Document:

exv4w1

 

Exhibit 4.1

Form of Warrant

Beijing med-pharm corporation

Warrant for common stock

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
therefore of the exercise price which shall be $9.37 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 August 17, 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 August 22, 2012; or
	 
	 	(ii)	 	a Change of Control (as defined below).

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), 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.

	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. 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.

8. CASHLESS EXERCISE RIGHTS.

(A) Cashless Exercise Provisions. Notwithstanding anything to the contrary contained
herein, if, at any time after the date that is two years after the Closing Date, a
registration statement covering the Warrant Shares ceases to be effective for a period of more
than ninety (90) consecutive days (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 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 may not be assigned or transferred by Holder except that
the Holder may assign this Warrant and the rights granted to Holder hereunder to a Permitted
Transferee). 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 first set
forth above.

	 	 	 	 	 	 	 
	Dated: August __, 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:exv10w1

 

Exhibit 10.1

BEIJING MED-PHARM CORPORATION

Common Stock

PLACEMENT AGENCY AGREEMENT

August 17, 2007

Philadelphia Brokerage Corporation

992 Old Eagle School Road

     Suite 915

Wayne, Pennsylvania 19087

Ladies and Gentlemen:

     Beijing Med-Pharm 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 $30,000,000 and an aggregate gross maximum consideration of $55,000,000, Units (the “Units”),
with each Unit comprising one (1) share (the “Shares”) of the Company’s common stock, par value
$0.001 per share (the “Common Stock”), and
warrants to purchase two-tenths (0.2) shares of Common Stock (the “Warrants;” the Units, the Shares and the Warrants are hereby referred to as the “Securities”).
The Securities 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 Securities.

     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 Securities (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 Securities 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 Securities 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 will the Placement Agent or any of its affiliates be obligated to
underwrite or purchase any of the Securities 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 Securities and the Company shall have the sole right to accept offers to purchase
Securities 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 Securities 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 Securities on such Closing Date (the “Agency
Fee”). The Agency Fee shall be payable as follows: (i) 25% of the Agency Fee shall be payable in
shares of Common Stock valued at no less than the closing bid price of the shares of Common Stock
on The Nasdaq Global Market on the date of this Agreement and (ii) 75% 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 Securities by the Investors shall be evidenced by the execution of the
Subscription Agreements by each of the parties thereto in the form attached hereto as Exhibit
A.

          (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 Securities 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 Securities 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 Securities shall
have been delivered to the Investor purchasing such Securities against payment by such Investor.
If the Company shall default in its obligations to deliver Securities to an Investor whose offer it
has accepted, the Company shall indemnify and hold the Placement Agent (as defined below) 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 Securities 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 August 21,
2007 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 August 13, 2007 (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 Securities shall be
made to the Company in the manner set forth below by Federal Funds wire transfer, against delivery
of the Securities to such persons and 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 Securities 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 therewith. The Company
shall cause its transfer agent, Florida Atlantic Stock Transfer, Inc. (the “Transfer Agent”) to
deliver to the Escrow Agent, at least two business days prior to the Closing, certificates bearing
the name of the Investors (or their designees or nominees) evidencing the Securities 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

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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 Securities 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.

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

3

 

          (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
Securities, 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 the offering and sale of the
Securities that discloses the public offering price and other final terms of the Securities.

          (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 D 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 Securities (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 Preliminary Prospectus, 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 Preliminary Prospectus, 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 Preliminary Prospectus 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

4

 

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
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 Securities (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 Securities 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 Securities 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 Securities (any such effect as
described in clauses (i) or (ii), a “Material Adverse Effect”).

5

 

          (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 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, are 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 Securities. The issuance of the Securities 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, 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 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) 50,000,000 shares of Common Stock, par value $.001 per share, of which 26,857,943
shares are issued and outstanding, 2,567,272 shares are reserved for issuance upon exercise of
stock options outstanding under the Company’s employee and director stock option plans, 2,377,000
shares are reserved for grants of rights to purchase under the Company’s stock option plans, and
1,340,997 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

6

 

Package, accurately and fairly present the information required to be shown with respect to
such plans, arrangements, options and rights.

