Shares ALLION HEALTHCARE, INC. COMMON STOCK UNDERWRITING AGREEMENT Dated , 2005

Exhibit 1.1

Shares

ALLION HEALTHCARE, INC.

COMMON STOCK

Dated , 2005

TABLE OF CONTENTS


			Page
1.	Representations and Warranties of the Company		2

	1.1	Effective Registration Statement	2
	1.2	Contents of Registration Statement	2
	1.3	Compliance with Securities Act	3
	1.4	Financial Statements of the Company and Acquired Companies	3
	1.5	Pro Forma Financial Statements	4
	1.6	Auditor Independence	4
	1.7	Due Incorporation	4
	1.8	Subsidiaries	4
	1.9	Authorization of Underwriting Agreement	5
	1.10	Pre-Closing Transactions	5
	1.11	Description of Capital Stock	5
	1.12	Outstanding Securities	5
	1.13	Validly Issued Shares	6
	1.14	No Registration Rights	6
	1.15	Nasdaq; Exchange Act Registration	6
	1.16	No Conflicts	7
	1.17	No Consents	7
	1.18	No Material Adverse Change	7
	1.19	Legal Proceedings; Statutes and Regulations	7
	1.20	Contracts	8
	1.21	Related Party Transactions	8
	1.22	Not an Investment Company	8
	1.23	No Violation	8
	1.24	Governmental Permits	9
	1.25	Properties	9
	1.26	Environmental	10
	1.27	Intellectual Property Rights	10
	1.28	No Labor Disputes	10
	1.29	Insurance	10
	1.30	Taxes	11
	1.31	No Price Stabilization or Manipulation	11
	1.32	Accounting Controls	11
	1.33	Exchange Act; Xxxxxxxx-Xxxxx Act.	11
	1.34	Disclosure Controls and Procedures	12
	1.35	Brokers Fees	12

2.	Purchase and Sale Agreements		12

	2.1	Firm Shares	12
	2.2	Additional Shares	12
	2.3	Market Standoff Provision	13
	2.4	Terms of Public Offering	13

3.	Payment and Delivery		14

	3.1	Firm Shares	14
	3.2	Additional Shares	14
	3.3	Delivery of Certificates	14

-i-

TABLE OF CONTENTS

(continued)


			Page
4.	Covenants of the Company		15

	4.1	Furnish Copies of Registration Statement and Prospectus	15
	4.2	Notification of Amendments or Supplements	15
	4.3	Filings of Amendments or Supplements	15
	4.4	Blue Sky Laws	15
	4.5	Earnings Statement	16
	4.6	Use of Proceeds	16
	4.7	Transfer Agent	16
	4.8	Periodic Reporting Obligations	16
	4.9	Preparation of Prospectus	16
	4.10	Notification of Earnings Releases or Material News	16

5.	Conditions to the Underwriters’ Obligations		16

	5.1	Effective Registration Statement	17
	5.2	Rule 462(b) Registration Statement	17
	5.3	Prospectus Filed with Commission	17
	5.4	No Stop Order	17
	5.5	Nasdaq	17
	5.6	No NASD Objection	17
	5.7	Representations and Warranties	17
	5.8	No Material Adverse Change	18
	5.9	Officer’s Certificate	18
	5.10	Opinion of Company Counsel	18
	5.11	Opinion of Special Regulatory Counsel	18
	5.12	Opinion of Underwriters’ Counsel	18
	5.13	Comfort Letter from BDO Xxxxxxx, LLP.	19
	5.14	Comfort Letter from LWBJ, LLP.	19
	5.15	Comfort Letter from McGladrey & Xxxxxx	19
	5.16	Lock-Up Agreements	19
	5.17	Pre-Closing Transactions	19
	5.18	Additional Documents	19

6.	Expenses		20

7.	Indemnity and Contribution		21

	7.1	Indemnification by the Company	21
	7.2	Indemnification by the Underwriters	21
	7.3	Indemnification Procedures	22
	7.4	Contribution Agreement	23
	7.5	Contribution Amounts	23
	7.6	Survival of Provisions	24

8.	Effectiveness		24

9.	Termination		24

-ii-

TABLE OF CONTENTS

(continued)


		Page

10.	Defaulting Underwriters	25

11.	Counterparts	26

12.	Headings; Table of Contents	26

13.	Notices	26

14.	Successors	27

15.	Partial Unenforceability	27

16.	Governing Law	27

17.	Consent to Jurisdiction	27

18.	Entire Agreement	28

19.	Amendments	28

20.	Sophisticated Parties	28

SCHEDULE A		30

SCHEDULE B		31

SCHEDULE C		32

EXHIBIT A-1		1

EXHIBIT A-2		1

EXHIBIT B		1

EXHIBIT C		1

-iii-

, 2005

Xxxxxx Xxxxxx Partners LLC

Xxxxxxx Xxxxx & Company, L.L.C.

First Albany Capital Inc.

As Representatives of the several Underwriters

c/x Xxxxxx Xxxxxx Partners LLC

000 Xxxx Xxxxxx, 00^xx Xxxxx

Xxx Xxxx, Xxx Xxxx 00000

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”), an aggregate of [ ] shares of the common stock, par value $0.001 per share, of the Company (the “Firm Shares”).

The Company also proposes to issue and sell to the several Underwriters not more than an additional [ ] 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 2 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.” Xxxxxx Xxxxxx Partners LLC, Xxxxxxx Xxxxx and Company and First Albany Inc. 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. 333-124099), 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 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 of the rules 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. The prospectus in the form first used to confirm sales of Shares is hereinafter referred to as the “Prospectus.” All references in this Agreement to the Registration Statement, the Rule 462(b) Registration Statement, a preliminary prospectus, the 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 (“XXXXX”).

Immediately prior to the purchase of the Shares by the Underwriters on the Closing Date (as defined below):

(i) all of the outstanding shares of the Company’s Series A, Series B, Series C, Series D and Series E convertible preferred stock will be automatically converted into shares of Common Stock, as described in the Prospectus (the “Preferred Stock Conversion”), and

(ii) the Company’s Second Amended and Restated Bylaws will be amended and restated (the “Amendment and Restatement”),

all on terms contemplated by the Prospectus. The Preferred Stock Conversion and the Amendment and Restatement are hereinafter collectively called the “Pre-Closing Transactions.”

1. Representations and Warranties 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 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, when first used to confirm the sales of the Shares, 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 caption “Underwriting” in the Prospectus, (c) information under the paragraph captioned “Discretionary Accounts” 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 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.

1.4 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”), and (iv) Specialty Pharmacies, Inc. (“Specialty” and, collectively with North American, the “Acquired Companies”) included in the Registration Statement and 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, MME 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, 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 statements are subject to year end adjustments not material in amount, and do not contain footnotes required under GAAP. The information in 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, MME and of the Acquired Companies set forth in the Registration Statement and the Prospectus, subject to such adjustments as shall be described in the footnotes to such financial data in the Prospectus

1.5 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 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.

