**CERTIFICATE
OF DESIGNATION OF**


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**RIGHTS
AND PREFERENCES OF**


****


**SERIES
A PREFERRED STOCK OF**


****


**ALLION
HEALTHCARE, INC.**


****


**(Under
Section 151 of the**


**Delaware
General Corporation Law)**




Allion
Healthcare, Inc., a corporation organized and existing under the laws of the
State of Delaware (the “Corporation”), hereby certifies that the following
resolution was adopted by the Board of Directors of the
Corporation:




**RESOLVED**,
that pursuant to the authority expressly granted to and vested in the Board of
Directors of the Corporation (the “Board of Directors”) by the provisions of the
Amended and Restated Certificate of Incorporation (the “Certificate of
Incorporation”), there is hereby created, out of the 5,000,000 shares of
Preferred Stock, par value $0.001 per share, of the Corporation authorized and
unissued in the Certificate of Incorporation (the “Preferred Stock”), as series
of Preferred Stock consisting of 512,500 shares, which series shall have the
following designation, powers, preferences and relative, participating, optional
or other rights, and the following qualifications, limitations and restrictions
(in addition to any powers, preferences and relative, participating, optional or
other rights, and the following qualifications, limitations and restrictions,
set forth in the Certificate of Incorporation):




1. **Designation;
Number of Shares**. 512,500 shares of Preferred Stock
shall be designated the “Series A Preferred Stock” (the “Series A Preferred
Stock”).




2. **Ranking**. All of the preferential
amounts to be paid to the holders of the Series A Preferred Stock as provided in
this Certificate of Designation shall be paid or set apart for payment before
the payment or setting apart for payment of any amount for, or the distribution
of any property of the Corporation to, the holders of any class of series of
Common Stock (as defined below) or other class or series of capital stock of the
Corporation, whether now or hereafter authorized, ranking junior as to
liquidation rights to the Series A Preferred Stock,




3. **Dividends**. In the event any
dividends (other than dividends payable in Common Stock) are declared with
respect to the common stock, par value $0.001 per share, of the Corporation (the
“Common stock”), the holders of the Series A Preferred Stock as of the record
date established by the Board of Directors for such dividend shall be entitled
to receive as dividends (the “Dividends”) an amount (whether in the form of
cash, securities or other property) equal to the amount (and in the form) of the
dividends that such holder would have received had the Series A Preferred Stock
been converted into Common Stock as of the date immediately prior to the record
date of such dividend, such Dividends to be payable on the payment date of the
dividend established by the Board of directors (the “Dividend Payment Date”).
The record date for any such Dividends shall be the record date for the
applicable dividend, and any such Dividends shall be payable to the persons in
whose name the Series A Preferred Stock is registered at the close of business
on the applicable record date.







**4.****Liquidation
Dissolution or Winding Up**. In the event of any liquidation,
dissolution or winding up of the Corporation, whether voluntary or involuntary,
before any distribution may be made with respect to the Common Stock or any
other series of capital stock of the Corporation ranking junior as to
liquidation rights to the Series A Preferred Stock, the holders of each share of
Series A Preferred Stock shall be entitled to be paid out of the assets of the
Corporation available for distribution to holders of the Corporation’s capital
stock of all classes, whether such assets are capital, surplus or capital
earnings, an amount equal to $2.00 per share on the Series A Preferred Stock (as
adjusted for stock splits, stock dividends and the like) plus all declared and
unpaid dividends thereon since the date of issue up to and including the date
full payment shall be tendered to the holders of the Series A Preferred Stock
with respect to such liquidation, dissolution or winding up (the “Liquidation
Preference”). If, upon any liquidation, dissolution or winding up of the
Corporation, the amounts payable with respect to the Series A Preferred Stock
are not paid in full, the holders of the Series A Preferred Stock shall share
ratably in any distribution of assets in proportion to the full respective
preferential amounts to which they are otherwise entitled to
receive.





After the
payment of the Liquidation Preference shall have been made in full to the
holders of the Series A Preferred Stock, the holders of the Series A Preferred
Stock shall be entitled to no further participation in the distribution of the
assets of the Corporation, and the remaining assets of the Corporation legally
available for distribution to its stockholders shall be distributed among the
holders of other classes of securities of the Corporation in accordance with
their respective terms.




