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Exhibit 10-b
 
 
EXECUTIVE EMPLOYMENT AGREEMENT

 
 
 
This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of
January 13, 2010 by and between China Aoxing Pharmaceutical Company, Inc, a
company incorporated under the laws of the Florida  (the “Company”), and Mr. Hui
Shao    , an individual (the “Executive”) and effective on the Effective Date
(as hereinafter defined). The term “Company” as used herein with respect to all
obligations of the Executive hereunder shall be deemed to include the Company
and all of its direct or indirect parent companies, subsidiaries, affiliates, or
subsidiaries or affiliates of its parent companies (collectively, the
“Company”).
 
RECITALS
 
A. The Company desires to employ the Executive and to assure itself of the
services of the Executive during the term of Employment (as defined below).
 
B. The Executive desires to be employed by the Company during the term of
Employment and under the terms and conditions of this Agreement.
 
AGREEMENT
 
The parties hereto agree as follows:
 
1.
 
POSITION

 
The Executive hereby accepts a position of Chief Financial Officer (the
“Employment”) of the Company.
 
2.
 
TERM

 
Subject to the terms and conditions of this Agreement, the initial term of the
Employment shall be three years, commencing on January 13, 2010 (the “Effective
Date”), until January 13, 2013, unless terminated earlier pursuant to the terms
of this Agreement. Upon expiration of the initial three-year term, the
Employment shall be automatically extended for successive one-year terms unless
either party gives the other party hereto written notice to terminate the
Employment no less than 60 days, and no more than 120 days, prior to the
expiration of such one-year term or unless terminated earlier pursuant to the
terms of this Agreement.
 
3.
 
DUTIES AND RESPONSIBILITIES

 
The Executive’s duties at the Company will include all jobs assigned by the
Board of Directors of the Company (the “Board”) or the Chief Executive Officer
(“CEO”). The Executive will report directly to the CEO.
 
The Executive shall devote all of his working time, attention and skills to the
performance of his duties at the Company and shall faithfully and diligently
serve the Company in accordance with this Agreement and the guidelines, policies
and procedures of the Company approved from time to time by the Company.
 
 
 

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The Executive shall use his best efforts to perform his duties hereunder. The
Executive shall not, without the prior written consent of the Company, become an
employee or consultant of any entity other than the Company and/or any member of
the Company , and shall not carry on or be interested in the business or entity
that competes with that carried on by the Company  (any such business or entity,
a “Competitor”), provided that nothing in this clause shall preclude the
Executive from holding any shares or other securities of any Competitor that is
listed on any securities exchange or recognized securities market anywhere.
 
4.
 
NO BREACH OF CONTRACT

 
The Executive hereby represents to the Company that: (i) the execution and
delivery of this Agreement by the Executive and the performance by the Executive
of the Executive’s duties hereunder shall not constitute a breach of, or
otherwise contravene, the terms of any other agreement or policy to which the
Executive is a party or otherwise bound, except for agreements that are required
to be entered into by and between the Executive and any member of the
Company  pursuant to applicable law of the jurisdiction where the Executive is
based, if any; (ii) that the Executive has no information (including, without
limitation, confidential information and trade secrets) relating to any other
person or entity which would prevent, or be violated by, the Executive entering
into this Agreement or carrying out his duties hereunder; (iii) that the
Executive is not bound by any confidentiality, trade secret or similar agreement
(other than this) with any other person or entity except for other member(s) of
the Company , as the case may be.
 
5.
 
LOCATION

 
The Executive will be based in the United States of America or China, on a full
time basis. The executive may be required to work in other regions on temporary
basis.
 
6.
 
COMPENSATION AND BENEFITS

 
(a)
 
Cash Compensation. The Executive’s cash compensation shall be provided by the
Company pursuant to Schedule A-1 hereto, subject to annual review and adjustment
by the Board.

