Document:

Unassociated Document

    [   ]
= Certain confidential information contained in this document, marked by
brackets, has been omitted and filed separately with the Securities and Exchange
Commission pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended.

     

     

    PATENT
LICENSE AGREEMENT

     

    between

     

    PROTEIN
DESIGN LABS, INC.

     

    and

     

    MEDIMMUNE,
INC.

     

    This
Agreement (“Agreement”), effective as of July 17, 1997 (“Effective Date”), is
made by and between PROTEIN DESIGN LABS, INC., a Delaware corporation having
offices at 2375 Garcia Avenue, Mountain View, CA 94043, USA (hereinafter “PDL”)
and MEDIMMUNE, INC., a Delaware corporation, having offices at 35 West Watkins
Mill Road, Gaithersburg, MD  20878 (hereinafter
“MEDIMMUNE”).

     

    RECITALS

     

    A.           MEDIMMUNE
desires to license certain patents owned or controlled by PDL related to a
humanized antibody directed against RSV (as defined below), which antibody has
involved significant development efforts undertaken by MEDIMMUNE (including
without limitation the antibody known as “MEDI-493”); and

     

    B.           PDL
is willing to license to MEDIMMUNE such rights under the terms and conditions of
this Agreement.

     

    AGREEMENT

     

    NOW
THEREFORE, in consideration of the mutual covenants herein contained and
intending to be legally bound, the parties agree as follows:

     

    
      	
              1.  

            	
              DEFINITIONS

            

    

     

    All
references to Exhibits, Articles and Sections shall be references to Exhibits,
Articles and Sections of this Agreement.  In addition, except as
otherwise expressly provided herein, the following terms in this Agreement shall
have the following meanings:

     

    1.01  “Affiliate” means, with respect
to a party hereto, any corporate or other entity which, directly or indirectly,
controls, is controlled by, or is under common control with such party where
“control” means the ownership of not less than 50% of the voting shares of a
corporation, or decision-making authority as to an unincorporated
entity.

     

    
      
         

      

      
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    1.02  “Combination Product(s)” shall
mean any product containing both a pharmaceutically active agent or ingredient
which constitutes a Licensed Product and one or more other pharmaceutically
active agents or ingredients which do not constitute Licensed
Products.

     

    1.03  “Field” means the field of
human prophylaxis and therapy.

     

    1.04  “Licensed Product(s)” shall
mean an Antibody for which MEDIMMUNE has undertaken significant development
efforts (e.g., conducted or sponsored a human clinical trial), which product is
an Antibody that binds to RSV (including without limitation, the MEDI-493
product of MEDIMMUNE or MEDIMMUNE’s sublicensees and any modifications or
improvements) whose development, importation, manufacture, use or sale would,
but for a license under this Agreement, infringe a Valid
Claim.  “Antibody” as used in the preceding sentence shall include,
without limitation, monospecific and bispecific antibodies; less than
full-length antibody forms such as Fv, Fab, and F(ab’)(2); single-chain
antibodies; and antibody conjugates bound to a toxin, label or other
moiety.

     

    1.05  “Net Sales” shall mean the
aggregate gross revenues, whether in cash or in kind, derived by or payable from
or on account of the sale of Licensed Products, less an allowance of Five
Percent (5%) to cover factors such as (a) credits or allowances, if any,
actually granted on account of price adjustments, recalls, rejection or return
of items previously sold, (b) excise and sales taxes, duties or other taxes
imposed on and paid with respect to such sales (excluding income or franchise
taxes of any kind) and (c) outer packing, freight and freight insurance
costs.  If MEDIMMUNE or any of its Affiliates or sublicensees receive
non-cash consideration for any Licensed Product sold or otherwise transferred to
an independent third party not an Affiliate of the seller or transferor, the
fair market value of such non-cash consideration on the date of such
transfer  as known to MEDIMMUNE, or as reasonably estimated by
MEDIMMUNE if unknown, shall be included in the definition of Net
Sales.

     

    1.06  “PDL Patent Rights” means the
patents (as well as any foreign counterparts or patent applications thereto)
identified on Exhibit
A, including any addition, continuation, continuation-in-part or division
thereof or any substitute application therefor; any patent issued with respect
to such patent application, any reissue, extension or patent term extension of
any such patent, and any confirmation patent or registration patent or patent of
addition based on any such patent.

     

    1.07  “Territory” means the
world.

     

    1.08  “Valid Claim” means any claim
in any issued patent included in the PDL Patent Rights which has not been
disclaimed or held unenforceable or invalid by a governmental agency or court of
competent jurisdiction by a decision beyond right of review.

     

    1.09  “Europe” means one or more the
following countries:  U.K., France, Germany, Italy and
Spain.

     

    
      
         

      

      
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              2.  

            	
              LICENSE

            

    

     

    2.01  License
Grant.  Subject to the terms and conditions of this Agreement,
PDL hereby grants and MEDIMMUNE hereby accepts a nonexclusive license under the
PDL Patent Rights limited to the Field and Territory, including the right to
grant sublicenses (subject to Section 2.02), to make, import, have made, use or
sell Licensed Products.

     

    2.02  Limitation on Sublicenses;
Notification of Grant of Sublicense.  MEDIMMUNE shall have the
right to grant sublicenses of its rights under Section 2.01 only in connection
with the assignment or license by it of a Licensed Product to a third party and
only with respect to that Licensed Product.  The right to grant
sublicenses under Section 2.01 shall be on terms and conditions which are
subject to and subordinate to the terms of this Agreement.  Promptly
following execution of any sublicense hereunder, but in any event not less than
ten (10) days thereafter, MEDIMMUNE shall notify PDL of the identity of the
sublicensee and the scope of the sublicense.

     

    2.03  Notification of Other Potential
Licensee.  PDL shall use commercially reasonable efforts to
notify MEDIMMUNE in the event that a third party proposes to obtain a license
under the PDL Patent Rights in the Field.  MEDIMMUNE shall have a
period of ten (10) business days from notification to propose terms for an
amendment to this Agreement for an exclusive license in the Field and
Territory.  PDL agrees to reasonably consider any proposal to enter
into an amendment to this Agreement for an exclusive license proposed by
MEDIMMUNE, but neither party shall have any obligation to enter into such
amendment.

     

    2.04  Most Favored
Licensee.  PDL has not granted and agrees not to grant a
license under the Queen Patent (as defined in Exhibit A) to a third party, other
than a PDL Affiliate, for use in the Field with a royalty rate less than
[   ] of net sales of licensed products unless MEDIMMUNE is
provided the same royalty rate as such third party, provided that if the royalty
rate in said third party license is less than [   ] and the
agreement with that third party involves other terms conveying any economic
benefit to PDL, MEDIMMUNE shall be provided the same royalty rate as such third
party if MEDIMMUNE provides economic benefit to PDL of equal value (with full
credit with respect to such economic benefit to MedImmune for licensing fees,
milestones and maintenance fees previously paid under this
Agreement).  Notwithstanding the foregoing, PDL will be able to grant
one license under the Queen Patent under more favorable terms in the Field
without the royalty reduction and credit to MedImmune provided herein, provided
that such license is not for use of an antibody binding to RSV. PDL shall
promptly notify MEDIMMUNE in the event that PDL proposes to grant such a license
under the Queen Patent to a third party with a royalty rate less than
[   ].  The parties agree to execute such documents as
may be reasonably necessary to carry out the purposes of this Section
2.04.

