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.

     

    

     

    Exhibit
      No.3: The
      Articles of Association of the joint venture