Sanspo has published a report saying that the Orioles have made their final offer to Kenshin Kawakami, and are waiting for a response. According to the article, the O's have concerns about the health of Kawakami's throwing shoulder, and are offering an incentive-laden deal. Agent Dan Evans is holding out for a higher base salary. Given that it's an incentive-laden deal, I'd speculate that it would be a short term contract as well. The concerns over Kawakami's arm are a bit eyebrow-raising for me; Kawakami missed time with a strained back and an undisclosed minor injury last season, but had otherwise been pretty healthy recently.
Rumors persist that the Orioles are interested in Koji Uehara as a starter, and Baltimore was the only club to show any interest in catcher Ryoji Aikawa at all.
Updated, Jan 2: The rumor of a final offer from the Orioles to Kawakami has been debunked — Pete Schmuck of the Baltimore Sun has the details. I should note at this point that it was only Sanspo that ran this report, other Japanese sources have said simply that Kawakami and the Orioles are “deep in negotiations“.