Contract for Joint Venture
Between
Hebei Huaxing Pharmaceuticals Co., Ltd.
And
Kiwa Bio-Tech Products Group Corporation

 
Chapter 1 General Rules
 
According to “Law of the People's Republic of China on Chinese-Foreign Joint
Ventures,” “Company Law of the People’s Republic of China” and other applicable
regulations and based on principles of equality and mutual benefit, after
discussion, Hebei Huaxing Pharmaceuticals Co., Ltd. and Kiwa Bio-Tech Products
Group Corporation agreed to jointly make investment to set up a joint venture -
Hebei Kiwa Huaxing Bio-Pharmaceuticals Co., Ltd. in Shijiazhuang City, Hebei
Province, P.R. China. Both parties have made the contract as follows.
 
 
Chapter 2 Parties for Joint Venture
 
Clause 1.  The parties are as follows:
 
Hebei Huaxing Pharmaceuticals Co., Ltd ( hereinafter referred to as “Party A” )
, a company established and existing under laws of P.R. China with its legal
domicile in No. 3 (Fu), Xuefu Road, Qiaodong District, Shijiazhuang City, Hebei
Province.
 
Legal representative: Li Ruijun, Chairman of the Board of Directors.
Nationality: Chinese.
 
Kiwa Bio-Tech Products Group Corporation(hereinafter referred to as “Party B”),
registered and existing in DELAWARE State, U.S.A. with its legal domicile in 415
West Foothill Blvd, Suite206 Claremont, California, U.S.A.
 
Legal representative: Li Wei, Chairman of the Board of Directors. Nationality:
Chinese.
 
 
Chapter 3 Establishment of Joint Venture
 
Clause 2.  Both parties agreed to set up a joint venture (hereinafter referred
to as “the joint venture”) in China in accordance with “Law of the People's
Republic of China on Chinese-Foreign Joint Ventures” and other applicable
regulations.
 
Clause 3. Name of the joint venture: Hebei Kiwa Huaxing Bio-Pharmaceuticals Co.,
Ltd.
 
Domicile:No. 3 (Fu), Xuefu Road, Qiaodong District, Shijiazhuang City, Hebei
Province, China.
 
Clause 4.  Applicable Chinese laws, regulations and rules shall be observed for
all activities of the joint venture.
 
Clause 5.  The joint venture is a liability limited company. Each party shall
take responsibilities for liabilities of the joint venture, share profits and
bear risks and loss in proportion of its ownership to the joint venture.
 
 
 

--------------------------------------------------------------------------------

 
 
Chapter 4 Purpose, Scope and Scale of Production and Operation
 
Clause 6.  Purposes of the joint venture: to fully use Party A’s market network
and reserved products, and Party B’s advantages in funds and technology to
develop new animal medicine and expand market shares so as to gain satisfactory
economic benefits for both parties.
 
Clause 7.  Scope of operations: (1) Research, develop, produce and marketing of
animal medicine; (2) Technological development, transference and technical
license utilization.
 
 
Chapter 5 Total Amount of Investment, Registered Capital and Investment made by
Each Party
 
Clause 8.  Total amount of investment of the joint venture is USD 2,700,000.
 
Clause 9.  Both parties shall invest USD 2,110,000 in total, among which USD
1,920,000 as registered capital of the joint venture and the remaining balance
of USD 190,000 as investment premium of Party B.
 
Clause 10. Methods and proportion of investments made by each party:
 

(1)
Party A shall invest USD 576,000, all of which constitutes its 30% of registered
capital, which means Party A holds 30% ownership of the joint venture. Party A’s
investment to the joint venture is based on its asset appraisal value RMB
4,200,000 (appraisal benchmark date: December 31, 2007), certified by the
appraisal firm and confirmed by both parties. The exchange rate (1US dollars =
RMB 7.3046) is the trading price on December 31, 2007. The asset appraisal
report is Exhibit A to the contract thereto.

