Underwriting Agreement

ALLIED HEALTHCARE INTERNATIONAL INC. 14,500,000 SHARES OF COMMON STOCK UNDERWRITING AGREEMENT July 1, 2004FRIEDMAN, BILLINGS, RAMSEY & CO., INC. as Representative of the several Underwritersc/o Friedman, Billings, Ramsey & Co., Inc.1001 19th Street NorthArlington, Virginia 22209Dear Sirs: Allied Healthcare International Inc., a New York corporation (the"Company"), confirms its agreement with each of the Underwriters listed onSchedule I hereto (collectively, the "Underwriters"), for whom Friedman,Billings, Ramsey & Co., Inc. is acting as representative (in such capacity, the"Representative"), with respect to (i) the sale by the Company of 14,500,000shares (the "Initial Shares") of Common Stock, par value $0.01 per share, of theCompany ("Common Stock") and the purchase by the Underwriters, acting severallyand not jointly, of the respective number of shares of Common Stock set forthopposite the names of the Underwriters in Schedule I hereto, and (ii) the grantof the option described in Section 1(b) hereof to purchase all or any part of2,175,000 shares of Common Stock to cover over-allotments (the "Option Shares"),if any, from the Company to the Underwriters, acting severally and not jointly,in proportion to the respective numbers of shares of Common Stock set forthopposite the names of the Underwriters in Schedule I hereto. The 14,500,000shares of Common Stock to be purchased by the Underwriters and all or any partof the 2,175,000 shares of Common Stock subject to the option described inSection l(b) hereof are hereinafter called, collectively, the "Shares." The Company understands that the Underwriters propose to make a publicoffering of the Shares as soon as the Underwriters deem advisable after thisAgreement has been executed and delivered. The Company has filed with the Securities and Exchange Commission (theCommission") a registration statement on Form S-1 (No. 333-115559) and a relatedpreliminary prospectus for the registration of the Shares under the SecuritiesAct of 1933, as amended (the "Securities Act"), and the rules and regulationsthereunder (the "Securities Act Regulations"). The Company has prepared andfiled such amendments thereto, if any, and such amended preliminaryprospectuses, if any, as may have been required prior to the date hereof, andwill file such additional amendments thereto and such amended prospectuses asmay hereafter be required. The registration statement has been declared effective under the Securities Act by the Commission. Theregistration statement as amended at the time it became effective (including allinformation deemed (whether by incorporation by reference or otherwise) to be apart of the registration statement at the time it became effective pursuant toRule 430A(b) of the Securities Act Regulations) is hereinafter called the"Registration Statement," except that, if the Company files a post-effectiveamendment to such registration statement which becomes effective prior to theClosing Time (as defined below), "Registration Statement" shall refer to suchregistration statement as so amended. Any registration statement filed pursuantto Rule 462(b) of the Securities Act Regulations is hereinafter called the "Rule462(b) Registration Statement," and after such filing the term "RegistrationStatement" shall include the 462(b) Registration Statement. Each prospectusincluded in the Registration Statement, or amendments thereof or supplementsthereto, before it became effective under the Securities Act and any prospectusfiled with the Commission by the Company with the consent of the Underwriterspursuant to Rule 424(a) of the Securities Act Regulations is hereinafter calledthe "Preliminary Prospectus." The term "Prospectus" means the final prospectus,as first filed with the Commission pursuant to paragraph (1) or (4) of Rule424(b) of the Securities Act Regulations, and any amendments thereof orsupplements thereto. The Commission has not issued any order preventing orsuspending the use of any Preliminary Prospectus. The Company and the Underwriters agree as follows: 1. Sale and Purchase: (a) Initial Shares. Upon the basis of the warranties and representationsand other terms and conditions herein set forth, at the purchase price per shareof $4.606, the Company agrees to sell to the Underwriters the Initial Shares andeach Underwriter agrees, severally and not jointly, to purchase from the Companythe number of Initial Shares set forth in Schedule I opposite such Underwriter'sname, plus any additional number of Initial Shares which such Underwriter maybecome obligated to purchase pursuant to the provisions of Section 8 hereof,subject in each case, to such adjustments among the Underwriters as theRepresentative in its sole discretion shall make to eliminate any sales orpurchases of fractional shares. (b) Option Shares. In addition, upon the basis of the warranties andrepresentations