Document:

exv4w3

 

Exhibit 4.3

Form of Class A Warrant

Beijing med-pharm corporation

Class A warrant for common stock

THIS WARRANT HAS BEEN ACQUIRED FOR INVESTMENT AND HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE “ACT”). THIS WARRANT MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING
THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
THE ACT.

Right to purchase                      (                    ) shares (subject to adjustment) of the common stock, $.001
par value (the “Stock”), of BEIJING MED-PHARM CORPORATION, a Delaware corporation (the “Company”).

The Company hereby certifies that, for value received,

[WARRANT HOLDER]

or registered assigns (the “Holder”) is entitled to purchase from the Company at any time or from
time to time during the Exercise Period (as hereinafter defined) an aggregate of                      fully paid
and nonassessable shares, subject to adjustment as provided below, of the Stock, on the payment
therefor of the exercise price which shall be $12.43 per share (subject to adjustment) (the “Per
Share Exercise Price”) multiplied by the number of shares of Stock to be issued (the “Exercise
Price”), upon the surrender of this Warrant duly signed by the registered Holder hereof at the time
of exercise, accompanied by payment of the Exercise Price, upon the terms and subject to the
conditions hereinafter set forth.

The Warrant represented hereby is delivered pursuant to and is subject to that certain Subscription
Agreement accepted by the Company as of November 1, 2007 by and between the Company and the Holder
(the “Agreement”). Capitalized terms used herein without definition shall have the meanings set
forth in the Agreement.

1. EXERCISE OF WARRANT. This Warrant shall be exercisable commencing on the date hereof and shall expire at the times
specified herein under the heading “EXPIRATION OF WARRANT” (the “Exercise Period”). Subject to the
foregoing restrictions, the Holder may, at its option, elect to exercise this Warrant, in whole or
in part and at any time or from time to time during the Exercise Period, by surrendering this
Warrant, with the Notice of Exercise appended hereto duly executed by or on behalf of the Holder,
at the principal office of the Company, or at such other office or agency as the Company may
designate, accompanied by payment in full, in lawful money of the United States, of the Exercise
Price payable in respect of the number of shares of Stock purchased upon such exercise.

2. EXPIRATION OF WARRANT. This Warrant shall expire and shall no longer be exercisable upon the earlier to occur of:

(i) 5:00
p.m., Philadelphia local time, on May 1, 2009;

(ii) a Change of Control (as defined below); or

(iii) the forty-fifth (45th) day following the Company’s delivery of notice to the
Holder of a Trading Price Termination Event (as defined below).

For purposes hereof, a “Trading Price Termination Event” shall mean at any time that the
Company’s Stock is listed for trading on a national securities exchange, including, but not
limited to, the NASDAQ
Global Market, or other nationally recognized trading system, or is quoted on the Pink
Sheets LLC or similar over-the-counter service, the occurrence of a period of twenty (20)
consecutive trading days during

 

 

which the quoted bid price of the Company’s Common Stock has
been greater than a price equal to one hundred seventy-five percent (175%) of the Exercise
Price. The Company shall notify the Holder in writing of the occurrence of any Trading
Price Termination Event.

In the event of a proposed Change of Control, the Company shall give the Holder ten (10)
days prior notice of the proposed closing date of the Change of Control and, to the extent
the Warrant has not been exercised by such date, then this Warrant shall terminate. “Change
of Control” shall mean:

	 	(i)	 	the acquisition of the Company by another entity by means of
any transaction or series of related transactions (including, without
limitation, any merger, consolidation or other form of reorganization in which
outstanding shares of the Company are exchanged for securities or other
consideration issued, or caused to be issued, by the acquiring entity or its
subsidiary, but excluding any transaction effected primarily for the purpose of
changing the Company’s jurisdiction of incorporation), unless the Company’s
stockholders of record as constituted immediately prior to such transaction or
series of related transactions will, immediately after such transaction or
series of related transactions hold at least a majority of the voting power of
the surviving or acquiring entity; or
	 
	 	(ii)	 	a sale of all or substantially all of the assets of the
Company.

