ALLI Allion Healthcare (MM)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934

Filed by the Registrant þ

Filed by a Party other than the Registrant o

Check the appropriate box:

þ		Preliminary Proxy Statement
o		Confidential, For Use By the Commission Only (as permitted by Rule 14a- 6(e)(2) )
o		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to Rule 14a-12

Allion Healthcare, Inc.

(Name of Registrant as Specified in its Charter)

Payment of Filing Fee (Check the appropriate box):

o		No fee required.
þ		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.*

	(1)		Title of each class of securities to which transaction applies:
			Allion Healthcare, Inc. common stock, par value $0.001 per share
	(2)		Aggregate number of securities to which transaction applies:
			20,787,548.46 shares of common stock 431,750 options to purchase shares of common stock 455,657 warrants to purchase shares of common stock 2,200,000 cash-settled phantom stock units
	(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
			$6.60 per share
	(4)		Proposed maximum aggregate value of the transaction:
			$161,260,374.29
	(5)		Total fee paid:
			$8,998.32

þ		Fee paid previously with preliminary materials.
o		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)

Amount Previously Paid:

(2)

Form, Schedule or Registration Statement No.:

(3)

Filing party:

(4)

Date Filed:

Preliminary Copies

ALLION HEALTHCARE, INC.
1660 Walt Whitman Road, Suite 105
Melville, New York 11747

           , 2009

Dear Stockholder:

     You are cordially invited to attend a special meeting of the stockholders of Allion Healthcare, Inc. to be held on       , 2009, at 10:00 a.m. Eastern time, at            .

     At the special meeting, you will be asked to consider and vote upon the adoption of the Agreement and Plan of Merger, dated October 18, 2009, by and among Brickell Bay Acquisition Corp., which we refer to as Parent, Brickell Bay Merger Corp., which we refer to as Merger Sub, and Allion. Pursuant to the merger agreement, Merger Sub will be merged with and into Allion, with Allion surviving as a direct, wholly owned subsidiary of Parent. Certain of our stockholders are expected to exchange shares of Allion common stock for equity interests of Parent in connection with the merger. Parent and Merger Sub are both controlled by investment funds affiliated with H.I.G. Capital, L.L.C., a private equity firm.

     Assuming the holders of a majority of our issued and outstanding shares of common stock adopt the merger agreement and the merger is completed, upon completion of the merger, you will be entitled to receive $6.60 in cash, without interest, for each share of Allion common stock that you own, unless you have sought and properly perfected your appraisal rights under Delaware law. After the merger, you will no longer have an equity interest in Allion and will not participate in any potential future earnings and growth of Allion.

     The proposed merger was negotiated by an independent Special Committee of our Board of Directors, consisting of Willard T. Derr and Gary P. Carpenter. Our Board of Directors, acting on the recommendation of the Special Committee, has adopted a resolution unanimously approving the merger agreement. Both the Special Committee and our Board of Directors have unanimously determined that the merger agreement and the merger are advisable, fair to and in the best interest of Allion and our stockholders. Acting on the recommendation of the Special Committee, the Board of Directors unanimously recommends that you vote “FOR” the adoption of the merger agreement. In arriving at their recommendation, the Special Committee and Board of Directors carefully considered a number of factors described in the accompanying Proxy Statement.

     The merger agreement and the merger are described in the accompanying Proxy Statement. A copy of the merger agreement is attached as Appendix A to the accompanying Proxy Statement. We urge you to read carefully the accompanying Proxy Statement, including the appendices.

     Your vote is important, and it is important that your shares be represented at the special meeting, regardless of the number of shares you hold. We urge you to submit your proxy card as soon as possible. Even if you plan to attend the special meeting, please sign and promptly return your proxy card in the enclosed postage-paid envelope. Even if you return a proxy card, if you attend the special meeting, you may revoke your proxy and vote in person.

Sincerely,

Michael P. Moran
Chairman, President and Chief Executive Officer

      NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THE MERGER, PASSED UPON THE MERITS OR FAIRNESS OF THE MERGER AGREEMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE PROPOSED MERGER, OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

ALLION HEALTHCARE, INC.
1660 Walt Whitman Road, Suite 105
Melville, New York 11747

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD       , 2009

     NOTICE IS HEREBY GIVEN that a special meeting of stockholders of Allion Healthcare, Inc. will be held at            , on       , 2009, at 10:00 a.m. Eastern time, for the following purposes:

	1.		To consider and vote upon the adoption of the Agreement and Plan of Merger, dated as of October 18, 2009, by and among Brickell Bay Acquisition Corp., Brickell Bay Merger Corp. and Allion Healthcare, Inc. Pursuant to the merger agreement, Allion will become an indirect, wholly owned subsidiary of Brickell Bay Acquisition Corp., and the holders of Allion common stock will be entitled to receive $6.60 in cash, without interest, per share of Allion common stock held by them at the effective time of the merger;
	2.		To approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies in support of Proposal 1 if there are insufficient votes at the time of the meeting to adopt the merger agreement; and
	3.		To consider and vote upon any other matter that may properly come before the special meeting or any adjournment thereof.

     You are entitled to receive notice of and to attend and vote at the special meeting and any postponements or adjournments if you owned shares of Allion stock as of the close of business on       , 2009. To ensure your representation at the special meeting, please complete, date and sign the enclosed proxy card and return it in the enclosed postage-prepaid envelope in time to be received by us prior to the special meeting. Returning your proxy card will not affect your right to revoke your proxy or to attend the special meeting and vote in person.

     REGARDLESS OF THE NUMBER OF SHARES YOU OWN, YOUR VOTE IS VERY IMPORTANT. THE MERGER CANNOT BE COMPLETED UNLESS A MAJORITY OF THE OUTSTANDING SHARES OF ALLION COMMON STOCK ENTITLED TO VOTE ON THE MERGER ADOPT THE MERGER AGREEMENT. EVEN IF YOU PLAN TO ATTEND THE SPECIAL MEETING, PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

By order of the Board of Directors,

Stephen A. Maggio
Secretary

Melville, New York
      , 2009

      Please do not send your Allion common stock certificates to us at this time. If the merger is completed, we will send you instructions regarding the surrender of your certificates.

TABLE OF CONTENTS

SUMMARY TERM SHEET			1
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER			9
SPECIAL FACTORS			13
Parties Involved in the Merger			13
Background of the Merger			14
Recommendation of the Special Committee and our Board of Directors			22
Fairness of the Merger; Reasons for the Recommendation of the Special Committee and our Board of Directors			23
Purposes and Reasons for the Merger			27
Position of the H.I.G. Buying Group as to the Fairness of the Merger			28
Position of the Parallex Group as to the Fairness of the Merger			29
Opinion of Allion’s Financial Advisor, Raymond James & Associates, Inc.			31
Effects of the Merger			37
Plans for Allion after the Merger			39
Conduct of Allion’s Business if the Merger is Not Completed			39
Financing of the Merger			40
Limited Guarantee			41
Rollover Agreements			41
Voting Agreements			42
Consulting Agreements			42
Interests of Certain Persons in the Merger			42
Related Party Transactions			48
Material U.S. Federal Income Tax Consequences			50
Estimated Fees and Expenses of the Merger			52
Regulatory Approvals			52
Litigation			52
Provisions for Unaffiliated Security Holders			53
RISK FACTORS AND SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS			54
THE SPECIAL MEETING			55
Date, Time and Place of the Special Meeting			55
Matters To Be Considered at the Special Meeting			55
Record Date, Outstanding Voting Securities, Voting Rights and Quorum			55
Required Votes			55
Voting			56
Revocation of Proxies			56
Expenses of Proxy Solicitation			57
PROPOSAL 1: ADOPTION OF THE MERGER AGREEMENT AND APPROVAL OF THE MERGER			58
THE MERGER AND THE MERGER AGREEMENT			58
The Merger			58
Treatment of Stock and Equity Awards			58
Representations and Warranties			59
Covenants			62
Acquisition Proposals			63
Conditions			65
Termination			65

Termination Fees; Expenses			67
Amendments, Extensions and Waivers			68
Payment of Merger Consideration and Surrender of Stock Certificates			68
APPRAISAL RIGHTS			70
SELECTED HISTORICAL FINANCIAL DATA			73
MARKET PRICE AND DIVIDEND INFORMATION			75
PRIOR PUBLIC OFFERINGS AND STOCK PURCHASES			76
RECENT TRANSACTIONS			76
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT			77
DIRECTORS AND EXECUTIVE OFFICERS OF ALLION, THE H.I.G. BUYING GROUP AND THE PARALLEX GROUP			79
PROPOSAL 2: APPROVAL OF THE ADJOURNMENT OF THE SPECIAL MEETING, IF NECESSARY OR APPROPRIATE, TO SOLICIT ADDITIONAL PROXIES			83
OTHER MATTERS FOR ACTION AT THE SPECIAL MEETING			83
STOCKHOLDER PROPOSALS			83
HOUSEHOLDING			84
WHERE YOU CAN FIND MORE INFORMATION			84

ALLION HEALTHCARE, INC.
1660 WALT WHITMAN ROAD, SUITE 105
MELVILLE, NEW YORK 11747

PROXY STATEMENT FOR SPECIAL MEETING OF STOCKHOLDERS

TO BE HELD ON            , 2009

          We are providing these proxy materials to you in connection with the solicitation of proxies by the Board of Directors of Allion Healthcare, Inc. for a special meeting of stockholders to be held on            , 2009 and for any adjournment or postponement thereof. This Proxy Statement provides information that you should read before you vote on the proposals that will be presented to you at the special meeting. The special meeting will be held on            , 2009 at 10:00 a.m. Eastern Time at            .

          In this Proxy Statement, we refer to Allion Healthcare, Inc. as “Allion,” the “Company,” “we” or “us.” We refer to H.I.G. Capital, L.L.C. as “H.I.G.,” Brickell Bay Acquisition Corp. as “Parent,” Brickell Bay Merger Corp. as “Merger Sub,” and Parallex LLC as “Parallex.” References in this Proxy Statement to our “unaffiliated stockholders” are deemed to refer to holders of Allion stock other than the rollover stockholders and affiliates of Allion (including officers and directors).

          This Proxy Statement and a proxy card are first being mailed on or about            , 2009 to people who owned shares of Allion common stock as of the close of business on            , 2009.

SUMMARY TERM SHEET

      This summary term sheet presents selected information in this Proxy Statement relating to the merger and may not contain all of the information that is important to you. To understand the merger and the transactions contemplated by the merger agreement fully, you should carefully read this entire document as well as the additional documents to which it refers. For instructions on obtaining more information, see “Where You Can Find More Information” on page 84. We have included page references to direct you to a more complete description of the topics presented in this summary.

Parties Involved in the Merger (see page 13)

	•		Allion Healthcare, Inc. , or Allion, is a national provider of specialty pharmacy and disease management services focused on HIV/AIDS patients as well as specialized biopharmaceutical medications and services to chronically ill patients.
	•		Brickell Bay Acquisition Corp. , or Parent, was formed solely in anticipation of the merger by entities affiliated with H.I.G. Capital, L.L.C. , or H.I.G., a global private equity investment firm that specializes in providing capital to small and medium-sized companies. The entities affiliated with H.I.G. and certain related persons, together with Parent and Merger Sub, are collectively referred to in this Proxy Statement as the “H.I.G. Buying Group.” Upon completion of the merger, Allion will be a direct wholly owned subsidiary of Parent.
	•		Brickell Bay Merger Corp. , or Merger Sub, was formed by Parent solely for the purpose of acquiring Allion. Upon completion of the merger, Merger Sub will cease to exist.
	•		Parallex LLC , or Parallex, is a stockholder of Allion that, as of November 25, 2009, beneficially owned 7,903,499 shares, or approximately 27.5% of Allion’s outstanding common stock. Parallex and certain other stockholders, whom we collectively refer to as the rollover stockholders, have agreed to surrender a portion of their shares of Allion common stock to Parent immediately prior to the effective time of the merger in exchange for equity interests in Parent. The rollover stockholders, who beneficially own

approximately 41.1% of our outstanding common stock, have executed voting agreements pursuant to which they have agreed to vote their shares of Allion common stock in favor of adoption of the merger agreement. Each of the rollover stockholders is a former stockholder of Biomed America, Inc., which Allion acquired in April 2008. None of the rollover stockholders, other than Parallex, is an affiliate of Allion. In this proxy statement, we refer to Parallex and Raymond A. Mirra, Jr., its sole voting equity holder, as the Parallex Group.

The Special Meeting (see page 55)

	•		Date, Time and Place (see page 55). The special meeting of Allion stockholders will be held on       , 2009, at 10:00 a.m. Eastern time, at            .
	•		Matters to be Considered (see page 55). At the special meeting, you will be asked to approve a proposal to adopt the merger agreement. You may also be asked to vote to adjourn the special meeting, if necessary, to solicit additional proxies in support of the proposal to adopt the merger agreement.
	•		Record Date and Quorum (see page 55). You are entitled to vote at the special meeting if you owned shares of Allion stock at the close of business on       , 2009, which Allion has set as the record date for the special meeting. The presence, in person or by proxy, of holders of record of a majority of the issued and outstanding shares of Allion stock entitled to vote on the matters to be presented at the special meeting will constitute a quorum.
	•		Required Votes (see page 55). Adoption of the merger agreement requires the affirmative vote of a majority of the outstanding shares entitled to vote on the merger. The rollover stockholders, who beneficially own approximately 41.1% of our outstanding common stock, have executed voting agreements pursuant to which they have agreed to vote their shares of Allion common stock in favor of adoption of the merger agreement. The full text of the form of voting agreement is attached to this Proxy Statement as Appendix C .
	•		Voting (see page 56). You may attend the special meeting and vote in person or you may complete, sign and date the enclosed proxy card and return it in the enclosed self-addressed postage pre-paid envelope. Returning your proxy card will not affect your right to attend the special meeting and vote in person or to revoke your proxy. If your shares are held in “street name” by a bank or brokerage firm, your bank or brokerage firm forwarded these proxy materials, as well as a voting instruction card, to you. Please follow the instructions on the voting instruction card to vote your shares.

The Merger (see page 58)

	•		If the merger is completed, Merger Sub will be merged with and into Allion, with Allion continuing as the surviving corporation.
	•		This is a “going private” transaction. If the merger is completed, the following will occur:

	o		your shares will be converted into the right to receive $6.60 in cash per share, without interest and less any applicable withholding tax;
	o		all of the equity interests in Allion will be owned directly by Parent; immediately following the merger Parent will be owned by H.I.G. Healthcare, LLC and the rollover stockholders;
	o		you will no longer have any interest in Allion’s future earnings or growth;
	o		Allion will no longer be a public company and Allion’s common stock will no longer be traded on the NASDAQ Global Market; and
	o		we will no longer be required to file periodic and other reports with the Securities and Exchange Commission.

Effects of the Merger on Our Common Stock and Equity Awards (see page 58)

	•		Common Stock . At the effective time of the merger, each share of Allion common stock (including restricted stock) issued and outstanding immediately prior to the effective time of the merger (other than shares held by Allion, Parent or Merger Sub and stockholders who have perfected and not withdrawn a demand for appraisal rights under Delaware law) will be automatically cancelled and converted into the right to receive $6.60 in cash, without interest.
	•		Stock Options . Prior to the effective time of the merger, we will cause each outstanding Allion stock option to vest in full. At the effective time of the merger, each outstanding Allion stock option not exercised prior to the merger will be cancelled and converted into the right to receive an amount in cash equal to (i) the number of shares subject to such option, multiplied by (ii) the excess (if any) of $6.60 over the exercise price per share of such option.
	•		Warrants . At the effective time of the merger, each outstanding Allion warrant (whether or not vested) will be cancelled and converted into the right to receive an amount in cash equal to (i) the number of shares subject to such warrant, multiplied by (ii) the excess (if any) of $6.60 over the exercise price per share of such warrant.
	•		Phantom Stock Units . At the effective time of the merger, each holder of an outstanding Allion cash-settled phantom stock unit (whether or not vested) will be entitled to receive an amount in cash equal to (i) the number of phantom stock units held by that holder multiplied by $6.60, without interest, plus (ii) a tax gross-up payment to cover any excise tax liability such holder may incur as a result of any payments or benefits, whether paid pursuant to the phantom stock units or otherwise, that may be deemed “golden parachute” payments for tax purposes.

Purpose of the Merger (see page 27)

	•		Allion . The primary purpose of the merger for Allion is to permit its unaffiliated stockholders to receive cash for their shares of Allion common stock and to realize a premium to the market price at which such shares traded immediately prior and in the weeks leading up to the announcement of the execution of the merger agreement.
	•		The H.I.G. Buying Group . The primary purpose of the merger for the H.I.G. Buying Group is to allow the H.I.G. Buying Group to acquire control of Allion and bear the rewards and risks of ownership of Allion after shares of Allion’s common stock cease to be publicly traded.
	•		The Parallex Group . The primary purposes of the merger for the Parallex Group are (i) to receive cash for the portion of its shares of Allion common stock that will not be surrendered to Parent immediately prior to the merger and to realize a premium to the market price at which such shares traded immediately prior to the announcement of the execution of the merger agreement, (ii) to receive the principal plus accrued interest on promissory notes previously issued to the Parallex Group by Allion, the maturity of which will accelerate at the effective time of the merger, and (iii) to retain an indirect equity interest in Allion and to continue bearing the rewards and risks of such ownership after shares of Allion common stock cease to be publicly traded.

Recommendation of the Special Committee and our Board of Directors (see page 22)

	•		The Special Committee of our Board of Directors unanimously determined that the merger agreement and the merger are advisable, fair to and in the best interest of Allion and its stockholders and unanimously recommended that our Board of Directors approve the merger agreement.
	•		After considering the recommendation of the Special Committee, our Board of Directors unanimously approved the merger agreement and determined that it is advisable, fair to and in the best interest of Allion and its stockholders. Our Board of Directors unanimously recommends that you vote “FOR” adoption of the merger agreement.

Fairness of the Merger; Reasons for the Recommendation of the Special Committee and our Board of Directors (see page 23)

•

The Special Committee and our Board of Directors determined that the merger is substantively and procedurally fair to Allion’s unaffiliated stockholders. In reaching this conclusion, the Special Committee and our Board of Directors considered, among other factors, the following:

	o		the fact that the $6.60 per share merger consideration to be paid pursuant to the merger agreement constitutes a significant premium over the market price of Allion common stock before the public announcement of the merger agreement, including a premium of approximately 30.2% over the volume-weighted average price of Allion common stock for the five days prior to announcement of the merger;
	o		the opinion of Raymond James & Associates, Inc. to our Board of Directors to the effect that, subject to the various factors, assumptions and limitations set forth in Raymond James’s written opinion, the full text of which is attached hereto as Appendix B and incorporated herein by reference, as of October 18, 2009, the $6.60 per share consideration to be received by our stockholders (excluding the rollover stockholders, Parent, Merger Sub and their respective affiliates) was fair to such holders, from a financial point of view;
	o		the fact that the Special Committee was comprised of two independent directors and acted to represent solely the interests of the unaffiliated stockholders and to negotiate with H.I.G. on behalf of such stockholders;
	o		the fact that the Special Committee, with the assistance of Allion’s legal and financial advisors, conducted extensive arms-length negotiations with H.I.G. over several months, which led to a 20% increase in the merger consideration to be received by our stockholders to $6.60 per share from a price of $5.50 per share proposed by H.I.G. in its initial letter of intent dated June 2, 2009;
	o		the fact that the Special Committee and our Board of Directors, with the assistance of our financial advisors, had engaged in an extensive process to explore a possible sale of the Company since February 2009 and that the Special Committee and our Board of Directors believed that $6.60 per share was the highest offer that could be obtained for Allion; and
	o		the Special Committee’s and our Board of Directors’ belief that the termination fee provisions in the merger agreement likely would not significantly discourage another potential acquirer from submitting an acquisition proposal.

Position of the H.I.G. Buying Group as to the Fairness of the Merger (see page 28)

•

The H.I.G. Buying Group believes that the merger is both procedurally and substantively fair to Allion’s unaffiliated stockholders. Their belief is based upon their knowledge and analysis of Allion, as well as the factors discussed in the section entitled “Special Factors—Position of the H.I.G. Buying Group as to the Fairness of the Merger” beginning on page 28.

Position of the Parallex Group as to the Fairness of the Merger (see page 29)

•

The Parallex Group believes that the merger is fair to Allion’s unaffiliated stockholders. Its belief is based upon its knowledge and analysis of Allion, as well as the factors discussed in the section entitled “Special Factors—Position of the Parallex Group as to the Fairness of the Merger” beginning on page 29.

Fairness Opinion of Raymond James & Associates, Inc. (see page 31)

•

In connection with the merger, our Board of Directors received the opinion of Raymond James as to the fairness, from a financial point of view as of the date of the opinion, to Allion’s stockholders (excluding the rollover stockholders, Parent, Merger Sub and their respective affiliates) of the merger consideration to be received by such holders. The full text of Raymond James’s written opinion is attached to this Proxy Statement as Appendix

B . You are encouraged to read that opinion carefully for a description of the assumptions made, matters considered and limitations and qualifications on the review undertaken.

Interests of Certain Persons in the Merger (see page 42)

	•		Directors and Officers . Some of our directors and officers may have interests in the merger that are different from, or in addition to, the interests of our stockholders generally. These interests may include the “cash-out” of options, the vesting and settlement of phantom stock units, the removal of restrictions on restricted stock, and the right to continued indemnification and insurance coverage by Allion after the merger. In addition, it is expected that the executive officers of Allion immediately prior to the merger will continue to serve as the executive officers of the surviving corporation following completion of the merger, and such officers may be entitled to participate in equity incentive plans that Parent or the surviving corporation may sponsor. Moreover, certain of our directors and officers may be appointed by members of the H.I.G. Buying Group or Parallex to serve on the Board of Directors of Parent or the surviving corporation following completion of the merger.
	•		Rollover Stockholders . The rollover stockholders have entered into exchange agreements with Parent pursuant to which the rollover stockholders have agreed to surrender to Parent, immediately prior to the effective time of the merger, a portion of their shares of Allion common stock in exchange for equity interests in Parent. As a result, the rollover stockholders will retain indirect equity ownership of Allion following the merger and will continue to participate in Allion’s future earnings or growth. At the effective time of the merger, the maturity of promissory notes issued by the Company to the rollover stockholders will also accelerate, and the rollover stockholders will receive the principal plus accrued interest on such notes. Finally, the rollover stockholders entered into voting agreements with Parent pursuant to which the rollover stockholders, who collectively beneficially own an aggregate of approximately 41.1% of the outstanding shares of Allion common stock, have agreed to vote their respective shares of Allion common stock in favor of the adoption of the merger agreement and have granted Parent a proxy to vote such shares in the event the rollover stockholders fail to do so. The full text of the form of voting agreement is attached to this Proxy Statement as Appendix C .