1.6 Auditor Independence.

BDO Xxxxxxx, LLP, which has expressed its opinion with respect to the financial statements and schedules of the Company and its consolidated subsidiaries and MME filed as a part of the Registration Statement and included in the Registration Statement 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.

1.7 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 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”).

1.8 Subsidiaries.

Schedule B 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 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 owned directly 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.

1.9 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.

1.10 Pre-Closing Transactions.

The Pre-Closing Transactions will be consummated on or prior to the Closing Date on the terms contemplated by this Agreement and the Prospectus. The Preferred Stock Conversion will not result in a breach or violation of the Company’s Amended and Restated Certificate of Incorporation and the Certificates of Designation for the Series D and E convertible preferred stock. The Amendment and Restatement has been duly and validly authorized by all necessary corporate action in respect thereof in accordance with the Company’s certificate of incorporation and bylaws and the Delaware General Corporation Law.

1.11 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 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 Prospectus.

1.12 Outstanding Securities.

The shares of capital stock, including the Common Stock, outstanding prior to the issuance of the Shares to be sold (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 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 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 under, 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 and the Prospectus.

1.13 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.

1.14 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 C hereto. Schedule C hereto accurately sets forth the names of all holders of shares of capital stock of the Company that have Registration Rights and the number and class of such shares of capital stock subject to Registration Rights. Prior to the date hereof, all holders listed on Schedule C have either (i) 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 that such shares subject to Registration Rights cannot be included in the offering contemplated by this Agreement upon the advice of Xxxxxx Xxxxxx Partners LLC that such inclusion could delay or jeopardize the success of the offering of the Shares and, no holder who has received notice in accordance with clause (ii) has notified the Company that it objects to the exclusion of its shares from being registered in the offering contemplated by this Agreement.

1.15 Nasdaq; Exchange Act Registration.

The Shares have been listed for quotation on the National Association of Securities Dealers Automated Quotation (“Nasdaq”) National Market System, subject to official notice of issuance. 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 the Nasdaq National Market System, nor has the Company received any notification that the Commission or the Nasdaq National Market is contemplating terminating such registration or quotation.

1.16 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.

1.17 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 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”).

1.18 No Material Adverse Change.

Subsequent to the respective dates as to which information is given in the Registration Statement 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.

1.19 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

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 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 or the Prospectus that are not described as required. The statements relating to legal matters and proceedings and statutes and regulations in 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.

1.20 Contracts.

There are no contracts or other documents which are required to be described in the Prospectus or filed as exhibits to the Registration Statement by the Securities Act or the applicable rules and regulations thereunder which have not been described in the Prospectus or filed as exhibits to the Registration Statement.

1.21 Related Party Transactions.

No relationship, direct or indirect, exists between or among the Company, on the one hand, and the directors, officers, stockholders, customers or suppliers of the Company, on the other hand, which is required to be described in the Prospectus and which is not so described. There are no outstanding loans, advances or guarantees of indebtedness by the Company to or for the benefit of any of the officers or directors of the Company or any of their respective family members.

1.22 Not an Investment Company.

The Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus, will not be an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

1.23 No Violation.

The Company and its subsidiaries have conducted its and their businesses in compliance with applicable laws, except where the failure to comply would not result in a Material Adverse Effect and neither the Company nor any of its subsidiaries is in violation of, and no event has occurred which with notice or lapse of time or both would constitute a default under or in, (i) its certificate of incorporation or bylaws, (ii) the performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound, or (iii) any federal, state, local or foreign law, statute, rule, regulation, decree, order, license or permit, to which the Company or any of its subsidiaries or any of its or their properties or its or their businesses may be subject, including but not limited to the Federal Food, Drug, and Cosmetic Act, the Federal Controlled Substances

Act, the Federal Anti-Kickback Statute, the Federal Xxxxx Law, the Federal False Claims Act, the Federal Civil Monetary Penalties Law, the health information privacy and security regulations enacted under the Health Insurance Portability and Accountability Act of 1996, the applicable State pharmacy licensing laws, and the applicable State unfair and deceptive trade practices and consumer protection laws except, for violations or defaults which would not, individually or in the aggregate, result in a Material Adverse Effect.

1.24 Governmental Permits.

The Company, its subsidiaries and each of the pharmacists employed by the Company (i) have all licenses, certificates, authorizations, permits, approvals and other rights from, and have filed all reports, documents and other information required to be filed with, the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as now conducted (each, an “Authorization”) except for such Authorizations where the failure to possess such Authorization, or the invalidity of which, individually or in the aggregate, would not have a Material Adverse Effect, (ii) have fulfilled and performed all obligations necessary to maintain each Authorization, and (iii) to the Company’s knowledge, there are no pending or threatened actions, suits, proceedings or investigations that would reasonably be expected to result in the revocation, termination, suspension, modification or impairment of any Authorization, which revocation, termination, suspension, modification or impairment would, individually or in the aggregate, result in a Material Adverse Effect. All such Authorizations are valid and in full force and effect and the Company, its subsidiaries and each of the pharmacists employed by the Company are in compliance in all respects with the terms and conditions of all such Authorizations and with the rules and regulations of the regulatory authorities having jurisdiction with respect thereto except where the failure to comply would not result in a Material Adverse Effect

1.25 Properties.

All real property, buildings and other improvements held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings or other improvements by the Company and its subsidiaries, and all such leases are in full force and effect. Neither the Company nor any of its subsidiaries has any notice of any claim of any sort that has been asserted by anyone adverse to the rights of the Company or any of its subsidiaries under any of the leases mentioned above or affecting or questioning the rights of the Company or its subsidiaries in the continued possession of the leased premises under any such lease. The Company and its subsidiaries have good and marketable title to all personal property owned by them which is material to the businesses of the Company and its subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in the Prospectus or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries.

1.26 Environmental.

The Company and its subsidiaries (i) are in compliance with any and all applicable foreign, federal, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their respective businesses, and (iii) are in compliance with all terms and conditions of any such permit, license or approval, except where such noncompliance with Environmental Laws, failure to receive required permits, licenses or other approvals or failure to comply with the terms and conditions of such permits, licenses or approvals would not, individually or in the aggregate, result in a Material Adverse Effect.

1.27 Intellectual Property Rights.

Except as disclosed in the Registration Statement and the Prospectus, the Company and its subsidiaries own, license or otherwise possess all rights to use, all software, hardware, systems, processes and other technology and all material patents, patent rights, inventions, know-how (including trade secrets and other unpatented or unpatentable proprietary or confidential information, systems or procedures), trademarks, service marks, trade names, copyrights and other intellectual property rights (collectively, the “Rights”) necessary for the conduct of its or their businesses as currently operated. To the Company’s knowledge, no claims have been asserted against the Company or any of the Company’s subsidiaries by any person with respect to the use of any such Rights or challenging or questioning the validity or effectiveness of any such Rights. Except as disclosed in the Registration Statement and the Prospectus, the continued use of the Rights in connection with the business and operations of the Company and its subsidiaries does not, to the knowledge of the Company, infringe on the rights of any person, which, if the subject of an unfavorable decision, ruling or filing, would, individually or in the aggregate, result in a Material Adverse Effect.

