**Agreement        on Joint Incorporation of**

**Kiwa-CAU        Bio-Tech Research & Development Center between **

**China        Agricultural University and **

**Kiwa        Bio-Tech Products (Shandong) Limited**

**WHEREAS:**

**Kiwa        Bio-Tech Products (Shandong) Limited **
**Kiwa        Bio-Tech Products Group Corporation**
**Kiwa**

**China        Agricultural University **
**CAU**
**CAU        Institute of Botany Ecological Engineering” (**
**Eco-Institute**

**Kiwa        **

**Article        1 Investment and Incorporation of the R & D Center**

| 1.1 | Kiwa                  Shandong and CAU shall utilize their respective advantage resources                  to                  jointly set up Kiwa-CAU Bio-Tech R & D Center, the R & D Center                  shall be an affiliate of Kiwa                  Shandong. |
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| 1.2 | Kiwa                  Shandong agrees to invest RMB1,000,000 each year as the funds for                  R &                  D to the R & D Center, such R & D funds shall be used for the                  following purposes: |
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| (1) | The                  allowances and travel expenses for the staff of the R & D                  Center; |
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| (2) | The                  equipment, instruments and consumables added for the R & D project as                  identified by both parties; |
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| (3) | Other                  costs and expenses related to the R & D activities of the                  Center. |
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| 1.3 | CAU                  agrees to provide the R & D Center with the following                  resources: |
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| (1) | The                  R & D staff of CAU to join the R & D Center shall not be less than                  six, and at least three of them shall be with professor or doctorate                  and                  above title, at least two of them shall be with master                  degree; |
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| (2) | The                  Eco-Institute shall be used as the base and the carrier to set                  up the R                  & D Center, and the R & D Center shall be allowed to use the                  experimental space and the facilities of the Eco-Institute free                  of charge,                  and provide conveniences to the use of other technical documents,                  laboratories and research institutes of                  CAU. |
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| 1.4 | Kiwa                  Shandong may, according to the circumstances of specific R & D                  project, appoint appropriate personnel to join the R & D Center to                  carry out the project R & D                  Center. |
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**Article        2 Objective and Task of the R & D Center**

| 2.1 | As                  the R & D organization of Kiwa Shandong, the R & D Center shall                  fulfill the overall R & D functions of Kiwa Shandong, including                  technical planning, technical consultancy and new technology and                  new                  products development. The R & D Center shall set its foot on Microbial                  fermentation engineering, carry out the research and development                  of                  bio-engineering technology in an all-round way, gradually bring                  Kiwa                  Shandong to enter the industries including bio-fertilizers, bio-feeds,                  bio-pharmaceuticals (bio- pesticides,                  bio- veterinary,                  bio-medicines), bio-energy, bio-environment protection and                  bio-seeds. |
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| 2.2 | The                  R & D Center shall complete the following R & D tasks each                  year: |
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| ø1÷ | Three                  new technological achievements get                  patented; |
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| ø2÷ | Two                  technological achievements pass the provincial level or ministerial                  level                  scientific and technological achievements                  qualification; |
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| ø3÷ | Develop                  two new products which can be                  industrialized. |
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| 2.3 | The                  R & D Center shall also be responsible for subsequent perfection of                  the existing product-related technologies of Kiwa Shandong, Kiwa                  Shandong                  shall be responsible for providing relating production and process                  data. |
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| 2.4 | Both                  parties agree to set up the international R & D Center. CAU and the R                  & D Center shall provide Kiwa Shandong with the latest information                  of                  bio-techs at home and abroad, and make full use of its status in                  the                  international agriculture research field to provide the R & D staff of                  Kiwa Shandong with opportunities to famous agencies and experts                  at home                  and abroad, and assist Kiwa Shandong in feasibility study on the                  introduced new technologies and new products. Kiwa Shandong and                  its parent                  shall be responsible for contacting the international famous scientific                  research institutions and universities in the U.S. and other regions,                  recruiting expert consultants from home and abroad, creating conditions                  for international exchange, and introducing new technologies and                  new                  products from abroad. |
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| 2.5 | The                  R & D Center shall fulfill the function of training quality control                  personnel and technicians for Kiwa Shandong, and providing technical                  support for the marketing center. |
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**Article        3 Management and Coordination of the R & D Center**

