio, of a to-be-determined ratio declining to a to-be-determined ratio during the term of the Facilities with step downs in accordance with projections to be agreed upon by the Borrower and the Administrative Agent, defined as the ratio of Total Funded Debt as of the end of the most recent fiscal quarter, to EBITDA for the most recently ended four (4) fiscal quarters. Total Funded Debt is defined as all indebtedness for borrowed money and guaranties of the same.

		Maximum Senior Leverage Ratio, of a to-be-determined ratio declining to a to-be-determined ratio during the term of the Facilities with step downs in accordance with projections to be agreed upon by the Borrower and the Administrative Agent, defined as the ratio of Senior Funded Debt as of the end of the most recent fiscal quarter, to EBITDA for the most recently ended four (4) fiscal quarters. Senior Funded Debt is defined as all indebtedness for borrowed money and guaranties of the same, excluding indebtedness subordinated to the Facilities on terms acceptable to the Administrative Agent.

		Fixed Charge Coverage Ratio of not less than a to-be-determined ratio, defined as the ratio of, in each case as determined for the most recently ended four (4) fiscal quarters (or if less, the period commencing at closing and ending as of the last day of the most recently ended fiscal quarter), (a) EBITDA less the sum of (i) unfinanced capital expenditures, (ii) management fees paid in cash, and (iii) cash taxes, to (b) the sum of (i) principal payments paid or required to be paid in cash and (ii) cash interest expense.

-13-


		Maximum Capital Expenditures of a to-be-determined amount per annum, provided that up to fifty percent (50%) of unused capital expenditures capacity may be carried over to the following fiscal year.

		EBITDA is defined as the sum of net income, taxes, interest expense, depreciation and amortization, plus: (i) plug numbers for period prior to close reflecting adjustments to historical pre-closing numbers set forth in the definition of Adjusted EBITDA as reasonably agreed to by the Administrative Agent and Borrower, (ii) customary normalizing adjustments for non-operational charges and expenses (including, without limitation, management fees and reimbursements, expenses related to the Acquisition Transaction, permitted acquisitions (whether or not consummated), the Facilities and the Required Mezzanine Debt), in each case, as reasonably agreed upon by Administrative Agent and Borrower (iii) GAAP accounting adjustments (including, without limitation, purchase accounting adjustments), as reasonably agreed upon by Administrative Agent and Borrower, and (iv) adjustments and other items to be reasonably agreed upon by the Administrative Agent, in each case during all relevant periods.

Other Covenants:		Those customary for similar credit facilities (subject in each case to customary materiality qualifiers, monetary baskets, cure periods and other exceptions to be agreed upon), including, but not limited to:

		(a) Prohibition on the pledging of property or assets to secure indebtedness with the exception of acceptable existing liens and an agreed-upon permitted liens.

		(b) Limitations on additional indebtedness, dividends and stock repurchases, management fees, restrictions on subsidiaries’ ability to pay dividends, mergers and acquisitions (subject to a permitted acquisition basket to be agreed upon in the Credit Facilities Documentation), asset sales, investments, loans, advances, guarantees, liens, capital leases, affiliate transactions, use of proceeds, and change in the nature of business.

-14-


		(c) Compliance with laws, including environmental and ERISA.

		(d) Preservation and maintenance of existence.

		(e) Payment of taxes.

		(f) Maintenance of property and insurance.

		(g) Borrower may pay to Sponsor management fees not to exceed $1,250,000 for each fiscal year. Management fees shall not be paid should a default or event of default be occurring, or in the event that such payment would immediately thereafter create a default or event of default; provided, however, that such blocked management fees may accrue (at the non-default rate) and be paid upon the cure or waiver of such default or event of default. The payment of all management fees payable to the Sponsor by the Borrower or any Guarantor shall be subordinated to the obligations under the Credit Facilities Documentation pursuant to a subordination agreement in form and substance customary for transactions of this type or otherwise reasonably satisfactory to the Administrative Agent and Sponsor. The Borrower shall also be permitted to pay additional management fees as set forth in the management agreement in connection with any permitted acquisition, indebtedness raise or any equity issuance, in each instance, on terms and conditions reasonably acceptable to the Administrative Agent and, in the case of any indebtedness raise or equity issuance, solely to the extent paid such fees are paid with the proceeds received in connection with such equity or debt raise.

