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Exhibit 10.3

INDEMNIFICATION AGREEMENT

This Indemnification Agreement, dated as of June __, 2009, is made by and
between CHINA BIOLOGIC PRODUCTS, INC., a Delaware corporation (the “Company”),
and SIU LING CHAN, the controlling shareholder of the Company (the
“Indemnitee”).

RECITALS

A.

The Company desires to issue to certain accredited investors or their designees
(the “Secured Parties”), 3.8% 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 up to
1,194,268 shares of common stock of the Company, pursuant to a Securities
Purchase Agreement dated June 5, 2009, by and among the Company, Siu Ling Chan
and the Secured Parties (the “Purchase Agreement”).

B.

The Indemnitee 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.  To
induce the Secured Parties’ agreement to enter into the Purchase Agreement, the
Indemnitee has agreed to pledge 3,000,000 of her shares (the “Pledged Shares”)
to secure the Company’s obligations under the Purchase Agreement, the Notes and
the Warrants, pursuant to a Guarantee and Pledge Agreement to be entered into as
of the date thereof, by and among the Indemnitee and the Secured Parties (the
“Guarantee and Pledge Agreement” and together with the Purchase Agreement, the
Notes and the Warrants, the “Transaction Documents”). For purposes hereof, all
capitalized terms used, but not otherwise defined, herein have the meanings
ascribed to them in the Guarantee and Pledge Agreement.

C.

The Board of Directors of the Company has concluded that, the Guarantee and
Pledge Agreement has been entered and delivered for the benefit of the Company,
and that it is proper to indemnify the Indemnitee against any and all losses
that she may suffer in connection with the Company’s failure to fulfill the
Guaranteed Obligations as a result of any negligent or unlawful conduct of the
Company beyond the Indemnitee’s reasonable control.

AGREEMENT

NOW, THEREFORE, the Company and the Indemnitee hereby agree as follows:

1.

Subject to Section 3 below, the Company shall make whole, indemnify and hold
harmless the Indemnitee with respect to any and all damages, liabilities,
losses, taxes, fines, penalties, proceedings, suits, damages, deficiencies,
costs, and expenses (including, without limitation, interest at the highest rate
permitted by law, reasonable fees of counsel) of any kind or nature whatsoever
(whether or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing) (“Losses”), which may
be sustained or suffered by the Indemnitee, arising out of or in connection with
any Enforcement Action instituted by the Secured Parties against the Indemnitee
pursuant the Guarantee and Pledge Agreement, for the Company’s failure to
fulfill the Guaranteed Obligations.

2.

The indemnification obligation of the Company under Section 1 hereof, shall only
apply to Losses that arise as the result of any negligent or unlawful conduct of
the Company that is caused unilaterally by the Company and is beyond the
Indemnitee’s control in her capacity as a director of the Company.  Furthermore,
the Company’s total obligations under Section 1 shall not exceed the fair market
value of the Pledged Shares as of the date hereof.

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3.

The Indemnitee agrees to provide timely written notice to the Company of any
Enforcement Action, specifying in sufficient detail the nature and amount of any
claim in connection with such  Enforcement Action.  All fees and expenses of
Indemnitee (including reasonable fees and expenses to the extent incurred in
connection with investigating or preparing to defend such Enforcement Action)
shall be paid to the Indemnitee, as incurred, within fifteen (15) calendar days
of written notice thereof to the Company; provided, however, that if it is
ultimately determined by a court of competent jurisdiction that the Enforcement
Action was not as a result of any negligent or unlawful conduct of the Company
beyond the Indemnitee’s reasonable control such that the Indemnitee is not
entitled to indemnification hereunder, then the Indemnitee agrees to reimburse
all such fees and expenses to the extent it is finally judicially determined
that the Indemnitee was not entitled to indemnification hereunder.

4.

All notices, requests, claims, demands and other communications under this
Agreement shall be in writing and shall be deemed given upon receipt by the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):

If to the Company, to:

China Biologic Products, Inc.
No.14 East Hushan Road
Tai’an City, Shandong
People’s Republic of China 271000
Attention:  Chief Executive Officer
Facsimile: +86 (538) 6203 895

If to the Indemnitee, to:

Ms. Siu Lin Chan
c/o China Biologic Products, Inc.
No.14 East Hushan Road
Tai’an City, Shandong
People’s Republic of China 271000
Facsimile: +86 (538) 6203 895

with a copy to:

Pillsbury Winthrop Shaw Pittman LLP
2300 N Street, N.W.
Washington, D.C.  20037
Attention:  Louis A. Bevilacqua, Esq.
Facsimile: (202) 663-8007

5.

This Agreement shall be deemed to have been made under and be governed by, and
construed in accordance with, the laws of the State of New York, in all
respects, regardless of the laws that might otherwise govern under applicable
principles of conflicts of laws thereof, except to the extent the laws of
Delaware are mandatorily applicable to any of the transactions.

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6.

This Agreement may not be amended, modified, or supplemented except in writing
executed by the parties hereto.  No provision contained herein shall be waived
unless the same shall be in writing and signed by each of the parties hereto and
shall be effective only in the specific instance and for the specific purpose
given.

7.

Whenever possible, each provision of this Agreement shall be interpreted in such
a manner as to be effective and valid under applicable law, but if any provision
of this Agreement shall be deemed prohibited or invalid under such applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, and such prohibition or invalidity shall not invalidate the
remainder of such provision or the other provisions of this Agreement.  Nothing
contained herein shall be deemed to prohibit any party from seeking equitable
relief, such as specific performance or other similar remedies, from a court of
competent jurisdiction.

8.

This Agreement may be executed, and accepted and agreed to in several
counterparts, each of which will be deemed to be an original, and such
counterparts together will constitute but one and the same instrument.
 Facsimile signatures shall be deemed to have the same effect as originals.

[Signature Page Follows]

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year set forth above.

COMPANY:

INDEMNITEE:

    CHINA BIOLOGIC PRODUCTS, INC.       By:                               
                      
Chao Ming Zhao
Chief Executive Officer                                                     
SIU LING CHAN

 

 

 

 

 

 

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