and other terms and conditions herein set forth, at the purchaseprice per share set forth in paragraph (a), the Company hereby grants an optionto the Underwriters, acting severally and not jointly, to purchase from theCompany, all or any part of the Option Shares, plus any additional number ofOption Shares which such Underwriter may become obligated to purchase pursuantto the provisions of Section 8 hereof. The option hereby granted will expire 30days after the date hereof and may be exercised in whole or in part from time totime only for the purpose of covering over-allotments which may be made inconnection with the offering and distribution of the Initial Shares upon noticeby the Representative to the Company setting forth the number -2- of Option Shares as to which the several Underwriters are then exercising theoption and the time and date of payment and delivery for such Option Shares. Anysuch time and Date of Delivery (as defined below) shall be determined by theRepresentative, but shall not be later than three full business days (orearlier, without the consent of the Company, than two full business days) afterthe exercise of such option, nor in any event prior to the Closing Time, ashereinafter defined. If the option is exercised as to all or any portion of theOption Shares, the Company will sell that number of Option Shares then beingpurchased and each of the Underwriters, acting severally and not jointly, willpurchase that proportion of the total number of Option Shares then beingpurchased which the number of Initial Shares set forth in Schedule I oppositethe name of such Underwriter bears to the total number of Initial Shares,subject in each case to such adjustments among the Underwriters as theRepresentative in its sole discretion shall make to eliminate any sales orpurchases of fractional shares. 2. Payment and Delivery (a) Initial Shares. The Shares to be purchased by each Underwriterhereunder, in definitive form, and in such authorized denominations andregistered in such names as the Representative may request upon at leastforty-eight hours' prior notice to the Company shall be delivered by or onbehalf of the Company to the Representative, including, at the option of theRepresentative, through the facilities of The Depository Trust Company ("DTC")for the account of such Underwriter, against payment by or on behalf of suchUnderwriter of the purchase price therefor by wire transfer of Federal(same-day) funds to the account specified to the Representative by the Companyupon at least forty-eight hours' prior notice. The Company will cause thecertificates representing the Initial Shares to be made available for checkingand packaging at least twenty-four hours prior to the Closing Time (as definedbelow) with respect thereto at the office of the Representative, 1001 19thStreet North, Arlington, Virginia 22209, or at the office of DTC or itsdesignated custodian, as the case may be (the "Designated Office"). The time anddate of such delivery and payment shall be 9:30 a.m., New York City time, on thethird (fourth, if pricing occurs after 4:30 p.m., New York City time) businessday after the date hereof (unless another time and date shall be agreed to bythe Representative and the Company). The time at which such payment and deliveryare actually made is hereinafter sometimes called the "Closing Time" and thedate of delivery of both Initial Shares and Option Shares is hereinaftersometimes called the "Date of Delivery." (b) Option Shares. Any Option Shares to be purchased by each Underwriterhereunder, in definitive form, and in such authorized denominations andregistered in such names as the Representative may request upon at leastforty-eight hours' prior notice to the Company shall be delivered by or onbehalf of the Company to the Representative, including, at the option of theRepresentative, through the facilities of DTC for the account of suchUnderwriter, against payment by or on behalf of such Underwriter of the purchaseprice therefor by wire transfer of Federal (same-day) funds -3- to the account specified to the Representative by the Company upon at leastforty-eight hours' prior notice. The Company will cause the certificatesrepresenting the Option Shares to be made available for checking and packagingat least twenty-four hours prior to the Date of Delivery with respect thereto atthe Designated Office. The time and date of such delivery and payment shall be9:30 a.m., New York City time, on the date specified by the Representative inthe notice given by the Representative to the Company of the Underwriters'election to purchase such Option Shares or on such other time and date as theCompany and the Representative may agree upon in writing. 