Underwriting Agreement Dated January 25, 2006

EXHIBIT 10.1


Execution Copy

4,436,454 Shares

ALLION HEALTHCARE, INC.

COMMON STOCK


UNDERWRITING AGREEMENT


Dated January 25, 2006

January 25, 2006


Thomas Weisel Partners LLC

William Blair & Company, L.L.C.

First Albany Capital Inc.

Susquehanna Financial Group, LLLP

As Representatives of the several Underwriters c/o Thomas Weisel Partners LLC

390 Park Avenue, 16 th Floor

New York, New York 10022


Ladies and Gentlemen:

Introduction . Allion Healthcare, Inc., a Delaware corporation (the " Company" ), proposes to issue and sell to the several underwriters named in Schedule A hereto (the " Underwriters" ), and certain stockholders of the Company (the " Selling Stockholders" ) named in Schedule B hereto severally propose to sell to the several Underwriters, an aggregate of 4,436,454 shares of the common stock, par value $0.001 per share, of the Company (the " Firm Shares" ), of which 1,800,000 shares are to be issued and sold by the Company and 2,636,454 shares are to be sold by the Selling Stockholders, with each Selling Stockholder selling the number of shares set forth opposite such Selling Stockholder' s name in Schedule B hereto.


The Company also proposes to issue and sell to the several Underwriters not more than an additional 665,468 shares of the Company' s common stock, par value $0.001 per share (the " Additional Shares" ), if and to the extent that you shall have determined to exercise, on behalf of the Underwriters, the right to purchase such shares of common stock granted to the Underwriters in Section 3 hereof. The Firm Shares and the Additional Shares are hereinafter collectively referred to as the " Shares ." The shares of common stock, par value $0.001 per share, of the Company to be outstanding after giving effect to the sales contemplated hereby are hereinafter referred to as the " Common Stock ." The Company and the Selling Stockholders are hereinafter sometimes collectively referred to as the " Sellers ." Thomas Weisel Partners LLC, William Blair & Company L.L.C., First Albany Capital Inc., and Susquehanna Financial Group, LLLP have agreed to act as representatives of the several Underwriters (in such capacity, the " Representatives" ) in connection with the offering and sale of the Shares.


The Company has prepared and filed with the Securities and Exchange Commission (the " Commission" ), in accordance with the provisions of the Securities Act of 1933, as amended (the " Securities Act" ), and the applicable rules and regulations thereunder, a registration statement on Form S-1 (Commission File No. 333-130165), including a prospectus, relating to the Shares. The term " Registration Statement" as used herein means the registration statement including all financial schedules and exhibits incorporated or deemed to be incorporated by reference therein (but excluding any information or statements therein that were incorporated, or deemed to be incorporated by reference to the extent such information or statements have been modified or superceded by any statement in the prospectus, or in any other document that was


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subsequently filed with the Commission and incorporated by reference in the prospectus or Registration Statement) as amended at the time it becomes effective or, if the registration statement became effective prior to execution of this Agreement, as supplemented or amended prior to the execution of this Agreement and includes information (if any) contained in the form of final prospectus filed with the Commission pursuant to Rule 424(b) of the rules under the Securities Act and deemed to be part thereof at the time of effectiveness pursuant to Rule 430A under the Securities Act. If it is contemplated, at the time this Agreement is executed, that a post-effective amendment to the registration statement will be filed and must be declared effective before the offering of the Shares may commence, the term " Registration Statement" as used herein means the registration statement as amended by said post-effective amendment. If the Company has filed, or files on or after the date of this Agreement, a registration statement to register additional shares of Common Stock pursuant to Rule 462(b) under the Securities Act (the " Rule 462(b) Registration Statement" ), then any reference herein to the term " Registration Statement" shall be deemed to include such Rule 462(b) Registration Statement. Any preliminary prospectus included in the Registration Statement or filed with the Commission pursuant to Rule 424(a) of the rules under the Securities Act is hereinafter referred to as a " Preliminary Prospectus ." The term " Statutory Prospectus" as used herein means any Preliminary Prospectus, as amended or supplemented, relating to the Shares that is included in the Registration Statement immediately prior to the Applicable Time (as defined below). The final prospectus filed with the Commission pursuant to Rule 424 of the rules under the Securities Act that satisfies the requirements of Section 10(a) of the Securities Act is hereinafter referred to as the " Prospectus ." The term " Applicable Time" means 8:00 p.m. (Eastern time) on the date of this Agreement. The term " General Disclosure Package" means the Statutory Prospectus, each Issuer Represented Free Writing Prospectus (as defined below) and the pricing-related information set forth on Schedule C . All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, a Preliminary Prospectus, the Statutory Prospectus, the Prospectus, any Issuer Represented Free Writing Prospectus or any amendments or supplements to any of the foregoing, shall include any copy thereof filed with the Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval System (" EDGAR" ).

