Document:

Unassociated Document

     

    EMPLOYMENT
      AGREEMENT

     

    THIS
      EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) dated as of June 30, 2008 (the
“Effective Date”), is by and between InovaChem, Inc., a Delaware corporation
      (together with its subsidiaries, the “Company” or “InovaChem”), and Shao Xun Xu,
      (the “Executive”).

    WITNESSETH:

     

    WHEREAS,
      the Company now desires to employ the Executive as the Company’s Chief Science
      Officer; and

     

    WHEREAS,
      the Executive desires to serve as the Chief Science Officer; and

     

    NOW
      THEREFORE, in consideration of the mutual benefits to be derived from this
      Agreement, and other good and valuable consideration, the receipt and
      sufficiency of which is hereby acknowledged, the Company and the Executive
      hereby agree as follows:

     

    
      1.  Term
        of Employment; Office and Duties.

    

     

    (a)  Commencing
      on the Effective Date (the “Employment Date”), and for an initial term ending on
      December 31, 2010 (the “Initial Term”), the Company shall employ the Executive
      as a senior executive of
      the
      Company with the title of Chief Science Officer. As Chief Science Officer,
      Executive shall perform all duties and responsibilities which are consistent
      with the positions and such additional duties and responsibilities consistent
      with such positions as may from time to time be assigned to the Executive by
      the
      Board of Directors. Executive agrees to perform such duties and discharge such
      responsibilities in accordance with the terms of this Agreement. This Agreement
      shall be automatically renewed for an additional one (1) year term (the “Renewal
      Period”) unless the Company notifies the Executive ninety (90) days prior to the
      expiration of the Agreement of the Company’s intention not to renew the
      Agreement. The Initial Term and any Renewal Period that has commenced, as the
      same may be sooner terminated, shall be collectively referred to herein as
      the
“Term” in effect as of the relevant time.

     

    
      2.  Compensation
        and Benefits.

    

     

    The
      Company is in the process of offering securities (the “Private Offering”), per
      the Executive Summary dated March 14, 2008, to a limited number of accredited
      investors. All compensation and benefits listed below will begin to accrue
      with
      the completion of the Private Offering. Following the completion of the Private
      Offering, and at the sole discretion of the Board, Executive’s compensation will
      begin to be paid at a percentage and time in keeping with the Company’s
      financial situation.

     

    For
      all
      services rendered by the Executive in any capacity during the period of
      Executive’s employment by the Company, including without limitation, services as
      an executive officer or member of any committee of the Board of Directors or
      any
      subsidiary, affiliate or division thereof, from and after the Effective Date,
      the Executive shall be compensated as follows:

     

    
      
        
        

      

      
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    (a)  Base
      Salary.
      The
      Company shall pay the Executive a fixed salary (“Base Salary”) at a rate of One
      Hundred Thousand US Dollars (US $100,000) per year. The Board of Directors
      may
      periodically review the Executive’s Base Salary and may determine to increase
      (but not decrease) the Executive’s salary, in accordance with such policies as
      the Company may hereafter adopt from time to time, if it deems appropriate.
      A
      portion of the Base Salary will be payable in accordance with the customary
      payroll practices of the Company and a portion of the Base Salary in the sole
      discretion of the Board, will be deferred and paid at such time as the Company’s
      financial situation permits as determined by the Board of Directors.

     

    (b)  Bonus.
      Executive is entitled to receive an annual bonus (the “Annual Bonus”), payable
      each year subsequent to the issuance of final audited financial statements,
      but
      in no case later than 120 days after the end of the Company’s most recently
      completed fiscal year. The final determination on the amount of the Annual
      Bonus
      will be made by the Compensation Committee of the Board of Directors, based
      primarily on mutually agreed upon criteria, established with respect to the
      ensuing fiscal year, within thirty (30) days following the adoption by the
      Board
      of Directors of a budget relating to the ensuing year. Criteria for the Annual
      Bonus for 2008 shall be agreed upon prior to or within sixty (60) days after
      the
      execution of this Agreement. The Compensation Committee may also consider other
      more subjective factors in making its determination. The targeted amount of
      the
      Annual Bonus shall be fifty percent (50%) of the Executive’s base salary. The
      actual Annual Bonus for any given period may be higher or lower than fifty
      percent (50%). For any fiscal year in which Executive is employed for less
      than
      the full year, Executive shall receive a bonus which is prorated based on the
      number of full months in the year which are worked.

     

    (c)  Fringe
      Benefits, Option Grants and Miscellaneous Employment Matters.

     

    (i)  The
      Executive shall be entitled to participate in such disability, health and life
      insurance and other fringe benefit plans or programs offered to all employees
      of
      the Company, as well as to the key executive employees of Company, including
      a
      Section 401(k) and retirement plan of the Company as may be established from
      time to time by the Board of Directors, subject to the rules and regulations
      applicable thereto. At the Executive's option, in lieu of providing group
      medical benefits, the Company will reimburse the Executive for health insurance
      premium payments made by the Executive. Upon termination of Executive's coverage
      under such private supplemental health insurance policy, he shall have the
      option of enrolling in the Company's group plan or converting his prior coverage
      to an individual policy, at which time the Company would reimburse him for
      an
      amount equal to its monthly cost of covering Executive under its plan, and
      Executive would pay any additional amounts necessary to provide individual
      coverage. In addition, the Executive shall be entitled to the following
      benefits:

     

    (ii)  Contemporaneous
      with the execution of this Employment Agreement, Executive received a grant
      (the
“Stock Option Grant”) of stock options (the “Stock Options”) to purchase
100,000
      shares at an exercise price equal to
      the
      closing transaction price of the Company’s Common Stock on the last trading day
      preceding execution of this Employment Agreement.
      If the
      Company’s common stock is not trading at the effective date of this Agreement,
      then the exercise price shall equal the fair market value of the Company’s
      Common Stock as determined by the Board of Directors in its reasonable
      discretion. The Stock Options shall have a term of ten (10) years, shall become
      exercisable when vested, and shall vest pro rata in twelve equal quarterly
      installments (1/12th each at the end of each fiscal quarter), with the first
      installment vesting on June 30, 2008. Notwithstanding the foregoing, the Stock
      Options shall terminate ninety (90) days following a termination of the
      Executive for “Cause” or upon the voluntary termination of service by the
      Executive that is not for “Good Reason.”

     

    
      
        
        

      

      
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    (iii)  Contemporaneous
      with the execution of this Employment Agreement, the Executive shall receive
      a
      grant of 100,000 shares of the Company's Common Stock.

     

    (d)  Withholding
      and Employment Tax.
      Payment
      of all compensation hereunder shall be subject to customary withholding tax
      and
      other employment taxes as may be required with respect to compensation paid
      by
      an employer/corporation to an employee.

     

    (e)  Disability.
      The
      Company shall provide the Executive with a policy of disability insurance
      benefits of at least sixty percent (60%) of his gross Base Salary per month.
      To
      the extent permitted by the Company’s existing disability policy, the
      Executive’s disability policy will be a portable policy. The Executive agrees to
      pay for any additional premium payments resulting from providing a portable
      policy (in comparison to a group policy) and further agrees to have the
      additional premium payments deducted from his pay. In the event of the
      Executive’s Disability (as hereinafter defined), the Executive and his family
      shall continue to be covered by all of the Company’s life, medical, health and
      dental plans, at the Company’s expense, to the extent such benefits can be
      obtained at a reasonable cost, for the lesser of the term of such Disability
      (as
      hereinafter defined) or eighteen (18) months, in accordance with the terms
      of
      such plans.