3. Representations and Warranties of the Company: The Company represents and warrants to the Underwriters that: (a) the Company has an authorized capitalization as set forth in theProspectus; the outstanding shares of capital stock of the Company and eachsubsidiary of the Company listed on Exhibit 21 to the Registration Statement(each, a "Subsidiary" or collectively, the "Subsidiaries") have been duly andvalidly authorized and issued and are fully paid and non-assessable, and all ofthe outstanding shares of capital stock of the Subsidiaries are directly orindirectly owned of record and beneficially by the Company or anotherSubsidiary; except as disclosed in the Prospectus, there are no outstanding (i)securities or obligations of the Company or any of the Subsidiaries convertibleinto or exchangeable for any capital stock of the Company or any suchSubsidiary, (ii) warrants, rights or options to subscribe for or purchase fromthe Company or any such Subsidiary any such capital stock or any suchconvertible or exchangeable securities or obligations, or (iii) obligations ofthe Company or any such Subsidiary to issue any shares of capital stock, anysuch convertible or exchangeable securities or obligation, or any such warrants,rights or options; (b) each of the Company and the Subsidiaries has been duly incorporated andis validly existing as a corporation in good standing under the laws of itsrespective jurisdiction of incorporation with full corporate power and authorityto own its respective properties and to conduct its respective businesses asdescribed in the Registration Statement and Prospectus and, in the case of theCompany, to execute and deliver this Agreement and to consummate thetransactions contemplated herein; (c) the Company and all of the Subsidiaries are duly qualified or licensedand are in good standing in each jurisdiction in which they conduct theirrespective businesses or in which they own or lease real property or otherwisemaintain an office and in which the failure, individually or in the aggregate,to be so qualified or licensed would reasonably be expected to have a materialadverse effect on the assets, business, operations, earnings, prospects,properties or condition (financial or otherwise), of the Company and theSubsidiaries taken as a whole (any such effect or change, where the context sorequires, is hereinafter called a "Material Adverse Effect" or "Material AdverseChange"); except as disclosed in the Prospectus, no Subsidiary is prohibited or -4- restricted (other than by applicable law), directly or indirectly, from payingdividends to the Company, or from making any other distribution with respect tosuch Subsidiary's capital stock or from repaying to the Company or any otherSubsidiary any amounts which may from time to time become due under any loans oradvances to such Subsidiary from the Company or such other Subsidiary, or fromtransferring any such Subsidiary's property or assets to the Company or to anyother Subsidiary; other than as disclosed in the Prospectus, the Company doesnot own, directly or indirectly, any capital stock or other equity securities ofany other corporation or any ownership interest in any partnership, jointventure or other association; (d) the Company and the Subsidiaries are in compliance with all applicablelaws, rules, regulations, orders, decrees and judgments, including thoserelating to transactions with affiliates, except where such non-compliance wouldnot reasonably be expected to have a Material Adverse Effect; (e) neither the Company nor any Subsidiary is in breach of or in defaultunder (nor has any event occurred which with notice, lapse of time, or bothwould constitute a breach of, or default under), its respective organizationaldocuments, or in the performance or observance of any obligation, agreement,covenant or condition contained in any license, indenture, mortgage, deed oftrust, loan or credit agreement or other agreement or instrument to which theCompany or any Subsidiary is a party or by which any of them or their respectiveproperties is bound, except for such breaches or defaults which would notreasonably be expected to have a Material Adverse Effect; (f) the execution, delivery and performance of this Agreement, andconsummation of the transactions contemplated herein will not (A) conflict with,or result in any breach of, or constitute a default under (nor constitute anyevent which with notice, lapse of time, or both would constitute a breach of, ordefault under), (i) any provision of the organizational documents of the Companyor any Subsidiary, or (ii) any provision of any license, indenture, mortgage,deed of trust, loan or credit agreement or other agreement or instrument towhich the Company or any Subsidiary is a party or by which any of them or theirrespective properties may be bound or affected, or under any federal, state,local or foreign law, regulation or rule or any decree, judgment or orderapplicable to the Company or any Subsidiary, except in the case of this clause(ii) for such breaches or defaults which would