 
(b)
 
Equity Incentives. The Executive will be eligible to participate in any of the
Company’s equity incentive plans as determined by the Board. Subject to approval
by the Company’s Board of Directors and the execution of a stock option
agreement which will govern the terms and conditions contained in a stock option
agreement to be entered into by you and the Company prior to the grant, you will
receive the equity award listed on Schedule A-2 (the “Initial Grant”). Following
a Company Change of Control Transaction (as hereinafter defined), all unvested
options under the Initial Grant shall vest upon the closing of the Change of
Control Transaction.

 
(c)
 
Benefits. The Executive is eligible for participation in any standard employee
benefit plan of the Company, including any health insurance plan and annual
holiday plan.

 
(d)
 
Certain Definitions. For purposes of this Agreement, a Change of Control
Transaction shall mean (a) any sale, lease, exchange or other transfer (in one
transaction or a series of transactions) of all or substantially all of the
assets of the Company other than to a Company Affiliate; (b) any consolidation
or merger or other business combination of the Company with any other entity,
other than a Company Affiliate, where the shareholders of the Company,
immediately prior to the consolidation or merger or other business combination
would not, immediately after the consolidation or merger or other business
combination, beneficially own, directly or indirectly, shares representing fifty
percent (50%) of the combined voting power of all of the outstanding securities
of the entity issuing cash or securities in the consolidation or merger or other
business combination (or its ultimate parent corporation, if any); or (c) the
Board of the Company adopts a resolution to the effect that a “Change In
Control” has occurred for purposes of this Agreement.

 
 
 

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7.
 
TERMINATION OF THE AGREEMENT

 
(a)
 
By the Company with cause. The Company may terminate the Executive’s Employment
for cause, at any time, without advance notice or remuneration, if (1) the
Executive is convicted or pleads guilty to a felony or to an act of fraud,
misappropriation or embezzlement, (2) the Executive has been grossly negligent
or acted dishonestly to the detriment of the Company, (3) the Executive has
engaged in actions amounting to gross misconduct or failed to perform his duties
hereunder and such failure continues after the Executive is afforded a
reasonable opportunity to cure such failure, (4) the Executive has died, or
(5) the Executive has a disability which shall mean a physical or mental
impairment which, as reasonably determined by the Board, renders the Executive
unable to perform the essential functions of his employment with the Company,
even with reasonable accommodation that does not impose an undue hardship on the
Company, for more than 180 days in any 12-month period, unless a longer period
is required by applicable law, in which case that longer period would apply.

 
(b)
 
By the Company without cause. The Company may terminate the Executive’s
Employment without cause, at any time, upon one-month prior written notice to
the Executive during the first year after the Effective Date, or two-month prior
written notice to the Executive during any period after the first anniversary of
the Effective Date.

 
(c)
 
By the Executive for Good Reason. If there is a material and substantial
reduction in the Executive’s existing authority and responsibilities and such
resignation is approved by the Board, the Executive may resign upon one-month
prior written notice to the Company during the first year after the Effective
Date, or two-month prior written notice to the Company during any period after
the first anniversary of the Effective Date.

 
(d)
 
Notice of Termination. Any termination of the Executive’s employment under this
Agreement shall be communicated by written notice of termination from the
terminating party to the other party. The notice of termination shall indicate
the specific provision(s) of this Agreement relied upon in effecting the
termination.

 
(e)
 
Remuneration upon Termination. Upon the Company’s termination of the Employment
without cause pursuant to Section 7(b) above or the Executive’s resignation upon
the Board’s approval pursuant to Section 7(c) above and upon the execution of a
general release agreement in a form reasonably acceptable to the Company, the
Company will provide remuneration to the Executive as follows: (1) if such
termination or resignation becomes effective during the first year after the
Effective Date, the Company will provide the Executive with a severance pay
equal to three months base salary of the Executive; (2) if such termination or
resignation becomes effective during any period after the first anniversary of
the Effective Date, the Company will provide the Executive with a severance pay
equal to six months base salary of the Executive; and (3) the Company will vest
any options of the Initial Grant that would have vested during the applicable
severance period.  Any payments made pursuant to Section 7(e)(1) or
Section 7(e)(2) shall be paid in accordance with the Company’s normal payroll
cycles in effect on the termination or resignation date.