Covenants (see page 62)

	•		Allion, Parent and Merger Sub have agreed to take certain actions between the date of the merger agreement and the effective time of the merger, including using commercially reasonable efforts to consummate the merger.
	•		We have also agreed to refrain from certain enumerated actions without Parent’s consent, including actions that are outside the ordinary course of our business.
	•		Parent has agreed to use its reasonable best efforts to maintain in effect its debt and equity commitment letters and consummate the financing contemplated by the debt and equity commitment letters. In addition, Parent has agreed, for a period of twelve months following the merger, to maintain the base salary and non-equity based incentive bonus opportunity of the Allion employees who continue to be employed by the surviving corporation and to maintain 401(k) and health and welfare benefits plans that are no less favorable in the aggregate than our current benefits and policies.

      Acquisition Proposals (see page 63)

	•		The merger agreement prohibits us from soliciting, initiating or encouraging other acquisition proposals or providing non-public information to third parties with respect to any acquisition proposal. We have agreed to immediately cease any and all existing activities, discussions or negotiations with third parties conducted prior to the date of the merger agreement with respect to any acquisition proposal. If we receive an unsolicited acquisition proposal, we must promptly notify Parent of the proposal’s material terms.
	•		We may, however, provide confidential information to a third party in response to an unsolicited takeover proposal and engage in discussions and negotiations with such third party if (i) our Board of Directors (or

the Special Committee) determines in good faith that such action is necessary to comply with its fiduciary duties, (ii) our Board of Directors (or the Special Committee) determines the acquisition proposal is, or would reasonably be expected to lead to, a superior proposal and (iii) prior to taking such action, the Company executes a confidentiality agreement with such third party with terms no less favorable than those contained in our confidentiality agreement with H.I.G. Capital Management, Inc.

Conditions to the Merger (see page 65)

•

Completion of the merger depends upon the parties meeting or waiving a number of conditions, including the following:

	o		adoption of the merger agreement at the special meeting by holders of a majority of the issued and outstanding shares of Allion common stock entitled to vote on the adoption;
	o		the absence of any law or governmental order prohibiting the consummation of the merger;
	o		the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act;
	o		the material accuracy of the parties’ representations and warranties and the parties’ compliance with the covenants and agreements set forth in the merger agreement;
	o		the absence of a material adverse effect on Allion, as that term is defined in the merger agreement;
	o		the exercise of dissenters’ rights and preservation of the right to seek appraisal by holders of not more than 10% of Allion’s outstanding common stock; and
	o		other customary closing conditions.

Termination (see page 65)

•

Under certain circumstances, the merger agreement may be terminated and the merger may be abandoned at any time prior to the effective time of the merger, whether before or after adoption of the merger agreement by our stockholders. If the merger agreement is terminated, there will be no liability on the part of Allion, Merger Sub or Parent, except for the payment of the termination fees and expenses as described below and in the section entitled “The Merger and the Merger Agreement—Termination Fees; Expenses” beginning on page 67.

Termination Fees; Expenses (see page 67)

•

Termination Fees Payable by the Company . Allion is obligated to pay Parent a termination fee of $7.5 million if any of the following occur:

	o		the merger agreement is terminated because (i)(a) the merger has not been consummated by February 18, 2010 (unless extended in accordance with the terms of the merger agreement) and Allion has received an acquisition proposal prior to termination, (b) Allion has breached its representations or covenants and, prior to the breach, it has received an acquisition proposal, or (c) an acquisition proposal is publicly announced and not withdrawn prior to the special meeting and our stockholders fail to adopt the merger agreement, and (ii) within nine months of such termination the Company has either consummated another acquisition proposal or has entered into an agreement with respect to another acquisition proposal;
	o		Parent or Merger Sub terminates the merger agreement because our Board of Directors has (i) adversely changed its favorable recommendation of the merger agreement, (ii) recommended or approved an acquisition proposal, (iii) failed to publicly confirm its favorable recommendation of the merger agreement within 10 business days of Parent’s written request that it do so after Allion’s stockholders receive a bona fide acquisition proposal or (iv) not sent a statement to its

			stockholders recommending that they reject a tender or exchange offer by a third party within 10 business days after commencement of such tender or exchange offer;
	o		Parent or Merger Sub terminate the merger agreement because we solicit, initiate or encourage a third party acquisition proposal in violation of the merger agreement; or
	o		we terminate the merger agreement in order to accept a superior acquisition proposal.

•

Termination Fees Payable by Parent . Parent is obligated to pay us a reverse termination fee of $7.5 million if Parent and Merger Sub fail to close the merger because of a failure to receive financing after the conditions to Parent’s and Merger Sub’s obligation to complete the merger have been satisfied and Parent and Merger Sub are not otherwise in breach of the merger agreement. The amount of the reverse termination fee will be $10.0 million, however, if:

	o		Parent and Merger Sub fail to close the merger in circumstances not involving Parent’s failure to receive financing, after the conditions to Parent’s and Merger Sub’s obligations to complete the merger have been satisfied; or
	o		Parent and Merger Sub terminate the merger agreement in their discretion 60 days or more after the date of the merger agreement.

•

Expense Reimbursement . We are obligated to reimburse Parent and Merger Sub for up to $3.25 million of their documented, out-of-pocket expenses in the event that the merger agreement is terminated because our stockholders fail to adopt the merger agreement, which reimbursement will be credited against any termination fee we must subsequently pay to Parent. We are obligated to reimburse Parent and Merger Sub for up to $4.5 million of their documented, out-of-pocket expenses in the event that the merger agreement is terminated because we willfully breach one or more of our representations, warranties or covenants in the merger agreement, which reimbursement will not be credited against any termination fee we must subsequently pay to Parent.

Appraisal Rights (see page 70)

	•		Pursuant to Section 262 of the General Corporation Law of the State of Delaware, if you do not vote in favor of the adoption of the merger agreement and you instead follow the appropriate procedures for demanding and perfecting appraisal rights as described on pages 70 through 72 and in Appendix D , you will receive a cash payment for the “fair value” of your shares of Allion common stock, as determined by a Delaware Court of Chancery, instead of the $6.60 per share merger consideration to be received by our stockholders pursuant to the merger agreement. The “fair value” of Allion common stock may be more than, less than or equal to the $6.60 merger consideration you would have received for each of your shares pursuant to the merger agreement if you had not exercised your appraisal rights.
	•		Generally, in order to exercise appraisal rights, among other things:

	o		you must NOT vote in favor of adoption of the merger agreement; and
	o		you must make written demand for appraisal in compliance with Delaware law PRIOR to the vote of our stockholders to adopt the merger agreement.

•

Merely abstaining or voting against the adoption of the merger agreement will not preserve your appraisal rights under Delaware law. Appendix D to this Proxy Statement contains the Delaware statute relating to your appraisal rights. If you want to exercise your appraisal rights, please read and carefully follow the procedures described on pages 70 through 72 and in Appendix D. Failure to take all of the steps required under Delaware law may result in the loss of your appraisal rights.

Material U.S. Federal Income Tax Consequences (see page 50)

•

The receipt of $6.60 in cash by our stockholders for each outstanding share of Allion common stock will be a taxable transaction for U.S. federal income tax purposes. Each of our stockholders generally will recognize taxable gain or loss, measured by the difference, if any, between the stockholder’s amount realized in the merger of $6.60 per share, and the tax basis of each share of Allion common stock owned by such stockholder.

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING AND THE MERGER

      The following questions and answers are intended to address briefly some commonly asked questions regarding the special meeting and the merger, and other matters to be considered by Allion’s stockholders at the special meeting. These questions and answers may not address all questions that may be important to you as a stockholder. Please refer to the more detailed information contained elsewhere in this Proxy Statement, the appendices to this Proxy Statement and the documents referred to in this Proxy Statement.

      Q: When and where is the special meeting?

      A: The special meeting is scheduled to take place on       , 2009 at 10:00 a.m. Eastern time, at            .

      Q: What is the purpose of the special meeting?

      A: At the special meeting, our stockholders will be asked to vote on a proposal to adopt the Agreement and Plan of Merger, dated as of October 18, 2009, by and between Allion, Parent and Merger Sub.

     Our stockholders may also be asked to vote to adjourn the special meeting to solicit additional proxies in support of the proposal to adopt the merger agreement, if there are not sufficient votes at the special meeting to adopt the merger agreement.

           Q: Why am I receiving this Proxy Statement and proxy card?

           A: You are receiving this Proxy Statement and proxy card because you own shares of Allion common stock. This Proxy Statement describes matters on which we urge you to vote at the special meeting and is intended to assist you in deciding how to vote your shares. If your shares are held by a bank or brokerage firm, you are considered the beneficial owner of shares held in “street name.” If your shares are held in street name, your bank or brokerage firm (the record holder of your shares) forwarded these proxy materials, along with a voting instruction card, to you.

           Q: What is a proxy?

           A: A proxy is your legal designation of another person, referred to as a “proxy,” to vote your shares of stock. The written document describing the matters to be considered and voted on at the meeting is called a “proxy statement.” The document used to designate a proxy to vote your shares of stock is called a “proxy card.” Our Board of Directors has designated two of our officers, Michael P. Moran and Russell A. Fichera, as proxies for the special meeting.

           Q: How many shares must be present to hold the meeting?

           A: A quorum must be present at the special meeting for any business to be conducted. The presence, in person or by proxy, of holders of record of a majority of the issued and outstanding shares of Allion stock entitled to vote at the special meeting will constitute a quorum. Proxy cards received by us but marked “ABSTAIN” will be included in the calculation of the number of shares considered to be present at the meeting. If you hold your shares in street name and do not give instructions to your bank or brokerage firm on how to vote your shares, it will not be permitted to vote your shares at the special meeting and your shares will not be counted for purposes of establishing a quorum. If a quorum is not present, a vote cannot occur, and a majority in interest of the stockholders entitled to vote at the meeting, present in person or by proxy, may adjourn the meeting until a quorum is present or represented. The time and place of the adjourned meeting will be announced at the time the adjournment is taken, and no other notice will be given.

      Q: What vote is required to adopt the merger agreement and approve the adjournment, if necessary?

      A: Adoption of the merger agreement requires the affirmative vote of a majority of the outstanding shares of Allion common stock entitled to vote on the merger. Adjournment of the special meeting, if necessary to solicit additional proxies, requires the approval of a majority of the votes cast. The rollover stockholders, who beneficially own approximately 41.1% of the outstanding Allion common stock, have executed voting agreements pursuant to which they have agreed to vote their shares of Allion common stock in favor of adoption of the merger agreement at the special meeting. In addition, the directors and executive officers of Allion, who beneficially own approximately

0.2% of the outstanding Allion common stock, have informed us that they intend to vote all of their shares of Allion common stock “FOR” the adoption of the merger agreement and “FOR” any adjournment of the special meeting, if necessary to solicit additional proxies.

      Q: Who is entitled to attend the special meeting?

      A: You are entitled to attend the special meeting if you owned shares of Allion stock at the close of business on            , 2009, which Allion has set as the record date for the special meeting. Stockholders must present a form of photo identification to be admitted to the special meeting. If you hold your shares in street name, you are invited to attend the special meeting, but you will also need to bring a copy of your bank or brokerage statement, evidencing your ownership as of the record date, to gain admittance.

      Q: Who is entitled to vote?

      A: You are entitled to vote on the proposals to be considered at the special meeting if you owned shares of Allion stock at the close of business on            , 2009, the record date for the special meeting. For each share of Allion common stock you owned at the close of business on the record date, you will have one vote on each proposal presented at the special meeting. On the record date, there were             shares of Allion common stock issued and outstanding and entitled to vote at the special meeting.

      Q: What happens if I sell my shares before the special meeting?

      A : The record date for the special meeting,       , 2009, is earlier than the date of the special meeting. If you held your shares on the record date but transfer them prior to the effective time of the merger, you will retain your right to vote at the special meeting, but you will lose the right to receive the merger consideration for your shares. The right to receive such merger consideration will pass to the person who owns your shares when the merger becomes effective.

      Q: How do I vote?

      A: If you are a registered stockholder, meaning that you hold your shares in certificate form or through an account with Allion’s transfer agent, Continental Stock Transfer & Trust Company, you may submit a proxy prior to the special meeting or you may vote in person at the special meeting.

          To vote in person at the special meeting, you must attend the meeting and obtain and submit a ballot. Ballots for voting in person will be available at the special meeting. If you are a beneficial owner of shares held in “street name” by a bank or brokerage firm, you may not vote your shares in person at the special meeting unless you obtain a power of attorney or proxy form from the record holder of your shares.

          To submit a proxy to vote your shares of stock, you must complete and return the enclosed proxy card in time to be received by us prior to the special meeting, or you may deliver your proxy card in person at the special meeting. If a proxy card is properly executed, returned to us and not revoked, the shares represented by the proxy will be voted in accordance with the instructions set forth on the proxy card. We know of no other business that will be presented at the special meeting. However, if any other matter properly comes before the stockholders for vote at the special meeting, your shares will be voted in accordance with the best judgment of the proxy holders.

          If your shares are held in street name, your bank or brokerage firm forwarded these proxy materials, as well as a voting instruction card, to you. Please follow the instructions on the voting instruction card to vote your shares. If you are the beneficial owner of the shares, you have the right to direct your record holder how to vote your shares, and the record holder is required to vote your shares in accordance with your instructions.

      Q: What if I do not specify how my shares are to be voted?

      A: If you are a registered stockholder, and you submit a proxy card but do not provide voting instructions, your shares will be voted:

•

“FOR” the adoption of the merger agreement, and

•

“FOR” the approval of the adjournment of the special meeting to solicit additional proxies.

          If you hold your shares in street name and do not give instructions to your bank or brokerage firm, it will not be permitted to vote your shares and your shares will not be considered present at the special meeting. As a result, it will have the same effect as a vote “AGAINST” the adoption of the merger agreement, but it will have no effect on any vote with respect to the adjournment of the meeting to solicit additional proxies in support of the proposal to adopt the merger agreement.

      Q: How do I change my vote after I submit my proxy?

      A: If you decide to change your vote, you may revoke your proxy at any time before it is voted at the special meeting. You may revoke your proxy in one of three ways:

     1. You may notify the Secretary of Allion or Allion’s proxy solicitor, Okapi Partners, in writing that you wish to revoke your proxy. Please contact Allion Healthcare, Inc., 1660 Walt Whitman Road, Suite 105, Melville, New York 11747, Attention: Secretary, or Okapi Partners, 780 Third Avenue, 30 ^th floor, New York, New York 10017. We must receive your notice before the time of the special meeting.

     2. You may submit a properly executed proxy card with a later date than your original proxy card. We must receive your later-dated proxy card before the time of the special meeting.

     3. You may attend the special meeting and vote in person. Merely attending the special meeting will not by itself revoke a proxy; you must obtain a ballot and vote your shares at the special meeting to revoke the proxy.

      Q: Who will solicit and pay the cost of soliciting proxies?

      A: Allion is paying the cost of soliciting these proxies. Upon request, Allion will reimburse brokers and other nominees for their reasonable out-of-pocket expenses for forwarding these proxy materials to the beneficial owners of Allion shares. Allion’s directors, officers and employees may solicit proxies in person or by telephone, mail, facsimile, email or otherwise, but they will not receive additional compensation for their services. In addition, Allion will pay approximately $6,500 (plus per call fees and reimbursement of out-of-pocket expenses) to Okapi Partners, the Company’s proxy solicitor.

      Q: What will be the effect of the merger?

      A: After the effective time of the merger, you will no longer own any shares of Allion common stock. All of the capital stock of Allion following completion of the merger will be wholly owned by Parent.

      Q: If the merger is completed, what will I receive for the shares of Allion common stock I hold?

      A: If the merger is completed, each share of Allion common stock that you own at the effective time of the merger will be automatically cancelled and converted into the right to receive $6.60 in cash, without interest and subject to applicable tax withholding requirements. However, if you perfect your appraisal rights, you will not receive the $6.60 per share merger consideration and instead your shares will be subject to appraisal in accordance with Delaware law.

      Q: If the merger is completed, what will happen to outstanding options and warrants to acquire Allion common stock?

      A: Prior to the effective time of the merger, the Company will cause each outstanding Allion stock option to vest in full. Each stock option to purchase Allion common stock outstanding at the effective time of the merger will be cancelled and converted into the right to receive an amount in cash equal to (i) the number of shares subject to such option multiplied by (ii) the excess (if any) of $6.60 over the exercise price per share of such option. Each outstanding warrant to purchase Allion common stock, whether or not vested, will be cancelled and converted into the right to receive an amount in cash equal to (i) the number of shares subject to such warrant, multiplied by (ii) the excess (if any) of $6.60 over the exercise price per share of such warrant. If the exercise price per share of an option

or warrant to acquire Allion common stock equals or exceeds the $6.60 per share merger consideration, such option or warrant will be cancelled without payment.

      Q: What should I do now?

      A: After you read and consider carefully the information contained in this Proxy Statement, please return your proxy as soon as possible so that your shares may be represented at the special meeting. If your shares of Allion common stock are registered in your own name, you may submit your proxy by filling out and signing the proxy card and then mailing your signed proxy card in the enclosed pre-paid envelope. If your shares are held in “street name,” please follow the directions your broker or bank has provided.

      Q: Should I send in my stock certificates now?

      A: No. If the merger agreement is adopted and other conditions to the merger are satisfied, shortly after the merger is completed you will receive a letter of transmittal with instructions informing you how to send in your stock certificates to Continental Stock Transfer & Trust Company, the exchange agent appointed by Merger Sub. YOU SHOULD NOT SEND ANY STOCK CERTIFICATES WITH YOUR PROXY CARD.

      Q: When do you expect the merger to be completed?

     A: We are working towards completing the merger as soon as possible. Assuming timely satisfaction of necessary closing conditions, we expect the merger to be completed in the first quarter of 2010.

      Q: When will I receive the cash payment for my shares?

      A: Assuming that you do not elect to exercise your appraisal rights, shortly after the effective time of the merger, Continental Stock Transfer & Trust Company, the exchange agent appointed by Merger Sub, will send to you a letter of transmittal with instructions regarding the surrender of your share certificates in exchange for the merger consideration. Once you have delivered an executed copy of the letter of transmittal together with your share certificates to Continental Stock Transfer & Trust Company, it will promptly pay the merger consideration owing to you, less any applicable withholding taxes.

      Q: Where can I find more information about Allion?

      A: We file reports, proxy statements and other information with the Securities and Exchange Commission, referred to as the SEC, under the Securities Exchange Act of 1934, as amended, or the Exchange Act. You may read and copy this information at the SEC’s public reference facilities. You may call the SEC at 1-800-SEC-0330 for information about these facilities. This information is also available at the Internet site the SEC maintains at www.sec.gov . You can also request copies of these documents from us. See “Where You Can Find More Information” on page 84.

      Q: Who can help answer my other questions?

      A: If you have further questions about the merger, you should contact our proxy solicitor at the following address and telephone number:

SPECIAL FACTORS

Parties Involved in the Merger

Allion Healthcare, Inc.

     Allion Healthcare, Inc. is a Delaware corporation and a national provider of specialty pharmacy and disease management services focused on HIV/AIDS patients as well as specialized biopharmaceutical medications and services to chronically ill patients. Allion sells HIV/AIDS medications, ancillary drugs and nutritional supplies under the trade name MOMS Pharmacy. Allion also provides services for intravenous immunoglobulin, Blood Clotting Factor and other therapies through its Biomed America division. Allion works closely with physicians, nurses, clinics, AIDS Service Organizations, and government and private payors to improve clinical outcomes and reduce treatment costs.

     Allion’s principal executive offices are located at 1660 Walt Whitman Road, Suite 105, Melville, New York 11747, and its telephone number is (631) 547-6520.

Brickell Bay Acquisition Corp.

     Brickell Bay Acquisition Corp., or Parent, is a Delaware corporation formed solely in anticipation of the merger by entities affiliated with H.I.G. Capital, L.L.C., a leading global private equity investment firm focused exclusively on the middle market with more than $7.5 billion of equity capital under management. The rollover stockholders are expected to exchange a portion of their shares of Allion common stock for equity interests in Parent in connection with the merger. Parent currently has de minimis assets and has not conducted any activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement.

     Parent’s principal executive offices are located at 1001 Brickell Bay Drive, 27 ^th Floor, Miami, Florida 33131, and its telephone number is (305) 379-2322.

Brickell Bay Merger Corp.

     Brickell Bay Merger Corp., or Merger Sub, is a Delaware corporation formed by Parent solely for purposes of entering into the merger agreement and consummating the transactions contemplated by the merger. Subject to the terms and conditions of the merger agreement and in accordance with Delaware law, at the effective time of the merger, Merger Sub will merge with and into Allion, with Allion continuing as the surviving corporation. Merger Sub currently has de minimis assets and has not conducted any activities to date other than activities incidental to its formation and in connection with the transactions contemplated by the merger agreement.

     Merger Sub’s principal executive offices are located at 1001 Brickell Bay Drive, 27 ^th Floor, Miami, Florida 33131, and its telephone number is (305) 379-2322.