1.28 No Labor Disputes.

No material labor dispute with the employees of the Company or any of its subsidiaries exists or is imminent; and the Company is not aware of any existing, threatened or imminent labor disturbance by the employees of any of its principal suppliers, manufacturers or contractors that would, individually or in the aggregate, result in a Material Adverse Effect.

1.29 Insurance.

The Company and its subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged. There are no claims by the Company or its subsidiaries under any insurance policy as to which any insurance company is denying liability or defending under a reservation of rights clause. Neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its or their businesses at a cost that would not, individually or in the aggregate, result in a Material Adverse Effect.

1.30 Taxes.

(i) Each of the Company and its subsidiaries has filed all federal, state, local and foreign tax returns and tax forms required to be filed except where the failure to file would not have a Material Adverse Effect, (ii) such returns and forms were complete and correct in all material respects, and any taxes, including any penalties and interest, shown by such returns or otherwise assessed that are due or payable have been paid, (iii) all payroll withholdings required to be made by the Company and its subsidiaries with respect to employees have been made, and (iv) there have been no tax deficiencies asserted or, to the knowledge of the Company, threatened against the Company or its subsidiaries.

1.31 No Price Stabilization or Manipulation.

The Company has not taken, directly or indirectly, any action designed to or that would reasonably be expected to cause or result in any stabilization or manipulation of the price of the Shares.

1.32 Accounting Controls.

The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance regarding the (i) reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP, (ii) maintenance of records that in reasonable detail accurately and fairly reflect transactions and dispositions of the assets of the Company and its subsidiaries, (iii) recording of transactions as necessary to permit preparation of financial statements in accordance with GAAP and that receipts and expenditures of the Company and its subsidiaries are being made only in accordance with authorizations of management and directors of the Company or the applicable subsidiary, and (iv) prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s or its subsidiaries’ assets that would have a Material Adverse Effect.

1.33 Exchange Act; Xxxxxxxx-Xxxxx Act.

The Company has filed all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act and such documents, at the time filed with Commission, conformed in all material respects to the requirements of the Exchange Act, and none of such documents when they were filed with the Commission contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein not misleading. The Company is in compliance in all material respects with all of the provisions of the Xxxxxxxx-Xxxxx Act of 2002 that are effective and applicable to the Company.

1.34 Disclosure Controls and Procedures.

Management has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 and 15d-15) for the Company and designed such disclosure controls and procedures to ensure that material information relating to the Company and its subsidiaries is made known to the Company’s principal executive officer and principal financial officer, or persons performing similar functions, by others within those entities. Since the date of the Form 10-Q for the first quarter of 2005, there has been no change in the Company’s internal controls that has materially affected, or is reasonably likely to materially affect, the Company’s disclosure controls.

1.35 Brokers Fees.

Except as disclosed in the Registration Statement and the Prospectus, there are no contracts, agreements or understandings between the Company and any person that would give rise to a valid claim against the Company or any of the Underwriters for a brokerage commission, finder’s fee or other like payment in connection with the transactions contemplated herein, the Registration Statement and the Prospectus or, to the Company’s knowledge, any contracts, agreements, understandings, payments, arrangements or issuances with respect to the Company or any of its officers, directors, stockholders, employees or affiliates that may affect the Underwriters’ compensation as determined by the NASD.

2. Purchase and Sale Agreements.

2.1 Firm Shares.

The Company hereby agrees to sell to the several Underwriters, and each Underwriter, upon the basis of the representations and warranties herein contained, but subject to the conditions hereinafter stated, agrees, severally and not jointly, to purchase from the Company at $[ ] per share (the “Purchase Price”) the number of Firm Shares (subject to such adjustments to eliminate fractional shares as the Representatives may determine) that bears the same proportion to the number of Firm Shares to be sold by the Company as the number of Firm Shares set forth in Schedule A hereto opposite the name of such Underwriter bears to the total number of Firm Shares.

2.2 Additional Shares.

On the basis of the representations and warranties contained in this Agreement, and subject to its terms and conditions, the Company agrees to sell to the Underwriters the Additional Shares, and the Underwriters shall have the right to purchase, severally and not jointly, up to [ ] Additional Shares at the Purchase Price. The Representatives may exercise this right on behalf of the Underwriters in whole or from time to time in part by giving notice to the Company in writing not later than thirty days after the date of this Agreement. Any exercise notice shall specify the number of Additional Shares to be purchased by the Underwriters and the date on which such shares are to be purchased. A purchase date may be the same as the Closing Date (as defined below) but may not be earlier than the Closing Date and no purchase date may be later than ten business days after the date of notice. Additional Shares may be purchased as provided in Section 3 hereof solely for the purpose of

covering over-allotments made in connection with the offering of the Firm Shares. If any Additional Shares are to be purchased, each Underwriter agrees, severally and not jointly, to purchase the number of Additional Shares (subject to such adjustments to eliminate fractional shares as the Representatives may determine) that bears the same proportion to the total number of Additional Shares to be purchased as the number of Firm Shares set forth in Schedule A hereto opposite the name of such Underwriter bears to the total number of Firm Shares.

2.3 Market Standoff Provision.

The Company hereby agrees that, without the prior written consent of Xxxxxx Xxxxxx Partners LLC (which consent may be withheld in its sole discretion), it will not, during the period commencing on the date hereof and ending 180 days after the date of the Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, or (iii) file any registration statement with the Commission relating to the offering of any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, whether any such transaction described in clause (i), (ii) or (iii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to (a) the Shares to be sold hereunder, (b) the issuance by the Company of options to purchase shares of the Company’s Common Stock under the Company’s existing plans as described in the Prospectus, provided that such options do not become vested and exercisable during the 180-day restricted period or (c) the issuance by the Company of shares of Common Stock upon the exercise of options or warrants or the conversion of a security outstanding on the date hereof of which the Underwriters have been advised in writing and which is described in the Prospectus. If, (i) during the last 17 days of the 180-day restricted period described in this Section 2.3, the Company issues an earnings release or material news or a material event relating to the Company occurs, or (ii) prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the 180-day restricted period, the 180-day restricted period described in this Section 2.3 automatically shall extend until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event, unless in either clauses (i) or (ii) the Representatives waive the extension in writing.

The Company acknowledges that its directors, officers and certain of its stockholders are subject similar restrictions as contained in this Section 2.3 on the transfer or other disposition of shares of capital stock of the Company held by them, and the Company agrees to take all reasonable measures to enforce the holders’ compliance with such restrictions.