 
(f)
 
Termination by Executive for No Reason. The Executive may terminate his
Employment for any reason, at any time, upon 90 days prior written notice to the
Company.

 
(g)
 
Compliance with Internal Revenue Code Section 409A and 457A. This Agreement is
intended to comply with the requirements of Internal Revenue Code (the “Code”)
Section 409A and 457A, as applicable, and the corresponding regulations and
related guidance, and shall be administered in accordance with Section 409A and
Section 457A, to the extent such sections apply. To the extent Section 409A or
Section 457A applies, the parties agree to work together to ensure any payments
pursuant to Section 7(d) of this Agreement comply with Section 409A and
Section 457A, as applicable.

 
 
 

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8.
 
CONFIDENTIALITY AND NONDISCLOSURE

 
(a)
 
Confidentiality and Non-disclosure. In the course of the Executive’s services,
the Executive may have access to the Company and/or the Company’s client’s
and/or prospective client’s trade secrets and confidential information,
including but not limited to those embodied in memoranda, manuals, letters or
other documents, computer disks, tapes or other information storage devices,
hardware, or other media or vehicles, pertaining to the Company and/or the
Company’s client’s and/or prospective client’s business. All such trade secrets
and confidential information are considered confidential. All materials
containing any such trade secret and confidential information are the property
of the Company and/or the Company’s client and/or prospective client, and shall
be returned to the Company and/or the Company’s client and/or prospective client
upon expiration or earlier termination of this Agreement. The Executive shall
not directly or indirectly disclose or use any such trade secret or confidential
information, except as required in the performance of the Executive’s duties in
connection with the Employment, or pursuant to applicable law.

 
(b)
 
Trade Secrets. During and after the Employment, the Executive shall hold the
Trade Secrets in strict confidence; the Executive shall not disclose these Trade
Secrets to anyone except other employees of the Company who have a need to know
the Trade Secrets in connection with the Company’s business. The Executive shall
not use the Trade Secrets other than for the benefits of the Company.

 
“Trade Secrets” means information deemed confidential by the Company, treated by
the Company or which the Executive know or ought reasonably to have known to be
confidential, and trade secrets, including without limitation designs,
processes, pricing policies, methods, inventions, conceptions, technology,
technical data, financial information, corporate structure and know-how,
relating to the business and affairs of the Company and its subsidiaries,
affiliates and business associates, whether embodied in memoranda, manuals,
letters or other documents, computer disks, tapes or other information storage
devices, hardware, or other media or vehicles. Trade Secrets do not include
information generally known or released to public domain through no fault of the
Executive.
 

 
(c)
 
Former Employer Information. The Executive agrees that he has not and will not,
during the term of his employment improperly use or disclose any proprietary
information or trade secrets of any former employer, unless the former employer
has been acquired by the Company, or other person or entity with which the
Executive has an agreement to keep in confidence information acquired by
Executive, if any. The Executive will indemnify the Company and hold it harmless
from and against all claims, liabilities, damages and expenses, including
reasonable attorneys’ fees and costs of suit, arising out of or in connection
with any violation of the foregoing.

 
(d)
 
Third Party Information. The Executive recognizes that the Company may have
received, and in the future may receive, from third parties their confidential
or proprietary information subject to a duty on the Company’s part to maintain
the confidentiality of such information and to use it only for certain limited
purposes. The Executive agrees that the Executive owes the Company and such
third parties, during the Executive’s employment by the Company and thereafter,
a duty to hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any person or firm and to use it in a
manner consistent with, and for the limited purposes permitted by, the Company’s
agreement with such third party.

 
 
 

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This Section 8 shall survive the termination of this Agreement for any reason.
In the event the Executive breaches this Section 8, the Company shall have right
to seek any and all remedies at law or in equity.
 
