REGISTRATION
RIGHTS AGREEMENT

 

This
Registration Rights Agreement, dated January 4, 2005, is between Allion
Healthcare, Inc., a Delaware corporation (“Allion”), and Michael Stone and
Jonathan Spanier (together, the “Warrant Holders”).

 

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

 

The
parties agree as follows: 




1. Request
for Registration. If at
any time Allion shall receive a written request from both Warrant Holders (a
“Demand Request”) that Allion effect a registration under the Securities Act of
1933, as amended (the “Securities Act”), Allion shall, within 45 days after its
receipt of the Demand Request, 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. For purposes of this Agreement, “Registrable Shares” means the shares
of Common Stock issued or issuable upon exercise of the Warrants. 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, 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.

 

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

 

(a)  after
Allion has already effected one such registration pursuant to this Section 2,
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 Holders
request 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 Holders 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).

 







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2.  “Market
Stand-off” Agreement. Each of
the Warrant Holders agrees, if requested by Allion and an underwriter of Common
Stock of Allion Stock
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 such 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 Holders 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 each of the Warrant
Holders and their respective counsel and (d) other fees and expenses required to
be paid by Warrant Holders under applicable law shall be borne and paid ratably
by the Warrant Holders whose Registrable Securities are included in any such
registration.

 

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

 

(a)  keep such
registration statement effective for a period of 60 days or until each Warrant
Holder has completed the distribution described in the registration statement,
whichever occurs first;

 

(b)  furnish
each 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 any Warrant Holder may from time to time reasonably
request;

 

(c)  prepare
and promptly file with the SEC and promptly notify each 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 any 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.

 







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5.  Delay
of Registration. No
Warrant Holder shall have any 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
each 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 solely on any 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 to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse each
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 all such Warrant Holders and Allion
shall not be liable to a 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 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 a 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 omission was contained in a preliminary prospectus and corrected in
a final or amended prospectus, and such 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 any Warrant Holder that is
inconsistent with the Warrant Holder’s rights hereunder or a violation of
law.

 

(b)  Subject
to the limitations set forth below in this Section 6(b), each Warrant Holder
shall, if Registrable Shares held by him are included in the securities as to
which such registration is being effected, severally and not jointly 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 solely on any
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 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 such 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 such Warrant Holder, furnished in writing to Allion by such
Warrant Holder specifically for use in the registration statement or the
prospectus included therein.

 







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(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), 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. 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, each Warrant Holder shall provide such information and execute such
documents as may reasonably be required in connection with such registration.
Without limiting the foregoing, no Warrant Holder may participate in any
registration under this agreement which is underwritten unless such 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

 







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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
Sellers, to:

 

Michael
Stone

18 Ozone
Avenue

Venice,
California 90291




and

 

Jonathan
Spanier

269 South
Beverly Drive, #1162

Beverly
Hills, California 90212




With a
copy to:

 

Ackerman,
Levine, Cullen, Brickman & Limmer, LLP

175 Great
Neck Road

Great
Neck, New York 11021

Fax:
(516) 829-6966

Attention:
Leslie J. Levine, Esq.




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 California, 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 California or of the United States of America located in
the County of Los Angeles, State of California, 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.










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13.  Counterparts. This
Agreement may be executed in two or more 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:
__/s/
Michael Moran_____

Name:
Michael Moran

Title:
President and CEO

 




___/s/
Michael Stone__________

Name:
Michael Stone

 




__/s/
Jonathan Spanier_________

Name:
Jonathan Spanier

 









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