          (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 Securities,
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 Securities 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 Securities under the securities or blue sky laws of the various jurisdictions in which the
Securities are being offered by the Placement Agent, (iii) under the rules and regulations of the
National Association of Securities Dealers, Inc. (“NASD”) or (iv) The Nasdaq Global Market in
connection with the distribution of the Securities 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) Lock-Up Agreements. The Company has received copies of the executed Lock-Up Agreements,
substantially in the form of Exhibit B hereto (the “Lock-Up Agreement”) executed by each of its
officers and directors and such of its stockholders as are designated by the Placement Agent, and
such Lock-Up Agreements shall be in full force and effect on the Closing Date.

          (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”).

7

 

          (s) Commission Reports. Since June 30, 2004, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed by it with the 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 change in
or affecting the general affairs, business, properties, management, consolidated financial
position, stockholders’ equity or results of operations of the Company and its Subsidiaries taken
as a whole (a “Material Adverse Change”); 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 Change. To the Company’s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.

8

 

          (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 Securities 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 Securities.

          (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 would not have a Material Adverse Effect or
do not materially

9

 

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.

          (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.

10

 

          (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 (ii) 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 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 described in the due
diligence materials provided by the Company to the Placement Agent or as set forth in the General
Disclosure Package or the Prospectus, since January 1, 2006, (i) Grant Thornton, Hong Kong has not
identified any material weakness in the Company’s internal

11

 

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 described in the due diligence materials provided by the Company
to the Placement Agent or 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 Securities.

          (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 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

12

 

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 Securities on The Nasdaq Global Market.

          (oo) Sarbanes-Oxley Act. The Company, and to its knowledge, all of the Company’s directors or
officers, in their capacities as such, is 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 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) NASD 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 NASD Conduct Rule 2720(b)(1)(a)) directly or indirectly controls, is

13

 

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 the NASD) of, any member firm of the NASD.

          (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 Securities.

     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
Securities 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 Securities 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 or the approval of the Shares from any securities exchange upon which it is 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 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

14

 

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
Securities 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 Securities
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 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 Securities 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 Securities, provided, that in no event
shall the Company be

15

 

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 Securities
in the manner set forth in the General Disclosure Package and the Prospectus under the heading “Use
of Proceeds.”

          (j) Lock-Up Period. Beginning on the date hereof and continuing for a period of 90 days after
the date of the Prospectus (the “Lock-Up Period”), the Company will not (i) offer to sell,
hypothecate, pledge, announce the intention to sell, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option, right or warrant
to purchase or otherwise transfer or dispose of, directly or indirectly, or establish or increase a
put equivalent position or liquidate or decrease a call equivalent position within the meaning of
Section 16 of the Exchange Act, with respect to, any shares of Common Stock or any securities
convertible into or exercisable or exchangeable for Common Stock; (ii) file or cause to become
effective a registration statement under the Securities Act relating to the offer and sale of any
shares of Common Stock or securities convertible into or exercisable or exchangeable for Common
Stock except for (x) a registration statement on Form S-8 relating to employee benefit plans or (y)
registration statements required by any registration rights agreements or (iii) enter into any
swap, hedge or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction described in clause
(i), (ii) or (iii) above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise, without the prior written consent of the Placement Agent (which consent may be
withheld in its sole discretion), other than (A) the Securities to be sold hereunder, (B) the
issuance of restricted Common Stock or options to acquire Common Stock pursuant to the Company’s
employee benefit plans, qualified stock option plans or other employee compensation plans as such
plans are in existence on the date hereof and described in the Registration Statement (excluding
the exhibits thereto), the General Disclosure Package and the Prospectus, (C) issuances of Common
Stock upon the exercise of options or warrants disclosed as outstanding in the Registration
Statement (excluding the exhibits thereto), the General Disclosure Package and the Prospectus or
upon the conversion or exchange of convertible or exchangeable securities outstanding as of the
date of this Agreement; (D) the issuance by the Company of any shares of Common Stock as
consideration for mergers, acquisitions, other business combinations, or strategic alliances,
occurring after the date of this Agreement; provided that each recipient of shares pursuant to this
clause (D) agrees that all such shares remain subject to restrictions substantially similar to
those contained in this subsection 3(j); or (E) the purchase or sale of the Company’s securities
pursuant to a plan, contract or instruction that satisfies all of the requirements of Rule
10b5-1(c)(1)(i)(B) that was in effect prior to the date hereof. Notwithstanding the foregoing, if
(1) during the last 17 days of the Lock-Up Period, the Company releases earnings results or
publicly announces other material news or a material event relating to the Company occurs or (2)
prior to the expiration of the Lock-Up Period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the Lock-Up Period, then in each case
the Lock-Up Period will be extended until the expiration of the 18-day period beginning on the date
of release of the earnings results or the public announcement regarding the material news or the
occurrence of the material event, as applicable, unless the Placement Agent waive, in writing, such
extension. The Company agrees not to