5. **Conversion**. The holders of the Series
A Preferred Stock shall have the following conversion rights:




(a)  **Voluntary
Conversion**. Each holder of shares of Series A
Preferred Stock may elect at any time to convert the shares of Series A
Preferred Stock then held by such holder into a number of shares of Common Stock
computed by multiplying the number of shares of Series A Preferred Stock to be
converted by their applicable Conversion Value (as defined below) and dividing
the result by the applicable conversion price for the Series A Preferred Stock
(the “Series A Conversion Price”) then in effect. The “Conversion Value” of the
Series A Preferred Stock shall be $2.00 per share. The Series A Conversion Price
shall initially be $2.00 per share and shall be subject to adjustment as
hereinafter provided. The conversion rate for each series of Series A Preferred
Stock shall initially be one-to-one. If a holder of Series A Preferred Stock
elects to convert Series A Preferred Stock at a time when there are any declared
and unpaid dividends or other amounts due on such shares, such dividends and
other amounts shall be paid in full by the Corporation in connection with such
conversion.




(b)  **Automatic
Conversion**. Each share of Series A Preferred
Stock outstanding shall automatically be converted into the number of shares of
Common Stock into which such shares are convertible as computed according to the
formula set forth in Section 5(a) hereof at the then effective applicable Series
A Conversion Price upon the earlier of (i) the date specified by the holders of
at least two-thirds of shares of Series A Preferred Stock then outstanding, or
(ii) immediately prior to the closing of an underwritten public offering of
shares of the Corporation’s Common Stock pursuant to an effective registration
statement under the Securities Act of 1933, as amended, which results in gross
proceeds to the Corporation of at least $25,000,000 (a “Qualified Public
Offering”).




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  (c) Procedure
for Voluntary Conversion .  Upon
election to convert pursuant to Sections 5(a) or 5(b)(i), the relevant holder or
holders of Series A Preferred Stock shall surrender the certificate or
certificates representing the Series A Preferred Stock being converted, duly
assigned or endorsed for transfer to the Corporation (or accompanied by duly
executed stock powers relating thereto), at the principal executive office of
the Corporation or the offices of the transfer agent for the Series A Preferred
Stock or such office or offices in the continental United States of an agent for
conversion as may from time to time be designated by notice to the holders of
the Series A Preferred Stock by the Corporation, or in the event the certificate
or certificates are lost, stolen or missing, shall deliver an affidavit or
agreement satisfactory to the Corporation to indemnify the Corporation from any
loss incurred by it in connection therewith (an “Affidavit of Loss”) with
respect to such certificates. The issuance by the Corporation of Common Stock
upon a conversion of Series A Preferred Stock upon election to convert pursuant
to Sections 5(a) or 5(b)(i) hereof shall be effective as of the surrender of the
certificate or certificates for the Series A Preferred Stock to be converted,
duly assigned or endorsed for transfer to the Corporation (or accompanied by
duly executed stock powers relating thereto), or as of the delivcry of an
Affidavit of Loss. Upon surrender of a certificate representing Series A
Preferred Stock for conversion, or delivery of an Affidavit of Loss, the
Corporation shall issue and send by hand delivery, by courier or by first class
mail (postage prepaid) to the holder thereof or to such holder’s designee, at
the address designated by such holder, certificates for the number of shares of
Common Stock to which such holder shall be entitled upon conversion plus a cash
payment in the amount of any declared but unpaid dividends and other amounts as
contemplated by Sections 5(a) or 5(b)(i) in respect of the shares of Series A
Preferred Stock. Notwithstanding the foregoing, in the event of an automatic
conversion pursuant to Section 5(b)(i) upon the election of the holders of not
less than two thirds of the outstanding shares of Series A Preferred Stock, the
outstanding shares of such applicable Series A Preferred Stock shall be
converted automatically without any further action by the holders of such shares
and whether or not the certificates representing such shares are surrendered to
the Corporation or its transfer agent and all rights with respect to such
applicable Series A Preferred Stock shall terminate, except any of the rights of
the holders thereof upon surrender of their certificate or certificates therefor
or delivery of an Affidavit of Loss thereof to receive certificates for the
number of shares of Common Stock into which such shares of Series A Preferred
Stock has been converted plus all declared but unpaid dividends and other
amounts as contemplated by Sections 5(a) or 5(b)(i), as applicable, in respect
of the shares of Series A Preferred Stock which are converted. The issuance of
certificates for Common Stock upon conversion of Series A Preferred Stock will
be made without charge to the holders of such shares for any issuance tax in
respect thereof or other costs incurred by the Corporation in connection with
such conversion and the related issuance of such stock.


