Document:

Joint Venture Contract between Shijiazhuang Pharmaceutical Group Company, Ltd.

 EXHIBIT 10.1 
 Portions of this Exhibit were omitted and filed separately with the Secretary of the Commission pursuant to an application for confidential treatment filed with the Commission pursuant to Rule 24b-2 under the Securities Exchange Act of
1934. Such omissions are designated as ***. 
 JOINT VENTURE CONTRACT 
 on the establishment of 
 “SHIJIAZHUANG – UNIGENE PHARMACEUTICAL CORPORATION
LIMITED” 
 between 
 Shijiazhuang Pharmaceutical Group Company, Ltd. 
 And 
 Unigene Laboratories, Inc. 
 June 15, 2000 

 TABLE OF CONTENTS 
  

			
	 Chapter I GENERAL PROVISIONS
	  	2
	 Chapter II CONTRACTING PARTIES
	  	2
	 Chapter III ESTABLISHMENT OF THE JOINT VENTURE
	  	2
	 Chapter IV PURPOSE, SCOPE AND SCALE OF OPERATION
	  	3
	 Chapter V TOTAL INVESTMENT AND REGISTERED CAPITAL
	  	4
	 Chapter VI RESPONSIBILITIES OF CONTRACT PARTIES
	  	6
	 Chapter VII TECHNOLOGY CONTRIBUTION
	  	7
	 Chapter VIII SALES OF PRODUCTS
	  	9
	 Chapter IX BOARD OF DIRECTORS
	  	10
	 Chapter X MANAGEMENT ORGANIZATION
	  	12
	 Chapter XI PURCHASE OF EQUIPMENT
	  	12
	 Chapter XII MANAGEMENT OF LABOR
	  	12
	 Chapter XIII TRANSFER OF JV RIGHTS
	  	13
	 Chapter XIV TAXATION, ACCOUNTING AND AUDITING
	  	14
	 Chapter XV PROFITS AND LOSSES
	  	15
	 Chapter XVI REPRESENTATIONS, WARRANTIES AND COVENANTS
	  	15
	 Chapter XVII TERM OF JOINT VENTURE CONTRACT
	  	16
	 Chapter XVIII EFFECT OF CONTRACT EXPIRATION OR TERMINATION
	  	16
	 Chapter XIX INSURANCE
	  	17
	 Chapter XX CONTRACT AMENDMENT, ALTERATION AND TERMINATION
	  	17
	 Chapter XXI RESPONSIBILITIES OF CONTRACT BREACH
	  	18
	 Chapter XXII FORCE MAJEURE
	  	19
	 Chapter XXIII APPLICABLE LAWS
	  	19
	 Chapter XXIV RESOLUTION OF DISPUTES
	  	19
	 Chapter XXV LANGUAGES
	  	19
	 Chapter XXVI MISCELLANEOUS
	  	19

  

 Chapter I GENERAL PROVISIONS 
 This contract for the establishment of an equity joint venture in Shijiazhuang, Hebei Province, People’s Republic of China (the “PRC”), is entered into on June 15, 2000, through friendly
negotiation based on principles of equality and mutual benefits, by and between Shijiazhuang Pharmaceutical Group Company, Ltd.(“Party A”) and Unigene Laboratories, Inc.(“Party B”) pursuant to the Law of the PRC on Joint Ventures
Using Chinese and Foreign Investment (the “Law”) and other relevant laws and regulations. 
 Chapter II CONTRACTING PARTIES 

 ARTICLE 1. Parties to the Contract 
 1.1. Party A is
Shijiazhuang Pharmaceutical Group Company, Ltd., a legal person established under the laws of the PRC, registered with the Administrative Bureau for Industry and Commerce of Shijiazhuang, Hebei Province, PRC. 
 Legal Address: 276 Zhongshan West Road Shijiazhuang, Hebei Province, PRC 
 Legal Representative: Mr. Cai Dong Chen 
 Position: Chairman and President 
 Nationality: Chinese 
 1.2. Party B is Unigene Laboratories, Inc., established and registered under the laws of the
State of Delaware, United States of America (USA). 
 Legal Address: 110 Little Falls Road, Fairfield, New Jersey, 07004, USA, 
 Legal Representative: Dr. Warren P. Levy 
 Position: President

 Nationality: American 
 1.3. Party A and Party B are each
referred to as a “JV Party” and collectively referred to as the “JV Parties”. 
 Chapter III ESTABLISHMENT OF THE JOINT
VENTURE 
 ARTICLE 2. Establishment of JV 
 Party A and Party
B hereby establish “Shijiazhuang—Unigene Pharmaceutical Corporation Limited” (hereafter referred to as the “JV”) in the PRC pursuant to this Contract, the Law and other relevant PRC laws and regulations. 
 ARTICLE 3. Name and Address of the JV 
 3.1 The name of the JV in Chinese is
“                                       
 ”; and the name of the JV in English is “Shijiazhuang—Unigene Pharmaceutical Corporation Limited.” 
  

