exhibit 10.1
BMP SUNSTONE CORPORATION
Common Stock
PLACEMENT AGENCY AGREEMENT
October 9, 2008
Philadelphia Brokerage Corporation
Radnor Corporate Center
Building Two, Suite 111
100 Matsonford Road
Radnor, Pennsylvania 19087
Ladies and Gentlemen:
     BMP Sunstone Corporation, a Delaware corporation (the “Company”), proposes,
subject to the terms and conditions stated in this Placement Agency Agreement
(this “Agreement”) and the Subscription Agreements in the form of Exhibit A
attached hereto (the “Subscription Agreements”) entered into with the investors
identified therein (each, an “Investor” and collectively, the “Investors”), to
issue and sell for an aggregate of minimum gross consideration of $1,500,000 and
an aggregate gross maximum consideration of $5,000,000, shares (the “Shares”) of
the Company’s common stock, par value $0.001 per share (the “Common Stock”). The
Shares are more fully described in the Registration Statement (as defined
herein). This is to confirm the agreement between the Company and Philadelphia
Brokerage Corporation (the “Placement Agent”) concerning the offering, issuance
and sale of the Shares.
1. Agreement to Act as Placement Agent; Delivery and Payment. On the basis of
the representations, warranties and agreements of the Company herein contained,
and subject to the terms and conditions set forth in this Agreement:

  (a)   The Company hereby authorizes the Placement Agent to act as its
exclusive agent in connection with the issuance and sale by the Company of the
Shares (the “Offering”) to the Investors, and the Placement Agent hereby agrees,
as agent of the Company, to use its commercially reasonable efforts to solicit
offers to purchase all or part of the Shares from the Company upon the terms and
conditions set forth in the Prospectus (as defined below). The Placement Agent
shall make commercially reasonable efforts to assist the Company in obtaining
performance by each Investor whose offer to purchase Shares has been solicited
by the Placement Agent and accepted by the Company, but the Placement Agent
shall not, except as otherwise provided in this Agreement, have any liability to
the Company in the event any such purchase is not consummated for any reason.
Under no circumstances shall the Placement Agent or any of its affiliates be
obligated to underwrite or purchase any of the Shares for their own accounts or
otherwise provide any financing. The Placement Agent shall act solely as the
Company’s agent and not as principal. The Placement Agent shall have no
authority to bind the Company with respect to any prospective offer to purchase
Shares and the Company shall have the sole right to accept offers to purchase
Shares and may reject any such offer, in whole or in part. Notwithstanding the
foregoing, it is understood and agreed that the Placement Agent and its
affiliates may, solely at their discretion and without any obligation to do so,
purchase Shares as principals; provided, however, that any such purchase by the
Placement Agent (or its affiliates) shall be fully disclosed to the Company and
approved by the Company in accordance with the preceding sentence.     (b)   As
compensation for services rendered, on the Closing Date, the Company shall pay
or cause to be paid to the Placement Agent an aggregate amount equal to seven
percent (7.0%) of the gross proceeds received by the Company from its sale of
the Shares on such Closing Date (the

 

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      “Agency Fee”). The Agency Fee shall be payable as follows: (i) 15% of the
Agency Fee shall be payable in shares of Common Stock valued at no less than the
offering price of the shares of Common Stock that are being sold to investors in
the Offering as provided in Exhibit C hereto and (ii) 85% of the Agency Fee
shall be payable by wire transfer of immediately available funds to an account
or accounts designated by the Placement Agent. If the Offering contemplated
hereby is completed, the Placement Agent agrees that the foregoing compensation
constitutes all of the compensation that the Placement Agent shall be entitled
to receive in connection with the Offering contemplated hereby.     (c)   The
purchases of Shares by the Investors shall be evidenced by the execution of the
Subscription Agreements by each of the parties thereto.     (d)   Prior to the
earlier of (i) the date on which this Agreement is terminated and (ii) the
Closing Date, the Company shall not, without the prior written consent of the
Placement Agent, solicit or accept offers to purchase Shares of the Company
(other than pursuant to the exercise of options or warrants to purchase shares
of Common Stock that are outstanding at the date hereof) otherwise than through
the Placement Agent in accordance herewith.     (e)   No Shares that the Company
has agreed to sell pursuant to this Agreement shall be deemed to have been
purchased and paid for, or sold by the Company, until such Shares shall have
been delivered to the Investor purchasing such Shares against payment therefor
by such Investor. If the Company shall default in its obligations to deliver
Shares to an Investor whose offer it has accepted, the Company shall indemnify
and hold the Placement Agent harmless against any loss, claim, damage or
liability directly or indirectly arising from or as a result of such default by
the Company.     (f)   Payment of the purchase price for, and delivery of, the
Shares shall be made at a closing (the “Closing”) at the offices of Morgan,
Lewis & Bockius LLP, counsel for the Company, located at 1701 Market Street,
Philadelphia, Pennsylvania, at 10:00 a.m., local time, on October 13, 2008 or at
such other time and date as the Placement Agent and the Company determine
pursuant to Rule 15c6-1(a) under the Exchange Act (such date of payment and
delivery being herein referred to as the “Closing Date”). The Company, the
Placement Agent and The Bank of New York, as escrow agent (the “Escrow Agent”),
has entered into an escrow agreement, dated as of October 9, 2008 (the “Escrow
Agreement”) pursuant to which an escrow account will be established, at the
Company’s expense, for the benefit of the Company and the Investors (the “Escrow
Account”). Subject to the terms hereof and of the Escrow Agreement, payment of
the purchase price for the Shares shall be made to the Company in the manner set
forth below by Federal Funds wire transfer against delivery of the Shares to
such persons, and the Shares shall be registered in the name or names and shall
be in such denominations as the Placement Agent may request at least one
business day before the Closing Date. Payment of the purchase price for the
Shares to be purchased by Investors shall be made by such Investors directly to
the Escrow Agent by depositing such amount into the Escrow Account and the
Escrow Agent agrees to hold such purchase price in escrow in accordance with the
Escrow Agreement. The Company shall cause its transfer agent, StockTrans, Inc.
(the “Transfer Agent”) to deliver certificates bearing the name of the Investors
(or their designees or nominees) evidencing the Shares to be issued to each such
Investor. Subject to the terms and conditions hereof and of the Subscription
Agreements and the Escrow Agreement, the Escrow Agent shall, on the Closing
Date, deliver to the Company, by Federal Funds wire transfer, the aggregate
purchase price so held in escrow, reduced by an amount equal to the sum of the
aggregate Agency Fee payable in cash to the Placement Agent, and to each of the
Investors certificates evidencing the Shares purchased by such Investor. Each of
the Company and the Placement Agent hereby agree to deliver to the Escrow Agent
a closing notice as contemplated by the Escrow Agreement at least one day prior
to the Closing Date.

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  (g)   With respect to any Investor that is a registered investment company and
is not settling its purchase of Shares pursuant to Section 1(f) above, on or
before the Closing Date, the Company shall cause the Transfer Agent to deliver
the Shares purchased by such Investor to the account and/or at the address
designated by such Investor, and upon receipt by such Investor of such Shares,
such Investor shall wire, in immediately available funds, the Purchase Amount
for such Shares to an account designated by the Company.

2. Representations and Warranties of the Company. The Company represents and
warrants to the Placement Agent as of the date hereof and as of the Closing
Date, and agrees with the Placement Agent, as follows:

  (a)   Filing and Effectiveness of Registration Statement. The Company has
filed, in conformity with the requirements of the Securities Act of 1933, as
amended (the “Securities Act”), and the published rules and regulations
thereunder (the “Securities Act Rules and Regulations”) adopted by the
Securities and Exchange Commission (the “Commission”), a registration statement
on Form S-3 (No. 333-143789), relating to the Shares and the offering thereof
from time to time in accordance with Rule 415(a)(1)(x) of the Securities Act
Rules and Regulations, and such amendments thereof as may have been required to
date.     (b)   Registration Statement and Prospectus; Certain Defined Terms.
The Company meets the requirements for use of Form S-3 under the Securities Act
and has complied with the requirements of Rule 415 with respect to the
Registration Statement (as hereafter defined). The Registration Statement has
heretofore become effective under the Securities Act or, with respect to any
registration statement to be filed to register the offer and sale of Shares
pursuant to Rule 462(b) under the Securities Act, will be filed with the
Commission and become effective under the Securities Act no later than
10:00 p.m. New York City time on the date of determination of the public
offering price for the Shares. No stop order preventing or suspending the
effectiveness of the Registration Statement has been issued by the Commission,
and no proceedings for such purpose pursuant to Section 8A of the Securities Act
against the Company or related to the Offering have been instituted or are
pending or, to the Company’s knowledge, are contemplated or threatened by the
Commission, and any request received by the Company on the part of the
Commission for additional information has been complied with. As used in this
paragraph and elsewhere in this Agreement:

  (i)   “Registration Statement” means the registration statement, as amended at
the time of such registration statement’s effectiveness (the “Effective Time”),
including (i) all documents filed as a part thereof or incorporated or deemed to
be incorporated by reference therein, (ii) any information in the corresponding
Base Prospectus or a prospectus supplement filed with the Commission pursuant to
Rule 424(b) under the Securities Act, to the extent such information is deemed
pursuant to Rule 430B (“Rule 430B”) or Rule 430C (“Rule 430C”) under the
Securities Act to be a part thereof at the Effective Time. If the Company has
filed an abbreviated registration statement to register additional Shares
pursuant to Rule 462(b) under the Securities Act Rules and Regulations (the
“Rule 462(b) Registration Statement”), then any reference herein to the term
“Registration Statement” shall also be deemed to include such Rule 462(b)
Registration Statement.     (ii)   “Base Prospectus” means the Base Prospectus
included in the Registration Statement at the Effective Time.     (iii)   “Final
Prospectus Supplement” means the final prospectus supplement, relating to the
Shares, filed by the Company with the Commission pursuant to Rule 424(b) under
the Securities Act on or before the second business day after the date hereof
(or such earlier time as may be required under the Securities Act) for use in
connection with

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      the offering and sale of the Shares that discloses the public offering
price and other final terms of the Shares.     (iv)   “Prospectus” means the
Final Prospectus Supplement together with the Base Prospectus attached to or
used with the Final Prospectus Supplement.     (v)   “Time of Sale” with respect
to any Investor, means the time of receipt and acceptance (evidenced by
execution by the Company) of an executed Subscription Agreement (as defined
below) from such Investor.     (vi)   “General Disclosure Package” means the
Base Prospectus, each “free-writing prospectus” (as defined pursuant to Rule 405
under the Securities Act) listed on Schedule II hereto and the pricing and other
information as set forth on Exhibit C hereto (the “Pricing Information”), all
considered together.