Parallex LLC

     Parallex LLC, or Parallex, is a Delaware limited liability company and a former stockholder of Biomed America, Inc., which Allion acquired in April 2008. Parallex is controlled by Raymond A. Mirra, Jr. and, as of November 25, 2009 beneficially owned 7,903,499 shares of Allion common stock, representing approximately 27.5% of the outstanding shares of Allion common stock. Parallex and certain other stockholders, whom we collectively refer to as the rollover stockholders, have entered into exchange agreements with Parent pursuant to which such rollover stockholders have agreed to surrender to Parent, immediately prior to the effective time of the merger, a portion of the shares of Allion common stock owned beneficially or of record by such rollover stockholders, in exchange for equity interests in Parent. Each of the rollover stockholders is a former stockholder of Biomed America, Inc., which Allion acquired in April 2008. None of the rollover stockholders, other than Parallex, is an affiliate of Allion.

     Parallex’s principal executive offices are located at 27181 Barefoot Boulevard, Millsboro, Delaware 19966, and its telephone number is (610) 586-1655.

Background of the Merger

     As part of the ongoing management and oversight of Allion’s business, our Board of Directors and senior management have regularly reviewed and discussed the Company’s strategic direction, performance, risks, and long term plans. In the course of these discussions, our Board of Directors and senior management have periodically explored and assessed strategic options as part of an ongoing effort to strengthen the Company’s business and enhance stockholder value.

     In early 2009, our Board of Directors became more focused on risks associated with potential reductions in reimbursement rates, including as a result of state budget cuts, health care reform, the status of premium reimbursement programs in California and New York, and revisions to the industry’s pricing benchmarks, as well as the costs and expenses associated with our status as a public company. Our Board of Directors had also been focused for some time on the volatile nature of the trading price and the low average trading volume of our stock. In combination, those factors were continuing to restrict liquidity for our stockholders as a result of the difficulty associated with acquiring or divesting significant blocks of Allion shares without creating short-term disruptions in the market price. Limited liquidity and low average trading volume were also making it difficult for the Company to attract long-term, fundamental-oriented institutional investors, as well as institutional quality research and trading support. As a result of these factors and others, our Board of Directors determined to begin a formal process to explore strategic alternatives to maximize stockholder value, including a sale of the Company.

     On January 30, 2009, in light of market, economic, competitive, regulatory and other conditions and developments, we engaged Raymond James as the Company’s financial advisor to facilitate a process for and explore a possible sale of the Company.

     On February 17, 2009, Raymond James began contacting potential strategic and financial buyers, contacting 60 total potential buyers over the course of the process. As a result of these contacts, we executed confidentiality agreements with 51 potential buyers, including 17 strategic candidates and 34 financial sponsors.

     From February 18 through April 21, 2009, Raymond James provided each party who had executed a confidentiality agreement with a confidential information memorandum and various supplemental analyses regarding our business. During that time, we also responded, through Raymond James and Alston & Bird, to initial diligence questions from the potential buyers who had executed confidentiality agreements.

     On March 2, 2009, at a regularly scheduled meeting of our Board of Directors, at which our Chief Financial Officer was present, Raymond James summarized the status of the process, including the nature, number and status of the parties that had been contacted and the number and status of those parties that had entered into confidentiality agreements.

     On or around March 25, 2009, Raymond James provided the 27 potential buyers who remained active in the process with process guidelines, which requested that any party wishing to proceed further in the process submit a preliminary, non-binding written proposal by April 3, 2009. The process guidelines further provided that the preliminary proposals must, among other items, specify the potential buyer’s valuation of the Company, contemplated transaction structure, and prospective sources of financing required to close the potential transaction.

     On April 3, 2009, the deadline for preliminary proposals established by the process letter distributed by Raymond James, we received written preliminary proposals from five financial sponsors. Each proposal provided for the purchase of all of our outstanding common stock for cash at prices ranging from $4.66 to $6.00 per share.

     On April 6 and 7, 2009, we received two additional written preliminary proposals from financial sponsors. Both of these proposals also provided for the purchase of all of our outstanding common stock for cash, at prices ranging between $4.25 and $5.50 per share.

     On April 8, 2009, Raymond James provided our Chairman and Chief Executive Officer, our Chief Financial Officer and one of our other directors, Flint Besecker, whom our Board of Directors had designated to receive updates on its behalf, with an overview of the seven preliminary proposals received as of that date. Raymond James also noted that it expected feedback from the two potential remaining strategic candidates within a few days.

     On April 10, 2009, we received an oral preliminary proposal from one of the two remaining strategic candidates for an all-cash purchase of our outstanding common stock at a price range of $5.50 to $6.50 per share. That same day, Raymond James also informed our Chairman and Chief Executive Officer and our Chief Financial Officer that the other remaining strategic candidate had elected not to submit a proposal.

     On April 13, 2009, our Board of Directors and our Chief Financial Officer met with Raymond James and Alston & Bird to review the eight preliminary proposals received. Raymond James identified each remaining potential buyer and discussed the significant financial terms of each preliminary proposal, including price range per share, sources of financing, and financing contingencies. Raymond James also outlined a potential process for advancing the due diligence efforts of, and discussions with, the remaining potential buyers. Following a discussion of the proposals, our Board of Directors resolved to allow five of the parties from whom we had received preliminary proposals to move forward in the potential transaction process. Our Board of Directors directed Raymond James to obtain a written proposal with more specific terms from the potential strategic buyer and to request improved proposals from the two parties who had submitted the lowest price ranges in their preliminary proposals. Our Board of Directors discussed the desire to establish a committee of convenience to consider and negotiate the potential transaction on behalf of the Company, the Board of Directors and our stockholders. At that meeting, a representative of Alston & Bird also reviewed for our Board of Directors the fiduciary duties of directors under Delaware law in the context of a proposed transaction involving a change in control of the Company. Our Board of Directors considered that the seven written preliminary proposals were submitted by financial sponsors, who might choose to retain Company management following the potential transaction. Our Board of Directors discussed the resulting potential for a conflict of interest to develop and determined that the committee should be composed of independent and disinterested directors. After reviewing the independence and potential conflicts of interest of the members of our Board of Directors, our Board of Directors established an informal Negotiating Committee comprised of two of our independent and disinterested directors, Flint Besecker and Gary Carpenter. Our Board of Directors authorized the Negotiating Committee to review, evaluate, negotiate and recommend for approval by our full Board of Directors the terms of any potential transaction involving a change in control of the Company, and provided the Negotiating Committee with all power necessary to execute its purposes, including the power to retain advisors.

     Beginning on or around April 13 through April 28, 2009, at the direction of our Board of Directors, we provided a select group of parties from whom we had received acceptable written preliminary proposals with access to an online data room, which included certain confidential financial, legal, and operational information, as well as a draft of a proposed form of merger agreement, and those parties conducted due diligence investigations of our business.

     On April 13, 2009, we executed a confidentiality agreement with H.I.G., and Raymond James provided H.I.G. with access to the preliminary information materials previously provided to the other potential purchasers who had executed confidentiality agreements.

     During the week of April 13, 2009, as directed by our Board of Directors, Raymond James contacted the two potential buyers who had submitted the lowest price ranges in their preliminary proposals, to request improved proposals. Both potential purchasers declined to increase their proposals and were dismissed from the process. Raymond James also contacted the strategic party that had submitted the oral proposal in order to request additional information regarding their proposal and to request that their proposal be submitted in writing. The strategic party reiterated their interest to Raymond James, provided additional information regarding their oral proposal, but indicated that due to internal review and approval requirements, they would not be able to provide us with a written proposal within the timeframe we requested.

     On April 20, 2009, we received a written preliminary proposal from H.I.G., increasing the total number of preliminary proposals received to nine. The H.I.G. proposal contemplated an all-cash purchase of all outstanding Allion common stock at a price range of $5.50 to $6.00 per share. Raymond James informed the Negotiating Committee and was directed to invite H.I.G. to continue in the process.

     On April 27, 2009, we received a tenth written preliminary proposal from a financial buyer, with an indicated price range of between $7.00 and $7.50 per share. Raymond James informed the Negotiating Committee and was directed to invite the party to continue in the process.

     At the direction of the Negotiating Committee, between April 23 and May 8, 2009, our Chairman and Chief Executive Officer and our Chief Financial Officer made presentations regarding the Company’s business to the eight remaining potential buyers who had submitted preliminary proposals and had been invited to advance in the Company’s process, including H.I.G.

     During the weeks of May 4 and May 11, 2009, Raymond James notified the eight remaining potential buyers of the procedures for submitting a final offer, setting a deadline for final offers of May 18, 2009.

     On May 5, 2009, at a regularly scheduled meeting of our Board of Directors, at which our Chief Financial Officer was present, Raymond James discussed the initial feedback received from the remaining potential buyers and the follow-up due diligence requests received following the buyers’ meetings with Company management.

     Between May 11 and May 15, 2009, our Chairman and Chief Executive Officer and our Chief Financial Officer held conference calls with three of the remaining potential buyers to provide additional information about our business. In addition, we responded to additional due diligence requests from a number of the remaining potential purchasers through Raymond James and Alston & Bird.

     During the weeks of May 11 and May 18, 2009, all of the remaining potential buyers, other than H.I.G., notified Raymond James of their decision to cease evaluating a potential transaction with the Company and exit the process, citing various reasons generally relating to risks associated with reductions in reimbursement rates and patient and profitability concentrations in certain segments of our business.

     On May 12, 2009, H.I.G. met with Raymond Mirra, the sole voting equity holder of Parallex, to discuss the Company’s business.

     On May 20, 2009, H.I.G. submitted a letter to Parallex, outlining a proposed structure for a transaction in which certain of our stockholders, including Parallex, who had formerly been stockholders of Biomed America, Inc. would be required to exchange their shares of Allion common stock for equity interests in H.I.G.’s acquisition vehicle. The former stockholders of Biomed America, Inc. were invited to exchange their equity interests into H.I.G.’s acquisition vehicle because of the importance of the Biomed business to Allion’s future growth and the ongoing integration of the Biomed business, as well as the administrative convenience of negotiating through a single stockholder to reduce the equity commitment required by H.I.G.

     On May 20, 2009, H.I.G. submitted a written confirmation of its proposal to Raymond James to purchase our outstanding common stock at price range between $5.50 and $6.00 per share in cash, with the additional requirement that H.I.G. and Mr. Mirra reach a suitable unspecified arrangement regarding his continued involvement in the Company, should H.I.G. acquire the Company.

     On May 21, 2009, our Board of Directors met with our Chief Financial Officer, Raymond James and Alston & Bird. During that meeting, Raymond James discussed the status of the potential transaction process. After reviewing the stated rationale of the potential buyers who had elected to leave the potential transaction process, Raymond James reviewed the financial terms of H.I.G.’s proposal, including the price range, H.I.G.’s condition that it enter into a suitable, unspecified arrangement with Mr. Mirra, and H.I.G.’s indication that Company management would receive equity incentive compensation post-closing. A representative of Alston & Bird reviewed for our Board of Directors the fiduciary duties of directors under Delaware law in the context of a proposed transaction involving a change in control of the Company, including considerations for establishing a formal Special Committee of independent directors to evaluate the potential transaction. Upon consideration of the potential roles of Company management and Mr. Mirra in a potential transaction with H.I.G., our Board of Directors determined that the formation of a formal Special Committee was appropriate and advisable. Our Board of Directors established a formal Special Committee, consisting of Willard Derr and Gary Carpenter, to review, evaluate, negotiate and recommend for approval by our full Board of Directors a potential transaction involving a change in control of the Company, including the proposed acquisition by H.I.G.

     On May 21, 2009, the Special Committee met with Alston & Bird and Raymond James and instructed Raymond James to request that H.I.G. refine its bid. Specifically, the Special Committee instructed Raymond James to communicate to H.I.G. the Company’s requirement that H.I.G.’s letter of intent state a specific price per share and that the price be above the range previously proposed by H.I.G. in its letter dated May 20, 2009.

     On May 22, 2009, Parallex provided H.I.G. with comments to H.I.G.’s letter outlining the proposed rollover arrangement in connection with the Company’s potential transaction.

     On or around May 25, 2009, Raymond James spoke with H.I.G. and requested that H.I.G. refine its proposal to a specific price per share above $6.00.

     On May 30, 2009, H.I.G. and Kirkland & Ellis LLP, H.I.G.’s outside legal counsel, provided Parallex with comments to our proposed merger agreement for purposes of facilitating discussion regarding H.I.G.’s proposed arrangement with Mr. Mirra.

     On June 2, 2009, H.I.G. submitted a revised offer to acquire all of the outstanding Allion common stock for $5.50 per share in cash, contingent upon entering into a rollover arrangement with Mr. Mirra. H.I.G. also provided a summary of proposed revisions to the draft merger agreement.

     On June 3, 2009, the Special Committee met with Raymond James and Alston & Bird to consider the refined final proposal from H.I.G. Following discussion, the Special Committee directed Raymond James to request that H.I.G. increase its final proposal to a price per share greater than $6.00.

     After exchanging messages for a couple of days, on June 5, 2009, Raymond James spoke with H.I.G. and requested that H.I.G. increase its final proposal to a price greater than $6.00 per share.

     On June 8, 2009, H.I.G. contacted Raymond James to submit a revised final proposal of $5.65 per share.

     The Special Committee met on June 8 and June 9, 2009 with Raymond James and Alston & Bird to discuss H.I.G.’s revised final proposal. After discussion, the Special Committee directed Raymond James to request that H.I.G. increase its final offer to $6.00 per share.

     On June 11, 2009, Raymond James spoke with H.I.G. and communicated the Special Committee’s revised proposal of $6.00 per share. During that call, H.I.G. responded to the Special Committee’s request by reaffirming its proposal of $5.65 per share.

     On June 11, 2009, H.I.G. met with Mr. Mirra to discuss the Company’s business and the potential transaction between H.I.G. and the Company.

     On June 14 and June 15, 2009, the Special Committee met with Raymond James and Alston & Bird to review the history of the transaction process and to discuss H.I.G.’s proposal of $5.65 per share in relation to select other recent transactions and the historical trading price of our stock. Representatives from Alston & Bird reviewed for the Special Committee H.I.G.’s summary of proposed revisions to the draft merger agreement. The Special Committee discussed these items, including H.I.G.’s request for an exclusivity period to negotiate a potential transaction with us, and determined to present the proposed transaction with H.I.G. to our full Board of Directors for consideration.

     On June 16, 2009, H.I.G. submitted a revised proposal increasing its offer to $6.00 per share. The Special Committee met with Raymond James and Alston & Bird to consider the revised proposal, and, after discussion, determined to present H.I.G.’s revised proposal to our full Board of Directors for consideration. At a meeting of our Board of Directors on June 16, 2009, at which our Chief Financial Officer was present, Raymond James reviewed the terms of H.I.G.’s revised offer, and Alston & Bird reviewed the proposed rollover arrangement with Mr. Mirra, the proposed exclusivity period, and H.I.G.’s proposed revisions to the draft merger agreement. Raymond James also discussed with our Board of Directors the history of the proposed transaction process (including the fact that no potential buyer other than H.I.G. had submitted a final proposal), the historical trading price and volume of our stock, as well as the valuation implied by H.I.G.’s final proposal in comparison to selected companies and selected recent transactions. Following discussion, our Board of Directors authorized the Special Committee to negotiate and execute a letter of intent with H.I.G., including an exclusivity period to negotiate the potential transaction with us.

     From June 17 through June 24, 2009, the Special Committee negotiated a letter of intent with H.I.G.

     We executed a letter of intent with H.I.G. on June 24, 2009, providing for a price of $6.00 per share in cash and subject to an exclusivity period of 30 days with two 15-day extensions upon H.I.G.’s reaffirmation of its final proposal. On June 24, 2009, our Board of Directors also executed a written consent permitting H.I.G. to discuss with Mr. Mirra (and certain of his affiliates and associates) the terms upon which such persons would be willing to participate in a potential transaction between us and H.I.G., with such consent expressly conditioned upon the final arrangement being approved by our Board of Directors. Our Board of Directors also waived, for purposes of such discussions, the standstill provision contained in the Stockholders’ Agreement, dated April 4, 2008, between us and the former stockholders of Biomed America, Inc. named therein.

     From June 25 through July 8, 2009, our Chairman and Chief Executive Officer, our Chief Financial Officer, our Vice Presidents of Pharmacy Operations and our Vice President of HIV Sales met with H.I.G. and its advisors to discuss our business for the purpose of H.I.G.’s due diligence review. Between June 26 and August 8, 2009, we responded to H.I.G.’s additional due diligence requests through Raymond James and Alston & Bird.

     During July and August 2009, H.I.G. had several conversations with Mr. Mirra regarding the status of H.I.G.’s due diligence review of our business and H.I.G.’s discussions with potential lenders regarding financing.

     On July 17, 2009, H.I.G. provided Parallex with a term sheet outlining the proposed terms of the potential relationship with Parallex in connection with a potential transaction between H.I.G. and the Company. H.I.G. believed that requiring Parallex and the other rollover stockholders to exchange a portion of their shares of Allion common stock for equity interests in Parent as part of any potential merger would enable H.I.G. to pay a higher price per share to Allion’s other stockholders.

     On July 21, 2009, the Special Committee met with Raymond James and Alston & Bird to review the status of H.I.G.’s due diligence review and meetings with Company management. The Special Committee also discussed H.I.G.’s final proposal of $6.00 in light of recent increases in the trading price of our stock.

     On July 23, 2009, H.I.G. sent Raymond James a letter reaffirming its final proposal and extending the exclusivity period by 15 days, as set forth in the executed letter of intent between us and H.I.G on June 24, 2009.

     Between July 27 and August 4, 2009, our Chairman and Chief Executive Officer and our Chief Financial Officer met with H.I.G. and its potential lending sources to review our business and to respond to the due diligence questions of those potential lenders.

     On July 28, 2009, at a Special Committee meeting with Raymond James and Alston & Bird, Alston & Bird again reviewed the Special Committee’s fiduciary duties with respect to the consideration of a potential transaction with H.I.G. The Special Committee discussed the increased trading price of our stock in relation to H.I.G.’s final proposal of $6.00 per share.

     On July 31, 2009, Alston & Bird received a revised draft of the proposed merger agreement from Kirkland & Ellis. Among the requested changes was a request from H.I.G. that its obligations to complete the transactions contemplated by the proposed merger agreement be conditioned upon the receipt of satisfactory financing, that the amount of the termination fee payable by the Company in various circumstances be increased from $5.0 million to $10.0 million and that the definition of “material adverse effect” used in the proposed merger agreement be revised to delete a number of exclusions previously proposed by the Company.

     At a regularly scheduled meeting of our Board of Directors on August 3, 2009, with our Chief Financial Officer present, our Board of Directors received an update on the status of the potential transaction with H.I.G. Our Board of Directors discussed the recent trading price of our stock in comparison to H.I.G.’s final proposal of $6.00 per share and agreed to wait until the completion of lender presentations to determine how to proceed with the potential transaction.

     On August 8, 2009, H.I.G. sent Raymond James a second letter reaffirming its final proposal and extending the exclusivity period by an additional 15 days to August 23, 2009, as set forth in the letter of intent between us and H.I.G dated June 24, 2009. Following expiration of the exclusivity period with H.I.G. on August 23, 2009, H.I.G. continued to provide Raymond James with updates on its efforts to obtain financing for the potential transaction. The Special Committee also continued to focus on the potential transaction with H.I.G. and did not contact other potential bidders, because it believed the Company had already contacted all reasonably likely potential buyers through the transaction process.

     On August 31, 2009, the Special Committee met with Raymond James and Alston & Bird for an update on the status of H.I.G.’s discussions with potential lending sources and to discuss H.I.G.’s final proposal of $6.00 in comparison to the recent trading price of our stock. After discussion, the Special Committee directed Raymond James to request that H.I.G. provide us with its best and final offer prior to the meeting of our Board of Directors on September 1, 2009, as well as to discuss to with H.I.G. its expectations with respect to the proposed arrangement between H.I.G. and Mr. Mirra in connection with a potential transaction with us.

     On September 1, 2009, H.I.G. submitted an oral revised proposal of $6.50 per share. During a Special Committee discussion on September 1, 2009, the Special Committee reviewed the revised proposal. After considering the apparent lack of financing for a potential transaction with H.I.G., the increase in the trading price of our stock and the continued positive performance of our business, the Special Committee determined to recommend to our full Board of Directors termination of negotiations with H.I.G. At a meeting of our full Board of Directors on September 1, 2009, at which our Chief Financial Officer was present, the Special Committee presented its recommendation that our Board of Directors terminate negotiations with H.I.G. Our Board of Directors discussed, among other things, the increased price proposal from H.I.G., the recent increased trading price of our stock, as well as our business prospects and the apparent lack of financing for a potential transaction with H.I.G.

Based on these factors, our Board of Directors adopted the Special Committee recommendation to terminate negotiations with H.I.G. and directed our Chairman and Chief Executive Officer to notify H.I.G. of its decision.

     Following the meeting on September 1, 2009, our Chairman and Chief Executive Officer informed H.I.G. of our Board of Directors’ decision to terminate negotiations.

     On September 16, 2009, H.I.G. contacted our Chairman and Chief Executive Officer by telephone to request a meeting to discuss re-initiating negotiations regarding a potential transaction with the Company.

     On September 17, 2009, H.I.G. met with our Chairman and Chief Executive Officer to discuss re-engaging in negotiations regarding a potential transaction. During that meeting, H.I.G. informed our Chairman and Chief Executive Officer that it was prepared to increase its proposal to $7.00 per share, that it had lending sources for the potential transaction ready to proceed, and that it was willing to eliminate any financing contingency. Our Chairman and Chief Executive Officer informed H.I.G. that he would communicate H.I.G.’s revised proposal of $7.00 per share to our Board of Directors. Also on September 17, 2009, H.I.G. met with Parallex to discuss the status of the potential transaction with us, and Parallex informed H.I.G. that it would be willing to continue to explore the possibility of participating in the rollover transaction if H.I.G. revised its final proposal to $7.00 per share.

     On September 18, 2009, our Chairman and Chief Executive Officer notified Alston & Bird of his discussions with H.I.G. and requested that the Special Committee convene a meeting for him to update the Special Committee on his discussions with H.I.G. Later that day, the Special Committee met with our Chairman and Chief Executive Officer and Alston & Bird to receive an update on his discussions with H.I.G.