3. DELIVERY OF STOCK CERTIFICATE UPON EXERCISE. As soon as practicable after the exercise of this Warrant and payment of the Exercise Price
(which payment shall be deemed to have occurred when funds are immediately available to the Company
without provisions), but in no event more than three Business Days (as defined below) after such
exercise, the Company will cause to be issued in the name of and delivered to the registered Holder
hereof or its assigns, or such Holder’s nominee or nominees, a certificate or certificates for the
number of full shares of Stock of the Company to which such Holder shall be entitled upon such
exercise (and in the case of a partial exercise, a Warrant of like tenor for the unexercised
portion remaining subject to exercise prior to the expiration of the Exercise Period set forth
herein). For all corporate purposes, such certificate or certificates shall be deemed to have been
issued and such Holder or such Holder’s designee to be named therein shall be deemed to have become
a holder of record of such shares of Stock as of the date the duly executed exercise form pursuant
to this Warrant, together with full payment of the Exercise Price, is received by the Company as
aforesaid. No fraction of a share or scrip certificate for such fraction shall be issued upon the
exercise of this Warrant; in lieu thereof, the Company will pay or cause to be paid to such Holder
cash equal to a like fraction at the prevailing fair market price for such share as determined in
good faith by the Company.

4. ADJUSTMENTS.

     a. Dividends. In the event that a dividend shall be declared upon the Stock of the Company payable in shares
of Stock, the number of shares of Stock covered by this Warrant shall be adjusted by adding thereto
the number of shares that would have been distributable thereon if such shares had been outstanding
on the date fixed for determining the stockholders entitled to receive such stock dividend, and the
Per Share Exercise Price shall be adjusted by multiplying the Per Share Exercise Price by a
fraction (i) the numerator of which is the number of shares of Stock issued and outstanding
immediately prior to the payment of such stock dividend and (ii) the denominator of which is the
number of shares of Stock issued and outstanding immediately after the payment of such stock
dividend.

     b. Reorganizations, Consolidations, Mergers. Except as otherwise set forth herein, in the event that the outstanding shares of Stock of the
Company shall be changed into or exchanged for a different number or kind of shares of stock or
other securities of the Company or of another corporation, whether through reorganization,
recapitalization, stock split-up, combination of shares, merger or consolidation, then upon
exercise of this Warrant there shall be substituted for the shares of Stock covered by this
Warrant, the number and kind of shares of stock or other securities that would have been
substituted therefor if such shares of Stock had been outstanding on the date fixed for determining
the stockholders entitled to receive such changed or substituted stock or other securities and the
exercise price shall be proportionately adjusted.

 

 

     c. Other Changes. In the event there shall be any change, other than specified above, in the number or kind of
outstanding shares of Stock of the Company or of any stock or other securities into which such
Stock shall be changed or for which it shall have been exchanged, then if the Board of Directors
shall determine, in good faith, that such change equitably requires an adjustment in the number or
kind of shares covered by this Warrant, such adjustment shall be made by the Board of Directors and
shall be effective and binding for all purposes on this Warrant.

     d. Registration Default. The Company and the Holder agree that the Holder will suffer damages if the Company
fails to fulfill its obligations pursuant to Section 11 of the Agreement and that it would not be
possible to ascertain the extent of such damages with precision. Accordingly, the Company hereby
agrees to provide liquidated damages to the Investor, in the form of an adjustment to the Per Share
Exercise Price, under the following circumstances (each such event a “Registration Default”) if the
Registration Statement (as defined in the Agreement):

	 	(ii)	 	is not filed by the Company on or prior to the 120th day after
the Closing Date; or
	 
	 	(iii)	 	is not declared effective by the Securities and Exchange
Commission (“SEC”) on or prior to the 90th day after the date the Registration
Statement is first filed with the SEC.

In the event that there shall occur a Registration Default, then the Per Share Exercise Price shall
be reduced by $0.25 for each full thirty (30) day period for which such Registration Default exists
and is continuing unless waived by the holders of Warrants exercisable for a majority of the shares
of Stock issuable upon exercise of the then outstanding Warrants issued in the Offering.

5. LOST, STOLEN, DESTROYED OR MUTILATED WARRANT.
Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership of and
the loss, theft or destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnity reasonably satisfactory to it, and (in the case of mutilation) upon the
surrender and cancellation thereof, the Company will issue and deliver, in lieu thereof, a new
Warrant of like tenor.

