AMERICAN ORIENTAL BIOENGINEERING INC
EMPLOYMENT AGREEMENT, DATED APRIL 20, 2008
<DOCUMENT>
<TYPE>EX-10.10.(A)
<SEQUENCE>2
<FILENAME>dex1010a.htm
<DESCRIPTION>EMPLOYMENT AGREEMENT, DATED APRIL 20, 2008
<TEXT>
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<TITLE>Employment Agreement, dated April 20, 2008</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 10.10(a) </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B><U>EMPLOYMENT AGREEMENT </U></B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%;padding-bottom:3px;line-height:95%; vertical-align:top"><FONT FACE="Times New Roman" SIZE="2">THIS EMPLOYMENT
AGREEMENT (the &#147;Agreement&#148;) is made and entered into this 9</FONT><FONT FACE="Times New Roman" SIZE="1"><SUP>th</SUP></FONT><FONT FACE="Times New Roman" SIZE="2"> day of April, 2008, effective as of April&nbsp;20, 2008 (the &#147;Effective
Date&#148;), between American Oriental Bioengineering, Inc., a Nevada corporation with its principal place of business located at Great International Exchange Square, 25/F Mid Section, 1 Fuhua Rd., Futian District, Shenzhen, Guangdong, PRC 518034
(the &#147;Company&#148;), and Tony Liu, residing at Nangang District, Harbin, China (the &#147;Executive&#148;). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">WHEREAS, the business of
the Company and its affiliates consists of the development and production of bioengineered products and traditional Chinese medicinal products that combine modern biotechnology and traditional Chinese medical technology, and activities incidental
thereto (the &#147;Business&#148;); </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">WHEREAS, the Company has expended considerable time, effort and resources in the development of
certain Confidential Information, as defined in paragraph 10 herein below, which must be maintained as confidential in order to ensure the success of the Business; </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">WHEREAS, prior to the Effective Date, the Executive has been employed by the Company in the position of, and has been performing the services required of, Chairman and Chief Executive Officer of the Company;
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">WHEREAS, the Executive and the Company desire to memorialize the terms and conditions of the Executive&#146;s employment by the Company in
the position of Chairman and Chief Executive Officer; and </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">WHEREAS, the Executive has had, prior to the Effective Date, and will continue
to have, as of the Effective Date, access to such Confidential Information, as defined in paragraph 10 herein below. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">NOW, THEREFORE, in
consideration of the covenants and promises contained herein, the compensation and benefits received by the Executive from the Company, and the access given the Executive to the aforesaid Confidential Information, as defined in paragraph 10 herein
below, and for other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the Company and the Executive agree as follows: </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">1. EMPLOYMENT PERIOD. The Company offers to employ the Executive, and the Executive agrees to be employed by the Company, in accordance with the terms and subject to the conditions of this Agreement commencing on the
Effective Date and terminating on the first anniversary of the Effective Date (the &#147;Scheduled Termination Date&#148;), unless terminated prior thereto in accordance with the provisions of paragraph 9 herein below. The term of this Agreement
shall be automatically renewed for successive one (1)&nbsp;year terms, unless either party gives the other party written notice of its intention not to renew the Agreement no later than 90 days prior to the expiration of the then current term. A
determination by the Company not to renew this Agreement without &#147;Company Cause&#148; shall be deemed a termination of employment for purposes of paragraph 9(d) and the terms thereof shall apply. </FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">2. POSITION AND DUTIES. During the term of the Executive&#146;s employment hereunder, the Executive will
serve in the position, and assume duties and responsibilities consistent with the position of Chairman and Chief Executive Officer unless and until otherwise instructed by the Company. The Executive agrees to devote substantially all of his working
time, skill, energy and best business efforts during the term of his employment with the Company. The Executive covenants and agrees that for so long as he is employed by the Company, the Executive shall inform the Company of each and every business
opportunity related to the business of the Company of which the Executive becomes aware, and that the Executive will not, directly or indirectly, exploit any such opportunity for the Executive&#146;s own account, nor will the Executive render any
services to any other person or business, acquire any interest of any type in any other business or engage in any activities that conflict with the Company&#146;s best interests or which is in competition with the Company. The Executive affirms that
no obligation exists between the Executive and any other entity which would prevent or impede the Executive&#146;s immediate and full performance of every obligation of this Agreement. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">3. HOURS OF WORK. The Executive&#146;s normal days and hours of work shall coincide with the Company&#146;s regular business hours. The nature of the
Executive&#146;s employment with the Company requires flexibility in the days and hours that the Executive must work, and may necessitate that the Executive work on other or additional days and hours. The Company reserves the right to require the
Executive, and the Executive agrees, to work during other or further days or hours than the Company&#146;s normal business hours. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">4.
