FORM OF SECURITIES PURCHASE AGREEMENT

Exhibit 10.1

FORM OF SECURITIES PURCHASE AGREEMENT

This Securities Purchase Agreement (this “ Agreement ”), dated June 5, 2009, is entered into by and among China Biologic Products, Inc., a Delaware corporation (the “ Company ”), Siu Ling Chan (the “ Controlling Stockholder ”) and the purchasers identified on the signature pages hereto (the “ Purchasers ”).

RECITALS

A.

The Purchasers desire to purchase from the Company, and the Company desires to issue to the Purchasers, or their designees, senior secured convertible notes in the aggregate principal amount of $9,554,140 (the “ Notes ”), convertible into shares of common stock of the Company (the “ Conversion Shares ”) and warrants (the “ Warrants ” and together with the Notes, the “ Subscribed Securities ”) to purchase 1,194,268 shares of common stock of the Company (the “ Warrant Shares ” and together with the Conversion Shares, the “ Underlying Securities ”) (the “ Transaction ”).  The Subscribed Securities and the Underlying Securities are collectively referred as the “ Securities .”

B.

The Company and the Purchasers are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the provisions of Regulation D (“ Regulation D ”) promulgated by the United States Securities and Exchange Commission under the Securities Act of 1933, as amended (the “ Securities Act ”).

C.

The Controlling Stockholder owns 6,862,624 shares of the Company’s common stock, which represent in the aggregate 32.0% of the outstanding shares in the Company.  As consideration for the Purchasers’ agreement to purchase the Subscribed Securities, the Controlling Stockholder will pledge 3,000,000 of her shares (the “ Pledged Shares ”) to secure the Company’s obligations under the Transaction Documents, pursuant to a Guarantee and Pledge Agreement in the form attached as Exhibit D, to be entered into as of the date hereof, among the Controlling Stockholder and the Purchasers (the “ Guarantee and Pledge Agreement ”).

D.

Contemporaneously with the Closing of the Transaction, the parties hereto will execute and deliver (i) a Registration Rights Agreement (the “ Registration Rights Agreement ”) substantially in the form of Exhibit A attached hereto, to provide for certain registration rights with respect to the Underlying Securities; (ii) the Notes, substantially in the form of Exhibit B attached hereto; (iii) the Warrants, substantially in the form of Exhibit C ; and (iv) the Guarantee and Pledge Agreement.  This Agreement, the Registration Rights Agreement, the Notes, the Warrants and the Pledge Agreement, are collectively referred to as the “ Transaction Documents .”

AGREEMENT

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers agree as follows:

ARTICLE I.
DEFINITIONS

1.1

Definitions .  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1:

“ Agreement ” has the meaning set forth in the first paragraph of this Agreement.

“ Action ” means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility.

“ Affiliate ” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 (as defined below).

“ Board ” means the board of directors of the Company.

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

“ CFC ” means a controlled foreign corporation as defined in the Code.

“ Circular 75 ” has the meaning set forth in Section 3.1(oo)(iv).

“ Closing ” means the closing of the purchase and sale of the Securities pursuant to Article II .

“ Closing Date ” has the meaning set forth in Section 2.1.

“ Company ” has the meaning set forth in the first paragraph of this Agreement.

“ Code ” means the U.S. Internal Revenue Code of 1986, as amended.

“ Collateral ” means all of the Pledged Shares pledged to the holders of the Notes pursuant to the Guarantee and Pledge Agreement.

“ Commission ” means the United States Securities and Exchange Commission.

“ Common Stock ” means the common stock of the Company, $0.0001 par value per share.

“ Controlling Stockholder ” has the meaning set forth in the first paragraph of this Agreement.

“ Conversion Shares ” has the meaning set forth in paragraph A of the recitals herein.

“ Dalin ” has the meaning set forth in Section 4.5.

“ Dalin/Huitian Acquisitions ” has the meaning set forth in Section 4.5.

“ Disclosure Materials ” has the meaning set forth in Section 3.1(i).

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“ Employee Benefit Plan ” has the meaning set forth in Section 3.1(r)(i).

“ Enforceability Exceptions ” has the meaning set forth in Section 3.1(c).