6. TRANSFER.

     a. Owner of Warrant. The Company may deem and treat the person in whose name this Warrant is registered as the Holder
and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other
than the Company) for all purposes and shall not be affected by any notice to the contrary until
presentation of this Warrant for registration of transfer as provided below.

     b. Transfer of Warrant. The Company agrees to maintain, at its then principal place of business, books for the
registration of the Warrant and transfers thereof, and this Warrant and all rights hereunder are
transferable, in whole or in part, on said books at said office, upon surrender of this Warrant at
said office, together with a written assignment of this Warrant duly
executed by the Holder hereof or his duly authorized agent or attorney and funds sufficient to pay
any transfer taxes payable upon the making of such transfer. Upon such surrender and payment, the
Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees and in the denominations specified in such instrument of assignment, and this Warrant
shall promptly be canceled.

7. COVENANTS.

     a. Reservation of Common Stock. The Company covenants that, so long as this Warrant is exercisable, the Company will reserve
from its authorized and unissued Stock a sufficient number of shares to provide for the delivery of
Stock pursuant to the exercise of this Warrant. The Company further covenants that all shares of
Stock that shall be so deliverable upon exercise of this Warrant shall be duly and validly issued
and fully paid and nonassessable.

     b. Notice of Certain Events. In the event that:

 

 

	 	(i)	 	the Company shall declare a dividend (or any other
distribution) on its Common Stock that would require an adjustment pursuant to
paragraphs (a), (b) or (c) of Section 4; or
	 
	 	(ii)	 	the Company shall authorize the granting to the holders of all
or substantially all of its Common Stock of rights or warrants to subscribe for
or purchase any share of any class or any other rights or warrants; or
	 
	 	(iii)	 	of any reclassification or reorganization of the Common Stock
of the Company (other than a subdivision or combination of its outstanding
Common Stock, or a change in par value, or from par value to no par value, or
from no par value to par value), or of any consolidation or merger to which the
Company is a party and for which approval of any shareholders of the Company is
required, or of the sale or transfer of all or substantially all of the assets
of the Company; or
	 
	 	(iv)	 	of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company;

the Company shall cause to be mailed to the Holder as promptly as possible but in any event at
least five (5) days prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend, distribution or rights or
warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such dividend, distribution or rights are to be determined, or (y) the
date on which such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up is expected to become effective or occur, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange their Common Stock
for securities or other property deliverable upon such reclassification, consolidation, merger,
sale, transfer, dissolution, liquidation or winding-up. Failure to give such notice, or any defect
therein, shall not affect the legality or validity of such dividend, distribution,
reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up.

8. CASHLESS EXERCISE RIGHTS.

     a. Cashless Exercise Provisions. Notwithstanding anything to the contrary contained herein, if, at any time upon the occurrence and
during the continuance of a Registration Default, the sale of all the Warrant Shares is not covered
by an effective Registration
Statement registering such sale with the SEC (a “Delinquency Period”), then the Holder shall have
the right, with respect to any Notice of Exercise of Warrant delivered during such Delinquency
Period to pay the Exercise Price through a “cashless exercise,” in which event the Company shall
issue to the Holder, without the requirement that the Holder pay any portion of the Exercise Price
in cash or other consideration, the number of shares of Stock determined as follows:

          X = Y [(A-B)/A], where:

          X = the number of shares of Stock to be issued to the Holder upon exercise.

          Y = the number of shares of Stock with respect to which this Warrant is being exercised.

          A = the arithmetic average of the VWAP of the Stock for the five Trading Days immediately
prior to (but not including) the Exercise Date.

          B = the Exercise Price.

b. Certain Definitions. For purposes of this Section 8, the following definitions shall apply:

	 	(i)	 	“Business Day” means any day except Saturday, Sunday and any
day which shall be a federal legal holiday or a day on which banking
institutions in the Commonwealth of Pennsylvania are authorized or required by
law or other governmental action to close.

 

 

	 	(ii)	 	“Trading Day” means (a) any day on which the Stock is listed or
quoted and traded on its primary Trading Market, or (b) if the Stock is not
then listed or quoted and traded on any Trading Market, then any Business Day.
	 
	 	(iii)	 	“Trading Market” means the Nasdaq Global Market or any other
national securities exchange, market or trading or quotation facility on which
the Stock is then listed or quoted.
	 
	 	(iv)	 	“VWAP” means on any particular Trading Day or for any
particular period the volume weighted average trading price per share of Stock
on such date or for such period on the primary Trading Market as reported by
Bloomberg L.P., or any successor performing similar functions.

