Document:

ex41.htm

EXHIBIT 4.1

 

NEITHER THIS WARRANT NOR THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THEY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL (WHICH MAY BE COUNSEL TO THE COMPANY) SATISFACTORY TO THE COMPANY TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED

 

	
Warrant No.  03252011

	
To Purchase 13,575,000 Shares

	  	
of Class A Common Stock

	  	
($0.001 par value)

	  	  

WARRANT

 

YTB INTERNATIONAL, INC.

 

INCORPORATED UNDER THE

 

LAWS OF THE STATE OF DELAWARE

 

§ 1 Basic Terms.  This certifies that, for value received, the registered owner is entitled, subject to the terms and conditions of this Warrant, from the date of issue until the expiration date and time shown below (the “Expiration Date”), to purchase 13,575,000 shares of the Class A Common Stock, par value $0.001 (the “Common Stock”), of YTB International, Inc. (the “Company”) from the Company at the Purchase Price shown below (the “Purchase Price”), on delivery of this Warrant to the Company with the exercise form duly executed and payment of the Purchase Price (in cash or by certified or bank cashier’s check payable to the order of the Company by wire transfer to the Company’s designated account for each share purchased.

 

	
Registered Owner:

	
Wood River Capital, LLC

	  	  
	
Purchase Price:

	
$0.032 per share

	  	  
	
Expiration Date and Time:

	
5:00 p.m., Wood River, Illinois time, March 25, 2016

	  	  
	  	  

 

  

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§ 2 Company’s Covenants as to Common Stock.  Promptly after the exercise of this Warrant and the payment of the Purchase Price pursuant to § 1, the Company will issue to the Registered Owner or upon the order of the Registered Owner hereof, a certificate or certificates for the number of whole shares of Common Stock to which the Registered Owner is entitled.  Shares deliverable on the exercise of this Warrant shall, at delivery, be fully paid and nonassessable, free from taxes, liens, and charges with respect to their purchase.  The Company shall take any necessary steps to assure that the par value per share of the Common Stock is at all times equal to or less than the Purchase Price per share of the Common Stock issuable pursuant to this Warrant.  The Company shall at all times reserve and hold available solely for issuance and delivery upon the exercise of this Warrant, sufficient shares of Common Stock to satisfy all conversion and purchase rights of outstanding convertible securities, options and warrants.

 

§ 3 Method of Exercise.  The purchase rights represented by this Warrant are exercisable at the option of the registered owner in whole or in part, at any time and from time to time within the period above specified.  In case of the exercise of this Warrant for fewer than all the shares then purchasable hereunder, the Company shall cancel this Warrant and execute and deliver a new Warrant of like tenor and date for the balance of the shares purchasable.

 

§ 4 Adjustment of Shares Purchasable.  The number of shares purchasable hereunder and the Purchase Price per share are subject to adjustment from time to time as specified in this Warrant.

 

§ 5 Limited Rights of Owner.  This Warrant does not entitle the owner to any voting rights or other rights as a stockholder of the Company, or to any other rights whatsoever except the rights herein expressed.  No dividends are payable or will accrue on this Warrant or the shares purchasable hereunder until, and except to the extent that, this Warrant is exercised.

 

§ 6 Exchange for Other Denominations.  This Warrant is exchangeable, on its surrender by the registered owner to the Company, for new Warrants of like tenor and date representing in the aggregate the right to purchase the number of shares purchasable hereunder in denominations designated by the registered owner at the time of surrender.

 

§ 7 Transfer.  The Common Stock issuable upon exercise of this Warrant is transferable only on the books of the Company by the registered owner in person or by attorney, upon surrender of such Common Stock, properly endorsed.

 

§ 8 Recognition of Registered Owner.  Prior to due presentment for registration of transfer of this Warrant, the Company may treat the registered owner as the person exclusively entitled to receive notices and otherwise to exercise rights hereunder.