  (c)   Compliance with Securities Act Requirements. The Registration Statement
complied when it became effective, complies as of the date hereof and, as
amended or supplemented, at the Time of Sale and at all times during which a
prospectus is required by the Securities Act to be delivered (whether physically
or through compliance with Rule 172 under the Securities Act or any similar
rule) in connection with any sale of Shares (the “Prospectus Delivery Period”),
will comply, in all material respects, with the requirements of the Securities
Act and the Securities Act Rules and Regulations; the Registration Statement did
not, as of the Effective Time, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, provided, that the Company makes no
representations or warranty in this paragraph with respect to statements in or
omissions from the Registration Statement in reliance upon, and in conformity
with, written information furnished to the Company by or on behalf of the
Placement Agent specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agent’s Information (as defined
in Section 8).     (d)   Contents of Prospectus. Each of the General Disclosure
Package, if any, and the Prospectus will comply, as of the date that it is filed
with the Commission, the date of its delivery to Investors, the Time of Sale and
at all times during the Prospectus Delivery Period, in all material respects,
with the requirements of the Securities Act (in the case of the Prospectus,
including, without limitation, Section 10(a) of the Securities Act); at no time
during the period that begins on the earlier of the date of the General
Disclosure Package, if any, and the date the Prospectus is filed with the
Commission and ends at the later of the Time of Sale and the end of the
Prospectus Delivery Period did or will any General Disclosure Package or the
Prospectus, as then amended or supplemented, include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, provided that the Company makes no representation or
warranty with respect to the Placement Agent’s Information.     (e)  
Incorporated Documents. Each of the documents incorporated or deemed to be
incorporated by reference in the Registration Statement, at the time such
document was filed with the Commission or at the time such document became
effective, as applicable, complied, in all material respects, with the
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and did not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.     (f)  
General Disclosure Package. The General Disclosure Package as of the Time of
Sale did not, and as of the Closing Date will not, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements

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      therein, in the light of the circumstances under which they were made, not
misleading; provided, that the Company makes no representations or warranty in
this paragraph with respect to the Placement Agent’s Information. No statement
of material fact included in the Prospectus has been omitted from the General
Disclosure Package and no statement of material fact included in the General
Disclosure Package that is required to be included in the Prospectus has been
omitted therefrom.     (g)   Distributed Materials; Conflict with Registration
Statement. Other than the Base Prospectus, any Preliminary Prospectus and the
Prospectus, the Company has not made, used, prepared, authorized, approved or
referred to and will not make, use, prepare, authorize, approve or refer to any
“written communication” (as defined in Rule 405 under the Securities Act) that
constitutes an offer to sell or a solicitation of an offer to buy the Shares
(each such communication by the Company or its agents and the Placement Agent
(other than a communication referred to in clause (i) below) an “Issuer Free
Writing Prospectus”) other than (i) any document not constituting a prospectus
pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134 under the
Securities Act or (ii) the documents listed on Schedule II hereto and other
written communications approved in advance by the Placement Agent. Each such
Issuer Free Writing Prospectus, if any, conformed or will conform in all
material respects to the requirements of the Securities Act and the Securities
Act Rules and Regulations on the date of first use, and the Company has complied
or will comply with any filing requirements applicable to such Issuer Free
Writing Prospectus pursuant to the Securities Act Rules and Regulations. Each
Issuer Free Writing Prospectus, if any, as of its issue date and at all
subsequent times through the completion of the offering and sale of the Shares
did not, does not and will not include any information that conflicted,
conflicts or will conflict with the information contained in the Registration
Statement or the Prospectus, including any document incorporated by reference
therein and any prospectus supplement deemed to be a part thereof that has not
been superseded or modified.     (h)   Not an Ineligible Issuer. (i) At the
earliest time after the filing of the Registration Statement that the Company or
another offering participant made a bona fide offer (within the meaning of
Rule 164(h)(2) under the Securities Act) of the Shares and (ii) at the date
hereof, the Company was not and is not an “ineligible issuer,” as defined in
Rule 405 (“Rule 405”) under the Securities Act.     (i)   Due Incorporation. The
Company has been duly organized and is validly existing as a corporation or
other legal entity in good standing (or the foreign equivalent thereof) under
the laws of its jurisdiction of organization, with the corporate power and
authority to own its properties and to conduct its business as currently being
conducted and as described in the Registration Statement, the Prospectus and the
General Disclosure Package and is duly qualified to transact business and is in
good standing as a foreign corporation or other legal entity in each other
jurisdiction in which its ownership or leasing of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified and in good standing or have such power or authority (i) would not
have, individually or in the aggregate, a material adverse effect upon, the
general affairs, business, operations, properties, financial condition or
results of operations of the Company and its Subsidiaries (as defined below),
taken as a whole, or (ii) impair in any material respect the power or ability of
the Company to perform its obligations under this Agreement or to consummate any
transactions contemplated by the Agreement and the Subscription Agreements,
including the issuance and sale of the Shares (any such effect as described in
clauses (i) or (ii), a “Material Adverse Effect”).     (j)   Subsidiaries. The
Company has no significant subsidiaries (as such term is defined in Rule 1-02 of
Regulation S-X promulgated by the Commission) other than as set forth on
Schedule I hereto (each, a “Subsidiary” and collectively, the “Subsidiaries”).
Each Subsidiary has been

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      duly organized and is validly existing as a corporation or other legal
entity in good standing (or the foreign equivalent thereof) under the laws of
its jurisdiction of organization, with the corporate power and authority to own
its properties and to conduct its business as currently being conducted and as
described in the Registration Statement, the Prospectus and the General
Disclosure Package. All of the issued and outstanding capital stock (or similar
equity interests) of each Subsidiary has been duly authorized and validly issued
and is fully paid and nonassessable and, except as described in the General
Disclosure Package, is owned by the Company, directly or through subsidiaries,
free from liens, encumbrances and defects.     (k)   Due Authorization and
Enforceability. The Company has the full right, power and authority to enter
into this Agreement, each of the Subscription Agreements and the Escrow
Agreement, and to perform and discharge its obligations hereunder and
thereunder; and each of this Agreement, the Escrow Agreement and each
Subscription Agreement has been duly authorized, executed and delivered by the
Company, and constitutes a valid, legal and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnity hereunder may be limited by federal or state securities laws and
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity.     (l)   The Shares. The
issuance of the Shares has been duly and validly authorized by the Company and,
when issued, delivered and paid for in accordance with the terms of this
Agreement and the Subscription Agreements, the Shares will have been duly and
validly issued and will be fully paid and nonassessable. Except as otherwise
stated in the General Disclosure Package and the Prospectus, there are no
statutory or contractual preemptive rights or other rights to subscribe for or
purchase or acquire any shares of Common Stock of the Company, which have not
been waived or complied with, and the Shares will conform in all material
respects to the description thereof contained in the General Disclosure Package
and the Prospectus.     (m)   Capitalization. As of the date hereof, the
authorized capital stock of the Company consists of (i) 75,000,000 shares of
Common Stock, par value $.001 per share, of which 39,808,864 shares are issued
and outstanding, 3,180,098 shares are reserved for issuance upon exercise of
stock options outstanding under the Company’s employee and director stock option
plans, 1,433,674 shares are reserved for grants of rights to purchase under the
Company’s stock option plans, and 1,839,671 shares are reserved for issuance
under warrants; and (ii) 20,000,000 shares of preferred stock, par value $.001
per share, none of which are issued and outstanding. The authorized capital
stock of the Company conforms as to legal matters to the description thereof
contained in the Prospectus under the caption “Description of common stock” (and
any similar sections or information, if any, contained in the General Disclosure
Package). The issued and outstanding shares of capital stock of the Company have
been duly authorized and validly issued, are fully paid and nonassessable, and
have been issued in compliance with all federal and state securities laws. None
of the outstanding shares of capital stock was issued in violation of any
preemptive rights, rights of first refusal or other similar rights to subscribe
for or purchase or acquire any securities of the Company. There are no
authorized or outstanding shares of capital stock, options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable for, any capital stock of the
Company or any of its Subsidiaries other than those described in the Prospectus
and the General Disclosure Package. The description of the Company’s stock
option, stock bonus and other stock plans or arrangements, and the options or
other rights granted thereunder, as described in the Prospectus and the General
Disclosure Package, accurately and fairly present the information required to be
shown with respect to such plans, arrangements, options and rights.