(d)  **Procedure
for Automatic Conversion on Qualified Public Offering**. As of, and in all cases
subject to, the closing of a Qualified Public Offering (the “Automatic
Conversion Date”), all outstanding shares of Series A Preferred Stock shall be
converted automatically into shares of Common Stock as set forth in Section
5(b)(ii) hereof and without any further action by the holders of such shares and
whether or not the certificates representing such shares of Series A Preferred
Stock are surrendered to the Corporation or its transfer agent. On the Automatic
Conversion Date, all rights with respect to the Series A Preferred Stock so
converted shall terminate, except any of the rights of the holders thereof upon
surrender of their certificate or certificates therefor or delivery of an
Affidavit of Loss thereof to receive certificates for the number of shares of
Common Stock into which such Series A Preferred Stock has been converted plus
all declared but unpaid dividends and other amounts as contemplated by Section
5(b)(ii). If so required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or by his, her or its attorney duly authorized in
writing. Upon surrender of such certificates or Affidavit of Loss the
Corporation shall issue and deliver to such holder, promptly at such office and
in its name as shown on such surrendered certificate or certificates, a
certificate or certificates for the number of shares of Common Stock into which
the shares of the Series A Preferred Stock surrendered are convertible on the
Automatic Conversion Date and shall pay all declared but unpaid dividends and
other amounts as contemplated by Section 5(b)(ii) in respect of the shares of
Series A Preferred Stock which are converted.




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(e)**Fractional
Shares**. The Corporation shall not be
obligated to deliver to holders of Series A Preferred Stock any fractional share
of Common Stock issuable upon any conversion of such Series A Preferred Stock,
but in lieu thereof may make a cash payment in respect thereof in any manner
permitted by law,

(f)**Reservation
of Common Stock**. The Corporation shall at all
times reserve and keep available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion of Series A Preferred Stock as
herein provided, free from any preemptive rights or other obligations, such
number of shares of Common Stock as shall from time to time be issuable upon the
conversion of all the Series A Preferred Stock then outstanding provided that
the shares of Common Stock so reserved shall not be reduced or affected in any
manner whatsoever so long as any shares of Series A Preferred Stock are
outstanding. The Corporation shall prepare and shall use its best efforts to
obtain and keep in force such governmental or regulatory permits or other
authorizations as may be required by law, and shall comply with all requirements
as to registration, qualification or listing of the Common Stock, in order to
enable the Corporation lawfully to issue and deliver to each holder of record of
Series A Preferred Stock such number of shares of its Common Stock as shall from
time to time be sufficient to effect the conversion of all Series A Preferred
Stock then outstanding and convertible into shares of Common
Stock.





(g)**Adjustments
to Series A Conversion Price**. The Series A Conversion Price in
effect from time to time shall be subject to adjustment as
follows:





(i)  **Stock
Dividends, Subdivisions and Combinations**. Upon the issuance of additional
shares of Common Stock as a dividend or other distribution on outstanding Common
Stock, the subdivision of outstanding shares of Common Stock into a greater
number of shares of Common Stock, or the combination of outstanding shares of
Common Stock into a smaller number of shares of the Common Stock, the applicable
Series A Conversion Prices shall, simultaneously with the happening of such
dividend, subdivision or split be adjusted by multiplying the then effective
Series A Conversion Price by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding immediately prior to such event and
the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such event. An adjustment made pursuant to this
Section 5(g)(i) shall be given effect, upon payment of such a dividend or
distribution, as of the record date for the determination of stockholders
entitled to receive such dividend or distribution (on a retroactive basis) and
in the case of a subdivision or combination shall become effective immediately
as of the effective date thereof.





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(h)**Other
Adjustments**. In the event the Corporation
shall make or issue, or fix a record date for the determination of holders of
Common Stock entitled to receive, a dividend or other distribution payable in
securities of the Corporation other than shares of Common Stock, then and in
each such event lawful and adequate provision shall be made so that the holders
of Series A Preferred Stock shall receive upon conversion thereof in addition to
the number of shares of Common Stock receivable thereupon, the number of
securities of the Corporation which they would have received had their Series A
Preferred Stock been converted into Common Stock on the date of such event and
had they thereafter, during the period from the date of such event to and
including the date of conversion retained such securities receivable by them as
aforesaid during such period, giving application to all adjustments called for
during such period under this Section 5 as applied to such distributed
securities.

If the
Common Stock issuable upon the conversion of the Series A Preferred Stock shall
be changed into the same or different number of shares of any class or classes
of stock, whether by reclassification or otherwise (other than a subdivision or
combination of shares or stock dividend provided for above, or a reorganization,
merger, consolidation or sale of assets provided for elsewhere in this Section
5(h), then and in each such event the holder of each share of Series A Preferred
Stock shall have the right thereafter to convert such share into the kind and
amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification or other change, by holders of the number of
shares of Common Stock into which such shares of Series A Preferred Stock might
have been converted immediately prior to such reorganization, reclassification
or change, all subject to further adjustment as provided herein.