		(h) The Borrower shall, during the term of the Facilities, maintain all operating accounts at either (x) the Administrative Agent or (y) financial institutions reasonably acceptable to the Administrative Agent that have delivered deposit account control agreements for all such deposit accounts that are in form and substance reasonably acceptable to the Administrative Agent. All accounts of the Borrower and its Subsidiaries shall be subject to a deposit account control agreement reasonably acceptable to the Administrative Agent (other than payroll accounts and other accounts to be reasonably and mutually agreed upon).

-15-


		(i) No later than ninety (90) days following the closing date, the Borrower shall enter into one or more interest rate hedging arrangements with a lender or an affiliate of a lender and on terms reasonably acceptable to the Administrative Agent with respect to at least fifty (50%) of the Term Loan which shall provide coverage for a minimum of three (3) years after closing.

Reporting Requirements:		Reporting requirements, for periods following the closing date (but, with respect to financial reporting, including the month during with the closing occurs), customary for transactions of this type, including but not be limited to, the following:

		(a) Annual audited consolidated financial statements for the Parent, the Borrower and their respective subsidiaries within 120 days of fiscal year end starting with the first full fiscal year ended following the closing date and 150 days if the first fiscal year ended following the closing date is a partial one.

		(b) Quarterly (including the last quarter of each fiscal year) company-prepared consolidated and consolidating financial statements for the Parent, the Borrower and its subsidiaries within forty five (45) days of the last day of each fiscal quarter.

		(c) Monthly (excluding the last month of each fiscal quarter) company-prepared consolidated and consolidating financial statements for the Parent, the Borrower and its subsidiaries within (x) forty five (45) days after the last day of each of the two fiscal months ending after the closing date and (y) thirty (30) days following the last day of each fiscal month ending thereafter.

		(d) Quarterly covenant compliance certificates signed on behalf of the Borrower by the Borrower’s Chief Financial Officer within forty five (45) days of quarter end.

		(e) A copy of the Borrower’s operating budget for the then current fiscal year no later than the end thirty days following the last day of the immediately preceding fiscal year.

		(f) Notice of any material adverse change, litigation (subject to materiality thresholds to be agreed to in the Credit Facilities Documentation) or default upon obtaining knowledge of such litigation or default.

-16-


		(g) Such other financial information with respect to the Borrower, its subsidiaries and any Guarantors as the Administrative Agent or any other Lender may reasonably request.

Events of Default:		Those customary for similar credit facilities (and subject in each case to materiality qualifiers, monetary baskets, cure periods and other exceptions to be agreed upon), including but not limited to, failure to pay any interest, principal or fees when due, failure to satisfy any covenant, untrue representations or warranties, impairment of liens, invalidity of any loan documents, default under other debt agreements, customary bankruptcy, change of control, material litigation, ERISA and judgment defaults.

Assignments & Participations:		Each Lender will be permitted to make assignments in minimum amounts of $3,000,000 (with respect to assignments under the Revolver) and $2,500,000 (with respect to assignments of Term Loan). Minimums do not apply to assignments to a Lender, an affiliate of a Lender or a related fund or to assignments by a Lender of all of its Loans and commitments, and minimums may be waived with consent of the Administrative Agent and (unless an event of default exists) the Borrower.

		Consents of the Borrower and the Administrative Agent are required for each assignment, which consents shall not be unreasonably withheld or delayed, except that the Borrower’s consent shall not be required during an event of default or in the case of an assignment to a Lender, an affiliate of a Lender or a related fund. The Administrative Agent’s consent shall not be required (x) in the case of an assignment under the Revolver to a Lender with a Revolver commitment, an affiliate of such Lender or a related fund with respect to such Lender or (y) in the case of an assignment of Term Loans to a Lender, an affiliate of a Lender or a related fund. Borrower’s consent shall be required (and may be withheld in Borrower’s discretion notwithstanding the foregoing but subject to the following) with respect to an assignment to an entity whose principal business is in direct competition with the Borrower or its Subsidiaries (a “Competitor”) or, with respect to any Competitor, any other entity which directly or indirectly, is in control of, is controlled by, or is under common control with, such Competitor.