2.4 Terms of Public Offering.

The Company is advised by the Representatives that the Underwriters propose to make a public offering of their respective portions of the Shares as soon after the Registration

Statement and this Agreement have become effective as in the Representatives’ judgment is advisable. The Company is further advised by the Representatives that the Underwriters will offer the Shares to the public initially at a price of $[ ] per share (the “Public Offering Price”) and to certain dealers selected by the Representatives at a price that represents a concession of not more than $[ ] per share below the Public Offering Price, and that any Underwriter may allow, and such dealers may reallow, a concession not in excess of $[ ] per share to any other Underwriter or to certain other dealers.

3. Payment and Delivery.

3.1 Firm Shares.

Payment for the Firm Shares to be sold by the Company shall be made to the Company in immediately available funds against delivery of such Firm Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on [ ], 2005, or at such other time on the same or such other date, not later than [ ], 2005, as shall be designated in writing by the Representatives. The time and date of such payment are hereinafter referred to as the “Closing Date.”

3.2 Additional Shares.

Payment for any Additional Shares shall be made to the Company in immediately available funds against delivery of such Additional Shares for the respective accounts of the several Underwriters at 10:00 a.m., New York City time, on the date specified in the notice described in paragraph 2.2 or at such other time on the same or on such other date, in any event not later than [ ], 2005, as shall be designated in writing by the Representatives. The time and date of each payment for any Additional Shares are hereinafter referred to as the “Option Closing Date.”

3.3 Delivery of Certificates.

Certificates for the Firm Shares and Additional Shares, if any, shall be in definitive form and registered in such names and in such denominations as the Representatives shall request in writing not later than two full business day prior to the Closing Date or the Option Closing Date, as the case may be. The certificates evidencing the Firm Shares and Additional Shares shall be delivered to you on the Closing Date or the Option Closing Date, as the case may be, for the respective accounts of the several Underwriters, with any transfer taxes payable in connection with the transfer of the Shares to the Underwriters duly paid, against payment of the Purchase Price therefor.

4. Covenants of the Company.

In further consideration of the agreements of the Underwriters herein contained, the Company covenants with each Underwriter as follows:

4.1 Furnish Copies of Registration Statement and Prospectus.

To furnish to the Representatives, without charge, four signed copies of the Registration Statement (including exhibits thereto) and, for delivery to each other Underwriter a conformed copy of the Registration Statement (without exhibits thereto) and, to furnish to the Underwriters in New York City, without charge, prior to 10:00 a.m. New York City time on the business day next succeeding the date of this Agreement and during the period mentioned in paragraph 4.3 below, as many copies of the Prospectus and any supplements and amendments thereto or to the Registration Statement as the Representatives may reasonably request.

4.2 Notification of Amendments or Supplements.

Before amending or supplementing the Registration Statement or the Prospectus, to furnish to the Representatives a copy of each such proposed amendment or supplement, and not to file any such proposed amendment or supplement to which the Representatives or counsel for the Underwriters reasonably object, and to file with the Commission within the applicable period specified in Rule 424(b) under the Securities Act any prospectus required to be filed pursuant to such rule.

4.3 Filings of Amendments or Supplements.

If, during such period after the first date of the public offering of the Shares as in the opinion of counsel for the Underwriters the Prospectus is required by law to be delivered in connection with sales by an Underwriter or dealer (the “Prospectus Delivery Period”), any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Prospectus in order to make the statements therein, in the light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if, in the reasonable opinion of counsel for the Underwriters, it is necessary to amend or supplement the Prospectus to comply with applicable law, forthwith to prepare, file with the Commission and furnish, at its own expense, to the Underwriters and to the dealers (whose names and addresses the Representatives will furnish to the Company) to which Shares may have been sold by the Representatives on behalf of the Underwriters and to any other dealers upon request, either amendments or supplements to the Prospectus so that the statements in the Prospectus as so amended or supplemented will not, in the light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus, as amended or supplemented, will comply with applicable law.

4.4 Blue Sky Laws.

To use its reasonable efforts to qualify the Shares for offer and sale under the securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request. In each jurisdiction in which the Shares have been so qualified, the Company will file such statements and reports as may be required by the laws of such jurisdiction and shall maintain such qualifications in effect so long as required for the distribution of the Shares; provided however, that the Company shall not be required in connection therewith, as condition thereof, to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction or subject itself to taxation as doing business in any jurisdiction.

4.5 Earnings Statement.

To make generally available to its securityholders and to the Representatives as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Securities Act), an earnings statement of the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act and the rules and regulations thereunder (including, at the option of the Company, Rule 158).

4.6 Use of Proceeds.

The Company shall apply the net proceeds from the sale of the Shares sold by it in the manner described under the caption “Use of Proceeds” in the Prospectus.

4.7 Transfer Agent.

The Company shall engage and maintain, at its expense, a registrar and transfer agent for the Common Stock.

4.8 Periodic Reporting Obligations.

During the Prospectus Delivery Period, the Company shall (i) file all documents required to be filed with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act in the manner and within the time periods required by the Exchange Act and (ii) file all reports and documents required to be filed with the Nasdaq National Market under applicable securities laws and by the Nasdaq National Market.

4.9 Preparation of Prospectus.

Immediately following the execution of this Agreement, the Company will, subject to Section 4.3 hereof, prepare the Prospectus containing the Rule 430A Information and other selling terms of the Shares, the plan of distribution thereof and such other information as may be required by the Securities Act or rules and regulations thereunder or as the Representatives and the Company may deem appropriate, and will file or transmit for filing with the Commission, in accordance with Rule 424(b), copies of the Prospectus.

4.10 Notification of Earnings Releases or Material News.

Prior to the expiration of the 180-day period described in Section 2.3, the Company shall promptly notify the Representatives if it intends to release earnings results or becomes aware that material news or a material event concerning the Company will occur at any time prior to the expiration of the 180-day restricted period through the 16-day period beginning on the last day of the 180-day restricted period.

5. Conditions to the Underwriters’ Obligations.

The obligations of the Company to sell the Shares to the several Underwriters and the several obligations of the Underwriters to purchase and pay for the Shares on the Closing

Date and on each Option Closing Date, as the case may be, are subject to the following conditions:

5.1 Effective Registration Statement.

The Registration Statement shall have become effective not later than [ ] (New York City time) on the date hereof.

5.2 Rule 462(b) Registration Statement.

If the Company elects to rely upon Rule 462(b), the Company shall file a Rule 462(b) Registration Statement with the Commission in compliance with Rule 462(b) by 10:00 P.M., Washington, D.C. time, on the date of this Agreement, and the Company shall at the time of filing either pay to the Commission the filing fee for the Rule 462(b) Registration Statement or give irrevocable instructions for the payment of such fee pursuant to Rule 111(b) under the Securities Act.

5.3 Prospectus Filed with Commission.

The Company shall have filed the Prospectus with the Commission (including the information required by Rule 430A under the Securities Act) in the manner and within the time period required by Rule 424(b) under the Securities Act; or the Company shall have filed a post-effective amendment to the Registration Statement containing the information required by such Rule 430A, and such post-effective amendment shall have become effective.