 

(2)
Party B shall invest USD 1,534,000 in cash, among which USD 1,344,000
constitutes 70% of registered capitals which means Party B holds 70% ownership
of the joint venture. The remaining balance of USD 190,000 shall be deemed as
premium, recorded as additional paid-in capital in the joint venture’s book.
Such premium is the consideration of Party A’s existing marketing and sales
network.

 
Clause 11. All legal procedures for the investment to be made by Party A,
including but not limited to transference of the lessee of Party A’s existing
lease agreement of site of operation to the joint venture, transference of
beneficiary of GMP license for production of animal medicine, all animal
medicine manufacturing license, approval numbers of animal medicine products, of
the beneficiary of registered trademark “Jinxing” to the joint venture, shall be
completed within two months after issuance of business license to new joint
venture by relevant authority.
 
Party B’s investment shall be made in installments: 25% shall be made within one
month after issuance of business license and another 25% shall be made within
two months after issuance of business license. The remaining shall be made
within one year after issuance of business license.
 
Clause 12. In case that any party transfers its part or whole ownership to any
third party, consent of the other party shall be obtained and approval shall be
gained from the authorities. Either party has the priority to purchase the
ownership transferred by the other party.
 
 
 

--------------------------------------------------------------------------------

 
 
Chapter 6 Commitment and Responsibility of both Parties
 
Clause 13. Representations and Warranties of Party A
 
( 1 )  Party A has undertaken internal approval procedures for investing and
setting up joint venture under Chinese laws and its articles of incorporation,
including approvals of shareholders meeting and board of directors.
 
( 2 )  Party A promised being in possession of statutory licenses for production
and sales of animal medicine required by Chinese laws, regulations and policies,
including but not limited to animal medicine manufacturing license, approval
numbers of animal medicine products, some of which are held through its related
parties. Such licenses shall be changed to the joint venture within two months
after establishment of the joint venture in order to ensure the joint venture to
have such statutory licenses for production and sales of animal medicine
required by Chinese laws, regulations and policies.
 
( 3 )  Party A undertakes authenticity, accuracy and integrality of all
materials such as legal document and financial data provided during due
diligence by Party B and asset appraisal by asset appraisal firm.
 
( 4 )  Party A made the following promises regarding its investments:
 
( i )  It possesses entire proprietary of the assets, contained in the assets
appraisal report, as its investment to the joint venture. These assets had not
been used as collateral or pledge against any indebtedness.
 
( ii )  Inventory can be utilized during normal course of business of the joint
venture.
 
( iii )  Party A shall make up in cash the accounts receivables, which has been
invested by Party A but not been settled within one year after issuance of
business license, except those cancelled by the Board of Directors of the joint
venture and treated as sales commission. The corresponding creditor’s rights
shall be transferred to Party A. The appraisal report has provided 10% of bad
debt provision against Party A’s account receivables, RMB 148,000, which has not
been contained in Party A’s investment. If the joint venture collect full amount
of accounts receivable in the future, Party B agrees the joint venture deliver
this amount to Party A.
 
( iv )  Guarantee good conditions and normal operation of production facilities
to be invested to the joint venture.
 
( v )  Validity of lease agreement of land use right of joint venture’s site of
operation to satisfy the normal utilization of buildings, constructions and
underground works during the period of joint venture set forth in clause 42. In
case that the lessor revokes the lease agreement prior to the due date and
renewal cannot be achieved, for any reason (exclusive of force majeure set out
in Clause 53), Party A shall pay compensations to joint venture in cash. The
compensation shall be calculated on a pro rata basis, in accordance with the
proportion of unexecuted term of the joint venture period and total period.
 
( vi )  Except for liabilities presented in the asset appraisal report, no
liabilities and warranty (if any) made by Party A, its shareholders or relevant
parties before establishment of the joint venture, shall be taken by the joint
venture.
 