     

    
      	
              3.  

            	
              MILESTONE
      PAYMENTS; ROYALTIES, REPORTS

            

    

     

    3.01  Payments.  In
consideration for the license granted by PDL under Article 2 of this Agreement
MEDIMMUNE shall pay the amounts set forth in this Section 3.01.

     

    
      
         

      

      
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    (a)  Initial
Payment.  Unless this Agreement is terminated as provided in
Section 7.02(a), not later than September 1, 1997 MEDIMMUNE shall pay to PDL a
nonrefundable signing and licensing fee in the sum of
[   ].

     

    (b)  Milestone
Payments.

     

    i.  Filing of Biologics License
Application(s).  Within thirty (30) days following the
submission of a biologics license application (or foreign counterpart thereto)
to regulatory authorities with respect to a Licensed Product in any country in
the Territory, MEDIMMUNE shall pay to PDL a one time nonrefundable sum of
[   ].

     

    ii.  Approval to Market in the
U.S.  Within thirty (30) days following the initial approval to
market a Licensed Product in the U.S., MEDIMMUNE shall pay to PDL the
nonrefundable sum of [   ].

     

    iii.  Approval to Market in
Europe.  Within thirty (30) days following the initial approval
to market a Licensed Product in any country in Europe, MEDIMMUNE shall pay to
PDL the nonrefundable sum of [   ].

     

    iv.  First Sale in the
U.S.  Within thirty (30) days following the initial sale of a
Licensed Product that, but for the licenses granted to MEDIMMUNE under this
Agreement would infringe a Valid Claim in the U.S., MEDIMMUNE shall pay to PDL
the nonrefundable sum of [   ].

     

    v.  First Sale in
Europe.  Within thirty (30) days following the initial sale of
a Licensed Product that, but for the licenses granted to MEDIMMUNE under this
Agreement would infringe a Valid Claim in any country in Europe, MEDIMMUNE shall
pay to PDL the nonrefundable sum of [   ].

     

    Each
milestone set forth in this Section 3.01 shall be deemed achieved and the
corresponding milestone payment due upon the achievement of the milestone,
whether by MEDIMMUNE, its Affiliates or sublicensees.  Any payment
made by MEDIMMUNE for the achievement of any milestone herein shall be paid by
MEDIMMUNE only once.

     

    3.02  Annual Maintenance
Fee.  In further consideration of the license granted under
Article 2, not later than June 30, 2000 and not later than May 31 each year
thereafter, MEDIMMUNE shall pay PDL a nonrefundable annual maintenance fee in
the amount of [   ].

     

    3.03  Royalties to PDL; Credits Against
Royalties.

     

    (a)  In
further consideration of the rights and licenses granted under Article 2,
MEDIMMUNE shall pay to PDL a royalty of [   ] of the Net Sales of
all Licensed Products sold by MEDIMMUNE or its Affiliates or sublicensees to
non-Affiliated third parties in each country in the Territory until the last
date on which there is a Valid Claim that, but for the licenses granted to
MEDIMMUNE under this Agreement, would be infringed by the making, importing,
using, having made or sale of that Licensed Product in such country in the
Territory or by the manufacture of Licensed Product in the country of
manufacture.

     

    
      
         

      

      
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    (b)  [   ]

     

    3.04  Sales Among
Affiliates.  Sales between and among MEDIMMUNE, its
sublicensees and its Affiliates of Licensed Products which are subsequently
resold or to be resold by such sublicensees or Affiliates shall not be subject
to royalty, but in such cases royalties shall accrue and be calculated on any
subsequent sale of such Licensed Products to a non-affiliated third
party.

     

    3.05  Combination
Products.  Net Sales in a particular country in the Territory,
in the case of Combination Products for which the pharmaceutically active agent
or ingredient constituting a Licensed Product and each of the other
pharmaceutically active agents or ingredients not constituting Licensed Products
have established market prices in that country in the Territory when sold
separately, shall be determined by multiplying the Net Sales for each such
Combination Product by a fraction, the numerator of which shall be the
established market price for the Licensed Product(s) contained in the
Combination Product and the denominator of which shall be the sum of the
established market prices for the Licensed Product(s) plus the established
market prices for the other pharmaceutically active agents or ingredients
contained in the Combination Product.  When such separate market
prices are not established in that country in the Territory, then the parties
shall negotiate in good faith to determine a fair and equitable method of
calculating Net Sales in that country for the Combination Product in
question.

     

    3.06  Withholding.

     

    (a) Payments.  MEDIMMUNE
shall pay all amounts payable to PDL under Section 3.01 and Section 3.02 from a
U.S. bank account.  Any deductions for any taxes or other withholding
that may be applicable to the payments to PDL under Sections 3.01 and 3.02 shall
be promptly paid by MEDIMMUNE to the appropriate governmental authority and
MEDIMMUNE shall provide proof of payment to PDL.

     

    (b) Royalty
Payments.  MEDIMMUNE may withhold from royalties due to PDL
amounts for payment of any withholding tax that MEDIMMUNE has paid to any taxing
authority with respect to royalties due on account of the sale or manufacture of
Licensed Products in the Territory.  MEDIMMUNE agrees to reasonably
cooperate with PDL in obtaining a foreign tax credit in the U.S. with respect to
royalties due to PDL on the sale or manufacture of Licensed
Products.

     

    3.07  Currency
Conversion.  All amounts payable to PDL under this Agreement
shall be payable in U.S. Dollars by wire transfer to-a bank account designated
by PDL.  In the case of royalties on Net Sales, all amounts payable
shall first be calculated in the currency of sale and then converted into U.S.
Dollars using the average of the daily exchange rates for such currency quoted
by Citibank, N.A. for each of the last fifteen (15) banking days of each
calendar quarter.

     

    3.08  Royalty Reports.

     

    (a)  Current
Reports.  MEDIMMUNE agrees to make written reports and royalty
payments to PDL within forty-five (45) days after the close of each calendar
quarter during the term of this Agreement, beginning with the calendar quarter
in which the date of first commercial sale occurs.  These reports
shall show for the calendar quarter in question Net Sales by MEDIMMUNE, its
Affiliates and sublicensees of the Licensed Products in the Territory on a
country-by-country basis, details of the quantities of Licensed Products sold in
each country and the country of manufacture if different, and the royalty due to
PDL thereon pursuant to Article 2.  Concurrently with the making of
each such report, MEDIMMUNE shall make any payment due to PDL of royalties for
the period covered by such report.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    (b)  Termination
Report.  For each Licensed Product, MEDIMMUNE also agrees to
make a written report to PDL within ninety (90) days after the date on which
MEDIMMUNE, its Affiliates or sublicensees last sell that Licensed Product in the
Territory stating in such report the same information required by quarterly
reports for all such Licensed Products made, sold or otherwise disposed of which
were not previously reported to PDL.