“ Environmental Laws ” has the meaning set forth in Section 3.1(x).

“ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

“ Fee Deduction ” has the meaning set forth in Section 2.2(c)(v).

“ Foreign Exchange Authorizations ” has the meaning set forth in Section 3.1(oo)(iv).

“ GAAP ” has the meaning set forth in Section 3.1(i).

“ Governmental Authority ” means any nation or government or any federation, province or state or any other political subdivision thereof; any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality of the People’s Republic of China (“ PRC ” or “ China ”) or any other country, or any political subdivision thereof, or any court.

“ Group ” means the Company and its Subsidiaries.

“ G roup Company Security Holder ” has the meaning set forth in Section 3.1(oo)(iv).

“ Guarantee and Pledge Agreement ” has the meaning set forth in paragraph C of the recitals herein.

“ Hazardous Materials ” has the meaning set forth in Section 3.1(x).

“ Huitian ” has the meaning set forth in Section 4.5.

“ Indemnifying Party ” has the meaning set forth in Section 4.10(b).

“ Intellectual Property Right ” has the meaning set forth in Section 3.1(w).

“ Investor Party ” has the meaning set forth in Section 4.10(a).

“ Losses ” has the meaning set forth in Section 4.10(a).

“ Majority Holder ” has the meaning set forth in Section 4.12.

“ Material Adverse Effect ” means any material adverse effect on the business, properties, assets, operations, results of operations, condition (financial or otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, or on the transactions contemplated hereby or in the other Transaction Documents, or on the authority or ability of the Company to perform its obligations under the Transaction Documents.

“ Notes ” has the meaning set forth in paragraph A of the recitals herein.

“ Lien ” means any lien, charge, encumbrance, security interest, right of first refusal or other restrictions of any kind.

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“ OTCBB ” means the Over-the-counter Bulletin Board maintained by the Financial Industry Regulatory Authority.

“ Person ” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

“ Pledged Shares ” has the meaning set forth in paragraph C of the recitals herein.

“ PFIC ” means a passive foreign investment company as defined in the Code.

“ Proceeding ” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

“ Public Official ” means any employee of a Governmental Authority, member of a political party, political candidate, officer of a public international organization, or officer or employee of a state-owned enterprise, including a PRC state-owned enterprise.

“ Purchase Price ” means $1,000 for each $1,000 of principal amount of the Notes to be purchased by the Purchasers at the Closing, which aggregate amount is set forth on Schedule A hereto.

“ Purchasers ” has the meaning set forth in the first paragraph of this Agreement.

“ Registration Rights Agreemen t ” has the meaning set forth in paragraph D of the recitals herein.

“ Registration Statement ” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Registrable Securities (as defined in the Registration Rights Agreement).

“ Regulation D ” has the meaning set forth in paragraph B of the recitals herein.

“ Representatives ” has the meaning set forth in Section 3.1(ee).

“ Rule 144 ” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

“ SAFE ” has the meaning set forth in Section 3.1(oo)(i).

“ Securities ” has the meaning set forth in paragraph A of the recitals herein.

“ Securities Act ” has the meaning set forth in paragraph B of the recitals herein.

“ SEC Reports ” has the meaning set forth in Section 3.1(i).

“ Subject Share s ” has the meaning set forth in Section 4.11.

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“ Subsidiary ” means any subsidiary, joint venture or any entity in which the Company, directly or indirectly, owns greater than 50% of the capital stock or equity or similar interests.

“ Subscribed Securities ” has the meaning set forth in paragraph A of the recitals herein.

“ Trading Day ” means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTCBB, or (iii) if the Common Stock is not quoted on any Trading Market, or on the OTCBB, a day on which the Common Stock is quoted in the over-the-counter market as reported by the Pink Sheets, LLC (or any similar organization or agency succeeding to its functions of reporting prices), or (iv) in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, a Business Day.

“ Trading Market ” means whichever of The New York Stock Exchange, the NYSE Amex, The NASDAQ Capital Market, The NASDAQ Global Market or The NASDAQ Global Select Market on which the Common Stock is listed or quoted for trading on the date in question.

“ Transaction ” has the meaning set forth in paragraph A of the recitals herein.