-17-


		The Lenders will also have the right to sell participations, subject to customary limitations on voting rights, in their respective shares of the Facilities.

Required Lenders:		Lenders holding greater than 50% of the loan and other credit exposure under the Credit Facilities Documentation. Certain amendments and waivers (to be agreed to in the Credit Facilities Documentation) may require class votes or the consent of all Lenders.

Yield Maintenance and Contingencies:		Those customary for similar credit facilities to protect the Lenders in the event of LIBOR breakage, unavailability of funding, capital adequacy requirements, and increased costs (in each case, subject to customary tolling periods and mitigation requirements).

Expenses:		The Borrower shall pay all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent and the Arranger incurred in connection with the negotiation, preparation, administration and syndication of the Facilities, and all due diligence related thereto, including without limitation, the reasonable and documented legal fees of one counsel to Arranger and the Administrative Agent plus, subject to the Borrower’s consent so long as no event of default exists (which such consent shall not be unreasonably conditioned, withheld or delayed), additional counsel in any relevant jurisdiction that Administrative Agent reasonably deems necessary. The Borrower shall also pay all reasonable and documented out-of-pocket costs and expenses of the Administrative Agent and Lenders, including without limitation their reasonable legal fees, incurred in connection with any Borrower default and the exercise of remedies, provided, that, with respect to any Borrower default and the exercise of remedies, the Borrower shall only be required to pay legal fees of one law firm on behalf of the Administrative Agent in each relevant jurisdiction and one law firm on behalf of all Lenders (other than Administrative Agent) incurred in connection such default and the exercise of remedies; provided, further, that, if the representation by one law firm on behalf of all Lenders (other than Agent) would be inappropriate due to the existence of an actual conflict between any Lender and any other Lender, then in addition to the forgoing, the Borrower shall be required to pay legal fees of one law firm on behalf of such conflicted Lender in addition to the forgoing.

-18-


Indemnification:		The Lenders will be indemnified against all losses, liabilities, claims, damages, or expenses relating to the Borrower’s use of loan proceeds or the commitments or environmental problems, including but not limited to reasonable attorneys’ fees.

Governing Law:		New York.

Counsel to the Arranger and Administrative Agent:		Katten Muchin Rosenman LLP.

-19-

EX-99.9 9 g20953exv99w9.htm EX-99.9 exv99w9

Exhibit 99.9

LIMITED GUARANTEE

LIMITED GUARANTEE, dated as of October 18, 2009 (this “Limited Guarantee”), by H.I.G. Bayside Debt & LBO Fund II, L.P. (the “Guarantor”) in favor of Allion Healthcare, Inc., a Delaware corporation (the “Guaranteed Party”).

1. GUARANTEE. To induce the Guaranteed Party to enter into an Agreement and Plan of Merger, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Merger Agreement”) by and among Brickell Bay Acquisition Corp. (“Parent”), Brickell Bay Merger Corp. a wholly-owned subsidiary of Parent (“Merger Sub”), and the Guaranteed Party, pursuant to which Merger Sub will merge with and into the Guaranteed Party (the “Merger”), Guarantor, intending to be legally bound, hereby absolutely, irrevocably and unconditionally, guarantees to the Guaranteed Party, but only up to the Cap (as defined below), the due and punctual observance, performance and discharge of payment when due of (i) the Parent Break-Up Fee pursuant to Section 8.01(e) of the Merger Agreement (including any amounts payable pursuant to the second sentence of Section 8.01(h) of the Merger Agreement), (ii) the Parent Default Fee pursuant to Section 8.01(f) of the Merger Agreement (including any amounts payable pursuant to the second sentence of Section 8.01(h) of the Merger Agreement), and (iii) Parent’s obligation to pay Company Damages pursuant to Section 8.01(h) of the Merger Agreement and, in all cases, subject to the Parent Liability Cap in Section 8.01(i) of the Merger Agreement (the “Obligations”); provided that in no event shall the Guarantor’s aggregate liability under this Limited Guarantee (but exclusive of any amounts that may be payable by the Guarantor pursuant to Section 13 hereof) exceed in the aggregate $10,000,000 plus any amounts payable pursuant to the second sentence of Section 8.01(h) of the Merger Agreement (the “Cap”), it being understood that this Limited Guarantee may not be enforced without giving effect to the Cap. All payments hereunder shall be made in lawful money of the United States, in immediately available funds. Subject to the Cap, the Guarantor promises and undertakes to make all payments hereunder free and clear of any deduction, offset, defense, claim or counterclaim of any kind (other than defenses to the payment of the Obligations that are available to Parent or Merger Sub under the Merger Agreement). Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Merger Agreement.

