Exhibit 10.4

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement, dated May 13, 2005, is between Allion
Healthcare, Inc., a Delaware corporation (“Allion”) and Crestview Capital
Master, LLC (the “Warrant Holder”).

 

The Warrant Holder has been issued a warrant (the “Warrant”) to purchase shares
of Common Stock, $.01 par value per share, of Allion (“Common Stock”), and
Allion has agreed to grant to the Warrant Holder the registration rights
provided for herein.

 

The parties agree as follows:

 

1. Request for Registration. At any time after the IPO Date (as defined in the
Warrant), the Warrant Holder shall have the right, by written notice signed by
the Warrant Holder and given to Allion (the “Demand Notice”), to request that
Allion register all of the Warrant Holders’ Registrable Shares (a “Demand
Registration”) under and in accordance with the provisions of the Securities Act
of 1933, as amended (the “Securities Act”); provided that the Warrant Holder may
not give a Demand Notice prior to December 31, 2005. Allion shall as soon as
practicable, but in no event more than 60 days after the date on which Allion
receives the Demand Notice, file with the Securities and Exchange Commission
(the “SEC”) a registration statement on a form deemed appropriate by Allion’s
counsel covering all the Warrant Holder’s Registrable Shares, and Allion shall
use its reasonable best efforts to cause the registration statement to become
effective within 90 days of such filing. In the event that a Demand Registration
involves an underwritten offering and the managing underwriter or underwriters
participating in such offering advise the Warrant Holder in writing that the
total number of Registrable Shares to be included in such offering exceeds the
amount that can be sold in (or during the time of) such offering without
delaying or jeopardizing the success of such offering (including the price per
share of the Registrable Shares to be sold), then the number of Registrable
Shares (which have registration rights with respect to such offering) shall be
reduced on a pro rata basis (based upon the number of shares requested or
proposed to be registered by the Warrant Holder, Allion and each other holder of
equity securities of Allion eligible to register its shares in the offering) to
a number deemed satisfactory by such managing underwriter or underwriters. In
the event that the Warrant Holder is unable to register all of its Registrable
Shares in an underwritten offering effected in response to a Demand
Registration, the Warrant Holder shall have the right to make an additional
demand for registration of the remaining Registrable Shares on Form S-3 pursuant
to Rule 415 under the Securities Act and shall be entitled to issue an
additional Demand Notice for such Demand Registration in accordance with this
Section 1. For purposes of this Agreement, “Registrable Shares” means the shares
of Common Stock of Allion issued or issuable upon exercise of the Warrant.
Registrable Shares shall cease to be such when (a) a registration statement
covering such Registrable Shares has become or been declared effective and they
have been disposed of pursuant to that registration statement, (b) eligible to
be sold, transferred or distributed pursuant to or in compliance with Rule 144
(or any similar provision then in force) or any other exemption from
registration under the Securities Act without limitation as to volume, or (c)
they have been otherwise transferred and Allion has delivered new certificates
not subject to any stop transfer order or other restriction on transfer and not
bearing a legend restricting transfer in the absence of an effective
registration statement.

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Allion shall not be obligated to effect a registration pursuant to this Section
1:

 

(a) after Allion has already effected one registration pursuant to this Section
1 that either did not involve an underwritten offering or involved an
underwritten offering in which the Warrant Holder was not subjected to any
reduction in the number of Registrable Shares it was entitled to include in such
registration, that registration has been declared or ordered effective and no
stop order suspending the effectiveness of that registration statement has been
issued within 30 days of that effectiveness (provided that Allion shall be
deemed to have effected a registration pursuant to this Section 1 if it files a
registration statement pursuant to this Section 1 and such registration
statement is subsequently withdrawn because the Warrant Holder requests for any
reason whatsoever that such registration statement be withdrawn); or

 

(b) if, at the time it receives a Demand Request, Allion would be required to
prepare any financial statements other than those it customarily prepares or
Allion determines in good faith in its reasonable judgment that the registration
and offering would interfere with any material financing, acquisition, corporate
reorganization or other material corporate transaction or development involving
Allion that is pending or contemplated at the time and promptly gives the
Warrant Holder written notice of that determination (in which case Allion shall
have the right to defer such filing for a period of not more than 60 days after
receipt of the Demand Request).

 

2. “Market Stand-off” Agreement. The Warrant Holder agrees, if requested by
Allion and an underwriter of Common Stock of Allion and if imposed generally on
officers and directors of Allion and acquirers of Common Stock of Allion or
rights to Common Stock in acquisitions by Allion and its subsidiaries, not to
sell or otherwise transfer or dispose of any Common Stock held by the Warrant
Holder during the 180-day period following the effective date of any
registration statement of Allion prepared and filed under the Securities Act. If
requested by the underwriters, the Warrant Holder shall execute a separate
agreement to the foregoing effect. Allion may impose stop-transfer instructions
with respect to the Common Stock subject to the foregoing restriction until the
end of said 180-day period.