| 3.1 | The                  R & D Center shall adopt the responsibility system of director. The                  director of the R & D Center shall be the director of the                  Eco-Institute, who shall be responsible for project planning, personnel                  recruitment and daily management of the R & D Center. The directors of                  the R & D Center shall report his work to the chief executive officer                  of Kiwa Shandong. Project planning shall acquire prior consent                  of Kiwa                  Shandong. |
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| 3.2 | The                  R & D Center shall prepare the overall R &D plan and the annual R                  &D plan for Kiwa Shandong, such plans shall be implemented after                  approval by the chief executive officer of Kiwa Shandong. The annual                  R                  &D plan shall include the R &D projects, and the technical                  objective, technical contents, technical method and routes of each                  project, R &D schedule and duration for each                  project. |
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| 3.3 | The                  main R &D personnel of the R & D Center shall be recruited on                  labor contract basis, and Kiwa Shandong shall sign labor contract                  with the                  employees. |
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| 3.4 | The                  annual R & D funds shall be allotted in the following                  schedule: |
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| (1) | The                  RMB500,000 for the third quarter and the fourth quarter of 2006                  shall be                  allotted by two times before 31 December                  2006. |
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| (2) | The                  annual R & D funds for the subsequent years shall be allotted in the                  following schedule: |
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| 3.5 | The                  financial management of the R & D Center shall adopt the budget                  management as the principle. The director of the R & D Center shall                  prepare the annual budget according to the annual R & D plan, and use                  the R & D funds according to the budget. The detailed rules for                  financial management shall be worked out by the R & D Center and                  implemented after approval by Kiwa                  Shandong. |
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| 3.6 | The                  director of the R & D Center shall at a quarterly basis report his                  work and R &D progress of previous month in writing to the leaders in                  charge of Kiwa Shandong and CAU. |
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**Article        4 Share, Delivery and Acceptance of the Technical        Achievements**

| 4.1 | Both                  parties agree that, the technological achievements of the R & D Center                  shall be shared by Kiwa Shandong and CAU. Kiwa Shandong shall have                  the                  right of preference to choose the projects, but each party shall                  apply for                  patents separately. Either party shall have the ownership to the                  patents                  and know-how applied for by him: |
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| (1) | For                  invention patent, Kiwa Shandong 2ôCAU                  1. |
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| (2) | For                  provincial level or ministerial level qualification of scientific                  and                  technological achievements: Kiwa Shandong 1, CAU                  1. |
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| (3) | For                  new products, Kiwa Shandong 1, CAU 1. For new products owned by                  CAU, Kiwa                  Shandong shall have the right to preference in implementation,                  and the                  specific transfer price shall be agreed by both                  parties. |
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| 4.2 | Both                  parties agree that, when the following work is done, the delivery                  of R                  & D technical achievements shall be                  realized: |
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| (1) | For                  project to apply for invention patent, when the technical documents                  for                  patent application are prepared and pass the new item retrieval                  and the                  patent application is accepted; |
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| (2) | For                  project to apply for provincial level or ministerial level qualification                  of scientific and technological achievements: when the detailed                  technical                  documents are prepared and the certificate for qualification of                  science                  and technology is issued; |
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| (3) | For                  new product development: when the detailed technical background                  documents                  are prepared, including the product compositions, application effect,                  feasibility study reports (to be prepared by itself), technical                  standards                  and specifications, process flow charts, equipment flow charts,                  and can                  produce qualified products. |
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**Article        5 Technical Risks**

| 5.1 | Where                  the R & D Center identifies any technical risk which may lead to                  failure or partial failure of the R & D, the R & D Center shall,                  within ten days, notify Kiwa Shandong and take necessary actions                  to                  minimize the loss; CAU shall have the obligation to take necessary                  actions                  to remind the R & D Center to pay attention to the technical risks                  which may exist, and urge the R & D Center to notify Kiwa Shandong, so                  as to avoid unnecessary investment. |
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| 5.2 | During                  performance of this Agreement, in case the technology as the research                  subject has been made public by others (including by way of patent                  rights), either party shall give a timely notice to the                  other. |
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**Article        6 Technical Confidentiality **