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  (n)   No Conflict. The execution, delivery and performance by the Company of
this Agreement, the Subscription Agreements and the Escrow Agreement and the
consummation of the transactions contemplated hereby and thereby, including the
issuance and sale by the Company of the Shares, will not (i) conflict with or
result in a breach or violation of, or constitute a default under (nor
constitute any event which with notice, lapse of time or both would result in
any breach or violation of or constitute a default under), give rise to any
right of termination or other right or the cancellation or acceleration of any
right or obligation or loss of a benefit under, or give rise to the creation or
imposition of any lien, encumbrance, security interest, claim or charge upon any
property or assets of the Company or any Subsidiary pursuant to any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Company or any Subsidiary is a party or by which any of them or any of
their respective properties may be bound or to which any of the property or
assets of the Company or any of its Subsidiaries is subject, (ii) result in any
violation of the provisions of the charter or by-laws (or analogous governing
instrument, as applicable) of the Company or any Subsidiary, or (iii) result in
any violation of any law, statute, rule, regulation, judgment, order or decree
of any court or governmental agency or body, domestic or foreign, having
jurisdiction over the Company or its Subsidiaries or any of their properties or
assets, except, in the case of each of clauses (i) and (iii) above, for any such
conflict, breach, violation, default, lien, charge or encumbrance that would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.     (o)   No Consents Required. No approval, authorization,
consent or order of or filing, qualification or registration with, any court or
governmental agency or body, foreign or domestic, which has not been made,
obtained or taken and is not in full force and effect, is required in connection
with the execution, delivery and performance of this Agreement, the Subscription
Agreements and the Escrow Agreement by the Company, the issuance and sale of the
Shares or the consummation by the Company of the transactions contemplated
hereby or thereby other than (i) as may be required under the Securities Act or
the Exchange Act, (ii) any necessary qualification of the Shares under the
securities or blue sky laws of the various jurisdictions in which the Shares are
being offered by the Placement Agent, (iii) under the rules and regulations of
the Financial Industry Regulatory Authority (“FINRA”) or (iv) The Nasdaq Global
Market in connection with the distribution of the Shares by the Placement Agent.
    (p)   Registration Rights. Except as described in the due diligence
materials provided by the Company to the Placement Agent or as otherwise
described in the Registration Statement, the Prospectus and the General
Disclosure Package, there are no contracts, agreements or understandings between
the Company and any person granting such person the right (other than rights
which have been waived in writing in connection with the transactions
contemplated by this Agreement or otherwise satisfied) to require the Company to
register any securities with the Commission.     (q)   [Intentionally Omitted].
    (r)   Independent Accountants. Grant Thornton, Hong Kong, whose reports on
the audited consolidated financial statements of the Company and the
Subsidiaries are incorporated by reference in the Registration Statement, the
Prospectus and the General Disclosure Package, are independent public
accountants with respect to the Company as required by the Securities Act, and
the applicable published Securities Act Rules and Regulations thereunder and
Rule 3600T of the Public Company Accounting Oversight Board (“PCAOB”).     (s)  
Commission Reports. Since September 30, 2006, the Company has timely filed all
reports, schedules, forms, statements and other documents required to be filed
by it with the

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      Commission pursuant to the reporting requirements of the Exchange Act (all
of the foregoing filed prior to the date hereof and all exhibits included
therein and financial statements and schedules thereto and documents (other than
exhibits) incorporated by reference therein, being hereinafter referred to
herein as the “Exchange Act Filings”). As of their respective dates, the
Exchange Act Filings complied in all material respects with the requirements of
the Exchange Act or the Securities Act, as the case may be, and the Securities
Act Rules and Regulations or rules and regulations of the Commission promulgated
under the Exchange Act (the “Exchange Act Rules and Regulations”), as the case
may be, applicable to the Exchange Act Filings.     (t)   Financial Statements.
The consolidated financial statements of the Company, together with the related
schedules and notes thereto, set forth or incorporated by reference in the
Registration Statement, the Prospectus and the General Disclosure Package,
comply in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and present fairly in all
material respects (i) the financial condition of the Company and the
Subsidiaries, taken as a whole, as of the dates indicated and (ii) the
consolidated results of operations, stockholders’ equity and changes in cash
flows of the Company and the Subsidiaries, taken as a whole, for the periods
therein specified; and such financial statements and related schedules and notes
thereto have been prepared in conformity with United States generally accepted
accounting principles, consistently applied throughout the periods involved
(except as otherwise stated therein and subject, in the case of unaudited
financial statements, to the absence of footnotes and normal year-end
adjustments). There are no other financial statements (historical or pro forma)
that are required to be included or incorporated by reference in the
Registration Statement, the Prospectus or the General Disclosure Package.    
(u)   Absence of Material Changes. Subsequent to the respective dates as of
which information is given in the Registration Statement, the Prospectus and the
General Disclosure Package, and except as may be otherwise stated or
incorporated by reference in the Registration Statement, the Prospectus and the
General Disclosure Package, (i) there has not been any change in the capital
stock of the Company (except for changes in the number of outstanding shares of
Common Stock of the Company due to the issuance of shares upon the exercise or
conversion of securities exercisable for, or convertible into, shares of Common
Stock outstanding on the date hereof) or long-term debt of the Company or any of
its Subsidiaries or any dividend or distribution of any kind declared, set aside
for payment, paid or made by the Company on any class of capital stock;
(ii) there has not been any material adverse change or development that would
result in a Material Adverse Effect; and (iii) neither the Company nor any of
its Subsidiaries have entered or will enter into any transaction or agreement,
not in the ordinary course of business, that is material to the Company and its
Subsidiaries taken as a whole or incurred or will incur any liability or
obligation, direct or contingent, not in the ordinary course of business, that
is material to the Company and its Subsidiaries taken as a whole.     (v)  
Legal Proceedings. There are no legal or governmental actions, suits, claims or
proceedings pending to which the Company or any Subsidiary is or would be a
party or of which any of their respective properties is or would be subject at
law or in equity, which are required to be described in the Registration
Statement, the General Disclosure Package or the Prospectus or a document
incorporated by reference therein and are not so described therein, or which,
singularly or in the aggregate, if resolved adversely to the Company or any
Subsidiary, would reasonably be likely to result in a Material Adverse Effect.
To the Company’s knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others.

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  (w)   No Violation. Neither the Company nor any Subsidiary is in breach or
violation of or in default (nor has any event occurred which with notice, lapse
of time or both would result in any breach or violation of, or constitute a
default) (i) under the provisions of its charter or bylaws (or analogous
governing instrument, as applicable) or (ii) in the performance or observance of
any term, covenant, obligation, agreement or condition contained in any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
evidence of indebtedness, or any license, lease, contract or other agreement or
instrument to which the Company or any Subsidiary is a party or by which any of
them or any of their properties may be bound or affected, or (iii) in the
performance or observance of any statute, law, rule, regulation, ordinance,
judgment, order or decree of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having jurisdiction over the
Company, the Subsidiaries or any of their respective properties, as applicable,
except, with respect to clauses (ii) and (iii) above, to the extent any such
contravention has been waived or would not result in a Material Adverse Effect.
    (x)   Permits. The Company and each Subsidiary has made all filings,
applications and submissions required by, and owns or possesses all approvals,
licenses, certificates, certifications, clearances, consents, exemptions, marks,
notifications, orders, permits and other authorizations issued by, the
appropriate federal, state or foreign regulatory authorities necessary to
conduct its business as described in the General Disclosure Package
(collectively, “Permits”), except for such Permits which the failure to obtain
would not have a Material Adverse Effect (the “Immaterial Permits”), and is in
compliance with the terms and conditions of all such Permits other than the
Immaterial Permits (the “Required Permits”) except for such failure to comply
that would not have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received notice of any proceedings relating to revocation or
modification of, any such Required Permit, which, individually or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, would
have a Material Adverse Effect.     (y)   Not an Investment Company. Neither the
Company nor any Subsidiary is an “investment company” or an “affiliated person”
of, or “promoter” or “principal underwriter” for, an “investment company,” as
such terms are defined in the Investment Company Act of 1940, as amended (the
“Investment Company Act”), and, after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described in the
General Disclosure Package and the Prospectus, neither the Company nor any
Subsidiary will an “investment company” or an “affiliated person” of, or
“promoter” or “principal underwriter” for, an “investment company,” as such
terms are defined in the Investment Company Act.     (z)   No Price
Stabilization. Neither the Company nor any Subsidiary nor, to the Company’s
knowledge, any of their respective officers, directors, affiliates or
controlling persons has taken or will take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result in, or which
has constituted or which might reasonably be expected to constitute the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.     (aa)   Good Title to Property.
The Company and each Subsidiary has good and valid title to all property
(whether real or personal) described in the General Disclosure Package as being
owned by each of them, in each case free and clear of all liens, claims,
security interests, other encumbrances or defects (collectively, “Liens”),
except such as are described in the Prospectus and the General Disclosure
Package or those that would not have a Material Adverse Effect. All of the
property described in the General Disclosure Package as being held under lease
by the Company or any Subsidiary is held thereby under valid, subsisting and
enforceable leases, without any liens, restrictions, encumbrances or claims,
except those that