     

    3.09  Inspection.  MEDIMMUNE
agrees to keep clear, accurate and complete records for a period of at least
three (3) years (or such longer period as may correspond to MEDIMMUNE’s internal
records retention policy) for each reporting period in which Net Sales occur
showing the manufacturing, sales, use and other disposition of Licensed Products
in the Territory in sufficient detail to enable the royalties payable hereunder
to be determined, and further agrees to permit its books and records to be
examined by an independent accounting firm selected by PDL and reasonably
satisfactory to MEDIMMUNE, from time-to-time to the extent necessary, during
normal business hours and upon reasonable notice, but not more than once a
year.  Such examination is to be made at the expense of PDL, except in
the event that the results of the audit reveal that MEDIMMUNE underpaid PDL by
five percent (5%) or more, then the audit fees shall be paid by
MEDIMMUNE.  Any such discrepancies will be promptly corrected by a
payment or refund, as appropriate.

     

    
      	
              4.  

            	
              PATENT
      UPDATE

            

    

     

    4.01  Updates.  Upon the
written request of MEDIMMUNE (which request shall not be made more than once per
calendar year), PDL agrees to provide a written update of the information
relating to the PDL Patent Rights as set forth on Exhibit
A.

     

    4.02  Defense of PDL Patent
Rights.  With respect to the PDL Patent Rights licensed under
this Agreement, PDL at its sole cost and expense agrees to take all steps and
proceedings and to undertake such other acts as PDL may, in its sole discretion,
deem necessary or advisable to restrain any infringement or improper or unlawful
use of the PDL Patent Rights in the Field and Territory.  MEDIMMUNE
shall permit PDL to have the sole right to take such steps, conduct any such
proceedings or undertake any such actions to restrain any infringement or
improper or unlawful use of the PDL Patent Rights in the Territory, whether or
not MEDIMMUNE is a party to such steps, proceedings or actions.  Any
Moines recovered from alleged infringers shall be retained by PDL.

     

    4.03  Notification.  MEDIMMUNE
shall promptly notify PDL in writing of any actual or suspected infringement of
any PDL Patent Right, which notification shall specify in reasonable detail the
nature of such actual or suspected infringement.  If, in MEDIMMUNE’s
reasonable opinion, PDL has not undertaken action reasonably designed to
restrain any infringement or improper or unlawful use of the PDL Patent Rights
with respect to an Antibody directed against RSV by such third party in the
particular country and MEDIMMUNE’s market share of the indications for which
Licensed Products are sold in that country is reduced by [   ] or
more as a result of the infringing or unlawful use of PDL Patent Rights with
respect to an Antibody directed against RSV, then MEDIMMUNE shall be entitled to
reduce the royalties payable on Net Sales of Licensed Products in that country
as follows: (a) by [   ] if MEDIMMUNE’s market share is reduced
by [   ] up to [   ], and (b) by
[   ] if MEDIMMUNE’s market share is reduced by
[   ] or more; provided that the royalty rate on Net Sales of
Licensed Products in that country shall revert to the applicable royalty rate
under Section 3.03 at such time as the infringement is abated.

     

    
      
         

      

      
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              5.  

            	
              REPRESENTATIONS
      AND WARRANTIES; INDEMNIFICATION

            

    

     

    5.01  Valid
Agreement.  Each party represents and warrants to the other
that it knows of no legal reason to prevent it from entering into this Agreement
and that the signatory hereto is duly authorized to execute and deliver this
Agreement.  In addition, PDL represents and warrants that it is the
owner of the PDL Patent Rights.

     

    5.02  No Warranty of Validity,
Non-Infringement.  Nothing in this Agreement shall be construed
as (a) a warranty or representation by PDL as to the validity or scope of any
PDL Patent Rights; or (b) a warranty or representation that any Licensed Product
made, used, sold or otherwise disposed of under the license granted in this
Agreement is or will be free from infringement of patents, copyrights,
trademarks, trade secrets or other rights of third parties.

     

    5.03  No Other
Warranties.  EXCEPT AS SPECIFICALLY SET FORTH IN ARTICLE 5, PDL
MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED,
WITH RESPECT TO ANY CELL LINES, ANTIBODIES, LICENSED PRODUCTS DEVELOPED BY
MEDIMMUNE UNDER THE LICENSE SET FORTH IN THIS AGREEMENT AND PDL FURTHER MAKES NO
EXPRESS OR IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE, OR THAT THE USE OF ANY CELL LINES, ANTIBODIES, LICENSED PRODUCTS OR
OTHER MATERIALS DEVELOPED BY MEDIMMUNE UNDER THE LICENSE SET FORTH IN THIS
AGREEMENT WILL NOT INFRINGE ANY THIRD PARTY RIGHTS.

     

    5.04  Indemnification.  MEDIMMUNE
shall at all times, during the term of this Agreement and thereafter, defend,
indemnify and hold harmless PDL and its Affiliates, sublicensees, directors,
officers, agents and employees from any third party claim, proceeding, loss,
expense, and liability of any kind whatsoever (including but not limited to
those resulting from death, personal injury, illness or property damage and
including legal expenses and reasonable attorneys’ fees) arising out of or
resulting from the development, manufacture, holding, use, testing,
advertisement, sale or other disposition by MEDIMMUNE, its Affiliates or
sublicensees, or any distributor, customer or representative of MEDIMMUNE or any
one in privity therewith, of any Licensed Product.  PDL shall give
MEDIMMUNE prompt notice of any such claim, proceeding or action and MEDIMMUNE
shall control the defense, settlement or compromise of any such claim,
proceeding or action; provided that the control granted to MEDIMMUNE hereunder
shall not include any right to grant licenses or sublicenses under the PDL
Patent Rights without the prior written consent of PDL, which consent may be
withheld in PDL’s sole discretion.

     

    
      
         

      

      
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              6.  

            	
              CONFIDENTIALITY

            

    

     

    6.01  Confidentiality.  PDL
and MEDIMMUNE acknowledge that in the course of negotiations and furtherance of
the interests of the parties hereunder that it (“Recipient”) may receive
confidential information of the other party
(“Provider”).  “Confidential Information” means any and all data and
information which (a) has been reduced to tangible form and marked clearly and
conspicuously with a legend identifying its confidential or proprietary nature;
or (b) with respect to any oral presentation or communication, is designated as
confidential immediately before, during, or within a reasonable time after the
oral presentation or communication and such designation is subsequently
confirmed in writing; or (c) is otherwise characterized by Provider as
confidential information.

     

    6.02  Limitations on Use; Information Not
Considered Confidential.  Except as expressly provided in
Section 8.03(a), each party shall keep confidential, and shall not use the
Confidential Information of the other party for any purpose other than the
development and commercial exploitation of Licensed Products in the Territory,
during the term of this Agreement and for five (5) years after termination
hereof, all Confidential Information heretofore and hereafter supplied by the
other, provided however, that the foregoing obligation of confidentiality shall
not apply to the extent that any Confidential Information (a)  is
already known to the recipient at the time of disclosure or is developed by
recipient thereafter in the course of work entirely independent of any
disclosure by the other party; (b)  is publicly known prior to or
becomes publicly known after disclosure other than through acts or omissions of
the recipient; (c)  is disclosed in good faith to recipient by a third
party under a reasonable claim of right, or (d) is required to be disclosed
pursuant to an order of a court of law or governmental agency; provided that the
disclosing party shall advise the other party promptly of any such disclosure
requirement in order to permit such other party to undertake efforts to restrict
or limit the required disclosure.