9. MISCELLANEOUS.

     a. No Rights as Shareholder. This Warrant does not confer upon the Holder any rights of a stockholder of the Company, including,
without limitation, any right to vote or to consent to or receive notice as a stockholder of the
Company.

     b. Notices. Any notices required or permitted to be given under the terms of this Warrant shall be written
in the English language and shall be sent by certified or registered mail (return receipt
requested) or delivered personally or by courier or by confirmed telecopy, and shall be effective
three (3) days after being placed in the mail, if mailed, or upon receipt or refusal of receipt, if
delivered personally or by courier, or by confirmed telecopy, in each case
addressed as follow: If to the Company to: at 600 W. Germantown Pike, Suite 400, Plymouth Meeting,
Pennsylvania 19462, Attn: President, facsimile number (610) 940-1676 and if to the Holder to the
address shown therefor on the books and records of the Company. Any party may change its address
for notice and the address to which copies must be sent by giving notice of the new addresses to
the other parties in accordance with this Section 9, except that any such change of address notice
shall not be effective unless and until received.

     c. Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this
Warrant shall be governed by and construed and enforced in accordance with the laws of the State of
Delaware without regard to principles of conflicts of laws.

     d. Amendment.

     This Warrant and any provision hereof may be amended solely by an instrument in writing signed
by the Company and Holder.

     e. Severability. In case any one or more of the provisions of this Warrant shall be determined by a court of
competent jurisdiction to be invalid or unenforceable in any respect, the validity and
enforceability of the remaining terms and provisions of this Warrant shall not in any way be
affected or impaired thereby.

     f. Assignment. This Warrant shall be binding on and inure to the benefit of the parties hereto and their
respective permitted successors and assigns. Subject to the preceding sentence, nothing in this
Warrant shall be construed to give to any Person other than the Company and Holder any legal or
equitable right, remedy or cause of action under this Warrant.

     g. Headings. The headings in this Warrant are for purposes of reference only and shall not limit or
otherwise affect the meaning hereof.

 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized
officer, and the undersigned Holder has executed this Warrant, effective as of the date set forth
below.

	 	 	 	 	 	 	 
	Dated: November 1, 2007	 	BEIJING MED-PHARM CORPORATION	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:	 	 	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 

 

 

NOTICE OF EXERCISE OF WARRANT

To: BEIJING MED-PHARM CORPORATION

The
undersigned Holder hereby exercises the right to purchase                      shares of Common Stock,
$.001 par value, of Beijing Med-Pharm Corporation, a Delaware corporation (the “Company”), and
delivers to the Company herewith the Exercise Price.

You will kindly forward a certificate or certificates for the shares purchased hereby and, if such
shares shall not include all of the shares provided in this Warrant, a new Warrant of like tenor
and date for the balance of the shares issuable thereunder shall be delivered to the undersigned at
the address set forth below.

	 	 	 
	Date:                                          	 	 
	 
	 	 
	 
	 	Name of Holder

	 	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 
	 

	 	Address:exv4w4

 

Exhibit 4.4

Form of Note

THIS NOTE HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES
COMMISSION OF ANY STATE AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AS EVIDENCED BY THE DELIVERY TO THE COMPANY OF AN
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH OFFER OR SALE IS EXEMPT FROM OR
NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT) AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS. NOTWITHSTANDING THE FOREGOING, THIS NOTE MAY BE
PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY SUCH NOTE.

			
	 
	No. [     ]
	 	$[     ]

Date:
November 1, 2007

BEIJING MED-PHARM CORPORATION

10.0% SENIOR SECURED PROMISSORY NOTE DUE

May 1, 2009

     THIS NOTE is one of a series of duly authorized and issued notes of Beijing Med-Pharm
Corporation, a Delaware corporation (the “Company”), designated as its 10.0% Senior Secured
Promissory Notes due May 1, 2009, in the aggregate principal amount of up to $23,000,000 (the
“Notes”).

     FOR VALUE RECEIVED, the Company promises to pay to the order of [Holder] or its registered
assigns (the “Holder”), the principal sum of [                    ] $(                    ) (the “Original Principal
Amount”), on May 1, 2009 (the “Maturity Date”), or such earlier date as the Notes are required
or permitted to be repaid as provided hereunder, and to pay interest to the Holder on the then
outstanding principal amount of this Note in accordance with the provisions hereof.
Notwithstanding the foregoing, the Company hereby unconditionally promises to pay to the order of
the Holder interest on any principal or interest payable hereunder that shall not be paid in full
when due, whether at the time of any stated interest payment date or maturity or by prepayment,
acceleration or declaration or otherwise, for the period from and including the due date of such
payment to but excluding the date the same is paid in full, at a rate of 18% per annum (but in no
event in excess of the maximum rate permitted under applicable law).