5.4 No Stop Order.

No stop order suspending the effectiveness of the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment to the Registration Statement, shall be in effect on the Closing Date and each Option Closing Date, as the case may be, and no proceedings for such purpose shall have been instituted or threatened by the Commission on the Closing Date and each Option Closing Date, as the case may be.

5.5 Nasdaq.

The Shares shall have been listed for quotation on the Nasdaq National Market System.

5.6 No NASD Objection.

The NASD shall have raised no objection to the fairness and reasonableness of the underwriting terms and arrangements.

5.7 Representations and Warranties; Covenants.

The representations and warranties of the Company contained in this Agreement and in the certificates delivered pursuant to Section 5.9 shall be true and correct when made and on and as of the Closing Date and each Option Closing Date, as the case may be, as if made on

such date (except that those representations and warranties that address matters only as of a particular date shall remain true and correct as of such date). The Company shall have performed in all material respects all covenants and agreements and satisfied all the conditions contained in this Agreement required to be performed or satisfied by the Company at or before such Closing Date or Option Closing Date, as the case may be.

5.8 No Material Adverse Change.

There shall not have occurred any change, or any development involving a prospective change, in the condition, financial or otherwise, or in the earnings, businesses, operations or prospects of the Company and its subsidiaries, individually or as a whole, from that set forth in the Prospectus (exclusive of any amendments or supplements thereto subsequent to the date of this Agreement) that, in the Representative’s reasonable judgment, is material and adverse and that makes it, in the Representative’s judgment, impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus.

5.9 Officer’s Certificate.

The Representatives shall have received on the Closing Date and on each Option Closing Date a certificate, dated the Closing Date or the Option Closing Date, as applicable, and signed by the Chief Executive Officer and by the Chief Financial Officer of the Company, representing (i) that the representations and warranties contained in this Agreement are true and correct as of the Closing Date or the Option Closing Date, as applicable, (ii) that the Company has complied with all of the agreements and has satisfied all of the conditions on its part to be performed or satisfied hereunder on or before such Closing Date or Option Closing Date, as applicable.

5.10 Opinion of Company Counsel.

The Representatives shall have received on the Closing Date an opinion of Xxxxxxxx & Xxxxx LLP, counsel for the Company, dated the Closing Date, to the effect set forth in Exhibit A-1 attached hereto. The opinion shall be rendered to the Representatives as representatives of the Underwriters at the request of the Company and shall so state therein.

5.11 Opinion of Special Regulatory Counsel.

The Representatives shall have received on the Closing Date an opinion of Xxxxx Peabody LLP, special regulatory counsel to the Company, dated the Closing Date, , to the effect set forth in Exhibit A-2 attached hereto. The opinion shall be rendered to the Representatives as representatives of the Underwriters at the request of the Company and shall so state therein.

5.12 Opinion of Underwriters’ Counsel.

The Representatives shall have received on the Closing Date an opinion of Xxxxxx & Bird LLP, counsel for the Underwriters, dated the Closing Date, with respect to the Registration Statement, the Prospectus and other related matters as the Representatives may request, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters.

5.13 Comfort Letter from BDO Xxxxxxx, LLP.

The Representatives shall have received, on each of the date hereof and the Closing Date, and the Option Closing Date, a letter dated the date hereof or the Closing Date or the Option Closing Date, as the case may be, in form and substance satisfactory to the Representatives, from BDO Xxxxxxx, LLP, independent public accountants, containing statements and information of the type ordinarily included in accountants’ “comfort letters” to underwriters with respect to the financial statements and certain financial information of the Company and its consolidated subsidiaries and of MME, contained in the Registration Statement and the Prospectus; provided that the letter delivered on the Closing Date shall use a “cut-off date” not earlier than the date hereof.

5.14 Comfort Letter from LWBJ, LLP.

5.15 Comfort Letter from McGladrey & Xxxxxx.

5.16 Lock-Up Agreements.

The “lock-up” agreements, each in the form of Exhibit B hereto, between the Representatives and those stockholders, officers and directors of the Company listed in Exhibit C hereto, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date.

5.17 Pre-Closing Transactions.

Prior to the purchase of the Shares on the Closing Date, the Pre-Closing Transactions shall have been duly consummated on the terms contemplated by this Agreement and the Prospectus, and the Representatives shall have received such other evidence that the Pre-Closing Transactions have been consummated as the Representatives may reasonably request.

5.18 Additional Documents.

On the Closing Date and on each Option Closing Date, the Representatives and counsel for the Underwriters shall have received such information, documents and opinions as

they may reasonably require for the purposes of enabling them to pass upon the issuance and sale of the Shares as contemplated herein or in order to evidence the accuracy of any of the representations and warranties or the satisfaction of any of the conditions or agreements herein contained.

The several obligations of the Underwriters to purchase Additional Shares hereunder are subject to the satisfaction of each of the above conditions on or prior to the Option Closing Date and to the delivery to the Representatives on the Option Closing Date of such documents as the Representatives may reasonably request with respect to the good standing of the Company, the due authorization and issuance of the Additional Shares and other matters related to the issuance of the Additional Shares.

6. Expenses.

Whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, the Company agrees to pay or cause to be paid all expenses incident to the performance of its obligations under this Agreement, including: (i) the fees, disbursements and expenses of each of the Company’s counsel and the Company’s accountants in connection with the preparation and negotiation of this Agreement and the registration and delivery of the Shares under the Securities Act, and all other fees or expenses in connection with the preparation and filing of the Registration Statement, any preliminary prospectus, the Prospectus, and amendments and supplements to any of the foregoing, including all printing costs associated therewith, and the mailing and delivering of copies thereof to the Underwriters and dealers, in the quantities as may be specified by the Underwriters, (ii) all costs and expenses related to the transfer and delivery of the Shares to the Underwriters, including any transfer or other taxes payable thereon, (iii) the cost of printing or producing any Blue Sky or legal investment memorandum in connection with the offer and sale of the Shares under state securities laws and all expenses in connection with the qualification of the Shares for offer and sale under state securities laws as contemplated by paragraph 4.4 hereof, including filing fees and the reasonable fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky or legal investment memorandum (such fees and disbursements not to exceed $5,000), (iv) all filing fees and the reasonable fees and disbursements of counsel to the Underwriters incurred in connection with the review and qualification of the offering of the Shares by the NASD (such fees and disbursements not to exceed $20,000), (v) all fees and expenses in connection with the preparation and filing of the registration statement on Form 8-A relating to the Common Stock and all costs and expenses incident to listing the Shares on the Nasdaq National Market, (vi) the cost of printing certificates, if any, representing the Shares, (vii) the costs and charges of any transfer agent, registrar or depositary, (viii) the costs and expenses of the Company relating to investor presentations on any “road show” undertaken in connection with the marketing of the offering of the Shares, including, without limitation, expenses associated with the production of road show slides and graphics, fees and expenses of any consultants engaged in connection with the road show presentations with the prior approval of the Company, travel and lodging expenses of the representatives and officers of the Company and any such consultants, (ix) all expenses in connection with any offer and sale of the Shares outside of the United States, if any, including filing fees and reasonable fees and disbursements of counsel for the Underwriters in connection with offers and sales outside of the United States, and (x) all other costs and expenses incident to

the performance of the obligations of the Company hereunder for which provision is not otherwise made in this Section. It is understood, however, that except as provided in this Section, Section 7 entitled “Indemnity and Contribution,” and the last paragraph of Section 10 below, the Underwriters will pay all of their costs and expenses, including fees and disbursements of their counsel and any advertising expenses connected with any offers they may make.