     On September 18, 2009, H.I.G. provided Parallex with a revised draft of the term sheet outlining H.I.G.’s proposed relationship with Parallex in connection with a potential transaction between H.I.G. and the Company. Later that day, Parallex’s advisors provided H.I.G. with proposed revisions to the draft term sheet.

     On September 20 2009, H.I.G. accepted Parallex’s proposed revisions to the draft term sheet outlining H.I.G.’s proposed relationship with Parallex in connection with a potential transaction between H.I.G. and the Company.

     On September 21, 2009, H.I.G. submitted a letter of intent to Raymond James to purchase all of the outstanding Allion stock at $7.00 per share in cash, with no exclusivity period.

     On September 21, 2009, the Special Committee met with Raymond James and Alston & Bird to discuss H.I.G.’s revised final proposal and letter of intent. Alston & Bird again outlined the Special Committee’s fiduciary duties with respect to consideration of a potential transaction. On September 22, 2009, the Special Committee met again with Raymond James and Alston & Bird to review H.I.G.’s revised proposal. Raymond James discussed with the Special Committee the history of the potential transaction process, the valuation implied by the revised H.I.G. proposal in comparison to selected companies and selected recent transactions, and the historical trading price and volume of our stock. After discussion, the Special Committee resolved to recommend to our full Board of Directors that we proceed to negotiate a potential transaction with H.I.G.

     On September 23, 2009, our full Board of Directors met, with our Chief Financial Officer present, to discuss the revised final proposal and letter of intent from H.I.G. Raymond James discussed the history of the potential transaction process, a summary of the various preliminary proposals received, a comparison of selected transactions, and the historical trading price and volume of our stock. The Special Committee recommended to our full Board of Directors that we proceed to negotiate a potential transaction with H.I.G. A representative of Alston & Bird outlined our directors’ fiduciary duties with respect to consideration of a potential transaction and after discussion of the terms of H.I.G.’s offer, our Board of Directors adopted the Special Committee’s recommendation.

     During September and October 2009, H.I.G. provided Parallex with various documents outlining the proposed economic relationship between H.I.G. and Parallex in connection with a proposed transaction between H.I.G. and the Company.

     On September 26, 2009, Alston & Bird provided a revised draft of a proposed merger agreement to Kirkland & Ellis. The revised draft deleted any financing contingency and proposed that H.I.G.’s liability to the Company would be limited to the payment of a $7.5 million reverse termination fee in the event that H.I.G. was unable to

obtain financing to complete the transaction, but did not otherwise limit the liability of H.I.G. in the event that it failed to complete the transaction. The draft also provided for the payment of a $7.5 million termination fee by the Company in certain instances and re-proposed a number of the deleted exceptions to the definition of “material adverse change, including those relating to reimbursement and health care reform.

     On September 27, 2009, for the purpose of facilitating discussion among the parties, H.I.G. provided Parallex’s advisors with initial drafts of an exchange agreement, restrictive covenant agreement, stockholders agreement and registration agreement.

     On October 1, 2009, Kirkland & Ellis provided Alston & Bird with a list of key open items with regard to the proposed merger agreement and H.I.G.’s position with regard to these items. Kirkland & Ellis indicated that a $7.5 million reverse termination fee was acceptable, but further proposed that this reverse termination fee be the Company’s sole remedy if H.I.G. failed to complete the transaction for any reason or otherwise breached the merger agreement. Kirkland & Ellis further indicated that H.I.G. would agree to a $7.5 million termination fee payable by the Company.

     On October 1, 2009, Fox Rothschild LLP, legal counsel to the rollover stockholders, provided revisions to the exchange agreement, restrictive covenant agreement, stockholders agreement and registration agreement to Kirkland & Ellis. From October 1 through October 9, 2009, Fox Rothschild and Kirkland & Ellis negotiated and exchanged revised drafts of the exchange agreement, restrictive covenant agreement, stockholders agreement and registration agreement.

     From October 2 through October 18, 2009, Alston & Bird, Raymond James, Kirkland & Ellis and H.I.G. had several conversations regarding the proposed merger agreement and negotiated the terms of the potential transaction, and we responded to additional due diligence requests from H.I.G., its advisors and its potential lenders through Raymond James and Alston & Bird.

     On October 2 and October 7, 2009, the Special Committee met informally with Flint Besecker, Raymond James and Alston & Bird to discuss the outstanding issues related to the negotiation of the proposed merger agreement with H.I.G. These conversations focused primarily on the events that would trigger expense reimbursement obligations or the payment of a termination fee by the Company and certain proposed limitations on the liability of H.I.G. in the event of a breach of the merger agreement. The Special Committee also discussed the availability of financing for the potential transaction.

     On October 8, 2009, the Special Committee again met informally with Flint Besecker, Raymond James and Alston & Bird. The Special Committee discussed H.I.G.’s rejection of the Special Committee’s proposal that the Company’s remedy for failure to close the transaction be limited to the $7.5 million reverse termination fee only in the event of a failed financing.

     On October 9, 2009, the Special Committee met formally to consider its response to H.I.G regarding the circumstances allowing for payment of the reverse termination fee. The Special Committee discussed its desire to maintain the $7.00 per share purchase price for our stockholders in light of recent declines in the trading price of our stock. After discussion and in an effort to preserve the $7.00 per share purchase price, the Special Committee determined to accept H.I.G.’s position limiting the Company’s remedies for a failure to complete the transaction or breaches of the merger agreement to the reverse termination fee of $7.5 million, provided that H.I.G. agree to expediently execute a merger agreement.

     On October 9, 2009, Kirkland & Ellis provided Fox Rothschild with initial drafts of a voting agreement and the amended and restated certificate of incorporation of Parent, outlining the terms of the proposed equity to be received by the rollover stockholders pursuant to the exchange agreement.

     On October 10, 2009, Alston & Bird provided Kirkland & Ellis with a revised draft of the proposed merger agreement, indicating that limiting the remedies of the Company for a failure to complete the transaction or breaches of the merger agreement to a reverse termination fee of $7.5 million would be acceptable.

     On October 11, 2009, Kirkland & Ellis provided Fox Rothschild with revised drafts of the exchange agreement, restrictive covenant agreement, stockholders agreement and registration agreement.

     Between October 12 and October 16, 2009, Kirkland & Ellis and Fox Rothschild negotiated and exchanged revised drafts of the exchange agreement, restrictive covenant agreement, stockholders agreement, registration agreement, voting agreement and amended and restated certificate of incorporation of Parent.

     On October 13, 2009, the Special Committee met with Flint Besecker, Raymond James and Alston & Bird to discuss the outstanding issues related to negotiation of the proposed merger agreement with H.I.G. The Special Committee discussed its concerns regarding the status of H.I.G.’s financing commitments, including the apparent lack of fully committed financing in relation to H.I.G.’s termination rights in the draft merger agreement. The Special Committee directed Raymond James to discuss with H.I.G. the status of its financing commitments, but to otherwise wait until receipt of H.I.G.’s revised draft of the proposed merger agreement to respond to the other outstanding issues.

     On October 14, 2009, H.I.G. informed Parallex of a proposed reduction by H.I.G. of its price per share to $6.60, and Parallex agreed to continue to explore the possibilty of participating in the rollover transaction at the reduced price.

     On October 14, 2009, H.I.G. submitted a revised oral proposal to Raymond James of $6.60 per share in cash, citing the lower trading price of our stock, the reimbursement risks and risks associated with health care reform faced by our business, which risks were also factors contributing to a lower trading price of our stock.

     On October 15, 2009, the Special Committee met with Raymond James and Alston & Bird to discuss H.I.G.’s revised proposal of $6.60 per share. The Special Committee discussed the revised proposal in light of recent declines in the trading price of our stock, as well as the nearly final nature of negotiations with H.I.G. on the remaining issues, the expectation of executed financing commitment letters promptly for the potential transaction, H.I.G.’s agreement to increase its equity commitment to the extent debt commitment letters could not be finalized prior to signing the merger agreement, and the understanding that Parallex continued to be willing to explore the possibility of participating in the rollover transaction. After discussion, the Special Committee directed Raymond James to request that H.I.G. increase its proposed price to $6.80 per share.

     Following the Special Committee meeting, on October 15, 2009, Raymond James discussed with H.I.G. the Special Committee’s revised offer of $6.80 per share, which H.I.G. rejected. H.I.G. indicated to Raymond James that it remained firm at $6.60 per share.

     At a second meeting of the Special Committee on October 15, 2009, following Raymond James’s discussion with H.I.G., the Special Committee discussed proposing revisions to the amount and structure of the reverse termination fee and the definition of material adverse change under the merger agreement, as a result of H.I.G.’s proposed price of $6.60 per share. At the conclusion of the meeting, the Special Committee resolved to accept H.I.G.’s proposal of $6.60 per share in exchange for revisions to the proposed merger agreement and a rapid conclusion to negotiations with H.I.G.

     On October 15, 2009, representatives of Raymond James, at the direction of the Special Committee, communicated to H.I.G. that a price of $6.60 per share would be acceptable in the event that the reverse termination fee was increased from $7.5 million to $12.0 million and the material adverse change definition excluded any risks related to changes in reimbursement rates, coverage limitations, the methods of calculating reimbursement rates, and industry pricing benchmarks. H.I.G. responded by proposing a $7.5 million reverse termination fee in the event that H.I.G. was unable to obtain financing to complete the proposed transaction and a $10.0 million reverse termination fee in the event that H.I.G. did not complete the proposed transaction for any other reason, and agreeing to the requested definition of material adverse change.

     From October 15 through 18, 2009, Alston & Bird and Kirkland & Ellis continued to negotiate the terms of the proposed merger agreement.

     On October 16, 2009, current drafts of the revised merger agreement and a background presentation from Raymond James were circulated to our Board of Directors for review. Later that day, our Board of Directors met to review the draft of the proposed merger agreement, the other terms of the potential transaction with H.I.G., the status of H.I.G.’s financing commitments, and the terms of the proposed rollover transaction. Raymond James made a presentation discussing the history of the potential transaction process, a summary of the

various preliminary proposals received, a comparison of selected transactions, and the historical trading price and volume of our stock, and Alston & Bird summarized the material terms of the draft merger agreement.

     On October 18, 2009, the Special Committee met with Raymond James and Alston & Bird to consider the proposed final terms of the merger agreement and the proposed transaction with H.I.G. Alston & Bird summarized the material terms of the final draft merger agreement and described the revisions to the merger agreement since the last draft of the merger agreement reviewed by our Board of Directors on October 16, 2009. Raymond James discussed the history and results of the transaction process and the history of the discussions with H.I.G. Raymond James also provided a presentation, which was generally identical to the presentation provided on October 16, 2009, that discussed the historical trading price and volume of our stock, trading multiples for selected public companies, transaction multiples for selected recent transactions, and premiums paid in other selected transactions. Following discussion, the Special Committee resolved to recommend that our full Board of Directors approve the final terms of the proposed merger agreement and to approve the proposed transaction with H.I.G.

     Following the Special Committee meeting, on October 18, 2009, our full Board of Directors, with our Chief Financial Officer present, met to review the proposed final terms of the transaction with H.I.G., including the final proposed merger agreement. Alston & Bird described the revisions to the merger agreement since the last draft of the merger agreement reviewed by our Board of Directors on October 16, 2009. Raymond James discussed the history and results of the transaction process and the history of the discussions with H.I.G. Raymond James also discussed the historical trading price and volume of our stock, trading multiples for selected public companies, transaction multiples for selected recent transactions, and premiums paid in other selected transactions. Raymond James also delivered its oral opinion to our Board of Directors, which it subsequently confirmed in writing, that the merger consideration to be received by our stockholders, other than the rollover stockholders, Parent, Merger Sub and their respective affiliates, was fair, from a financial point of view, to such stockholders. Following the recommendation of the Special Committee, our full Board of Directors unanimously approved the final terms of the proposed merger agreement and the proposed transaction with H.I.G.

     On October 18, 2009, we executed and delivered the merger agreement and limited guarantee with H.I.G., and H.I.G. and the rollover stockholders executed and delivered the exchange agreements, restrictive covenant agreements, stockholders agreement, registration agreement, and voting agreements. We issued a press release announcing the transaction following execution of the various transaction documents on October 18, 2009.

Recommendation of the Special Committee and our Board of Directors

     Both the Special Committee and our Board of Directors have determined that the merger agreement and the merger are fair to and in the best interest of the Company and our unaffiliated stockholders. The Special Committee unanimously recommended that our Board of Directors:

	•		approve the merger agreement and the merger; and
	•		recommend that the stockholders of Allion vote for the adoption of the merger agreement.

     After considering the recommendation of the Special Committee, our Board of Directors unanimously approved the merger agreement, declared the merger agreement and the merger to be advisable, and resolved to recommend to Allion’s stockholders that the stockholders approve the merger agreement.

     The merger agreement was unanimously approved by our full Board of Directors at a meeting called for that purpose. As a result, the merger agreement was unanimously approved by the non-employee directors of the Company, which excludes Mr. Moran, who serves as our President and Chief Executive Officer in addition to Chairman of the Board. Furthermore, the merger agreement was unanimously approved by the disinterested directors of the Company, which excludes Mr. Moran, as well as Mr. Miller and Mr. Stepanuk, both of whom serve on our Board of Directors as designees of the rollover stockholders and certain other holders of Allion common stock.

     The Special Committee and our Board of Directors considered a number of factors in determining to recommend that our stockholders adopt the merger agreement, as more fully described above under “—Background of the Merger” and below under “—Fairness of the Merger; Reasons for the Recommendation of the Special Committee and our Board of Directors.” Our Board of Directors unanimously recommends that you vote “FOR” the adoption of the merger agreement.

Fairness of the Merger; Reasons for the Recommendation of the Special Committee and our Board of Directors

     In reaching its conclusion regarding the fairness of the merger agreement to our unaffiliated stockholders and its decision to recommend that our Board of Directors approve the merger agreement, the Special Committee considered the following factors, each of which the Special Committee believes supported its conclusion, but which are not listed in any relative order of importance:

	•		the Special Committee’s assessment of the uncertainties associated with continuing to execute on our strategic business plan in light of our current financial position, our competitive position in our industry, our potential for future growth, potential reductions in reimbursement rates (including as a result of state budget cuts), health care reform, the status of premium reimbursement programs in California and New York, in each case as compared to the certainty of value provided by the $6.60 per share to be paid to our stockholders pursuant to the merger agreement;
	•		the volatile nature of the trading price and the low trading volume of our stock restricting liquidity for our stockholders;
	•		the Special Committee’s review of alternatives to a sale of Allion, such as undertaking further acquisitions, stock repurchases, a stock offering, or a leveraged recapitalization, including the alternative of continuing to operate as an independent public company and the attendant opportunities, costs and risks of each of these alternatives, after which the Special Committee determined not to pursue any of these alternatives as a result of the uncertainties associated with continuing to execute on our business plan and each of the other alternatives compared to the certainty of value provided by the $6.60 per share;
	•		the Special Committee’s belief that the merger will result in greater value to our stockholders than the value that could be expected to be generated from the various other strategic alternatives available to the Company, including the alternatives of remaining independent and pursuing our current strategic plan, making a strategic acquisition, and various recapitalization and restructuring strategies, considering the potential risks and uncertainties associated with those alternatives;
	•		the fact that the merger consideration is all cash, which provides certainty of value and complete liquidity to our unaffiliated stockholders;
	•		the fact that our stockholders who may not support the merger will have the opportunity to seek appraisal of the fair value of their shares under Delaware law;
	•		the fact that the $6.60 per share to be paid pursuant to the merger agreement constitutes a significant premium over the market price of Allion common stock, including:

	o		a premium of approximately 30.2% over the volume-weighted average price of Allion common stock for the five days prior to announcement of the merger, and
	o		a premium of approximately 12.6% over the closing price of Allion common stock on June 11, 2009, 90 trading days prior to announcement of the merger;

	•		the Special Committee’s belief that, although our common stock had traded at prices as high as $7.72 per share prior to the announcement of the merger, such trading prices were primarily a result of a temporary increase in demand as a result of our shares being added to the Russell 2000 index, combined with a limited number of shares available for purchase by institutional investors, and were not necessarily reflective of the long-term, fundamental value of Allion;
	•		the fact that $6.60 per share to be received by our stockholders pursuant to the merger agreement is a substantial increase from the offer of $5.50 per share proposed by H.I.G. in its initial letter of intent dated June 2, 2009;
	•		the Special Committee’s belief that the Company’s efforts to market itself to potentially interested parties, with the assistance of the Company’s financial advisors, constituted a thorough, fair and full process to ensure that the $6.60 per share consideration was the highest offer that could be obtained for Allion;
	•		the fact that because the rollover stockholders were required to exchange a portion of their shares of Allion common stock for equity interests in Parent as a condition of the H.I.G. Buying Group’s agreement to enter into the merger agreement, it reduced the cash required to be paid by the H.I.G. Buying Group pursuant to the merger agreement and allowed the H.I.G. Buying Group to pay a higher price per share to our unaffiliated stockholders under the merger agreement, as compared to prices that could be offered by other potentially interested parties;
	•		the opinion of Raymond James delivered to our Board of Directors to the effect that, based on and subject to the various factors, assumptions and limitations set forth in Raymond James’s written opinion, the full text of which is attached hereto as Appendix B and incorporated herein by reference, as of October 18, 2009, the $6.60 per share consideration to be received by our stockholders (other than the rollover stockholders, Parent, Merger Sub and their affiliates) was fair to such holders from a financial point of view;
	•		the Special Committee’s belief that the terms of the merger agreement were the product of extensive arms-length negotiations between the Special Committee and the Company’s advisors, on the one hand, and H.I.G. and its advisors, on the other hand;

	•		the fact that, subject to compliance with the terms and conditions of the merger agreement, the Company is permitted to furnish information to and conduct negotiations with third parties that make unsolicited acquisition proposals and, upon payment of a $7.5 million termination fee, terminate the merger agreement in order to approve a superior proposal, which the Special Committee believed was important in ensuring that the merger would be substantively fair to the Company’s unaffiliated stockholders and providing the Special Committee with adequate flexibility to respond to solicitations from other third parties;
	•		the Special Committee’s belief that the $7.5 million termination fee payable by the Company upon the Company’s termination of the merger agreement to accept a superior proposal (i) is reasonable in light of the overall terms of the merger agreement and the benefits of the merger, (ii) is within the range of termination fees in other transactions of this size and nature and (iii) would not preclude another party from making a competing proposal;
	•		the Special Committee’s belief that the terms and conditions of the binding debt and equity commitment letters received by Parent to finance the cash merger consideration and the terms and conditions of the exchange agreements and voting agreements entered into between Parent and the rollover stockholders reduced the risk that the merger would not be consummated;
	•		the fact that Parent is obligated to pay the Company a reverse termination fee if Parent fails to complete the merger, and the guarantee of such reverse termination fee by H.I.G. Bayside Debt & LBO Fund II, L.P., an affiliate of H.I.G.; and
	•		the fact that the merger is subject to the adoption of the merger agreement by the holders of at least a majority of the issued and outstanding shares of Allion common stock.

     In addition, the Special Committee believed that sufficient procedural safeguards were and are present to ensure the fairness of the merger to our unaffiliated stockholders and to permit the Special Committee to represent effectively the interests of our unaffiliated stockholders. These procedural safeguards include the following, which are not listed in any relative order of importance:

	•		the fact that the Special Committee is comprised of two directors who are not affiliated with H.I.G. or the rollover stockholders and who are not employees of Allion or any of its subsidiaries and the fact that the Special Committee represented solely the interests of our unaffiliated stockholders and negotiated with H.I.G. on behalf of such stockholders;
	•		the fact that no member of the Special Committee has an interest in the proposed merger different from that of our unaffiliated stockholders, other than unvested restricted stock held by members of the Special Committee that will become vested in connection with the merger and the customary indemnification and director and officer liability insurance coverage to which the members of the Special Committee will be entitled under the terms of the merger agreement;
	•		the process undertaken by the Special Committee and the Company’s advisors in connection with evaluating third party interest in acquiring the Company, as described above in “—Background of the Merger”, including the fact that the Special Committee was free to explore a transaction with any other bidder, except during the limited period of exclusivity the Special Committee granted to H.I.G.;
	•		the fact that the Special Committee consulted with Allion’s financial advisor, Raymond James, with respect to financial issues and received legal advice from our outside counsel, Alston & Bird, each of which has extensive experience in transactions similar to the proposed merger;
	•		the fact that the Special Committee, with the assistance of Allion’s legal and financial advisors, conducted extensive arms-length negotiations with H.I.G. over several months and had the authority to reject the terms of the merger agreement, and that these negotiations led to a 20% increase in the merger consideration to be received by our stockholders to $6.60 per share from a price of $5.50 per share proposed by H.I.G. in its initial letter of intent dated June 2, 2009;
	•		the fact that the terms and conditions of the merger agreement enable the Special Committee to consider and recommend a superior proposal and terminate the merger agreement upon the payment of a $7.5 million termination fee;

	•		the fact that the merger is subject to the adoption of the merger agreement by the holders of at least a majority of the issued and outstanding shares of Allion common stock; and
	•		the availability of appraisal rights to holders of Allion common stock who comply with all of the required procedures under Delaware law.

     Given the procedural safeguards described above, the Special Committee, which consisted solely of non-employee directors, did not consider it necessary to retain an unaffiliated representative to act solely on behalf of our unaffiliated stockholders for purposes of negotiating the terms of the merger or preparing a report concerning the fairness of the merger. Also as a result of these procedural safeguards, the Special Committee did not consider it necessary to require the approval of at least a majority of our unaffiliated stockholders. Nonetheless, the Special Committee believes that the merger is fair to our unaffiliated stockholders because the Special Committee was charged with representing the interests of such unaffiliated stockholders, it was advised by independent financial and legal advisors during its negotiation of the merger agreement and it was actively involved in extended and numerous deliberations and negotiations regarding the merger on behalf of our unaffiliated stockholders.