“ Transaction Documents ” has the meaning set forth in paragraph D of the recitals herein.

“ Underlying Securities ” has the meaning set forth in paragraph A of the recitals herein.

“ Warrants ” has the meaning set forth in paragraph A of the recitals herein.

“ Warrant Shares ” has the meaning set forth in paragraph A of the recitals herein.

ARTICLE II.
PURCHASE AND SALE

2.1

Closing .  Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to the Purchasers, and the Purchasers shall purchase from the Company, the Subscribed Securities set forth on the signature pages hereto at a purchase price equal to the purchase price specified on the signature pages hereto.  The Closing shall take place via the exchange of documents and signatures as soon as practicable after all closing conditions specified in Section 2.2 hereof have been satisfied or otherwise waived by the Majority Holder, or at such time and place as the Company and the Purchasers shall mutually agree upon orally or in writing (the “ Closing Date ”).  

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2.2

Closing Deliveries and Conditions to Closing .

(a)

The obligations of the Purchasers to close the purchase of the Subscribed Securities shall be subject to the delivery, fulfillment or satisfaction of, each of the following:

(i)

The legal opinion of Pillsbury Winthrop Shaw Pittman LLP, special US counsel to the Company, in substantially the form attached as Exhibit E , addressed to the Purchasers;

(ii)

The representations and warranties made by the Company in Article III and the representations and warranties made by the Controlling Stockholder in Sections 3.1(a) through 3.1(f) shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date), all covenants, agreements and conditions contained in this Agreement to be performed or complied with by the Company and the Controlling Stockholder prior to the Closing shall have been performed or complied with (or waived by the Purchasers), and the Company and the Controlling Stockholder shall have obtained any approvals, consents and qualifications necessary to perform their respective obligations hereunder;

(iii)

The Company shall have delivered to the Purchasers copies of each of the following, in each case certified by the Secretary of the Company to be in full force and effect on the date of the Closing:

(A)

the certificate of incorporation of the Company as of the Closing  certified by the Secretary of State of the State of Delaware as of a date not more than ten days prior to the Closing;

(B)

a good standing certificate with respect to the Company certified by the Secretary of State of the State of Delaware as of a date not more than ten days prior to the Closing;

(C)

the by-laws of the Company; and

(D)

resolutions of the Board, and, as necessary, the requisite shareholders of the Company, authorizing the execution, delivery and performance of each of the Transaction Documents to which the Company is a party, and the transactions contemplated hereby and thereby, including the issuance and sale of the Securities and the reservation of the Underlying Securities.

(iv)

The Controlling Stockholder shall have delivered to the Purchasers the irrevocable proxy set forth in Section 4.11 for the benefit of the holders of the Notes.

(v)

All authorizations, approvals or permits of, or filings with any governmental authority, including state securities or “Blue Sky” offices, that are required by law in connection with the lawful sale and issuance of the Securities shall have been duly obtained by the Company, and shall be effective as of the Closing;

(vi)

All corporate and other proceedings in connection with the transactions contemplated by the Transaction Documents, and all documents and instruments incident to such transactions, shall be satisfactory in form and substance to the Purchasers, and the Purchasers shall have received at or prior to the Closing all such documents as the Purchasers shall have requested;

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(vii)

There shall have been no Material Adverse Effect in the financial condition or results of operations of any member of the Group since executing this Agreement;

(viii)

The Purchasers shall have received delivery from the Company’s existing investors holding any participation, preemptive or related rights of a writing evidencing their waiver or non-exercise of such rights in relation to the Transaction;

(ix)

The Purchasers shall have received each of the Closing deliveries provided in Section 2.2(c) below; and

(x)

The Company shall have delivered to the Purchasers at the Closing a certificate signed on its behalf by its Chief Executive Officer certifying that the conditions specified in this Section 2.2(a) hereof have been fulfilled.

(b)

The obligations of the Company to close the purchase and sale of the Subscribed Securities shall be subject to the fulfillment or satisfaction of, the following:

(i)

the representations and warranties of the Purchasers shall be true and correct in all material respects (except for those representations and warranties that are qualified by materiality, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date), and the Purchasers shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchasers at or prior to the Closing Date; and

(ii)

the Company shall have received each of the Closing deliveries provided in Section 2.2(d) below.