     

    (f)  Death.
      The
      Company shall provide the Executive with a policy of term life insurance
      benefits in the amount of at least One Million United States Dollars (US
      $1,000,000). To the extent permitted by the Company’s existing life insurance
      policy, the Executive’s life insurance policy will be a portable policy. The
      Executive agrees to pay for any additional premium payments resulting from
      providing a portable policy (in comparison to a group policy) and further agrees
      to have the additional premium payments deducted from his pay. In the event
      of
      the Executive’s death, the Executive’s family shall continue to be covered by
      all of the Company’s medical, health and dental plans, at the Company’s expense,
      to the extent such benefits can be obtained at a reasonable cost, for eighteen
      (18) months following the Executive’s death in accordance with the terms of such
      plans.

     

    (g)  Vacation.
      Executive shall receive four (4) weeks of vacation annually, administered in
      accordance with the Company’s existing vacation policy.

     

    
      3.  Business
        Expenses.

    

     

    The
      Company shall pay or reimburse all reasonable travel and entertainment expenses
      incurred by the Executive in connection with the performance of his duties
      under
      this Agreement, including travel to offices and facilities in the United States
      and abroad, reimbursement for attending out-of-town meetings of the Board of
      Directors, and such other travel as may be required or appropriate in
      Executive’s discretion, consistent with duly approved Company budgets, to
      fulfill the responsibilities of his office, all in accordance with such policies
      and procedures as the Company may from time to time establish for senior
      officers and as required to preserve any deductions for federal income taxation
      purposes to which the Company may be entitled and subject to the Company’s
      normal requirements with respect to reporting and documentation of such
      expenses. The Company shall also pay or reimburse Executive for all membership
      fees and dues in appropriate professional associations and organizations
      utilized by Executive in the course of his service for the Company, as well
      as
      all expenses incurred by the Executive for Executive’s cellular telephone and
      portable text messaging including monthly service charges, equipment maintenance
      and all other ancillary charges including, but not limited to, text messaging,
      paging, and wireless communications.

     

    
      
        
        

      

      
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      4.  Termination
        of Employment.

    

     

    Notwithstanding
      any other provision of this Agreement, Executive’s employment with the Company
      may be terminated upon written notice to the other party as
      follows:

     

    (a)  By
      the
      Company, in the event of the Executive’s death or Disability (as hereinafter
      defined) or for Cause (as hereinafter defined). For purposes of this Agreement,
      “Cause” shall mean either: (i) the indictment of, or the bringing of formal
      charges against Executive on charges involving criminal fraud or embezzlement;
      (ii) the conviction of Executive of a crime involving an act or acts of
      dishonesty, fraud or moral turpitude by the Executive, which act or acts
      constitute a felony; (iii) Executive negligently or knowingly having caused
      the
      Company to violate the Company’s Bylaws; (iv) Executive having committed acts or
      omissions constituting gross negligence or willful misconduct with respect
      to
      the Company, including with respect to any valid contract to which the Company
      is a party; (v) Executive having committed acts or omissions constituting a
      breach of Executive’s duty of loyalty or fiduciary duty to the Company or any
      material act of dishonesty or fraud with respect to the Company which are not
      cured or substantially cured to the satisfaction of the Board of Directors
      of
      the Company in a reasonable time, which time shall be at least 30 days from
      receipt of written notice from the Company of such material breach; (vi)
      Executive having committed acts or omissions constituting a material breach
      of
      this Agreement which are not cured or substantially cured to the satisfaction
      of
      the Board of Directors of the Company in a reasonable time, which time shall
      be
      at least 30 days from receipt of written notice from the Company setting forth
      with specificity the particulars of any such material breach as well as the
      corrective actions required. A determination that Cause exists as defined in
      clauses (iv), (v), or (vi) (as to this Agreement) of the preceding sentence
      shall be made by at least a majority of the members of the Board of Directors.
      For purposes of this Agreement, “Disability” shall mean the inability of
      Executive, in the reasonable judgment of a physician jointly appointed by the
      Executive and Board of Directors, to perform, even with reasonable
      accommodation, his duties of employment for the Company or any of its
      subsidiaries because of any physical or mental disability or incapacity, where
      such disability shall exist for an aggregate period of more than 120 days in
      any
      365-day period or for any period of 90 consecutive days. The Company shall
      by
      written notice to the Executive specify the event relied upon for termination
      pursuant to this Section 4(a), and Executive’s employment hereunder shall be
      deemed terminated as of the date of such notice. In the event of any termination
      under this Subsection 4(a), the Company shall pay all amounts then due to the
      Executive under Section 2 (a) of this Agreement for any portion of the payroll
      period worked but for which payment had not yet been made up to the date of
      termination, and, if such termination was for Cause, the Company shall have
      no
      further obligations to Executive under this Agreement, and any and all options
      granted hereunder shall terminate according to their terms; provided, however,
      that in the event of a termination for Cause pursuant to clause (vi) above,
      the
      Company shall continue to pay to Executive the Base Salary (at a monthly rate
      equal to the rate in effect immediately prior to such termination) for nine
      (9)
      months from the date of termination, when, as and if such payments would have
      been made in the absence of Executive’s termination and any and all options
      granted hereunder shall terminate according to their terms. In the event of
      a
      termination due to Executive’s Disability or death, the Company shall comply
      with its obligations under Sections 2(f) and 2(g).

     

    
      
        
        

      

      
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    (b)  By
      the
      Company, in the absence of Cause, for any reason and in its sole and absolute
      discretion, provided that in such event the Company shall, as liquidated damages
      or severance pay, or both, continue to pay to Executive the Base Salary (at
      a
      monthly rate equal to the rate in effect immediately prior to such termination)
      for the longer of (x) the remaining Term or (y) twelve (12) months from the
      date
      of termination (the “Termination Payments”), when, as and if such payments would
      have been made in the absence of Executive’s termination. The Termination
      Payments shall be made regardless of Executive’s subsequent re-employment as
      long as any new employment is not in violation of Sections 5 or 6 of this
      Agreement.

     

    (c)  By
      the
      Executive for “Good Reason,” (as the Executive shall reasonably determine in
      good faith) which shall be deemed to exist: (i) if the Company’s Board of
      Directors or that of any successor entity of the Company fails to appoint or
      reappoint the Executive or removes the Executive from the title and/or office
      of
Chief
      Science Officer of the Company or from any successor entity operating the
      Company; (ii) if the Company’s Board of Directors or that of any successor
      entity of the Company fails to appoint the Executive to serve on the Board
      of
      Directors within thirty (30) days of the Employment Date or fails to renominate
      the Executive to serve on the Board of Directors; (iii) if Executive is assigned
      any duties materially inconsistent with the duties or responsibilities of the
      Chief Science Officer of the Company as contemplated by this Agreement or any
      other action by the Company that results in a material diminution in such
      position, authority, duties, or responsibilities, excluding an isolated,
      insubstantial, and inadvertent action not taken in bad faith and which is
      remedied by the Company promptly after receipt of notice thereof given by
      Executive (but not excluding changes resulting from a sale of the Company,
      whether by merger, tender offer or otherwise) provided that Executive shall
      act
      within 30 days of becoming aware of any such diminution in the scope of his
      duties, responsibilities, authority or position; (iv) if the Company shall
      breach or shall have continued to fail to comply with any material provision
      of
      this Agreement after a 30-day period to cure (if such failure is curable)
      following written notice to the Company of such non-compliance; or (v) upon
      a
      change in control of the Company or within twelve (12) months of any such change
      in control (for these purposes the term “change in control” shall have the
      meaning set forth in Rule 405 of the Securities Act of 1933), or within twelve
      (12) months of a sale of substantially all of the assets of the Company or
      the
      merger out of existence of the Company. In the event of any termination for
      “Good Reason” under this Section 4(c), the Company shall, as liquidated damages
      or severance pay, or both, pay the Termination Payments, as defined in (b)
      of
      this Section 4, to Executive, when,
      as
      and if such payments would have been made in the absence of Executive’s
      termination.