     The Special Committee also considered a variety of potentially negative factors concerning the merger agreement and the merger, including the following factors, which are not listed in any relative order of importance:

	•		the fact that, following the merger, our stockholders (other than the rollover stockholders) will no longer participate in any future earnings or benefit from any increase in the value the Company;
	•		the fact that the merger agreement does not require the adoption of the merger agreement by a majority of the unaffiliated holders of Allion common stock; the Special Committee believes that requiring the adoption of the merger agreement by a majority of the unaffiliated holders of common stock is unnecessary in light of the other protections afforded stockholders under Delaware law and the merger agreement, including the ability of stockholders to seek appraisal rights and the ability of the Special Committee to recommend a superior proposal and terminate the merger agreement in certain circumstances, at which time the voting agreements with the rollover stockholders would automatically terminate and be of no further force and effect;
	•		the fact that, while Allion expects the merger will be consummated, there can be no assurances that all conditions to the parties’ obligations to complete the merger agreement will be satisfied and, as a result, the merger may not be consummated;
	•		the fact that the $6.60 per share to be paid pursuant to the merger agreement constitutes a discount of approximately 4.1% to the closing price of Allion common stock on September 9, 2009, 30 trading days prior to announcement of the merger and a discount to our trailing 52-week closing price of $7.40 on July 31, 2009;
	•		the fact that gains from an all-cash transaction will generally be taxable to our stockholders for U.S. federal income tax purposes as described below in “—Material U.S. Federal Income Tax Consequences”;
	•		the fact that the merger agreement contains restrictions on the conduct of our business prior to the completion of the merger, including generally requiring the Company to conduct its business only in the ordinary course, subject to specific limitations, which may delay or prevent the Company from undertaking business opportunities that may arise pending completion of the merger;
	•		the restrictions the merger agreement imposes on our ability to solicit third party acquisition proposals;
	•		the requirement that we pay a termination fee of $7.5 million if the merger agreement is terminated under specified circumstances, including if we accept a superior proposal;
	•		the fact that, even if the merger is not completed, we will be required to pay our legal and accounting fees, a portion of our investment banking fees, and other miscellaneous fees;
	•		the fact that the Company’s remedy in connection with a breach of the merger agreement by Parent, even a breach that is deliberate or willful, is limited to a maximum of $10.0 million; and
	•		the risk that the public announcement of the merger, and/or the failure to complete the merger, would disrupt the operations of the Company and our relationships with employees and customers.

     In addition, the Special Committee was aware that the rollover stockholders would be required to enter into exchange agreements with Parent obligating the rollover stockholders to exchange a substantial portion of their shares of Allion common stock for equity interests in Parent in connection with the merger. Although the Special Committee was aware of the interests of the rollover stockholders, the Special Committee’s primary concern was to ensure that the per share merger consideration and other terms of the merger agreement were both procedurally and

substantively fair to and in the best interest of the Company and our unaffiliated stockholders. See “—Interests of Certain Persons in the Merger” beginning on page 42, below.

     The Special Committee did not consider the liquidation value of the Company’s assets because it considers the Company to be a viable going concern business and views the trading history of Allion common stock as an indication of the Company’s value as such. The Special Committee believes that the Company’s liquidation value would be significantly lower than the Company’s value as a viable going concern and that, due to the fact that the Company is being sold as a going concern, the Company’s liquidation value is irrelevant to a determination as to whether the merger is fair to the Company’s unaffiliated stockholders. Further, the Special Committee did not consider net book value, which is an accounting concept, as a factor because it believed that net book value is not a material indicator of the value of the Company as a going concern but rather is indicative of historical costs.

     In the course of reaching its conclusion regarding the fairness of the merger to the stockholders and its decision to approve the merger agreement, the Special Committee adopted the analyses and the opinion presented by Raymond James to our Board of Directors. These analyses included, among others, an analysis of the historical trading performance of the Company’s stock, and analyses relating to potential transaction values for the Company, including a selected companies analysis, a selected transactions analysis and a premiums paid analysis. These analyses are summarized below under “—Opinion of Allion’s Financial Advisor, Raymond James & Associates, Inc.” Although the opinion of Raymond James addresses the fairness, from a financial point of view, of the consideration to be received by our stockholders (other than the rollover stockholders, Parent, Merger Sub and their affiliates) pursuant to the merger agreement, the Special Committee was nonetheless able to rely on Raymond James’s opinion to reach a determination as to the fairness of the merger agreement to our unaffiliated stockholders. Raymond James’s opinion addresses the fairness of the consideration to be received by all of our unaffiliated stockholders, as none of Parent, Merger Sub or their affiliates are considered unaffiliated stockholders, and even though Raymond James’s opinion also addresses the fairness of the consideration to certain of our affiliated stockholders, including our directors and executive officers, such affiliated stockholders will receive the same per share consideration pursuant to the merger agreement as our unaffiliated stockholders and will not receive any other material benefit.

     The foregoing discussion of the information and factors considered by the Special Committee is not intended to be exhaustive, but includes the material factors considered by the Special Committee. In view of the wide variety of factors considered by the Special Committee in evaluating the merger agreement and the merger, the Special Committee did not find it practicable, and did not attempt to, quantify, rank or otherwise assign relative weights to the foregoing factors in reaching its conclusion. In addition, individual members of the Special Committee may have given different weights to different factors and may have viewed some factors more positively or negatively than others. The Special Committee approved the merger agreement and recommended it to our Board of Directors based upon the totality of the information it considered.

     In reaching its determination that the merger agreement and the merger are advisable, substantively and procedurally fair to and in the best interest of the Company and our unaffiliated stockholders, our Board of Directors determined that the analyses of the Special Committee of the merger consideration of $6.60 per share were reasonable and expressly adopted the analyses and conclusions of the Special Committee. In determining the reasonableness of the Special Committee’s analysis, our Board of Directors considered and relied upon the following factors, among others:

	•		the Special Committee’s unanimous determination that the merger agreement and the merger are fair to and in the best interest of the Company and our unaffiliated stockholders and its unanimous recommendation that our Board of Directors approve the merger agreement;
	•		the fact that no member of the Special Committee has an interest in the proposed merger different from that of our unaffiliated stockholders, other than unvested restricted stock held by members of the Special Committee that will become vested in connection with the merger and the customary indemnification and director and officer liability insurance coverage to which the members of the Special Committee will be entitled under the terms of the merger agreement;
	•		the process undertaken by the Special Committee and the Company’s advisors in connection with evaluating third party interest in acquiring the Company, as described above in “—Background of the Merger,” including the fact that the Special Committee was free to explore a transaction with any other bidder and did, in fact, explore transactions with other bidders, except during the period of exclusivity the Special Committee granted to H.I.G.; and
	•		the availability of appraisal rights under Delaware law for Allion’s stockholders who oppose the merger.

     Our Board of Directors also believes that sufficient procedural safeguards were present to ensure the fairness of the transaction and to permit the Special Committee to represent effectively the interests of Allion’s unaffiliated stockholders. Our Board of Directors reached this conclusion based on the following factors, among others:

•

the fact that the Special Committee consisted solely of independent directors who are not affiliated with H.I.G. or the rollover stockholders;

	•		the fact that the Special Committee consulted with the Company’s independent legal counsel, Alston & Bird, and the Company’s independent financial advisor, Raymond James;
	•		the fact that the negotiations that had taken place between H.I.G. and its representatives, on the one hand, and the Special Committee and the Company’s representatives, on the other hand, were structured and conducted so as to preserve the independence of the Special Committee and promote the fairness of the transaction; and
	•		the fact that the merger agreement and the merger were approved by the members of our Board of Directors who are not employees of Allion or affiliated with H.I.G. or the rollover stockholders or their affiliates.

     In light of the procedural protections described above, our Board of Directors, including each of the independent directors, did not consider it necessary to require a separate affirmative vote of a majority of our unaffiliated stockholders even though the rollover stockholders hold approximately 41.1% of Allion common stock. In addition, given the procedural safeguards described above, our Board of Directors did not consider it necessary to retain an unaffiliated representative to act solely on behalf of our unaffiliated stockholders for purposes of negotiating the terms of the merger or preparing a report concerning the fairness of the transaction.

     Our Board of Directors also considered the interests certain executive officers and directors of the Company may have with respect to the merger in addition to their interests as stockholders generally, as described below in “—Interests of Certain Persons in the Merger.”

     The foregoing discussion of the information and factors considered by our Board of Directors is not intended to be exhaustive, but includes the material factors considered by our Board of Directors. In view of the wide variety of factors considered by our Board of Directors in evaluating the merger agreement and the merger, our Board of Directors did not find it practicable, and did not attempt to, quantify, rank or otherwise assign relative weights to the foregoing factors in reaching its conclusion. In addition, individual members of our Board of Directors may have given different weights to different factors and may have viewed some factors more positively or negatively than others. Our Board of Directors approved the merger agreement and recommends it to Allion’s stockholders based upon the totality of the information it considered.

     Based in part upon the recommendation of the Special Committee, our Board of Directors voted to approve the merger agreement and resolved to recommend that you vote “FOR” the adoption of the merger agreement. In making their determination as to the fairness of the proposed merger to the Company and our stockholders, the Special Committee and our Board of Directors were not aware of any firm offers during the prior two years by any person for the merger or consolidation of Allion with another company, the sale or transfer of all or substantially all of Allion’s assets or a purchase of Allion’s assets that would enable the holder to exercise control of Allion.

     Based on the factors outlined above, our Board of Directors determined that the merger agreement and the transactions contemplated thereby are fair to and in the best interest of the Company and our unaffiliated stockholders. Therefore, our Board of Directors recommends that you vote “FOR” the adoption of the merger agreement.

Purposes and Reasons for the Merger

     The purpose of the merger for us is to enable our unaffiliated stockholders to immediately realize the value of their investment in the Company through their receipt of the per share merger consideration of $6.60 in cash, without interest, representing a premium of approximately 30.2% over the volume-weighted average price of Allion common stock for the five days prior to announcement of the merger.

     For Merger Sub, the purpose of the merger is to effectuate the transactions contemplated by the merger agreement. For the other members of the H.I.G. Buying Group, the purpose of the merger is to allow them to acquire control of Allion and bear the rewards and risks of such ownership of Allion after shares of Allion common stock cease to be publicly traded. The H.I.G. Buying Group did not consider any alternatives for achieving these purposes. The transaction has been structured as a cash merger in order to provide our unaffiliated stockholders with cash for their shares of Allion common stock and to provide a prompt and orderly transfer of ownership of Allion in a single step, without the necessity of financing separate purchases of Allion common stock in a tender offer and implementing a second-step merger to acquire any shares of common stock not tendered into any such tender offer,

and without incurring any additional transaction costs associated with such activities. The H.I.G. Buying Group has undertaken to pursue the transaction at this time in light of the opportunities they perceive to strengthen the Company’s competitive position, strategy and financial performance under a new form of ownership.

     The purpose of the Parallex Group for engaging in the merger is (i) to receive cash for the portion of its shares of Allion common stock that will not be surrendered to Parent and to realize a premium to the market price for such shares based on the closing price of Allion common stock on October 16, 2009, (ii) to receive the principal plus accrued interest on promissory notes issued to it by the Company, the maturity of which will accelerate at the effective time of the merger, and (iii) to retain an indirect equity interest in Allion and to continue bearing the rewards and risks of such ownership of Allion after shares of Allion common stock cease to be publicly traded. In addition, as a condition to entering the merger agreement, H.I.G. required that as part of the equity financing for the merger, Parallex and the other rollover stockholders make an equity investment in Parent by surrendering a portion of their shares of Allion common stock to Parent and enter into restrictive covenant agreements restricting their ability to engage in certain activities competitive with Allion or Parent after the merger.

Position of the H.I.G. Buying Group as to the Fairness of the Merger

     Under applicable SEC rules, the members of the H.I.G. Buying Group are engaged in a “going private” transaction and therefore required to express their beliefs as to the fairness of the merger to Allion’s unaffiliated stockholders. For purposes of this Proxy Statement, the members of the “H.I.G. Buying Group” are Parent, Merger Sub, H.I.G. Capital, L.L.C., H.I.G. Healthcare, LLC, H.I.G. Bayside Debt & LBO Fund II, L.P., H.I.G. Bayside Advisors II, LLC, H.I.G.-GPII, Inc., Sami Mnaymneh and Anthony Tamer. The members of the H.I.G. Buying Group are making the statements included in this section solely for the purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The H.I.G. Buying Group’s views as to fairness of the proposed merger should not be construed as a recommendation to any stockholder of Allion as to how such stockholder should vote on the proposal to adopt the merger agreement.

     The H.I.G. Buying Group believes that the merger is both substantively and procedurally fair to Allion’s unaffiliated stockholders. However, none of the members of the H.I.G. Buying Group has undertaken any formal evaluation of the fairness of the merger to Allion’s unaffiliated stockholders or engaged a financial advisor for such purpose. Moreover, none of the members of the H.I.G. Buying Group participated in the deliberations of the Special Committee or received advice from the Company’s legal or financial advisors in connection with the merger.

     While the members of the H.I.G. Buying Group believe that the merger is substantively and procedurally fair to Allion’s unaffiliated stockholders, they attempted to negotiate the terms of a transaction that would be most favorable to them and, accordingly, did not negotiate the merger agreement with the goal of obtaining terms that were fair to Allion’s unaffiliated stockholders. None of the members of the H.I.G. Buying Group believes that it has or had any fiduciary duty to Allion or its stockholders, including with respect to the merger agreement and its terms and conditions. Allion and its unaffiliated stockholders were represented by an independent Special Committee that negotiated on their behalf with H.I.G., Parent and Merger Sub, each with the assistance of its respective advisors, as described above in “—Fairness of the Merger; Reasons for the Recommendation of the Special Committee and our Board of Directors.”

     The belief of the members of the H.I.G. Buying Group that the merger is substantively and procedurally fair to the unaffiliated stockholders of Allion is based on the following factors, among others:

	•		the H.I.G. Buying Group’s assessment of Allion’s ability to continue to execute on its strategic business plan, considering its current financial position, its competitive position in its industry, its potential for future growth, potential reductions in reimbursement rates (including as a result of state budget cuts), health care reform, and the status of premium reimbursement programs in California and New York, in each case in comparison to the certainty of value provided by the $6.60 per share to be paid to Allion stockholders pursuant to the merger agreement;
	•		the fact that the $6.60 per share to be paid pursuant to the merger agreement constitutes a significant premium over the market price of Allion common stock before the public announcement of the merger agreement, including a premium of approximately 30.2% over the volume-weighted average price of Allion common stock for the five days prior to announcement of the merger; although Allion common stock had traded at prices as high as $7.72 per share prior to the announcement of the merger, the H.I.G. Buying Group believes that such trading prices were primarily a result of a temporary increase in demand as a result of Allion’s shares being added to the Russell 2000 index, combined with a limited number of shares available for purchase by institutional investors, and were not necessarily reflective of the long-term, fundamental value of Allion;
	•		the volatile nature of the trading price and the low trading volume of Allion common stock restricting liquidity for Allion stockholders;

	•		the fact that, notwithstanding that the members of the H.I.G. Buying Group and their respective affiliates are not entitled to rely on it, Allion’s Board of Directors received an opinion from Raymond James as to the fairness, from a financial point of view, as of the date thereof, of the merger consideration to be received by Allion’s stockholders (other than the rollover stockholders, Parent, Merger Sub and their respective affiliates); although Raymond James’s opinion addresses the fairness of the consideration to be received by all of Allion’s unaffiliated stockholders as well as certain of Allion’s affiliated stockholders, the H.I.G. Buying Group nonetheless partly based its determination of the fairness of the merger consideration to Allion’s unaffiliated stockholders on Raymond James’s opinion because such affiliated stockholders will receive the same per share consideration pursuant to the merger agreement as Allion’s unaffiliated stockholders and will not receive any other material benefit;
	•		the fact that the merger consideration is all cash, which provides certainty of value and complete liquidity to Allion’s stockholders;
	•		the fact that because the rollover stockholders were required to exchange a portion of their shares of Allion common stock for equity interests in Parent as a condition of the H.I.G. Buying Group’s agreement to enter into the merger agreement, it reduced the cash required to be paid by the H.I.G. Buying Group pursuant to the merger agreement and allowed the H.I.G. Buying Group to pay a higher price per share to Allion’s unaffiliated stockholders under the merger agreement;
	•		the belief that the Company has undertaken extensive efforts to market itself to potentially interested parties, with the assistance of the Company’s financial advisors, in a thorough, fair and full process designed to ensure that the $6.60 per share consideration was the highest offer that could be obtained for Allion; and
	•		and the fact that the merger is subject to the adoption of the merger agreement by the holders of at least a majority of the issued and outstanding shares of Allion common stock.

     The H.I.G. Buying Group considered each of the foregoing factors in determining the fairness of the merger to Allion’s unaffiliated stockholders. In light of the factors described above and the fact that the use of a Special Committee of independent directors is a mechanism well recognized to ensure fairness in transactions of this type, the H.I.G. Buying Group believes that the merger is procedurally fair to Allion’s unaffiliated stockholders despite the fact that the merger agreement does not require adoption by a majority of the unaffiliated holders of Allion common stock and the fact that Allion’s Special Committee did not retain an unaffiliated representative to act solely on behalf of its unaffiliated stockholders.

     The H.I.G. Buying Group did not consider Allion’s net book value, which is an accounting concept, to be a factor in determining the substantive fairness of the transaction to Allion’s unaffiliated stockholders because they believed that net book value is not a material indicator of the value of Allion’s equity but rather an indicator of historical costs. The H.I.G. Buying Group also did not consider the liquidation value of Allion’s assets as indicative of Allion’s value primarily because of their belief that the liquidation value would be significantly lower than Allion’s value as an ongoing business and that, due to the fact that Allion is being sold as an ongoing business, the liquidation value is irrelevant to a determination as to whether the merger is fair to the unaffiliated stockholders of Allion. The H.I.G. Buying Group did not establish a pre-merger going concern value for Allion’s equity as a public company for the purposes of determining the fairness of the merger consideration to Allion’s unaffiliated stockholders because, following the merger, Allion will have a significantly different capital structure, which will result in different opportunities and risks for the business as a highly leveraged private company.

     In making their determination as to the fairness of the proposed merger to Allion’s unaffiliated stockholders, the H.I.G. Buying Group was not aware of any firm offers during the prior two years by any person for the merger or consolidation of Allion with another company, the sale or transfer of all or substantially all of Allion’s assets or a purchase of Allion’s common stock that would enable the holder to exercise control of Allion.

     The H.I.G. Buying Group’s view as to the fairness of the merger to Allion’s unaffiliated stockholders is not a recommendation as to how any such stockholder should vote on the merger agreement. The foregoing discussion of the information and factors considered by the H.I.G. Buying Group, while not exhaustive, is believed to include all material factors considered by the H.I.G. Buying Group. The H.I.G. Buying Group did not find it practicable to assign, nor did they assign, relative weights to the individual factors considered in reaching their conclusion as to the fairness of the merger to such stockholders. The H.I.G. Buying Group believes that these factors provide a reasonable basis for its position that the merger is fair to Allion’s unaffiliated stockholders.

Position of the Parallex Group as to the Fairness of the Merger

     Under applicable SEC rules, the Parallex Group is engaged in a “going private” transaction and therefore required to express its belief as to the fairness of the merger to Allion’s unaffiliated stockholders. The Parallex Group is making the statements included in this section solely for the purposes of complying with the requirements of Rule 13e-3 and related rules under the Exchange Act. The Parallex Group’s view as to fairness of the proposed merger should not be construed as a recommendation to any stockholder of Allion as to how such stockholder should vote on the proposal to adopt the merger agreement.

     The Parallex Group believes that the merger is both substantively and procedurally fair to Allion’s unaffiliated stockholders. The Parallex Group has expressly adopted the analyses of Raymond James in their determination of the substantive fairness of the merger consideration to Allion’s unaffiliated stockholders. However, the Parallex Group has not undertaken any formal evaluation of the fairness of the merger to Allion’s unaffiliated stockholders or engaged a financial advisor for such purpose. The Parallex Group did not consider Allion’s historic market prices, net book value, going concern value or liquidation value in determining the fairness of the transaction to Allion’s unaffiliated stockholders. Moreover, the Parallex Group did not participate in the deliberations of the Special Committee or receive advice from the Company’s legal or financial advisors in connection with the merger and was not involved in any negotiations regarding the merger, the merger agreement or the per share merger consideration. The Parallex Group also was not involved in the negotiations between H.I.G. and the Special Committee with respect to the merger, the merger agreement or the per share merger consideration. The Parallex Group has not been given access to any of the analyses undertaken by the H.I.G. Buying Group, the Special Committee or the Allion Board of Directors in valuing Allion. Mr. Miller and Mr. Stepanuk currently serve as the designees of the rollover stockholders, together with certain other holders of Allion common stock, to Allion’s Board of Directors. Mr. Miller and Mr. Stepanuk, each in his capacity as a member of Allion’s Board of Directors, participated in the deliberations of the Board of Directors in approving the merger agreement and the merger, although they were not members of, and did not participate in the deliberations of, the Special Committee. Following the unanimous approval of the merger agreement by all of Allion’s independent directors, the merger agreement was unanimously approved by Allion’s full Board of Directors.