LOCATION. The locus of the Executive&#146;s employment with Company shall be the Company&#146;s office located at No.&nbsp;4018 Jintian Road, Anlian Plaza, 12F Suite B02, Futian, District Shenzhen, PRC 518026. The Company may, in its sole
discretion, require the Executive to travel to and reside in, on a temporary, indefinite or permanent basis, in any other location throughout the world in which the Company or any of its affiliates has offices. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">5. BASE SALARY. In consideration of the Executive&#146;s services under this Agreement, the Company shall pay or cause to pay, and the Executive agrees
to accept, during the one year period following the Effective Date (the &#147;First Year&#148;), an annual base salary of <B>US$200,000</B>, less all applicable taxes and other appropriate deductions, paid in accordance with the Company&#146;s
standard payroll practices. Following the First Year, the Executive&#146;s base salary shall be reviewed annually by the Compensation Committee of the Board of Directors of the Company. The decision to increase or decrease the Executive&#146;s base
salary and the amount of any such increase or decrease are within the sole discretion of the Board of Directors. Nothing contained in this paragraph 5 is intended to be, or should be construed as, a promise or guarantee by the Company to increase
the Executive&#146;s base salary. The Company reserves the right, in its sole discretion, and the Executive hereby acknowledges the Company&#146;s right, to make no such payments or make reduced payments in connection with any periods of
unauthorized or unjustified absence from work or in the event that the Executive is unavailable or unable to perform the Executive&#146;s duties for the Company without adequate justification, as determined by the Company in its sole discretion.
</FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">6. BONUS COMPENSATION. During the term hereof, the Executive shall have the opportunity to earn an annual performance based bonus equal to
up to US$40,000 based upon the Company&#146;s attainment of certain annual net income targets, as set by the Board of Directors </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">in its sole discretion on an annual basis. Such bonus amount may be increased in the event the annual net income target is exceeded, however, shall not
exceed 300% of the annual performance based bonus. The Compensation Committee may, from time to time, also pay such other bonus or bonuses to the Executive as the Compensation Committee, in its sole discretion, deems appropriate. In order to receive
the annual performance based bonus, the Executive must continue to be employed by the Company through the end of the period with respect to which the annual performance bonus has been earned. The annual performance based bonus will be paid to the
Executive at such time as bonuses for the applicable period are regularly paid to senior executives of the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">7. STOCK OPTIONS. The
Executive shall receive stock options to purchase <B>307,428 </B>shares of common stock of the Company for the First Year. The exercise price per share shall be determined by the Compensation Committee of the Board and shall be at least equal to the
last closing price of the Company&#146;s common stock, as reported by Bloomberg LP, on the New York Stock Exchange, or any such securities exchange on which the Company&#146;s common stock is listed or quoted for trading, on April&nbsp;20, 2008, the
date of grant (the &#147;Stock Options&#148;). The Stock Options shall vest in five equal installments on each April&nbsp;19 of the first, second, third, fourth and fifth anniversary of the grant, subject to the Executive&#146;s continued employment
with the Company on each vesting date, and further to subject to accelerated vesting under the applicable incentive plan, the applicable grant agreement and the terms of this Agreement. The Stock Options shall be granted under the Company&#146;s
2006 Equity Incentive Plan and pursuant to the terms of the Company&#146;s standard form of stock option agreement approved by the Board of Directors. The Compensation Committee shall determine, on an annual basis, the number of Stock Options to be
granted to the Executive for each renewal period. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">8. REIMBURSEMENT OF EXPENSES. During the term of this Agreement, in accordance with the
Company&#146;s expense reimbursement policy, the Executive shall be entitled to reimbursement for reasonable expenses (including, without limitation, reasonable travel expenses) paid or incurred by him, in connection with and related to the
performance of his duties and responsibilities hereunder for the Company. All requests by Executive for reimbursement for such expenses must be supported by appropriate invoices, vouchers, receipts or such other supporting documentation in such form