 - 2 - 

 3.2 The JV’s legal address is High and New Technology Industrial Development Zone, Shijiazhuang, Hebei Province.

 ARTICLE 4. The JV is established under the Law of the PRC and all activities of the JV shall conform to the pertinent laws, decrees, rules and regulations
of the PRC. 
 ARTICLE 5. The JV takes the form of a limited liability company. Party A and Party B are liable up to amount of their respective capital
contribution subscribed. Each party is entitled to the profits and liable to the risks and losses equivalent to such party’s Distribution Ratio (as defined below), as set forth in Article 56. 
 ARTICLE 6. The JV shall be deemed to have been established as of the date its business license is issued pursuant to the Law (the “Establishment Date”). This
Contract shall be effective as of the date it is approved by the National Administration of High and New Technology Industrial Development Zone, Shijiazhuang, Hebei Province (the “Effective Date”). 
 ARTICLE 7. Promptly following the Establishment Date, the parties hereto shall cause the JV to ratify this Contract, whereby the JV shall agree to be bound by the
provisions of this Contract as if it were a party hereto in its own right. An instrument evidencing such ratification shall be furnished to each of the parties. 
 ARTICLE 8. The JV Parties hereby adopt and shall execute the Articles of Association for the JV. 
 ARTICLE 9. Promptly after the first capital
contributions required by Article 15.1(a) and 15.2(a) have been made by each party, the JV and Party B shall execute a Technology Transfer Agreement (the “Technology Transfer Agreement”) pursuant to which Party B will (a) license the
Technology to the JV (as defined in the Technology Transfer Agreement); (b) agree to sell to the JV its requirements of AE (as defined below); and (c) agree to sell to the JV its requirements of JV Products and bulk Calcitonin until such
time as the JV can manufacture such JV Products and Calcitonin at the JV Facility, all in accordance with the terms and conditions of the Technology Transfer Agreement. 
 Chapter IV PURPOSE, SCOPE AND SCALE OF OPERATION 
 ARTICLE 10. In the spirit of strengthening economic cooperation
and technological exchanges, the purpose of the JV is to use advanced technology and scientific operational management expertise to carry out the manufacture of pharmaceutical-grade recombinant salmon calcitonin (the “Calcitonin”) in
injectable and nasal formulations (the “JV Products”), using the processes of Party B that include the use of an amidating enzyme that the JV will purchase from Party B (the “AE”) in accordance with the Technology Transfer
Agreement, and the distribution and sale of JV Products in the PRC and such other regions as decided by the Board of Directors of the JV (the “Territory”) in order to obtain a satisfactory return on investment for all parties and to build
up competitiveness in both domestic and international markets (collectively, the “JV Business”). 
 ARTICLE 11. The business scope of the JV is
(a) to construct, equip, own, manage, and operate a manufacturing facility in the PRC that complies with all regulations and guidelines applicable 

  

 - 3 - 

 
to such a manufacturing facility (“Applicable Regulations”) and that has the capacity to manufacture Calcitonin in accordance with the terms and
conditions of the Contract (the “JV Facility”) and prepare, fill, label and package injectable and nasal formulations thereof; and (b) to market, distribute and sell the JV Products in the Territory. 
 ARTICLE 12. In order to fully utilize the time necessary for construction of the JV Facility and nurture the market for the JV Products, the production and operation of
the JV shall be carried out in two (2) phases, which are as follows: 
 Phase I: The JV shall import finished JV Products from Party B and package and
distribute, market and sell such JV Products in the PRC and shall import bulk Calcitonin from Party B, formulate JV Products therefrom, and distribute, market and sell such JV Products in the Territory. 
 Phase II: The JV shall import AE from Party B and manufacture bulk Calcitonin therefrom, formulate JV Products therefrom, and distribute, market and sell such JV
Products in the Territory. 
 The JV shall actively explore market opportunities outside the PRC as provided in Article 31 to accumulate foreign exchange.

 ARTICLE 13. Once the JV has begun Phase II, the intended scale of production for the JV Facility shall be as follows: 
 13.1 An annual output of ***of bulk Calcitonin, as well as JV Products in the following approximate quantities: 
  

	 	•	 	 *** 

  

	 	•	 	 *** 

  

	 	•	 	 Four million (4,000,000) vials *** for the *** nasal spray product. 

 13.2 Both parties agree that full consideration shall be given to the possibility for future expansion during planning, designing and construction. Proper adjustment will be made to reflect the development of
operations and market changes. 
 Chapter V TOTAL INVESTMENT AND REGISTERED CAPITAL 
 ARTICLE 14. The total investment of the JV will be Fifteen Million U.S. Dollars (US$15,000,000.00). 
 ARTICLE 15. The registered capital of the JV will be *** 
 Party A shall contribute *** in cash for an equity share
of 55%; 
  

 - 4 - 

 Party B shall contribute cash and technology valued, in the aggregate, at *** for an equity share of 45%.

 Party A and Party B shall make their respective capital contributions in the following manner. 
 15.1 Party A shall contribute the Renminbi equivalent of ***, in cash. Such contribution shall be made as follows: 
 (a) No later than *** after the Establishment Date, Party A shall deposit the Renminbi equivalent of *** in cash into a bank account
designated by the JV in the name of the JV; and 
 (b) No later than *** after the Establishment Date, Party A shall deposit the
Renminbi equivalent of *** in cash into a bank account designated by the JV in the name of the JV. 
 15.2 Party B shall contribute cash and
technology valued, in the aggregate, at ***. Such contribution shall be made as follows: 
 (a) No later than ninety (90) days
after the Establishment Date, Party B shall deposit Four Hundred Five Thousand US Dollars (US$405,000.00) in cash into a bank account designated by the JV in the name of the JV; 
 (b) No later than two (2) years after the Establishment Date, Party B shall deposit Four Hundred Ninety Five Thousand US Dollars ($495,000.00) in
cash into a bank account designated by the JV in the name of the JV; 
 (c) Pursuant to the Technology Transfer Agreement, Party A shall
transfer the Technology to the JV, which shall be deemed a contribution valued at *** made upon execution of the Technology Transfer Agreement. All data, documentation and information required for the Technology transfer must be provided by
Party B according to the terms of the Technology Transfer Agreement and within two (2) years of the Establishment Date. 
 15.3 All cash capital
contributions shall be denominated in US Dollars. Cash contribution of Renminbi shall be valued in terms of US Dollars at the official exchange rate published by the PRC Administration of Foreign Exchange Control for the purchase of US Dollars with
Renminbi on the day payment is made. 
 ARTICLE 16. Party A shall arrange, on behalf of the JV, such third-party financing as the JV may reasonably require
in connection with the establishment and operation of the JV , in an amount not to exceed ***. Party A shall provide any guarantees required by the lenders. 
 ARTICLE 17. In the event that the Board of Directors of the JV unanimously determines that the JV requires capital in addition to the contributions and financing provided for in Articles 15 and 16, the Board shall solicit additional capital
contributions from the JV Parties in proportion to the Distribution Ratios (as defined below) in effect at the time. No JV Party shall have any obligation to make any such capital contributions. In the event that the additional capital 

  

 - 5 - 

 
contributions made in response to such solicitation shall fall short of the amount of additional capital required by the JV, Party A shall arrange for
third-party financing of the shortfall, provided, however, that such financing shall be sought only in extraordinary circumstances and only with the prior unanimous written approval of the Board of Directors. No capital increase after
the establishment of the JV shall impact the Distribution Ratio of any JV Party. All financial loans by the JV shall be guaranteed by Party A, as set forth in Article 16. 
 Chapter VI RESPONSIBILITIES OF CONTRACT PARTIES 
 ARTICLE 18. In addition to any other express obligations of either
JV Party under this Contract, the Articles of Association or the Technology Transfer Agreement, the responsibilities of Party A and Party B shall include the following: 
 18.1 Party A shall, at its sole cost and expense: 
  