     Interest payable under this Note shall be computed on the basis of a year of 360 days and
actual days elapsed (including the first day but excluding the last day) occurring in the period
for which interest is payable.

     Payments of principal and interest shall be made in lawful money of the United States of
America to the Holder at its address as provided in Section 8or by wire transfer to such
account specified from time to time by the Holder hereof for such purpose as provided in Section
8.

     1. Definitions. In addition to the terms defined elsewhere in this Note, (a) capitalized
terms that are not otherwise defined herein have the meanings given to such terms in the
Subscription Agreement, dated as of October 31, 2007, between the Company and the Holder (the
“Subscription Agreement”), and (b) the following terms have the meanings indicated:

     “Bankruptcy Event” means that the Company or any Subsidiary shall commence, or
there shall be commenced against the Company or any Subsidiary under any applicable
bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the
Company or any Subsidiary commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction whether now or hereafter in effect relating to the
Company or any Subsidiary or there is commenced against the Company or any Subsidiary any
such bankruptcy, insolvency or other proceeding which remains undismissed for a period of
sixty-one (61) days; or the Company or any Subsidiary is adjudicated insolvent or bankrupt;
or any order of relief or other order approving any such case or proceeding is entered; or
the Company or any Subsidiary suffers any appointment of any custodian, private or court
appointed receiver or the like for it or any substantial part of its property which
continues undischarged or unstayed for a period of sixty one (61) days; or the Company or
any Subsidiary makes a general assignment for the benefit of creditors; or the Company or
any

 

 

Subsidiary shall fail to pay, or shall state that it is unable to pay, or shall be
unable to pay, its debts generally as they become due; or the Company or any Subsidiary
shall call a meeting of its creditors with a view to arranging a composition, adjustment or
restructuring of its debts; or the Company or any Subsidiary shall by any act or failure to
act expressly indicate its consent to, approval of or acquiescence in any of the foregoing;
or any corporate or other action is taken by the Company or any Subsidiary for the purpose
of effecting any of the foregoing.

     “Business Day” means any day except Saturday, Sunday and any day that shall be a federal
legal holiday or a day on which banking institutions in the state of New York are authorized or
required by law or other governmental action to close.

     “Change of Control” means the occurrence of (i) an acquisition after the date hereof by an
individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the
Exchange Act) of effective control (whether through legal or beneficial ownership of capital
stock of the Company, by contract or otherwise) of in excess of fifty percent (50%) of the
voting securities of the Company (except that the acquisition of voting securities by the Holder
or any current holder of convertible securities of the Company shall not constitute a Change of
Control for purposes hereof); (ii) a replacement at one time or over time of more than one-half
of the members of the board of directors of the Company which is not approved by a majority of
those individuals who are members of the board of directors on the date hereof (or by those
individuals who are serving as members of the board of directors on any date whose nomination to
the board of directors was approved by a majority of the members of the board of directors who
are members on the date hereof); (iii) the merger or consolidation of the Company with or into
another entity as a result of which the holders of the voting securities of the Company
immediately before such merger or consolidation do not hold fifty percent (50%) or more of the
voting securities of the surviving or resulting entity; (iv) the sale of fifty percent (50%) or
more of the assets of the Company and its subsidiaries on a consolidated basis; or (v) the
execution by the Company of an agreement to which the Company is a party or by which it is
bound, providing for any of the events set forth above in (i), (ii), (iii) or (iv).

     “Company Prepayment Price” for any Notes which shall be subject to prepayment pursuant to
Section 8(a), shall equal the sum of: (i) if the Company
Notice Date is prior to May 1, 2008, 103%of the then outstanding principal amount of this
Note; (ii) if the Company Notice Date is on or after May 1, 2008
but before November 1, 2008, 101% of the then
outstanding principal amount of this Note; and (iii) 100% of the principal amount of this Note
thereafter, plus all accrued but unpaid interest on the then outstanding principal amount.

     “Majority in Interest” means the holders of greater than fifty percent (50%) of the
aggregate principal amount of Notes then outstanding.

     “Subsidiary” means (i) any “significant subsidiary,” as defined in Item 1-02(w) of
Regulation S-X promulgated by the Securities and Exchange Commission, of the Company and (ii)
Hong Kong Fly International Health Care Limited, a Hong Kong corporation.