and containing such information as the Company may from time to time require, evidencing that the Executive, in fact, incurred or paid said expenses. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">9. TERMINATION. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">a. DEATH OR RESIGNATION. If the Executive dies or resigns during the term of this
Agreement, this Agreement shall automatically terminate on the date of the Executive&#146;s death or resignation and, following the date of the Executive&#146;s death or resignation, the Company shall have no further obligations or liability to the
Executive or his heirs, administrators or executors with respect to compensation and benefits thereafter, except for the obligation to pay the Executive (i)&nbsp;any earned but unpaid base salary through the Executive&#146;s date of death or
resignation, (ii)&nbsp;for any unused accrued and unforfeited vacation, and (iii)&nbsp;subject to paragraph 8 hereinabove, for any unreimbursed business expenses incurred by the Executive prior to his death or resignation. The Company shall deduct,
from all payments made hereunder, all applicable taxes, including income tax, FICA and FUTA, and other appropriate deductions. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">b. DISABILITY. At any time during the term of this Agreement, the Company may terminate this Agreement
and the Executive&#146;s employment with the Company because of the Executive&#146;s &#147;Disability,&#148; by written notice to the Executive. For purposes of this Agreement, &#147;Disability&#148; shall mean, if at the end of any calendar month
during the term of this Agreement, the Executive, as a result of mental or physical illness or injury, is or has been unable to perform his duties under this Agreement, with or without reasonable accommodation, for (i)&nbsp;the four
(4)&nbsp;preceding consecutive calendar months, or (ii)&nbsp;any 180 days in the previous twelve (12)&nbsp;months. If this Agreement is terminated because of the Executive&#146;s &#147;Disability,&#148; the Company shall have no further obligations
or liability to the Executive or his heirs, administrators or Executors with respect to compensation and benefits thereafter, except for the obligation to pay the Executive (x)&nbsp;any earned but unpaid base salary through the date of termination
for &#147;Disability&#148;, at the rate then in effect, (y)&nbsp;for any unused accrued and unforfeited vacation, and (z)&nbsp;subject to paragraph 8 hereinabove, for any unreimbursed business expenses incurred by the Executive prior to his last
date of employment with the Company. The Company shall deduct, from all payments made hereunder, all applicable taxes, including income tax, FICA and FUTA, and other appropriate deductions. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">c. &#147;CAUSE.&#148; At any time during the term of this Agreement, the Company may terminate this Agreement and the Executive&#146;s employment with
the Company, at any time, for &#147;Company Cause.&#148; For purposes of this Agreement, &#147;COMPANY CAUSE&#148; shall mean: (i)&nbsp;the good faith determination by the Company&#146;s Board of Directors that there has been continued neglect by
the Executive of his duties hereunder, or (ii)&nbsp;willful misconduct on the Executive&#146;s part in connection with the performance of his duties hereunder, PROVIDED HOWEVER, that the Executive shall have been given one (1)&nbsp;written notice of
such determination by the Company&#146;s Board of Directors of continued neglect or willful misconduct and thereafter the Executive shall not have cured such neglect or willful misconduct to the satisfaction of the Company&#146;s Board of Directors
within fifteen (15)&nbsp;days of the Executive&#146;s receipt of such written notice, (iii)&nbsp;the Executive is convicted of or pleads guilty or no contest to a felony or other conduct involving moral turpitude. If this Agreement and the
Executive&#146;s employment is terminated for &#147;Company Cause,&#148; following the Executive&#146;s last date of employment with the Company, the Company shall have no further obligations or liability to the Executive or his heirs,
administrators or Executors with respect to compensation and benefits thereafter, except for the obligation to pay the Executive (x)&nbsp;any earned but unpaid base salary through the Executive&#146;s last date of employment, at the rate then in
effect, (y)&nbsp;for any unused accrued and unforfeited vacation, and (z)&nbsp;subject to paragraph 8 hereinabove, for any unreimbursed business expenses incurred by the Executive prior to the last date of employment with the Company. The Company