9.
 
NON-COMPETITION AND NON-SOLICITATION

 
(a) In consideration of the base salary provided to the Executive by the Company
hereunder, the adequacy of which is hereby acknowledged by the parties hereto,
the Executive agrees that during the term of the Employment and for a period of
one year following the termination of the Employment for whatever reason:
 
(i) The Executive will not approach clients, customers or contacts of the
Company or other persons or entities introduced to the Executive in the
Executive’s capacity as a representative of the Company for the purposes of
doing business with such persons or entities which will harm the business
relationship between the Company and such persons and/or entities;
 
(ii) unless expressly consented to by the Company, the Executive will not seek
directly or indirectly, by the offer of alternative employment or other
inducement whatsoever, to solicit the services of any employee of the Company
employed as at or after the date of such termination, or in the year preceding
such termination.
 
(b) In consideration of the base salary provided to the Executive by the Company
hereunder, the adequacy of which is hereby acknowledged by the parties hereto,
the Executive agrees that during the term of the Employment and for a period of
one year thereafter (except in the event of a Termination by the Company without
cause pursuant to Section 7(b) or in the event of a Termination by the Executive
for Good Reason pursuant to Section 7(c)), following the termination of the
Employment for whatever reason, unless expressly consented to by the Company,
the Executive will not assume employment with or provide services for any
Competitor, or engage, whether as principal, partner, licensor or otherwise, in
any Competitor.
 
(c) In consideration of the base salary provided to the Executive by the Company
hereunder, the adequacy of which is hereby acknowledged by the parties hereto,
the Executive agrees that in the event of a Termination by the Company without
cause pursuant to Section 7(b) or in the event of a Termination by the Executive
for Good Reason pursuant to Section 7(c), then during the term of the Employment
and for the period of the duration of the severance pay described in
Section 7(e)(1) or Section 7(e)(2), as appropriate, unless expressly consented
to by the Company, the Executive will not assume employment with or provide
services for any Competitor, or engage, whether as principal, partner, licensor
or otherwise, in any Competitor.
 
The provisions contained in this Section 9 are considered reasonable by the
Executive and the Company. In the event that any such provisions should be found
to be void under applicable laws but would be valid if some part thereof was
deleted or the period or area of application reduced, such provisions shall
apply with such modification as may be necessary to make them valid and
effective.
 
This Section 9 shall survive the termination of this Agreement for any reason.
In the event the Executive breaches this Section 9, the Executive acknowledges
that there will be no adequate remedy at law, and the Company shall be entitled
to injunctive relief and/or a decree for specific performance, and such other
relief as may be proper (including monetary damages if appropriate). In any
event, the Company shall have right to seek any and all remedies permissible at
law or in equity.
 
 
 

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10.
 
ASSIGNMENT

 
This Agreement is personal in its nature and neither of the parties hereto
shall, without the consent of the other, assign or transfer this Agreement or
any rights or obligations hereunder; provided, however, that (i) the Company may
assign or transfer this Agreement or any rights or obligations hereunder to any
member of the Company  without such consent, and (ii) in the event of a
Change-of-Control Transaction of the Company, this Agreement shall, subject to
the provisions hereof, be binding upon and inure to the benefit of such
successor and such successor shall discharge and perform all the promises,
covenants, duties, and obligations of the Company hereunder.
 
11.
 
SEVERABILITY

 
If any provision of this Agreement or the application thereof is held invalid,
the invalidity shall not affect other provisions or applications of this
Agreement which can be given effect without the invalid provisions or
applications and to this end the provisions of this Agreement are declared to be
severable.
 
12.
 
GOVERNING LAW

 
This Agreement shall be governed by and construed in accordance with the law of
the State of Florida, U.S.A.
 
13.
 
AMENDMENT

 
This Agreement may not be amended, modified or changed (in whole or in part),
except by a formal, definitive written agreement expressly referring to this
Agreement, which agreement is executed by both of the parties hereto.
 