1. Representations and Warranties and Agreements of the Company .


The Company represents and warrants to and agrees with each of the Underwriters that:


1.1 Effective Registration Statement .


The Registration Statement has become effective under the Securities Act; no stop order suspending the effectiveness of the Registration Statement is in effect, and no proceedings for such purpose are pending before or to the Company' s knowledge threatened by the Commission.


1.2 Contents of Registration Statement .

(i) The Registration Statement, when it became effective, did not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements


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therein not misleading, (ii) the Registration Statement and the Prospectus comply and, as amended or supplemented, if applicable, will comply in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder, (iii) the Prospectus does not contain and, as amended or supplemented, if applicable, will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions in the Registration Statement or the Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through you expressly for use therein, and (iv) the statistical and market-related data included in the Registration Statement and the Prospectus are based on or derived from sources that the Company believes to be reliable and accurate. With respect to the exception set forth at clause (iii), the Company acknowledges that the only information furnished in writing by the Underwriters for use in the Registration Statement or the Prospectus are the statements specifically relating to (a) the aggregate number of Firm Shares that the Representatives have severally agreed to purchase contained in the first paragraph under the Section captioned " Underwriting" in the Prospectus, (b) the concession and reallowance figures contained in the paragraph captioned " Commissions and Discounts" under the Section captioned " Underwriting" in the Prospectus, (c) information under the paragraph captioned " Passive Market Making" under the Section captioned " Underwriting" in the Prospectus, and (d) stabilizing and passive market making activities under the paragraph captioned " Short Sales, Stabilizing Transactions and Penalty Bids" under the Section captioned " Underwriting" in the Prospectus.


1.3 Non-Ineligible Issuer .


At the time of filing the Registration Statement and at the date hereof, the Company was not and is not an " ineligible issuer" as defined in Rule 405 under the Securities Act (" Rule 405" ).

1.4 Contents of Free Writing Prospectuses .

Other than the Preliminary Prospectus and the Prospectus, the Company (including its agents and representatives, other than the Underwriters in their capacity as such) has not used or referred to or authorized any other person to use or refer to, and will not use or refer to or authorize any other person to use or refer to, any " written communication" (as defined in Rule 405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy the Shares (each such communication by the Company or its agents and representatives (other than a communication referred to in clause (i) below, but including a communication referred to in clause (ii) below) an " Issuer Represented Free Writing Prospectus" ) other than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the Securities Act or (ii) the documents listed on Schedule D hereto and any other " written communications" (as defined in Rule 405 under the Securities Act) approved in writing in advance by the Representatives. Each such Issuer Represented Free Writing Prospectus, as of its issue date and at all subsequent times through the Closing Date or until any earlier date of which the Company notified or notifies the Representatives as described in the second paragraph of Section 5.11, (i) complied and will comply in all material respects with the Securities Act, (ii) did not and does not include any information that conflicts with the


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information contained in the Registration Statement, the Statutory Prospectus or the Prospectus, (iii) has been filed in accordance with the Securities Act (to the extent required thereby) and, (iv) when taken together with the Preliminary Prospectus, the Statutory Prospectus and the Prospectus accompanying, or delivered prior to delivery of, such Issuer Represented Free Writing Prospectus, did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this paragraph do not apply to statements or omissions made in each such Issuer Represented Free Writing Prospectus based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in any Issuer Represented Free Writing Prospectus, it being acknowledged that the only such information provided by the Underwriters expressly for use therein consists of the information set forth in the final sentence of Section 1.2.