 
 

--------------------------------------------------------------------------------

 
( vii )  To ensure funds invested by Party B have been employed in joint
venture’s operation, Party A promises that it has extended the due date of the
liabilities listed in Exhibit B prior to this agreement. In case creditors of
the liabilities listed in Exhibit B claims settlement prior to the extended date
due to Party A’s failure in obtaining creditors’ consent of extend, Party A
shall be responsible for the settlement.
 
( 5 )  Party A shall made every possible effort to ensure pass Party A’s
existing market system, network, sales team to the joint venture; during the
period of joint venture, except for services for the joint venture, Party A, its
shareholders or related parties shall not conduct businesses same as or
identical to the joint venture in any way so as to avoid horizontal competition.
 
( 6 )  Party A promised to operate its business and manage its assets as
investment bona fade before establishment of the joint venture to avoid the
assets from being devalued; in case of devalue, Party A shall make it up in
cash; profit generated from the operation during the benchmark date of asset
appraisal date and the date of joint venture’s establishment shall belong to
Party A. Further, Party A shall keep complete accounting records from the
benchmark date of asset appraisal (December 31, 2007) to the date of the joint
venture establishment. When establishing, the assets invested, together with
accounting records shall be delivered to the joint venture.
 
( 7 )  Party A shall provide assistance to go through procedures with relevant
authorities, such as application for approval, registration and etc.
 
( 8 )  Party A shall be responsible for any other issues entrusted by the joint
venture.
 
Clause 14. Representations and Warranties of Party B
 
( 1 )  Party B has undertaken internal approval procedures for investing and
setting up joint venture under laws and its articles of incorporation, including
approval of the board of directors.
 
( 2 )  Party B shall make the investment on schedule in accordance with the
provisions set forth in Clauses 10 and 11.
 
( 3 )  After establishment of the joint venture, Party B agreed to apply for
“Registration Certificate of New Animal Medicine” and “Approval Number of Animal
Medicine Product” for its AF-01 anti-viral aerosol technology under the name of
the joint venture. Therefore, necessary arrangement for experiment, construction
and certification of production facilities shall be contained in the plan of the
joint venture’s new product development and operation plan. Payment for
technical license fee may be made as compensations for Party B’s AF-01
anti-viral aerosol technology. Both parties shall enter into other agreement(s)
for license application matters and distribution of profit.
 
( 4 )  Party B shall be responsible for handling other issues entrusted by the
joint venture.
 
 
 

--------------------------------------------------------------------------------

 
 
Chapter 7 Board of Directors
 
Clause 15. The joint venture shall set up Board of Directors on the date when
relevant authorities issues business license to the joint venture.
 
Clause 16. The Board of Directors shall be made up of five directors, among
which two Directors shall be appointed by Party A and the remaining three
directors shall be appointed by Party B. The Chairman of the Board of Directors
(“Chairman”) shall be appointed by Party B; and the Vice Chairman of the Board
of Directors (“Vice Chairman”) shall be appointed by Party A. Term of members of
the Board, the Chairman and Vice Chairman shall be four years, which can be
extended subject to the appointment of the party.
 
Clause 17. The Board of Directors is the paramount of the joint venture. Scope
of authorities of the Board of Directors shall be as follows:
 
( 1 )  To ratify annual business plan, annual budget and report of operations;
 
( 2 )  To ratify annual financial report and plan of profit distribution;
 
( 3 )  To approve bylaws of the joint venture;
 
( 4 )  To pass resolution of establishment or repealing of branch;
 
( 5 )  To pass resolution of appointment or dismissal of General Manager and
Vice General Manager;
 
( 6 )  To pass resolutions on disposal of principal assets;
 
( 7 )  Acquire or provide loans to any third party ( including shareholders or
their related parties ) ;
 
( 8 )  Provide collateral or pledge to any third party’s indebtedness (
including shareholders or their related parties ) ;
 
( 9 )  Make amendments to the articles of incorporation of the joint venture;
 
( 10 )  Pass resolutions on increase or decrease amount of registered capital of
the joint venture;
 
( 11 )  Pass resolutions of merge with other entities;
 
( 12 )  Terminate or extend joint venture period;
 
( 13 )  Pass resolutions on liquidation after termination or expiry of the joint
venture;
 
( 14 )  Other principal issues.
 