     

    
      
        
        

      

      
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    (d)  During
      any period in which Executive is obligated not to compete with the Company
      pursuant to Section 5 hereof (unless Executive was terminated for Cause as
      defined herein), Executive and his family shall continue to be covered by the
      Company’s life, medical, health and death plans. Such coverage shall be at the
      Company’s expense to the same extent as if Executive were still employed by the
      Company. In the event of a termination pursuant to Sections 4(b) or 4(c), the
      Company shall provide to Executive the pro-rata share of his annual bonus,
      to
      the extent one is awarded by the Compensation Committee the consideration of
      which shall be taken in good faith, giving a full month’s credit for any partial
      month worked in that bonus year. Additionally, in the event of a termination
      pursuant to Sections 4(b) or 4(c), the Company shall provide to Executive,
      at
      the Company’s expense, outplacement services of a nature customarily provided to
      a senior executive. Notwithstanding the foregoing, the obligations of the
      Company pursuant to this Section 4(d) shall remain in effect no longer than
      the
      term of the Termination Payments.

     

    (e)  In
      the
      event that any amounts payable and/or any benefits provided to the Executive
      under the terms of this Agreement and/or under any other plan, agreement or
      arrangement by which he is to receive payments or benefits in the nature of
      compensation would constitute “excess parachute payments” as that term is
      defined for purposes of Section 280G of the Internal Revenue Code of 1986,
      as
      amended (“Code”) and Treasury Regulations promulgated pursuant thereto, then the
      amounts payable under the terms of this Agreement and/or under any other plan,
      agreement or arrangement shall be reduced so that no payments are deemed “excess
      parachute payments.” Any decisions regarding this requirement or implementation
      of reductions shall be made by tax counsel selected by the Company.

     

    (f)  If
      any
      payment to Executive under the terms of this Agreement is determined to
      constitute a payment of nonqualified deferred compensation for purposes of
      Section 409A of the Code, such payment shall be delayed until the date that
      is
      six months after the date of Executive’s separation from service with the
      Company, so as to comply with the special rule for certain “specified employees”
set forth in Code Section 409A(a)(2)(B)(i) unless it is determined that
      immediate distribution is permissible (and does not trigger any additional
      tax
      liability pursuant to Code Section 409A(a)(1)) pursuant to Code Section
      409A(a)(2)(A)(v) by reason of being payable in connection with a change in
      the
      ownership or effective control of the Company or in the ownership of a
      substantial portion of the assets of the Company.

     

    (g)  The
      Executive agrees that as of or following the termination of the Executive’s
      employment for any reason or for no reason, he shall immediately resign as
      a
      member of the Company’s Board of Directors if so requested by the
      Company.

     

    
      5.  Non-Competition.

    

     

    During
      the period of Executive’s employment hereunder and during the period, if any,
      during which payments are required to be made to the Executive by the Company
      pursuant to Sections 4(b) or 4(c), the Executive shall not, within any state
      or
      foreign jurisdiction in which the Company or any subsidiary of the Company
      is
      then providing services or products or marketing its services or products (or
      engaged in active discussions to provide such services), or within a fifty
      (50)
      mile radius of any such state or foreign jurisdiction, directly or indirectly
      own any interest in, manage, control, participate in, consult with, render
      services for, or in any manner engage in any business engaged in by the Company
      (unless the Board of Directors shall have authorized such activity and the
      Company shall have consented thereto in writing). Investments in less than
      five
      percent of the outstanding securities of any class of a corporation subject
      to
      the reporting requirements of Section 13 or Section 15(d) of the Securities
      Exchange Act of 1934, as amended, shall not be prohibited by this Section 5.
      At
      the option of Executive, Executive’s obligations under this Section 5 arising
      after the termination of Executive shall be suspended during any period in
      which
      the Company fails to pay to him Termination Payments required to be paid to
      him
      pursuant to this Agreement. The provisions of this Section 5 are subject to
      the
      provisions of Section 14 of this Agreement.

     

    
      
        
        

      

      
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      6.  Inventions
        and Confidential Information.

    

     

    The
      parties hereto recognize that a major need of the Company is to preserve its
      specialized knowledge, trade secrets, and confidential information. The strength
      and good will of the Company is derived from the specialized knowledge, trade
      secrets, and confidential information generated from experience with the
      activities undertaken by the Company and its subsidiaries. The disclosure of
      this information and knowledge to competitors would be beneficial to them and
      detrimental to the Company, as would the disclosure of information about the
      marketing practices, pricing practices, costs, profit margins, design
      specifications, analytical techniques, and similar items of the Company and
      its
      subsidiaries. The Executive acknowledges that the proprietary information,
      observations and data obtained by him while employed by the Company concerning
      the business or affairs of the Company are the property of the Company. By
      reason of his being a senior executive of the Company, the Executive has or
      will
      have access to, and has obtained or will obtain, specialized knowledge, trade
      secrets and confidential information about the Company’s operations and the
      operations of its subsidiaries, which operations extend throughout the United
      States. For purposes of this Section 6, “Company” shall mean the Company and
      each of its controlled subsidiaries. Therefore, subject to the provisions of
      Section 14 hereof, the Executive hereby agrees as follows, recognizing that
      the
      Company is relying on these agreements in entering into this
      Agreement:

     

    (i)  During
      the period of Executive’s employment with the Company and thereafter, the
      Executive will not use, disclose to others, or publish or otherwise make
      available to any other party any inventions or any confidential business
      information about the affairs of the Company, including but not limited to
      confidential information concerning the Company’s products. “Confidential
      Information” shall include commercial or trade secrets about Company’s products,
      methods, engineering designs and standards, analytical techniques, technical
      information, customer information, employee information, or financial and
      business records, any of which contains proprietary information created or
      acquired by the Company and which information is held in confidence by Company.
      Confidential Information does not include information which: (i) becomes
      generally available to the public, unless said Confidential Information was
      disclosed in violation of a confidentiality agreement; or (ii) becomes available
      to Executive on a non-confidential basis from a source other than the Company
      or
      its agents, provided that such source is not bound by a confidentiality
      agreement with the Company.

     

    (ii)  During
      the period of Executive’s employment with the Company and for twelve (12) months
      thereafter, (a) the Executive will not directly or indirectly through another
      entity induce any employee of the Company to leave the Company’s employ (unless
      the Board of Directors shall have authorized such employment and the Company
      shall have consented thereto in writing) or in any way interfere with the
      relationship between the Company and any employee thereof or (b) tortiously
      interfere with the Company’s business relationship with any customer, supplier,
      licensee, licensor or other business relation of the Company.

     

    
      
        
        

      

      
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      7.  Indemnification.

    

     

    The
      Company will indemnify (and advance the costs of defense of) and hold harmless
      the Executive (and his legal representatives) to the fullest extent permitted
      by
      the laws of the state in which the Company is incorporated, as in effect at
      the
      time of the subject act or omission, or by the Certificate of Incorporation
      and
      Bylaws of the Company, as in effect at such time or on the date of this
      Agreement, whichever affords greater protection to the Executive, and the
      Executive shall be entitled to the protection of any insurance policies the
      Company may elect to maintain generally for the benefit of its executive
      officers, against all judgments, damages, liabilities, costs, charges and
      expenses whatsoever incurred or sustained by him or his legal representative
      in
      connection with any action, suit or proceeding to which he (or his legal
      representatives or other successors) may be made a party by reason of his being
      or having been an officer of the Company or any of its subsidiaries except
      that
      the Company shall have no obligation to indemnify Executive for liabilities
      resulting from conduct of the Executive with respect to which a court of
      competent jurisdiction has made a final determination that Executive committed
      gross negligence or willful misconduct.