     

    
      	
              7.  

            	
              TERM
      AND TERMINATION

            

    

     

    7.01  Term.  Unless
earlier terminated as provided in this Article 7, this Agreement shall come into
force on the date first set forth above and shall continue until the expiration
of the obligation to pay royalties to PDL in accordance with Article 3
above.  Thereafter, this Agreement shall terminate and all licenses or
sublicenses granted hereunder shall become fully paid-up, irrevocable
licenses.

     

    7.02  Termination.

     

    (a)  This
Agreement may be terminated by MEDIMMUNE (I) immediately upon written notice
that it is terminating further development of MEDI-493 (or any successor
thereto); or (II) for convenience on thirty (30) days prior written
notice.

     

    
      
         

      

      
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    (b)  If either
party shall at any time default in the payment of any royalty, or the making of
any report hereunder, or shall commit any material breach of any covenant or
agreement herein contained or shall make any false report, and shall fail to
have initiated and actively pursued remedy of any such default or breach within
(I) in the case of default in payment, ten (10) days, and (II) in all other
cases of default or breach, thirty (30) days after receipt of written notice
thereof by the other party, that other party may, at its option, cancel this
Agreement and revoke any rights and licenses herein granted and directly
affected by the default or breach by notice in writing to such effect, but such
act shall not prejudice the right of the party giving notice to recover any
royalty or other sums due at the time of such cancellation, it being understood,
however, that if within the specified cure period after receipt of any such
notice the receiving party shall have initiated and actively pursued remedy of
its default, then the rights and licenses herein granted shall remain in force
as if no breach or default had occurred on the part of the receiving party,
unless such breach or default is not in fact remedied within a reasonable period
of time.

     

    (c)  This
Agreement may be terminated by either party upon the occurrence of any of the
following which is not stayed or vacated within ninety (90) days of such
occurrence:  (i) petition in bankruptcy filed by or against the other
party; (ii) adjudication of the other party as bankrupt or insolvent; (iii)
appointment of a liquidator, receiver or trustee for all or a substantial part
of the other party’s property; or (iv) an assignment for the benefit of
creditors of the other party.

     

    7.03  No Waiver.  The
right of either party to terminate this Agreement as provided herein shall not
be affected in any way by its waiver of, or failure to take action with respect
to, any previous failure to perform hereunder.

     

    7.04  Survival.  Termination
for any reason hereunder shall not affect any accrued rights or obligations of
the parties arising in any manner under this Agreement as of the date of
termination.  In any event, the confidentiality and indemnity
obligations and any accrued payment obligations under Articles 3, 5 and 6 shall
survive any termination of this Agreement.

     

    7.05  Direct License.  In
the event that this Agreement terminates, any sublicense granted under the terms
of Section 2.02 hereunder shall, upon the written request of the sublicensee,
become a direct license between PDL and that sublicensee so long as the (a)
sublicense does not impose obligations on PDL beyond those set forth in this
Agreement, and (b) sublicensee is not in breach of its sublicense agreement or,
mutatis mutandis, the terms of this Agreement.

     

    
      	
              8.  

            	
              MISCELLANEOUS

            

    

     

    8.01  Force
Majeure.  Neither party shall be responsible to the other for
failure or delay in performing any of its obligations under this Agreement or
for other non-performance hereof provided that such delay or non-performance is
occasioned by a cause beyond the reasonable control and without fault or
negligence of such party, including, but not limited to earthquake, fire, flood,
explosion, discontinuity in the supply of power, court order or governmental
interference, act of God, strike or other labor trouble and provided that such
party will inform the other party as soon as is reasonably practicable and that
it will entirely perform its obligations immediately after the relevant cause
has ceased its effect.

     

    8.02  Validity.  Should
one or several provisions of the Agreement be or become invalid, then the
parties hereto shall substitute such invalid provisions by valid ones, which in
their economic effect come so close to the invalid provisions that it can be
reasonably assumed that the parties would have contracted this Agreement with
those new provisions.  In the event that such provisions cannot be
determined or are legally impermissible, the invalidity of one or several
provisions of the Agreement shall not affect the validity of the Agreement as a
whole, unless the invalid provisions are of such essential importance for this
Agreement that it is to be reasonably assumed that the parties would not have
contracted this Agreement without the invalid provisions.

     

    
      
         

      

      
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    8.03  [   ]

     

    8.04  Notices.  Any notice
or report required or permitted to be given under this Agreement shall be in
writing and shall be sent by expedited delivery or telecopied and confirmed by
mailing, as follows and shall be effective three (3) days after such
delivery:

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        
                                          
                                            
                                              
                                                	
                                                        If
      to PDL:

                                                      	
                                                        Protein
      Design Labs, Inc.

                                                      
	
                                                      	      
                                                        2375
      Garcia Avenue

                                                      
	
                                                      	      
                                                        Mt.
      View, California  94043  USA

                                                      
	
                                                      	      
                                                        Attention:  Chief
      Executive Officer

                                                      
	 	 
	
                                                        Copy
      to:

                                                      	
                                                        Protein
      Design Labs, Inc.

                                                      
	
                                                      	      
                                                        2375
      Garcia Avenue

                                                      
	
                                                      	      
                                                        Mt.
      View, California  94043  USA

                                                      
	
                                                      	      
                                                        Attention:  General
      Counsel

                                                      
	 	 
	
                                                        If
      to MEDIMMUNE:

                                                      	
                                                        MedImmune,
      Inc.

                                                      
	
                                                      	      
                                                        35
      West Watkins Mill Road

                                                      
	
                                                      	      
                                                        Gaithersburg,
      MD  20878

                                                      
	
                                                      	      
                                                        Attention:
      Chief Executive Officer

                                                      
	 	 
	
                                                        Copy
      to:

                                                      	
                                                        Elliot
      M. Olstein, Esq.

                                                      
	
                                                      	      
                                                        Carella,
      Byrne, Bain, Gilfillan, Cecchi, Stewart &
    Olstein

                                                      
	
                                                      	      
                                                        6
      Becker Farm Road

                                                      
	
                                                      	      
                                                        Roseland,
      NJ  07068

                                                      

                                              

                                            

                                          

                                        

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

    

     

    8.05  Governing Law.  The
validity, performance, construction, and effect of this Agreement shall be
governed by the laws of the State of California without regard to choice of law
principles.

     

    8.06  Entire
Agreement.  This Agreement constitutes the entire Agreement
between the parties hereto with respect to the within subject matter and
supersedes all previous Agreements, whether written or oral.  This
Agreement shall not be changed or modified orally, but only by an instrument in
writing signed by both parties.

     

    8.07  Assignment.  The
rights of either party under this Agreement may not be assigned, and the duties
of either party under this Agreement may not be delegated, without the prior
written consent of the other party, which consent shall not be unreasonably
withheld; provided however, that either party may assign this Agreement without
prior written consent to a party which acquires all or substantially all of the
assignor’s business, whether by merger, sale of assets or
otherwise.