16

 

accelerate the vesting of any option or warrant or the lapse of any repurchase right prior to
the expiration of the Lock-Up Period.

          (k) Press Releases. Prior to 9:30 a.m. New York City time on the business day immediately
subsequent to the date hereof, the Company shall issue a press release (the “Press Release”)
reasonably acceptable to the Placement Agent disclosing the execution of this Agreement, the
Subscription Agreements and the transaction contemplated hereby and thereby. Prior to the Closing
Date, the Company will not issue any press release or other communication directly or indirectly or
hold any press conference with respect to the Company, the Subsidiaries, their condition, financial
or otherwise, or the earnings, business, operations or prospects of any of them, or the offering of
the Securities (except for routine oral marketing communications in the ordinary course of business
and consistent with the past practices of the Company and of which the Placement Agent is
notified), without the prior written consent of the Placement Agent, unless in the reasonable
judgment of the Company and its counsel, and after notification to the Placement Agent, such press
release or communication is required by law or applicable stock exchange or self-regulatory agency,
in which case the Company shall use its reasonable commercial efforts to allow the Placement Agent
reasonable time to comment on such release or other communication in advance of such issuance.

          (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 Securities.

          (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 registration, issue, sale and delivery
of the Securities including any stock or transfer taxes and stamp or similar duties payable upon
the sale, issuance or delivery of the Securities and the printing, delivery, and shipping of the
certificates representing the Securities, (c) the registration or qualification of the Securities
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
Securities, (e) any filings required to be made by the Placement Agent or the Company with the
NASD, (f) listing fees, if any, for the listing or quotation of the Shares on The Nasdaq Global
Market, (g)

17

 

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 Permitted 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 Securities 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 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 Securities; and no
injunction, restraining

18

 

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
Securities.

          (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, (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 Change
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
C 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) Accountant’s Comfort Letter. On the date hereof, the Placement Agent shall have received
a letter dated the date hereof, (the “Comfort Letter”), addressed to the Placement Agent and in
form and substance reasonably satisfactory to the Placement Agent and its counsel, from Grant
Thornton, Hong Kong, (i) confirming that they are independent public accountants with respect to
the Company within the meaning of the Securities Act and the Securities Act Rules and Regulations
and (ii) stating, as of the date hereof (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial information is given in the
General Disclosure Package, as of a date not more than three days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial information and other matters
ordinarily covered by accountants’ “comfort letters” to underwriters, delivered according to
Statement of Auditing Standards No. 72 and Statement of Auditing Standard No. 100 (or successor
bulletins), in connection with registered public offerings.