     

    
      8.  Litigation
        Expenses.

    

     

    In
      the
      event of any litigation or other proceeding between the Company and the
      Executive with respect to the subject matter of this Agreement and the
      enforcement of the rights hereunder, the losing party shall reimburse the
      prevailing party for all of his/its reasonable costs and expenses relating
      to
      such litigation or other proceeding, including, without limitation, his/its
      reasonable attorneys’ fees and expenses.

     

    
      9.  Consolidation;
        Merger; Sale of Assets; Change of Control.

    

     

    Nothing
      in this Agreement shall preclude the Company from combining, consolidating
      or
      merging with or into, transferring all or substantially all of its assets to,
      or
      entering into a partnership or joint venture with, another corporation or other
      entity, or effecting any other kind of corporate combination provided that
      the
      corporation resulting from or surviving such combination, consolidation or
      merger, or to which such assets are transferred, or such partnership or joint
      venture assumes this Agreement and all obligations and undertakings of the
      Company hereunder. Upon such a consolidation, merger, transfer of assets or
      formation of such partnership or joint venture, this Agreement shall inure
      to
      the benefit of, be assumed by, and be binding upon such resulting or surviving
      transferee corporation or such partnership or joint venture, and the term
“Company,” as used in this Agreement, shall mean such corporation, partnership
      or joint venture or other entity, and this Agreement shall continue in full
      force and effect and shall entitle the Executive and his heirs, beneficiaries
      and representatives to exactly the same compensation, benefits, perquisites,
      payments and other rights as would have been their entitlement had such
      combination, consolidation, merger, transfer of assets or formation of such
      partnership or joint venture not occurred.

     

    
      
        
        

      

      
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      10.  Survival
        of Obligations.

    

     

    Sections
      4, 5, 6, 7, 8, 9, 11, 12 and 14 shall survive the termination for any reason
      of
      this Agreement (whether such termination is by the Company, by the Executive,
      upon the expiration of this Agreement or otherwise).

     

    
      11.  Executive’s
        Representations.

    

     

    The
      Executive hereby represents and warrants to the Company that to the best of
      his
      knowledge: (i) the execution, delivery and performance of this Agreement by
      the
      Executive do not and shall not conflict with, breach, violate or cause a default
      under any contract, agreement, instrument, order, judgment or decree to which
      the Executive is a party or by which he is bound, (ii) the Executive is not
      a
      party to or bound by any employment agreement, non-compete agreement or
      confidentiality agreement with any other person or entity and (iii) upon the
      execution and delivery of this Agreement by the Company, this Agreement shall
      be
      the valid and binding obligation of the Executive, enforceable in accordance
      with its terms. The Executive hereby acknowledges and represents that he has
      consulted with legal counsel regarding his rights and obligations under this
      Agreement and that he fully understands the terms and conditions contained
      herein.

     

    
      12.  Company’s
        Representations.

    

     

    The
      Company hereby represents and warrants to the Executive that (i) the execution,
      delivery and performance of this Agreement by the Company do not and shall
      not
      conflict with, breach, violate or cause a default under any contract, agreement,
      instrument, order, judgment or decree to which the Company is a party or by
      which it is bound; (ii) upon the execution and delivery of this Agreement by
      the
      Executive, this Agreement shall be the valid and binding obligation of the
      Company, enforceable in accordance with its terms; and (iii) the Company’s
      representations made by the Board of Directors and members of senior management
      to the Executive prior to the execution of this Agreement regarding the science,
      business or fiscal propriety of the Company are accurate in all material
      respects.

     

    
      13.  Enforcement.

    

     

    Because
      the Executive’s services are unique and because the Executive has access to
      confidential information concerning the Company, the parties hereto agree that
      money damages would not be an adequate remedy for any breach of this Agreement.
      Therefore, in the event of a breach of this Agreement, the Company may, in
      addition to other rights and remedies existing in its favor, apply to any court
      of competent jurisdiction for specific performance and/or injunctive or other
      relief in order to enforce, or prevent any violations of, the provisions hereof
      (without posting a bond or other security).

     

    
      14.  Severability.

    

     

    In
      case
      any one or more of the provisions or part of a provision contained in this
      Agreement shall for any reason be held to be invalid, illegal or unenforceable
      in any respect in any jurisdiction, such invalidity, illegality or
      unenforceability shall be deemed not to affect any other provision or part
      of a
      provision of this Agreement, nor shall such invalidity, illegality or
      unenforceability affect the validity, legality or enforceability of this
      Agreement or any provision or provisions hereof in any other jurisdiction;
      and
      this Agreement shall be reformed and construed in such jurisdiction as if such
      provision or part of a provision held to be invalid or illegal or unenforceable
      had never been contained herein and such provision or part reformed so that
      it
      would be valid, legal and enforceable in such jurisdiction to the maximum extent
      possible. In furtherance and not in limitation of the foregoing, the Company
      and
      the Executive each intend that the covenants contained in Sections 5 and 6
      shall
      be deemed to be a series of separate covenants, one for each and every state
      of
      the United States and any foreign country set forth therein. If, in any judicial
      proceeding, a court shall refuse to enforce any of such separate covenants,
      then
      such unenforceable covenants shall be deemed eliminated from the provisions
      hereof for the purpose of such proceedings to the extent necessary to permit
      the
      remaining separate covenants to be enforced in such proceedings. If, in any
      judicial proceeding, a court shall refuse to enforce any one or more of such
      separate covenants because the total time, scope or area thereof is deemed
      to be
      excessive or unreasonable, then it is the intent of the parties hereto that
      such
      covenants, which would otherwise be unenforceable due to such excessive or
      unreasonable period of time, scope or area, be enforced for such lesser period
      of time, scope or area as shall be deemed reasonable and not excessive by such
      court.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    
      15.  Entire
        Agreement: Amendment.

    

     

    This
      Agreement sets forth the entire agreement and understanding of the parties
      hereto with respect to the matters covered hereby and supersedes any prior
      agreement or understanding. This Agreement may not be amended, waived, changed,
      modified or discharged except by an instrument in writing executed by or on
      behalf of the party against whom enforcement of any amendment, waiver, change,
      modification or discharge is sought. No course of conduct or dealing shall
      be
      construed to modify, amend or otherwise affect any of the provisions
      hereof.

     

    
      16.  Notices.

    

     

    All
      notices, requests, demands and other communications hereunder shall be in
      writing and shall be deemed to have been duly given: if physically delivered,
      upon delivery; if delivered by express mail or other expedited service, upon
      delivery; or if mailed, postage prepaid, via certified mail, return receipt
      requested, upon receipt; addressed as follows:

     

    
      
        	
                (a)

              	
                To
                  the Company:

              	
                (b)

              	
                To
                  the Executive: 

              
	 	 	 	 
	 	
                InovaChem

                c/o
                  Polymed

              	 	
                Shao
                  Xun Xu

                c/o
                  Polymed

              
	 	 	 	 
	 	
                3040
                  Post Oak Blvd. #1110

                Houston,
                  TX 77056

              	 	
                3040
                  Post Oak Blvd. #1110

                Houston,
                  TX 77056

              

      

       

      and
        / or to such other persons and addresses as any
        party shall have specified in writing to the other pursuant to this
        provision.

       

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    
      17.  Assignability.

    

     

    This
      Agreement shall not be assignable by either party and shall be binding upon,
      and
      shall inure to the benefit of, the heirs, executors, administrators, legal
      representatives, successors and assigns of the parties. In the event that all
      or
      substantially all of the business of the Company is sold or transferred, then
      this Agreement shall be binding on the transferee of the business of the Company
      whether or not this Agreement is expressly assigned to the
      transferee.

     

    
      18.  Governing
        Law.
        

    

     

    This
      Agreement shall be governed by and construed under the laws of the State of
      Texas.