shall deduct, from all payments made hereunder, all applicable taxes, including income tax, FICA and FUTA, and other appropriate deductions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">d. TERMINATION BY THE BOARD OF DIRECTORS. At any time during the term of this Agreement, the Board of Directors of the Company, in its sole discretion, may terminate this Agreement and the Executive&#146;s employment with the Company
without &#147;Company Cause&#148; by delivering to the Executive written notice. If this Agreement and the Executive&#146;s employment with the Company is terminated without &#147;Company Cause,&#148; following </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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<FONT FACE="Times New Roman" SIZE="2">the Executive&#146;s last date of employment with the Company, the Company shall have no further obligations or liability to the Executive or his heirs,
administrators or executors with respect to compensation and benefits thereafter, except for the obligation to pay the Executive (i)&nbsp;any earned but unpaid base salary through the Executive&#146;s last date of employment, at the rate then in
effect, (ii)&nbsp;for any unused accrued and unforfeited vacation, (iii)&nbsp;his base salary in effect at the time of his termination in accordance with paragraph 5 hereinabove through the Scheduled Termination Date or renewal period, as the case
may be, and (iv)&nbsp;subject to paragraph 8 hereinabove, for any unreimbursed business expenses incurred by the Executive prior to his last date of employment with the Company. The Company shall deduct, from all payments made hereunder, all
applicable taxes, including income tax, FICA and FUTA, and other appropriate deductions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">10. CONFIDENTIAL INFORMATION. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">a. The Executive expressly acknowledges that, in the performance of his duties and responsibilities relating to his employment with the Company, he has
been exposed and will continue to be exposed to the trade secrets, business and/or financial secrets and confidential and proprietary information of the Company, its affiliates and/or its clients or customers (&#147;Confidential Information&#148;).
The term &#147;Confidential Information&#148; means information or material that has actual or potential commercial value to the Company, its affiliates and/or its clients or customers and is not generally known to and is not readily ascertainable
by proper means to persons outside the Company, its affiliates and/or its clients or customers, and includes, without limitation, the following, whether or not expressed in a document or medium, regardless of the form in which it is communicated,
whether or not such information is on the Company&#146;s forms, memos, computer disc or tape, or otherwise, whether or not such information is in written or verbal form, and whether or not marked &#147;trade secret&#148; or &#147;confidential&#148;
or any similar legend: (i)&nbsp;sales information, (ii)&nbsp;operations information, (iii)&nbsp;financial information, (iv)&nbsp;administrative information, (v)&nbsp;research information, (vi)&nbsp;customer information, (vii)&nbsp;supplier
information, and (viii)&nbsp;any other information concerning the Company, its business, its properties or its affairs that the Company deems to be confidential or that is confidential according to industry practices. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">b. Except as authorized in writing by the Board of Directors, during the term of this Agreement, any renewal periods, and thereafter until such time as
any such Confidential Information becomes generally known to and readily ascertainable by proper means to persons outside the Company, its affiliates and/or its clients or customers, the Executive agrees to keep strictly confidential and not use or
disclose, cause to be used or disclosed, or permit to be used or disclosed, to any person or entity and/or for his personal benefit or the benefit to any other person or entity, any Confidential Information. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">c. The Executive agrees that upon termination of his employment with the Company for any reason, he will promptly return to the Company all Confidential
Information within his possession or within his power to control, including, without limitation all copies of such Confidential Information, all abstracts of such Confidential Information and any other information containing such Confidential
Information in whole or in part. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">d. The Executive affirms that he did not and does not possess, and has not relied and will not rely upon
the protected trade secrets or confidential or proprietary information of the Executive&#146;s prior employer(s) in providing services to the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">11. OWNERSHIP AND ASSIGNMENT OF INVENTIONS. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">a. The Executive acknowledges that, in connection with his