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      would not have a Material Adverse Effect or do not materially interfere
with the use made and proposed to be made of such property by the Company and
the Subsidiaries.     (bb)   Intellectual Property Rights. Except as set forth
in the Registration Statement, the Prospectus and the General Disclosure
Package, the Company and the Subsidiaries own or possess the right to use all
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, software,
databases, know-how, Internet domain names, trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures, and other intellectual property (collectively, “Intellectual
Property”) necessary to carry on their respective businesses as currently
conducted, and as proposed to be conducted and described in the General
Disclosure Package and the Prospectus except where the failure to own or possess
the right to use would not have a Material Adverse Effect, and the Company is
not aware of any claim to the contrary or any challenge by any other person to
the rights of the Company and the Subsidiaries with respect to the foregoing
except for those that would not have a Material Adverse Effect. The Intellectual
Property licenses described in the General Disclosure Package and the Prospectus
are valid, binding upon, and enforceable by or against the parties thereto in
accordance to its terms. The Company and each Subsidiary has complied in all
material respects with, and is not in breach nor has received any asserted or
threatened claim of breach of, any Intellectual Property license described in
the General Disclosure Package and the Prospectus except for such breaches or
asserted or threatened claims of breach that would not have a Material Adverse
Effect, and the Company has no knowledge of any breach or anticipated breach by
any other person to any Intellectual Property license. To the knowledge of the
Company, the Company’s and each Subsidiary’s businesses as now conducted and as
proposed to be conducted as set forth in the Registration Statement, the
Prospectus and the General Disclosure Package do not and will not infringe or
conflict with any patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses or other Intellectual Property or franchise right of any
person. The Company has not received written notice of any material claim
against the Company or any Subsidiary alleging the infringement by the Company
or any of its Subsidiary of any patent, trademark, service mark, trade name,
copyright, trade secret, license in or other intellectual property right or
franchise right of any person. The Company and each Subsidiary has taken all
reasonable steps to protect, maintain and safeguard its rights in all
Intellectual Property. The consummation of the transactions contemplated by this
Agreement will not result in the loss or impairment of or payment of any
additional amounts with respect to, nor require the consent of any other person
in respect of, the Company’s or any of Subsidiary’s right to own, use, or hold
for use any of the Intellectual Property as owned, used or held for use in the
conduct of the businesses as currently conducted. The Company and each
Subsidiary has duly and properly filed or caused to be filed with the United
States Patent and Trademark Office (the “PTO”) and applicable foreign and
international patent authorities all patent applications owned by the Company
and the Subsidiaries (the “Company Patent Applications”). To the knowledge of
the Company, the Company and each Subsidiary has complied with the PTO’s duty of
candor and disclosure for the Company Patent Applications and has made no
material misrepresentation in the Company Patent Applications. The Company is
not aware of any information material to a determination of patentability
regarding the Company Patent Applications not called to the attention of the PTO
or similar foreign authority. The Company is not aware of any information not
called to the attention of the PTO or similar foreign authority that would
preclude the grant of a patent for the Company Patent Applications. The Company
has no knowledge of any information that would preclude the Company, or as
applicable, any Subsidiary, from having clear title to the Company Patent
Applications.

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  (cc)   No Labor Disputes. No labor problem or dispute with the employees of
the Company exists, or, to the Company’s knowledge, is threatened or imminent,
which would reasonably be expected to result in a Material Adverse Effect. The
Company is not aware that any key employee or significant group of employees of
the Company plans to terminate employment with the Company.     (dd)   Taxes.
The Company and each Subsidiary (i) has timely filed all necessary federal,
state, local and foreign income and franchise tax returns (or timely filed
applicable extensions therefore) that have been required to be filed and (ii) is
not in default in the payment of any taxes which were payable pursuant to said
returns or any assessments with respect thereto, other than any which the
Company or any Subsidiary is contesting in good faith and for which adequate
reserves have been provided.     (ee)   ERISA. The Company has fulfilled its
obligations, if any, under the minimum funding standards of Section 302 of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”) and the
regulations and published interpretations thereunder with respect to each “plan”
(as defined in Section 3(3) of ERISA and such regulations and published
interpretations) in which employees of the Company are eligible to participate
and each such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. No “prohibited transaction” (as defined in Section 406 of
ERISA, or Section 4975 of the Internal Revenue Code of 1986, as amended from
time to time (the “Code”)) or “accumulated funding deficiency” (as defined in
Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the thirty (30)-day notice requirements
under Section 4043 of ERISA has been waived) has occurred or could reasonably be
expected to occur with respect to any employee benefit plan of the Company or
any Subsidiary, which could, singularly or in the aggregate, have a Material
Adverse Effect.     (ff)   Compliance with Environmental Laws. The Company and
its Subsidiaries (i) are in compliance with any and all applicable foreign,
federal, state and local laws, orders, rules, regulations, directives, decrees
and judgments relating to the use, treatment, storage and disposal of hazardous
or toxic substances or waste and protection of the environment which are
applicable to their businesses (“Environmental Laws”), (ii) have received and
are in compliance with all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct its business; and (iii) have not
received notice of any actual or potential liability for the investigation or
remediation of any disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except in the case of subsections (i),
(ii) and (iii) of this subsection (ff) as would not, individually or in the
aggregate, have a Material Adverse Effect.     (gg)   Insurance. The Company and
each Subsidiary maintains or is covered by insurance provided by recognized,
financially sound and reputable institutions with policies in such amounts and
covering such risks as is adequate for the conduct of its business and the value
of its properties and as is customary for companies engaged in similar
businesses in similar industries. All such insurance is fully in force on the
date hereof and will be fully in force as of the Closing Date. Neither the
Company nor any Subsidiary has any reason to believe that it will not be able to
renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a Material Adverse Effect.     (hh)  
Accounting Controls. The Company and each Subsidiary maintains a system of
internal accounting controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management’s general or
specific authorization; (ii) transactions

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      are recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management’s general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences. Except as set forth in the General Disclosure Package or the
Prospectus, since January 1, 2007, (i) Grant Thornton, Hong Kong has not
identified any material weakness in the Company’s internal control over
financial reporting (whether or not remediated), and (ii) there has been no
change in the Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect, the Company’s
internal control over financial reporting. The Company is not aware of any
fraud, whether or not material, that involves management or other employees who
have a role in the Company’s internal controls.     (ii)   Disclosure Controls.
The Company has established, maintains and evaluates “disclosure controls and
procedures” (as such term is defined in Rule 13a-15e and 15d-15e under the
Exchange Act) that (i) are designed to ensure that material information relating
to the Company is made known to the Company’s principal executive officer and
its principal financial officer by others within those entities, particularly
during the periods in which the periodic reports required under the Exchange Act
are being prepared; (ii) have been evaluated for effectiveness as of the end of
the last fiscal period covered by the Registration Statement; and (iii) are
effective to perform the functions for which they were established. Since the
date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weakness.     (jj)
  Contracts; Off-Balance Sheet Interests. There is no document, contract, permit
or instrument, or off-balance sheet transaction (including without limitation,
any “variable interests” in “variable interest entities,” as such terms are
defined in Financial Accounting Standards Board Interpretation No. 46) of a
character required by the Securities Act or the Securities Act Rules and
Regulations to be described in the Registration Statement or the General
Disclosure Package or to be filed as an exhibit to the Registration Statement or
document incorporated by reference therein, which is not described or filed as
required. The contracts described in the immediately preceding sentence to which
the Company is a party have been duly authorized, executed and delivered by the
Company, constitute valid and binding agreements of the Company, are enforceable
against and by the Company in accordance with the terms thereof and are in full
force and effect on the date hereof.     (kk)   No Undisclosed Relationships. No
relationship, direct or indirect, exists between or among the Company and any of
its Subsidiaries on the one hand and the directors, officers, stockholders,
customers or suppliers of the Company or any of its Subsidiaries or any of their
affiliates on the other hand, which is required to be described in the General
Disclosure Package and the Prospectus or a document incorporated by reference
therein and which has not been so described.     (ll)   Brokers Fees. Except as
disclosed in the General Disclosure Package, there are no contracts, agreements
or understandings between the Company and any person (other than this Agreement)
that would give rise to a valid claim against the Company, the Subsidiaries or
the Placement Agent for a brokerage commission, finder’s fee or other like
payment in connection with the offering and sale of the Shares.     (mm)  
Forward-Looking Statements. No forward-looking statements (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act) contained
in either the