(c)

At Closing, the Company shall deliver or cause to be delivered to the Purchasers each of the following:

(i)

the Notes duly executed by the Company evidencing the principal amount of the Notes set forth below the Purchasers’ names on the signature pages hereto;

(ii)

the Warrants duly executed by the Company evidencing the number of Warrants set forth below the Purchasers’ names on the signature pages hereto;

(iii)

the Registration Rights Agreement duly executed by the Company;

(iv)

the Guarantee and Pledge Agreement duly executed by the Controlling Stockholder, and the Controlling Stockholder shall have taken all actions required thereunder to perfect the security interests to be granted under the  Pledge Agreement; and

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(v)

the fees and expenses of the Majority Holder payable by the Company under Section 4.12, in United States dollars and in immediately available funds, by wire transfer to the account set forth on Schedule A hereto or to such other account designated in writing by the Majority Holder for such purpose; provided that the Company shall have the option to authorize the Majority Holder to deduct such fees and expenses from the purchase price payable under Section 4(d)(i) (“ Fee Deduction ”).

(d)

At Closing, the Purchasers shall deliver or cause to be delivered to the Company each of the following:

(i)

the aggregate amount of the purchase price set forth below the Purchasers’ names on the signature pages hereto (less their proportionate share of the Fee Deduction, if applicable), in United States dollars and in immediately available funds, by wire transfer to the account set forth on Schedule A hereto or to such other account designated in writing by the Company for such purpose;

(ii)

the Registration Rights Agreement duly executed by the Purchasers; and

(iii)

the Guarantee and Pledge Agreement duly executed by the Purchasers to the extent the Purchasers are a party thereto.

(e)

Notwithstanding anything contained in this Article II, the Closing shall be deemed to have occurred upon the Company’s fulfillment of the obligations set forth in Section 2.2(a) and upon the Company’s receipt from the Majority Holder of the Closing deliveries provided in Section 2.2(d); and upon the Majority Holder’s fulfillment of the obligations set forth in Section 2.2(b) and upon the Majority Holder’s receipt from the Company of the Closing deliveries provided in Section 2.2(c).

ARTICLE III.
REPRESENTATIONS AND WARRANTIES

3.1

Representations and Warranties of the Company .  The Company hereby makes the following representations and warranties to the Purchasers, and the Controlling Stockholder hereby makes the representations and warranties under Sections 3.1(a) through 3.1(f) to the Purchasers:

(a)

Organization and Qualification .  Each of the Company and its Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate of incorporation, bylaws or other organizational or charter documents.  Each of the Company and each Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate, have or reasonably be expected to result in any Material Adverse Effect.

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(b)

Subsidiaries .  The Company has no direct or indirect Subsidiaries other than those listed in Schedule 3.1(b) .  Except as disclosed in Schedule 3.1(b) , the Company owns, directly or indirectly, all of the capital stock of each Subsidiary free and clear of any and all Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights.

(c)

Authorization; Enforcement .  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents, as applicable, and otherwise to carry out its obligations thereunder.  The execution, delivery and performance of each of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby has been duly authorized by all necessary corporate action on the part of the Company and its shareholders and no further corporate action is required by the Company or its shareholders in connection therewith.  Each Transaction Document has been duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except (i) as rights to indemnity and contribution may be limited by state or federal securities laws or the public policy underlying such laws, (ii) as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting parties’ rights generally and (iii) as enforceability may be subject to general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law) (clauses (i)–(iii) collectively, the “ Enforceability Exceptions ”).

(d)

The Subscribed Securities and Security Interests .  The Subscribed Securities have been duly authorized by the Company and, when duly executed, authenticated, and delivered as provided therein and paid for as provided herein, will be duly and validly issued and will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their terms, subject to the Enforceability Exceptions, and holders of the Subscribed Securities will be entitled to the benefits therein.  The Guarantee and Pledge Agreement has been duly executed by the Controlling Stockholder and delivered as provided therein will be valid and binding obligations of the Controlling Stockholder, enforceable against the Controlling Stockholder in accordance with its terms, subject to the Enforceability Exceptions, and holders of the Subscribed Securities will be entitled to the benefits thereof.