duties and responsibilities relating to his employment with the Company, the Executive and/or other employees of the Company working with the Executive, without the Executive or under the Executive&#146;s supervision, may have created, conceived of,
made, prepared, worked on or contributed to, and/or may create, conceive of, make, prepare, work on or contribute to, the creation of, or may have been or may be asked by the Company and/or its affiliates or customers to create, conceive of, make,
prepare, work on or contribute to the creation of, without limitation, lists, business diaries, business address books, documentation, ideas, concepts, inventions, designs, works of authorship, computer programs, audio/visual works, developments,
proposals, works for hire or other materials (&#147;Inventions&#148;). To the extent that any such Inventions related or relate to any actual or reasonably anticipated business of the Company or any of its affiliates or customers, or falls within,
is suggested by or results from any tasks assigned to the Executive for or on behalf of the Company or any of its affiliates or customers, the Executive expressly acknowledges that all of his activities and efforts relating to any Inventions,
whether or not performed during the Executive&#146;s or the Company&#146;s regular business hours, are within the scope of the Executive&#146;s employment with the Company and that the Company owns all right, title and interest in and to all
Inventions, including, to the extent that they exist, all intellectual property rights thereto, including, without limitation, copyrights, patents and trademarks in and to all Inventions. The Executive also acknowledges and agrees that the Company
owns and is entitled to sole ownership of all rights and proceeds to all Inventions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">b. The Executive expressly acknowledges and agrees to
assign to the Company, and hereby assigns to the Company, all of the Executive&#146;s right, title and interest in and to all Inventions, including, to the extent they exist, all intellectual property rights thereto, including, without limitation,
copyrights, patents and trademarks in and to all Inventions. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">c. In connection with all Inventions, the Executive agrees to disclose any
Invention promptly to the Company and to no other person or entity. The Executive further agrees to execute promptly, at the Company&#146;s request, specific written assignments of the Executive&#146;s right, title and interest in any Inventions,
and do anything else reasonably necessary to enable the Company to secure or obtain a copyright, patent, trademark or other form of protection in or for any Invention in the United States or other countries. The Executive further agrees that the
Company is not required to designate the Executive as an author of or contributor to any Invention or to secure the Executive&#146;s permission to change or otherwise alter any Invention. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">d. The Executive acknowledges that all rights, waivers, releases and/or assignments granted herein and made by the Executive are freely assignable by the
Company and are made for the benefit of the Company and its affiliates, subsidiaries, licensees, successors and assigns. </FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">e. The Executive agrees to waive, and hereby does waive, for the benefit of all persons, any and all
right, title and interest in the nature of &#147;moral rights&#148; or &#147;droit moral&#148; granted to the Executive in any country in the world. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">12. NON-COMPETITION AND NON-SOLICITATION. Because of the nature of the Company&#146;s Business, and because, as a result of his employment with the Company, the Executive has been and will continue to be exposed to
Confidential Information, the Executive acknowledges that the Company would sustain grievous harm in the event that he were to disclose Confidential Information, engage in business activities that compete with the Business, appropriate or divert
business or customers of the Company or its affiliates and/or induce employees or consultants of the Company or its affiliates to leave the employment of the Company or its affiliates. The Executive acknowledges that the Company has a legitimate
business interest in protecting itself from the aforementioned harm and in the protection and maintenance of the Confidential Information and of the good will and customer relationships of the Company and its affiliates. Therefore, the Executive
hereby agrees and covenants to be bound by the non-competition and non-solicitation restrictions set forth herein below, which restrictions the Executive agrees and acknowledges are reasonable and necessary and do not impose undue hardship or