 

  

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§ 9 Adjustments of Purchase Price and Number of Shares.  The Purchase Price in effect at any time, and the number and kind of securities purchasable upon exercise of this Warrant shall be subject to adjustment from time to time upon the happening of certain events as follows:

 

	
(a)  

	
In case the Company shall hereafter (i) declare a dividend or a distribution on its Common Stock in shares of its Common Stock, (ii) subdivide its outstanding shares of Common Stock, (iii) combine its outstanding Common Stock into a smaller number of shares, or (iv) issue other securities of the Company by reclassification of its Common Stock (including any such reclassification in connection with a consolidation or merger in which the Company is the continuing corporation), the Purchase Price in effect at the time of the record date for such dividend or distribution or the effective date of such subdivision, combination or reclassification shall be proportionately adjusted so that the owner of any Warrant exercised after such date shall be entitled to receive the aggregate number and kind of shares of Common Stock which, if such Warrant had been exercised immediately prior to such time, he would have owned upon such exercise and been entitled to receive upon such dividend, distribution, subdivision, combination or reclassification.  If any cash is paid or other property that is not stock or securities described above (“Other Property”) is distributed in conjunction with the issuance of distribution of or change in stock or securities described in the foregoing sentence, then the aggregate purchase price for the Common Stock will be reduced by the amount of cash and the value of the Other Property Registered Owner would have received had it exercised this Warrant provided in the foregoing sentence.  Such adjustment shall be made successively whenever any event listed above shall occur.

 

	
(b)  

	
If after the date of this agreement, Company purchases for cash or property (other than in exchange for shares of Company’s stock) shares of Company’s Common Stock for a price per share in excess of the then current market value of each share purchased, then the price under this Warrant for each share of Common Stock will be reduced by the amount of such excess.  Property will be valued at the time the purchase price is payable.  Values under this §9(b) will be determined by Company’s board of directors in good faith, and their determination will be final, binding and conclusive on all parties.  Company will furnish Registered Owner with a statement of the valuations under this § 9(b).  The acquisition by Company of Common Stock in exchange, in whole or in part, for Company’s debt will be governed by the provisions of this § 9(b) – and not by the provisions of § 9(a).

 

	
(c)  

	
If after the date of this agreement, Company issues any Common Stock or other warrants, options or rights to purchase any Common Stock, and if the purchase price for such Common Stock or other warrants, options or rights (the “Issue Price”) is less than the then current market price, and if any such issuance takes place when the Common Stock is not publicly traded, then the Purchase Price under this Warrant will be reduced to the Issue Price.  The Issue Price of Common Stock under any warrant, option or other right will not include the price paid for the warrant, option or other right.

 

The Company shall not undertake any reverse stock split, combination, reorganization or other reclassification of its capital stock which would have the effect of making this Warrant exercisable for less than one share of Common Stock.

 

§ 10 Effect of Merger Etc.  If the Company consolidates with or merges into another corporation, the Registered Owner shall thereafter be entitled on exercise to purchase, with respect to each share of Common Stock purchasable hereunder immediately before the consolidation or merger becomes effective, the securities or other consideration to which a holder of one share of Common Stock is entitled in the consolidation or merger without any change in or payment in addition to the Purchase Price in effect immediately prior to the merger or consolidation.  The Company shall take any necessary steps in connection with a consolidation or merger to assure that all the provisions of this Warrant shall thereafter be applicable, as nearly as reasonably may be, to any securities or other consideration so deliverable on exercise of this Warrant.  The Company shall not consolidate or merge unless, prior to consummation, the successor Company (if other than the Company) assumes the obligations of this paragraph by written instrument executed and mailed to the Registered Owner at the address of the owner on the books of the Company.

 

  

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§ 11 Notice of Adjustment.  On the happening of an event requiring an adjustment of the Purchase Price or the shares purchasable hereunder, the Company shall forthwith give written notice to the Registered Owner stating the adjusted Purchase Price and number and kind of securities or other property purchasable hereunder resulting from the event and setting forth in reasonable detail the method of calculation and the facts upon which the calculation is based.  The Board of Directors of the Company, acting in good faith, shall determine the calculation.

 

§ 12 Notice and Effect of Dissolution. Etc.  In case a voluntary or involuntary dissolution, liquidation, or winding up of the Company (other than in connection with a consolidation or merger covered by § 10 above) is at any time proposed, the Company shall give at least 30 days’ prior written notice to the Registered Owner.  Such notice shall contain: (a) the date on which the transaction is to take place; (b) the record date (which shall be at least 30 days after the giving of the notice) as of which holders of Common Stock will be entitled to receive distributions as a result of the transaction; (c) a brief description of the transaction; (d) a brief description of the distributions to be made to holders of Common Stock as a result of the transaction; and (e) an estimate of the fair value of the distributions.  Company shall not voluntarily dissolve, liquidate or wind-up without the prior written consent of Registered Owner, which consent shall not be unreasonably withheld, delayed or conditioned.  On the date of the transaction, if it actually occurs, this Warrant and all rights hereunder shall terminate.