	(a)	Offer support to the JV not inferior to other substantially similar joint ventures in which Party A is currently engaged or will be engaged in the future; 

 

	(b)	Prepare the feasibility study concerning the JV Business, providing Party B with an English translation thereof, and submitting the feasibility study to the appropriate PRC
government authorities after Party A and Party B have jointly agreed on the text thereof; 

  

	(c)	Obtain all licenses and approvals necessary, and render all necessary assistance, (i) for the establishment of the JV as a legal person with limited liability; (ii) for
the establishment of the JV Facility; (iii) for the manufacture and marketing of the JV Products in the PRC; (iv) for the purchase of AE by the JV from Party B; and (v) to enable the JV to secure sufficient foreign exchange for the
payments to be made to Party B by the JV and to enable Party B to repatriate such amounts; 

  

	(d)	Endeavor to entitle the JV to all the preferences granted under Chinese laws including but not limited to taxation and market promotion preferences, and ensure to the greatest
extent possible that the JV qualifies for (i) such “tax holidays” and other most favorable tax treatment as may be available to foreign investment enterprises from time to time, and (ii) a tax rate (without regard to the tax
holiday) that is not greater than the most preferential income tax treatment available to foreign investment enterprises in the region; 

  

	(e)	Transfer to the JV, and arrange any other formalities with the Land Department related to, the land use right for the JV Facility, contract for the design and construction of the JV
Facility and purchase all equipment and other materials needed for the production of the JV Products; 

  

	(f)	Assist the JV Facility in building, validating and operating the JV Facility in full compliance with all Applicable Regulations and in causing the JV Facility to be fully
operational under such Applicable Regulations; 

  

	(g)	Assist the JV in arranging adequate supply of water, electricity and transportation and other infrastructure facilities; 

  

 - 6 - 

	(h)	Facilitate the acquisition and staffing of the JV with local Chinese managers, technicians, workers and other types of workforce; 

  

	(i)	Facilitate entry visas, work permits and other travel formalities for foreign staff of the JV and Party B; 

  

	(j)	Assist the JV in developing a national network for the distribution of JV Products in the PRC, including, without limitation, developing effective marketing plans and strategies for
each of the JV Products, securing suitable advertising for the JV Products, and generally promoting the market for the JV Products; and 

  

	(k)	Perform other matters entrusted to Party A by the JV. 

 18.2 Party B
shall, at its sole cost and expense, except as otherwise expressly provided: 
  

	(a)	Offer support to the JV not inferior to other substantially similar joint ventures in which Party B is currently engaged or will be engaged in the future; 

 

	(b)	Provide the JV with bulk Calcitonin and AE necessary for the production of Calcitonin at the cost defined in the Technology Transfer Agreement; 

  

	(c)	Provide technical guidance and assistance with respect to the Technology and with respect to equipment installation, testing and validation for Phase II production, as set forth in
the Technology Transfer Agreement; 

  

	(d)	Facilitate entry visas to the United States for employees of Party A and the JV; 

  

	(e)	Provide training to the technicians and workers of the JV with respect to the Technology, as set forth in the Technology Transfer Agreement; 

  

	(f)	Transfer the Technology, which shall meet the designed capacity and quality requirements defined by the Technology Transfer Agreement; 

  

	(g)	Assist the JV in developing an international network for the distribution of JV Products in areas in the Territory but outside the PRC, including, without limitation, developing
effective marketing plans and strategies for each of the JV Products, securing suitable advertising for the JV Products, and generally promoting the market for the JV Products; and 

  

	(h)	Perform such other matters entrusted to Party B by the JV and accepted by Party B. 

 Chapter VII TECHNOLOGY CONTRIBUTION 
 ARTICLE 19. For the purposes of the JV Business, Party A and Party B agree that
Party B will provide advanced technology including product designs, manufacturing processes, testing methods, material recipe, quality standard and training as set forth in the Technology Transfer Agreement. 
  

 - 7 - 

 ARTICLE 20. Party B agrees to provide certain guarantees regarding the Technology. 
  

	1.	Provided that the JV constructs and operates the JV Facility, and manufactures the Calcitonin and the JV Products, all in strict conformance with the requirements, specifications,
Technology and training provided by Party B from time to time and as set forth in the Technology Transfer Agreement, Party B will guarantee, as set forth in the Technology Transfer Agreement: (A) that the Technology is identical to that in use
by Party B in manufacturing the JV Products on a commercial basis at the time when the Technology Transfer Agreement enters into force; (B) that the Technology is suitable for the achievement of the JV’s business purpose; (C) that the
Technology is suitable for the achievement of the product quality and production capacity required by this Contract. 

  

	2.	Party B will provide the JV with the Technology. 

  

	3.	Party B will provide the JV with a list of the Technology and technical assistance calculated as capital contribution. 

  

	4.	Party B will promptly deliver the designs, technical know-how and other detailed materials as part of the Technology, as required by the Technology Transfer Agreement.

  

	5.	Party B will contribute its proprietary Technology for the production of Calcitonin. 

  

	6.	Party B will guarantee that it is not aware of any current legal disputes in any format affecting its use of the Technology in the PRC, or of any infringement by its proposed use of
the Technology in the PRC on any third party patent or intellectual property rights. If Party B fraudulently concealed such legal disputes or infringement, Party B shall be liable for damages thus caused to Party A or the JV.

 ARTICLE 21. In the event that the JV constructs and operates the JV Facility, and manufactures the Calcitonin and the JV Products, all in
strict conformance with the requirements, specifications, Technology and training provided by Party B from time to time and as set forth in the Technology Transfer Agreement, but, as a result of fraudulent concealment on the part of Party B in not
providing the Technology in accordance with the Technology Transfer Agreement, the Technology fails to reach the originally designed capacity set forth in the Technology Transfer Agreement, Party B shall be liable for the damages to the JV as set
forth in the Technology Transfer Agreement. 
 ARTICLE 22. Party B is free from responsibility for damages to the JV that result, in whole or in part, from
non-compliance with the requirements, specifications, Technology, training, guidelines and standards provided to the JV by Party B with regard to the construction and operation of the JV Facility and the manufacture of Calcitonin and the JV
Products. 
 ARTICLE 23. The Technology is regarded as conforming to the contract specifications if it can meet the technical indexes listed by Party B for
*** batches after the Technology is officially put into trial operation, which will be jointly confirmed by representatives from Party A, Party B and the JV. 
 ARTICLE 24. Both Party A and Party B are under the obligation to keep the Technology confidential in accordance with the Confidentiality Agreement between the parties dated October 29, 1998. 
  