7. Indemnity and Contribution.

7.1 Indemnification by the Company.

The Company agrees to indemnify and hold harmless each Underwriter and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, and each affiliate of any Underwriter within the meaning of Rule 405 under the Securities Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or in any Blue Sky application or other information or other documents executed by the Company and filed in any state or other jurisdiction to qualify any or all of the Shares under the securities laws thereof, or arising out of or based upon 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, except (a) insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or omission or alleged untrue statement or omission based upon information relating to any Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use therein and (b) that with respect to any preliminary prospectus, the foregoing indemnity agreement shall not inure to the benefit of any Underwriter from whom the person asserting any loss, claim, damage or liability purchased Shares, or any person controlling such Underwriter, if copies of the Prospectus were timely delivered to the Underwriter pursuant to Section 4 and a copy of the Prospectus (as then amended or supplemented if the Company shall have furnished any amendments or supplements thereto) was not sent or given by or on behalf of such Underwriter to such person, if required by law so to have been delivered, at or prior to the written confirmation of the sale of the Shares to such person, and if the Prospectus (as so amended or supplemented) would have cured the defect giving rise to such loss, claim, damage, liability or expense.

7.2 Indemnification by the Underwriters.

Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, the directors of the Company, the officers of the Company who sign the Registration Statement and each person, if any, who controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any and all losses, claims, damages and liabilities (including, without limitation, any legal or other expenses reasonably incurred in connection with defending or investigating any such action or claim) arising out of or based upon any untrue statement or alleged untrue statement of a material

fact contained in the Registration Statement or any amendment thereof, any preliminary prospectus or the Prospectus (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto), or arising out of or based upon 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, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter through the Representatives expressly for use in the Registration Statement, any preliminary prospectus, the Prospectus or any amendments or supplements thereto.

7.3 Indemnification Procedures.

In case any proceeding (including any governmental investigation) shall be instituted involving any person in respect of which indemnity may be sought pursuant to this Section 7 (the “Indemnified Party”), the Indemnified Party shall promptly notify the person against whom such indemnity may be sought (the “Indemnifying Party”) in writing and the Indemnifying Party, shall retain counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party and any others the Indemnifying Party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. In any such proceeding, any Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel, or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel would be ethically impermissible due to actual or potential differing interests between them. It is understood that the Indemnifying Party shall not, in respect of the legal expenses of any Indemnified Party in connection with any proceeding or related proceedings in the same jurisdiction, be liable for (i) the fees and expenses of more than one separate firm (in addition to any local counsel) for all Underwriters and all persons, if any, who control any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act or who are affiliates of any Underwriter within the meaning of Rule 405 under the Securities Act, and (ii) the fees and expenses of more than one separate firm (in addition to any local counsel) for the Company, its directors, its officers who sign the Registration Statement and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Underwriters and such control persons and affiliates of any Underwriters, such firm shall be designated in writing by Xxxxxx Xxxxxx Partners LLC. In the case of any such separate firm for the Company, and such directors, officers and control persons of the Company, such firm shall be designated in writing by the Company. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party from and against any loss or liability by reason of such settlement or judgment. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnified Party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment includes

an unconditional release of the Indemnified Party from all liability arising out of such action or claim, and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any Indemnified Party.

7.4 Contribution Agreement.

To the extent the indemnification provided for in this Section 7 is unavailable to an Indemnified Party or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Party under such Section 7, in lieu of indemnifying such Indemnified Party thereunder, shall contribute to the amount paid or payable by such Indemnified Party as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Indemnifying Party or Parties, on the one hand, and the Indemnified Party or Parties, on the other hand, from the offering of the Shares or (ii) if the allocation provided by clause 7.4(i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause 7.4(i) above but also the relative fault of the Indemnifying Party or Parties, on the one hand, and of the Indemnified Party or Parties, on the other hand, in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in connection with the offering of the Shares shall be deemed to be in the same respective proportions as the net proceeds from the offering of the Shares (before deducting expenses) received by the Company and the total underwriting discounts and commissions received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the total public offering price of the Shares. The relative fault of the Company, on the one hand, and the Underwriters, on the other hand, shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Underwriters’ respective obligations to contribute pursuant to this Section 7.4 are several in proportion to the respective number of Shares they have purchased hereunder, and not joint. Any party entitled to contribution will, promptly after receipt of notice of commencement of any action, suit or proceeding against such party in respect of which a claim for contribution may be made against another party or parties under this paragraph 7.4, notify such party or parties from whom contribution may be sought, but the omission so to notify such party or parties from whom contribution may be sought shall not relieve the party or parties from whom contribution may be sought from any obligation it or they may have under this paragraph 7.4, except to the extent the party or parties from whom contribution may be sought are actually and adversely prejudiced as a result of the failure to receive notice. No party shall be liable for contribution with respect to any action, suit, proceeding or claim settled without its written consent.

7.5 Contribution Amounts.

The Company and the Underwriters agree that it would not be just or equitable if contribution provided by this Section 7 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation

that does not take account of the equitable considerations referred to in Section 7.4. The amount paid or payable by an Indemnified Party as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity.

7.6 Survival of Provisions.

The indemnity and contribution provisions contained in this Section 7 and the representations, warranties and other statements of the Company contained in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of any Underwriter or any person controlling any Underwriter, or the Company, its officers or directors or any person controlling the Company and (iii) acceptance of and payment for any of the Shares.

8. Effectiveness.

This Agreement shall become effective upon the execution and delivery hereof by the parties hereto.

9. Termination.

This Agreement shall be subject to termination by notice given by the Representatives to the Company, if (a) after the execution and delivery of this Agreement and prior to the Closing Date (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange, the American Stock Exchange, or the Nasdaq National Market, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) a general moratorium on commercial banking activities in New York shall have been declared by either Federal or New York state authorities or (iv) in the reasonable judgment of the Representatives, there shall have occurred any material adverse change in the financial markets as the result of any outbreak or escalation of hostilities, directly or indirectly, involving the United States or the declaration by the United States of a national emergency or war or any change in financial markets or any calamity or crisis after the date of this Agreement that has an impact on the financial markets, or (v) in the reasonable judgment of the Representatives, there shall have occurred any material adverse change, or any development that could reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the

Company and its subsidiaries, taken as a whole, and (b) in the case of any of the events specified in clauses 9(a)(i) through 9(a)(v), such event, individually or together with any other such event, makes it, in the reasonable judgment of the Representatives, impracticable to market the Shares on the terms and in the manner contemplated in the Prospectus.