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      General Disclosure Package or the Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good faith.    
(nn)   Nasdaq; Exchange Act Registration. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act and is listed on The
Nasdaq Global Market, and the Company has taken no action designed to terminate,
or any action reasonably likely to have the effect of terminating, the
registration of the Common Stock under the Exchange Act or delisting the Common
Stock from The Nasdaq Global Market, nor has the Company received any
notification that the Commission or Nasdaq is contemplating terminating such
registration or listing. The Company has complied in all material respects with
the applicable requirements of Nasdaq for the maintenance of inclusion of the
Common Stock on The Nasdaq Global Market. The Company has filed an application
to include the Shares on The Nasdaq Global Market.     (oo)   Sarbanes-Oxley
Act. The Company is, and to its knowledge all of the Company’s directors or
officers in their capacities as such are, in compliance in all material respects
with all applicable effective provisions of the Sarbanes-Oxley Act of 2002, as
amended and any related rules and regulations promulgated by the Commission.
Each of the principal executive officer and the principal financial officer of
the Company (or each former principal executive officer of the Company and each
former principal financial officer of the Company as applicable) has made all
certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act with
respect to all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission. For purposes of the preceding
sentence, “principal executive officer” and “principal financial officer” shall
have the meanings given to such terms in the Sarbanes-Oxley Act.     (pp)  
Foreign Corrupt Practices. Neither the Company nor, to the Company’s knowledge,
any other person associated with or acting on behalf of the Company, including
without limitation any director, officer, agent or employee of the Company or
its Subsidiaries has, directly or indirectly, during the last five years, while
acting on behalf of the Company or on behalf of the Company’s Subsidiaries after
the Subsidiary was acquired by the Company (i) used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity or failed to disclose fully any contribution in violation
of law, (ii) made any payment to any federal or state governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or permitted by the laws of the United States or
any jurisdiction thereof, (iii) violated or is in violation of any provision of
the U.S. Foreign Corrupt Practices Act of 1977, as amended or (iv) made any
bribe, rebate, payoff, influence payment, kickback or other unlawful payment.  
  (qq)   Currency and Foreign Transactions. The operations of the Company and
its Subsidiaries are and have been conducted at all times in compliance with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”),
except where a failure to comply with such requirements, statutes, rules,
regulations or guidelines could not reasonably be expected to have a Material
Adverse Effect, and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company
or any of its Subsidiaries with respect to the Money Laundering Laws is pending
or, to the Company’s knowledge, threatened.     (rr)   No Sanctioned Employees.
Neither the Company nor any Subsidiary nor, to the Company’s knowledge, any
director, officer, agent, employee or affiliate of the Company or its

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      Subsidiaries is currently subject to any U.S. sanctions administered by
the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”);
and the Company will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, for the purpose of
financing the activities of any person currently subject to any U.S. sanctions
administered by OFAC.     (ss)   FINRA Affiliations. Except as described in the
due diligence materials provided by the Company to the Placement Agent, neither
the Company nor any Subsidiary nor any of their affiliates (within the meaning
of FINRA Rule 2720(b)(1)(a)) directly or indirectly controls, is controlled by,
or is under common control with, or is an associated person (within the meaning
of Article I, Section 1(e)(e) of the By-laws of FINRA) of, any member firm of
FINRA.     (tt)   Trading Market. Assuming the accuracy of the representations
of the Investors in the Subscription Agreements, no approval of the shareholders
of the Company under the rules and regulations of any trading market (including
Rule 4350 of The Nasdaq Global Marketplace Rules) is required for the Company to
issue and deliver to the Investors the Shares.

     Any certificate signed by any officer of the Company or any Subsidiary and
delivered to the Placement Agent or to counsel for the Placement Agent in
connection with the offering of the Shares shall be deemed a representation and
warranty by the Company to the Placement Agent and the Investors as to the
matters covered thereby.
3. Covenants. The Company covenants and agrees with the Placement Agent as
follows:

  (a)   Filing of Prospectuses. The Company will file: (i) each Preliminary
Prospectus and the Prospectus with the Commission within the time periods
specified by Rule 424(b) and Rules 430B or 430C under the Securities Act,
(ii) any Issuer Free Writing Prospectus to the extent required by Rule 433 under
the Securities Act, if applicable, and (iii) all reports and any definitive
proxy or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of the Prospectus and during the Prospectus Delivery
Period.     (b)   Filing of Amendments. The Company will promptly advise the
Placement Agent of any proposal to amend or supplement the Registration
Statement, the Prospectus or the General Disclosure Package until the completion
of the purchase and sale of the Shares contemplated herein and will afford the
Placement Agent a reasonable opportunity to comment on any such proposed
amendment or supplement and to file no such amendment or supplement to which the
Placement Agent shall object in writing, which objection shall not be
unreasonable; and the Company will also advise the Placement Agent promptly of
(i) the filing of any such amendment or supplement, (ii) any request by the
Commission or its staff for any amendment to the Registration Statement, for any
supplement to the Prospectus or for any additional information, (iii) the time
and date when any post-effective amendment to the Registration Statement becomes
effective, but only during the Prospectus Delivery Period; (iv) receipt by the
Company of any notification with respect to any suspension of the approval of
the Shares from any securities exchange upon which they are listed for trading
or included or designated for quotation, or the initiation or threatening of any
proceeding for such purpose, (v) the institution by the Commission of any stop
order proceedings in respect of the Registration Statement or the threatening of
any proceeding for that purpose, and (vi) the receipt by the Company of any
notification with respect to the suspension of the qualification of the Shares
in any jurisdiction or the institution or threatening of any proceedings for
such purpose. The Company will use its reasonable commercial efforts to prevent
the issuance of any such stop

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      order or the suspension of any such qualification and, if issued, to
obtain as soon as possible the withdrawal thereof.     (c)   Continued
Compliance with Securities Law. If, during the Prospectus Delivery Period, any
event occurs as a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is necessary
at any time to amend the Registration Statement or supplement the Prospectus to
comply with the Securities Act, the Company will promptly notify the Placement
Agent of such event and will promptly prepare and file with the Commission and
furnish, at its own expense, to the Placement Agent and, to the extent
applicable, the dealers and any other dealers upon request of the Placement
Agent, an amendment or supplement which will correct such statement or omission
or an amendment which will effect such compliance.     (d)   Free Writing
Prospectuses. The Company will (i) not make any offer relating to the Shares
that would constitute an Issuer Free Writing Prospectus or that would otherwise
constitute a “free writing prospectus” (as defined in Rule 405 under the
Securities Act) required to be filed by the Company with the Commission under
Rule 433 under the Securities Act unless the Placement Agent approves its use in
writing prior to first use; provided that the prior written consent of the
Placement Agent hereto shall be deemed to have been given in respect of the
Issuer Free Writing Prospectus(es) included in Schedule II hereto, (ii) comply
with the requirements of Rules 164 and 433 under the Securities Act applicable
to any Issuer Free Writing Prospectus, including the requirements relating to
timely filing with the Commission, legending and record keeping and (iii) not
take any action that would result in the Placement Agent or the Company being
required to file with the Commission pursuant to Rule 433(d) under the
Securities Act a free writing prospectus prepared by or on behalf of the
Placement Agent that the Placement Agent otherwise would not have been required
to file thereunder. The Company will satisfy the conditions in Rule 433 under
the Securities Act to avoid a requirement to file with the Commission any
electronic road show. The Placement Agent will (x) not make any offer relating
to the Shares that would constitute a “free writing prospectus” (as defined in
Rule 405 under the Securities Act) required to be filed by the Company with the
Commission under Rule 433 under the Securities Act unless the Company approves
its use in writing prior to first use; and (y) not take any action that would
result in the Company being required to file with the Commission pursuant to
Rule 433(d) under the Securities Act a free writing prospectus prepared by or on
behalf of the Placement Agent that the Placement Agent otherwise would not have
been required to file thereunder.     (e)   Conflicting Issuer Free Writing
Prospectus. If at any time following issuance of an Issuer Free Writing
Prospectus there occurred or occurs an event or development as a result of which
such Issuer Free Writing Prospectus conflicted or would conflict with the
information contained in the Registration Statement relating to the Shares or
included or would include an untrue statement of a material fact or omitted or
would omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances prevailing at that subsequent time,
not misleading, the Company promptly will notify the Placement Agent and will
promptly amend or supplement, at its own expense, such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or omission.
The foregoing sentence does not apply to statements in or omissions from any
Issuer Free Writing Prospectus in reliance upon, and in conformity with the
Placement Agent’s Information.     (f)   Delivery of Copies. The Company will
deliver promptly to the Placement Agent and its counsel such number of the
following documents as the Placement Agent shall reasonably request:
(i) conformed copies of the Registration Statement as originally filed with the

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      Commission and each amendment thereto (in each case excluding exhibits),
(ii) copies of any Preliminary Prospectus related to the Shares; (iii) any
Issuer Free Writing Prospectus, (iv) during the Prospectus Delivery Period,
copies of the Prospectus (or any amendments or supplements thereto); (v) any
document incorporated by reference in the Prospectus (other than any such
document, other than those documents described in clauses (i), (ii), (iii),
(iv) and (v) above) that is filed with the Commission electronically via EDGAR
or any successor system; and (vi) all correspondence to and from, and all
documents issued to and by, the Commission in connection with the registration
of the Shares under the Securities Act.     (g)   Blue Sky Laws. The Company
will promptly take or cause to be taken, from time to time, such actions as the
Placement Agent may reasonably request to qualify the Shares for offering and
sale under the state securities, or blue sky, laws of such states or other
jurisdictions as the Placement Agent may reasonably request and to maintain such
qualifications in effect so long as the Placement Agent may request for the
distribution of the Shares, provided, that in no event shall the Company be
obligated to qualify as a foreign corporation in any jurisdiction in which it is
not so qualified or to file a general consent to service of process in any
jurisdiction or subject itself to taxation as doing business in any
jurisdiction.     (h)   Earnings Statement. As soon as practicable, but in any
event not later than 16 months after the date of this Agreement, the Company
will make generally available to holders of its securities, an earnings
statement of the Company and its subsidiaries (which need not be audited) that
will satisfy the provisions of Section 11(a) of the Securities Act and the
Securities Act Rules and Regulations (including Rule 158). Any document or
information filed with the Commission and available on EDGAR shall be deemed to
be delivered for purposes of this section.     (i)   Use of Proceeds. The
Company will apply the net proceeds from the sale of the Shares in the manner
set forth in the General Disclosure Package and the Prospectus under the heading
“Use of Proceeds.”     (j)   [Intentionally Omitted].     (k)   [Intentionally
Omitted].     (l)   Stabilization. The Company will not, and will cause the
Subsidiaries not to, take directly or indirectly any action designed, or that
might reasonably be expected to cause or result in, or that will constitute,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Shares.     (m)   Transfer Agent.
The Company shall engage and maintain, at its expense, a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Shares.     (n)   Listing. The Company shall use its best efforts to
cause the Shares to be listed for quotation on The Nasdaq Global Market at the
Closing Date and to maintain such listing for a period of 12 months after the
date hereof.     (o)   Undertakings. The Company will comply with all the
provisions of any undertakings contained in the Registration Statement.