     

    
      19.  Waiver
        and Further Agreement.

    

     

    Any
      waiver of any breach of any terms or conditions of this Agreement shall not
      operate as a waiver of any other breach of such terms or conditions or any
      other
      term or condition, nor shall any failure to enforce any provision hereof operate
      as a waiver of such provision or of any other provision hereof. Each of the
      parties hereto agrees to execute all such further instruments and documents
      and
      to take all such further action as the other party may reasonably require in
      order to effectuate the terms and purposes of this Agreement.

     

    
      20.  Headings
        of No Effect.

    

     

    The
      paragraph headings contained in this Agreement are for reference purposes only
      and shall not in any way affect the meaning or interpretation of this
      Agreement.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

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

    

      	 	COMPANY:
	 	 	 
	 	INOVACHEM,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ William
              Zuo
	 	
              
William
              Zuo, Chairman & Chief Executive
              Officer

    

    
      	 	 	 
	 	EXECUTIVE:
	 
 	 
 	 
 
	 	By:  	/s/ Shao
              Xun Xu
	 	
              
Shao
              Xun Xu

    

     

    
      
        
        

      

      
        12Unassociated Document

    SUPPLY
      AGREEMENT

    
 

    THIS
      SUPPLY AGREEMENT (hereinafter
      "Agreement") is made this 28th
      day of
      June, 2008, by and between InovaChem Inc., a Delaware corporation, with
      headquarters at 3040
      Post
      Oak Blvd, Suite 1110, Houston, Texas 77056, USA (hereinafter
      “InovaChem”),
      and
Polymed
      Therapeutics Inc., a Texas corporation, with
      headquarters
      at 3040
      Post Oak Blvd, Suite 1110, Houston, Texas 77056, USA (hereinafter
“Polymed”).

     

    RECITALS

    

    
      	 	
              A.

            	
              InovaChem
                owns the Intellectual Property (as defined below), which relates
                to the
                manufacture of sucralose.

            

    

    

    
      	 	
              B.

            	
              Polymed
                manufactures food
                and pharmaceutical ingredients for use in products similar to sucralose.
                

            

    

     

    
      	 	
              C.

            	
              InovaChem
                and Polymed desire that Polymed manufacture sucralose exclusivelyfor
                InovaChem on the terms and conditions set forth in this
                Agreement.
                

            

    

     

    AGREEMENT

    

    In
      consideration of the premises, and for other good and valuable consideration,
      the receipt and sufficiency of which hereby are acknowledged, the parties hereby
      agree as follows: 

    

    1. Definitions. In
      this
      Agreement the following terms shall have the following meanings whenever such
      terms are used:

    

    (a) “Cost
      Price” shall mean the cost of manufacturing the Product as set forth on
Schedule
      A
      attached
      hereto. 

     

    (b) “Intellectual
      Property” shall mean any and all patent, patent application and other patent
      right, copyright, trademark, and tradename owned by or licensed to InovaChem,
      its subsidiaries and affiliates, including but not limited to those set forth
      on
Schedule
      B
      attached
      hereto. 

    

    (c) “Product”
      shall mean sucralose and sucralose products manufactured in accordance with
      the
      Intellectual Property.

    

    (d)
       “Regulations”
      shall mean any and all Federal and State laws, including without limitation,
      the
      regulations, policies and guidelines promulgated by the U.S. Food and Drug
      Administration and other applicable regulatory authorities, with respect to
      the
      manufacturing and testing practices for products similar to the
      Product.

    

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    (e)
       “Specifications”
      shall mean the technical specifications for the manufacture of the Product
      as
      set forth on Schedule
      C
      attached
      hereto.

    

    2. Term.
      This
      Agreement shall be effective from the date first set forth above (the “Effective
      Date”). The term of this Agreement shall be for a period of thirty-six (36)
      months from the Effective Date. This Agreement shall automatically renew for
      successive twelve (12) month periods, unless a party provides notice to the
      other party within ninety (90) days prior to the expiration of the term of
      this
      Agreement, as such term may have been extended, that such party does not wish
      to
      extend the term of this Agreement. This Agreement may also be terminated by
      either party upon ninety (90) days prior written notice to the other party.
      

    

    3. Purchase
      Orders; Delivery of Product.
      

    

    (a)  Polymed
      shall manufacture the Product pursuant to the Specifications and in accordance
      with the Intellectual Property, and deliver to InovaChem the Product in such
      quantities as InovaChem may order from time to time pursuant to one or more
      purchase orders (each a “Purchase Order”) in accordance with the terms of this
      Agreement. Each Purchase Order will set forth the Product ordered, the quantity
      of such Product and the Purchase Price for the Product calculated in accordance
      with Schedule
      A.
      The
      delivery date for the Product will be sixty (60) days from the date of the
      Purchase Order. Polymed shall promptly notify InovaChem of any change in the
      lead time. Polymed shall confirm in writing its acceptance of each Purchase
      Order upon receipt of such Purchase Order. Delivery for all Products will be
      F.O.B. ex-factory. InovaChem shall be responsible for all costs associated
      with
      transporting and importing the Product, including, without limitation, freight
      fees, insurance, taxes, customs, duties, licenses, permits and other
      governmental fees required to deliver the Product to the destination of
      InovaChem’s choice. In
      January of each year, InovaChem shall provide a forecast of the quantity of
      Product InovaChem anticipates purchasing during such year. Such forecast shall
      not bind InovaChem to order the forecasted amount during such year.

    

    (b) The
      parties acknowledge that the Product to be manufactured and delivered pursuant
      to the Purchase Orders shall not be sold directly to consumers at this time.
      If
      at any time in the future, Product delivered pursuant to any Purchase Order
      is
      to be sold directly to consumers, InovaChem shall identify that such Product
      is
      for sale to consumers on the Purchase Order and provide the appropriate labeling
      and packaging for such Product that complies in all respects with the
      Regulations.

    

    4.
       Price:
      Payment.
      InovaChem shall purchase the Product from Polymed for the Cost Price plus
      fifteen (15%) percent (the “Purchase Price”). Payment terms shall be net thirty
      (30) days from shipment of the Product by Polymed. Payment will be made by
      bank
      wire transfer pursuant to the wire transfer instructions Polymed provides.
      Polymed
      shall invoice InovaChem for Product on a monthly basis. The invoice shall
      be
      calculated in accordance with Schedule A and shall be subject to Financial
      Audit
      (as defined below) by Inovachem in accordance with this Agreement.
      

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    5. Confidentiality.
      (a) The
      term “Confidential Information” means all products, services, systems,
      technology, designs, devices, processes, plans, ideas, innovations, knowledge,
      know-how, diagrams, directions, specifications, models, formulae, discoveries,
      developments, modifications, data and other information relating to, owned
      or
      used by InovaChem or any parent, subsidiary or affiliate of InovaChem, or to
      any
      business in which InovaChem, or any parent, subsidiary or affiliate of InovaChem
      is engaged or contemplates becoming engaged; all business plans, development
      plans, site plans, architectural and engineering plans, marketing plans,
      marketing strategies, existing and prospective customer lists and information
      of
      InovaChem or any parent, subsidiary or affiliate of InovaChem, or relating
      to
      any business in which InovaChem, or any parent, subsidiary or affiliate of
      InovaChem is engaged or contemplates becoming engaged; all information or data
      supplied by or concerning InovaChem, or any parent, subsidiary or affiliate
      of
      InovaChem, or any client, equity partner, lender or customer of any of the
      foregoing or any business in which any such clients, equity partner, lender
      or
      customers are engaged or contemplate becoming engaged; and all trade secrets
      and
      confidential information belonging to InovaChem or any parent, subsidiary or
      affiliate of InovaChem. In addition, Confidential Information shall include
      all
      Intellectual Property, including without limitation any and all patent, patent
      application, patent right, and all improvements and enhancements thereto (as
      set
      forth on Schedule
      B),
      owned
      or developed by InovaChem, or any parent, subsidiary or affiliate of InovaChem,
      or any employee, contractor, consultant, agent or licensee/licensor of any
      of
      the foregoing. Confidential information shall not belong to or be deemed to
      be
      in the public domain merely as a result of such Confidential Information being
      in the prior possession of Polymed.