 - 8 - 

 ARTICLE 25. Party A and the JV shall not provide in any format to any third party the Technology after Party B has
provided the Technology to the JV unless unanimously agreed by the JV Board. Party B shall not transfer the Technology to any third party in the Territory after the Establishment Date. 
 ARTICLE 26. The JV will have access to improvements to the Technology developed by Party B after Party B has provided the Technology to the JV to the extent permitted by, and on the terms and conditions provided in,
the Technology Transfer Agreement. 
 ARTICLE 27. The JV shall be entitled to any new improvements developed through its own efforts on basis of the
Technology. No party shall use or transfer or release any such new technology to any third party without the permission of the JV. Party B shall have a right to use such improvements outside the Territory in accordance with the Technology Transfer
Agreement. 
 ARTICLE 28. The JV has right of first refusal to other products independently developed by Party B for use in the PRC. New products developed
by the JV shall belong to the JV, shall be considered JV Products, and Party B shall have a right of first refusal to such products outside the Territory. If the new products developed by the JV entail the use of AE, Party B or its successor shall
provide the JV’s AE requirements for such new products under the terms of the Technology Transfer Agreement provided there is no conflict with any obligation of Party B. 
 ARTICLE 29. Without the written permission from the other party after the establishment of the JV, neither Party A nor Party B as well as their subsidiaries and assignees shall independently or jointly with any third
party manufacture, distribute JV Products in the Territory. 
 ARTICLE 30. Party B shall be the exclusive source of AE for the JV and the JV shall purchase
all of its requirements of AE from the JV. The JV shall not sell AE. 
 Chapter VIII SALES OF PRODUCTS 
 ARTICLE 31. The goal of the JV is to optimize return on investment for all parties. The JV Products shall be sold inside the PRC and may be sold in countries outside the
PRC in the best interest of the JV, to the extent expressly authorized by the unanimous approval of the Board of Directors. If the Board authorizes the JV to sell the JV Products outside the PRC, the JV shall ensure that the ratio of export sales v.
domestic sales shall be *** Adjustment will be made to such ratio according to market conditions by the unanimous approval of the Board of Directors. 
 ARTICLE 32. The JV shall have the right to use for free in the marketing of JV Products in the Territory the trademarks of Party A (the “Party A Marks”). Party A and the JV shall have the right to use certain trademarks of Party B
in accordance with the following: 
  

 - 9 - 

	1.	Subject to the terms and conditions hereof, Party B hereby grants to Party A a non-exclusive, royalty-free license (without right to sublicense) to use the trade name
“Unigene” as part of the name of the JV, in connection with the preparation of the feasibility study and related documents, applications for all licenses and approvals required from PRC governmental authorities, and ancillary documents in
connection with the establishment of the JV pursuant to this Contract. Such license shall expire automatically on the Establishment Date. 

  

	2.	Subject to the terms and conditions hereof, Party B hereby grants to the JV, effective as of the Establishment Date, (i) a non-exclusive, royalty-free license (without right to
sublicense) to use the trade name “Unigene” as part of the name of the JV, and (ii) a non-exclusive, royalty-free license (without right to sublicense) to use the trademarks “Unigene” and “Fortical” (collectively,
the “Party B Marks” and with the Party A Marks, the “Marks”), solely for the purpose of marketing and promoting the JV Products in the Territory. Such license shall expire automatically upon the expiration or termination of the
Contract. 

  

	3.	Party A agrees not to use the trade name “Unigene” for any purpose not specified in Paragraph 1 hereof, including without limitation, in connection with its own business.
Further, Party A agrees not to use any trademark, trade name, service name, service mark or business symbol that is substantially similar to the Marks or so nearly resembles it as to be likely to cause deception or confusion.

 By its ratification of this Contract, the JV agrees (a) not to make use of the Marks in contravention hereof; and (b) to comply,
in its use of the Marks, with such rules and conditions pertaining to the use thereof as the relevant JV Party may establish from time to time at its sole discretion. The JV shall report forthwith to the relevant JV Party any infringement or
suspected infringement of such party’s Marks in the Territory which may come to the notice of the JV and, at the request of such party and to the extent such infringement is related to the JV’s use of the Marks, institute legal action with
respect to such infringement. Upon such JV Party’s reasonable request and at the cost and expense of the JV, the JV shall use its best efforts to prevent or enjoin any such infringement (to the extent related to the JV’s use of the Marks)
and to prosecute any proceedings that may be necessary for such purposes, including granting permission to such JV Party to institute any such proceedings in the name of the JV or in the names of such JV Party and the JV. Any damages recovered in
any such proceedings shall be for the account of the JV. The JV shall use its best efforts to preserve the value and validity of the Marks in the Territory. 
 Chapter IX BOARD OF DIRECTORS 
 ARTICLE 33. The Establishment Date is the establishment date of the Board of
Directors. 
 ARTICLE 34. The Board of Directors is composed of five (5) directors. The Board shall have one (1) director who shall serve as
Chairman and one (1) director who shall serve as Vice-Chairman. The Chairman shall be selected by Party A and the Vice-Chairman shall be selected 

  

 - 10 - 

 
by Party B. Three (3) directors will be selected by Party A and two (2) will be selected by Party B. Each director shall be appointed for a term of
four (4) years, subject to renewal, but may be replaced at any time during his term by the party that appointed him, upon prior written notice to the other party. 
 ARTICLE 35. The Board of Directors shall be the highest body of authority over the JV. It shall decide all major issues concerning the JV, in accordance with the Articles of Association. The vote of four of the five
members of the Board of Directors (or their duly appointed proxies) shall be sufficient to constitute action of the Board on all matters except the matters set forth below, as to which the Board may take action only by unanimous decision of the five
(5) members (or their duly appointed proxies): 
 1. Approving on an annual basis the operating plan for the JV; 
 2. Investigating and approving any expenditures by the JV in excess of ***; 
 3. Investigating and approving the obtainment by the JV of all third party financing; 
 4. Selecting and approving any foreign country market regions for sale of the JV Products and determining the ratio of export sales to domestic sales;