4. Costs and Expenses. The Company will pay or reimburse if paid by the
Placement Agent all costs and expenses incident to the performance of the
obligations of the Company under this Agreement and in connection with the
transactions contemplated hereby, including but not limited to costs and
expenses of or relating to (a) the preparation, printing, filing, delivery and
shipping of the Registration Statement, any Issuer Free Writing Prospectus, each
Preliminary Prospectus, the General Disclosure Package and the Prospectus, and
any amendment or supplement to any of the foregoing (including costs of mailing
and shipment), (b) the

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registration, issue, sale and delivery of the Shares including any stock or
transfer taxes and stamp or similar duties payable upon the sale, issuance or
delivery of the Shares and the printing, delivery, and shipping of the
certificates representing the Shares, (c) the registration or qualification of
the Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions designated pursuant to Section 3(g), (including, in the event that
the transactions contemplated hereby are not consummated, the reasonable legal
fees not to exceed $10,000, filing fees and other disbursements of counsel to
the Placement Agent in connection therewith), and, if reasonably requested by
the Placement Agent, the preparation and printing and furnishing of copies of
any blue sky surveys to the Placement Agent, (d) the fees and expenses of any
transfer agent or registrar for the Shares, (e) any filings required to be made
by the Placement Agent or the Company with FINRA, (f) listing fees, if any, for
the listing or quotation of the Shares on The Nasdaq Global Market, (g) fees and
disbursements of the Company’s auditor incurred in delivering the letter(s)
described in Section 5(i) of this Agreement, (h) fees of the Escrow Agent, and
(i) the costs and expenses of the Company and the Placement Agent in connection
with the marketing of the offering and the sale of the Shares to prospective
investors including, but not limited to, those related to any presentations or
meetings undertaken in connection therewith including, without limitation,
expenses associated with the production of road show slides and graphics, fees
and expenses of any consultants engaged with the written consent of the Company
in connection with the road show presentations, travel, lodging and other
expenses incurred by the officers of the Company and any such consultants, and
the cost of any aircraft or other transportation chartered in connection with
the road show; provided, however, that the costs and expenses of the Placement
Agent pursuant to this Section 4(i) shall be paid by the Company only in the
event that the transactions contemplated hereby are not consummated. If this
Agreement shall be terminated by the Placement Agent pursuant to Section 9
hereof, the Company will, in addition to paying the amounts described in
Section 4 hereof, reimburse the Placement Agent for all of its out-of-pocket
disbursements including, but not limited to, the fees and disbursements of its
counsel.
5. Conditions of Placement Agent’s Obligations. The respective obligations of
the Placement Agent hereunder and the Investors under the Subscription
Agreements are subject to the following conditions:

  (a)   Filings with the Commission. The Prospectus (including the Final
Prospectus Supplement) shall have been filed with the Commission pursuant to
Rule 424(b), in the manner and within the time period so required.     (b)  
Abbreviated Registration Statement. If the Company has elected to rely upon
Rule 462(b), the registration statement filed under Rule 462(b) shall have
become effective under the Securities Act by 8:00 a.m., Washington, D.C. time,
on the business day next succeeding the date of this Agreement.     (c)   No
Stop Orders; Negative Assurance. Prior to the Closing: (i) no stop order
suspending the effectiveness of the Registration Statement or any part thereof,
preventing or suspending the use of the Prospectus or any Issuer Free Writing
Prospectus or any part thereof shall have been issued under the Securities Act
and no proceedings for that purpose or pursuant to Section 8A under the
Securities Act shall have been initiated or threatened by the Commission,
(ii) no order suspending the qualification or registration of the Shares under
the securities or blue sky laws of any jurisdiction shall be in effect and
(iii) all requests for additional information on the part of the Commission (to
be included or incorporated by reference in the Registration Statement, the
General Disclosure Package, the Prospectus or any Issuer Free Writing Prospectus
or otherwise) shall have been complied with to the satisfaction of the Staff of
the Commission. The Placement Agent shall not have discovered and disclosed to
the Company on or prior to the Closing Date that (x) the Registration Statement
or any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of the Placement Agent, is material, or omits to state any
fact which, in the opinion of the Placement Agent, is material and is required
to be stated therein or is necessary to make the statements therein not
misleading, or (y) the General Disclosure Package or the Prospectus, or any
amendment or supplement thereto, or any Issuer Free Writing Prospectus, contains
an untrue

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      statement of a fact which, in the opinion of the Placement Agent, is
material, or omits to state any fact which, in the opinion of the Placement
Agent, is material and is required to be stated therein or is necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.     (d)   Action Preventing Issuance. No action shall have
been taken and no statute, rule, regulation or order shall have been enacted,
adopted or issued by any governmental agency or body which would, as of the
Closing Date, prevent the issuance or sale of the Shares; and no injunction,
restraining order or order of any other nature by any federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which would
prevent the issuance or sale of the Shares.     (e)   Objection of Placement
Agent. No Prospectus or amendment or supplement to the Registration Statement
shall have been filed to which the Placement Agent shall have objected in
writing, which objection shall not be unreasonable.     (f)   Material Adverse
Change. Subsequent to the date of the latest audited financial statements
included or incorporated by reference in the General Disclosure Package,
(i) neither the Company nor any of its Subsidiaries has sustained any material
loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth in
the General Disclosure Package, and (ii) there has not been any change in the
capital stock (other than a change in the number of outstanding shares of Common
Stock due to the issuance of shares upon the exercise of outstanding options or
warrants or the conversion of convertible indebtedness), or material change in
the short-term debt or long-term debt of the Company or any Subsidiary (other
than upon conversion of convertible indebtedness) or any Material Adverse Effect
otherwise than as set forth in the General Disclosure Package     (g)  
Representations and Warranties. Each of the representations and warranties of
the Company contained herein shall be true and correct when made and on and as
of the Closing Date, as if made on such date (except that those representations
and warranties that address matters only as of a particular date shall remain
true and correct as of such date), and all covenants and agreements herein
contained to be performed on the part of the Company and all conditions herein
contained to be fulfilled or complied with by the Company at or prior to the
Closing Date shall have been duly performed, fulfilled or complied with.     (h)
  Opinion of Counsel to the Company. The Placement Agent shall have received
from Morgan, Lewis & Bockius LLP, counsel to the Company, such counsel’s written
opinion, addressed to the Placement Agent and the Investors and dated the
Closing Date, in the form provided on Exhibit B hereto.     (i)   Opinion of
Counsel to the Placement Agent. The Placement Agent shall have received from
Duane Morris LLP, counsel for the Placement Agent, such counsel’s written
opinion, addressed to the Placement Agent and dated the Closing Date, covering
such matters as are customarily covered in transactions of this type. Such
counsel shall also have furnished to the Placement Agent a written statement,
addressed to the Placement Agent and dated the Closing Date, covering negative
assurances.     (j)   [Intentionally Omitted].     (k)   [Intentionally
Omitted].     (l)   Officer’s Certificate. The Placement Agent shall have
received on the Closing Date a certificate, addressed to the Placement Agent and
dated the Closing Date, of the chief

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      executive or chief operating officer and the chief financial officer or
chief accounting officer of the Company to the effect that:

  (i)   each of the representations, warranties and agreements of the Company in
this Agreement were true and correct in all material respects when originally
made and are true and correct in all material respects as of the Closing Date;
and the Company has complied in all material respects with all agreements and
satisfied all the conditions on its part required under this Agreement to be
performed or satisfied at or prior to the Closing Date;     (ii)   subsequent to
the date of the latest audited financial statements included or incorporated by
reference in the General Disclosure Package, (A) neither the Company nor any of
its Subsidiaries has sustained any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth in the General Disclosure Package, and
(B) there has been no material change in the financial position or results of
operation of the Company, otherwise than as set forth in the General Disclosure
Package;     (iii)   no stop order suspending the effectiveness of the
Registration Statement or any part thereof or any amendment thereof or the
qualification of the Shares for offering or sale, nor suspending or preventing
the use of the General Disclosure Package, the Prospectus or any Issuer Free
Writing Prospectus shall have been issued, and no proceedings for that purpose
or pursuant to Section 8A under the Securities Act shall be pending or to their
knowledge, threatened by the Commission or any state or regulatory body; and    
(iv)   (A) as of the date of such certificate, (x) the Registration Statement
does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (y) neither the Prospectus nor the General Disclosure
Package contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading and (B) no event has occurred as a result of which it is necessary to
amend or supplement the Registration Statement, the Prospectus or the General
Disclosure Package in order to make the statements therein not untrue or
misleading in any material respect.