If Parent or Merger Sub is in breach of its Obligations, then the Guaranteed Party may at any time and from time to time, at the Guaranteed Party’s option, and so long as Parent or Merger Sub remains in breach of its Obligations, take any and all actions available hereunder or under applicable Law to collect on the Guarantor’s liabilities hereunder in respect of such Obligations subject to the Cap; provided, that the Guaranteed Party acknowledges that the Guarantor’s liability hereunder is subject to the Cap.

Subject to and in furtherance of the foregoing, the Guarantor acknowledges that the Guaranteed Party may, in its sole discretion, bring and prosecute a separate action or actions against the Guarantor for the full amount of the Obligations (subject to the Cap), regardless of whether any action is brought against Parent or Merger Sub or whether Parent or Merger Sub is joined in any such action or actions.

2. NATURE OF GUARANTEE. Subject to the Cap, the Guarantor’s liability hereunder is absolute, unconditional, irrevocable and continuing irrespective, without limitation,

of (a) any lack of validity or enforceability of the Merger Agreement or (b) any modification, amendment or waiver of, or any consent to departure from, the Merger Agreement that may be agreed to by Parent or Merger Sub in accordance with the terms of the Merger Agreement or (c) any other circumstance that might otherwise constitute a defense available to, or a discharge of, Guarantor hereunder (other than payment and performance in full or termination of this Limited Guarantee in accordance with its terms). Without limiting the foregoing, the Guaranteed Party shall not be obligated to file any claim relating to the Obligations in the event that Parent or Merger Sub becomes subject to a bankruptcy, reorganization or similar proceeding, and the failure of the Guaranteed Party to so file shall not affect the Guarantor’s obligations hereunder. In the event that any payment to the Guaranteed Party in respect of the Obligations is rescinded or must otherwise be returned for any reason whatsoever, the Guarantor shall remain liable hereunder with respect to such Obligations as if such payment had not been made. Subject to the Cap, this Limited Guarantee is an unconditional and continuing guarantee of payment of the Obligations and not of collection of the Obligations. If the Guaranteed Party is prevented under applicable Law or otherwise from demanding or accelerating payment of any of the Obligations from Parent or Merger Sub by reason of any automatic stay or otherwise, the Guaranteed Party shall be entitled to receive from the Guarantor, upon demand therefor, the sums that otherwise would have been due had such demand or acceleration occurred.

3. CHANGES IN OBLIGATIONS, CERTAIN WAIVERS.

(a) The Guarantor agrees that the Guaranteed Party may at any time and from time to time, without notice to or further consent of the Guarantor, extend the time of payment of any of the Obligations (provided that any amendment to the Merger Agreement shall be subject to the consent of Parent and Merger Sub as provided in Section 8.05 thereof), and may also make any agreement with Parent or Merger Sub for the extension, renewal, payment, compromise, discharge or release thereof, in whole or in part, without in any way impairing or affecting such Guarantor’s obligations under this Limited Guarantee. The Guarantor agrees that the obligations of the Guarantor hereunder shall not be released or discharged, in whole or in part, or otherwise affected by (i) the failure or delay on the part of the Guaranteed Party to assert any claim or demand or to enforce any right or remedy against Parent or Merger Sub; (ii) any change in the time, place or manner of payment of any of the Obligations or any rescission, waiver, compromise, consolidation or other amendment or modification of any of the terms or provisions of the Merger Agreement made in accordance with the terms thereof or any agreement evidencing, securing or otherwise executed in connection with any of the Obligations; (iii) the addition, substitution or release of any entity or other Person interested in the transactions contemplated by the Merger Agreement; (iv) any change in the corporate existence, structure or ownership of Parent, Merger Sub or any other Person interested in the transactions contemplated by the Merger Agreement; (v) any insolvency, bankruptcy, reorganization or other similar proceeding affecting Parent, Merger Sub or any other Person interested in the transactions contemplated by the Merger Agreement; (vi) the existence of any claim, set-off or other right which the Guarantor may have at any time against Parent, Merger Sub or the Guaranteed Party, whether in connection with the Obligations or otherwise (other than defenses to the payment of the Obligations that are available to Parent or Merger Sub under the Merger Agreement); or (vii) the adequacy of any means the Guaranteed Party may have of obtaining payment related to the Obligations. Subject to the Cap, to the fullest extent permitted by Law, the Guarantor hereby