     

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

     

    8.08  Publicity.  PDL may
issue a press release identifying the identity of MEDIMMUNE, the parties’ entry
into this Agreement, with the content of such release to be approved in advance
by MEDIMMUNE, which approval shall not be unreasonably
withheld.  Except as required by law, neither party shall publicly
disclose the terms and conditions of this Agreement unless expressly authorized
to do so by the other party, which authorization shall not be unreasonably
withheld.  In the event that it is determined that a disclosure shall
be made by either or both of the parties hereunder, then the parties will work
together to develop a mutually acceptable disclosure.  MEDIMMUNE
agrees to provide PDL with press releases or other information regarding the
development status of the Licensed Products hereunder; provided that PDL shall
have no obligation to publicly update the status of any Licensed
Product.

     

    8.09  Headings.  The
captions used herein are inserted for convenience of reference only and shall
not be construed to create obligations, benefits, or limitations.

     

    8.10  Export.  Each party
acknowledges that the laws and regulations of the United States restrict the
export and re-export of commodities and technical data of United States
origin.  Each party agrees that it will not export or re-export
restricted commodities or the technical data of the other party in any form
without the appropriate United States and foreign government
licenses.

     

    8.11  Counterparts.  This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, and such counterparts together shall constitute one
agreement.

     

    IN
WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the
date first above written.

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          	
                                  PDL:

                                	
                                  MEDIMMUNE:

                                
	 	 
	
                                  PROTEIN
      DESIGN LABS, INC.

                                	
                                  MEDIMMUNE,
      INC.

                                
	 	 
	
                                  By:  /s/ Jon
      Saxe                            
      

                                	
                                  By:  /s/ David M.
      Mott                          
      

                                
	 	 
	
                                  Title:  President                             
      

                                	
                                  Title:  President and Chief
      Operating  

                                

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

     

    EXHIBIT
A

     

    PDL
Patent Rights

     

    The
following are patents (the “Queen Patent”) issued in certain countries in the
world as of the Effective Date and licensed under the Agreement.  The
Queen Patent shall expressly include any patent applications and foreign
counterparts thereto filed by PDL before or during the term of this
Agreement.

     

    1.  European
Patent number 0451216B1, Queen, “Humanized Immunoglobulins and their production
and use”.

     

    2.  U.S.
patent application number 5,530,101, Queen, “Improved Humanized
Immunoglobulins”.

     

    3.  U.S.
patent continuations, continuations-in-part, and divisional applications numbers
[   ]of issued U.S. patent number 5,530,101, Queen, “Improved
Humanized Immunoglobulins”.

     

    4.  Japan
patent application number [   ], Queen, “Improved Humanized
Immunoglobulins”

     

     

     

     

     

     

     

    
      
         

      

      
        12EXECUTIVE EMPLOYMENT
AGREEMENT

    

    THIS EMPLOYMENT AGREEMENT (the
“Agreement”) is
entered into as of _December 14_____________, 2010 by and between China
Botanical Pharmaceutical Inc. (the “Company”), and David
Dong__ (the “Executive”)
(collectively the “Parties”; individually a “Party”).

     

    WHEREAS, the Company desires
to employ the Executive, and the Executive desires to be employed by the
Company, as Chief Financial Officer; and

     

    WHEREAS, Executive has
knowledge that will be of value and service to the Company.

     

    NOW, THEREFORE, in
consideration of the mutual covenants set forth in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:

     

    1.           Term of
Employment.  This Agreement shall become effective on _December
14,____, 2010.  The term of employment shall be ____3_______ years,
unless this Agreement is terminated prior to the expiration of such ______3_____
year period (the “Term”).

     

    2.           Position and
Duties.  The Executive shall render services to the Company and
its subsidiaries, including Company Parent, in the position of chief financial
officer and perform all services appropriate to that position as well as other
services as may reasonably be assigned by the Company.  The
Executive’s principal place of employment shall be in Harbin, located in the
Heilongjiang Province, within the PRC or any other place as agreed by the
Parties from time to time.  The Executive shall devote most of his
working time, attention and skill to the discharge of his duties of his office
and shall faithfully and diligently perform such duties and exercise such powers
as may from time to time be assigned to or vested in him, and shall observe and
comply with all resolutions and directions from time to time made or given by
the Chief Executive Officer and the  Board of Directors of the Company
(the “Board”).  The
Executive shall at all times keep the Board promptly and fully informed of his
conduct relating to material matters, decisions and transactions affecting or
involving the Company or any of its subsidiaries or controlled affiliates
(collectively, the “Group” and each a
“Group
Company”) and provide such explanations as may reasonably be
required.  Insofar as the internal rules and regulations of the Group
or the Group Companies are applicable to the Executive, the Executive undertakes
to abide by such rules and regulations.

     

    3.           Remuneration and
Benefits.  Subject to the Company’s policies and practices,
during the Term, the Executive shall be entitled to the following remuneration
and benefits (on a cumulative basis):

     

    a.           Base
Salary.  The Company shall pay the Executive a total base
salary of RMB 600,000 per year (the “Annual Base Salary”
or “Base
Salary”).  The Base Salary shall be paid by the Company in
accordance with the Company’s regularly established payroll practices applicable
to all Company employees.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    b.           Benefits.  The
Executive shall be eligible to participate in the benefits generally made
available by the Company to its executives in accordance with the benefit plans
established by the Company, as the same may be amended from time to time in the
Company’s sole discretion.

     

    c.           Equity
Incentives.  The Executive shall be granted an aggregate of
200,000 shares of company option to purchase company’s common stock in his or
her 3 year’s agreement  Term and the option shall have a term of 3
years. The excercise price of the option should be equal to the fair market
value of the effective day of the Agreement. The vesting details as
following:

     

    
      
        
          
            
              
                
                  	
                          Vesting Date*

                        	 	
                          Number of Shares Issuable

                          Upon Exercise

                        	 	
                          Exercise Price

                        
	 	 	 	 	 
	
                          Dec
      14, 2011

                        	 	
                          60,000

                        	 	
                          the
      fair market value of the effective day of the Agreement

                        
	 
      	 	 
      	 	 
      
	
                          Dec
      14, 2012

                        	 	
                          70,000

                        	 	
                          the
      fair market value of the effective day of the Agreement

                        
	 
      	 	 
      	 	 
      
	
                          Dec
      14, 2013

                        	 	
                          70,000

                        	 	
                          the
      fair market value of the effective day of the
  Agreement

                        

                

              

            

          

        

      

    

     

    d.           Holidays.  The
Executive shall be eligible for the holiday benefits generally made available by
the Company to its executives in accordance with the holiday policies of the
Company, as the same may be amended from time to time in the Company’s sole
discretion.

     

    e.           Insurance.  The
Company shall pay for life insurance and medical insurance policies with an
internationally recognized insurance provider (or such other insurance provider
as agreed between the Parties) for the benefit of the Executive, provided that
(a) the annual premium of all such insurance policies in any one year shall
be no more than Renminbi (“RMB”)
[10,000__________] in the aggregate; (b) the beneficiaries under the life
insurance policy shall be designated by the Executive; (c) the other terms
of the insurance policies (including, but not limited to, the type of policy and
coverage) shall be reasonably satisfactory to the Executive and (d) the
Executive satisfies the eligibility requirements of such policies.