As of the Applicable Time, the General Disclosure Package, does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except that the representations and warranties set forth in this sentence do not apply to statements or omissions in the General Disclosure Package based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein, it being acknowledged that the only such information provided by the Underwriters expressly for use therein consists of the information set forth in the final sentence of Section 1.2.


1.5 Compliance with Securities Act .


Each Preliminary Prospectus filed as part of the Registration Statement as originally filed or as part of any amendment thereto, or filed pursuant to Rule 424 under the Securities Act, complied when so filed in all material respects with the Securities Act and the applicable rules and regulations of the Commission thereunder.


1.6 Financial Statements of the Company and Acquired Companies .


The financial statements of (i) the Company and its consolidated subsidiaries, (ii) Medicine Made Easy (" MME" ), (iii) North American Home Health Supply, Inc. (" North American" ), (iv) Specialty Pharmacies Inc. (" Specialty" ), and (v) Frontier Pharmacy & Nutrition, Inc. d/b/a PMW Pharmacy (" Frontier" and, collectively with MME, North American and Specialty, the " Acquired Companies" ) included in the Registration Statement, the Statutory Prospectus and the Prospectus (including, in each case, all notes and schedules thereto) present fairly in all material respects the financial condition, results of operations and cash flows of the Company and its consolidated subsidiaries, and of the Acquired Companies at the dates and for the periods indicated; and such financial statements and related schedules and notes thereto, including the unaudited financial information filed with the Commission as part of the Registration Statement , the Statutory Prospectus and Prospectus have been prepared in conformity with generally accepted accounting principles (" GAAP" ), consistently applied throughout the periods indicated and conform with the rules and regulations adopted by the Commission under the Securities Act, provided however, that unaudited interim financial


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statements are subject to year end adjustments not material in amount, and do not contain footnotes required under GAAP. The information in the Registration Statement, the Statutory Prospectus and the Prospectus under the captions " Summary Historical and Pro Forma Consolidated Financial Data," " Selected Historical Consolidated Financial Data" and " Unaudited Pro Forma Consolidated Financial Statements" presents fairly the information shown therein as at the respective dates and for the respective periods specified and has been presented on a basis consistent with the audited consolidated financial statements of the Company and its consolidated subsidiaries, and of the Acquired Companies set forth in the Registration Statement, the Statutory Prospectus and Prospectus, subject to such adjustments as shall be described in the footnotes to such financial data in the Registration Statement, the Statutory Prospectus and Prospectus.


1.7 Pro Forma Financial Statements .


The unaudited condensed consolidated pro forma financial data and the related notes thereto set forth under the captions " Summary Historical and Pro Forma Consolidated Financial Data" and " Unaudited Pro Forma Consolidated Financial Statements" in the Registration Statement, the Statutory Prospectus and the Prospectus presents fairly the information shown therein, have been prepared in accordance with the applicable requirements of Article 11 of Regulation S-X promulgated under Securities Exchange Act of 1934, as amended (the " Exchange Act" ), have been properly compiled on a pro forma basis as described therein, and the assumptions used in the preparation thereof were reasonable at the time made and the adjustments used therein are based upon good faith estimates and assumptions believed by the Company to be reasonable at the time made.


1.8 Auditor Independence .


BDO Seidman, LLP, which has expressed its opinion with respect to the financial statements and schedules of the Company and its consolidated subsidiaries and of MME filed as a part of the Registration Statement and included in the Registration Statement, the Statutory Prospectus and the Prospectus, is an independent certified public accountant with respect to the Company and its subsidiaries and MME within the meaning of the Securities Act and the rules and regulations of the Commission adopted thereunder.