Clause 18. The resolutions on issues sets forth by items (9) to (12) of Clause
17 hereof shall be passed unanimously by all the members of the Board of the
Directors; Resolutions on other issues thereto shall be passed at least by half
members of the Board of Directors.
 
Clause 19. The Chairman is the legal representative of the joint venture. The
chairman shall have the authority of signing documents on behalf of the joint
venture. In accordance with the authorization of the Chairman, other members of
Board of Directors are entitled to sign documents on behave of the joint venture
during the absence of the Chairman.
 
 
 

--------------------------------------------------------------------------------

 
Clause 20. Board meeting shall be held at least once a year (annual meeting).
Venue of the meeting shall be the domicile of the joint venture or other place
designated by the Board of Directors. The Chairman shall call for and emcee the
meeting. Upon proposal by two or more directors, the Chairman shall call for a
temporary Board meeting.
 
Clause 21. Notice for board meeting shall include date, venue, agenda and be
sent out to all directors by fax or email five days prior to the meeting.
Minutes of meeting shall be archived into files.
 
Clause 22. Each director has one ticket of voting right. Annual meeting and
temporary meeting is valid only when four directors participate.
 
Clause 23. Both parties are obligated to ensure directors it appointed to attend
annual meeting and temporary meeting. In case any director cannot attend the
board meeting for any reason, the director shall issue a proxy to other people
to attend the board meeting. In the event that a director fails to attend a
board meeting in person and appoint others on behalf of him (her) to attend it
after the Chairman sends the meeting notice of the same proposal to him (her)
twice, the resolution is deemed to be voted for by the director when he (she)
fails to respond.
 
 
Chapter 8 Operation and Management Organs
 
Clause 24. The joint venture shall set up relevant management organs in charge
of its daily operation, which constitutes General Manager, Chief Financial
Officer and Vice General Manager.
 
Clause 25. The system of job responsibility of General Manager under the Board
of Directors is adopted by the joint venture. General Manager shall be
responsible for carrying out all resolutions of the Board of Directors,
organizing and supervising daily operations and administration of the joint
venture. General Manager shall be nominated by the Chairman and appointed by the
Board of Directors. The Chairman shall be responsible for appointment, dismissal
and examination of General Manager’s performance. Both parties could recommend
candidate for General Manager.
 
Clause 26. The Chief Financial Officer of the joint venture shall be appointed
by Party B. The Chief Financial Officer shall be directly report to the Chairman
of the joint venture and Chief Financial Officer of Party B. Chief Financial
Officer of the joint venture have the responsibility of providing necessary
assistance to General Manager to perform his (her) duties. Chief Financial
Officer of the joint venture shall be responsible for personnel arrangement (
cashier shall be appointed by Party B and one accountant may be appointed by
Party A ) , daily financial management and examination of employee performance
of finance and accounting department.
 
Clause 27. Board of Directors of the joint venture reserves the following
rights. General Manager or Chief Financial Officer shall submit proposals
regarding the following issues to the Board of Directors for approval, or
approval from the Chairman subject to the authorization of Board of Directors:
 
 
 

--------------------------------------------------------------------------------

 
( 1 )  Amendment of annual business plan or annual budget, or making
expenditures or suffering liability on specific issues, if actual settlement
amounts exceeding more than 10% of the approved amounts.
 
( 2 )  Transactions of acquiring or bettering property, plant and equipment not
included in the annual business plan or budget with a single payment exceeding
RMB 10,000 Yuan or monthly accumulated amount exceeding RMB 20,000 Yuan.
 
( 3 )  Entering into any single transaction of sales or purchase, with the
amount exceeding RMB500,000 during normal course of business.
 