 5. Examining and approving the fiscal budget, financial statements and balance sheets of the JV; 
 6. Determining and approving the profit allocation and distribution and the loss offset plan for the JV; 
 7. Approving any change in the registered capital for the JV; 
 8. Approving the transfer of the registered capital of the JV to a third party; 
 9. Approving any merger,
separation, acquisition, dissolution, liquidation or alteration of the JV; 
 10. Amending the Articles of Association; 
 11. Approving the marketing and/or development of products by the JV other than the JV Products; 
 12. Approving the transfer, sale or licensing to a third party of any improvements in technology that belong to the JV or contractually may be
transferred, sold or licensed by the JV; and 
 13. Other issues of importance so deemed by the Board of Directors. 
 ARTICLE 36. The Chairman of the Board of Directors is the legal representative of the JV. When the Chairman is unable to perform his responsibilities, the Vice-Chairman
shall be authorized to represent the JV. 
  

 - 11 - 

 ARTICLE 37. A Board of Directors’ meeting is to be convened at least once per year. The Chairman of the Board shall
convene interim board meetings upon proposal by two or more directors. 
 ARTICLE 38. Board meetings shall be conducted both in Chinese and English. All
topics for Board Meetings and all minutes and resolutions from the Board Meetings shall be written in both Chinese and English language versions, which shall have equal force. All records of meetings, including without limitation minutes and
resolutions, shall be filed by the JV. 
 Chapter X MANAGEMENT ORGANIZATION 
 ARTICLE 39. The Board of Directors of the JV shall establish management organs for the JV, to be responsible for daily operational and managerial work. The JV shall have
one (1) general manager, selected by Party B, and one (1) deputy general manager, selected by Party A. The term of service for each of the general manager and the deputy general manager shall be four (4) years, which term may be
renewed through re-appointment by the Board of Directors. The general manager and the deputy general manager may be removed for cause by the vote of the Board of Directors and otherwise by the selecting party. Upon removal of the general manager or
the deputy general manager or expiration of their respective terms without renewal, the party that selected the general manager or deputy general manager, as the case may be, shall have the right to select the replacement general manager or deputy
general manager, as the case may be. 
 ARTICLE 40. The general manager shall carry out various resolutions of the Board of Directors and organize and lead
the daily operation and management of the JV. The deputy general manager shall assist the general manager in his work. 
 ARTICLE 41. In the case of
engagement in malpractice for private gain or serious dereliction of duty on the part of the general manager, deputy general managers or other corporate executives, or for any other reason, they may be dismissed at any time by resolution of the
Board of Directors. 
 Chapter XI PURCHASE OF EQUIPMENT 
 ARTICLE 42. In the purchases of such items as required machinery, equipment, raw materials, fuel, parts, means of transport and articles for office use, priority shall be given to sources located in the PRC, provided
that such sources are capable of providing such supply on terms and conditions, which conditions shall include without limitation quality considerations, substantially as favorable as those offered by sources not located in the PRC. 
 ARTICLE 43. The participation of Party A should not be prevented when Party B is entrusted by the JV for the purchase of equipment from overseas markets. 
 Chapter XII MANAGEMENT OF LABOR 
 ARTICLE 44. Matters
relating to the staff and workers of the JV such as recruitment, employment, dismissal, resignation, wages, labor insurance, welfare benefits, incentive and penalty systems, are to be settled through collective or individual contracts by the JV and
Trade 

  

 - 12 - 

 
Union following the programs mapped out by the Board of Directors, in accordance with “The PRC Labor Law” and other relevant regulations. Labor
Contracts shall be filed with the local Labor Department. 
 ARTICLE 45. Matters relating to the recruitment, wage treatment, social insurance, welfare
benefits and standard of travel expenses of high level managerial personnel are subject to the approval of the Board of Directors. 
 Chapter XIII TRANSFER OF JV RIGHTS 
 ARTICLE 46. For a period of three (3) years following the Effective Date, no JV Party shall sell,
assign, transfer, convey, pledge, encumber or liquidate (“Transfer”) or otherwise cease to be the beneficial owner of any or all of its rights under this Contract or in its capital contribution in the JV. 
 ARTICLE 47. Right of First Refusal. 
 (a) No JV Party shall
effect a Transfer of any or all of its rights under this Contract or in its capital contribution in the JV (collectively, its “Rights”), after the third anniversary following the Effective Date, except in accordance with this Article 46.
Any JV Party (the “Offeror”) that proposes to Transfer its Rights shall first offer to Transfer such Rights (the “Offer”) to the other JV Party (the “Offeree”), and the Offeree shall have the option to purchase such
Rights, on such terms and conditions as it and the Offeror shall mutually agree. In the absence of an agreement, the offer price shall be determined by a valuation expert chosen by lot from a list of the three (3) largest valuation firms
licensed to do business in the PRC within a period of thirty (30) days beginning with the receipt of the Offeror’s written offer to Transfer its Rights; provided, however, that the Offeree shall have no obligation to purchase
the Rights at such price. The costs associated with retaining the valuation expert shall be borne by the Offeror. 
 (b) If the Offeree does
not agree to purchase the Rights within thirty (30) days from the date of receipt of the Offer, the Offeror may offer its Rights to a third party on the terms and conditions offered to the Offeree. If the Offeror receives a bona fide offer from
a third party (a “Third Party Offer”), the Offeror shall obtain the from the third party and deliver to the Offeree a notice in writing, signed by the Offeror and the third party, of the terms thereof. The Offeree shall then have ten
(10) days from the date of receipt of such notice to accept the Third Party Offer by delivering written notice of acceptance to the Offeror. Further, the Offeree shall have the right to purchase such Rights on the terms and conditions set forth
in the notice delivered to the Offeree, except that any Offeree accepting the Offer shall have the right to substitute equivalent cash for any non-cash consideration included in the Third Party Offer. A valuation expert chosen by lot from a list of
the three (3) largest valuation firms licensed to do business in the PRC shall determine the cash value of any non-cash consideration. The costs associated with retaining the valuation expert shall be borne by the Offeror. If the Offeree does
not accept the Third Party Offer within such ten–day period, the Offeror shall be free, for a succeeding sixty-day period, to accept the Third Party Offer and Transfer the relevant Rights accordingly 
  