     2. Interest. The Company shall pay interest to the Holder on the aggregate then outstanding
principal amount of this Note at the rate of 10.0% per annum, payable semi-annually in arrears on
each May 1 and November 1, except if such date is not a Business Day, in which case such interest
shall be payable on the next succeeding Business Day (each, an “Interest Payment Date”). The first
Interest Payment Date shall be May 1, 2008.

     3. Ranking and Covenants.

     (a) No indebtedness of the Company is senior to this Note in right of payment, whether with
respect to interest, damages or upon liquidation or dissolution or otherwise. Other than
indebtedness to any commercial bank or other institutional lender of commercial loans and any
renewal, refinancing or replacement thereof, the Company will not, and will not permit any
Subsidiary to, directly or indirectly, enter into, create, incur, assume or suffer to exist any
indebtedness of any kind, on or with respect to any of its property or assets now owned or
hereafter acquired or any interest therein or any income or profits therefrom, that is not by its
terms specifically subordinated in all respects to the Company’s obligations under the Notes, other
than indebtedness secured by

 

 

purchase money security interests (which will be senior only as to the underlying assets
covered thereby) and indebtedness under capital lease obligations (which will be senior only as to
the assets covered thereby).

     (b) So long as any Notes are outstanding, the Company shall maintain in an escrow account
established pursuant to the terms of the Escrow Agreement (as defined in the Subscription
Agreement) (i) at all times, an amount equal to the interest to be paid with respect to all the
Notes then outstanding on the next succeeding Interest Payment Date and (ii) at all times until
December 31, 2008, during the period fifteen (15) days prior to the next succeeding Interest
Payment Date, an amount equal to the interest to be paid with respect to all the Notes then
outstanding on the next two succeeding Interest Payment Dates.

     (c) So long as any Notes are outstanding, the Company shall own, directly or indirectly, at
least a 49% equity ownership interest in Sunstone Pharmaceutical Co., Ltd., a Hong Kong
corporation.

     (d) So long as any Notes are outstanding, neither the Company nor any Subsidiary shall,
directly or indirectly, redeem, purchase or otherwise acquire any capital stock or set aside any
monies for such a redemption, purchase or other acquisition.

     4. Registration of Notes. The Company shall register the Notes upon records to be maintained
by the Company for that purpose (the “Note Register”) in the name of each record holder thereof
from time to time. The Company may deem and treat the registered Holder of this Note as the
absolute owner hereof for the purpose of any payment of interest or principal hereon, and for all
other purposes, absent actual notice to the contrary.

     5. Registration of Transfers and Exchanges. The Company shall register the transfer of any
portion of this Note in the Note Register upon surrender of this Note to the Company at its address
for notice set forth herein. Upon any such registration or transfer, a new Note, in substantially
the form of this Note (any such new Note, a “New Note”), evidencing the portion of this Note so
transferred shall be issued to the transferee and a New Note evidencing the remaining portion of
this Note not so transferred, if any, shall be issued to the transferring Holder. The acceptance
of the New Note by the transferee thereof shall be deemed the acceptance by such transferee of all
of the rights and obligations of a holder of a Note. This Note is exchangeable for an equal
aggregate principal amount of Notes of different authorized denominations, as requested by the
Holder surrendering the same. No service charge or other fee will be imposed in connection with
any such registration of transfer or exchange. Notwithstanding anything herein to the contrary,
the Company shall not be required at any time to register any transfer to a transferee and any
transfer shall be void and of no force or effect unless the Note has been registered under the
Securities Act or the Company has received an opinion of counsel reasonably acceptable to it
stating that such transfer is exempt from the registration and prospectus delivery requirements of
the Securities Act.

     6. Prepayment.

     (a) At any time upon delivery of a written notice to the Holder (a “Company Prepayment Notice”
and the date such notice is delivered by the Company, the “Company Notice Date”), the Company shall
be entitled to prepay all or any portion of the outstanding principal amount of this Note plus any
accrued and unpaid interest thereon for an amount in cash equal to the Company Prepayment Price.
Once delivered, the Company shall not be entitled to rescind a Company Prepayment Notice.