    

    (b)
      As a
      consequence of the parties’ relationship with each other, Polymed will receive
      and deal with Confidential Information belonging to InovaChem. Polymed further
      acknowledges that Confidential Information to be received or dealt with by
      it is
      of such a value and nature to InovaChem, and/or protected from disclosure by
      Regulations, as to make it reasonable and necessary for the protection and
      non-disclosure of the Confidential Information to any third party, and that
      InovaChem will be irreparably damaged if Polymed were to disclose any of the
      Confidential Information that it receives or deals with. Polymed acknowledges
      and agrees that all Confidential Information regarding InovaChem or its parents,
      subsidiaries or affiliates which is compiled or obtained by Polymed or furnished
      to it in connection with the parties’ relationship is InovaChem’s exclusive
      property, and that said Confidential Information shall not be disclosed to
      any
      person, firm or entity, any time during or after the term of this Agreement,
      except as required to perform the transaction contemplated by this Agreement.
      Polymed agrees and acknowledges that it shall have no right, title or interest
      in the Confidential Information belonging to InovaChem. Polymed recognizes
      that,
      notwithstanding the provisions of this Agreement, InovaChem may legitimately
      refuse to disclose, or may defer disclosure of, certain Confidential Information
      to the extent that it is not necessary for the purpose of this Agreement. Upon
      demand by InovaChem, and in any event within three (3) days following the
      termination of this Agreement, Polymed will surrender to InovaChem all
      Confidential Information and all other original and facsimile records, documents
      and data in Polymed’s possession or control pertaining to or belonging to
      InovaChem.

    

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    (c)
      In
      the event that Polymed is requested or required (by deposition, interrogatories,
      requests for information or documents in legal, regulatory or administrative
      proceedings, subpoenas, civil investigative demand or similar process), in
      connection with any proceeding, to disclose any Confidential Information
      belonging to InovaChem, Polymed will give InovaChem prompt written notice of
      such request or requirement so that InovaChem may seek an appropriate protective
      order or other remedy and/or waive compliance with the provisions of this
      Agreement, and Polymed will cooperate with InovaChem to obtain such protective
      order or remedy. In the event that such protective order or other remedy is
      not
      obtained or InovaChem waives compliance with the relevant provisions of this
      Agreement, Polymed will furnish only that portion of the Confidential
      Information which, in the opinion of its counsel, is legally required to be
      disclosed and, will use its best efforts to obtain assurances that confidential
      treatment will be accorded to such information.

    

    6. Existing
      Intellectual Property. Polymed
      shall have no rights in and to the Intellectual Property as a result of being
      a
      prior assignee of such Intellectual Property. InovaChem shall retain all right,
      title and interest arising under the United States Patent Act, the United States
      Trademark Act, the United States Copyright Act and all other applicable
      Regulations relating to the Intellectual Property, the Product, and any label,
      trademark or tradename associated therewith (collectively, "InovaChem's
      Intellectual Property"). Neither Polymed nor any third party shall acquire
      any
      right, title or interest in InovaChem's Intellectual Property by virtue of
      this
      Agreement or otherwise, except to the extent expressly provided
      herein.

     

    7. Individually
      Owned Inventions.
      Except
      as the parties may otherwise agree in writing, any Invention (as defined herein)
      which is conceived, reduced to practice, or created by Polymed in the course
      of
      performing its obligations under this Agreement as it relates to the Products
      and Intellectual Property shall be solely owned by InovaChem, whether or not
      InovaChem is the inventing party. Any and all use and exploitation of the
      Invention shall be solely at the discretion of InovaChem. For purposes of this
      Agreement, "Invention" shall mean any invention, innovation, improvement,
      development, discovery, computer program, device, trade secret, method,
      know-how, process, technique or the like, whether or not written or otherwise
      fixed in any form or medium, regardless of the media on which contained and
      whether or not patentable or copyrightable. Polymed shall assign, or cause
      to be
      assigned, to InovaChem
      all
      patent rights and other intellectual property rights covering any Invention.
      

     

    8. Exclusivity.
      Polymed
      shall manufacture the Product exclusively for InovaChem. Polymed shall not
      manufacture, sell or otherwise supply Product or any other sucralose-related
      product to any third party without the prior written consent of
      InovaChem.

    

    9. Specifications:
      Manufacturing process.
      Polymed
      shall manufacture the Product in accordance with the Specifications and the
      manufacturing process of the Intellectual Property. Polymed shall not modify
      or
      deviate from the Specifications or the manufacturing process pursuant to the
      Intellectual Property without the prior written consent of InovaChem.
       Polymed
      shall test, or cause to be tested, each batch of Product manufactured pursuant
      to this Agreement before delivery to InovaChem to ensure the Product conforms
      with the Specifications in all respects. A certificate of analysis for each
      batch of Product will be delivered to InovaChem that sets forth the items tested
      and such test results. Polymed shall send such certificate to InovaChem prior
      to
      or at the time the Product is shipped to InovaChem. Polymed will obtain and
      maintain all permits and licenses required for it to carry out its obligations
      pursuant to this Agreement, and will comply with all applicable Regulations
      in
      connection with manufacturing, handling, storage, distribution, and resale
      of
      any Product delivered to InovaChem. Polymed may use subcontractors
      located
      in the People’s Republic of China
      to
      fulfills its manufacturing obligations under this Agreement; provided, however,
      that Polymed must obtain InovaChem’s prior written consent of any subcontractor
      that Polymed seeks to use to manufacture the Product in accordance with Section
      21. Polymed
      shall
      maintain internal standard operating procedures as to product recalls and the
      treatment of product complaints and inquiries regarding safety, quality or
      efficacy that are in keeping with accepted standards in the United States,
      and
      shall promptly notify InovaChem of any issues associated with the Product of
      which Polymed becomes aware. 

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

       

    

    10. Warranties.
      Polymed
      represents and warrants to and covenants with InovaChem that upon delivery,
      the
      Product shall conform to the Specifications in all respects, and it shall have
      been manufactured in accordance with the Intellectual Property. Polymed
      covenants that the Product will be manufactured in accordance with all
      applicable Regulations, including applicable United States Federal laws and
      regulations, and applicable regulations of the countries where the Product
      may
      be sold or distributed. Polymed covenants that the Product will be fit for
      consumption by humans and animals. EXCEPT
      AS
      EXPRESSLY SET FORTH IN THIS AGREEMENT, POLYMED MAKES NO OTHER WARRANTIES,
      EXPRESSED OR IMPLIED, WITH RESPECT TO PRODUCT, INCLUDING, BUT NOT LIMITED TO,
      WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. 

    

    11.
       Audit.
      (a)
      InovaChem shall have the right to visit and audit Polymed’s manufacturing
      facilities to determine compliance with this Agreement and the Regulations,
      and
      that the Product is being manufactured in accordance with the Specifications
      and
      the manufacturing process pursuant to the Intellectual Property. Such audits
      shall be scheduled at mutually agreeable times upon not less than five (5)
      days
      written notice to Polymed, and shall be at InovaChem’s expense. An audit may be
      made upon advance notice of less than five (5) days upon a showing of good
      cause
      as a result of any quality issues of which InovaChem may become
      aware.