 - 13 - 

 Chapter XIV TAXATION, ACCOUNTING AND AUDITING 
 ARTICLE 48. The JV shall pay various taxes in accordance with stipulations of the relevant laws and regulations of the PRC. 
 ARTICLE 49. Staff and workers of the JV shall pay individual income tax and income adjustment tax according to the “Individual Income Tax Law of the People’s
Republic of China.” 
 ARTICLE 50. The Board of Directors of the JV shall determine the amounts to be allocated to the reserve fund, the enterprise
expansion fund, and the staff and workers welfare and incentive fund (collectively, the “Three Funds”) before any distribution of profits is made to Party A and Party B. The JV may not make allocations to such funds (or similar funds) if
such allocations exceed, in the aggregate, *** of the after-tax profits of the JV, without the unanimous prior consent of the Board of Directors. 
 ARTICLE 51. The profits distributed by the JV to Party B may be repatriated from the PRC according to Chinese law. 
 ARTICLE 52. The fiscal year of
the JV shall be 1st January through 31 December each year (the Gregorian calendar year). 
 ARTICLE 53. The financial and accounting system of the
JV shall be formulated according to, and consistent with, the relevant laws and regulations of the PRC. All vouchers, accounts, books, statements shall be written in Chinese. All monthly and annual statements and quarterly reports shall be prepared
both in Chinese and English, with both versions having equal force and effect. The JV shall render assistance to each party for review of such documents by such party. 
 ARTICLE 54. The JV shall keep full and accurate books of account showing all revenues and disbursements and all assets and liabilities of the JV. Without limiting the generality of the foregoing, such books of account
shall include the following items: 
 1. All cash receipts and expenses of the JV; 
 2. All records of sales, losses and purchases by the JV; 
 3. The registered capital and liability of the JV; and

 4. The timing of registered capital contributions, distributions, changes and assignment. 
 ARTICLE 55. The JV shall provide accounting reports in both English and Chinese to the Board of Directors, each of Party A and Party B, the local tax authorities and other relevant government agencies on a quarterly
and annual basis, and shall include such information in the reports to each of Party A and Party B. The JV’s management shall provide the annual report of the JV to the Board of Directors for approval within two (2) months following the
end of each fiscal year. 
  

 - 14 - 

 ARTICLE 56. An annual audit of the JV’s accounts shall be carried out by an internationally known and recognized
accounting firm (registered in the PRC) appointed by the Board of Directors. The auditor shall submit reports to the Board of Directors and to the general manager. All costs and expenses incurred in connection with such annual audit shall be borne
by the JV. Party A and Party B shall each have the right to procure a special audit of the JV’s books and records, provided that the external auditor is from an internationally known and recognized accounting firm, whose reports shall likewise
be submitted to the Board of Directors and the general manager. The costs and expenses incurred in connection with such additional audit shall be borne by the requesting party, unless such audit shall disclose one or more errors in the regular audit
totaling at least one percent (1%) of the aggregate expenses of the JV for such year, in which case the JV shall bear such costs and expenses. Party A and Party B may designate duly authorized personnel to inspect, at reasonable business hours,
the books and records of the JV at the expense of such party. 
 Chapter XV PROFITS AND LOSSES 
 ARTICLE 57. The equity of the JV shall be held by, and the distributions of profits of the JV shall be made to, the JV Parties in the following proportions: fifty-five
percent (55%) to Party B and forty-five percent (45%) to Party A (the “Distribution Ratios”). 
 ARTICLE 58. Profit of the JV (calculated
after (a) repayment of any loans to third parties (other than the JV Parties); (b) payment of any and all taxes due and owing by the JV; (c) satisfaction of losses for any previous years; and (d) allocations to the Three Funds in
accordance with Article 49) (the “JV Profit”) shall be distributed to Party B and Party A annually in accordance with the Distribution Ratios then in effect, unless the Board of Directors unanimously determines that no such distribution
should be made. Such distribution of JV Profit shall be made within three (3) months of the end of each fiscal year of the JV. Distributions to Party A shall be made in Renminbi and distributions to Party B shall be made in US Dollars.

 ARTICLE 59. As set forth in Article 17, the Distribution Ratios shall not be altered, notwithstanding any capital contributions by any third party or
either JV Party. 
 ARTICLE 60. Neither JV Party shall be jointly or severally liable for the debts or obligations of the JV, or for any claim for losses or
damages caused by the JV, except to the extent of its contributions to the JV as provided for in Article 15 and except to the extent of any third-party financing it guarantees pursuant to Article 16. 
 ARTICLE 61. Any payments made by the JV in US Dollars pursuant to this Contract shall be calculated on the basis of the official exchange rate published by the PRC
Administration of Foreign Exchange Control for the purchase of US Dollars with Renminbi on the day the payment is due. 
 Chapter XVI
REPRESENTATIONS, WARRANTIES AND COVENANTS 
 ARTICLE 62. General Representations and Warranties. 
  

 - 15 - 

 62.1 Party A represents and warrants to Party B that it has the authorization required under the laws of the PRC to
execute and deliver this Contract and to carry out and perform its obligations under the terms of this Contract. Party A further represents and warrants to Party B that it is a legal person established and in good standing under the laws of the PRC
and registered in Shijiazhuang, Hebei Province, PRC. 
 62.2 Party B represents and warrants to Party A that it has all the requisite legal and corporate
power to execute and deliver this Contract and to carry out and perform its obligations under the terms of this Contract. Party B further represents and warrants to Party A that it is a corporation established and in good standing under the laws of
the State of Delaware, USA. 
 ARTICLE 63. Covenants. 
 63.1
Neither the JV nor Party A shall, directly or indirectly, (a) purchase, manufacture, distribute or sell bulk (unformulated) calcitonin or products containing calcitonin other than the JV Products; or (b) use AE for any purpose other than
the manufacture of the JV Products, including, without limitation, for resale. 
 63.2 The parties agree that any transaction between the JV and either of
the JV Parties, including any entity directly or indirectly related to either of the JV Parties, other than transactions expressly contemplated by this Contract or the Technology Transfer Agreement, shall be at prices, and on other terms and
conditions, that are no less favorable to the JV than those that could be reasonably obtained by the JV from unrelated third parties on an arms-length-basis in similar transactions. 
 Chapter XVII TERM OF JOINT VENTURE CONTRACT 
 ARTICLE 64. The term of this Contract shall be
thirty (30) years from the Establishment Date and for such period thereafter as is agreed by the parties, unless earlier terminated pursuant to Chapter XX. 
 ARTICLE 65. Upon the proposal from one party and unanimous approval from the Board of Directors, the JV may extend the term of the JV by filing an application for extension of the JV term with the original examination and approval organ six
(6) months before the date of expiration of the JV Term. 
 Chapter XVIII EFFECT OF CONTRACT EXPIRATION OR TERMINATION 