     

    f.           Expenses.  The
Company shall reimburse the Executive for reasonable and necessary business
expenses incurred by the Executive in connection with the performance of the
Executive’s duties and
obligations as set forth herein during the Term; provided the Executive shall
provide reasonable supporting documentation with respect to such expenses, if
requested.

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

     

    g.           Indemnification.  Subject
to the advice of an appropriate human resource adviser engaged by the Company to
ascertain the scope of such indemnity, the Company shall fully indemnify the
Executive for any losses incurred in his capacity as a director and/or officer
of any of the Group Companies, if the Company’s director and officer liability
insurance is inadequate to cover such losses; provided the Company shall
not be responsible for any losses caused by or attributable to the Employee’s
gross negligence or willful default.

     

    Unless
otherwise indicated herein and as agreed by the Parties and to the extent
permitted by the governing law (as described in Section 7(e) below), all of
the foregoing remuneration and benefits shall be paid to such account in RMB or
any other currency as designated by the Executive.  Unless otherwise
agreed by the Parties in writing, any conversion from United States Dollars to
RMB and vice versa shall be effected at the exchange rate published by the
People’s Bank of China for the relevant period or date (as the case may
be).

     

    4.           Amendment, Termination and
Discharge of this Agreement.

     

    a.           Amendment to and Termination
of the Agreement.  This Agreement may not be modified, amended,
renewed or terminated except by an instrument in writing, signed by the
Executive and the Company.

     

    b.           Discharge of the
Agreement.

     

    (i)           By
Death.  This Agreement shall be discharged automatically upon
the Executive’s death.  In such event, the Company shall pay to the
Executive’s beneficiaries full amount of any compensation then due and payable
under Section 3 hereof to which the Executive is entitled as of the date of
termination.

     

    (ii)           By
Disability.  If (i) the Executive becomes eligible for the
Company’s long-term disability benefits or (ii) the Executive is unable to
carry out the responsibilities and functions of the position held by the
Executive by reason of any physical or mental impairment, for a period of more
than ninety (90) consecutive days or more than one hundred twenty (120) days in
any consecutive twelve-month period, then, to the extent permitted by law, the
Company may terminate the Executive’s employment.  In the event that
the Company terminates the Executive’s employment on grounds of disability, the
Company shall pay to the Executive full amount of any compensation then due and
payable under Section 3 hereof to which the Executive is entitled as of the
date of termination and thereafter (subject to Section 7(f)) all
obligations of the Company under this Agreement shall cease.  Nothing
in this section shall affect the Executive’s rights under any disability plan
implemented by the Company in which the Executive is a participant, if
any.

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    c.           Early Termination by the
Company. The Company may dismiss the Executive for Cause (as hereinafter
defined) at any time or by serving the Executive __Three_____ (_3_) months’
prior written notice.  During such notice period, the Executive shall
continue to diligently perform all of the Executive’s duties
hereunder.  In the event of dismissal without Cause, the Executive
will be eligible to receive an amount equal to the Monthly Salary multiplied by
(M + 12), where M shall mean the number of years Executive has been employed by
the Company pursuant to this Agreement, payable in full immediately following
the receipt by the Executive of such written notice.  For the for
purposes of this Agreement, Cause shall
include:  (i) the conviction of a felony or any crime involving
moral turpitude, fraud or misrepresentation, (ii) the continued failure by
Executive to substantially perform his duties to the Company after receipt of
written notice from the Company specifying any action or inaction by Executive
which is deemed by the Company to constitute a failure to perform his duties
hereunder with suggestions, where feasible, as to how Executive may remedy such
failure, and Executive has failed to correct the unsatisfactory performance
within fifteen (15) days of such notice, (iii) Executive’s gross
negligence or willful misconduct which is materially injurious to the Company,
monetarily or otherwise, (iv) proven dishonesty by Executive adversely
affecting the Company as determined by the Board, and (v) any material
breach by Executive of the Company’s then current policies with written notice
thereof which has note been cured with 30 days of such notice where such breach
is not one subject to immediate termination under the Company’s policies, or of
the covenants contained in Section 5 of this Agreement.  For
purposes of this paragraph, no act or failure to act on Executive’s part shall
be considered “willful” unless done, or omitted to be done, by Executive not in
good faith and without reasonable belief that his action or omission was in the
best interest of the Company.  If at any time the Company shall
determine that Executive has engaged in one or more activities constituting
“Cause” for termination hereunder, Executive’s employment shall be terminated
for Cause.

     

    d.           Early Termination by the
Executive.

     

    (i)           Termination by Executive for
Good Reason.  If the Executive selects to terminate his
employment for Good Reason (as hereinafter defined), the Executive will be
eligible to receive an amount equal to the Monthly Salary multiplied by (M +
12), where M shall mean the number of years the Executive has been employed by
the Company pursuant to this Agreement, payable in full immediately following
the Company’s receipt of such termination notice.  No Annual Bonus
shall be payable upon such termination.  Thereafter (subject to
Section 7(f)) all obligations of the Company under this Agreement shall
cease.  For the purpose of this Agreement, “Good Reason” shall mean
any of the following events if (i) the event is effected by the Company
without the consent of the Executive and (ii) such event is not rectified
within twenty (20) days by the Company to the Executive’s reasonable
satisfaction:

     

    (1)           a
significant change in the Executive’s position with the Company or a change to
his duties or responsibilities which materially reduces the Executive’s level of
responsibility; or

     

    (2)           the
Company fails to perform this Agreement or violates the relevant labor laws
applicable to the Company’s business, regulations or infringes upon any of the
Executive’s rights or interests; or

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    (3)           the
imposition by the Board on Executive of any action or responsibility involving
the commission of (i) a felony, (ii) criminal dishonesty,
(iii) any crime involving moral turpitude or (iv) fraud;
or

     

    (4)           any
action by the Board requiring Executive to breach Executive’s obligations and
responsibilities under this Agreement; or

     

    (5)           any
action of the Board constituting a constructive discharge or an unreasonable
interference with Executive’s ability to fulfill Executive’s obligations under
this Agreement; or

     

    (6)           a
Change of Control of the Company (for purposes of this Agreement, a “Change of Control of the
Company” shall mean (a) the sale of all or substantially all of the
assets of the Company in a transaction or series of transactions, (b) any
transaction or series of transactions in which an unaffiliated third party
acquires all or substantially all the issued and outstanding capital stock of
the Company, or (c) any merger, consolidation or reorganization to which
the Company is a party, except for a merger, consolidation or reorganization in
which, after giving effect to such merger, consolidation or reorganization, the
stockholders holding a majority of the outstanding voting power of the Company
immediately prior to the merger, consolidation or reorganization of the Company
have at least a majority of the outstanding voting power of the surviving entity
after the merger, consolidation or reorganization.

     

    e.           Termination other than for
Good Reason.