(e)

No Conflicts .  The execution, delivery and performance of each of the Transaction Documents by the Company or the Controlling Stockholder, as applicable, to which it is party and the consummation by the Company or the Controlling Stockholder, as applicable, of the transactions contemplated thereby, including the issuance, sale and/or reservation of the Securities and grant of the Security Interests, as applicable, do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of clauses (ii) and (iii), such as could not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

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(f)

Filings, Consents and Approvals .  Except as disclosed in Schedule 3.1(f) , neither of the Company nor the Controlling Stockholder is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company and the Controlling Stockholder of the Transaction Documents, as applicable, including the issuance, sale and/or reservation of the Securities, other than:  (i) the filing with the Commission of one or more Registration Statements in accordance with the requirements of the Registration Rights Agreement, (ii) notice filings required by state securities laws, the failure of which to make will not affect the validity of the Securities or the enforceability of this Agreement, and (iii) those that have been made or obtained prior to the date of this Agreement.  The Company and its Subsidiaries are unaware of any facts or circumstances that would reasonably be expected to prevent the Company or  the Controlling Stockholder from obtaining or effecting any of the registration, application or filings pursuant to the preceding sentence.

(g)

Issuance of Subscribed Securities and Underlying Securities .  The issuance of the Subscribed Securities, upon issuance in accordance with the terms of the Transaction Documents, will be free from all taxes, liens and charges. The Underlying Securities have been duly authorized and reserved for issuance upon conversion or exercise of the Subscribed Securities by all necessary corporate action of the Company.  All Underlying Securities, when so issued in accordance with the Company’s Certificate of Incorporation and delivered upon such conversion or exercise in accordance with the terms of the Subscribed Securities, will be duly authorized and validly issued, fully paid and nonassessable and free and clear of all liens, encumbrances, equities, claims or preemptive or similar rights with the holders being entitled to all rights accorded to a holder of Common Stock.  

(h)

Capitalization .  The authorized capital stock of the Company consists solely of 100,000,000 shares of Common Stock, $0.0001 par value per share and 10,000,000 shares of preferred stock.  As of the date hereof prior to Closing: (i) the number of shares of Common Stock set forth on Schedule 3.1(h) hereto are issued and outstanding and no shares of Common Stock are held in treasury, (ii) the number of shares of Common Stock set forth on Schedule 3.1(h) hereto are reserved for future issuance pursuant to the Company’s equity incentive plan, pursuant to outstanding warrants and the Securities as indicated in such schedule, (iii) no shares of preferred stock are issued and outstanding and (iv) the number of shares of Common Stock set forth on Schedule 3.1(h) are reserved for issuance pursuant to securities exercisable or exchangeable for, or convertible into, shares of Common Stock.  All outstanding shares of Common Stock are validly issued, fully paid and nonassessable.

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Except as disclosed in Schedule 3.1(h) , (i) none of the Company’s capital stock is subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company; (ii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional capital stock of the Company or any of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock of the Company or any of its Subsidiaries; (iii) there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents or instruments evidencing indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound which are required to be disclosed in any SEC Report but not so disclosed in the SEC Reports, (iv) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of their securities under the Securities Act; (v) there are no outstanding securities or instruments of the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the Company or any of its Subsidiaries; (vi) there are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance or reservation of the Securities; (vii) the Company does not have any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement; (viii) the Company and its Subsidiaries have no liabilities or obligations required to be disclosed in the SEC Reports but not so disclosed in the SEC Reports, other than those incurred in the ordinary course of the Company’s or its Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or would not have a Material Adverse Effect; and (ix) there are no financing statements securing obligations in any material amounts, either singly or in the aggregate, filed in connection with the Company or any of its Subsidiaries.  The Company has filed in its SEC Reports with the Commission true, correct and complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof, and the Company’s Bylaws, as amended and as in effect on the date hereof, and the form of all securities convertible into, or exercisable or exchangeable for, shares of Common Stock.