(i)**Mergers
and Other Reorganizations**. If at any time or from time to
time there shall be a capital reorganization of the Common Stock (other than a
subdivision, combination, reclassification or exchange of shares provided for in
Section 5(g) hereof or a merger or consolidation of the Corporation with or into
another corporation or the acquisition of the Corporation or the sale of all or
substantially all of the Corporation’s properties and assets to any other
person, then, as a part of and as a condition to the effectiveness of such
reorganization, merger, consolidation, acquisition or sale, lawful and adequate
provision shall be made so that the holders of the Series A Preferred Stock
shall thereafter be entitled to receive upon conversion of the Series A
Preferred Stock, the number of shares of stock or other securities or property
of the Corporation or of the successor corporation resulting from such
recapitalization, merger, consolidation or sale, to which a bolder of Common
Stock deliverable upon conversion would have been entitled on such capital
reorganization, merger, consolidation or sale. In any such case, appropriate
provisions shall be made with respect to the rights of the holders of the Series
A Preferred Stock after the reorganization, merger, consolidation, acquisition
or sale to the end that the provisions of this Section 5 (including without
limitation provisions for adjustment of the Series A Conversion Price and the
number of shares purchasable upon conversion of the Series A Preferred Stock)
shall thereafter be applicable, as nearly as may be, with respect to any shares
of stock, securities or assets to be deliverable thereafter upon the conversion
of the Series A Preferred Stock.


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(j)  **No
Impairment**. The Corporation will not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all of the provisions of this Section 5 and in the taking of all such action as
may be necessary or appropriate in order to protect the rights of the holders of
the Series A Preferred Stock against impairment.
  (k)  **Notices
of Adjustments**. In each case of an adjustment or
readjustment of the Series A Conversion Price, the Corporation will furnish each
holder of Series A Preferred Stock with a certificate, prepared by the chief
financial officer of the Corporation, showing such adjustment or readjustment,
and stating in detail the facts upon which such adjustment or readjustment is
based.
  6. **Voting
Rights**. Except as otherwise required by
law, each holder of Series A Preferred Stock shall be entitled to vote on all
matters and each such holder shall be entitled to that number of votes equal to
the largest number of whole shares of Common Stock into which such holder’s
shares of Series A Preferred Stock could be converted pursuant to the provisions
of Section 5 hereof, at the record date for the determination of stockholders
entitled to vote on such matter or, if no such record date is established, at
the date such vote is taken or any written consent of stockholders is solicited.
Except as otherwise expressly provided herein or as required by law, the holders
of Series A Preferred Stock and Common Stock shall vote together as a single
class on all matters.
  7. **No
Reissuance of Series A Preferred Stock**. No share or shares of the Series
A Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue. The Corporation may from time to time take such appropriate
corporate action as may be necessary to reduce the authorized number of shares
of the Series A Preferred Stock accordingly.
  8. **Notices
of Record Date**. In the event (i) the Corporation
establishes a record date to determine the holders of any class of securities
who are entitled to receive any dividend or other distribution or (ii) there
occurs any capital reorganization of the Corporation, any reclassification or
recapitalization of the capital stock of the Corporation, any merger or
consolidation of the Corporation, any acquisition of the Corporation, any
transfer of all or substantially all of the assets of the Corporation to any
other Corporation entity or person, any sale of a majority of the voting
securities of the Corporation in one or a series of related transactions or any
voluntary or involuntary dissolution, liquidation or winding up of the
Corporation, the Corporation shall mail to each holder of Series A Preferred
Stock at least twenty (20) days prior to the record date specified therein, a
notice specifying (a) the date of such record date for the purpose of such
dividend or distribution and a description of such dividend or distribution, (b)
the date on which any such reorganization, reclassification, transfer,
consolidation, merger, acquisition, sale, dissolution, liquidation or winding up
is expected to become effective, and (c) the time, if any, that is to be fixed,
as to when the holders of record of Common Stock (or other securities) shall be
entitled to exchange their shares of Common Stock (or other securities) for
securities or other property deliverable upon such reorganization,
reclassification, transfer, consolidation, merger, acquisition, sale,
dissolution, liquidation or winding up.
  * * * *
*







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**IN
WITNESS WHEREOF**, the undersigned has executed this Certificate of
Designation this 8th day of January, 2001.






/s/
      Michael P. MoranMichael
      P. MoranPresident
      and Chief Executive Officer









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