     

    (i)           The
Executive may terminate employment with the Company at any time for any reason
other than Good Reason or for no reason at all, upon three (3) months’
advance written notice.  Upon a termination other than for Good
Reason, the Executive
shall be entitled to a contribution bonus (“Contribution
Bonus”).  The distribution of such Contribution Bonus and its
amount shall be
determined by the Company and approved by the Board; provided that the
Contribution Bonus shall not exceed an amount equal to the Monthly Salary
multiplied by (M + 10), where M is the number of years the Executive has been
employed by the Company pursuant to the Agreement.  No Annual Bonus
shall be payable upon such termination.  During such notice period the
Executive shall continue to diligently perform all of the Executive’s duties
hereunder.  The Company shall have the option, in its sole discretion,
to make the Executive’s termination effective at any time prior to the end of
such notice period as long as the Company pays the Executive all compensation
under Section 3 hereof to which the Executive is entitled through the last
day of the three (3) month notice period.

     

    (ii)           Termination
Obligations.  The Executive agrees that on or before
termination of employment, he will promptly return to the Company all documents
and materials of any nature (including any materials in electronic form)
pertaining to his work with the Company, including all originals and copies of
all or any part of any Confidential Information along with any and all equipment
and other tangible and intangible property of the Company.  The
Executive agrees not to retain any documents or materials or copies thereof
containing any Confidential Information.

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    f.           Any
payments made by the Company pursuant to Section 3 or Section 4 of
this Agreement shall be net of all applicable withholdings and
deductions.

     

    5.           Confidentiality;
Non-Compete: Non-Solicitation; No Conflict;
Non-Disparagement.

     

    a.           Confidentiality
Obligation.  The Executive hereby agrees at all times during
the term of his employment and after termination, to hold in the strictest
confidence, and not to use, except for the benefit of the Group, or to disclose
to any person, corporation or other entity without written consent of the
Company, any Confidential Information.  The Executive understands that
“Confidential Information” means any proprietary or confidential information of
the Group, its affiliates, their clients, customers or partners, and the Group’s
licensors, including, without limitation:  technical data, trade
secrets, research and development information, product plans, services, customer
lists and customers (including, but not limited to, customers of the Group on
whom the Executive called or with whom the Executive became acquainted during
the term of his employment), supplier lists and suppliers, software,
developments, inventions, processes, formulas, technology, designs, drawings,
engineering, hardware configuration information, personnel information,
marketing, finances, information about the clients, customers, suppliers, joint
ventures, licensors, licensees, distributors and other persons with whom the
Group does business, information regarding the skills and compensation of other
employees of the Group or other business information disclosed to the Executive
by or obtained by the Executive from the Group, its affiliates, or their
clients, customers, suppliers or partners either directly or indirectly in
writing, orally or by drawings or observation of parts or
equipment.  Notwithstanding the foregoing, Confidential Information
shall not include information that is common knowledge or that the Executive
demonstrates was or became generally available to the public other than as a
result of a disclosure by the Executive.

     

    b.           Non-Compete and
Non-Solicitation.  In consideration of the termination
compensation payable to the Executive under Section 4, the Executive
irrevocably and unconditionally agrees with and undertakes to the Company that,
he will not (i) during his term of employment with the Company take up any
executive position in any company other than the Group Companies and will commit
most of his efforts towards the development of the business and operations of
the Group, except as currently contemplated or approved by the Board, and
(ii) for a period of twelve (12) months (or less than twelve
(12) months if agreed by the Board) after he ceases to be employed by any
Group Company (collectively the “Non-Compete
Period”):

     

    (i)           either
on his own account or in conjunction with or on behalf of any person, firm or
company carry on or be employed, engaged, concerned, provide technical expertise
or be interested directly or indirectly in, any business, whether as
shareholder, director, executive, partner, agent or otherwise, that is, in the
opinion of the Company in competition (whether directly or indirectly) with any
business carried on or proposed to be carried on by the Group from time to
time;

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    (ii)           either
on his own account or in conjunction with or on behalf of any other person, firm
or company, solicit or entice away or attempt to solicit or entice away from the
Group from time to time, the customer of any person, firm, company or
organization who shall at any time have been a customer, client, agent or
correspondent of the Group or in the habit of dealing with the Group;
or

     

    (iii)           either
on his own account or in conjunction with or on behalf of any other person, firm
or company, solicit or entice away or attempt to solicit or entice away from the
Group from time to time, any person who is an officer, manager or executive of
the Group whether or not such person would commit a breach of his contract of or
employment by reason of leaving such employment.

     

    (iv)           The
Executive shall be entitled to monthly compensation in consideration of
fulfilling the obligation under this Section, in an amount equal to the Monthly
Salary, for the period of the Non-compete Period.

     

    If the
Executive fails to discharge his obligations under this Section 5 at any
time during the Non-compete Period, in addition to any and all legal remedies
that the Company is entitled to under the applicable law, the Executive shall
return to the Company such proportion of the compensation payable to the
Executive upon the termination of his employment pursuant to Section 4 of
this Agreement corresponding to the portion of the Non-compete Period during
which the Executive has failed to discharge his non-compete
obligation.

     

    c.           No
Conflict.  The Executive represents and warrants that the
Executive’s execution of this Agreement, his employment with the Company, and
the performance of his proposed duties under this Agreement shall not violate
any obligations he may have to any former employer or other party, including any
obligations with respect to proprietary or confidential information or
intellectual property rights of such party.

     

    d.           Provisions reasonable for
protection of legitimate interest.  The Parties agree that the
restrictions in Sections 5(a) and 5(b) are considered to be reasonable in
all circumstances.  Notwithstanding the foregoing, it is agreed
between the Parties that if any one or more of such restrictions shall, either
by itself or together with other restrictions, be adjudged to go beyond what is
reasonable in all the circumstances for the protection of the legitimate
interest of any Group Company from time to time, but would be adjudged
reasonable if any particular restriction or restrictions were deleted or if any
part or parts of the wording thereof were deleted, restricted or limited in any
particular manner then the restrictions shall apply with such deletions,
restrictions or limitations, as the case may be.

     

    e.           Non-Disparagement.  Following
the date hereof, the Executive shall not, directly or indirectly, in person or
through an agent or intermediary, disparage or make negative, derogatory or
defamatory statements about the Company and any of its officers, directors
employees or stockholders or their respective business activities or the
business activities of any of their affiliates or their respective officers,
directors, managers, employees or stockholders to any other person or entity,
whether true or not.

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

     

    6.           Intellectual
Property.  The Executive further agrees with and undertakes to
the Company that:

     

    a.           he
will not divulge, use (other than for the purpose and benefit of the Group) or
infringe the trade marks, logos, inventions, know-how, technology, proprietary
information and other intellectual property rights of the Group Companies;
and

     

    b.           all
trade marks, logos, inventions, know-how, technology, proprietary information
and other intellectual property rights developed, acquired or filed by the
Executives in the course of his work or employment shall belong solely to the
Group Company.  The Executive agrees he will, upon demand by the
Company, execute any documents reasonably necessary to transfer any such
intellectual property rights to the Company.

     

    7.           General
Provisions.

     

    a.           Effectiveness.  This
Agreement shall come into effect when it is signed by the Parties.

     

    b.           Entire
Agreement.  This Agreement, including the exhibits attached
hereto (if any), constitutes the full and complete understanding of the Parties
hereto and supersedes any previous agreements between the Executive and any
Group Company.