burdens on the Executive. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">a. The Executive agrees that, during his employment with the Company and for a period of three (3)&nbsp;years
following the termination of his employment with the Company, he and his affiliates shall not directly or indirectly own, manage, operate, control, be employed by, consult for, be a shareholder of, be an officer of, participate in, contract with or
be connected in any capacity or any manner with any person or entity whose business activities directly or indirectly (whether through related persons, entities or otherwise) compete with the Business anywhere in the United States, Canada and the
People&#146;s Republic of China, where the Company or its affiliates is engaged in the Business, PROVIDED HOWEVER, that the Executive shall not be prevented from owning an interest in a publicly traded company so long as the fair market value of
such interest at the date of acquisition is less than US$100,000. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">b. The Executive agrees that during the period of his employment with
the Company and for a period of three (3)&nbsp;years following the termination of his employment with the Company, for any reason, he will not, within the United States, Canada and the People&#146;s Republic of China, where the Company or its
affiliates is engaged in the Business, directly or indirectly recruit, induce, divert, supervise, employ, manage, hire or entice, or cause to be recruited, induced, diverted, supervised, employed, managed, hired or enticed, any employee, consultant
or independent contractor of the Company or its affiliates to leave or terminate the employment or other relationship thereof, for any reason. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman"
SIZE="2">c. The Executive agrees that during the period of his employment with the Company and for a period of three (3)&nbsp;years following the termination of his employment with the Company, he will not, within the United States, Canada and the
People&#146;s Republic of China, where the Company or its affiliates is engaged in the Business, directly or indirectly appropriate, call on, induce, divert or solicit, or assist another to appropriate, call on, induce, divert or solicit any actual
or potential business or customer away from the Company or its affiliates, or attempt to do any of the foregoing, or otherwise induce or attempt to induce any actual or potential business or customer of the Company or its affiliates, to terminate or
adversely modify its </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
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 <P STYLE="margin-top:0px;margin-bottom:0px">
<FONT FACE="Times New Roman" SIZE="2">relationship with the Company or its affiliates, or to enter into a relationship with or conduct business with the Company or its affiliates, which actual or
potential business or customer the Executive was involved with or had a relationship with or whose identity became known to the Executive in connection with the Executive&#146;s employment with the Company. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">d. If any of the restrictive covenants set forth in paragraphs 12(a), (b)&nbsp;and (c)&nbsp;of this Agreement is held to be invalid, illegal or
unenforceable (in whole or in part), such restrictive covenant shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability, and a court of competent jurisdiction shall have the power to modify,
any such restrictive covenant to the extent necessary to render such provision enforceable, and the remaining restrictive covenant shall not be affected thereby. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">e. In the event of a violation of any of the restrictive covenants set forth in paragraphs 12(a), (b)&nbsp;and (c)&nbsp;of this Agreement, if the Executive is prevented by a court or arbitrator from committing any
further violation, whether by a temporary restraining order, injunction or otherwise, the time periods set forth in paragraphs 12(a), (b)&nbsp;and (c)&nbsp;of this Agreement shall be computed by commencing the periods on the date of the applicable
court or arbitrators&#146; order and continuing them from that date for the full period provided. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">f. The Executive shall have the right to
request a waiver of all or part of the restrictive covenants contained in paragraphs 12(a), (b)&nbsp;and (c)&nbsp;of this Agreement by providing the Company with a written request for such a waiver that contains all relevant details. The Company
may, in its sole discretion, waive all or part of the restrictive covenants contained in paragraphs 12(a), (b)&nbsp;and (c)&nbsp;of this Agreement on such terms and conditions, and to such extent, as it, in its sole discretion, deems appropriate.