 

§ 13 Method of Giving Notice: Extent Required.  Notices shall be given by first class mail, postage prepaid, addressed to the Registered Owner at the address of the owner appearing in the records of the Company.  No notice to Warrant holders is required except as specified herein.

 

§ 14 Restrictions on Transfer.  This Warrant has not been registered under the Securities Act of 1933, as amended.  This Warrant has been purchased for investment and not with a view to distribution or resale, and may not be made subject to a security interest, pledged, hypothecated, or otherwise transferred without an effective registration statement for such Warrant under the Securities Act of 1933, as amended, or an opinion of counsel for the Company or other counsel reasonably acceptable to the Company that registration is not required under such Act.  Any certificates for Common Stock issued upon the exercise of this Warrant shall bear a legend substantially in the following form:

 

“The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended.  These shares have been acquired for investment and not with a view to distribution or resale, and may not be made subject to a security interest, pledged, hypothecated, or otherwise transferred without an effective registration statement for such shares under the Securities Act of 1933, as amended, or an opinion of counsel for the Company or other counsel reasonably acceptable to the Company that registration is not required under such Act.”

 

§ 15 Rule 144 Reporting.  With a view to making available to the holders of this Warrant or any holders of shares of Common Stock issued or issuable upon exercise thereof the benefits of certain rules and regulations of the Commission which may permit the sale of shares of Common Stock issuable upon exercise thereof to the public without registration, the Company agrees, after such time as a public market exists for the Common Shares, to:

 

(a) make and keep public information available as those terms are understood and defined in Rule144;

 

(b) file with the Commission in a timely manner all reports and other documents required of the Company under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended; and

 

(c) furnish to the holder of this Warrant or shares of Common Stock issued upon the exercise thereof forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of Rule 144, and of the Exchange Act, a copy of the most recent annual or quarterly report of the Company filed with the Commission, if any, and such other reports and documents of the Company and other information in the possession of or reasonably obtainable by the Company as such holders may reasonably request in availing themselves of any rule or regulation of the Commission allowing them to sell securities without registration under the Securities Act.

 

  

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§ 16 Assignment.  Registered Owner may assign this Warrant and all rights and benefits contained therein to any of its parent, affiliates or subsidiaries, effective upon delivery of notice thereof to Company.  Upon the effective date of such assignment, the assignee shall be deemed the Registered Owner hereof.

 

§ 17 Information.  Company shall promptly provide to Registered Owner all information provided to Company’s shareholders so long as this Warrant is outstanding.

 

§ 18 Replacement of Warrant.  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement in such reasonable amount as the Company may determine, or (in the case of mutilation) upon surrender and cancellation thereof, the Company at its expense, will issue a replacement warrant in substantially identical form to this Warrant.

 

§ 19 Headings.  The headings in this Warrant are for purposes of reference only and shall not be deemed to constitute a part hereof.

 

§ 20 Governing Law.  This Warrant shall be construed in accordance with and governed by the laws of the State of Delaware.

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be executed this 25th day of March, 2011 by its corporate officer thereunto duly authorized.

 

	 	

YTB INTERNATIONAL, INC.

	 
	 	 	 	 
	 	
By: 

	/s/ Robert M. Van Patten	 
	 	 	

Name: Robert M. Van Patten

	 
	 	 	

Title: President

	 
	 	 	 	 

 

  

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FORM OF ASSIGNMENT

 

[To be executed only upon transfer of Warrant]

 

For value received, the undersigned registered holder of the within Warranty hereby sells, assigns and transfers unto ______________ the right represented by such Warrant to purchase _______ shares of Class A Common Stock of YTB INTERNATIONAL, INC. to which such Warrant relates, and appoints Attorney to make such transfer on the books of YTB INTERNATIONAL, INC. maintained for such purpose, with full power of substitution in the premises.