     

    c.           Continuing
Obligations.  The obligations in this Agreement will continue
in the event that the Executive is hired, renders services to or for the benefit
of or is otherwise retained at any time by any present or future Affiliates of
the Company.  Any reference to the Company in this Agreement will
include such Affiliates.  Upon the expiration or termination for any
reason whatsoever of this Agreement, the Executive shall forthwith resign from
any employment of office with the Company and all Affiliates of the Company
unless the Board requests otherwise.  In this Agreement, “Affiliate”
shall mean (a) in relation to any individual, the immediate family of such
individual or any entity controlled by the individual, where “control” shall
mean the power to direct the management and policies or appoint or remove
members of the board of directors or other governing body of the entity,
directly or indirectly, whether through the ownership of voting securities,
contract or otherwise, and “controlled” shall be construed accordingly;
(b) in relation to any legal person, a company which is for the time being
a holding company of such legal person, or a subsidiary or controlled affiliate
of such legal person or of such holding company.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

     

    d.           Releases.  In
consideration for any compensation and other benefits provided for in accordance
with Section 4 hereof, the adequacy of which is hereby acknowledged,
Executive, for and on behalf of himself and each of his heirs, executors,
administrators, personal representatives, successors and assigns, to the maximum
extent permitted by law, hereby covenants never to sue and fully and forever
releases, acquits and discharges the Company, together with its subsidiaries,
parents and affiliates and each of its past and present direct and indirect
stockholders, directors, members, partners, officers, employees, attorneys,
agents and representatives, and their heirs, executors, administrators, personal
representatives, successors and assigns (collectively, the “Releasees”), from all
rights and liabilities up to and including the date of this Agreement to the
expiration thereof arising under or relating to Executive’s employment with the
Company, Executive’s application for and employment with the Company,
Executive’s service as an employee of the Company or any of the Releasees, the
termination of employment, and from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages, actions,
causes of actions, suits, rights, demands, costs, losses, debts and expenses of
any nature whatsoever, known or unknown, suspected or unsuspected and any claims
of wrongful discharge, breach of contract, implied contract, promissory
estoppel, defamation, slander, libel, tortious conduct, interference with
contract or business relations, intentional or negligent infliction of emotional
distress, sexual harassment, negligence, employment discrimination or claims
under any federal, state or local employment statute, law, order or ordinance,
including without limitation any rights or claims arising under any national,
state or municipal ordinance in China relating to discrimination in employment,
or any applicable statutory or common laws relating to the terms, conditions or
termination of employment, discrimination in employment, or contract- or
tort-based claims in connection therewith.

     

    e.           Governing Law and Dispute
Resolution.  The execution, validity, interpretation and
performance and resolution of disputes under this Agreement shall be governed by
and construed in accordance with the officially published and publicly available
laws of the State of New York.  When the officially published and
publicly available laws of the State of New York do not apply to any particular
matter, international legal principles and practices shall apply (including
available laws of the PRC).

     

    Any
disputes or claims relating to this Agreement or the interpretation, breach,
termination or validity hereof shall be resolved through friendly consultations,
commencing upon written notice given by one Party to the other Party of the
existence of such a claim or dispute.  If the dispute or claim cannot
be resolved after thirty (30) days of such notice, either Party may request
arbitration by a labor dispute arbitration committee established in accordance
with Section (h) below.  If either Party disagrees with the
arbitral award of the labor dispute arbitration committee, such Party may
institute legal proceedings with the authorized court within 15 days after
notification of the arbitral award

     

    f.           Assignability.  The
terms of this Agreement will remain in effect and shall be binding upon any
successor in interest including any entity with which the Company may merge or
consolidate or to which all or substantially all of its assets may be
transferred.  A reference to the Company shall include its
successors.  Except as set forth in the preceding sentence, this
Agreement may not be assigned by a Party to any third party, without the prior
consent of the other Party.

     

    g.           Survival.  The
Parties’ obligations under Sections 5 and 6 hereof shall survive and
continue in effect after the termination of this Agreement, whatever the reason
for such termination.

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

     

    h.           Dispute Resolution.
All disputes arising out of or in connection with this Agreement shall be
finally settled under the Rules of Arbitration of the International Chamber of
Commerce by one (1) arbitrator appointed in accordance with the said
Rules.  The place of arbitration shall be resolved by the Court of
State of Nevada. The language of the arbitral proceedings shall be English (and
translated to Mandarin, if possible).  The award shall be rendered
within nine (9) months of the appointment of the arbitrator, unless the
arbitrator determines that the interest of justice requires that such limit be
extended.  Judgment upon any award(s) rendered by the arbitrator may
be entered in any court having jurisdiction thereof.  Nothing in this
Agreement shall prevent either party from seeking provisional measures from any
court of competent jurisdiction, and any such request shall not be deemed
incompatible with the agreement to arbitrate or a waiver of the right to
arbitrate.  The fees payable to the ICC (including arbitrator fees and
costs but excluding any filing fee payable by a Party commencing the
arbitration) shall be borne equally by the Parties; provided,
however, that the
Company shall pay, and the Executive shall not be responsible for, any such fees
payable to the ICC that exceed €30,000.  The Company and the Executive
acknowledge that attorneys fees shall be payable by the Party incurring such
attorneys fees and any filing fees payable in connection with commencing any
arbitration proceeding shall be payable by the Party commencing such arbitration
proceeding, and no such attorneys fees and filing fees shall be counted toward
the forgoing €30,000 cap.

     

    i.           Notices.  Notices
under this Agreement shall be given in writing to the relevant Party at the
address stated herein (or to such other address as it shall have notified the
other Party previously in writing).

     

    
      
        
          
            	
                    to
      the Company at:

                  
	 
      
	
                    China
      Botanic Pharmaceutical Inc

                  
	
                    The
      11th Floor, Changjiang International Building, No. 28,

                    Changjiang
      Road, Nangang District, Harbin, Heilongjiang

                    Province,
      P.R. China 150090

                  
	
                    Attention:  _Shaoming
      Li_____________________

                  
	 
      
	
                    to
      the Executive at:

                  
	 
      
	
                    Apartment 401, Unit 1, Building 19, Beijing
      Forestry

                    University, No. 35, Tsinghua East Road, Haidian
      District

                    Beijing,
100083

                  

          

        

      

    

     

    j.           Language and Copies of the
Agreement.  This Agreement shall be executed in Chinese and
English in two (2) original copies.  The English version shall
prevail in case of conflict.  Each Party shall receive one
(1) original copy, all of which shall be equally valid and
enforceable.

     

    [REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK AND SIGNATURE PAGE FOLLOWS]

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
undersigned has hereunto caused this Agreement to be executed as of the day and
year first above written.

     

    
      
        
          
            
              	
                      CHINA
      BOTANICAL

                      PHARMACEUTICAL
      INC.

                    
	 
      
	
                      By:

                    	
                       /s/

                    
	
                      Name:

                    
	
                      Title:

                    
	 
      
	
                      EXECUTIVE

                    
	 
      
	
                      By:

                    	
                       /s/

                    
	 
      
	 
      

            

          

        

      

    

     

    
      
         

      

      
        11

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