 

3. Expenses of Registration. Allion shall pay all registration and filing fees,
printing expenses, fees and disbursements of counsel and independent public
accountants for Allion, fees of the National Association of Securities Dealers,
Inc., fees of transfer agents and registrars, and expenses of listing the
Registrable Securities on any exchange or securities market. All (a)
underwriting discounts, selling commissions and brokerage fees, (b) stock
transfer taxes incurred in respect of the Registrable Shares being sold, (c)
fees and expenses of the Warrant Holder and their respective counsel and (d)
other fees and expenses required to be paid by the Warrant Holder under
applicable law shall be borne and paid ratably by the Warrant Holder whose
Registrable Securities are included in any such registration.

 

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4. Registration Procedures. In the case of each registration effected by Allion
pursuant to this Agreement, Allion shall:

 

(a) keep such registration statement effective until the Warrant Holder has
completed the distribution described in the registration statement, or the
Warrant has expired unexercised, or two years have elapsed from the issue date
of the Warrant, whichever occurs first;

 

(b) furnish the Warrant Holder copies of any registration statement and each
preliminary or final prospectus, or supplement or amendment required to be
prepared pursuant to this agreement, as the Warrant Holder may from time to time
reasonably request;

 

(c) prepare and promptly file with the SEC and promptly notify the Warrant
Holder of the filing of any amendments or supplements to such registration
statement or prospectus as may be necessary to correct any statements or
omissions if, at any time when a prospectus relating to the Registrable Shares
is required to be delivered under the Securities Act, any event with respect to
Allion shall have occurred as a result of which any such prospectus or any other
prospectus as then in effect would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made, in the light of the circumstances under which they were made,
not misleading; and

 

(d) use its best efforts to qualify as soon as reasonably practicable the
Registrable Shares included in the registration statement for sale under the
securities or blue-sky laws of such states and jurisdictions within the United
States as shall be reasonably requested by the Warrant Holder; provided that
Allion shall not be required in connection therewith or as a condition thereto
to qualify to do business, to become subject to taxation or to file a consent to
service of process generally in any of the aforesaid states or jurisdictions.

 

5. Delay of Registration. The Warrant Holder shall have no right to take any
action to restrain, enjoin or otherwise delay any registration as a result of
any controversy that may arise with respect to the interpretation or
implementation of this agreement.

 

6. Indemnification.

 

(a) Subject to the limitations set forth below in this Section 6(a), Allion
shall indemnify the Warrant Holder offering Registrable Shares for sale pursuant
to each registration that has been effected pursuant to this Agreement against
all claims, losses, damages and liabilities (or actions in respect thereof)
(collectively, “Losses”) arising out of or based on any untrue statement of a
material fact or alleged untrue statement of a material fact contained in any
registration statement under which such Registrable Shares were registered under
the Securities Act, or based on any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse such Warrant Holder for
any legal or other expenses reasonably incurred in connection with investigating
or defending any such claim, loss, damage, liability or action; provided,
however, that Allion shall pay for only one counsel for the Warrant Holder and
Allion shall not be liable to the Warrant Holder in any such case (i) to the
extent that any such Losses arise out of or are based on or result from any
untrue statement or alleged untrue statement or

 

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omission or alleged omission made in such registration statement based upon
written information furnished to Allion by such Warrant Holder or (ii) in the
case of a sale directly by the Warrant Holder of Registrable Shares (including a
sale of such Registrable Shares through any underwriter retained by such Warrant
Holder engaging in a distribution on behalf of such Warrant Holder), such untrue
statement or alleged untrue statement or omission or alleged omission was
contained in a preliminary prospectus and corrected in a final or amended
prospectus, and the Warrant Holder failed to deliver a copy of the final or
amended prospectus at or prior to the confirmation of the sale of the
Registrable Shares to the person or entity asserting any such Losses or (iii) to
the extent that any such Losses arise out of or are based on or result from any
other act or omission on the part of the Warrant Holder that is inconsistent
with the Warrant Holder’s obligations hereunder or a violation of law.