 

	
Dated:

	  
	  	
(Signature must conform in all respects to name of holder as specified on the face of Warrant)

	  	  
	  	  
	  	  
	  	
(Street Address)

	  	  
	  	  
	  	
(City)(State)(Zip Code)

	
Signed in the presence of:

 

 

 

	  

 

 

 

 

 

 

 

 

 

 

 

6ex1025.htm

EXHIBIT 10.25 

EMPLOYMENT AGREEMENT

This employment agreement (this "Agreement"), dated as of September 1, 2010(the "Effective Date"), is made by and between China Pediatric Pharmaceuticals, Inc., a Nevada corporation (the "Company"), and Ming Gang Xiao (the "Executive") (each, a "Party" and together, the "Parties").

WHEREAS, the Executive is currently employed as a Chief Financial Officer of the Company; and

WHEREAS, the Parties wish to establish the terms of the Executive's continued employment by the Company;

NOW, THEREFORE, in consideration of the foregoing, of the mutual promises contained herein and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, hereby agree as follows:

 

1.         POSITION/DUTIES.

 

(a)       During the Employment Term (as defined in Section 2 below), the Executive shall serve as a Chief Financial Officer of the Company. In this capacity the Executive shall have such duties, authorities and responsibilities commensurate with the duties, authorities and responsibilities of persons in similar capacities in similarly sized companies and such other reasonable duties and responsibilities as the Board of Directors of the Company (the "Board") shall designate. The Executive shall report directly to the Board. The Executive shall obey the lawful directions of the Board and shall use his diligent efforts to promote the interests of the Company and to maintain and promote the reputation thereof.

 

(b)       During the Employment Term, the Executive shall use his best efforts to perform his duties under this Agreement and shall devote all of his business time, energy and skill in the performance of his duties with the Company. The Executive shall not during the Employment Term (except as a representative of the Company or with consent in writing of the Board) be directly or indirectly engaged or concerned in any other business activity. Notwithstanding the foregoing provisions, the Executive is not prohibited from (1) participating in charitable, civic, educational, professional or community affairs or serving on the board of directors or advisory committees of non-profit entities, and (2) managing his and his family's personal investments, in each case, providedthat such activities in the aggregate do not materially interfere with his duties hereunder.

2.         EMPLOYMENT TERM. Except for earlier termination as provided in Section 6, the Executive's employment under this Agreement shall be for a one-year term commencing on the Effective Date and ending on September 30, 2010 (the "Initial Term"). Subject to Section 6, the Initial Term shall be automatically extended for additional terms of successive one-year periods (the "Additional Term") unless the Company or the Executive gives written notice to the other of the termination of the Executive's employment hereunder at least 90 days prior to the expiration of the Initial Term or Additional Term. The Initial Term and any Additional Term shall be referred to herein as the "Employment Term."

 

  

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3.         BASE SALARY. The Company agrees to pay to the Executive a base salary at an annual rate of not less than US$7,036, payable in accordance with the regular payroll practices of the Company. The Executive's Base Salary shall be subject to annual review by the Board (or a committee thereof). The base salary as determined herein from time to time shall constitute "Base Salary" for purposes of this Agreement.

4.         BONUS. With respect to each full fiscal year during the Employment Term, the Executive shall be eligible to earn an annual bonus (the "Annual Bonus") in such amount, if any, as determined in the sole discretion of the Board of up to 50% of the Executive's Base Salary. In addition, the Executive shall be eligible to participate in the Company's bonus and other incentive compensation plans and programs (if any) for the Company's senior executives at a level commensurate with his position and may be entitled to bonus payments in addition to the amount set forth hereinabove.1 

 

5.         EMPLOYEE BENEFITS.

 

(a)       Benefit Plans. The Executive shall be eligible to participate in any employee benefit plan of the Company, including, but not limited to, equity, pension, thrift, profit sharing, medical coverage, education, or other retirement or welfare benefits that the Company has adopted or may adopt, maintain or contribute to for the benefit of its senior executives, at a level commensurate with his positions, subject to satisfying the applicable eligibility requirements. The Company may at any time or from time to time amend, modify, suspend or terminate any employee benefit plan, program or arrangement for any reason in its sole discretion.

1 NOTE: publicly held companies are subject to the $1,000,000 compensation deduction limitation imposed by Internal Revenue Code Section 162(m).