14.
 
WAIVER

 
Neither the failure nor any delay on the part of a party to exercise any right,
remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or
privilege preclude any other or further exercise of the same or of any right,
remedy, power or privilege, nor shall any waiver of any right, remedy, power or
privilege with respect to any occurrence be construed as a waiver of such right,
remedy, power or privilege with respect to any other occurrence. No waiver shall
be effective unless it is in writing and is signed by the party asserted to have
granted such waiver.
 
15.
 
NOTICES

 
All notices, requests, demands and other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been duly
given and made if (i) delivered by hand, (ii) otherwise delivered against
receipt therefor, or (iii) sent by a recognized courier with next-day or
second-day delivery to the last known address of the other party.
 
 
 

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16.
 
COUNTERPARTS

 
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original as against any party whose signature appears
thereon, and all of which together shall constitute one and the same instrument.
This Agreement shall become binding when one or more counterparts hereof,
individually or taken together, shall bear the signatures of all of the parties
reflected hereon as the signatories. Photographic copies of such signed
counterparts may be used in lieu of the originals for any purpose.
 
17.
 
NO INTERPRETATION AGAINST DRAFTER

 
Each party recognizes that this Agreement is a legally binding contract and
acknowledges that such party has had the opportunity to consult with legal
counsel of choice. In any construction of the terms of this Agreement, the same
shall not be construed against either party on the basis of that party being the
drafter of such terms.
 
18.
 
LANGUAGE

 
This Agreement is prepared and executed in English.
 
 
 
 
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
written above.
 

           
CHINA AOXING PHARMACEUTICAL COMPANY, INC
             
By: /s/ Zhenjiang Yue
     
Name: Zhenjiang Yue
 
              
 
Title: Chairman of the Board and CEO
             
EXECUTIVE
                     
By: /s/ Hui Shao
     
Name: Hui Shao    
     
   
 

 

/s/ Zhenjiang Yue
/s/ John O’Shea
 
Zhenjiang Yue
John O’Shea
       
/s/ Min Jun
/s/ Howard Sterling
/s/ Guozhu Xu
Min Jun
Howard Sterling
Guozhu Xu

 
 
 

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Schedule A-1
Cash Compensation
 

             
Amount
 
Pay Period
Base Salary 
 
US $200,000 annually, subject to applicable
withholding and other taxes
 
  
 
Payable in 12 equal
monthly
installments for
each calendar year
 
Bonus
 
Discretionary as approved by the Board of Directors.
 
As determined by
the Board of
Directors

 
Schedule A-2
Initial Equity Award
 
Subject to the approval of the Company’s Board of Directors, the Executive is
granted an option to purchase 600,000 shares of the Company’s common stock on
January 13, 2010 (“Date of Grant”). The option price is $0.98 USD, based on the
average trading price of the previous 10-day trading days prior to January 13,
2010.  This option award includes two components.

Component One: The Executive is granted an option to purchase 300,000 shares of
the Company’s common stock on January 13, 2010 (“Date of Grant”). This award
will vest in three years, including 100,000 shares vested on the one year
anniversary of the Date of Grant, 100,000 shares vested on the second
anniversary on the Date of Grant and 100,000 shares vested on the third
anniversary of the Date of Grant. The shares granted in Component One are
exercisable for five years after the vesting date.

Component 2: The Executive is granted an option to purchase 300,000 shares of
the Company’s common stock on January 13, 2010 (“Date of Grant”). This award
will vest in five years, including 60,000 shares vested on the one year
anniversary of the Date of Grant, 60,000 shares vested on the second anniversary
on the Date of Grant, 60,000 shares vested on the third anniversary of the Date
of Grant, 60,000 shares vested on the fourth anniversary on the Date of Grant,
60,000 shares vested on the fifth year anniversary of the Date of Grant.  The
shares granted in Component Two are exercisable for five years after the vesting
date.
 

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