1.9 Due Incorporation .

The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the State of Delaware, has the corporate power and authority to own its property and to conduct its business as described in the Registration Statement, the Statutory Prospectus and the Prospectus and to enter into and perform its obligations under this Agreement, and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have, individually or in the aggregate, a material adverse effect on the assets, properties, condition, financial or otherwise, or in the results of operations, business, affairs or business prospects of the Company and its subsidiaries, taken as a whole (a " Material Adverse Effect" ).


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1.10 Subsidiaries .


Schedule E hereto accurately sets forth each such subsidiary of the Company and its jurisdiction of organization. Each subsidiary of the Company has been duly organized, is validly existing as a corporation or limited liability company, as the case may be, in good standing under the laws of the jurisdiction of its organization, has the power and authority to own its property and to conduct its business as described in the Registration Statement, the Statutory Prospectus and the Prospectus and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not result in, individually or in the aggregate, a Material Adverse Effect. All of the issued shares of capital stock of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are either owned directly or indirectly by the Company, free and clear of all liens, encumbrances, equities, claims, preemptive rights, rights of first refusal or similar rights, or restrictions upon voting or transfer.

1.11 Authorization of Underwriting Agreement .

This Agreement has been duly and validly authorized by all necessary corporate action in respect thereof, duly executed and delivered by the Company, and is a valid and binding agreement of the Company, enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

1.12 Description of Capital Stock .

The authorized, issued and outstanding capital stock of the Company conforms in all material respects to the description thereof contained in the Registration Statement, the Statutory Prospectus and the Prospectus, and, as of the date hereof, the Company has authorized and outstanding capital stock as set forth in the column entitled " Actual" and in the corresponding line items under the caption " Capitalization" in the Registration Statement, the Statutory Prospectus and the Prospectus.

1.13 Outstanding Securities .

All of the issued and outstanding shares of capital stock of the Company, including the Firm Shares to be sold by the Selling Stockholders, (i) have been duly authorized and are validly issued, fully paid and non-assessable, (ii) were not issued in violation of any preemptive rights, rights of first refusal or other similar rights of any security holder of the Company or any other person, and (iii) are not subject to preemptive rights, rights of first refusal or similar rights to subscribe for or to purchase or acquire any shares of capital stock of the Company or any of its subsidiaries, or any such rights pursuant to its certificate of incorporation or bylaws or any agreement or instrument to or by which the Company or any of its subsidiaries is a party or bound. All sales of shares of capital stock of the Company prior to the date hereof were at all relevant times duly registered under the Securities Act or were exempt from the


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registration requirements of the Securities Act, and all such sales of shares complied in all material respects with applicable state securities or Blue Sky laws or were exempt from such applicable state securities or Blue Sky laws. Except as disclosed in the Registration Statement, the Statutory Prospectus and the Prospectus, the Company has not sold or issued any securities during the six-month period preceding the date of the Prospectus, including any sales pursuant to Rule 144A, or Regulations D or S of, the Securities Act, other than shares issued pursuant to employee benefit plans, qualified stock option plans or other employee compensation plans or pursuant to outstanding options, rights or warrants described in the Registration Statement, the General Disclosure Package and the Prospectus.

1.14 Validly Issued Shares .

The Shares to be sold by the Company have been duly authorized and, when issued and delivered by the Company in accordance with the terms of this Agreement, will be validly issued, fully paid and non-assessable, and the issuance of such Shares will not be subject to any preemptive rights, rights of first refusal or other similar rights to subscribe for or to purchase or acquire any shares of Common Stock of the Company or any of its subsidiaries, or any such rights pursuant to its certificate of incorporation or bylaws or any agreement or instrument to or by which the Company or any of its subsidiaries is a party or bound.