     The belief of the Parallex Group that the merger is fair to the unaffiliated stockholders of Allion is based on the following factors, among others:

	•		the fact that the $6.60 per share merger consideration and other terms and conditions of the merger agreement resulted from extensive arms-length negotiations between the Special Committee and the Company’s advisors, on the one hand, and H.I.G. and its advisors, on the other hand, and represents a substantial increase in the offer by H.I.G. of $5.50 per share in its initial letter of intent dated June 2, 2009;
	•		the fact that the Special Committee unanimously determined that the merger agreement and the merger are fair to and in the best interest of Allion and its stockholders;
	•		the fact that the merger agreement was unanimously approved by Allion’s full Board of Directors, including each of Allion’s independent directors, present at the meeting called for that purpose;
	•		the fact that neither the Special Committee nor Allion’s Board of Directors had any obligation to recommend approval of the merger or adoption of the merger agreement or any other transaction;
	•		the fact that the merger requires the adoption of the merger agreement by the affirmative vote of the holders of at least a majority of the issued and outstanding shares of Allion common stock entitled to vote at a meeting of stockholders;
	•		the fact that, although the Parallex Group is not entitled to rely on it, Allion’s Board of Directors received an opinion from Raymond James as to the fairness, from a financial point of view, as of the date thereof, of the merger consideration to be received by Allion’s stockholders (other than the rollover stockholders, Parent, Merger Sub and their respective affiliates); although Raymond James’s opinion addresses the fairness of the consideration to be received by all of Allion’s unaffiliated stockholders as well as certain of Allion’s affiliated stockholders, the Parallex Group nonetheless partly based its determination of the fairness of the merger consideration to Allion’s unaffiliated stockholders on Raymond James's opinion because such affiliated stockholders will receive the same per share consideration pursuant to the merger agreement as Allion's unaffiliated stockholders and will not receive any other material benefit;
	•		the fact that the Special Committee consulted with the Company’s legal and financial advisors, who are experienced in transactions similar to the proposed merger;
	•		the fact that the merger will provide consideration to the unaffiliated stockholders of Allion entirely in cash, which provides certainty of value;
	•		the fact that the merger will provide liquidity, without the brokerage and other costs typically associated with market sales, for Allion’s public stockholders, whose ability, absent the merger, to sell their shares of Allion common stock is adversely affected by the low trading volume of the shares;
	•		the fact that because the rollover stockholders were required to exchange a portion of their shares of Allion common stock for equity interests in Parent as a condition of the H.I.G. Buying Group’s agreement to enter

			into the merger agreement, it reduced the cash required to be paid by the H.I.G. Buying Group pursuant to the merger agreement and allowed the H.I.G. Buying Group to pay a higher price per share paid to Allion’s unaffiliated stockholders under the merger agreement;
	•		the fact that any Allion stockholders who do not support the merger will have the opportunity to seek appraisal of the fair value of their shares under Delaware law;
	•		the Special Committee’s belief that the Company’s efforts to market itself to potentially interested parties, with the assistance of the Company’s financial advisors, constituted a thorough, fair and full process to ensure that the $6.60 per share consideration was the highest offer that could be obtained for Allion;
	•		the fact that none of the members of the H.I.G. Buying Group or the Parallex Group participated in or had any influence on the Special Committee’s deliberative process or conclusions; and
	•		the fact that Allion may terminate the merger agreement prior to the adoption of the merger agreement by Allion’s stockholders in order to accept a superior third party proposal, subject to certain conditions, including payment of a termination fee.

     The Parallex Group considered each of the foregoing factors in determining the fairness of the merger to Allion’s unaffiliated stockholders. In light of the factors described above and the fact that the use of a Special Committee of independent directors is a mechanism well recognized to ensure fairness in transactions of this type, the Parallex Group believes that the merger is procedurally fair to Allion’s unaffiliated stockholders despite the fact that Allion did not retain an unaffiliated representative to act solely on behalf of its unaffiliated stockholders. The Parallex Group also believes that the merger is procedurally fair to Allion’s unaffiliated stockholders despite the fact that Mr. Miller and Mr. Stepanuk, each in his capacity as a member of Allion’s Board of Directors, participated in the deliberations of the Board of Directors in approving the merger agreement and the merger. In this regard, the Parallex Group notes that all of the other members of the Board of Directors who voted on the transaction approved the merger agreement.

     In making its determination as to the fairness of the proposed merger to Allion’s unaffiliated stockholders, the Parallex Group was not aware of any firm offers during the prior two years by any person for the merger or consolidation of Allion with another company, the sale or transfer of all or substantially all of Allion’s assets or a purchase of Allion’s common stock that would enable the holder to exercise control of Allion.

     The Parallex Group’s view as to the fairness of the merger to Allion’s unaffiliated stockholders is not a recommendation as to how any such stockholder should vote on the merger. The foregoing discussion of the information and factors considered by the Parallex Group, while not exhaustive, includes all material factors considered by the Parallex Group. The Parallex Group did not find it practicable to assign, nor did it assign, relative weights to the individual factors considered in reaching its conclusion as to the fairness of the merger to Allion’s unaffiliated stockholders. Rather, the fairness determinations were made after consideration of the totality of the information presented to it.

Opinion of Allion’s Financial Advisor, Raymond James & Associates, Inc.

     Pursuant to an engagement letter dated January 29, 2009, we retained Raymond James as our exclusive financial advisor in connection with the proposed merger. At the meeting of our Board of Directors on October 18, 2009, Raymond James delivered to our Board of Directors its opinion that, as of such date and based upon, and subject to, various qualifications and assumptions described with respect to its opinion, the consideration to be received in the proposed merger by holders of Allion common stock (other than the rollover stockholders, Parent and Merger Sub, and their respective affiliates) was fair, from a financial point of view, to such holders .

      The full text of the written opinion of Raymond James, dated October 18, 2009, which sets forth assumptions made, matters considered, and limits on the scope of review undertaken, is attached as Appendix B to this Proxy Statement. Raymond James’s opinion, which is addressed to our Board of Directors, is directed only to the fairness, from a financial point of view, to the holders of Allion common stock (other than the rollover stockholders, Parent, Merger Sub and their respective affiliates), of the consideration to be received in the proposed merger by such holders. Raymond James expressed no opinion on the relative merits of the merger compared to any alternative that might be available to Allion or the terms of the merger agreement. Raymond James’s opinion does not constitute a recommendation to our Board of Directors or any holder of Allion common stock as to how to vote with respect to the proposed merger or otherwise and

does not address any other aspect of the proposed merger or any related transaction. Raymond James’s opinion does not address the fairness of the proposed merger to, or any consideration that may be received by, the holders of any other class of securities, creditors or constituencies of Allion, including the rollover stockholders, Parent or Merger Sub, or the underlying decision by Allion or our Board of Directors to pursue the proposed merger. Raymond James expressed no opinion as to the price at which Allion common stock or any other securities would trade at any future time. In addition, Raymond James did not express any view or opinion as to the fairness, financial or otherwise, of the amount or nature of any compensation payable to or to be received by our officers, directors, or employees, or any class of such persons, in connection with or as a result of the merger. Raymond James’s opinion was authorized for issuance by the Fairness Opinion Committee of Raymond James. The summary of the opinion of Raymond James set forth in this proxy statement is qualified in its entirety by reference to the full text of such opinion. Holders of Allion common stock are urged to read this opinion in its entirety.

In arriving at its opinion, Raymond James, among other things:

	•		reviewed the financial terms and conditions as stated in the October 18, 2009 draft agreement;
	•		reviewed our annual report filed on Form 10-K for the fiscal year ended December 31, 2008 and the quarterly reports filed on Form 10-Q for the quarters ended March 31, 2009 and June 30, 2009;
	•		reviewed certain other publicly available information on the Company;
	•		reviewed other Company financial and operating information provided by us, such as detailed accounts receivable aging schedules and segmented historical financials by operating location;
	•		reviewed the historical stock price and trading activity for the shares of Allion common stock;
	•		discussed our operations, historical financial results, and future prospects with certain management team members of the Company;
	•		discussed with our senior management certain information related to the aforementioned;
	•		compared financial and stock market information for the Company with similar information for certain other companies with publicly-traded equity securities;
	•		reviewed the financial terms and conditions of certain recent business combinations involving companies in businesses Raymond James deemed to be similar to those of the Company; and
	•		considered such other quantitative and qualitative factors that Raymond James deemed to be relevant to its evaluation, including the Company’s exposure to potential changes in reimbursement rates, health care reform and the status of premium reimbursement programs in a period of weak economic growth and pressure on state budgets.

     Raymond James did not assume responsibility for independent verification of, and did not independently verify, any information, whether publicly available or furnished to it by us or any other party, including, without limitation, any financial information, forecasts, or projections considered in connection with the rendering of its opinion. For purposes of its opinion, Raymond James assumed and relied upon, with permission from our Board of Directors, the accuracy and completeness of all such information. Raymond James did not conduct a physical inspection of any of the properties or assets, and did not prepare or obtain any independent evaluation or appraisal of any of the assets or liabilities (contingent or otherwise). With respect to financial forecasts and estimates, along with other information and data provided to or otherwise reviewed by or discussed with Raymond James, Raymond James (i) assumed, with permission from our Board of Directors, that such forecasts, estimates and other such information and data had been reasonably prepared in good faith on bases reflecting the best currently available estimates and judgments of management and (ii) relied upon each party to advise Raymond James promptly if any information previously provided became inaccurate or was required to be updated during the period of its review.

     In rendering its opinion, Raymond James assumed that the merger would be consummated on the terms described in the merger agreement. Furthermore, Raymond James assumed, in all respects material to its analysis, that the representations and warranties of each party contained in the merger agreement were true and correct, that each party will perform all of the covenants and agreements required to be performed by it under the merger

agreement, and that all conditions to the consummation of the merger will be satisfied without being waived. Raymond James also assumed that all material governmental, regulatory, or other consents and approvals will be obtained and that, in the course of obtaining any necessary governmental, regulatory, or other consents and approvals necessary for the consummation of the merger, as contemplated by the merger agreement, no restrictions will be imposed or amendments, modifications, or waivers made that would have any material adverse effect on Allion. Raymond James expressed no opinion regarding the structure or tax consequences of the merger, or the availability or advisability of any alternatives to the merger.

     Raymond James’s opinion is necessarily based on economic, market, and other conditions and the information made available to Raymond James as of October 18, 2009. It should be understood that subsequent developments could affect Raymond James’s opinion and that Raymond James does not have any obligation to reaffirm its opinion.

Summary of Financial Analyses Conducted by Raymond James

     The following is a summary of the material financial analyses underlying Raymond James’s opinion, dated October 18, 2009, delivered to our Board of Directors in connection with the merger at a meeting of the our Board of Directors on October 18, 2009. The order of the analyses described below does not represent the relative importance or weight given to those analyses by Raymond James or by our Board of Directors. Considering such data without considering the full narrative description of the financial analyses could create a misleading or incomplete view of Raymond James’s financial analyses.

     In arriving at its opinion, Raymond James did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Raymond James believes that its analyses must be considered as a whole and that selecting portions of its analyses, without considering all analyses, would create an incomplete view of the process underlying its opinion.

     The following summarizes the material financial analyses presented by Raymond James to our Board of Directors at its meeting on October 18, 2009 and considered by Raymond James in rendering its opinion. The description below explains Raymond James’s methodology for evaluating the consideration to be reviewed in the proposed merger. No company or transaction used in certain of the analyses described below was deemed to be directly comparable to Allion or the merger, and the summary set forth below does not purport to be a complete description of the analyses or data presented by Raymond James. In presenting their financial analyses to our Board of Directors, Raymond James included, along with other information, the mean and median values resulting from their analyses of other companies and transactions, which mean and median values are included in the descriptions below. However, Raymond James included the mean and median values for informational purposes only, to illustrate the dispersion of the data within the corresponding range, and noted that they did not consider those values alone dispositive of whether a particular analysis supported the fairness of the consideration to be paid in the merger, particularly where the multiple implied by the consideration to be paid in the merger otherwise fell within the high to low range of multiples for the analysis.

      Historical Stock Trading Analysis

     Raymond James analyzed the performance of Allion common stock between October 16, 2008 and October 16, 2009. During this period, Allion common stock achieved a closing price high of $7.40 and a closing price low of $2.83. The results of this summary analysis are summarized below.

						Implied
		Price				Premium
Merger consideration		$	6.60				—
One-day volume-weighted average price* “VWAP”		$	5.22				26.4	%
Five-day VWAP		$	5.07				30.2	%
30-day VWAP		$	5.76				14.6	%
60-day VWAP		$	6.33				4.3	%
90-day VWAP		$	6.12				7.8	%

     Raymond James also presented a stock price histogram, for the trailing twelve-month and six-month periods, illustrating that approximately 84.4% and 77.1% of the trading activity in Allion common stock during the twelve

months and six months periods prior to announcement of the merger occurred at prices below the per share merger consideration of $6.60.

      Selected Public Companies Analysis

     Raymond James compared certain operating, financial, trading, and valuation information for Allion to certain publicly available operating, financial, trading, and valuation information for nine selected companies, each of which Raymond James believes to have a business model reasonably similar, in whole or in part, to that of Allion. These selected companies included:

	•		Amerisourcebergen Corporation (“ABC”),
	•		Cardinal Health, Inc. (“CAH”),
	•		McKesson Corp. (“MCK”),
	•		PSS World Medical Inc. (“PSS”),
	•		Henry Schein Inc. (“HSIC”),
	•		Owens & Minor Inc. (“OMI”),
	•		BioScrip Inc. (“BIOS”),
	•		Omnicare Inc. (“OCR”), and
	•		Pharmerica Corporation (“PMC”).

     Raymond James did not provide our Board of Directors with all the data underlying this analysis for the selected companies, although Raymond James provided the current (as of October 16, 2009) enterprise values (calculated as the sum of the value of common equity on a fully diluted basis and the value of net debt) and the trailing twelve month earnings before interest, income taxes, depreciation, and amortization, or EBITDA, for the selected companies, as described in the following table:

Financial Metric		ABC				CAH				MCK				PSSI				HSIC
Total Enterprise Value ($millions)		$	7,351			$	12,772			$	16,476			$	1,428			$	5,173
Trailing Twelve Month EBITDA ($millions)		$	972			$	1,623			$	2,223			$	132			$	545

Financial Metric		OMI						BIOS				OCR						PMC
Total Enterprise Value ($millions)		$	2,172					$	307			$	4,591					$	753
Trailing Twelve Month EBITDA ($millions)		$	207					$	22			$	709					$	101

     In addition, for each of the selected companies, Raymond James calculated the multiples of enterprise value divided by (i) actual or projected revenue and (ii) actual or projected EBITDA (adjusted for non-recurring income and expenses), for the twelve month period ended June 30, 2009 and years ending December 31, 2009 and 2010. Raymond James also calculated the multiples of equity value per share divided by the diluted EPS (adjusted for non-recurring income and expenses) for the twelve month period ended June 30, 2009 and years ending December 31, 2009 and 2010. The resulting multiples for the selected companies are set forth in the table below:

Multiple

ABC

CAH

MCK

PSSI

HSIC

Enterprise Value/Revenue:

Twelve month period ended June 30, 2009

0.1x

0.1x

0.2x

0.7x

0.8x

CY2009

0.1x

0.1x

0.2x

0.7x

0.8x

CY2010

0.1x

0.1x

0.1x

0.7x

0.8x

Enterprise Value/EBITDA:

Twelve month period ended June 30, 2009

7.6x

7.9x

7.4x

10.8x

9.5x

CY2009

7.6x

8.3x

6.9x

10.6x

9.5x

CY2010

7.2x

8.3x

6.7x

9.2x

8.8x

Price/EPS:

Twelve month period ended June 30, 2009

14.2x

12.7x

13.2x

21.4x

18.1x

CY2009

14.1x

11.1x

15.0x

21.6x

17.6x

CY2010

12.5x

14.7x

13.5x

18.4x

15.8x

Multiple

OMI

BIOS

OCR

PMC

Enterprise Value/Revenue:

Twelve month period ended June 30, 2009

0.3x

0.2x

0.7x

0.4x

CY2009

0.3x

0.2x

0.7x

0.4x

CY2010

0.3x

0.2x

0.7x

0.4x

Enterprise Value/EBITDA:

Twelve month period ended June 30, 2009

10.5x

14.1x

6.5x

7.5x

CY2009

9.9x

12.8x

6.5x

7.4x

CY2010

8.9x

10.4x

6.3x

7.0x

Price/EPS:

Twelve month period ended June 30, 2009

23.8x

20.9x

10.5x

15.1x

CY2009

19.6x

17.9x

10.7x

14.8x

CY2010

15.5x

12.9x

8.3x

12.5x

     Raymond James then reviewed the mean, median, low, and high relative valuation multiples of the selected companies and compared them to corresponding trading multiples for Allion on October 18, 2009, utilizing actual results as reported by Allion and Wall Street research consensus estimates for calendar years 2009 and 2010, as directed by Allion management. The results of the selected public company analysis are summarized below:

Multiple

Allion

Mean

Median

Low

High

Enterprise Value/Revenue:

Twelve month period ended June 30, 2009

0.6x

0.4x

0.3x

0.1x

0.8x

CY2009

0.6x

0.4x

0.3x

0.1x

0.8x

CY2010

0.5x

0.4x

0.3x

0.1x

0.8x

Enterprise Value/EBITDA:

Twelve month period ended June 30, 2009

6.7x

9.1x

7.9x

6.5x

14.1x

CY2009

6.0x

8.8x

8.3x

6.5x

12.8x

CY2010

5.5x

8.1x

8.3x

6.3x

10.4x

Price/EPS:

Twelve month period ended June 30, 2009

10.8x

16.7x

15.1x

10.5x

23.8x

CY2009

11.3x

15.8x

15.0x

10.7x

21.6x

CY2010

9.2x

13.8x

13.5x

8.3x

18.4x

     Raymond James then applied the mean and median multiples to the relevant Allion revenue, EBITDA, and EPS metrics, using consensus analyst estimates, per Allion management, to determine a range of implied Allion

enterprise values. After adjusting for Allion’s capitalization, Raymond James reviewed the range of per share prices derived in the selected public companies analysis as of October 16, 2009 and compared them to the merger price of $6.60 per share for Allion. The results of the selected public companies analysis are summarized below:

Equity Value per Share		Allion				Mean				Median				Low				High
Enterprise Value/Revenue:
Twelve month period ended June 30, 2009		$	6.60			$	2.60			$	1.21			nmf				$	7.77
CY2009		$	6.60			$	2.82			$	1.21			nmf				$	8.10
CY2010		$	6.60			$	3.12			$	1.38			nmf				$	8.58
Enterprise Value/EBITDA:
Twelve month period ended June 30, 2009		$	6.60			$	7.32			$	6.05			$	4.58			$	12.58
CY2009		$	6.60			$	8.19			$	7.53			$	5.43			$	12.87
CY2010		$	6.60			$	8.12			$	8.43			$	5.80			$	11.06
Price/EPS:
Twelve month period ended June 30, 2009		$	6.60			$	8.38			$	7.61			$	5.29			$	11.98
CY2009		$	6.60			$	7.60			$	7.18			$	5.13			$	10.38
CY2010		$	6.60			$	8.14			$	7.97			$	4.87			$	10.88

      Raymond James noted that the consideration of $6.60 per share offered in the merger is within the range of values implied for the shares of Allion common stock by each of the multiples described in the preceding table. Additionally, while Raymond James noted that the consideration of $6.60 offered in the merger is less than the value implied for Allion by the means and medians of a number of the multiples used in this analysis, it also noted that the consideration of $6.60 offered in the merger is above the value implied for the Company by the means and medians of other multiples used in the analysis and within the range of the mean and median for one of the multiples used. Raymond James further noted that it had provided the means and medians for the multiples in this analysis solely for our Board of Directors’ information, and that those means and medians should not be viewed as dispositive as to whether a particular multiple supported the fairness of the consideration. Raymond James believes that considering this analysis individually, without considering all of Raymond James’ analyses as a whole, would create an incomplete view of the process underlying its opinion. Raymond James also noted that no company utilized in the selected companies analysis is identical to Allion, and, accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning our financial and operating characteristics and other factors that would affect the companies to which Allion is being compared. Among other things, Raymond James noted that Allion might be negatively affected relative to the selected companies by Allion’s comparatively greater reliance for its revenue on state Medicaid programs, particularly in California and New York, which are experiencing budget shortfalls and are expected to face increasing fiscal problems.

      Selected Transactions Analysis

     Raymond James derived a range of potential values for Allion relative to select mergers and acquisitions involving companies that Raymond James believed to have similar business models, in whole or in part, to that of Allion and were announced and completed (or were then pending) between September 1, 2007 and October 17, 2009. The selected transactions considered included:

	•		Excellere Partners’ pending acquisition of MTS Medication Technologies, Inc., announced in August 2009 (“MTS”);
	•		MedcoHealth Solutions Inc. acquisition of Owens & Minor Inc., Direct-to-Consumer Diabetes Supply Business, closed in January 2009 (“O&M-DTC”);
	•		The Blackstone Group’s acquisition of Apria Healthcare Group, Inc., closed in October 2008 (“APRIA”);
	•		SunLink Health Systems Inc. acquisition of Carmichael’s Cashway Pharmacy, Inc. closed in April 2008 (“CCP”); and
	•		Allion Healthcare Inc. acquisition of Biomed America, Inc., closed in April 2008 (“BIOMED”).

     Raymond James calculated multiples of transaction enterprise value compared to the revenue and EBITDA (adjusted for non-recurring income and expenses) of the target companies, in each case for the reported twelve month period prior to announcement of the transaction, where such information was publicly available. The resulting multiples for the selected transactions are set forth in the table below:

Multiple

MTS

O&M-DTC

APRIA

CCP

BIOMED

Enterprise Value ( $millions )

$

46.8

$

63.0

$

1594.1

$

22.8

$

118.0

Enterprise Value/Trailing Twelve Months:

Revenue

0.6 x

0.7 x

1.0 x

0.5 x

nmf

EBITDA

6.2 x

na

5.3 x

6.4 x

8.0 x

     Raymond James then reviewed the mean, median, low, and high relative valuation multiples of the selected transactions and compared them to corresponding multiples for Allion as of October 16, 2009. The results of the selected transactions analysis are summarized below:

Multiple

Allion

Mean

Median

Low

High

Enterprise Value/Trailing Twelve Months:

Revenue

0.7 x

0.7 x

0.6 x

0.5 x

1.0 x

EBITDA

8.4 x

6.5 x

6.3 x

5.3 x

8.0 x

     Raymond James then applied the mean and median multiples to the relevant Allion revenue and EBITDA metrics to determine a range of implied Allion enterprise values. After adjusting for our capitalization, Raymond James reviewed the range of per share prices derived in the selected transactions analysis and compared them to the offer price of $6.60 per share for Allion. The results of the selected transactions analysis are summarized below:

Equity Value per Share		Allion				Mean				Median				Low				High
Enterprise Value ( $millions )		$	277.9
Enterprise Value/Trailing Twelve Months:
Revenue		$	6.60			$	6.44			$	5.70			$	4.38			$	9.95
EBITDA		$	6.60			$	4.59			$	4.40			$	3.39			$	6.19

     Raymond James believes that considering this analysis individually, without considering all of Raymond James’ analyses as a whole, would create an incomplete view of the process underlying its opinion. No transaction utilized in the selected transactions analysis is identical to the proposed merger, including the timing or size of the transactions, and, accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning Allion’s financial and operating characteristics and other factors that would affect the selected transactions to which Allion is being compared.