If this Agreement shall be terminated by the Underwriters, or any of them, pursuant to Sections 9(a)(ii) or 9(a)(v) hereof, or because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, the Company will reimburse the Underwriters or such Underwriters as have so terminated this Agreement with respect to themselves for all out-of-pocket expenses (including the fees and disbursements of their counsel) reasonably incurred by such terminating Underwriters in connection with this Agreement and the offering contemplated hereunder.

10. Defaulting Underwriters.

If, on the Closing Date or the Option Closing Date, as the case may be, any one or more of the Underwriters shall fail or refuse to purchase Shares that it has or they have agreed to purchase hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase is not more than one-tenth of the aggregate number of the Shares to be purchased on such date, the other Underwriters shall be obligated severally in the proportions that the number of Firm Shares set forth opposite their respective names in Schedule A bears to the aggregate number of Firm Shares set forth opposite the names of all such non-defaulting Underwriters, or in such other proportions as the Representatives may specify, to purchase the Shares which such defaulting Underwriter or Underwriters agreed but failed or refused to purchase on such date; provided that in no event shall the number of Shares that any Underwriter has agreed to purchase pursuant to this Agreement be increased pursuant to this Section 10 by an amount in excess of one-ninth of such number of Shares without the written consent of such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Firm Shares and the aggregate number of Firm Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Firm Shares to be purchased, and arrangements satisfactory to the Representatives and the Company for the purchase of such Firm Shares are not made within 36 hours after such default, this Agreement shall terminate without liability on the part of any non-defaulting Underwriter or the Company. In any such case either the Representatives or the Company shall have the right to postpone the Closing Date, but in no event for longer than seven days, in order that the required changes, if any, in the Registration Statement and in the Prospectus or in any other documents or arrangements may be effected. If, on the Option Closing Date, any Underwriter or Underwriters shall fail or refuse to purchase Additional Shares and the aggregate number of Additional Shares with respect to which such default occurs is more than one-tenth of the aggregate number of Additional Shares to be purchased, the non-defaulting Underwriters shall have the option to (i) terminate their obligation hereunder to purchase Additional Shares or (ii) purchase not less than the number of Additional Shares that such non-defaulting Underwriters would have been obligated to purchase in the absence of such default. Any action taken under this paragraph shall not relieve any defaulting Underwriter from liability to the Company and the non-defaulting Underwriters arising out of or related to any default of such Underwriter under this Agreement.

11. Counterparts.

This Agreement may be signed in counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.

12. Headings; Table of Contents.

The headings of the sections of this Agreement and the table of contents have been inserted for convenience of reference only and shall not be deemed a part of this Agreement.

13. Notices.

All communications hereunder shall be in writing and shall be mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:

If to the Representatives:

Xxxxxx Xxxxxx Partners LLC

000 Xxxx Xxxxxx, 00^xx Xxxxx

Xxx Xxxx, XX 00000

Facsimile: (000) 000-0000

Attention: E. Xxxxx Xxxxxxxx III

with a copy to:

Xxxxxx Xxxxxx Partners LLC

Xxx Xxxxxxxxxx Xxxxxx, Xxxxx 0000

Xxx Xxxxxxxxx, Xxxxxxxxxx 00000

Facsimile: (000) 000-0000

Attention: Xxxx Xxxxxxx, Esq.

If to the Company:

Allion Healthcare, Inc.

0000 Xxxx Xxxxxxx Xxxx, Xxxxx 000

Xxxxxxxx, Xxx Xxxx 00000

Facsimile: (000) 000-0000

Attention: Xxxxxxx X. Xxxxx

with a copy to:

Xxxxxxxx & Xxxxx LLP

000 00^xx Xxxxxx, X.X., Xxxxx 0000

Xxxxxxxxxx, XX 00000

Facsimile: 000-000-0000

Attention: Xxxx X. Director, Esq.

Any party hereto may change the address for receipt of communications by giving written notice to the others.

14. Successors.

This Agreement will inure to the benefit of and be binding upon the parties hereto, including any substitute Underwriters pursuant to Section 10 hereof, and to the benefit of the officers and directors and controlling persons referred to in Section 7, and in each case their respective successors, and no other person will have any right or obligation hereunder. The term “successors” shall not include any purchaser of the Shares as such from any of the Underwriters merely by reason of such purchase.

15. Partial Unenforceability.

The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

16. Governing Law.

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE.

17. Consent to Jurisdiction.

Any legal suit, action or proceeding arising out of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of the United States of America located in the City of New York or the courts of the State of New York in each case located in the City of New York (collectively, the “Specified Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings instituted in regard to the enforcement of a judgment of any such court (a “Related Judgment”), as to which such jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of any process, summons, notice or document by mail to such party’s address set forth above shall be effective service of process for any suit, action or other proceeding brought in any such court. The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit, action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any such court that any such suit, action or other proceeding brought in any such court has been brought in an inconvenient forum.

18. Entire Agreement.

This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof.

19. Amendments.

This Agreement may only be amended or modified in writing, signed by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit.

20. Sophisticated Parties.

Each of the parties hereto acknowledges that it is a sophisticated business person who was adequately represented by counsel during negotiations regarding the provisions hereof, including, without limitation, the indemnification and contribution provisions of Section 7, and is fully informed regarding said provisions. Each of the parties hereto further acknowledges that the provisions of Section 7 hereto fairly allocate the risks in light of the ability of the parties to investigate the Company, its affairs and its business in order to assure that adequate disclosure has been made in the Registration Statement, any preliminary prospectus and the Prospectus (and any amendments and supplements thereto), as required by the Securities Act and the Exchange Act.

[Remainder of page intentionally left blank]

If the foregoing is in accordance with your understanding of our agreement, kindly sign and return to the Company the enclosed copies hereof, whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in accordance with its terms.


Very truly yours,

ALLION HEALTHCARE, INC.

By:
Name:
Title:

Accepted as of the date hereof

Xxxxxx Xxxxxx Partners LLC

Xxxxxxx Xxxxx & Company, L.L.C.

First Albany Capital Inc.

Acting severally on behalf

of themselves and the

several Underwriters named

in Schedule A hereto.


By:		Xxxxxx Xxxxxx Partners LLC

		By:
		Name:
		Title:

SCHEDULE A


Underwriter		Number of Firm Shares To Be Purchased
Xxxxxx Xxxxxx Partners LLC
Xxxxxxx Xxxxx & Company, L.L.C.
First Albany Capital Inc.