(i)

SEC Reports; Financial Statements .  Since February 29, 2008, the Company has filed all reports, schedules, forms, statements and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof (the foregoing materials including all exhibits and schedules thereto, being collectively referred to herein as the “ SEC Reports ” and, together with the Schedules to this Agreement, and any other materials prepared by the Company and delivered to the Purchasers in writing, the “ Disclosure Materials ”).  The Company has delivered to the Purchasers or their representatives, true, correct and complete copies of the SEC Reports not available on the EDGAR system.  As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and, except to the extent superseded by an amended SEC Report filed at least five Business Days prior to the date hereof, none of the SEC Reports or the other Disclosure Materials, when filed or prepared, as applicable, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments or as otherwise disclosed in the SEC Reports.  No other information provided by or on behalf of the Company to the Purchasers which is not included in the SEC Reports and that has not been subsequently modified, corrected, supplemented or superceded in writing, including, without limitation, information referred to in any schedules to this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstance under which they are or were made not misleading.

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(j)

Litigation .  Except as disclosed in Schedule 3.1(j) or in the SEC Reports, there is no Action pending or, to the knowledge of the Company, threatened against the Company or any of its Subsidiaries, or any of the Company’s Subsidiaries or any of the Company’s or its Subsidiaries’ officers or directors that (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Notes or (ii) could, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty and there has not been, and to the knowledge of the Company there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

(k)

Transactions with Affiliates and Employees .  Except as set forth on Schedule 3.1(k) or in the SEC Reports, none of the officers, directors or employees of the Company or any of Subsidiary is presently a party to any transaction with the Company or any Subsidiary (other than for ordinary course services as employees, officers and directors) where the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of the total assets of the Company at year end for the last three completed fiscal years, including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

(l)

Internal Accounting and Disclosure Controls .  Except as disclosed in Schedule 3.1(l) or in the SEC Reports, the Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with GAAP and to maintain asset and liability accountability, (iii) access to assets or incurrence of liabilities is permitted only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate action is taken with respect to any differences.  Except as disclosed in the SEC Reports, the Company maintains disclosure controls and procedures (as such term is defined in Rule 13a-14 under the Exchange Act) that are effective in ensuring that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the rules and forms of the Commission, including, without limitation, controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive officer or officers and its principal financial officer or officers, as appropriate, to allow timely decisions regarding required disclosure.  Except as disclosed in Schedule 3.1(l) , since September 4, 2007, neither the Company nor any of its Subsidiaries have received any notice or correspondence from any accountant relating to any material weakness in any part of the system of internal accounting controls of the Company or any of its Subsidiaries.

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(m)

Certain Fees .  Except for fees and other consideration payable to Oppenheimer & Co. Inc., no brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.  The Purchasers shall have no obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by the Purchasers pursuant to written agreements executed by the Purchasers which fees or commissions shall be the sole responsibility of the Purchasers) made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.  Except for the engagement of Oppenheimer & Co. Inc. and fees incurred in connection with such engagement, neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection with the sale of the Subscribed Securities and has not incurred any placement agent’s fees, financial advisory fees, or broker’s commissions relating to or arising out of the transactions contemplated hereby.  

(n)

Certain Registration Matters .  Assuming the accuracy of the Purchasers’ representations and warranties set forth in Section 3.2(c) through (g), no registration under the Securities Act is required for the offer, sale and/or reservation of the Securities  by the Company and the pledge of the Pledged Shares by the Controlling Stockholder to the Purchasers under the Transaction Documents.  The Company has not offered the Securities by means of any form of general solicitation or general advertising, including but not limited to the following:  (A) any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio whether closed circuit or generally available or (B) any seminar, meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising.

(o)

No Integrated Offering .  None of the Company, its Subsidiaries, any of their Affiliates, and any Person acting on their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the issuance of any of the Securities under the Securities Act, whether through integration with prior offerings or otherwise.  None of the Company, its Subsidiaries, their Affiliates and any Person acting on their behalf will take any action or steps referred to in the preceding sentence that would require registration of the issuance of any of the Subscribed Securities under the Securities Act or cause the offering of the Subscribed Securities to be integrated with other offerings for purposes of any such applicable stockholder approval provisions.