      Premiums Paid Analysis

     For informational purposes, Raymond James analyzed the premiums paid in 54 all-cash acquisitions for U.S. publicly traded companies with a transaction enterprise value between $100 and $500 million that were announced and completed between September 1, 2007 and October 17, 2009.

     Raymond James’s analysis was based on the one-, five-, thirty-, sixty- and ninety-day average implied premiums paid in such transactions. The implied premiums in this analysis were calculated by comparing the publicly disclosed transaction price to the target company’s one-, five-, thirty-, sixty- and ninety-day average stock price prior to the announcement of each of the applicable transactions as summarized below:

		Premiums
Target / Acquiror		1-day				5-day				30-day				60-day				90-day
Noven Pharmaceuticals Inc. / Hisamitsu Pharmaceutical Co., Inc.			22.4	%			14.9	%			44.7	%			64.7	%			100.0	%
Monogram Biosciences, Inc. / Laboratory Corp. of America Holdings			170.8	%			164.5	%			117.7	%			75.0	%			11.0	%
SumTotal Systems / Vista Equity Partners			141.3	%			174.0	%			159.4	%			58.0	%			76.4	%
Vnus Medical Technologies, Inc. / Covidien plc			36.0	%			35.1	%			34.4	%			59.8	%			81.3	%
American Land Lease Inc. / Green Courte Real Estate Partners, LLC			264.1	%			273.7	%			129.7	%			(25.9	)%			(21.4	)%
Omrix Biophamaceuticals, Inc. / Johnson & Johnson			18.1	%			37.9	%			75.4	%			8.7	%			35.8	%
SM&A / Odyssey Investment Partners , LLC			159.3	%			131.5	%			103.6	%			73.6	%			33.8	%
Cherokee International Corp. / Lineage Power Holdings, Inc.			33.3	%			48.8	%			24.0	%			72.0	%			11.1	%
Gehl Company / Manitou BF			119.6	%			99.1	%			100.1	%			99.7	%			94.4	%
Captaris Inc. / Open Text, Inc.			37.5	%			42.4	%			42.0	%			18.8	%			2.6	%
Eagle Test Systems, Inc. / Teradyne Inc.			10.4	%			8.2	%			42.3	%			42.7	%			19.2	%
Greenfield Online, Inc. / Microsoft Corporation			31.8	%			42.0	%			60.8	%			42.3	%			38.7	%
PeopleSupport, Inc. / Essar Services			28.5	%			41.1	%			36.1	%			34.6	%			39.0	%
Intervoice, Inc. / Convergys Corporation			23.7	%			52.4	%			26.7	%			18.4	%			9.4	%
Excel Technology Inc. / GSI Group Inc.			41.2	%			45.3	%			25.7	%			31.3	%			24.0	%
Community Bankshares Inc. / First Citizens Bancorp and Trust Company, Inc.			90.9	%			81.8	%			76.5	%			78.0	%			68.7	%
Barrier Therapeutics Inc. / Stiefel Laboratories, Inc.			135.8	%			89.5	%			75.1	%			25.0	%			34.7	%
MEDecision, Inc. / Health Care Service Corp.			309.4	%			288.9	%			302.3	%			332.1	%			192.9	%
CAM Commerce Solutions, Inc. / Great Hill Partners, LLC			7.9	%			12.1	%			8.6	%			12.1	%			(0.8	)%
HireRight, Inc. / USIS Commercial Services, Inc.			95.2	%			95.2	%			13.3	%			110.8	%			127.0	%
Tumbleweed Communications Corp. / Axway Inc.			52.5	%			45.9	%			112.6	%			136.8	%			77.6	%
Kosan Biosciences Inc. / Bristol-Myers Squibb Co.			233.3	%			243.8	%			173.6	%			229.3	%			89.0	%
Angelica Corporation / Lehman Brothers Merchant Banking			(1.3	)%			(1.4	)%			(10.7	)%			(19.9	)%			(15.0	)%
MedQuist Inc. / Cbay, Inc.			46.7	%			56.9	%			29.4	%			12.2	%			9.9	%
Radyne Corp. / Comtech Telecommunications Corp.			48.6	%			47.6	%			35.0	%			19.3	%			27.5	%
Moldflow Corporation / Autodesk, Inc.			12.2	%			17.5	%			31.6	%			60.0	%			37.0	%
Packeteer, Inc. / Blue Coat Systems Inc.			83.9	%			51.4	%			62.8	%			9.4	%			(20.3	)%
180 Connect, Inc. / DirecTV Enterprises LLC			52.5	%			91.5	%			20.0	%			(23.7	)%			(41.9	)%
Clayton Holdings, Inc. / Greenfield Partners , LLC			24.5	%			10.7	%			38.6	%			41.5	%			51.9	%
Iomega Corp. / EMC Corporation			44.7	%			37.5	%			44.7	%			5.8	%			(6.3	)%
Industrial Distribution Group, Inc. / Luther King Captial Management Corporation			18.2	%			20.5	%			22.3	%			14.5	%			6.7	%
Bentley Pharmaceuticals Inc. / Teva Pharmaceuticals Industries Limited			17.3	%			14.5	%			25.9	%			25.1	%			18.3	%
Synplicity, Inc. / Synopsys Inc.			50.4	%			55.6	%			82.6	%			50.7	%			45.5	%
I-trax. Inc. / Walgreen Co.			38.5	%			44.0	%			61.7	%			67.2	%			44.0	%
CollaGenex Pharmaceuticals Inc. / Galderma Laboratories, L.P.			29.7	%			27.4	%			62.7	%			120.5	%			66.8	%
Encysive Pharmaceuticals Inc. / Pfizer Inc.			117.6	%			197.5	%			226.4	%			209.2	%			49.7	%
Possis Medical / MEDRAD, Inc.			35.9	%			41.4	%			34.9	%			46.6	%			43.1	%
NuCo2 Inc. / Aurora Capital Group			24.6	%			20.1	%			16.3	%			17.5	%			14.7	%
VistaCare Inc. / Odyssey Healthcare Inc.			(9.5	)%			(4.9	)%			(3.9	)%			(15.0	)%			(16.7	)%
Lifecore Biomedical Inc. / Warburg Pincus LLC			32.4	%			27.2	%			38.2	%			28.9	%			49.4	%
ASV Inc. / Terex Corp.			46.5	%			47.9	%			53.8	%			43.7	%			27.1	%
AmCOMP Incorporated / Employers Holdings, Inc.			40.0	%			37.1	%			22.7	%			21.4	%			27.5	%
North Pointe Holdings Corp. / QBE Holdings, Inc.			51.2	%			46.3	%			53.4	%			45.3	%			65.8	%
MTC Technologies, Inc. / BAE Systems, Inc.			35.0	%			51.6	%			38.0	%			24.3	%			14.4	%
Electronic Clearing House Inc. / Intuit Inc.			115.2	%			81.4	%			34.0	%			63.0	%			78.2	%
Nextest Systems Corp. / Teradyne Inc.			66.8	%			60.3	%			52.4	%			73.9	%			68.9	%
Genesis Microchip Inc. / STMicroelectronics NV			60.2	%			74.7	%			20.6	%			14.4	%			5.5	%
Coley Pharmaceutical Group, Inc. / Pfizer Inc.			166.7	%			145.4	%			158.9	%			137.4	%			126.6	%
Restoration Hardware, Inc. / Catterton Partners/Gary Friedman			67.9	%			57.9	%			43.3	%			20.0	%			(18.5	)%
First Consulting Group Inc. / Computer Science Corporation			30.3	%			31.3	%			30.3	%			44.4	%			43.3	%
Bradley Pharmaceuticals Inc. / Nycomed US, Inc.			8.5	%			9.1	%			(0.9	)%			9.1	%			(4.8	)%
E-Z-EM Inc. / Bracco Diagnostics, Inc.			27.9	%			33.2	%			39.2	%			39.2	%			33.8	%
Covad Communications Group Inc. / Platinum Equity, LLC			59.4	%			61.9	%			39.7	%			17.2	%			12.7	%
United Retail Group, Inc. / Redcats USA, Inc.			81.5	%			60.2	%			26.9	%			11.7	%			(0.1	)%

Premiums Paid Summary		Allion				Mean				Median				Low				High
One-day premium			21.3	%			66.4	%			43.0	%			(9.5	)%			309.4	%
Five-day premium			31.5	%			67.1	%			46.9	%			(4.9	)%			288.9	%
30-day premium			(4.1)	%			61.4	%			40.9	%			(10.7	)%			302.3	%
60-day premium			(3.8)	%			52.4	%			40.3	%			(25.9	)%			332.1	%
90-day premium			12.6	%			36.7	%			33.8	%			(41.9	)%			192.9	%

     The implied price per share range for Allion shown in the table below was calculated with the above transaction premiums using the closing price of Allion common stock on the relevant date.

Premiums Paid		Allion				Mean				Median				Low				High
One-day premium		$	6.60			$	9.05			$	7.78			$	4.92			$	22.27
Five-day premium		$	6.60			$	8.39			$	7.38			$	4.78			$	19.52
30-day premium		$	6.60			$	11.10			$	9.69			$	6.15			$	27.68
60-day premium		$	6.60			$	10.46			$	9.63			$	5.08			$	29.64
90-day premium		$	6.60			$	8.01			$	7.84			$	3.40			$	17.16

      Raymond James noted that the consideration of $6.60 per share offered in the merger is less than the value implied for shares of Allion common stock by the means and medians of the transaction set over the premium periods described in the preceding table. However, Raymond James also noted that the premiums implied by the consideration offered in the merger are within the ranges of premiums for the transaction set over each of the premium periods described in the preceding table. Raymond James believes that considering this analysis individually, without considering all of Raymond James’ analyses as a whole, would create an incomplete view of the process underlying its opinion. Raymond James also noted that no transaction utilized in the premiums paid analysis is identical to the merger, including the timing or size of the transactions, and, accordingly, an analysis of the results of the foregoing necessarily involves complex considerations and judgments concerning our financial and operating characteristics and other factors that would affect the acquisition value of companies to which Allion is being compared. Raymond James further noted that, given the large number of transactions included in the premiums paid analysis, and the dispersion of those transactions over time and across industries, the premiums paid analysis was provided for general informational purposes, rather than as a specific valuation of Allion. Raymond James also noted that Allion’s shares were relatively illiquid with prices subject to significant fluctuations, making its market price at any time potentially less indicative of the potential value of Allion.

Additional Considerations

     The foregoing summary describes all analyses and quantitative factors that Raymond James deemed material in its presentation to our Board of Directors but is not a comprehensive description of all analyses performed and factors considered by Raymond James in connection with preparing its opinion. The preparation of a fairness opinion is a complex process involving the application of subjective business judgment in determining the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, is not readily susceptible to summary description. In arriving at its fairness determination, Raymond James did not assign specific weights to any particular analyses.

     The analyses conducted by Raymond James were prepared solely for the purpose of enabling Raymond James to provide its opinion to our Board of Directors as to the fairness, from a financial point of view, of the consideration to be received by the holders of Allion common stock (other than the rollover stockholders, Parent, Merger Sub and their respective affiliates) to such holders. The analyses are not appraisals nor do they necessarily reflect the prices at which assets or securities actually may be sold. In performing its analyses, Raymond James made, and was provided by our management with, numerous assumptions with respect to industry performance, general business, economic, and regulatory conditions and other matters, many of which are beyond our control. The analyses performed by Raymond James, particularly those based on forecasts, are not necessarily indicative of actual values, trading values, or actual future results which might be achieved, all of which may be significantly more or less favorable than suggested by such analyses at the time of the opinion delivery. Because such analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond our or our advisors’ control, none of Allion, Raymond James or any other person assumes responsibility if future results or actual values are materially different from these forecasts or assumptions. All such analyses were prepared solely as a part of Raymond James’s analysis of the fairness, from a financial point of view, to certain holders of Allion common stock of the consideration to be received by such holders. Raymond James’s opinion is directed to our Board of Directors and is intended for its use in its consideration of the merger. The per share merger consideration was determined through negotiation between the Special Committee and H.I.G., and the decision by the Special Committee and our Board of Directors to enter into the merger agreement was solely that of the Special Committee and our Board of Directors. The opinion of Raymond James was one of many factors taken into consideration by our Board of Directors in making its determination to approve the merger. Consequently, the analyses described above should not be viewed as determinative of the opinion of our Board of Directors or management with respect to the value of Allion. We placed no limits of the scope of the analysis performed, or opinion expressed, by Raymond James. Our Board of Directors selected Raymond James as financial advisor in connection with the merger based on Raymond James’s qualifications, expertise, reputation, and experience in mergers and acquisitions. For services rendered in connection with the delivery of its opinion, we paid Raymond James a fee of $250,000 upon delivery of its opinion. We will also pay Raymond James a fee for advisory services of approximately $2.78 million in connection with, and contingent upon consummation of, the merger. We also agreed to reimburse Raymond James for expenses incurred in connection with its services, including the fees and expenses of its counsel, and we will indemnify Raymond James, including for liabilities under federal securities laws, relating to, or arising out of, its engagement.

     Raymond James is actively involved in the investment banking business and regularly undertakes the valuation of investment securities in connection with public offerings, private placements, business combinations, and similar transactions. In the ordinary course of business, Raymond James may trade in the securities of Allion for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.

     Other than the engagement of Raymond James by our Board of Directors described in this section, there are no existing or contemplated material relationships or arrangements for future services, nor have any such relationships or arrangements existed or been contemplated during the past two years, involving or resulting in the payment or receipt of compensation between Raymond James or its affiliates and any party to the transaction or their respective affiliates.

Certain Financial Forecasts

     Allion does not as a matter of course make public financial forecasts. However, in connection with the discussions concerning the proposed transactions, in February and June 2009, our management furnished to Raymond James a forecasted budget for the year ended December 31, 2009, without giving effect to the merger or the other transactions contemplated by the merger agreement. The financial forecast was prepared by our management in early 2007 based on its then-current expectations.

     Our management furnished these forecasts to Raymond James in connection with Raymond James’s engagement as the financial advisor to Allion. Our management did not update these forecasts subsequent to their having been provided to Raymond James to reflect subsequent events with regard to the Company’s business. Accordingly, our management subsequently advised Raymond James that these projections were too unreliable to be used in connection with the preparation of any financial analysis with regard to the proposed merger. Accordingly, Raymond James’s analyses, including the Selected Public Companies Analysis, and opinion were prepared at our direction using consensus Wall Street net income and EBITDA estimates from publicly available sources.

     The inclusion of these financial forecasts in this proxy statement should not be regarded as an indication that Allion or our Board of Directors considered, or now considers, these forecasts to be material to a stockholder or a reliable predictor of future results. You should not place undue reliance on the financial forecasts contained in this proxy statement. Please read carefully “- Important Information about the Financial Forecasts” below.

		Year Ended
		December 31, 2009
Nets sales		$	414,160
Gross profit			74,556
Adjusted EBTIDA			34,876
Net income			13,827

     Adjusted EBITDA is defined as net income before interest expense, income tax expense and depreciation and amortization and excluding the change in fair value of warrants, stock-based compensation expense from phantom stock units. The financial forecast of Adjusted EBITDA was not prepared in accordance with generally accepted accounting principles, or GAAP, and includes a number of non-GAAP adjustments and exclusions. Therefore, the financial forecasts should not be compared to actual results disclosed in Allion’s periodic reports or elsewhere.

Important Information about the Financial Forecasts

     The financial forecasts set forth above were not prepared with a view toward public disclosure, were not prepared in accordance with GAAP and are included in this proxy statement only because they were provided by our management to Raymond James for purposes of engaging in discussions with respect to the transactions.

     The financial forecasts included in this proxy statement were prepared by and are the responsibility of our management. The financial forecasts were not prepared by our management with a view toward compliance with published guidelines of the SEC, the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information, or GAAP.

     The financial forecasts are not guarantees of performance of Allion. The financial forecasts are forward-looking statements that are subject to a number of significant risks, uncertainties and assumptions, and should be read with caution. See “Risk Factors and Special Cautionary Notice Regarding Forward Looking Statements” beginning on page 54.

     While presented with numeric specificity, the financial forecasts reflect numerous important assumptions, many of which are highly subjective, made by our management in light of business, industry and market conditions at the time of their respective preparation. The financial forecasts and assumptions underlying them have not been updated since the dates of preparation. There can be no assurance that the assumptions made in preparing the financial forecasts or the financial forecasts themselves will prove accurate. Actual results may be materially different than the financial forecasts. Allion does not intend to make publicly available any update or other revisions to the financial forecasts.

Effects of the Merger

     If the merger is consummated, Merger Sub will be merged with and into Allion, with Allion continuing as the surviving corporation and a wholly owned subsidiary of Parent. At the effective time of the merger, the following will occur:

	•		each share of Allion common stock (including restricted stock) issued and outstanding immediately prior to the effective time of the merger (other than shares held by Allion, Parent or Merger Sub and stockholders who have perfected and not withdrawn a demand for appraisal rights under Delaware law) will be automatically cancelled and converted into the right to receive $6.60 in cash, without interest;
	•		each outstanding Allion stock option will vest in full prior to the effective time of the merger, and each outstanding Allion stock option not exercised prior to the merger will be cancelled and converted into the right to receive an amount in cash equal to (i) the number of shares subject to such option multiplied by (ii) the excess (if any) of $6.60 over the exercise price per share of such option;
	•		each outstanding Allion warrant (whether or not vested) will be cancelled and converted into the right to receive an amount in cash equal to (i) the number of shares subject to such warrant multiplied by (ii) the excess (if any) of $6.60 over the exercise price per share of such warrant; and
	•		each holder of an outstanding Allion cash-settled phantom stock unit (whether or not vested) will be entitled to receive an amount in cash equal to (i) the number of phantom stock units held by that holder multiplied by $6.60, without interest, plus (ii) a tax gross-up payment to cover any excise tax liability such holder may incur as a result of any payments or benefits, whether paid pursuant to the phantom stock units or otherwise, that may be deemed “golden parachute” payments for tax purposes.

     If the merger is completed, all of the equity interests in Allion will be owned directly by Parent, which immediately following the effective time of the merger will be owned by H.I.G. Healthcare, LLC and the rollover stockholders. Immediately prior to the effective time of the merger, the rollover stockholders will surrender a portion of their shares of Allion common stock in exchange for equity interests in Parent. Except for the rollover stockholders, no current stockholder of Allion will have any ownership interest in, nor be a stockholder of, Allion immediately following the completion of the merger. As a result, Allion’s stockholders (other than the rollover stockholders) will no longer benefit from any increase in Allion’s value, nor will they bear the risk of any decrease in Allion’s value. Following the merger, the rollover stockholders and H.I.G. Healthcare, LLC will, by virtue of its ownership of Parent, benefit from any increase in the value of Allion and also will bear the risk of any decrease in the value of Allion.

     Allion’s common stock is currently registered under the Exchange Act and is listed on the NASDAQ Global Market under the symbol “ALLI.” As a result of the merger, Allion will become a privately held corporation without a public market for its common stock, Allion common stock will no longer be listed on any exchange, including NASDAQ, and price quotations for Allion stock will no longer be available. In addition, the registration of Allion common stock under the Exchange Act will be terminated following the merger. Therefore, the provisions of the Exchange Act will no longer apply to Allion, including the requirement that Allion furnish a proxy or information statement to its stockholders in connection with meetings of its stockholders. Allion will also no longer be required to file periodic reports with the SEC.

     At the effective time of the merger, the certificate of incorporation and bylaws of Allion will be amended to look like the certificate of incorporation and bylaws of Merger Sub in effect immediately prior to the effective time of the merger and will become the certificate of incorporation and bylaws of Allion as the surviving corporation.

     Upon the completion of the merger, the directors of Merger Sub immediately prior to the merger will become the directors of Allion, and the officers of Allion immediately prior to the merger will continue to serve as the officers of Allion.

     The benefits of the merger to Allion’s unaffiliated stockholders include their right to receive $6.60 per share in cash for their shares of Allion common stock and the fact that they will no longer bear the risk that Allion will decrease in value. The detriments of the merger to Allion’s unaffiliated stockholders are that they will cease to participate in Allion’s future earnings and growth, if any, that they will no longer own any interest in Allion’s net book value or net earnings, and that the receipt of the payment for their shares in the merger will be a taxable event for U.S. federal income tax purposes. See “—Material U.S. Federal Income Tax Consequences” beginning on page 50, below.

     The benefits of the merger to the H.I.G. Buying Group include the fact that, following the completion of the merger, Parent will directly own 100% of the outstanding common stock of Allion and will therefore have a corresponding 100% interest in the surviving corporation’s net book value and net earnings. The benefits of the merger to the Parallex Group include the fact that, following the completion of the merger, the Parallex Group will own 19.52% of the

capital stock of Parent and will therefore indirectly have a 19.52% interest in the surviving corporation’s net book value and net earnings.

     Immediately after the merger, based on Allion’s unaudited September 30, 2009 financial statements and calculated based on Allion’s net earnings for the nine months ended September 30, 2009, Parent’s 100% interest in the surviving corporation’s net book value will be equal to approximately $193.1 million (as compared to no interest in Allion’s net book value at September 30, 2009) and $9.9 million in the surviving corporation’s net earnings (as compared to no interest in Allion’s net earnings for the nine months ended September 30, 2009). The Parallex Group’s 19.52% indirect interest in the surviving corporation will be equal to approximately $37.7 million in the surviving corporation’s net book value (as compared to an interest of $53.2 million in Allion’s net book value at September 30, 2009) and $1.9 million in the surviving corporation’s net earnings (as compared to an interest of $2.7 million in Allion’s net earnings for the nine months ended September 30, 2009).