1.15 Registration Rights .

There are no contracts, agreements or understandings between the Company and any person granting such person the right to require the Company to file a registration statement under the Securities Act with respect to any securities (debt or equity) of the Company or to require the Company to include such securities with the Shares registered pursuant to the Registration Statement (collectively, " Registration Rights" ), other than as set forth on Schedule F hereto. Schedule F hereto accurately sets forth the names of all holders of shares of capital stock of the Company that have Registration Rights and the number of such shares of capital stock subject to Registration Rights. Prior to the date hereof, all holders listed on Schedule F (i) have waived in writing the Registration Rights to which their shares relate in connection with the offering contemplated by this Agreement or (ii) have received written notice from the Company, in compliance with the terms of each holder' s Registration Rights agreement, that such holders may exercise his, her or its Registration Rights with respect to all or any portion of the shares subject thereto and such holders have elected either to exercise the right to have all or a portion of their shares included in the offering contemplated by this Agreement or to waive their rights to have their shares included in such offering.

1.16 Nasdaq; Exchange Act Registration .

The Shares have been listed for quotation on the National Association of Securities Dealers Automated Quotation (" Nasdaq" ) National Market System. A registration statement has been filed on Form 8-A pursuant to Section 12 of the Exchange Act, which complies in all material respects with the Exchange Act. The Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or the quotation of the Common Stock on Nasdaq, nor has the Company received any notification that the Commission or the Nasdaq is contemplating terminating such registration or quotation.


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1.17 No Conflicts .


The execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will not contravene, result in a breach or violation of, or constitute a default under, or will not result in the creation or imposition of any lien, charge, claim or encumbrance upon any property or assets of the Company or any of its subsidiaries pursuant to, (i) any provision of applicable law, (ii) any provision of the certificate of incorporation or bylaws or other organizational or governing documents of the Company or any of its subsidiaries, (iii) any agreement or other instrument binding upon the Company or any of its subsidiaries or to which the Company or any of its subsidiaries is a party or to which any of its or their respective properties are subject, or (iv) any regulation, rule, judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, except, in the case of clauses (i), (iii) and (iv) above, where such violations, breaches, contraventions, liens, charges, claims or encumbrances would not, individually or in the aggregate, result in a Material Adverse Effect.


1.18 No Consents .


(i) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency, domestic or foreign, (ii) no authorization, approval, vote or other consent of any stockholder or creditor of the Company, and (iii) no authorization, approval, vote or other consent of any other person or entity, is necessary or required for the performance by the Company of its obligations under this Agreement, for the offering, issuance, sale or delivery of the Shares hereunder, or for the consummation by the Company of any of the other transactions contemplated by this Agreement, in each case on the terms contemplated by the Prospectus, except such as have been already obtained under the Securities Act or the rules and regulations thereunder, or such as may be required under state securities or Blue Sky laws or the National Association of Securities Dealers, Inc. (the " NASD" ).


1.19 No Material Adverse Change .

Subsequent to the respective dates as to which information is given in the Registration Statement, the Statutory Prospectus and the Prospectus, (i) there has not occurred any Material Adverse Effect, (ii) except in the ordinary course of business, the Company and its subsidiaries have not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction, (iii) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock, and (iv) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company and its subsidiaries.


1.20 Legal Proceedings; Statutes and Regulations .


There are no legal or governmental proceedings pending or, to the knowledge of the Company, threatened to which the Company or any of its subsidiaries is a party or to which


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any of the properties of the Company or any of its subsidiaries is subject (i) that are required to be described in the Registration Statement, the Statutory Prospectus or the Prospectus and are not so described, or (ii) which would reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect. There are no material statutes or regulations applicable to the Company or any of its subsidiaries, or its or their business operations or properties, that are required to be described in the Registration Statement, the Statutory Prospectus or the Prospectus that are not described as required. The statements relating to legal matters and proceedings and statutes and regulations in the Registration Statement, the Statutory Prospectus and the Prospectus under the subcaptions " Reimbursement Management," " Disease Management," " Third Party Reimbursement, Cost Containment and Legislation," " Government Regulation," and " Legal Proceedings," under the caption " Business," in each case fairly and accurately summarize such matters and proceedings in all material respects.


1.21 Contracts .


There are no contracts or other documents which are required to be described in the Registration Statement, the Statutory Prospectus and the P ...