not reasonably be expected tohave a Material Adverse Effect; or (B) result in the creation or imposition ofany lien, charge, claim or encumbrance upon any property or asset of the Companyor any Subsidiary; (g) this Agreement has been duly authorized, executed and delivered by theCompany and is a legal, valid and binding agreement of the Company enforceablein accordance with its terms, except as may be limited by bankruptcy,insolvency, reorganization, moratorium or similar laws affecting creditors'rights generally, and by general equitable principles, and except to the extentthat the indemnification and -5- contribution provisions of Section 9 hereof may be limited by federal or statesecurities laws and public policy considerations in respect thereof; (h) no approval, authorization, consent or order of or filing with anyfederal, state, local or foreign governmental or regulatory commission, board,body, authority or agency is required in connection with the Company'sexecution, delivery and performance of this Agreement, its consummation of thetransactions contemplated herein, and its sale and delivery of the Shares, otherthan (A) such as have been obtained, or will have been obtained at the ClosingTime or the relevant Date of Delivery, as the case may be, under the SecuritiesAct and the Securities Exchange Act of 1934, as amended, (the "Exchange Act"),(B) such approvals as have been obtained in connection with the approval of thequotation of the Shares on the NASDAQ National Market and (C) any necessaryqualification under the securities or blue sky laws of the various jurisdictionsin which the Shares are being offered by the Underwriters; (i) each of the Company and the Subsidiaries has all necessary licenses,authorizations, consents and approvals and has made all necessary filingsrequired under any federal, state, local or foreign law, regulation or rule, andhas obtained all necessary authorizations, consents and approvals from otherpersons, required in order to conduct their respective businesses as describedin the Prospectus, except to the extent that any failure to have any suchlicenses, authorizations, consents or approvals, to make any such filings or toobtain any such authorizations, consents or approvals would not reasonably beexpected, individually or in the aggregate, to have a Material Adverse Effect;neither the Company nor any of the Subsidiaries is required by any applicablelaw to obtain accreditation or certification from any governmental agency orauthority in order to provide the products and services which it currentlyprovides or which it proposes to provide as set forth in the Prospectus, exceptas described therein; neither the Company nor any of the Subsidiaries is inviolation of, in default under, or has received any notice regarding a possibleviolation, default or revocation of any such license, authorization, consent orapproval or any federal, state, local or foreign law, regulation or rule or anydecree, order or judgment applicable to the Company or any of the Subsidiariesthe effect of which would reasonably be expected to result in a Material AdverseChange; (j) each of the Registration Statement and any Rule 462(b) RegistrationStatement has become effective under the Securities Act and no stop ordersuspending the effectiveness of the Registration Statement or any Rule 462(b)Registration Statement has been issued under the Securities Act and noproceedings for that purpose have been instituted or are pending or, to theknowledge of the Company, are threatened by the Commission, and the Company hascomplied to the Commission's satisfaction with any request on the part of theCommission for additional information; (k) the Preliminary Prospectus and the Registration Statement complies, andthe Prospectus and any further amendments or supplements thereto will, when theyhave -6- become effective or are filed with the Commission, as the case may be, comply,in all material respects with the requirements of the Securities Act and theSecurities Act Regulations; the Registration Statement did not, and anyamendment thereto will not, in each case as of the applicable effective date,contain an untrue statement of a material fact or omit to state a material factrequired to be stated therein or necessary to make the statements therein, inthe light of the circumstances under which they were made, not misleading; andthe Preliminary Prospectus does not, and the Prospectus or any amendment orsupplement thereto will not, as of the applicable filing date and at the ClosingTime and on each Date of Delivery (if any), contain an untrue statement of amaterial fact or omit to state a material fact required to be stated therein ornecessary to make the statements therein, in the light of the circumstancesunder which they were made, not misleading; provided, however, that the Companymakes no warranty or representation with respect