expressly waives any and all rights or defenses arising by reason of any Law which would otherwise require any election of remedies by the Guaranteed Party. The Guarantor waives promptness, diligence, notice of the acceptance of this Limited Guarantee and of the Obligations, presentment, demand for payment, notice of non-performance, default, dishonor and protest, notice of any Obligations incurred and all other notices of any kind (other than notices expressly required to be provided to Parent or Merger Sub pursuant to the Merger Agreement), all defenses which may be available by virtue of any valuation, stay, moratorium Law or other similar Law now or hereafter in effect, any right to require the marshalling of assets of Parent or Merger Sub or any other Person interested in the transactions contemplated by the Merger Agreement, and all suretyship defenses generally (other than defenses to the payment of the Obligations that are available to Parent or Merger Sub under the Merger Agreement). The Guarantor acknowledges that it will receive substantial direct and indirect benefits from the transactions contemplated by the Merger Agreement and that the waivers set forth in this Limited Guarantee are knowingly made in contemplation of such benefits.

(b) The Guaranteed Party hereby covenants and agrees that it shall not institute, and shall cause its respective affiliates not to institute, any proceeding or bring any other claim arising under, or in connection with, the Merger Agreement or the transactions contemplated thereby or otherwise relating thereto (including under the Equity Commitment Letter (as defined herein)) against (i) the Guarantor, (ii) any of the former, current and future equity holders, controlling persons, directors, officers, employees, agents, affiliates, members, managers, general or limited partners or assignees of the Guarantor (other than Parent and Merger Sub to the extent provided in the Merger Agreement), or (iii) any former, current or future stockholder, controlling person, director, officer, employee, general or limited partner, member, manager, affiliate, agent or assignee of any of the foregoing (those persons and entities described in clauses (ii) or (iii) , including Parent and Merger Sub, each being referred to as a “Non-Recourse Party”), except for claims against the Guarantor under this Limited Guarantee. The Guarantor hereby covenants and agrees that it shall not institute, and shall cause its affiliates not to institute, any proceeding asserting that this Limited Guarantee or any portion thereof is illegal, invalid or unenforceable in accordance with its terms.

(c) The Guarantor hereby unconditionally and irrevocably waives any rights that it may now have or hereafter acquire against Parent or Merger Sub that arise from the existence, payment, performance, or enforcement of the Guarantor’s obligations under or in respect of this Limited Guarantee, including, without limitation, any right of subrogation, reimbursement, exoneration, contribution or indemnification and any right to participate in any claim or remedy of the Guaranteed Party against Parent or Merger Sub or such other Person, whether or not such claim, remedy or right arises in equity or under contract, statute or common Law, including, without limitation, the right to take or receive from Parent or Merger Sub or such other Person, directly or indirectly, in cash or other property or by set-off or in any other manner, payment or security on account of such claim, remedy or right, and the Guarantor shall not exercise any such rights unless and until all of the Obligations under this Limited Guarantee shall have been paid in full in immediately available funds. If any amount shall be paid to the Guarantor in violation of the immediately preceding sentence at any time prior to the payment in full in immediately available funds of the Obligations and all other amounts payable under this Limited Guarantee, such amount shall be received and held in trust for the benefit of the Guaranteed Party, shall be