ARTICLE 66. Upon the expiration of or termination of this Contract, (a) the JV shall immediately cease using the Technology and shall return to Party B the
Technology and all other Confidential Information provided by Party B to the JV; (b) the Technology Transfer Agreement shall terminate; (c) any remaining inventory of JV Products shall be sold in the Territory; (d) the JV shall cease
using the Marks, and (e) the JV shall be liquidated according to the Law. The property of the JV remaining after liquidation shall be distributed to the JV Parties in accordance 

  

 - 16 - 

 
with the Distribution Ratios. Notwithstanding the foregoing, Party B or its successor shall continue to supply the JV or its successor with AE,
provided, however, that Party B and the JV can agree to commercially reasonable terms with respect thereto and there is no conflict with any other obligation of Party B and provided further that Party B shall in no event be
obligated to supply AE to the JV if the Contract was terminated as a result of the JV’s breach of the Technology Transfer Agreement or Party A’s breach of this Contract. 
 Chapter XIX INSURANCE 
 ARTICLE 67. All insurance coverage for the JV shall be arranged with
insurance carrier(s) that operate in the PRC, provided that such insurance carrier(s) are capable of providing coverage on terms and conditions substantially as favorable as those offered by sources not located in the PRC. The selection of insurance
company is subject to Board of Directors approval. 
 Chapter XX CONTRACT AMENDMENT, ALTERATION AND TERMINATION 
 ARTICLE 68. No amendments to the Contract and its appendixes shall be effective without the prior written agreement of Party A and Party B and the approval from the
original PRC Government examination and approval organization. 
 ARTICLE 69. In the event that either JV Party is unable to perform the Contract due to
force majeure or inability to continue operation due to continuous severe losses, the Contract may be terminated by unanimous approval of the Board of Directors of the JV and approval from the original examination and approval PRC Government
organization. 
 ARTICLE 70. In the event that any JV Party or the JV fails to perform its obligations stipulated in this Contract, the Articles of
Association or the Technology Transfer Agreement or repudiates this Contract, the Articles of Association or the Technology Transfer Agreement, such JV Party or the JV, as applicable, shall be regarded as unilaterally in breach of this Contract. In
addition to the right to claims for damages, the non-breaching JV Party shall have the right to terminate this Contract and to file with the original examination and approval organization for such termination if the breaching entity does not cure
its breach within thirty (30) days of written notice thereof. 
 ARTICLE 71. Party B may terminate this Contract, by written notice to Party A
(a) at any time after the first anniversary of the Effective Date, in the event that no sales of any JV Product have been made, (b) if the Establishment Date has not occurred within sixty (60) days of the Effective Date, or
(c) in the event that any profits distributed by the JV to Party B may not be repatriated from the PRC according to Chinese law. 
 ARTICLE 72. The
parties agree that if there is any subsequent enactment of law or regulation or any subsequent act of governmental authority in the PRC, including, without limitation, any condition to the approval of this Contract, that, in the reasonable opinion
of Party B, (a) makes performance of this Contract or a material provision of this Contract impossible for Party B, (b) materially adversely alters Party B’s rights and obligations from those agreed and contemplated by this Contract,
including, without limitation, materially adversely alters Party B’s 

  

 - 17 - 

 
responsibilities or required actions with respect to the JV, or (c) materially adversely interferes with the benefits contemplated herein to be received
by Party B, including, without limitation, materially adversely alters the compensation that Party B is due hereunder or under the Technology Transfer Agreement, Party B’s ownership interest in the JV or Party B’s participation in
decision-making that affects the JV, the parties shall use their best efforts to amend this Contract to restore the equitable arrangement intended by the parties as reflected in this Contract or, if Party B deems in its sole discretion that there is
no mutually acceptable means of accomplishing the parties’ original intent, Party B shall have the right to unilaterally terminate this Contract. 
 ARTICLE 73. Either JV Party may terminate this Contract by written notice to the other JV Party in the event that (a) the equipment necessary for fulfillment of the JV’s obligations is not fully operational in accordance with the
Applicable Regulations, including without limitation, not capable of producing Calcitonin in conformity with the specifications provided by Party B or not capable of producing the JV Product within a reasonable time period, or (b) the JV has
not received all necessary government approvals to distribute the JV Products in the PRC within one (1) year of the certification by the relevant PRC authorities that the facility is operating under Good Manufacturing Practice. 
 ARTICLE 74. Party A and the JV shall take all measures necessary, which in any event shall not be less than all reasonable measures, to maintain the confidentiality of
the Technology and other trade secrets or proprietary information (whether or not reduced to writing) (the “Confidential Information”) provided by Party B to the JV, which obligation shall continue for a period of five (5) years after
the expiration or termination of this Contract. Party A and the JV shall not disclose such Confidential Information to any third person, except to their respective designated officers and employees on a need to know basis, and who prior to such
disclosure have been notified of the confidential nature of the disclosure and have executed a confidentiality agreement having obligations of confidentiality at least as strict as those set forth in this Article 73 and a copy of which is promptly
provided to Party B. In the event of any unauthorized disclosure of the Confidential Information by Party A or the JV or their respective officers, employees, staff or workers, Party B shall have the right to terminate this Contract by written
notice to Party A. 
 ARTICLE 75. The following provisions of this Contract shall survive the termination or expiration thereof: Articles 22, 24, 81, 84 and
85, Chapters XIII, XIV, XV, XXI, XXIII, XXIV and this Chapter XX. 
 Chapter XXI RESPONSIBILITIES OF CONTRACT BREACH 
 ARTICLE 76. Any party who fails to make timely and adequate capital contributions pursuant to Chapter V, shall pay the other JV Party an amount equal to five percent
(5%) of such shortfall amount of delay of payment thereof. The non-breaching party shall also have the right to terminate the Contract according to Article 69 and shall have a claim for damages from the breaching party. 
  