 

(b) Subject to the limitations set forth below in this Section 6(b), the Warrant
Holder shall, if Registrable Shares held by it are included in the securities as
to which such registration is being effected, indemnify Allion, each of its
directors and officers who sign such registration statement, each affiliate and
control person of Allion, each underwriter, if any, of Allion’s securities
covered by such registration statement, and each other security holder whose
securities are included in such registration, and each affiliate thereof against
all Losses arising out of or based on any untrue statement or alleged untrue
statement of a material fact contained in any such registration statement under
which such Registrable Shares were registered under the Securities Act, or based
on any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and will reimburse Allion, such directors, officers, employees, affiliates, or
security holders or underwriters for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such Losses;
provided, however that the Warrant Holder will be liable hereunder in any such
case if and only to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in reliance upon and in conformity with
information pertaining to the Warrant Holder, furnished in writing to Allion by
the Warrant Holder specifically for use in the registration statement or the
prospectus included therein. The liability of the Warrant Holder shall in any
event be limited to the net proceeds to such Warrant Holder from the sale of the
Registrable Shares.

 

(c) Each party entitled to indemnification under this Section 6 (the
“Indemnified Party”) shall give notice to the party required to provide
indemnification (the “Indemnifying Party”) promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and any
claim or any litigation resulting therefrom. In case any action is brought
against an Indemnified Party, and it notifies the Indemnifying Parties of the
commencement thereof, the Indemnifying Party will be entitled to participate in
and, to the extent it so determines, assume the defense thereof; provided that
counsel for the Indemnifying Party, who shall conduct the defense of such claim
or any litigation resulting therefrom, shall be approved by the Indemnified
Party (whose approval shall not unreasonably be withheld or delayed), and the
Indemnified Party may participate in such defense at such party’s expense. After
notice from the Indemnifying Party of its election to so assume the defense
thereof, the Indemnifying Party will not be liable to such Indemnified Party for
any legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof, unless, in the opinion of counsel to the
Indemnified Party, there exists a conflict of interest between the

 

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Indemnified Party and the Indemnifying Party, in which case, the Indemnifying
Party shall pay the reasonable fees of no more than counsel for all such
Indemnified Parties. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request and as shall be reasonably required in connection with the
defense of such claim and litigation resulting therefrom.

 

7. Conditions to Registration. As a condition to Allion’s obligation under this
Agreement to cause a registration statement to be filed or Registrable Shares to
be included in a registration statement, the Warrant Holder shall provide such
information and execute such documents as may be required by the SEC in
connection with such registration. Without limiting the foregoing, the Warrant
Holder may not participate in any registration under this agreement which is
underwritten unless the Warrant Holder (a) agrees to sell its securities on the
basis provided in any such underwriting arrangements and (b) completes and
executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such underwriting
arrangements.

 

8. Notices. All notices, requests, demands and other communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered by courier, or if mailed, when mailed by United States first-class,
certified or registered mail, postage prepaid, to the other party at the
following addresses or by telecopy, receipt confirmed (or at such other address
as shall be given in writing by any party to the other):

 

If to Allion, to:

 

Allion Healthcare, Inc.

1660 Walt Whitman Road

Melville, New York 11747

Fax: (631) 547-6532

Attention: Michael P. Moran

 

With a copy to:

 

Nixon Peabody LLP

990 Stewart Avenue, 3rd Floor

Garden City, New York 11530

Fax: (516) 832-7555

Attention: Allan H. Cohen

 

If to Warrant Holder, to:

 

95 Revere Drive

Suite A

Northbrook, IL 60062

Fax: 847-599-5807

Attention: Stewart Flink

 

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9. Successors and Assigns. This Agreement, and all rights and powers granted
hereby, will bind and inure to the benefit of the parties hereto and their
respective successors and assigns.

 

10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without regard to the
conflicts of law provisions thereof.

 

11. Consent to Jurisdiction. The parties hereby agree that any action,
proceeding or claim against it arising out of, or relating in any way to, this
Agreement may be brought and enforced in the courts of the State of New York or
of the United States of America located in the County of New York, State of New
York, and irrevocably submits to such jurisdiction for such purpose. The parties
hereby irrevocably waive any objection to such exclusive jurisdiction or
inconvenient forum.

 

12. Headings. The headings preceding the text of the sections and subsections
hereof are inserted solely for convenience of reference and shall not constitute
a part of this Agreement, nor shall they affect its meaning, construction, or
effect.

 

13. Counterparts. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but which together shall constitute
one and the same instrument. Facsimile copies of original signatures shall be
effective as original signatures.

 

14. Entire Agreement. This Agreement sets forth all of the promises, covenants,
agreements, conditions and undertakings between the parties hereto with respect
to the subject matter hereof and supersede all prior and contemporaneous
agreements and understandings, inducements or conditions, express or implied,
oral or written. This Agreement may not be amended except by an instrument in
writing signed by the party sought to be charged with effect of such amendment.

 

[end of text; signature page follows]

 

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

 

   

ALLION HEALTHCARE, INC.

   

By:

 

 

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Name:

 

Michael P. Moran

   

Title:

 

President & Chief Executive Officer

   

CRESTVIEW CAPITAL MASTER, LLC

   

By:

 

 

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Name:

       

Title:

   

 

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