to any statement contained inthe Registration Statement or the Prospectus in reliance upon and in conformitywith the information concerning the Underwriters and furnished in writing by oron behalf of the Underwriters through the Representative to the Companyexpressly for use in the Registration Statement or the Prospectus (thatinformation being limited to that described in the penultimate sentence of thefirst paragraph of Section 9(c) hereof); (l) the Preliminary Prospectus was and the Prospectus delivered to theUnderwriters for use in connection with this offering will be identical to theversions of the Preliminary Prospectus and Prospectus created to be transmittedto the Commission for filing via the Electronic Data Gathering Analysis andRetrieval System ("EDGAR"), except to the extent permitted by Regulation S-T; (m) there are no actions, suits, proceedings, inquiries or investigationspending or, to the knowledge of the Company, threatened against the Company orany Subsidiary or any of their respective officers and directors in theircapacities as such or to which the properties, assets or rights of any suchentity are subject, at law or in equity, before or by any federal, state, localor foreign governmental or regulatory commission, board, body, authority,arbitral panel or agency which would reasonably be expected to result in ajudgment, decree, award or order having a Material Adverse Effect; (n) the financial statements, including the notes thereto, included in theRegistration Statement and the Prospectus present fairly the consolidatedfinancial position of the entities to which such financial statements relate(the "Covered Entities") as of the dates indicated and the consolidated resultsof operations and changes in financial position and cash flows of the CoveredEntities for the periods specified; such financial statements have been preparedin conformity with generally accepted accounting principles as applied in theUnited States and on a consistent basis during the periods involved and inaccordance with Regulation S-X promulgated by the Commission; the financialstatement schedules included in the Registration Statement and the amounts inthe Prospectus under the captions "Prospectus Summary - Summary FinancialInformation" and "Selected Financial Information" fairly present the -7- information shown therein and have been compiled on a basis consistent with thefinancial statements included in the Registration Statement and the Prospectus;no other financial statements or supporting schedules are required to beincluded in the Registration Statement; the unaudited pro forma financialinformation (including the related notes) included in the Prospectus and anyPreliminary Prospectus complies as to form in all material respects with theapplicable accounting requirements of the Securities Act and the Securities ActRegulations, and management of the Company believes that the assumptionsunderlying the pro forma adjustments are reasonable; such pro forma adjustmentshave been properly applied to the historical amounts in the compilation of theinformation and such information fairly presents with respect to the Company andthe Subsidiaries, the pro forma financial position purported to be shown thereinat the respective dates; no other pro forma financial information is required tobe included in the Registration Statement; (o) Deloitte and Touche LLP and Ernst & Young LLP, each of whose reports onthe consolidated financial statements of the Company are filed with theCommission as part of the Registration Statement and Prospectus are, and wereduring the periods covered by their reports, independent public accountants asrequired by the Securities Act and the Securities Act Regulations; (p) subsequent to the respective dates as of which information is given inthe Registration Statement and the Prospectus, and except as may be otherwisestated in the Registration Statement or Prospectus, there has not been (A) anyMaterial Adverse Change or any development that would reasonably be expected toresult in a Material Adverse Change, whether or not arising in the ordinarycourse of business, (B) any transaction that is material to the Company and theSubsidiaries taken as a whole, contemplated or entered into by the Company orany of the Subsidiaries, (C) any obligation, contingent or otherwise, directlyor indirectly incurred by the Company or any Subsidiary that is material to theCompany and Subsidiaries taken as a whole or (D) any dividend or distribution ofany kind declared, paid or made by the Company on any class of its capitalstock; (q) the Shares conform in all material respects to the description thereofcontained in the Registration Statement and the Prospectus; (r) there are no persons with registration or other similar rights to haveany equity or debt securities, including securities which are convertible intoor exchangeable for equity