 

(b)       Vacation. The Executive shall be entitled to an annual paid vacation in accordance with the Company's policy applicable to senior executives from time to time in effect, but in no event less than two weeks per calendar year (as prorated for partial years), which vacation may be taken at such times as the Executive elects with due regard to the needs of the Company. The carry-over of vacation days shall be in accordance with the Company's policy applicable to senior executives from time to time in effect.

 

(c)       Business and Entertainment Expenses. Upon presentation of appropriate documentation, the Executive shall be reimbursed for all reasonable and necessary business and entertainment expenses incurred in connection with the performance of his duties hereunder, all in accordance with the Company's expense reimbursement policy applicable to senior executives from time to time in effect.

 

  

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6.         TERMINATION. The Executive's employment and the Employment Term shall terminate on the first of the following to occur:

 

(a)       Disability. The thirtieth (30th) day following written notice by the Company to the Executive of termination due to Disability. For purposes of this Agreement, "Disability" shall mean a determination by the Company in accordance with applicable law that due to a physical or mental injury, infirmity or incapacity, the Executive is unable to perform the essential functions of his job with or without accommodation for 180 days (whether or not consecutive) during any 12-month period.

 

(b)       Death. Automatically on the date of death of the Executive.

 

(c)       Cause. Immediately upon written notice by the Company to the Executive of a termination for Cause. "Cause" shall mean, as determined by the Chief Financial Officer (or its designee) (1) conduct by the Executive in connection with his employment duties or responsibilities that is fraudulent, unlawful or grossly negligent; (2) the willful misconduct of the Executive; (3) the willful and continued failure of the Executive to perform the Executive's duties with the Company (other than any such failure resulting from incapacity due to physical or mental illness); (4) the commission by the Executive of any felony (or the equivalent under the law of the People's Republic of China) (other than traffic-related offenses) or any crime involving moral turpitude; (5) violation of any material policy of the Company or any material provision of the Company's code of conduct, employee handbook or similar documents; or (6) any material breach by the Executive of any provision of this Agreement or any other written agreement entered into by the Executive with the Company.

 (d)       Without Cause. On the thirtieth (30th) day following written notice by the Company to the Executive of an involuntary termination without Cause, other than for death or Disability.

 

(e)       Good Reason. On the sixtieth (60th) day following written notice by the Executive to the Company of a termination for Good Reason. "Good Reason" shall mean, without the express written consent of the Executive, the occurrence of any the following events unless such events are cured (if curable) by the Company within fifteen days following receipt of written notification by the Executive to the Company that he intends to terminate his employment hereunder for one of the reasons set forth below: any material reduction or diminution (except temporarily during any period of incapacity due to physical or mental illness) in the Executive's title, authorities, duties or responsibilities or reporting requirements with the Company.

 

7.         CONSEQUENCES OF TERMINATION.

 

(a)       Disability. Upon termination of the Employment Term because of the Executive's Disability, the Company shall pay or provide to the Executive (1) any unpaid Base Salary and any accrued vacation through the date of termination; (2) any unpaid Annual Bonus accrued with respect to the fiscal year ending on or preceding the date of termination; (3) reimbursement for any unreimbursed expenses properly incurred through the date of termination; and (4) all other payments or benefits to which the Executive may be entitled under the terms of any applicable employee benefit plan, program or arrangement (collectively, "Accrued Benefits").

 

  

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 (b)       Death. Upon the termination of the Employment Term because of the Executive's death, the Executive's estate shall be entitled to any Accrued Benefits.

 

 (c)       Termination for Cause. Upon the termination of the Employment Term by the Company for Cause or by either party in connection with a failure to renew this Agreement, the Company shall pay to the Executive any Accrued Benefits.

 

 (d)       Termination without Cause or for Good Reason. Upon the termination of the Employment Term by the Company without Cause or by the Executive with Good Reason, the Company shall pay or provide to the Executive (1) the Accrued Benefits, and (2) subject to the Executive's execution (and non-revocation) of a general release of claims against the Company and its affiliates in a form reasonably requested by the Company, (A) continued payment of his Base Salary for two (2) months after termination, payable in accordance with the regular payroll practices of the Company, but off the payroll; and (B) payment of the Executive's cost of continued medical coverage for two (2) months after termination (subject to the Executive's co-payment of the costs in the same proportion as such costs were shared immediately prior to the date of termination).2 Payments provided under this Section 7(d) shall be in lieu of any termination or severance payments or benefits for which the Executive may be eligible under any of the plans, policies or programs of the Company.