Such waiver must be in writing. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">g. The parties acknowledge that this Agreement would not have been entered into, that the benefits
described in paragraphs 5, 6 and 7 would not have been promised to the Executive by the Company, in the absence of the Executive&#146;s covenants and promises set forth in paragraphs 12(a), (b)&nbsp;and (c)&nbsp;of this Agreement. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">13. DISPUTE RESOLUTION. The Executive and the Company agree that any dispute or claim, whether based on contract, tort, discrimination, retaliation, or
otherwise, relating to, arising from, or connected in any manner with this Agreement or with the Executive&#146;s employment with Company shall be resolved exclusively through final and binding arbitration under the auspices of the Hong Kong Chamber
of Commerce (&#147;HKCC&#148;) in accordance with the commercial arbitration rules and supplementary procedures for international commercial arbitration of the HKCC. The arbitration shall be held in Hong Kong. There shall be three arbitrators: one
arbitrator shall be chosen by each party to the dispute and those two arbitrators shall choose the third arbitrator. Each party shall cooperate with the other in making full disclosure of and providing complete access to all information and
documents requested by the other party in connection with the arbitration proceedings. Arbitration shall be the sole, binding, exclusive and final remedy for resolving any dispute between the parties. The arbitrators shall have jurisdiction to
determine any claim, including the arbitrability of any claim, submitted to them. The arbitrators may grant any relief authorized by law for any properly established claim. The interpretation and enforceability of this paragraph of this Agreement
shall be governed and construed in accordance with the United States Federal Arbitration Act, 9. U.S.C. </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">8 </FONT></P>


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<FONT FACE="Times New Roman" SIZE="2">ss.1, ET SEQ. More specifically, the parties agree to submit to binding arbitration any claims for unpaid wages or benefits, or for alleged discrimination,
harassment, or retaliation, arising under Title VII of the Civil Rights Act of 1964, the Equal Pay Act, the National Labor Relations Act, the Age Discrimination in Employment Act, the Americans With Disabilities Act, the Executive Retirement Income
Security Act, the Civil Rights of 1991, the Family and Medical Leave Act, the Fair Labor Standards Act, Sections 1981 through 1988 of Title 42 of the United States Code, COBRA, and any other federal, state, or local law, regulation, or ordinance,
and any common law claims, claims for breach of contract, or claims for declaratory relief. The Executive acknowledges that the purpose and effect of this paragraph is solely to elect private arbitration in lieu of any judicial proceeding he might
otherwise have available to his in the event of an employment-related dispute between his and the Company. Therefore, the Executive hereby waives his right to have any such employment-related dispute heard by a court or jury, as the case may be, and
agrees that his exclusive procedure to redress any employment-related claims will be arbitration. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">14. MISCELLANEOUS. </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">a. Telephones, stationery, postage, e-mail, the internet and other resources made available to the Executive by the Company, are solely for the
furtherance of the Company&#146;s business. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">b. All issues concerning, relating to or arising out of this Agreement and from the
Executive&#146;s employment by the Company, including, without limitation, the construction and interpretation of this Agreement, shall be governed by and construed in accordance with the internal laws of the State of New York, without giving effect
to that State&#146;s principles of conflicts of law. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">c. The Executive and the Company agree that any provision of this Agreement deemed
unenforceable or invalid may be reformed to permit enforcement of the objectionable provision to the fullest permissible extent. Any provision of this Agreement deemed unenforceable after modification shall be deemed stricken from this Agreement,
with the remainder of the Agreement being given its full force and effect. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">d. The Company shall be entitled to equitable relief, including
injunctive relief and specific performance as against the Executive, for the Executive&#146;s threatened or actual breach of paragraphs 10, 11 or 12 of this Agreement, as money damages for a breach thereof would be incapable of precise estimation,
uncertain, and an insufficient remedy for an actual or threatened breach of paragraphs 10, 11 or 12 of this Agreement. The Executive and the Company agree that any pursuit of equitable relief in respect of paragraphs 10, 11 or 12 of this Agreement
shall have no effect whatsoever regarding the continued viability and enforceability of paragraph 13 of this Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">e. Any waiver or
inaction by the Company for any breach of this Agreement shall not be deemed a waiver of any subsequent breach of this Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">f. The