( 4 )  Entering into any single transaction purchasing services including but
not limited to advertisement, management consultant, market plan, etc. of which
the amount (through one transaction or a series of relevant transactions)
exceeds RMB 70,000 Yuan.
 
( 5 )  Loans to any third party, excluding advanced payment for business travel
expenses, or prepayment under purchase agreement.
 
( 6 )  Directly or indirectly provide collateral or pledge to any indebtedness
of any third party.
 
( 7 )  Acquiring any stocks or securities.
 
( 8 )  Entering into any other contract or commitment rather than ordinary
course of business of the joint venture.
 
Clause 28. Several Vice General Managers may be appointed subject to demand of
business management to assist General Manager. Vice General Managers shall be
nominated by General Manager and appointed by the Board of Directors.
 
Clause 29. The joint venture may set up several departments. Department Managers
shall be in charge of corresponding management functions, execute tasks assigned
by General Manager and Vice General Managers.
 
Clause 30. General Manager, Chief Financial Officer and Vice General Managers
shall not be any part time or full time employee of other entities, or engage in
any other commercial activities which compete with the joint venture.
 
Clause 31. Party B agreed to issue stock options as compensation to members of
senior management or other key personnel subject to their performance,
contributions and positions.
 
Clause 32. The board of directors may dismiss General Manager, Chief Financial
Officer or Vice General Managers or other managerial staff at any time by
resolution due to jobbery, serious abuse or fault. Claims against them for loss
may be made. In case of violence against criminal laws such as embezzlement of
the joint venture’s asset, criminal lawsuits may be made.
 
 
Chapter 9 Labor Force Management and Labor Union
 
Clause 33. The board of directors shall work out programs, pursuant to “Law of
Labor Contract of the People’s Republic of China,” “Regulations for Labor Force
Management in Sino-Foreign Joint Venture” and other applicable Chinese
regulations, in terms of employment, dismissal, salary, labor insurance, welfare
and reward or punishment of employees. Labor contracts shall be signed between
the joint venture and employees collectively or separately.
 
 
 

--------------------------------------------------------------------------------

 
Clause 34. The employees of the joint venture shall have the right to set up
labor union pursuant to “Law of Labor Union of the People’s Republic of China”
Tasks of the union are as follows: to legally protect employees’ democratic
right and material interest, assist the joint venture to arrange and reasonably
use reward and welfare funds; organize employees to study professional skills,
scientific and technical knowledge, conduct art or sport activities; educate
employees to observe labor disciplines; carry out labor contract and fulfill all
kinds of tasks of the joint venture.
 
Clause 35. The joint venture shall pay 2% of total actual salaries paid to
employees each month as funds of labor union. The labor union shall employ such
funds pursuant to “Method of Management of Labor Union Fund” stipulated by
General Labor Union of P.R. China.
 
 
Chapter 10 Tax, Accounting, Audit and Foreign Exchange
 
Clause 36. The joint venture and employees shall pay taxes pursuant to relevant
Chinese laws and regulations.
 
Clause 37. The joint venture shall accrue statutory accumulation fund pursuant
to “Company Law of the People’s Republic of China” and “Law of the People's
Republic of China on Chinese-Foreign Joint Ventures”. Reserve fund, social
benefit fund, development fund and welfare and reward fund shall be accrued in
proportion approved by the Board of Directors.
 
Clause 38. The joint venture’s fiscal year starts on January 1 and ends on
December 31 each year. Vouchers, bills of document, financial records
(statements) and book keeping shall be made in Chinese.
 
Clause 39. The joint venture shall employ Chinese CPA to conduct annual audit.
Audit report shall be submitted to General Manager and Board of Directors.
 
In case that Party A or Party B deems it is necessary to employ American CPA or
Chinese CPA to conduct annual audit or interim audit, the joint venture shall
agree with it and provide necessary assistance.
 
