(e) Phantom Stock Units On February 4, 2009, the Compensation Committee of the Board of Directors of Allion Healthcare, Inc. (the "Company") approved the grant of cash-settled phantom stock units to certain of the Company's key employees, including each of its named executive officers: Michael P. Moran, Chief Executive Officer, President and Chairman of the Board, Russell J. Fichera, Chief Financial Officer, Stephen A. Maggio, Director of Finance, Robert E. Fleckenstein, R.Ph., Vice President, Pharmacy Operations, and Anthony D. Luna, Vice President, HIV Sales (each, an "Executive"). Each of the Executives received the number of cash-settled phantom stock units set forth below opposite his name.

           Named Executive Officer      Cash-Settled Phantom Stock Units
           Mr. Moran                                            1,200,000
           Mr. Fichera                                            300,000
           Mr. Maggio                                              50,000
           Mr. Fleckenstein                                       200,000
           Mr. Luna                                               200,000

The cash-settled phantom stock units represent the right to earn, on a one-for-one basis, a cash amount equivalent to the value, as of the vesting date, of an equivalent number of shares of the Company's common stock (the "Units"). The Units will vest and pay out in cash on the tenth (10th) anniversary of the grant date, provided the Executive is still employed by the Company. The Units will also accelerate vesting and pay out as follows: (i) in full upon a change in control of the Company, (ii) as to a prorata number of Units, calculated as if the Units had vested on a monthly basis, upon the Executive's termination of employment by the Company without cause or by the Executive for good reason (as such terms are defined in the award certificate), or (iii) as to the full number of Units if a change in control of the Company occurs within six (6) months following such termination of employment. The award certificate also provides that the Executive will be entitled to a tax gross-up payment from the Company to cover any excise tax liability he may incur as a result of any payments or benefits, whether paid pursuant to the terms of the Units or otherwise, that may be deemed "golden parachute" payments under
Section 280G of the Internal Revenue Code.
The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the text of the form of cash-settled phantom stock unit award certificate, which is attached hereto as Exhibit 10.1, and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.

   (d) Exhibits.

        Exhibit No.   Description

        10.1          Form of Cash-Settled Phantom Stock Unit Certificate.