     In addition, the H.I.G. Buying Group and the Parallex Group will benefit from the savings associated with Allion no longer being required to file reports under or otherwise having to comply with provisions of the Exchange Act. Detriments of the merger to the H.I.G. Buying Group and the Parallex Group include the lack of liquidity for Allion common stock following the merger, the risk that Allion will decrease in value following the merger, and the payment by Allion of approximately $            million in transaction costs and estimated fees and expenses related to the merger, which such fees and expenses are further set forth below in “—Estimated Fees and Expenses of the Merger.”

Plans for Allion after the Merger

     Following the completion of the merger, the H.I.G. Buying Group anticipates that Allion will continue its current operations substantially as they are currently being conducted, except that Allion will be a wholly owned subsidiary of Parent rather than an independent public company. Following the completion of the merger, the registration of Allion’s common stock under the Exchange Act will be terminated, along with Allion’s reporting obligations under the Exchange Act. In addition, upon completion of the merger, Allion common stock will no longer be listed on any exchange, including NASDAQ, and price quotations will no longer be available for Allion common stock. Allion will no longer be subject to the obligations and constraints or the related direct and indirect costs associated with having publicly traded equity securities.

     The H.I.G. Buying Group has advised Allion that they do not have any specific plans or proposals that relate to or would result in an extraordinary corporate transaction following completion of the merger involving Allion’s corporate structure, business or management, such as a merger, reorganization, liquidation, relocation of any operations or purchase, sale or transfer of a material amount of assets. However, the H.I.G. Buying Group expects to continuously evaluate and review Allion’s business and operations following the merger and may develop new plans and proposals that they consider appropriate to maximize the value of Allion. The H.I.G. Buying Group expressly reserves the right to make any changes they deem appropriate in light of such evaluation and review or in light of future developments.

     It is currently anticipated that each of Bayside Capital, Inc., an affiliate of H.I.G., and RAM Capital Group, LLC, an affiliate of Parallex, will enter into an agreement with the Company following the closing of the transactions contemplated under the Merger Agreement pursuant to which each such entity would provide certain management and consulting services to the Company in exchange for reimbursement of expenses associated with providing such services and a fee equal to $975,000 per annum in the case of Bayside Capital, Inc. and $275,000 per annum in the case of RAM Capital Group, LLC. The Company will also provide customary indemnification to such entities in connection with such services.

     It is currently anticipated that Bayside Capital, Inc. will enter into an agreement with the Company following the closing the transactions contemplated under the Merger Agreement pursuant to which it would provide certain transaction consulting services to the Company in exchange for reimbursement of expenses associated with providing such services and fees equal to 2% of the value associated with certain sale and acquisition transactions contemplated by such agreement. The Company will also provide customary indemnification in connection with such services. RAM Capital Group, LLC may participate in providing such services and in connection therewith, may be entitled to a portion of such fees as mutually determined between the parties.

     In connection with the structuring and implementation of the merger and related financing transactions, the Company will pay Bayside Capital, Inc. fees in an aggregate amount equal to 2% of the total enterprise value at the completion of the Merger plus all out-of-pocket expenses incurred by H.I.G. prior to the closing of the Merger for services rendered by them in connection with consummation of the Merger.

Conduct of Allion’s Business if the Merger is Not Completed

     In the event that the merger agreement is not approved by Allion’s stockholders or if the merger is not completed for any other reason, Allion’s stockholders will not receive any payment for their shares of Allion common stock. Instead, Allion will remain an independent public company, its common stock will continue to be listed and traded on NASDAQ, and our stockholders will continue to be subject to the same risks and opportunities as they currently face with respect to their ownership of Allion common stock. If the merger is not completed, Allion can offer no assurance as to the effect of these risks and opportunities on the future value of your shares of Allion common stock, including the risk that the market price of Allion common stock may decline due to the fact that the current market price of Allion stock may reflect a market assumption that the merger will be completed. If the merger is not completed, our Board of Directors will evaluate and review the business operations, properties, dividend policy and capitalization of Allion from time to time, make such changes as they deem appropriate, and continue to seek to maximize stockholder value. If the merger agreement is not approved by our stockholders or if the merger is not consummated for any other reason, there can be no assurance that any other acceptable transaction will be available to the Company or that Allion’s business, prospects or results of operations will not be adversely impacted.

     Pursuant to the merger agreement, under certain circumstances, Allion is permitted to terminate the merger agreement and approve an alternative transaction. See “The Merger and the Merger Agreement—Termination” beginning on page 65.

     To the extent Allion does so, it will be obligated to pay Parent a termination fee. See “The Merger and the Merger Agreement—Termination Fees; Expenses” beginning on page 67.

Financing of the Merger

Equity Commitment Letter

     Pursuant to an equity commitment letter from H.I.G. Bayside Debt & LBO Fund II, L.P. to Parent dated as of October 18, 2009, H.I.G. Bayside Debt & LBO Fund II, L.P. has agreed to make capital contributions of up to $165 million to Parent in exchange for equity interests of Parent, to enable Parent and Merger Sub to consummate the merger and the other transactions contemplated by the merger agreement. The amount of the equity contribution from H.I.G. Bayside Debt and LBO Fund II, L.P. will be reduced at closing to the amount, when coupled with the aggregate proceeds of the debt financing described below, that is necessary to consummate the merger and other transactions contemplated by the merger agreement.

     These contributions are subject to:

	•		the satisfaction or waiver at the closing of each of the conditions to Parent’s and Merger Sub’s obligations to consummate the transactions contemplated by the merger agreement;
	•		the substantially concurrent funding of the debt financing transactions described below; and
	•		the contemporaneous consummating of the merger and the other transactions contemplated by the merger agreement.

Debt Commitment Letters

     Parent and Merger Sub will finance the merger and the transactions contemplated by the merger agreement using debt financing in an aggregate amount of not less than $159 million obtained from the proceeds of the Facilities and Notes, each defined below. The debt financing will reduce the amount of the equity commitment of H.I.G. Bayside Debt & LBO Fund II, L.P., described above, to an amount not to exceed the amount required to consummate the merger and the transactions contemplated by the merger agreement. H.I.G. Bayside Debt & LBO Fund II, L.P. and Parent have arranged to secure certain commitments in respect of debt financing, consisting of a senior secured credit facility and an issuance of unsecured senior subordinated notes. The proceeds of such financing shall be used, as applicable, for the purpose of funding a portion of the consideration payable in connection with the merger, to pay certain fees and expenses of the merger, and for general corporate purposes for the operation of the surviving corporation following the closing of the merger.

     Fifth Third Bank, or Fifth Third, provided a commitment letter dated October 18, 2009 to H.I.G. Bayside Debt & LBO Fund II, L.P., pursuant to which Fifth Third, subject to the terms and conditions therein, agreed (i) to act as arranger and administrative agent for the a term loan in the principal amount of $95 million, which we refer to as the Term Loan, and a revolving credit facility in the principal amount of $15 million, which we refer to as the Revolver and refer to together with the Term Loan as the Facilities, (ii) to commit to provide a portion of the Facilities in an aggregate amount of $30 million (to be allocated pro rata between the Revolver and the Term Loan), and (iii) to use its best efforts to arrange additional lenders to provide financing commitments in the aggregate amount of $80 million to complete the Facilities. Interest on the Facilities will be payable at a rate of prime plus 5.00%, or, at the surviving corporation’s election, LIBOR plus 6.00%. The Facilities will be secured by substantially all of the assets of the surviving corporation following consummation of the merger, and will mature 5 years following the closing date.

     Pursuant to commitment letters obtained by Fifth Third and H.I.G. Bayside Debt & LBO Fund II, L.P. since October 18, 2009, each of Brown Brothers Harriman & Co., Churchill Financial Cayman, Ltd., Siemens Financial Services, Inc., Sovereign Bank, SunTrust Bank, and TD Bank, N.A., has committed, subject to the terms and conditions therein, to provide, together with Fifth Third and the other committed lenders, the entire $110 million of debt financing contemplated by the Fifth Third commitment letter.

     Falcon Strategic Partners III, LP, or Falcon, provided a financing commitment letter dated October 18, 2009 to Parent, pursuant to which Falcon, subject to the terms and conditions therein, committed to purchase an amount of senior subordinated notes, which we refer to as the Notes, sufficient to result in aggregate gross proceeds of not less than $49 million and not more than $51 million, as the surviving corporation, following consummation of the merger, may elect. The Notes will bear interest at a rate of 16.00% per annum (3.00% of which may be either paid in cash or added to principal at the election of the surviving corporation) and will mature 5.5 years following the closing date. In addition, Falcon (together with other purchasers of Notes, as applicable) will receive detachable warrants representing the right to purchase common and preferred stock of Parent equal to 3.00% of the total equity interests of Parent on a fully diluted basis.

Repayment of Indebtedness

     We intend to repay the indebtedness incurred to effect the merger through cash flow from operations. Although there can be no assurance, we believe that cash flow from operations should be sufficient to service our interest and principal repayment obligations under the indebtedness incurred to effect the merger for the foreseeable future. However, we believe that it is reasonably likely that we will need to refinance all or a portion of the Facilities and/or Notes prior to maturity with the proceeds of future financing activities.

Limited Guarantee

     Pursuant to a limited guarantee, H.I.G. Bayside Debt & LBO Fund II, L.P. has agreed to guarantee the obligations of Parent and Merger Sub under the merger agreement with respect to any reverse termination fee payable by Parent, plus interest on any unpaid reverse termination fee at the prime lending rate published in The Wall Street Journal on the date such payment is required to be paid. In addition, H.I.G. Bayside Debt & LBO Fund II, L.P. has agreed to guarantee, up to $10 million, the obligations of Parent to pay any losses or damages payable to Allion as a result of Parent’s or Merger Sub’s willful breach of the merger agreement and Allion’s expenses (including reasonable attorneys’ fees) incurred in connection with the enforcement of Parent’s obligations to pay any such termination fee.

     The guarantee will terminate upon the earlier of the completion of the merger or the first anniversary of the merger agreement, unless prior to such first anniversary the Company presents a claim for payment to Parent, Merger Sub or H.I.G. Bayside Debt & LBO Fund II, L.P. under the terms of the merger agreement or the limited guarantee.

Rollover Agreements

Exchange Agreements

     As a condition and inducement to Parent and Merger Sub to enter into the merger agreement, Parent entered into exchange agreements with the rollover stockholders: Parallex, Rhonda Boni-Burden, Michael G. Bush, Edward L. Chomyak, Jason Cofone, James Francis Colonel, Arthur A. Cuomo, Shelly DeMora, David A. Galardi, Jennifer Hoefner, William A. Jones, Mark A. Kovinsky, John M. Kowalski, Bari Kuo, Kathy A. Love, Jonathan A. Lowe, Russell D. Lubrani, Virginia J. Margoli, Joseph T. Molieri, Jr., Shauna Mirra as Custodian for Devinne Peterson UTMA-PA, Ellen Pinto, Deborah Porter, Kimberley Prien-Martinez, Joseph Renzi, Anne-Marie Riley, Brian Rodgers, James R. Sadlier, Peter Sartini, Stephen Seiner, Renee M. Sigloch, Ryan N. Sloan, Mark Strollo, Joseph A. Troilo and Joseph J. Tropiano, Jr. Pursuant to the exchange agreements, immediately prior to the effective time of the merger, each of the rollover stockholders will surrender a portion of their shares of Allion common stock to Parent in exchange for a combination of senior preferred stock, junior preferred stock and common stock in Parent. The rollover stockholders will surrender an aggregate of 7,911,545.54 shares of Allion common stock, or 27.6% of the issued and outstanding shares of Allion common stock. Upon the completion of the merger, the rollover stockholders will directly own approximately 29.2% of the outstanding voting equity interest of Parent, of which Allion will be a wholly owned subsidiary. As of November 25, 2009, Parallex owned 7,903,499 shares, or approximately 27.5%, of the issued and outstanding shares of Allion common stock and will own 23,424,835.54 shares, or approximately 19.52%, of the voting capital stock of Parent upon completion of the merger; Peter Sartini owned 598,749 shares, or approximately 2.1%, of the issued and outstanding shares of Allion common stock and will own 1,785,224.5 shares, or approximately 1.5%, of the voting capital stock of Parent upon completion of the merger; Joseph Renzi owned 478,999 shares, or approximately 1.7%, of the issued and outstanding shares of Allion common stock and will own 1,419,684.95 shares, or approximately 1.2%, of the voting capital stock of Parent upon completion of the merger; Ryan Sloan owned 478,999 shares, or approximately 1.7%, of the issued and outstanding shares of Allion common stock and will own 1,419,684.95 shares, or approximately 1.2%, of the voting capital stock of Parent upon completion of the merger, and William Jones owned 359,249 shares, or approximately 1.3%, of the issued and outstanding shares of Allion common stock and will own 1,064,763.05 shares, or approximately 0.9%, of the voting capital stock of Parent upon completion of the merger. Each of the other rollover stockholders individually owned less than 1% of Allion common stock as of November 25, 2009 and will own less than 0.6% of the outstanding voting equity interests of Parent upon completion of the merger. The rollover agreements will terminate automatically upon the termination of the merger agreement prior to the completion of the merger. Parent has additionally agreed to indemnify Parallex and its members, directors, officers, employees and agents from and against any losses, damages, fees, expenses and costs arising from claims related to the merger that are asserted by any of Allion’s stockholders related to the transactions contemplated by the merger agreement and has established a $1 million escrow account to support such obligations.

Stockholders Agreement

     The rollover stockholders have also entered into a stockholders agreement with Parent and H.I.G. Healthcare, LLC, a member of the H.I.G. Buying Group, which will own the remaining equity interests in Parent upon completion of the merger. The stockholders agreement will govern the rights and obligations of H.I.G. Healthcare, LLC and the rollover stockholders as holders of equity interests in Parent following completion of the merger. Pursuant to the stockholders agreement, immediately following the merger, the board of directors of Parent will initially consist of nine members, five of which will be designated by H.I.G. Healthcare, LLC, three of which will be designated by Parallex and one of which will be the chief executive officer of Parent. The stockholders agreement also sets forth restrictions on transfer of the rollover stockholders’ equity interests in Parent and provides the rollover stockholders with certain veto rights, preemptive rights and tag-along rights.

Other Agreements

     The rollover stockholders have also entered into restrictive covenant agreements, pursuant to which they will be subject to confidentiality obligations from and after the effective time of the merger and under the restrictive covenant agreement. Parallex and Raymond Mirra will be subject to certain non-competition and non-solicitation covenants for a period of three years, and the other rollover stockholders will be subject to such non-competition covenants and non-solicitation covenants for a period of two years. Pursuant to a registrations rights agreement, the

rollover stockholders will also be entitled to registration rights with respect to the equity interests they will own in Parent following the merger.

Voting Agreements

     Simultaneously with the execution of the merger agreement and as a condition to Parent and Merger Sub entering into the merger agreement, Parent also entered into voting agreements with the rollover stockholders: Parallex, Rhonda Boni-Burden, Michael G. Bush, Edward L. Chomyak, Jason Cofone, James Francis Colonel, Arthur A. Cuomo, Shelly DeMora, David A. Galardi, Jennifer Hoefner, William A. Jones, Mark A. Kovinsky, John M. Kowalski, Bari Kuo, Kathy A. Love, Jonathan A. Lowe, Russell D. Lubrani, Virginia J. Margoli, Joseph T. Molieri, Jr., Shauna Mirra as Custodian for Devinne Peterson UTMA-PA, Ellen Pinto, Deborah Porter, Kimberley Prien-Martinez, Joseph Renzi, Anne-Marie Riley, Brian Rodgers, James R. Sadlier, Peter Sartini, Stephen Seiner, Renee M. Sigloch, Ryan N. Sloan, Mark Strollo, Joseph A. Troilo and Joseph J. Tropiano, Jr. Pursuant to the voting agreements, the rollover stockholders have agreed, among other things, to vote all of the shares of Allion common stock beneficially owned by such stockholders in favor of the adoption of the merger agreement at any meeting of Allion’s stockholders. As of the record date, the rollover stockholders collectively exercised voting control over approximately 41.1% of the outstanding shares of Allion common stock. Any additional shares of common stock acquired by the rollover stockholders following the record date will automatically become subject to the voting agreements.

     The voting agreements require the rollover stockholders, among other things, to vote their shares of Allion common stock at any meeting of Allion’s stockholders (i) in favor of the adoption of the merger agreement and the merger, (ii) against any third party acquisition proposal, or any action or agreement that would interfere with the merger or the Company’s performance of its obligations under the merger agreement, and (iii) against any amendment of the Company’s governing documents or other proposal or transaction that would interfere with the merger or nullify the merger agreement.

     In addition, the rollover stockholders granted Parent an irrevocable proxy to vote the rollover stockholders’ shares of Allion common stock on their behalf in the event the rollover stockholders fail to act in accordance with the voting agreements.

     Under the voting agreements, the rollover stockholders have also agreed not to sell, transfer, exchange, pledge or otherwise encumber, assign or dispose of their shares of Allion common stock, enter into any other voting arrangement or grant any other proxy with respect to such shares, or take any other action that would interfere with the merger or Allion’s performance of its obligations under the merger agreement. Further, the rollover stockholders may not solicit proxies or become a participant in a solicitation with respect to a third party acquisition proposal.

     The voting agreements terminate on the earlier of the completion of the merger of the termination of the merger agreement.

     The full text of the form of voting agreement is attached to this Proxy Statement as Appendix C .

Consulting Agreements

     It is currently anticipated that each of Bayside Capital, Inc., an affiliate of H.I.G., and RAM Capital Group, LLC, an affiliate of Parallex, will enter into an agreement with the Company following the closing of the transactions contemplated under the Merger Agreement pursuant to which each such entity would provide certain management and consulting services to the Company in exchange for reimbursement of expenses associated with providing such services and a fee equal to $975,000 per annum in the case of Bayside Capital, Inc. and $275,000 per annum in the case of RAM Capital Group, LLC. The Company will also provide customary indemnification to such entities in connection with such services.

     It is currently anticipated that Bayside Capital, Inc. will enter into an agreement with the Company following the closing the transactions contemplated under the Merger Agreement pursuant to which it would provide certain transaction consulting services to the Company in exchange for reimbursement of expenses associated with providing such services and fees equal to 2% of the value associated with certain sale and acquisition transactions contemplated by such agreement. The Company will also provide customary indemnification in connection with such services. RAM Capital Group, LLC may participate in providing such services and in connection therewith, may be entitled to a portion of such fees as mutually determined between the parties.

     In connection with the structuring and implementation of the merger and related financing transactions, the Company will pay Bayside Capital, Inc. fees in an aggregate amount equal to 2% of the total enterprise value at the completion of the Merger plus all out-of-pocket expenses incurred by H.I.G. prior to the closing of the Merger for services rendered by them in connection with consummation of the Merger.

Interests of Certain Persons in the Merger

     In considering the recommendation of the Special Committee and our Board of Directors, our stockholders should be aware that some of Allion’s executive officers, members of our Board of Directors and other affiliates may have interests in the transaction that are different from, or in addition to, the interests of our stockholders generally. The Special Committee and Board of Directors were aware of such interests and considered them, among other matters, in reaching their decisions to approve the merger agreement and recommend that Allion’s stockholders vote in favor of adopting the merger agreement.

Treatment of Stock Options, Warrants, Restricted Stock and Phantom Stock Units

     Upon the completion of the merger, all of our equity compensation awards (including awards held by our directors and executive officers) will be subject to the following treatment:

•

each outstanding Allion stock option will vest in full prior to the effective time of the merger, and each outstanding Allion stock option not exercised prior to the merger will be cancelled and converted into the

			right to receive an amount in cash equal to (i) the number of shares subject to such option multiplied by (ii) the excess (if any) of $6.60 over the exercise price per share of such option;
	•		each outstanding Allion warrant (whether or not vested) will be cancelled and converted into the right to receive an amount in cash equal to (i) the number of shares subject to such warrant multiplied by (ii) the excess (if any) of $6.60 over the exercise price per share of such warrant;
	•		each outstanding Allion option or warrant (whether vested or unvested) with an exercise price that equals or exceeds the $6.60 per share merger consideration will be cancelled without payment;
	•		each outstanding share of restricted stock will vest in full prior to the effective time of the merger and will be automatically cancelled and converted into the right to receive $6.60 in cash per share, without interest; and
	•		each holder of an outstanding Allion cash-settled phantom stock unit (whether or not vested) will be entitled to receive an amount in cash equal to (i) the number of phantom stock units held by that holder multiplied by $6.60, without interest, plus (ii) a tax gross-up payment to cover any excise tax liability such holder may incur as a result of any payments or benefits, whether paid pursuant to the terms of the phantom stock units or otherwise, that may be deemed “golden parachute” payments for tax purposes.

          See “The Merger Agreement—Treatment of Stock and Equity Awards” for a more complete description of the treatment of the relevant plans under which such stock options and other stock-based awards were issued.

          The following table reflects the consideration expected to be received by each of our directors and executive officers in connection with the merger:

										Cash to be				Cash to be
		Cash to be								Received for				Received				Estimated
		Received for				Cash to be				Allion				for				280G Tax
		Allion				Received for				Options and/or				Phantom				Gross-Up				Total
		Common				Restricted				Warrants ($)				Stock Units				Payment				Consideration
Name		Stock ($)				Shares ($)				(1)				($)				($)(2)				($)
Michael P. Moran			—				—				715,000				7,920,000				3,890,432				12,525,432
Chairman of the Board, President and Chief Executive Officer
Russell J. Fichera			—				—				—				1,980,000				988,397				2,968,397
Senior Vice President and Chief Financial Officer
Stephen A. Maggio			—				—				3,825				330,000				—				333,825
Secretary, Treasurer and Director of Finance
Robert E. Fleckenstein, R.Ph. Vice President, Pharmacy Operations			—				—				22,500				1,320,000				670,831				2,013,331
Anthony D. Luna			—				—				6,563				1,320,000				688,727				2,015,290
Vice President, HIV Sales
Flint D. Besecker			64,357				18,097				—				—				—				82,454
Director
Gary P. Carpenter			51,157				18,097				—				—				—				69,254
Director