    

    (b)
      InovaChem shall have the right to conduct financial audits (hereinafter
“Financial Audit”) from time to time, in its sole discretion, and at its sole
      cost (except as described below) to calculate the Cost Price. Polymed shall
      provide all documents requested by InovaChem, including but not limited to,
      all
      receipts, invoices, and accounting records of the costs comprising the Cost
      Price as set forth in Schedule
      A.
      If such
      Financial Audit reveals that the Cost Price was overstated by more than five
      percent (5%), then Polymed shall bear the cost of the Financial
      Audit.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    12. Non-Conforming
      Product.
      If
      within ninety (90) days after accepting delivery of any Product, InovaChem
      determines that all or any part of such Product was non-conforming upon the
      date
      of delivery, InovaChem may reject such non-conforming Product by giving written
      notice to Polymed. InovaChem shall provide all analysis results with respect
      to
      such non-conforming Product to Polymed. Polymed shall reimburse InovaChem for
      the amount of the Purchase Price and all other costs paid by InovaChem in
      connection with such non-conforming Product, including without limitation all
      freight and shipping charges and all testing costs. Polymed shall
      use
      commercially reasonable efforts to replace non-conforming Product with
      conforming Product
      promptly. In the event that Polymed does not agree that such Product is
      non-conforming, Polymed, at it sole expense, shall have the right to submit
      such
      Product to a third party laboratory, mutually agreed to by the parties, for
      testing. The results of the third party laboratory shall be binding upon the
      parties. If Product is determined by the third party laboratory to be
      conforming, InovaChem shall reimburse Polymed for the cost of testing the
      Product by the third party laboratory.

     

    13. Relationship
      of Parties.
      This
      Agreement shall not constitute or be construed as creating a partnership or
      joint venture between InovaChem and Polymed, and neither party shall be liable
      for any debts or obligations of the other party. Neither party shall in any
      way
      be considered an agent or representative of the other party in any dealings
      with
      any third party, and neither party may act for, nor bind, the other party in
      any
      such dealings.

    

    14. Indemnity.
      (a)
      Polymed shall indemnify, defend and hold harmless InovaChem, and its
      subsidiaries, affiliates, successors and assigns and its and their respective
      shareholders, members, managers, officers, directors, employees, stockholders,
      agents and affiliates from and against any and all damages, claims, losses,
      liabilities and expenses, including, without limitation, legal fees and
      expenses, arising from, through or in any manner related to (i) any breach
      by
      Polymed of its obligations under this Agreement; (ii) any act or omission of
      Polymed or its employees, agents, independent contractors, invitees, or
      licensees in connection with Polymed’s performance under this Agreement, and
      (iii) liability for any premiums, taxes, or contributions of or with respect
      to
      Polymed, and its employees, agents or independent contractors that may be
      assessed against InovaChem.

    

    (b)
      InovaChem shall indemnify, defend and hold harmless Polymed and its affiliates,
      successors and assigns and its and their respective shareholders, officers,
      directors, employees, stockholders, agents and affiliates from against any
      and
      all damages, claims, losses, liabilities and expenses, including, without
      limitation, legal fees and expenses, arising from, through or in any manner
      related to (i) any breach by InovaChem of its obligations under this Agreement;
      (ii) any
      liability arising out of or resulting from any Product that
      complies with the Specifications and was manufactured pursuant to the
      Intellectual Property unless such liability also results from a breach by
      Polymed of its obligations under this Agreement; (iii) any
      liability arising out of or resulting from InovaChem’s compliance or
      noncompliance with any Regulation;
      and (iv)
      liability for any premiums, taxes, or contributions of or with respect to
      InovaChem, and its employees, agents or independent contractors that may be
      assessed against Polymed.

    

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    15.
      Limitation
      of Liability.
      To the
      extent permitted under applicable Regulations and except for a breach of Section
      5, neither party shall be liable to the other party for any special,
      consequential, exemplary or incidental damages, arising from any claim relating
      to this Agreement, whether such claim is based on contract, tort (including
      negligence) or otherwise, even if it has been advised of the possibility or
      likelihood such damages. Notwithstanding the foregoing, nothing in this section
      shall limit either party’s right to indemnification for claims by third parties
      seeking any special, consequential, exemplary or incidental
      damages.

    

    16. Insurance
      Policies. InovaChem
      shall procure all insurance policies in connection with the Product, including
      without limitation a policy covering claims for product liability. Polymed
      shall
      be named as an additional insured on any product liability insurance policy
      procured by InovaChem with respect to the Product.

    

    17. Notices.
      All
      notices, requests, consents and other communications required or permitted
      under
      this Agreement shall be in writing and shall be deemed to have been properly
      given (a) upon delivery, if delivered in person or by facsimile transmission
      with receipt acknowledged by the recipient thereof, (b) one business day after
      having been deposited for overnight delivery with any reputable overnight
      courier service, or (c) three business days after having been deposited in
      any
      post office or mail depository regularly maintained by the U.S. Postal Service
      and sent by registered or certified mail, postage prepaid, return receipt
      requested, addressed as follows:

     

    

      
        	
                If
                  to InovaChem:

              	
                3040
                  Post Oak Blvd, Suite 1110,

                Houston,
                  Texas 77056, USA

              
	 	
                Attention:
                  Henry Toh

              
	 	 
	
                If
                  to Polymed:

              	
                3040
                  Post Oak Blvd, Suite 1110,

                Houston,
                  Texas 77056, USA

              
	 	
                Attention:
                  William W. Zuo, PhD.

              

      

    

    

    Any
      party
      hereto may change the address to which communications or copies are to be sent
      to such party by giving notice of such change of address in conformity with
      the
      provisions of this Section for the giving of notice. 

    

    18. No
      Waiver.
      The
      failure of either party to this Agreement to insist on the performance of any
      of
      the terms and conditions of this Agreement, or the waiver of any breach of
      any
      of the terms and conditions of this Agreement, shall not be construed as a
      continuing waiver or as a waiver of any other terms and conditions, but such
      terms and conditions shall continue and remain in full force and effect as
      if no
      forbearance or waiver had occurred.

    

    19.
       Governing
      Law; Jurisdiction.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Texas without giving effect to its conflicts of laws principles. Each
      party hereby irrevocably submits to the exclusive jurisdiction of the courts
      of
      the State of Texas and the United States District Court for the State of Texas,
      for the purpose of any action or proceeding arising out of or relating to this
      Agreement and each party hereby irrevocably agrees that all claims in respect
      of
      such action or proceeding may be heard and determined exclusively in any Texas
      state or federal court. Each party agrees that a final judgment in any action
      or
      proceeding shall be conclusive and may be enforced in other jurisdictions by
      suit on the judgment in any other matter provided by law.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    20. Partial
      Invalidity.
      If any
      one or more of the provisions contained in this Agreement shall, for any reason,
      be held to be invalid, illegal or unenforceable in any respect, this Agreement
      shall be reformed to eliminate such invalid, illegal or unenforceable provisions
      and this Agreement shall be construed in an enforceable manner that best
      achieves the parties’ intent in entering into this Agreement.

    

    21. Assignment;
      Binding Effect.
      Neither
      party may assign its rights or obligations, in whole or in part, hereunder
      without the prior written consent of the other party. Polymed may not
      subcontract any of its manufacturing obligations hereunder without the prior
      written consent of InovaChem. Any attempt to assign this Agreement without
      the
      prior written consent of the other party shall be void. If InovaChem permits
      Polymed to delegate certain of its obligations hereunder, at a minimum, Polymed
      (a) shall remain obligated to InovaChem under this Agreement; (b) shall be
      liable for the performance of its subcontractor; (c) shall indemnify InovaChem
      for any claims against InovaChem, and/or its subsidiaries, affiliates,
      successors and assigns, and their respective shareholders, members, managers,
      officers, directors, employees, stockholders, agents and affiliates, as a result
      of the acts or omissions of its subcontractor; and (d) shall assure that
      InovaChem has the right to inspect the facilities of the subcontractor (similar
      to the inspection rights provided hereunder), which facilities may be located
      in
      China. The terms of this Agreement shall be binding on and inure to the benefit
      of the parties and their respective permitted successors and permitted assigns.
      