segregated from other property and funds of the Guarantor and shall forthwith be paid or delivered to the Guaranteed Party in the same form as so received (with any necessary endorsement or assignment) to be credited and applied to the Obligations and all other amounts payable under this Limited Guarantee, in accordance with the terms of the Merger Agreement, whether matured or unmatured, or to be held as collateral for any Obligations or other amounts payable under this Limited Guarantee thereafter arising. Except as otherwise provided in this Limited Guarantee, the Guaranteed Party hereby agrees that to the extent Parent and Merger Sub are relieved of all or any portion of their payment obligations under the Merger Agreement, the Guarantor shall be similarly relieved of its corresponding Obligations under this Limited Guarantee.

4. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the Guaranteed Party to exercise, and no delay in exercising, any right, remedy or power hereunder shall operate as a waiver thereof, nor shall any single or partial exercise by the Guaranteed Party of any right, remedy or power hereunder preclude any other or future exercise of any right, remedy or power hereunder. Each and every right, remedy and power hereby granted to the Guaranteed Party or allowed it by Law or other agreement shall be cumulative and not exclusive of any other, and may be exercised by the Guaranteed Party at any time or from time to time. Subject to the Cap and except with respect to its obligations to proceed against Guarantor as provided in Section 1, the Guaranteed Party shall not have any obligation to proceed at any time or in any manner against, or exhaust any or all of the Guaranteed Party’s rights against, Parent, Merger Sub or any other Person liable for any Obligations prior to proceeding against the Guarantor hereunder.

5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and warrants that:

(a) the execution, delivery and performance of this Limited Guarantee have been duly authorized by all necessary action and do not contravene any provision of the Guarantor’s charter, partnership agreement, operating agreement or similar organizational documents or any Law or contractual restriction binding on the Guarantor or its assets;

(b) all consents, approvals, authorizations, permits of, filings with and notifications to, any Governmental Authority necessary for the due execution, delivery and performance of this Limited Guarantee by the Guarantor have been obtained or made and all conditions thereof have been duly complied with, and no other action by, and no notice to or filing with, any Governmental Authority or regulatory body is required in connection with the execution, delivery or performance of this Limited Guarantee;

(c) this Limited Guarantee constitutes a legal, valid and binding obligation of the Guarantor enforceable against the Guarantor in accordance with its terms, subject to (i) the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar laws affecting creditors’ rights generally, and (ii) general equitable principles (whether considered in a proceeding in equity or at law); and

(d) the Guarantor has the financial capacity to pay and perform its obligations under this Limited Guarantee, and all funds necessary for the Guarantor to fulfill its Obligations under this Limited Guarantee shall be available to the Guarantor for so long as this Limited Guarantee shall remain in effect in accordance with Section 8 hereof.

6. NO ASSIGNMENT. Neither the Guarantor nor the Guaranteed Party may assign or delegate their respective rights, interests or obligations hereunder to any other Person (except by operation of Law) without the prior written consent of the Guaranteed Party or the Guarantor, as the case may be.

7. NOTICES. All notices, requests, claims, demands and other communications hereunder shall be given and shall be deemed to have been duly received (a) upon receipt by hand delivery, (b) upon receipt after dispatch by registered or certified mail, postage prepaid, (c) on the next business day if transmitted by national overnight courier with confirmation of delivery, or (d) upon confirmation of delivery if transmitted by facsimile, as follows:

if to the Guarantor:

H.I.G. Bayside Debt & LBO Fund II, L.P.
c/o H.I.G. Capital LLC
1001 Brickell Bay Drive, 27th Floor
Miami, Florida 33131
Attn.: Brian Schwartz
Facsimile: (305) 379-2013

with a copy to:

Kirkland & Ellis LLP
300 North LaSalle Street
Chicago, Illinois 60654

Attn: Michael H. Weed
Facsimile: (312) 862-2200

If to the Guaranteed Party, as provided in the Merger Agreement.