Total

SCHEDULE B

Subsidiaries of the Company


Name		Jurisdiction of Organization
Mom’s Pharmacy, Inc.		California

Medicine Made Easy		California

Mail Order Meds, Inc.		Texas

Mom’s Pharmacy, Inc.		New York

Mom’s Pharmacy, LLC		Florida

North American Home Health Supply, Inc.		California

Specialty Pharmacies, Inc.		Washington

SCHEDULE C

Registration Rights

Name of Shareholder with

Registration Rights

Class of Security subject to

Registration Rights

Number of Shares subject to

Registration Rights

EXHIBIT A-1

Form of Legal Opinion of Xxxxxxxx & Xxxxx LLP

EXHIBIT A-2

Form of Legal Opinion of Xxxxx Peabody LLP

EXHIBIT B

Form of Lock-Up Agreement

, 2005

Xxxxxx Xxxxxx Partners LLC

Xxxxxxx Xxxxx & Company, Inc.

First Albany Capital Inc.

As Representatives of the several Underwriters

c/x Xxxxxx Xxxxxx Partners LLC

000 Xxxx Xxxxxx, 00^xx Xxxxx

Xxx Xxxx, Xxx Xxxx 00000

Re:

Lock-Up Agreement (the “Agreement”)

Ladies and Gentlemen:

The undersigned is an owner of record or beneficially of certain shares of Common Stock, par value $0.001 per share (the “Common Stock”), of Allion Healthcare, Inc., a Delaware corporation (the “Company”), or securities convertible into or exchangeable or exercisable for Common Stock. The undersigned understands that you, as representatives (the “Representatives”), propose to enter into an Underwriting Agreement on behalf of the several Underwriters named in such agreement (collectively, the “Underwriters”), with the Company providing for a public offering of the Common Stock of the Company pursuant to a Registration Statement on Form S-1 to be filed with the Securities and Exchange Commission (the “Public Offering”). The undersigned recognizes that the Public Offering will be of benefit to the undersigned and will benefit the Company by, among other things, raising additional capital for its operations. The undersigned acknowledges that you and the other Underwriters are relying on the representations and agreements of the undersigned contained in this letter in carrying out the Public Offering and in entering into underwriting arrangements with the Company with respect to the Public Offering.

To induce the Underwriters that may participate in the Public Offering to continue their efforts in connection with the Public Offering, the undersigned hereby agrees that, without the prior written consent of Xxxxxx Xxxxxx Partners LLC (which consent may be withheld in its sole discretion), it will not, during the period commencing on the date hereof and ending 180 days after the date of the final prospectus relating to the Public Offering (the “Prospectus”), (1) offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any shares of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock, or (2) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence shall not apply to the exercise of options or warrants or the conversion of a security outstanding on the date of the Prospectus and which is described in the Registration Statement on Form S-1; provided, however, that the undersigned agrees that the foregoing sentence shall apply to any securities issued by the Company to the undersigned upon such an exercise or conversion. The undersigned agrees that if, (1) during the last 17 days of the 180-day restricted period, the Company issues an earnings release or material news or a material event relating to the Company occurs, or (2)

prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results or becomes aware that material news or a material event will occur during the 16-day period beginning on the last day of the 180-day period, the 180-day period automatically shall extend until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event.

The undersigned hereby acknowledges and agrees that written notice of any extension of the 180-day lock-up period pursuant to the previous paragraph will be delivered by Xxxxxx Xxxxxx Partners LLC to the Company and that any such notice properly delivered will be deemed to have been given to, and received by, the undersigned. The undersigned further agrees that, prior to engaging in any transaction or taking any other action that is subject to the terms of this lock-up agreement during the period from the date of this lock-up agreement to and including the 34^th day following the expiration of the initial 180-day lock-up period, it will give notice thereof to the Company and will not consummate such transaction or take any such action unless it has received written confirmation from the Company that the 180-day lock-up period (as may have been extended pursuant to the previous paragraph) has expired.

The restrictions described above are expressly agreed to preclude the undersigned from engaging in any hedging or other transaction which is designed to or reasonably expected to lead to or result in a sale or disposition of the Common Stock even if such Common Stock would be disposed of by someone other than the undersigned. Such prohibited hedging or other transactions would include, without limitation, any short sale or any purchase, sale or grant of any right (including without limitation any put option or put equivalent position or call option or call equivalent position) with respect to any of the Common Stock or with respect to any security that includes, relates to, or derives any significant part of its value from such Common Stock.

Notwithstanding the foregoing, the undersigned may sell or otherwise transfer shares of Common Stock, without the prior written consent of Xxxxxx Xxxxxx Partners LLC, (1) as a bona fide gift or gifts, (2) to any trust for the direct or indirect benefit of the undersigned or the immediate family of the undersigned, (3) if the undersigned is a partnership or corporation or similar entity, as a distribution to partners or stockholders of the undersigned, if any, (4) if the undersigned is a corporation, as a transfer to any wholly-owned subsidiary of such corporation, (5) to an entity controlled by the undersigned or an immediate family member of the undersigned, or (6) by will or the laws of descent and distribution; provided, however, that in the case of each such transfer, it shall be a condition to the transfer that (1) the transferee execute an agreement stating that the transferee agrees to be bound by the restrictions contained in this Agreement, (2) any such transfer shall not involve a disposition for value, (3) such transfer is not required to be reported in any public report or filing with the Securities and Exchange Commission or otherwise and (4) the undersigned does not otherwise voluntarily effect any public filing or report regarding such transfers. For purposes of this Agreement, “immediate family” shall mean any relationship by blood, marriage or adoption, not more remote than first cousin. Furthermore, the undersigned may sell shares of Common Stock of the Company purchased by the undersigned in the open market following the Public Offering.

In addition, the undersigned agrees that, without the prior written consent of Xxxxxx Xxxxxx Partners LLC (which consent may be withheld in its sole discretion) it will not, during the period commencing on the date hereof and ending 180 days after the date of the Prospectus, make any demand for or exercise any right with respect to, the registration under the Securities Act of 1993, as amended, of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock. With respect to the Public Offering, the undersigned waives any registration rights relating to registration under the Securities Act of any Common Stock, or any securities convertible into or exercisable or exchangeable for Common Stock, owned either of record or beneficially by the undersigned, including any rights to receive notice of the Public Offering.

The undersigned understands that whether or not the Public Offering actually occurs depends on a number of factors, including stock market conditions. The Public Offering will only be made pursuant to an Underwriting Agreement, the terms of which are subject to negotiation among the Company and the Underwriters. If the Public Offering does not close by October 31, 2005, this Agreement shall terminate immediately upon such date and be of no further force and effect.

The undersigned agrees and consents to the entry of stop transfer instructions with the Company’s transfer agent and registrar against the transfer of shares of Common Stock or securities convertible into or exchangeable or exercisable for Common Stock held by the undersigned except in compliance with the foregoing restrictions.

This Agreement is irrevocable and will be binding on the undersigned and the respective successors, heirs, personal representatives, and assigns of the undersigned.

This lock-up agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflict of laws principles thereof.

Very truly yours,

(Name)

(Address)

EXHIBIT C

Parties to Lock-Up Agreements

Document Metadata

Shares ALLION HEALTHCARE, INC. COMMON STOCK UNDERWRITING AGREEMENT Dated , 2005

Document Metadata