 

8.         NO ASSIGNMENT. This Agreement is personal to each of the Parties. Except as provided below, no Party may assign or delegate any rights or obligations hereunder without first obtaining the written consent of the other Party hereto; provided, however, that the Company may assign this Agreement to any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company. 

2 NOTE: typically the period for severance payments corresponds to the length of the noncompete and nonsolicitation period.

 

9.         NOTICES. For the purpose of this Agreement, notices and all other communications provided for in this Agreement shall be in writing and shall be deemed to have been duly given (1) on the date of delivery if delivered by hand, (2) on the date of transmission, if delivered by confirmed facsimile, (3) on the first business day following the date of deposit if delivered by guaranteed overnight delivery service, or (4) on the fourth business day following the date delivered or mailed by United States registered or certified mail, return receipt requested, postage prepaid, addressed as follows:

 

If to the Executive:

At the address (or to the facsimile number) shown on the records of the Company

If to the Company:

China Pediatric Pharmaceuticals Inc.

9th Floor, No. 29 Nanxin Street,

Xi’an, Shaanxi Province

P.R.C., 710004

86 29 8727 1818

Fax:+86 29 87263078

With a copy to:

Marc J. Ross, Esq.

Sichenzia Ross Friedman Ference LLP

61 Broadway, 32 nd Floor

New York, New York  10006

Telephone:  (212) 930-9700 

Fax:

or to such other address as either Party may have furnished to the other in writing in accordance herewith, except that notices of change of address shall be effective only upon receipt.

 

  

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10.        PROTECTION OF THE COMPANY'S BUSINESS.

 

 (a)       Confidentiality. The Executive acknowledges that during the course of his employment by the Company (prior to and during the Employment Term) he has and will occupy a position of trust and confidence. The Executive shall hold in a fiduciary capacity for the benefit of the Company and shall not disclose to others or use, whether directly or indirectly, any Confidential Information regarding the Company, except (i) as in good faith deemed necessary by the Executive to perform his duties hereunder, (ii) to enforce any rights or defend any claims hereunder or under any other agreement to which the Executive is a party, providedthat such disclosure is relevant to the enforcement of such rights or defense of such claims and is only disclosed in the formal proceedings related thereto, (iii) when required to do so by a court of law, by any governmental agency having supervisory authority over the business of the Company or by any administrative or legislative body (including a committee thereof) with jurisdiction to order him to divulge, disclose or make accessible such information, providedthat the Executive shall give prompt written notice to the Company of such requirement, disclose no more information than is so required, and cooperate with any attempts by the Company to obtain a protective order or similar treatment, (iv) as to such Confidential Information that shall have become public or known in the Company's industry other than by the Executive's unauthorized disclosure, or (v) to the Executive's spouse, attorney and/or his personal tax and financial advisors as reasonably necessary or appropriate to advance the Executive's tax, financial and other personal planning (each an "Exempt Person"), provided, however, that any disclosure or use of Confidential Information by an Exempt Person shall be deemed to be a breach of this Section 10(a) by the Executive. The Executive shall take all reasonable steps to safeguard the Confidential Information and to protect it against disclosure, misuse, espionage, loss and theft. The Executive understands and agrees that the Executive shall acquire no rights to any such Confidential Information. "Confidential Information" shall mean information about the Company, its subsidiaries and affiliates, and their respective clients and customers that is not disclosed by the Company and that was learned by the Executive in the course of his employment by the Company, including, but not limited to, any proprietary knowledge, trade secrets, data and databases, formulae, sales, financial, marketing, training and technical information, client, customer, supplier and vendor lists, competitive strategies, computer programs and all papers, resumes, and records (including computer records) of the documents containing such Confidential Information.