Executive and the Company independently have made all inquiries regarding the qualifications and business affairs of the other which either party deems necessary. The </FONT>
</P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">9 </FONT></P>


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<FONT FACE="Times New Roman" SIZE="2">Executive affirms that he fully understands this Agreement&#146;s meaning and legally binding effect. Each party has participated fully and equally in the
negotiation and drafting of this Agreement. Each party assumes the risk of any misrepresentation or mistaken understanding or belief relied upon by his or it in entering into this Agreement. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">g. The Company and the Executive agree that the Executive&#146;s obligations to the Company during the Executive&#146;s employment with the Company, as
well as any other obligation of the Executive under this Agreement, may be assigned to any successor in interest to the Company or any division or affiliate of the Company in its sole discretion and without additional consideration or prior notice
to the Executive, but that nothing requires the Company to do so. The Executive&#146;s obligations under this Agreement are personal in nature and may not be assigned by the Executive to any other person or entity. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">h. The Company and the Executive acknowledge and agree that future alterations to the Executive&#146;s work hours, working title, management or
supervisory responsibilities, number of subordinate employees, sales or promotional budgets, reporting relationships within the Company or with businesses affiliated with the Company, management responsibilities or duties, or similar changes or
alterations may occur periodically during the Executive&#146;s employment with the Company. The Company and the Executive agree that the Company, in its sole discretion, may implement such alterations or adjustments for any or no reason and that any
such action shall not constitute a breach of this Agreement so long as the Company continues to perform its remaining obligations as provided by this Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">i. This instrument constitutes the entire Agreement between the parties regarding its subject matter. When signed by all parties, this Agreement supersedes and nullifies all prior or contemporaneous conversations,
negotiations, or agreements, oral and written, regarding the subject matter of this Agreement. In any future construction of this Agreement, this Agreement should be given its plain meaning. This Agreement may only be amended only by a writing
signed by the Company and the Executive. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">j. Notwithstanding the termination of this Agreement and of the Executive&#146;s employment with
the Company for any reason, paragraphs 10, 11 and 12 of this Agreement shall continue in full force and effect in accordance with their terms following such termination. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">k. This Agreement may be executed in counterparts, a counterpart transmitted via facsimile, and all executed counterparts, when taken together, shall constitute sufficient proof of the parties&#146; entry into this
Agreement. The parties agree to execute any further or future documents which may be necessary to allow the full performance of this Agreement. This Agreement contains headings for ease of reference. The headings have no independent meaning.
</FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">10 </FONT></P>


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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">THE EXECUTIVE STATES THAT HE HAS FREELY AND VOLUNTARILY ENTERED INTO THIS AGREEMENT AND THAT HE HAS READ AND UNDERSTOOD
EACH AND EVERY PROVISION THEREOF. THIS AGREEMENT IS EFFECTIVE UPON THE EXECUTION OF THIS AGREEMENT BY BOTH PARTIES. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">UNDERSTOOD, AGREED, AND
ACCEPTED: </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0">

<TR>
<TD WIDTH="4%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="42%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="4%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="4%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="42%"></TD></TR>
<TR>
<TD VALIGN="bottom" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">TONY LIU</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">AMERICAN ORIENTAL BIOENGINEERING, INC.</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Name:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Name:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Yanchun Li</FONT></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Title:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Chief Operating Officer and</FONT></P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="2">Acting Chief Financial
Officer</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Date:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">April 9, 2008</FONT></P></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Date:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-top:0px;margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">April 9, 2008</FONT></P></TD></TR>
</TABLE> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT SIZE="1">&nbsp;</FONT></P>
 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">11 </FONT></P>

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