  (m)   Secretary’s Certificate. On the Closing Date, the Company shall have
furnished to the Placement Agent a Secretary’s Certificate of the Company.    
(n)   [Intentionally Omitted].     (o)   The Nasdaq Global Market. The Shares
shall have been approved for quotation on The Nasdaq Global Market and listed
and admitted and authorized for trading on The Nasdaq Global Market, subject
only to official notice of issuance. Satisfactory evidence of such actions shall
have been provided to the Placement Agent.     (p)   Other Filings with the
Commission. The Company shall have prepared and filed with the Commission a
Current Report on Form 8-K with respect to the transactions contemplated hereby,
including as an exhibit thereto this Agreement and any other documents relating
thereto.

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  (q)   No FINRA Objection. The Placement Agent shall not have received any
objection from FINRA as to the fairness and reasonableness of the amount of
compensation allowable or payable to the Placement Agent in connection with the
issuance and sale of the Shares.     (r)   Subscription Agreements. The Company
shall have entered into the Subscription Agreements with each of the Investors,
and such agreements shall be in full force and effect on the Closing Date.    
(s)   Escrow Agreement. The Company shall have entered into the Escrow
Agreement, and such agreement shall be in full force and effect on the Closing
Date.     (t)   Additional Documents. Prior to the Closing Date, the Company
shall have furnished to the Placement Agent such further information,
certificates or documents as the Placement Agent shall have reasonably
requested.

     All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Placement Agent.
6. Indemnification and Contribution.

  (a)   Indemnification of the Placement Agent. The Company agrees to indemnify
and hold the Placement Agent harmless against any losses, claims, damages or
liabilities (“Losses”) to which the Placement Agent may become subject, under
the Securities Act or otherwise (including in settlement of any litigation if
such settlement is effected with the written consent of the Company), insofar as
such Losses (or actions in respect thereof) arise out of or are based upon
(i) any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement, the General Disclosure Package or the
Prospectus, or any amendment or supplement thereto, or in any Issuer Free
Writing Prospectus, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any breach of the representations, warranties
and agreements of the Company contained herein, and will reimburse the Placement
Agent for any legal or other expenses incurred by then in connection with
investigating or defending against such Losses (or actions in respect thereof);
provided, however, that the Company shall not be liable in any such case to the
extent that any such Losses (or actions in respect thereof) arise out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement, the General Disclosure
Package or the Prospectus, or any amendment or supplement thereto, or in any
Issuer Free Writing Prospectus in reliance upon and in conformity with the
Placement Agent’s Information.

     In addition to its other obligations under this Section 6(a), the Company
agrees that it will reimburse the Placement Agent for all legal fees or other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, described in this
Section 6(a), as such fees and expenses are incurred.

  (b)   Indemnification of the Company. The Placement Agent will indemnify and
hold harmless the Company against any Losses to which the Company may become
subject, under the Securities Act or otherwise (including in settlement of any
litigation, if such settlement is effected with the written consent of the
Placement Agent), insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the Registration
Statement, the General Disclosure Package, the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact

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      required to be stated therein or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in the Registration Statement, the General Disclosure Package, the
Prospectus, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by the Placement
Agent, specifically for use in the preparation thereof, and will reimburse the
Company for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending against any such loss, claim, damage,
liability or action, it being understood and agreed that the only such
information furnished by the Placement Agent consists of the Placement Agent
Information.     (c)   Notice and Procedures. Promptly after receipt by an
indemnified party under subsection (a) or (b) above of notice of the
commencement of any action, such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection,
notify the indemnifying party in writing of the commencement thereof; provided,
that the omission so to notify the indemnifying party shall not relieve the
indemnifying party from any liability that it may have to any indemnified party
except to the extent such indemnifying party has been materially prejudiced by
such failure. In case any such action shall be brought against any indemnified
party, and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel satisfactory to such
indemnified party, and after notice from the indemnifying party to such
indemnified party of the indemnifying party’s election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under such subsection for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that if, in the sole
judgment of the indemnified party, it is advisable for the indemnified party to
be represented by separate counsel, the indemnified party shall have the right
to employ a separate counsel to represent it, in which event the reasonable fees
and expenses of such separate counsel shall be borne by the indemnified party or
parties except to the extent that (i) the employment thereof has been
specifically authorized by the indemnifying party in writing, (ii) the
indemnifying party has failed after a reasonable period of time to assume such
defense and to employ counsel or (iii) in such action there is, in the
reasonable opinion of such separate counsel, a material conflict on any material
issue between the position of the indemnifying party and the position of the
indemnified party, in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all such indemnified
parties. An indemnifying party shall not be obligated under any settlement
agreement relating to any action under this Section 6 to which it has not agreed
in writing. In addition, no indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding unless such settlement includes an unconditional release
of such indemnified party for all liability on claims that are the subject
matter of the proceeding.     (d)   Contribution; Limitation on Liability. If
the indemnification provided for in this Section 6 is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party, in lieu of indemnifying such
indemnified party, shall

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      contribute to the amount paid or payable by such indemnified party as a
result of the losses, claims, damages or liabilities referred to in subsection
(a) or (b) above, (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Placement
Agent on the other from the offering of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and the Placement Agent on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Placement Agent on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bears to the total
compensation received by the Placement Agent. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Placement
Agent and the parties’ relevant intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The Company
and the Placement Agent agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were to be determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the first sentence of this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities referred to in the first sentence
of this subsection (d) shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such
indemnified party (and not reimbursed by the indemnifying party) in connection
with investigating or defending against any action or claim which is the subject
of this subsection (d). Notwithstanding the provisions of this subsection, the
Placement Agent shall not be required to contribute any amount in excess of the
total commissions received by the Placement Agent in accordance with
Section 1(b) less the amount of any damages which the Placement Agent has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement, omission or alleged omission, act or alleged act or failure to act or
alleged failure to act. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.     (e)   Non-Exclusive Remedies. The obligations of the
Company under this Section 6 shall be in addition to any liability which the
Company may otherwise have and shall extend, upon the same terms and conditions,
to each person, if any, who controls a Placement Agent within the meaning of the
Securities Act; and the Placement Agent’s obligations under this Section 6 shall
be in addition to any liability that the Placement Agent may otherwise have and
shall extend, upon the same terms and conditions, to each director of the
Company (including any person who, with his consent, is named in the
Registration Statement as about to become a director of the Company), to each
officer of the Company who has signed the Registration Statement and to each
person, if any, who controls the Company within the meaning of the Securities
Act.

7. Representations and Agreements to Survive Delivery. All representations,
warranties, and agreements of the Company herein or in certificates delivered
pursuant hereto, and the agreements of the Placement Agent and the Company
contained in Section 6 hereof, shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the Placement
Agent or any controlling person thereof, or the Company or any of its officers,
directors, or controlling persons and shall survive delivery of, and payment
for, the Shares. The respective agreements, covenants, indemnities and other
statements set forth

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in Sections 4, 6 and 12 hereof shall remain in full force and effect, regardless
of any termination of this Agreement.
8. Information Furnished by Placement Agent. The Company acknowledges that the
statements set forth in the “Plan of Distribution” section in the Prospectus
(the “Placement Agent Information”), constitute the only information relating to
the Placement Agent furnished in writing to the Company by the Placement Agent
as such information is referred to in Sections 2 and 6 hereof.
9. Termination. The Placement Agent shall have the right to terminate this
Agreement by giving notice as hereinafter specified at any time at or prior to
the Closing Date, without liability on the part of the Placement Agent to the
Company, if (a) prior to delivery and payment for the Shares (i) trading in
securities generally shall have been suspended on or by The Nasdaq Global
Market, (ii) trading in the Common Stock of the Company shall have been
suspended on The Nasdaq Global Market or by the Commission, (iii) a general
moratorium on commercial banking activities shall have been declared by federal
or New York state authorities or a material disruption shall have occurred in
commercial banking or securities settlement or clearance services in the United
States, (iv) there shall have occurred any outbreak or material escalation of
hostilities or acts of terrorism involving the United States or there shall have
been a declaration by the United States of a national emergency or war, or
(v) there shall have occurred any other calamity or crisis or any material
change in general economic, political or financial conditions in the United
States or elsewhere, if the effect of any such event specified in clause (iv) or
(v), in the judgment of the Placement Agent, is material and adverse and makes
it impractical or inadvisable to proceed with the completion of the sale of and
payment for the Shares on the Closing Date on the terms and in the manner
contemplated by this Agreement, the General Disclosure Package and the
Prospectus, (b) since the time of execution of this Agreement or the earlier
respective dates as of which information is given in the General Disclosure
Package or incorporated by reference therein, there has been any Material
Adverse Effect, if the effect of any such event specified in this clause (b), in
the judgment of the Placement Agent, makes it impractical or inadvisable to
proceed with the completion of the sale of and payment for the Shares on the
Closing Date on the terms and in the manner contemplated by this Agreement, the
General Disclosure Package and the Prospectus, (c) the Company shall have
failed, refused or been unable to comply with the terms or perform any agreement
or obligation of this Agreement or any Subscription Agreement, other than by
reason of a default by the Placement Agent, or (d) any condition of the
Placement Agent’s obligations hereunder is not fulfilled. Any such termination
shall be without liability of any party to any other party except that the
provisions of Section 4, Section 6, and Section 12 hereof shall at all times be
effective notwithstanding such termination.
10. Notices. All statements, requests, notices and agreements hereunder shall be
in writing shall be delivered or sent by mail, telex or facsimile transmission,
as follows:

  (a)   if to the Placement Agent, to:

Philadelphia Brokerage Corporation
Radnor Corporate Center
Building Two, Suite 111
100 Matsonford Road
Radnor, PA 19087
Attention: Robert Fisk
Facsimile No.: (610) 975-9993
with a copy (which shall not constitute notice) to:
Duane Morris LLP
30 South 17th Street
Philadelphia, PA 19103-4196
Attention: John M. Coogan, Jr., Esq.
Facsimile No. (215) 979-1020

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  (b)   if to the Company, to

BMP Sunstone Corporation
600 West Germantown Pike
Plymouth Meeting, Pennsylvania 19462
Attention: Fred M. Powell
Facsimile: (610) 940-1676
with a copy (which shall not constitute notice) to:
Morgan, Lewis & Bockius LLP
1701 Market Street, Philadelphia, Pennsylvania 19103\
Attention: Joanne R. Soslow, Esq.
Facsimile (215) 963-5001
11. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and shall be binding upon the Placement Agent, the Company, and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person other than the
persons mentioned in the preceding sentence any legal or equitable right, remedy
or claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person, except that (i) the representations,
warranties, covenants, agreements and indemnities of the Company contained in
this Agreement shall also be for the benefit of the controlling persons,
officers and directors referred to in Section 6(a) and the indemnities of the
Placement Agent shall also be for the benefit of the controlling persons,
officers and directors referred to in Section 6(b) and (ii) the Investors are
relying on the representations made by the Company under, and are intended third
party beneficiaries of, this Agreement. The term “successors and assigns” as
herein used shall not include any purchaser of the Shares by reason merely of
such purchase.
12. Governing Law; Submission to Jurisdiction. This Agreement shall be governed
by, and construed in accordance with, the laws of the Commonwealth of
Pennsylvania, without giving effect to the conflicts of laws provisions thereof.
Except as set forth below, no proceeding may be commenced, prosecuted or
continued in any court other than the courts of the Commonwealth of Pennsylvania
located in the County of Chester or in the United States District Court for the
Eastern District of Pennsylvania, which courts shall have jurisdiction over the
adjudication of such matters, and the Company hereby consents to the
jurisdiction of such courts and personal service with respect thereto. The
Company hereby consents to personal jurisdiction, service and venue in any court
in which any proceeding arising out of or in any way relating to this Agreement
is brought by any third party against the Placement Agent. The Company hereby
waives all right to trial by jury in any proceeding (whether based upon
contract, tort or otherwise) in any way arising out of or relating to this
Agreement. The Company agrees that a final judgment in any such Proceeding
brought in any such court shall be conclusive and binding upon the Company and
may be enforced in any other courts in the jurisdiction of which the Company is
or may be subject, by suit upon such judgment.
13. No Fiduciary Relationship. The Company hereby acknowledges and agrees that:

  (a)   No Other Relationship. The Placement Agent has been retained solely to
act as Placement Agent in connection with the Offering of the Company’s
securities. The Company further acknowledges that the Placement Agent is acting
pursuant to a contractual relationship created solely by this Agreement and
entered into on an arm’s length basis and in no event do the parties intend that
the Placement Agent act or be responsible as a fiduciary to the Company, its
management, stockholders, creditors or any other person in connection with any
activity that the Placement Agent may undertake or have undertaken in
furtherance of the Offering of the Company’s securities, either before or after
the date hereof. The Placement Agent hereby expressly disclaims any fiduciary or
similar obligations to the Company, either in connection

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      with the transactions contemplated by this Agreement or any matters
leading up to such transactions, and the Company hereby confirms its
understanding and agreement to that effect.     (b)   Absence of Obligation to
Disclose. The Company has been advised that the Placement Agent and its
affiliates are engaged in a broad range of transactions which may involve
interests that differ from those of the Company and that the Placement Agent has
no obligation to disclose such interests and transactions to the Company by
virtue of any fiduciary, advisory or agency relationship.     (c)   Waiver. The
Company hereby waives and releases, to the fullest extent permitted by law, any
claims that the Company may have against the Placement Agent with respect to any
breach or alleged breach of any fiduciary or similar duty to the Company in
connection with the transactions contemplated by this Agreement and agrees that
the Placement Agent shall have no liability (whether direct or indirect) to the
Company in respect of such a fiduciary duty claim to any person asserting a
fiduciary duty claim on behalf of the Company, including stockholders, employees
or creditors of the Company.

14. Headings. The Section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
15. Amendments and Waivers. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. The failure of a party to exercise any right or remedy shall not be
deemed or constitute a waiver of such right or remedy in the future. No waiver
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.
16. Counterparts. This Agreement may be executed in one or more counterparts
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original and all such counterparts shall together
constitute one and the same instrument. Delivery of an executed counterpart by
facsimile transmission or by electronic mail as an attachment in “PDF” or
similar format shall be effective as delivery of a manually executed counterpart
thereof.
17. Research Analyst Independence. The Company acknowledges that the Placement
Agent’s research analysts and research departments are required to be
independent (“Analyst Independence”) from its investment banking division and
are subject to certain regulations and internal policies, and that the Placement
Agent’s research analysts may hold views and make statements or investment
recommendations and/or publish research reports with respect to the Company
and/or the Offering that differ from the views of its investment banking
division. The Company hereby waives and releases, to the fullest extent
permitted by law, any claims that the Company may have against the Placement
Agent with respect to any conflict of interest that may arise from the fact that
the views expressed by its independent research analysts and research department
may be different from or inconsistent with the views or advice communicated to
the Company by the Placement Agent’s investment banking division; provided,
however, that it is understood by the Placement Agent that the Company does not
waive any claims it may have against the Placement Agent in the event that the
Placement Agent fails to maintain Analyst Independence. The Company acknowledges
that the Placement Agent is a full service securities firm and as such from time
to time, subject to applicable securities laws, rules and regulations, may
effect transactions for its own account or the account of its customers and hold
long or short positions in debt or equity securities of the Company; provided,
however, that nothing in this Section 17 shall relieve the Placement Agent of
any responsibility or liability they may otherwise bear in connection with
activities in violation of applicable securities laws, rules and regulations.
18. Entire Agreement. This Agreement constitutes the entire agreement of the
parties to this Agreement and supersedes all prior written or oral and all
contemporaneous oral agreements, understandings and negotiations with respect to
the subject matter hereof.

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19. Partial Unenforceability. The invalidity or unenforceability of any section,
paragraph, clause or provision of this Agreement shall not affect the validity
or enforceability of any other section, paragraph, clause or provision hereof.
If any section, paragraph, clause or provision of this Agreement is for any
reason determined to be invalid or unenforceable, there shall be deemed to be
made such minor changes (and only such minor changes) as are necessary to make
it valid and enforceable.
20. Effectiveness. This Agreement shall become effective upon the execution and
delivery hereof by the parties hereto.
[Signature Page Follows]

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     If the foregoing is in accordance with your understanding of the agreement
between the Company and the Placement Agent, kindly indicate your acceptance in
the space provided for that purpose below.

            Very truly yours,

BMP SUNSTONE CORPORATION
      By:   /s/ Fred M. Powell         Name:   Fred M. Powell        Title:  
President     

Accepted as of the date first above written:

          PHILADELPHIA BROKERAGE CORPORATION
      By:   /s/ Robert Fisk           Name:  Robert Fisk         
Title:   Senior Partner     

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Schedules and Exhibits

      Schedule I:  
Subsidiaries
   
 
Schedule II:  
Permitted Free Writing Prospectuses
   
 
Exhibit A:  
Form of Subscription Agreement
   
 
Exhibit B:  
Form of Legal Opinion
   
 
Exhibit C:  
Pricing Information

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Schedule I to Placement Agency Agreement
Subsidiaries

              Name   Percent Owned   Jurisdiction of Incorporation
 
           
Beijing Medpharm Co. Ltd.
    100 %   Beijing, China
 
           
Beijing Wanwei Pharmaceutical Co., Ltd.
    100 %   Beijing, China
 
           
Beijing Med-Pharm Hong Kong Company Ltd.
    100 %   Hong Kong, China
 
           
Hong Kong Fly International Health Care Limited
    100 %   Hong Kong, China
 
           
Sunstone (Tangshan) Pharmaceutical Co., Ltd.
    100 %   Tangshan, Hebei Province, China

 

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Schedule II to Placement Agency Agreement
Permitted Free Writing Prospectus

  1.   Term Sheet, dated October 9, 2008, outlining the terms of the offering
and including the form of subscription agreement and the representations and
warranties of the Company contained in the Placement Agency Agreement.

 

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Exhibit A to Placement Agency Agreement
Form of Subscription Agreement

 

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Exhibit B to Placement Agency Agreement
Legal Opinion of Counsel to the Company

 

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Exhibit C to Placement Agency Agreement
Pricing Information
Number of Shares to be Issued: 1,000,000
Offering Price: $5.00 per Share
Placement Agency Fee: The Placement Agent will receive a fee equal to seven
percent (7%) of the gross proceeds received by the Company in the Offering,
payable as follows: (i) 15% of the Agency Fee shall be payable in shares of
Common Stock valued at no less than the offering price of the shares of Common
Stock that are being sold to investors in the Offering as provided above and
(ii) 85% of the fee shall be payable by wire transfer of immediately available
funds to an account or accounts designated by the Placement Agent.
Estimated Net Proceeds to the Company (exclusive of estimated expenses of the
Company): $4,702,500.