 

(b)       Non-Competition. During the Employment Term and for the one-year period following the termination of the Executive's employment for any reason (the "Restricted Period"), the Executive shall not, directly or indirectly, without the prior written consent of the Company, provide employment (including self-employment),

 

directorship, consultative or other services to any business, individual, partner, firm, corporation, or other entity that competes with any business conducted by the Company or any of its subsidiaries or affiliates on the date of the Executive's termination of employment or within one year of the Executive's termination of employment in the geographic locations where the Company and its subsidiaries or affiliates engage or propose to engage in such business (the "Business"). Nothing herein shall prevent the Executive from having a passive ownership interest of not more than 2% of the outstanding securities of any entity engaged in the Business whose securities are traded on a national securities exchange.

 

(c)       Non-Solicitation of Employees. The Executive recognizes that he possesses and will possess confidential information about other employees of the Company and its subsidiaries and affiliates relating to their education, experience, skills, abilities, compensation and benefits, and inter-personal relationships with customers of the Company and its subsidiaries and affiliates. The Executive recognizes that the information he possesses and will possess about these other employees is not generally known, is of substantial value to the Company and its subsidiaries and affiliates in developing their business and in securing and retaining customers, and has been and will be acquired by him because of his business position with the Company. The Executive agrees that, during the Restricted Period, he will not, directly or indirectly, (i) solicit or recruit any employee of the Company or any of its subsidiaries or affiliates (a "Current Employee") or any person who was an employee of the Company or any of its subsidiaries or affiliates during the twelve (12) month period immediately prior to the date the Executive's employment terminates (a "Former Employee") for the purpose of being employed by him or any other entity, or (ii) hire any Current Employee or Former Employee.

 

(d)       Non-Solicitation of Customers. The Executive agrees that, during the Restricted Period, he will not, directly or indirectly, solicit or attempt to solicit (i) any party who is a customer or client of the Company or its subsidiaries, who was a customer or client of the Company or its subsidiaries at any time during the twelve (12) month period immediately prior to the date the Executive's employment terminates or who is a prospective customer or client that has been identified and targeted by the Company or its subsidiaries for the purpose of marketing, selling or providing to any such party any services or products offered by or available from the Company or its subsidiaries, or (ii) any supplier or vendor to the Company or any subsidiary to terminate, reduce or alter negatively its relationship with the Company or any subsidiary or in any manner interfere with any agreement or contract between the Company or any subsidiary and such supplier or vendor.

 

  

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(e)       Property. The Executive acknowledges that all originals and copies of materials, records and documents generated by him or coming into his possession during his employment by the Company or its subsidiaries are the sole property of the Company and its subsidiaries ("Company Property"). During the Employment Term, and at all times thereafter, the Executive shall not remove, or cause to be removed, from the premises of the Company or its subsidiaries, copies of any record, file, memorandum, document, computer related information or equipment, or any other item relating to the business of the Company or its subsidiaries, except in furtherance of his duties under this Agreement. When the Executive's employment with the Company terminates, or upon request of the Company at any time, the Executive shall promptly deliver to the Company all copies of Company Property in his possession or control.

 

(f)       Non-Disparagement. Executive shall not, and shall not induce others to, Disparage the Company or its subsidiaries or affiliates or their past and present officers, directors, employees or products. "Disparage" shall mean making comments or statements to the press, the Company's or its subsidiaries' or affiliates' employees or any individual or entity with whom the Company or its subsidiaries or affiliates has a business relationship which would adversely affect in any manner (1) the business of the Company or its subsidiaries or affiliates (including any products or business plans or prospects), or (2) the business reputation of the Company or its subsidiaries or affiliates, or any of their products, or their past or present officers, directors or employees.

 

(g)       Cooperation. Subject to the Executive's other reasonable business commitments, following the Employment Term, the Executive shall be available to cooperate with the Company and its outside counsel and provide information with regard to any past, present, or future legal matters which relate to or arise out of the business the Executive conducted on behalf of the Company and its subsidiaries and affiliates, and, upon presentation of appropriate documentation, the Company shall compensate the Executive for any out-of-pocket expenses reasonably incurred by the Executive in connection therewith. 