| 6.1 | The                  R & D personnel of CAU, Eco-Institute and the R & D Center shall                  keep confidential all the technical secrets and other business                  secrets                  related to the business of Kiwa Shandong, which are available to                  them                  during the process of R & D . Unless otherwise consent in writing is                  acquired from Kiwa Shandong, no R & D personnel shall disclose, make                  available, announce, release, publish, pass on, transfer or otherwise                  to a                  third party the business secrets, nor provide such third party                  with the                  conditions to know the business secrets, nor use the business secrets                  for                  himself or for the third party for purpose other than fulfillment                  of his                  duty. |
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| 6.2 | CAU                  and Kiwa Shandong shall be liable for keeping confidential the                  technological achievements shared by the other                  party. |
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| 6.3 | The                  intellectual property rights protection-related laws and the other                  provision hereof shall be applicable to the technological achievements                  formed in the R & D project of the R & D Center; Where for any                  reason it is necessary to terminate the R & D project, a written                  confirmation shall be provided by Kiwa Shandong. During the contract                  terms                  or within two year after the contract expires, the R & D personnel                  shall not be employed as a consultant or to take any other position                  in the                  companies which are implementing the same project as this R & D                  project. |
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| 6.4 | Where                  any of the above party violates its confidentiality obligations,                  it shall                  pay the liquidated damages to the party suffering the loss with                  the                  interests gained from this Agreement as the standard, including                  the                  technological achievements and allowances it                  shares. |
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**Article        7 Technical Implementation and Subsequent Improvement**

| 7.1 | R                  & D Center shall be responsible for all-the-way guidance, improvement                  and perfection during the industrialization implementation process                  of R                  & D scientific and technological                  achievements. |
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| 7.2 | Both                  parties agree that either party shall have the right to use the                  technological achievements of the R & D Center and carry out                  subsequent improvement. Where either party improves the achievements                  owned                  by itself, such party shall be entitled to the technological achievements                  improved subsequently by itself. Where either party improves the                  achievements owned by the other party, the new technological achievements                  so produced with substantial or innovative technological progress                  characteristics shall be shared by both                  parties. |
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**Article        8 Termination**

| 8.1 | Where                  Kiwa Shandong fails to allot the funds for R & D in accordance with                  the budget for two consecutive quarters, CAU shall have the right                  to                  terminate this Agreement, but Kiwa Shandong shall have no right                  to share                  the technological achievements produced in that                  year. |
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| 8.2 | Where                  the R & D Center fails to fulfill the annual R & D plan, and the                  objective and tasks provided in Article 2.2, Kiwa Shandong shall                  have the                  right to terminate this Agreement, and shall have the right to                  claim for                  return of the equipment, apparatus and instruments purchased for                  R & D                  funds for that year. |
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**Article        9 Supplementary Provisions **

| 9.1 | CAU                  agrees that the R & D Center can hang the plate with the wording                  "Kiwa-CAU Bio-Tech R & D Center” at the offices of                  Eco-InstituteôKiwa                  Shandong. After signing of this Agreement, Kiwa Shandong may use                  the                  wording ”Cooperation Partner---China Agriculture University” in all kinds                  of press or occasions including TV, news, broadcasting, newspapers,                  magazines, websites, pamphlets, posters, releases and expositions.                  But                  Kiwa Shandong shall commit not to carry out any activity which                  may ruin                  the reputation of CAU. CAU agrees to hang the plate with the wording”Kiwa                  Shandong -China Agriculture University Cooperative Research Base” at its                  experimental base. |
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| 9.2 | This                  Agreement shall remain valid for ten years starting from 1 July                  2006. This                  Agreement shall be binding on both parties during the period of                  validity,                  except as amended by both parties in writing or rescinded in accordance                  with Article 8 or expired. |
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| 9.3 | This                  Agreement shall become effective from the date executed by both                  parties.                  This Agreement shall be made in duplicate, each party shall hold                  one                  original copy, and each original copy shall be equally                  authentic. |
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**China        Agriculture University **

**Kiwa        Bio-Tech Products (Shandong) Limited**

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