8. CONTINUING GUARANTEE. This Limited Guarantee may not be revoked or terminated and shall remain in full force and effect and shall be binding on the Guarantor and its successors and assigns until all of the Obligations have been satisfied in full. Notwithstanding the foregoing, this Limited Guarantee shall terminate and the Guarantor shall have no further obligations under this Limited Guarantee as of the earlier of (a) the Effective Time and (b) the first anniversary of the date hereof, unless prior to such first anniversary, the Guaranteed Party shall have provided notice to the Guarantor claiming amounts payable by the Guarantor to the Guaranteed Party under this Limited Guarantee or notice to Parent or Merger Sub claiming amounts payable by Parent or Merger Sub under the Merger Agreement, in which case this Limited Guarantee shall terminate upon (i) payment of the Obligations (subject to the Cap), (ii) the final, non-appealable resolution of a legal proceeding commenced by the Guaranteed Party

alleging amounts payable by the Guarantor under this Limited Guarantee and payment of the Obligations (subject to the Cap), if applicable or (iii) a written agreement signed by each of the parties hereto terminating this Limited Guarantee. In the event that the Guaranteed Party or any of its affiliates (A), asserts in any litigation or other proceeding that the provisions of Section 1 hereof are illegal, invalid or unenforceable in whole or in part or (B) asserts any theory of liability against the Guarantor (including a claim to enforce or any other claim with respect to the equity commitment letter dated as of the date hereof from the Guarantor to Parent (the “Equity Commitment Letter”)) or any Non-Recourse Party with respect to the transactions contemplated by or otherwise relating to the Merger Agreement, then (x) the Obligations of the Guarantor under this Limited Guarantee shall terminate ab initio and be null and void, (y) if the Guarantor has previously made any payments under this Limited Guarantee, the Guarantor shall be entitled to recover such payments from the Guaranteed Party, and (z) neither the Guarantor, Parent, Merger Sub nor any Non-Recourse Party shall have any liability to the Guaranteed Party or any of its affiliates with respect to the transactions contemplated by the Merger Agreement or under this Limited Guarantee.

9. NO RECOURSE. Notwithstanding anything that may be expressed or implied in this Limited Guarantee or any document or instrument delivered in connection herewith, and notwithstanding the fact that the Guarantor is a limited partnership, by its acceptance of the benefits of this Limited Guarantee, the Guaranteed Party acknowledges and agrees that no Person other than the Guarantor has any obligations hereunder and that no recourse shall be had hereunder, or for any claim based on, in respect of, or by reason of, such obligations or their creation, against, and no personal liability shall attach to, Guarantor, or any Non-Recourse Party, through Parent, Merger Sub or otherwise, whether by or through attempted piercing of the corporate veil, by or through a claim by or on behalf of the Guaranteed Party against Guarantor, or any Non-Recourse Party (including any claim to enforce the Equity Commitment Letter), by the enforcement of any assessment or by any legal or equitable proceeding, by virtue of any applicable Law, or otherwise, except for the Guaranteed Party’s rights against the Guarantor under this Limited Guarantee. The Guaranteed Party acknowledges and agrees that Parent and Merger Sub have no assets and that no funds are expected to be contributed to Parent or Merger Sub unless and until the Closing occurs. Recourse against the Guarantor pursuant to and expressly subject to the terms and conditions of this Limited Guarantee shall be the sole and exclusive remedy of the Guaranteed Party and all of its affiliates against the Guarantor, Parent or Merger Sub in respect of any liabilities or obligations arising under, or in connection with, the Merger Agreement, the Equity Commitment Letter or the transactions contemplated thereby. Nothing set forth in this Limited Guarantee shall confer or give or shall be construed to confer or give to any Person (including any Person acting in a representative capacity) any rights or remedies against any Person other than the Guarantor as expressly set forth herein.