     (b) The Company Prepayment Price shall be due on the fifteenth Business Day immediately
following the Company Notice Date. If any portion of the Company Prepayment Price shall not be
timely paid by the Company, interest shall accrue thereon at the rate of 18% per annum (or the
maximum rate permitted by applicable law, whichever is less) until the Company Prepayment Price
plus all such interest is paid in full, which payment shall constitute liquidated damages and not a
penalty. In addition, if any portion of the Company Prepayment Price remains unpaid after such
date, the Holder subject to such prepayment may elect by written notice to the Company to
invalidate ab initio such Company Prepayment Notice with respect to the unpaid amount,
notwithstanding anything herein contained to the contrary and no interest shall be owed to the
Holder in respect thereof. If the Holder makes such an election, the principal amount of this
Note, together with the accrued and unpaid interest thereon shall be reinstated with respect to
such unpaid amount and the Company shall no longer have any prepayment rights under this Section 6.

 

 

     (c) Notwithstanding anything to the contrary herein, the Company may not elect a prepayment
pursuant to Section 6(a)(i) unless the Company makes such prepayment election to all of the Holders
on a pro rata basis, based on such Holders’ then outstanding principal amount of Notes.

     7. Events of Default.

     (a) “Event of Default” means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment,
decree or order of any court, or any order, rule or regulation of any administrative or
governmental body):

          (i) (A) any default in the payment (free of any claim of subordination) of any
principal amount of the Notes, as and when the same becomes due and payable (whether on a
date specified for the payment of interest or the date on which the obligations under the
Note mature or by acceleration, redemption, prepayment or otherwise), (B) any default in the
payment (free of any claim of subordination) of interest in respect of any Notes, no later
than the third Business Day after such interest become due and payable (whether on a date
specified for the payment of interest or the date on which the obligations under the Note
mature or by acceleration, redemption, prepayment or otherwise), (C) any default by the
Company in the performance of its covenants set forth in paragraphs 3(b) or 3(c) of this
Note or (D) any default by the Company in the performance of any of its other covenants and
obligations under this Note not listed in clauses (A), (B) or (C) above, which defaults
remain uncured fifteen (15) Business Days after the Company receives written notice thereof
from the Holder or a representative of the Holder;

          (ii) the Company or any Subsidiary defaults in any of its obligations under any other
note or any mortgage, credit agreement or other facility, indenture agreement, factoring
agreement or other instrument under which there may be issued, or by which there may be
secured or evidenced, any indebtedness for borrowed money or money due under any long term
leasing or factoring arrangement of the Company or any Subsidiary in an amount exceeding
$1,000,000, whether such indebtedness now exists or is hereafter created, and such default
results in such indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise become due and payable; or

          (iii) any default by the Company of any of its obligations pursuant to the Pledge
Agreement dated as of November 1, 2007 by and among the Company, Les Baledge, as Agent
thereunder, and the holders of the Notes.

          (iv) the occurrence of a Bankruptcy Event.

     (b) At any time or times that an Event of Default has occurred and is continuing, the full
unpaid principal amount of this Note, together with interest and other amounts owing in respect
thereof, to the date of acceleration shall become at the Holder’s election, immediately due and
payable in cash. The Holder need not provide, and the Company hereby waives, any presentment,
demand, protest or other notice of any kind, and the Holder may immediately and without expiration
of any grace period enforce any and all of its rights and remedies hereunder and all other remedies
available to it under applicable law. Such declaration may be rescinded and annulled by Holder at
any time prior to payment hereunder. No such rescission or annulment shall affect any subsequent
Event of Default or impair any right consequent thereon.

     (c) Upon the occurrence of any Bankruptcy Event, all amounts pursuant to Section 7(b) shall
immediately become due and payable in full in cash, without any further action by the Holder.

     (d) In connection with any Event of Default, the Holder need not provide and the Company
hereby waives any presentment, demand, protest or other notice of any kind, and the Holder may
immediately and without expiration of any grace period enforce any and all of its rights and
remedies hereunder and all other remedies available to it under applicable law. Any such
declaration may be rescinded and annulled by the Holder at any time prior to payment hereunder. No
such rescission or annulment shall affect any subsequent Event of Default or impair any right
consequent thereto.