(p)

Investment Company .  The Company is not, and upon consummation of the sale of the Subscribed Securities, will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated person” of, or “promoter” or “principal underwriter” for, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

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(q)

No Additional Agreements .  The Company does not have any agreement or understanding with the Purchasers with respect to the transactions contemplated by the Transaction Documents other than as specified in this Agreement.  

(r)

ERISA; Employee Relations .  

(i)

Each employee benefit plan (as defined in Section 3(3) of ERISA) and any other plan, agreement or arrangement for the benefit of any director, officer or employee of the Company (each, an “ Employee Benefit Plan ”) has been operated in material compliance with its terms and with all applicable laws, including, but not limited to, ERISA and the Code.  All contributions due and payable on or before the Closing in respect of any Employee Benefit Plan have been made in full.

(ii)

Neither the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union.  The Company and its Subsidiaries believe that their relations with their employees are good, except where such failure to have good relations would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.  No executive officer of the Company or any of its Subsidiaries (as defined in Rule 501(f) of the Securities Act) has notified the Company or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the Company or any such Subsidiary.  No executive officer of the Company or any of its Subsidiaries, is, or is now reasonably expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement, non-competition agreement, or any other similar contract or agreement or any restrictive covenant, and the continued employment of each such executive officer would not reasonably be expected to subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.

(iii)

The Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor, employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

(s)

Tax .

(i)

The Company and each of its Subsidiaries have filed all foreign, federal, state and local tax reports and returns required by any law or regulation to be filed by it, and such returns are true and correct, except where such failure would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.  The Company and each of its Subsidiaries have paid all taxes, interest and penalties, if any, reflected on such tax returns or otherwise due and payable by it, except where such failure would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.  Each of the Company and each of its Subsidiaries have set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply.  Any deficiencies proposed as a result of any governmental audits or such tax returns have been paid or settled, and there are no present disputes as to taxes payable by the Company.  The Company has not elected pursuant to the Internal Revenue Code of 1986, as amended (the “ Code ”), to be treated as a Subchapter S corporation or a collapsible corporation pursuant to Section 1362(a) or Section 341(f) of the Code, respectively, nor has it made any other elections pursuant to the Code (other than elections that relate solely to methods of accounting, depreciation or amortization) that would have a material adverse effect on the Company, its financial condition, its business as presently conducted or proposed to be conducted or any of its properties or material assets.  The Company has withheld or collected from each payment made to each of its employees, the amount of all taxes (including, but not limited to, federal income taxes, Federal Insurance Contribution Act taxes and Federal Unemployment Tax Act taxes) required to be withheld or collected therefrom, and has paid the same to the proper tax receiving officers or authorized depositories, except where such failure would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

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(ii)

Except as disclosed in Schedule 3.1(s) , no member of the Group is a CFC or expects to become, as a result of the transactions contemplated hereby and by each of the other Transaction Documents, a CFC, or an “investment company” as such term is defined under the United States Investment Company Act of 1940, as amended.  No member of the Group anticipates that it will become a PFIC or CFC for the current taxable year or any future taxable year.

(t)

Application of Takeover Protections; Rights Agreement .  The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of Incorporation or the laws of the State of Delaware which is or could become applicable to any Purchaser as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s issuance of the Subscribed Securities and any Purchaser’s ownership of the Securities.  The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company.

(u)

Absence of Certain Changes .  Except as set forth on Schedule 3.1(u) hereof, since December 31, 2008, there has been no material adverse changes or developments in the business, properties, operations, condition (financial or otherwise), results of operations or prospects of the Company or its Subsidiaries that have resulted, or could reasonably be expected to result, in a Material Adverse Effect.  Except with respect to the dividends declared by Shandong Taibang Biological Products Co. Ltd., since December 31, 2008, the Company has not (i) declared or paid any dividends or (ii) sold any assets, individually or in the aggregate, in excess of $500,000 outside of the ordinary course of business.  Neither the Company nor any of its Subsidiaries has taken any steps to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any fact that would reasonably lead a creditor to do so.  The Company and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions contemplated hereby to occur at the Closing, will not be Insolvent (as defined below).  For purposes of this Section 3.1(u), “ Insolvent ” means, with respect to any Person, (i) the present fair saleable value of such Person’s assets is less than the amount required to pay such Person’s total Indebtedness (as def