10. GOVERNING LAW; JURISDICTION. This Limited Guarantee, and all claims and causes of action arising out of, based upon, or related to this Limited Guarantee or the negotiation, execution or performance hereof, shall be governed by, and construed, interpreted and enforced in accordance with, the Laws of the State of Delaware, without regard to choice or conflict of law principles that would result in the application of any Laws other than the Laws of the State of Delaware. Any legal action, suit or proceeding arising out of, based upon or relating to this Limited Guarantee or the transactions contemplated hereby shall be brought solely in any

state or federal court within the State of Delaware and any direct appellate court therefrom. Each of the parties hereto hereby irrevocably submits to the exclusive jurisdiction of such courts in respect of any legal action, suit or proceeding arising out of, based upon or relating to this Limited Guarantee and the rights and obligations arising hereunder and agrees that it will not bring any action arising out of, based upon or related to this Limited Guarantee in any other court. Each of the parties hereto hereby irrevocably waives, and agrees not to assert as a defense, counterclaim or otherwise, in any legal action, suit or proceeding arising out of, based upon or relating to this Limited Guarantee, (a) any claim that it is not personally subject to the jurisdiction of the above named courts for any reason other than the failure to serve process in accordance with Section 7, (b) any claim that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) to the fullest extent permitted by applicable Law, any claim that (i) the suit, action or proceeding in such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Limited Guarantee, or the subject mater hereof, may not be enforced in or by such courts. Each of the parties hereto agrees that notice or the service of process in any action, suit or proceeding arising out of, based upon or relating to this Limited Guarantee or the rights and obligations arising hereunder shall be properly served or delivered if delivered in the manner contemplated by Section 7.

11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY AND ALL RIGHT SUCH PARTY MAY HAVE TO TRIAL BY JURY IN ANY LEGAL ACTION, SUIT OR PROCEEDING BETWEEN THE PARTIES HERETO ARISING OUT OF, BASED UPON OR RELATING TO THIS LIMITED GUARANTEE OR THE NEGOTIATION, EXECUTION OR PERFORMANCE HEREOF.

12. COUNTERPARTS. This Limited Guarantee may be executed by facsimile and in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

13. FEES AND EXPENSES. In the event that the Guarantor (a) fails to pay the Obligations or to pay or perform any of its other obligations under this Limited Guarantee and the Guaranteed Party commences any litigation or other proceeding in order to obtain payment or performance thereof or (b) asserts in any litigation or other proceeding that this Limited Guarantee is illegal, invalid or unenforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other similar Laws affecting creditors’ rights generally, and general equitable principles (whether considered in a proceeding in equity or at law), then, in any such case, to the extent the Guaranteed Party prevails in such litigation or proceeding, the Guarantor shall pay on demand all reasonable fees and out of pocket expenses of the Guaranteed Party (including, without limitation, attorney’s fees) in connection with such litigation or proceeding.

14. MISCELLANEOUS.

(a) This Limited Guarantee contains the entire agreement between the parties relative to the subject matter hereof. No modification or waiver of any provision hereof shall be enforceable unless agreed to by the Guaranteed Party and the Guarantor in writing.

(b) Any provision hereof that is prohibited or unenforceable in any jurisdiction shall be, as to such jurisdiction, ineffective solely to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(c) The descriptive headings herein are inserted for convenience of reference only and are not intended to be part of or to affect the meaning or interpretation of this Limited Guarantee.

(d) All parties acknowledge that each party and its counsel have reviewed this Limited Guarantee and that any rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Limited Guarantee.

(e) This Limited Guarantee shall be binding on, and inure to the benefit of, the successors and permitted assignees of the Guarantor and the Guaranteed Party.

* * * * *

(signature pages follow)

IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to be executed and delivered as of the date first written above by its officer thereunto duly authorized.


H.I.G. BAYSIDE DEBT & LBO FUND II, L.P.
By:	H.I.G. Bayside Advisors II, LLC
Its: General Partner
By:	H.I.G.-GPII, Inc.
Its: Manager

By:	/s/ Richard H. Siegel
	Name:	Richard H. Siegel
	Its: Vice President and General Counsel

[Signature Page to Limited Guarantee]

IN WITNESS WHEREOF, the Guaranteed Party has caused this Limited Guarantee to be executed and delivered as of the date first written above by its officer thereunto duly authorized.


ALLION HEALTHCARE, INC.
By:	/s/ Michael P. Moran
	Name:	Michael P. Moran
	Title:	Chairman, President and CEO

[Signature Page to Limited Guarantee]

-----END PRIVACY-ENHANCED MESSAGE-----