Clause 40. The Chief Financial Officer shall be responsible for compiling
balance sheets, income statement and proposal of profit distribution of previous
fiscal year in the first two months of each year. These financial statements
shall be submitted to board meeting for approval.
 
Clause 41. All matters in connection with foreign exchange shall be processed
pursuant to “Regulations on Foreign Exchange Control of the People’s Republic of
China” and other relevant regulations.
 
 
 

--------------------------------------------------------------------------------

 
 
Chapter 11 Term of the Joint Venture and Asset Disposal after Expiry of the Term
 
Clause 42. Term of the joint venture shall be fifteen years commencing on the
date the joint venture’s business license has been issued by relevant
authorities.
 
Clause 43. Application for extend of the joint venture term shall be submitted
to relevant authorities within six months prior to the expiry of term subject to
proposal from any party and unanimous resolution of the Board of Directors.
 
Clause 44. Liquidation shall be conducted pursuant to relevant laws and
regulations after expiry of term or termination of the joint venture. Liquidated
assets shall be distributed to the parties after payment of income tax in
proportion of ownership.
 
 
Chapter 12 Liabilities for Breach of Contract
 
Clause 45. In case of fundamental breach of this contract due to Party A’s
failure of performance of provisions sets forth by item (1) of Clause 14 hereof,
or its failure of the extend of the lease agreement of the operation site within
two months after issuance of business license, Party B may suspend to perform
its obligation of investment until Party A completes relevant procedures of
transference and extend; In case that Party A fails to complete such procedures
within three months after issuance of business license, Party B has the right to
terminate this contract with approval of the relevant authorities and Party A
shall be responsible for paying expenses occurred in connection with the attempt
of setting up of the joint venture.
 
Clause 46. In case that any party fails to make investment on schedule set forth
by Chapter 5 hereof, the defaulting party shall pay to the other party 1% of the
overdue contribution each month starting from the first month after exceeding
the time limit. In case the defaulting party delays contributing investment for
over three months, 3% of overdue contribution shall be paid to the other party
as liquidation damages and the other party shall have the right to terminate the
contract in accordance with Clause 52 hereof with approval of the authorities
and demand the defaulting party to pay compensations for actual economic loss.
 
Clause 47. Party A shall be responsible for handling and repaying any
indebtedness of itself or its related parties when claimed by any third party
against the joint venture, which are not contained in the asset appraisal report
and occurred prior to establishment of the joint venture (if any). Party A shall
make compensations for losses suffered by the joint venture or Party B resulting
from the above-mentioned issue.
 
Clause 48. In case that Party A breaches provisions set forth in item (5) of
Clause 13 hereof to conduct business competing with the join venture, it shall
stop such business upon receiving notice from the joint venture or Party B. In
case that Party A fails to stop such business within one month after receiving
notice, it shall pay RMB 100,000 Yuan to Party B as compensation. The
compensation shall increase by 50% each month.
 
Clause 49. In case that the agreement and/or its Exhibits thereof cannot be
partially or fully executed due to fault of any party, such party shall bear the
responsibility for breach; in case that fault is made by both parties, both
parties shall take the responsibility for breach respectively.
 
 
 
 

--------------------------------------------------------------------------------

 
Chapter 13 Modification, Change and Termination
 
Clause 50. Any amendment to this contract or its Exhibits thereof shall be made
by written agreement of both parties and approved by the relevant authorities.
Otherwise, amendments shall not be effective.
 
Clause 51. In case of inability to fulfill the contract or to continue operation
due to heavy losses in successive years as a result of force majeure, the
duration of the joint venture and the contract shall be terminated before the
time of expiration after being unanimously agreed upon by the board of directors
and approved by the original approval authority.
 
Clause 52. Should the joint venture be unable to continue its operation or
achieve its business purpose due to the fact that one of the contracting parties
fails to fulfill the obligations prescribed by the contract and articles of
association, or seriously violates the provisions of the contract and articles
of association, that party shall be deemed to have unilaterally terminated the
contract. The other party shall have the right to terminate the contract in
accordance with the provisions of the contract after approval by the original
approval authority, and to claim damages. In case Party A and Party B of the
joint venture company agree to continue the operation, the party who fails to
fulfill its obligations shall be liable for the economic losses caused thereby
to the joint venture.
 