 

(h)       Equitable Relief and Other Remedies. The Executive acknowledges and agrees that the Company's remedies at law for a breach or threatened breach of any of the provisions of this Section 10 would be inadequate and, in recognition of this fact, the Executive agrees that, in the event of such a breach or threatened or attempted breach, in addition to any remedies at law, the Company, without posting any bond, shall be entitled to obtain equitable

 relief in the form of specific performance, a temporary restraining order, a temporary or permanent injunction or any other equitable remedy which may then be available. In addition, without limiting the Company's remedies for any breach of any restriction on the Executive set forth in this Section 10, except as required by law, the Executive shall not be entitled to any payments set forth in Section 7(d) hereof if the Executive has breached the covenants applicable to the Executive contained in this Section 10, the Executive will immediately return to the Company any such payments previously received under Section 7(d) upon such a breach, and, in the event of such breach, the Company will have no obligation to pay any of the amounts that remain payable by the Company under Section 7(d).

 

  

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(i)       Reformation. If it is determined by a court of competent jurisdiction in any state that any restriction in this Section 10 is excessive in duration or scope or is unreasonable or unenforceable under the laws of that state, it is the intention of the parties that such restriction may be modified or amended by the court to render it enforceable to the maximum extent permitted by the law of that state. The Executive acknowledges that the restrictive covenants contained in this Section 10 are a condition of this Agreement and are reasonable and valid in temporal scope and in all other respects.

 

(j)       Survival of Provisions. The obligations contained in this Section 10 shall survive in accordance with their terms the termination or expiration of the Executive's employment with the Company and shall be fully enforceable thereafter.

 

11.        INDEMNIFICATION. The Executive shall be indemnified to the extent permitted by the Company's organizational documents and to the extent required by law.

 

12.        SECTION HEADINGS AND INTERPRETATION. The section headings used in this Agreement are included solely for convenience and shall not affect, or be used in connection with, the interpretation of this Agreement. Expressions of inclusion used in this agreement are to be understood as being without limitation.

 

13.        SEVERABILITY. The provisions of this Agreement shall be deemed severable and the invalidity of unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.

 

14.        COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same Agreement.

 

15.        GOVERNING LAW AND VENUE. The validity, interpretation, construction and performance of this Agreement shall be governed by the laws of the State of New York without regard to its conflicts of law principles. The Parties agree irrevocably to submit to the exclusive jurisdiction of the federal courts or, if no federal jurisdiction exists, the state courts, located in the City of New York, Borough of Manhattan, for the purposes of any suit, action or other proceeding brought by any Party arising out of any breach of any of the provisions of this Agreement and hereby waive, and agree not to assert by way of motion, as a defense or otherwise, in any such suit, action, or proceeding, any claim that it is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper, or that the provisions of this Agreement may not be enforced in or by such courts. IN ADDITION, THE PARTIES AGREE TO WAIVE A TRIAL BY JURY.

 

16.        ENTIRE AGREEMENT. This Agreement contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior agreements, written or oral, with respect thereto. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party which are not expressly set forth in this Agreement.

 

17.        WAIVER AND AMENDMENT. No provision of this Agreement may be modified, amended, waived or discharged unless such waiver, modification, amendment or discharge is agreed to in writing and signed by the Executive and such officer or director as may be designated by the Board. No waiver by either Party at any time of any breach by the other Party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other Party shall be deemed a waiver or similar or dissimilar provisions or conditions at the same or at any prior or subsequent time.

18.        WITHHOLDING. The Company may withhold from any and all amounts payable under this Agreement such federal, state, local and foreign taxes as may be required to be withheld pursuant to any applicable law or regulation.

 

19.        AUTHORITY AND NON-CONTRAVENTION. The Executive represents and warrants to the Company that he has the legal right to enter into this Agreement and to perform all of the obligations on his part to be performed hereunder in accordance with its terms and that he is not a party to any agreement or understanding, written or oral, which could prevent him from entering into this Agreement or performing all of his obligations hereunder.

 

20.        COUNTERPARTS. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument.

 

21.        TERMINATION OF EXCHANGE AGREEMENT. In the event that the consummation of the Acquisition does not occur and the Exchange Agreement terminates pursuant to its term, the terms of employment contained herein shall be null and void, or if the Executive's employment with the Company terminates prior to the consummation of the Acquisition, the terms contained herein shall be null and void unless the Company agrees otherwise, in its sole discretion.

 

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

 

China Pediatric Pharmaceuticals Inc

 

 

/s/ JUN XIA

 By: Jun Xia                                            

Title: Chief Executive Officer

 

 

 

EXECUTIVE

 

 

 /s/ MINGGANG XIAO

Minggang Xiao

Title: Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

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