    

    22. 
      Modification Of Agreement.
      Any
      modification of this Agreement shall be in writing signed by both parties
      hereto.

    

    23. Survival
      Of Rights.
      The
      termination of this Agreement for any reason shall be without prejudice to,
      and
      shall not affect, the right of each party to recover from the other party any
      and all damages to which such party may be entitled. In addition, any
      termination of this Agreement shall not release the parties from liabilities
      and
      obligations accrued as of the date thereof. Notwithstanding anything to the
      contrary that may be contained herein, in the event of the termination or
      expiration of this Agreement, the idemnification and confidentiality obligations
      contained herein shall survive such termination or expiration.

    

    24. Force
      Majeure.
      The
      parties shall not be liable for the failure or delay in performing any
      obligation under this Agreement if and to the extent such failure or delay
      is
      due to causes beyond the reasonable control of the affected party, including
      a)
      acts of God, b) weather, fire or explosion, c) war, invasion, riot or other
      civil unrest; d) changes in governmental laws, orders, restrictions, actions,
      embargoes or blockages, e) national or regional emergency, f) injunctions,
      strikes, lockouts, labor trouble or other industrial disturbances, g) shortage
      of adequate fuel, power, materials or transportation facilities, or h) or any
      other event which is beyond the reasonable control of the affected party,
      provided that the party affected shall promptly notify the other as soon as
      practicable, in writing, and in all events within ten (10) business days of
      the
      force majeure condition, and shall be required to use its best efforts to
      eliminate, cure or overcome any such causes and to resume performance of its
      obligations as soon as possible.

    

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    25. Entire
      Agreement.
      This
      Agreement embodies the entire agreement between the parties with respect to
      the
      subject matter expressed herein and supersedes all prior agreements, whether
      written or oral.

    

    26. Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original, but all of which together shall constitute but one
      and
      the same instrument.

    

    The
      parties hereto have caused this Agreement to be executed on the date first
      written above. 

     

    
      	InovaChem Inc.	 	 	Polymed
              Therapeutics Inc.
	 	 	 	 
	By:
              /s/ Henry
              Toh	 	 	By:
              /s/ William W. Zuo
	
              

              Printed:
                Henry
                Toh

              Title:
                Executive Vice President

            	 	 	
              
Printed:
              William W. Zuo, PhD.
Title:
              President

    

    
 

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      A

    

    CALCULATION
      OF PRICE TO BE CHARGED BY POLYMED TO INOVACHEM

    

    Definitions:

    

    
      	·  	
              Direct
                costs - labor, mechanical materials, packaging, raw materials (sugar,
                solvents, chemicals - to be identified), and
                transportation.

            

    

    
      	·  	
              Indirect
                costs - utilities (water, electricity, steam, waste disposal)
                -
                at the actual cost billed to Polymed and its affiliates with an allocation
                to Product to be agreed upon by both parties based upon use of the
                applicable facilities to manufacture Product versus use for other
                purposes.

            

    

    
      	·  	
              Overhead
                - Equipment depreciation, insurance, property taxes, and salaries
                (not
                included in direct labor) with
                an allocation to Product to be agreed upon by both parties based
                upon the
                overhead applicable to manufacture Product versus use for other
                purposes.

            

    

    

    Cost
      Price:

    

    The
      Cost
      Price shall be the sum of all costs for the manufacture of Product, which
      include direct costs, indirect costs, overhead and any other costs directly
      attributable to manufacture of Product.

    

    Calculation
      of the Cost Price shall be determined as follows:

    
      	1.  	
              Actual
                direct costs plus

            

    

    
      	2.  	
              Allocation
                of indirect costs using agreed upon percentages
                plus

            

    

    
      	3.  	
              Allocation
                of overhead using agreed upon
                percentages

            

    

    

    Purchase
      Price: 

    

    Total
      of
      Cost Price plus fifteen (15%) percent. Should
      the Purchase Price calculated in accordance with this Schedule be greater than
      the global market price of the Product, both parties shall negotiate and adjust
      the Purchase Price accordingly, to a mutually agreeable price to both
      parties.

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    SCHEDULE
      B

    

    INTELLECTUAL
      PROPERTY

    

    
      	1.  	
              U.S.
                Patents Applications. 

            

    

    
      	 	Application
              No. 11/898,652 - Novel Process for preparing sucrose
              6-ester

    

    
      	 	
              Application
                No. 11/806,810 - Novel Chlorination process for preparing
                sucralose

            

    

    
      	 	
              Application
                No. 12/003,850 - CIP of 11/806,810

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      C

    

    SPECIFICATIONS

    

    SUCRALOSE
      (Product)

    

    The
      Product shall be manufactured to meet either of the following specifications,
      as
      stated in the certificate of analysis, and these criteria, unless otherwise
      agreed to between the parties, shall be InovaChem’s criteria for determining
      whether to accept Product:

    

    Specification
      I:

    United
      States Pharmacopeia, 30th
      Revision (Assay), 29th
      Revision (karl fisher), 28th
      Revision (Residue on Ignition)

    

    Sucralose
      contains not less than 98.0 percent and not more than 102.0 percent of
      C12H19Cl3O8,
      calculated on the anhydrous basis.

    Identification— 

    A:
      Infrared
      Absorption [Missing Graphic Reference]197K[Missing
      Graphic Reference].

    B:
      The
      retention time of the principal peak in the chromatogram of the Assay
      preparation
      corresponds to that in the chromatogram of the Standard
      preparation,
      as
      obtained in the Assay.

    C:
      The
      RF
      value of
      the principal spot in the chromatogram of the Test
      solution
      corresponds to that of Standard
      solution 1,
      as
      obtained in the test for Related
      compounds.

    Specific
      rotation [Missing Graphic Reference]781S[Missing
      Graphic Reference]:
      between
      +84.0[Missing Graphic Reference]
      and
      +87.5[Missing Graphic Reference],
      determined at 20[Missing Graphic Reference].
      

    Test
      solution:
      10 mg
      per mL, in water.

    Water,
      Method
      I [Missing Graphic Reference]921[Missing
      Graphic Reference]:
      not more
      than 2.0%.

    Residue
      on ignition [Missing Graphic Reference]281[Missing
      Graphic Reference]:
      not more
      than 0.7%.

    Heavy
      metals, Method
      II [Missing Graphic Reference]231[Missing
      Graphic Reference]:
      0.001%.

    Limit
      of hydrolysis products (0.1%).

    Limit
      of methanol—
      not more
      than 0.1% of methanol is found.

    Related
      compounds—
      (0.5%).

    

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    Specification
      II:

    Food
      Chemical Code, 5th
      Edition

    

    Identification

    A.
      The
      infrared absorption spectrum of a potassium bromide dispersion of the sample
      exhibits relative maxima at the same wavelengths as those of a similar
      preparation of Sucralose Standard for analytical use.1

    B.
      The
      retention time of the major peak (excluding the solvent peak) in the liquid
      chromatogram of the Sample
      Preparation is
      the
      same as that of the Standard
      Preparation obtained
      in the Assay
      (below).

    C.
      The Rf
      value of the major spot in the thin-layer chromatogram of the Test
      Preparation is
      the
      same as that of the Standard
      Preparation obtained
      in the test for Related
      Substances (below).

    Assay
      Not
      less
      than 98.0% and not more than 102.0% of C12H19Cl3O8, calculated on the anhydrous
      basis.

    Hydrolysis
      Products Passes
      test.

    Lead
      Not
      more
      than 1 mg/kg.

    Methanol
      Not
      more
      than 0.1%.

    Optical
      (Specific) Rotation [_]D
      20°:
      Between +84.0° and +87.5°, calculated on the anhydrous basis.

    Related
      Substances Passes
      test.

    Residue
      on Ignition Not
      more
      than 0.7%.

    Water
      Not
      more
      than 2.0%.

     

    
      
        
        

      

      
        13

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