 
Chapter 14 Force Majeure
 
Clause 53. Should either of the parties to the contract be prevented from
executing the contract by force majeure, such as earthquake, typhoon, flood,
fire, war or other unforeseen events, and their occurrence and consequences are
unpreventable and unavoidable, the prevented party shall notify the other party
in written form without any delay, and within 15 days thereafter provide
detailed information of the events and a valid document for evidence issued by
the relevant public notary organization explaining the reason of its inability
to execute or delay the execution of all or part of the contract. Both parties
shall, through consultations, decide whether to terminate the contract or to
exempt part of the obligations for implementation of the contract or whether to
delay the execution of the contract according to the effects of the events on
the performance of the contract.
 
 
Chapter 15 Applicable Laws
 
Clause 54. Laws of P.R. China shall be applicable to and govern establishment,
validity, interpretation, performance of the contract and settlement of dispute.
 
 
Chapter 16 Settlement of Dispute
 
Clause 55. Any disputes arising from the execution of, or in connection with,
the contract shall be settled through friendly consultations between both
parties. In case no settlement can be reached through consultations, the
disputes shall be submitted to the Foreign Economic and Trade Arbitration
Commission of the China Council for the Promotion of International Trade for
arbitration in accordance with its rules of procedure. The arbitral award is
final and binding upon both parties.
 
 
 

--------------------------------------------------------------------------------

 
Clause 56. Except for provisions hereof under process of arbitration, other
provisions hereof shall be performed without any affect.
 
 
Chapter 17 Language
 
Clause 57. The agreement has been written in Chinese.
 
Clause 58. The agreement is made into five sets, of which each party holds one
set, two sets are submitted to approval authorities and registration authorities
respectively and one set is maintained as file.
 
 
Chapter 18 Effectiveness and Others
 
Clause 59. The following exhibits shall be an integrated part to the contract:
 
( 1 )  Party A’s Asset Appraisal Report.
 
( 2 )  Party A’s Loan Breakdowns.
 
( 3 )  Articles of Association of the Joint Venture. In case that there is any
conflict or discrepancy between the Articles of Association and the contract,
the contract shall be prevailing.
 
Clause 60. The parties are obligated to inform the other party by registered
mail of any notice related to rights or obligations of the counterparties after
sending it by fax or email. The addresses of the parties specified in the
contract shall be the notice address. In case that any party changes its
address, it shall inform the other party in advance.
 
Clause 61. The contract and its Exhibits thereof shall be approved by
Shijiazhuang Municipal Bureau of Commerce, Hebei Province. The contract shall
become effective at the date of approval.
 
Clause 62. The agreement has been signed and executed by representatives of both
parties on May 22, 2008 in Shijiazhuang City, China.
 

 
Party A: Hebei Huaxing Pharmaceuticals Co., Ltd.
 
Signature: __________________________
 
Chairman: Li Ruijun
 
Date: May 22, 2008
 

 
Party B: Kiwa Bio-tech Products Group Corporation
 
Signature: __________________________
 
chairman: Li Wei
 
Date: May 22, 2008
 
 
 

--------------------------------------------------------------------------------

 
Exhibits
 

 
Exhibit No.1: “The Assets Appraisal Report of Hebei Huaxing Pharmaceuticals Co.,
Ltd.” [Jinboping zi (2008) No.3], issued by Beijing Bochan Appraisal Co., Ltd.
 

 
Exhibit No.2: Breakdowns of the extended Loans of Hebei Huaxing Pharmaceuticals
Co., Ltd.
 
[table.jpg]
 
Exhibit No.3: The Articles of Association of the joint venture
 
 
 
 
 

--------------------------------------------------------------------------------