securities, registered pursuant to the RegistrationStatement or otherwise registered by the Company under the Securities Act exceptas described in the Registration Statement, except for those registration orsimilar rights which have been waived with respect to the offering contemplatedby this Agreement, all of which registration or similar rights described aboveare fairly summarized in the Prospectus; -8- (s) the Shares have been duly authorized and, when issued and dulydelivered against payment therefor as contemplated by this Agreement, will bevalidly issued, fully paid and non-assessable, free and clear of any pledge,lien, encumbrance, security interest or other claim, and the issuance and saleof the Shares by the Company is not subject to preemptive or other similarrights arising by operation of law, under the organizational documents of theCompany or under any agreement to which the Company or any Subsidiary is a partyor otherwise; (t) the Shares have been approved for quotation on the NASDAQ NationalMarket, subject to notice of issuance; (u) the Company has not taken, and will not take, directly or indirectly,any action which is designed to or which has constituted or which mightreasonably be expected to cause or result in stabilization or manipulation ofthe price of any security of the Company to facilitate the sale or resale of theShares; (v) neither the Company nor any of its affiliates (i) is required toregister as a "broker" or "dealer" in accordance with the provisions of theExchange Act, or the rules and regulations thereunder (the "Exchange ActRegulations"), or (ii) directly, or indirectly through one or moreintermediaries, controls or has any other association with (within the meaningof Article I of the By-laws of the National Association of Securities Dealers,Inc. (the "NASD")) any member firm of the NASD; (w) the Company has not relied upon the Representative or legal counsel forthe Representative for any legal, tax or accounting advice in connection withthe offering and sale of the Shares; (x) any certificate signed by any officer of the Company or any Subsidiarydelivered to the Representative or to counsel for the Underwriters pursuant toor in connection with this Agreement shall be deemed a representation andwarranty by the Company to each Underwriter as to the matters covered thereby; (y) the form of certificate used to evidence the Common Stock complies inall material respects with all applicable statutory requirements, with anyapplicable requirements of the organizational documents of the Company and therequirements of the NASDAQ National Market; (z) the Company and the Subsidiaries have good and marketable title in feesimple to all freehold real property, if any, and good title to all personalproperty owned by them, in each case free and clear of all liens, securityinterests, pledges, charges, encumbrances, mortgages and defects, except such asare disclosed in the Prospectus or such as do not materially and adverselyaffect the value of such property or do not interfere with the use made orproposed to be made of such property by the -9- Company and the Subsidiaries; and any real property and buildings held underlease by the Company or any Subsidiary are held under valid, existing andenforceable leases, with such exceptions as are disclosed in the Prospectus orwould not reasonably be expected to have a Material Adverse Effect; (aa) the descriptions in the Registration Statement and the Prospectus ofthe legal or governmental proceedings, contracts, leases and other legaldocuments therein described present fairly in all material respects theinformation required to be shown, and there are no legal or governmentalproceedings, contracts, leases, or other documents of a character required to bedescribed in the Registration Statement or the Prospectus or to be filed asexhibits to the Registration Statement which are not described or filed asrequired; all agreements between the Company or any of the Subsidiaries andthird parties expressly referenced in the Prospectus are legal, valid andbinding obligations of the Company or one or more of the Subsidiaries,enforceable in accordance with their respective terms, except to the extentenforceability may be limited by bankruptcy, insolvency, reorganization,moratorium or similar laws affecting creditors' rights generally and by generalequitable principles; (bb) the Company and each Subsidiary owns or possesses adequate licenses orother rights to use all patents, trademarks, service marks, trade names,copyrights, software and design licenses, trade secrets, manufacturingprocesses, other intangible property rights and know-how (collectively"Intangibles") necessary for the Company and each Subsidiary to conduct itsbusiness as described in the Prospectus, and neither the Company nor anySubsidiary has received notice of infringement of or conflict with (and th ...