 

 

     8. Notices. Any and all notices or other communications or deliveries hereunder shall be in
writing in the English language and shall be deemed given and effective on the earliest of (i) the
date of transmission, if such notice or communication is delivered via facsimile at the facsimile
number specified in this Section 8 prior to 5:00 p.m. (New York City time) on a Business Day, (ii)
the next Business Day after the date of transmission, if such notice or communication is delivered
via facsimile at the facsimile number specified in this Section 8 on a day that is not a Business
Day or later than 6:30 p.m. (New York City time) on any Business Day, (iii) the Business Day
following the date of mailing, if sent by nationally recognized overnight courier service, or (iv)
upon actual receipt by the party to whom such notice is required to be given. The addresses for
such communications shall be: (i) if to the Company, to 600 W. Germantown Pike, Suite 400, Plymouth
Meeting, PA 19482, facsimile: (610) 940-1676, attention Fred C. Powell, Chief Financial Officer, or
(ii) if to the Holder, to the address or facsimile number appearing on the Company’s Noteholder
records or such other address or facsimile number as the Holder may provide to the Company in
accordance with this Section 8.

     9. Miscellaneous.

     (a) Binding Nature of Note. This Note shall be binding on and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. The Company shall not be
permitted to assign this Note.

     (b) Limitation of Rights. Subject to Section 9(a), nothing in this Note shall be construed to
give to any person or corporation other than the Company and the Holder any legal or equitable
right, remedy or cause under this Note.

     (c) GOVERNING LAW; VENUE; WAIVER OF JURY TRIAL. ALL QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE COMMONWEALTH OF PENNSYLVANIA, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. EACH PARTY AGREES THAT ALL LEGAL PROCEEDINGS
CONCERNING THE INTERPRETATIONS, ENFORCEMENT AND DEFENSE OF THE TRANSACTIONS CONTEMPLATED BY ANY OF
THE TRANSACTION DOCUMENTS (WHETHER BROUGHT AGAINST A PARTY HERETO OR ITS RESPECTIVE AFFILIATES,
DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES OR AGENTS) SHALL BE COMMENCED EXCLUSIVELY IN THE STATE
AND FEDERAL COURTS HAVING JURISDICTION OVER MONTGOMERY COUNTY, PENNSYLVANIA. EACH PARTY HERETO
HEREBY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS HAVING
JURISDICTION OVER MONTGOMERY COUNTY, PENNSYLVANIA FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR
IN CONNECTION HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY OR DISCUSSED HEREIN (INCLUDING
WITH RESPECT TO THE ENFORCEMENT OF ANY OF THIS NOTE), AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT
TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HERETO HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED
IN ANY SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL
OR OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR
NOTICES TO IT UNDER THIS NOTE AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY
WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE OR ANY OF THE TRANSACTION DOCUMENTS OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. IF EITHER PARTY SHALL COMMENCE AN ACTION OR
PROCEEDING TO ENFORCE ANY PROVISIONS OF THIS NOTE OR ANY TRANSACTION DOCUMENT, THEN THE PREVAILING
PARTY IN SUCH ACTION OR PROCEEDING SHALL BE REIMBURSED BY THE OTHER PARTY FOR ITS REASONABLE
ATTORNEYS FEES AND OTHER REASONABLE COSTS AND EXPENSES

 

 

INCURRED WITH THE INVESTIGATION, PREPARATION AND PROSECUTION OF SUCH ACTION OR PROCEEDING.

     (d) Headings. The headings herein are for convenience only, do not constitute a part of this
Note and shall not be deemed to limit or affect any of the provisions hereof.

     (e) Provisions Severable. In case any one or more of the provisions of this Note shall be
invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and
provisions of this Note shall not in any way be affected or impaired thereby and the parties will
attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially
reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision
in this Note.

     (f) Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of this Note, and, in the
case of loss, theft or destruction, of any indemnification undertaking by the Holder to the Company
in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note of like tenor representing the
outstanding principal.

     (g) Waiver and Amendment. No provision of this Note may be waived or amended except in a
written instrument signed, in the case of an amendment, by the Company and the Majority in Interest
or, or, in the case of a waiver, by the Majority in Interest; provided, that the Maturity Date
hereof, the rate of interest payable hereunder, the Interest Payment Dates hereunder, and the
currency in which any payments of principal of or interest on this Note shall be paid may not be
waived or amended except in a written instrument signed by the Holder hereof. No waiver of any
default with respect to any provision, condition or requirement of this Note shall be deemed to be
a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other
provision, condition or requirement hereof, nor shall any delay or omission of either party to
exercise any right hereunder in any manner impair the exercise of any such right.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;

SIGNATURE PAGE FOLLOWS]

 

 

     IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by a duly authorized
officer as of the date first above indicated.

	 	 	 	 	 
	 	 	BEIJING MED-PHARM CORPORATION
	 
	 

	 	By	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:

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