19

 

          (k) Bring-Down Letter. At the Closing Date, the Placement Agent shall have received from
Grant Thornton, Hong Kong, a letter (the “Bring-Down Letter”), dated the Closing Date, addressed to
the Placement Agent and in form and substance reasonably satisfactory to the Placement Agent, (i)
confirming that they are independent public accountants with respect to the Company within the
meaning of the Securities Act and the Securities Act Rules and Regulations, (ii) stating, as of the
date of the Bring-Down Letter (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given in the General Disclosure
Package and the Prospectus, as of a date not more than three days prior to the date of the
Bring-Down Letter), the conclusions and findings of such firm with respect to the financial
information and other matters covered by the Comfort Letter and (iii) confirming in all material
respects the conclusions and findings set forth in the Comfort Letter.

          (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 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, (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 Securities 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.

20

 

          (n) Lock-Up Agreements. Each officer and director of the Company shall have entered into
Lock-Up Agreements substantially in the form attached as Exhibit B hereto on or prior to
the date hereof, and each such Lock-Up Agreement, or a copy thereof, shall have been delivered to
the Placement Agent and shall be in full force and effect at the Time of Sale.

          (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.

          (q) No NASD Objection. The Placement Agent shall not have received any objection from the
NASD 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 Securities.

          (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) arises 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

21

 

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 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

22

 

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 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 Securities 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 (even if the Placement Agent were treated as one entity for such purpose) 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.

23

 

     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 Securities.
The respective agreements, covenants, indemnities and other statements set forth 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 Securities (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 Securities 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 Securities 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
	 

	 	 	 	992 Old Eagle School Road
	 

	 	 	 	     Suite 915
	 

	 	 	 	Wayne, Pennsylvania 19087
	 

	 	 	 	Attention: Robert Fisk

24

 

	 	 	 	 	 
	 

	 	 	 	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
	 
	 	 	 	 
	 

	 	(b)
	 	if to the Company, to
	 
	 	 	 	 
	 

	 	 	 	Beijing Med-Pharm 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(a) 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 Securities 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

25

 

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 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

26

 

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.

     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]

27

 

     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,

BEIJING MED-PHARM CORPORATION

 	 
	 	By:  	/s/
Fred M. Powell	 
	 	 	Name:  	Fred M. Powell	 
	 	 	Title:  	Chief Financial Officer	 
	 

	 	 	 	 	 
	 	Accepted as of the date first above written:

PHILADELPHIA BROKERAGE CORPORATION

 	 
	 	By:  	/s/
Robert Fisk	 
	 	 	Name:  	Robert Fisk	 
	 	 	Title:  	Senior Partner	 

28

 

	 	 	 	 	 

Schedules and Exhibits

	 	 	 
	Schedule I:

	 	Subsidiaries
	 
	 	 
	Schedule II:

	 	Permitted Free Writing Prospectuses
	 
	 	 
	Exhibit A:

	 	Form of Subscription Agreement
	 
	 	 
	Exhibit B:

	 	Form of Lock-Up Agreement
	 
	 	 
	Exhibit C:

	 	Form of Legal Opinion
	 
	 	 
	Exhibit D:

	 	Pricing Information

29

 

Schedule I

Subsidiaries

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Jurisdiction of
	Name	 	Percent Owned	 	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

 

 

Schedule II

Permitted Free Writing Prospectus

	1.	 	Term Sheet, dated August 17, 2007, outlining the terms of the offering and including the form of
subscription agreement, form of warrant and the representations and warranties of the Company
contained in the Placement Agency Agreement.

 

 

Exhibit A

Form of Subscription Agreement

 

 

Exhibit B

Form of Lock-Up Agreement

 

 

Exhibit C

Legal Opinion of Counsel to the Company

 

 

Exhibit D

Pricing Information

Number of
Units to be Issued: 3,520,557

Offering
Price: $9.395 per Unit

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) 25% of the fee
shall be payable in shares of Common Stock valued at no less than the closing bid price of the
shares of Common Stock on The Nasdaq Global Market on August 17, 2007 and (ii) 75% of the Agency
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): $31,059,162.28

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