 - 18 - 

 ARTICLE 77. Partial or complete non-performance of the contract and its appendixes caused by any single party shall be
the responsibility of this defaulting party. In case of shared fault, each party shall be liable to its own share of responsibility. 
 Chapter XXII FORCE MAJEURE 
 ARTICLE 78. In the event of such incidents of force majeure as earthquake, hurricane, flood, war and other
unpredictable incidents whose inception and consequence are unpreventable, which result in the difficulty or inability to perform the Contract under the agreed conditions, the party who is affected by the force majeure incidents shall promptly fax
notice to the other party of the situation and provide valid documents with regard to the details of the incident and causes for the nonperformance or partial nonperformance or prolonged performance of the Contract. In consideration of the extent of
impact on the Contract performance, both parties will discuss and decide on whether to dissolve the Contract or partially alleviate the responsibility for nonperformance, or prolong the Contract performance. 
 Chapter XXIII APPLICABLE LAWS 
 ARTICLE 79. The
establishment, validity, interpretation, performance and dispute resolution of the Contract is subject to the jurisdiction of the laws of the PRC and the international rules and treaties that are recognized by China shall be duly followed.

 Chapter XXIV RESOLUTION OF DISPUTES 
 ARTICLE 80. All disputes that arise over the performance or in connection with the Contract, shall be referred to resolution through friendly discussions by both parties. If friendly discussions are ineffective, disputes shall be submitted
to arbitration before the Stockholm Chamber of Commerce applying the rules and procedures of International Chamber of Commerce. The arbitration awards shall be final and binding on both parties. The fees and expenses involved in the arbitration
shall be borne by the losing party. 
 ARTICLE 81. In the course of arbitration, with the exception of matters in dispute, both parties shall continue to
perform the Contract. 
 Chapter XXV LANGUAGES 
 ARTICLE 82. The Contract is written with 8 copies both in Chinese language and English language. Both versions shall have equal validity. 
 Chapter XXVI MISCELLANEOUS 
 ARTICLE 83. The contract, addenda and appendices including the Articles of Association, import list, sales
agreement and the Technology Transfer Agreement, all constitute an inseparable part of this Contract. 
  

 - 19 - 

 ARTICLE 84. This Contract and its addenda and appendixes shall enter into force upon the approval by National
Administration of High and New Technology Industrial Development Zone, Shijiazhuang, Hebei Province. 
 ARTICLE 85. All notices or other communications that
are required or permitted hereunder shall be in writing and delivered personally, sent by telecopier (and promptly confirmed by personal delivery, registered or certified mail or overnight courier), sent by internationally-recognized courier or sent
by registered or certified mail, postage prepaid, return receipt requested, addressed as follows: 
 If to Party A, to: 
 Shijiazhuang Pharmaceutical Group Company, Ltd. 
 276 Zhongshan West Road 
 Shijiazhuang, Hebei Province, PRC 
 Attention: Mr. Cai Dong Chen 
 Telecopier: 0086-311-703-9608 
 with a copy to: 
  

							
	  
	  		  	
	  
	  		  	
	  
	  		  	
	Attention:	 	  
	  		  	
	Telecopier:	 	  
	  		  	

 If to Party B, to: 
 Unigene Laboratories, Inc. 
 110 Little Falls Road 
 Fairfield, New Jersey 07004, USA 
 Attention: Dr. Warren Levy, President 
 Facsimile: 001-973-227-6088 
 with a copy to: 
 Covington &
Burling 
 601 California Street, Suite 1900 
 San Francisco, CA 94108, USA 
 Attention: James C. Snipes, Esq. 
 Facsimile: 001-415-591-6091 
 or to such other address as
the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such communication shall be deemed to have been given (a) when delivered, if personally delivered on a business day,
(b) on the business day 

  

 - 20 - 

 
after dispatch, if sent by facsimile (with confirming copy sent by international express courier), (c) on the third business day after dispatch, if sent
by internationally recognized courier, and (d) upon receipt, if dispatched by mail. It is understood and agreed that this Article 84 is not intended to govern the day-to-day business communications necessary between the parties in performing
their duties, in due course, under the terms of this Contract. 
 ARTICLE 86. Neither the JV nor Party B shall be responsible for compensating any brokers or
intermediaries involved in helping to establish the JV. 
 ARTICLE 87. This Contract is signed by representatives of Party A and Party B on June 15,
2000. 
 Party A: 
  

	
	 /s/ Cai Dong Chen

	 Cai Dong Chen
 Legal Representative

	SHIJIAZHUANG PHARMACEUTICAL GROUP COMPANY, LTD

 Party B: 
  

	
	 /s/ Dr. Warren P. Levy

	Dr. Warren P. Levy
	Legal Representative
	UNIGENE LABORATORIES, INC.

  

 - 21 -Articles of Association

 EXHIBIT 10.2 
 Portions of this Exhibit were omitted and filed separately with the Secretary of the Commission pursuant to an application for confidential treatment filed with the Commission pursuant to Rule 24b-2 under the Securities Exchange Act of
1934. Such omissions are designated as ***. 
 ARTICLES OF ASSOCIATION 
 of 
 “SHIJIAZHUANG – UNIGENE PHARMACEUTICAL CORPORATION LIMITED”

 June 15, 2000 

 TABLE OF CONTENTS 
  

			
	Chapter I GENERAL PROVISIONS	  	1
	Chapter II PURPOSE AND SCOPE OF OPERATION	  	2
	Chapter III TOTAL INVESTMENT AND REGISTERED CAPITAL	  	2
	Chapter IV BOARD OF DIRECTORS	  	3
	Chapter V MANAGEMENT ORGANIZATION	  	5
	Chapter VI CONFIDENTIALITY	  	7
	Chapter VII FINANCE AND ACCOUNTING	  	7
	Chapter VIII PROFITS AND LOSSES	  	8
	Chapter IX STAFF AND WORKERS	  	9
	Chapter X TRADE UNION	  	9
	Chapter XI TERM, TERMINATION AND LIQUIDATION	  	10
	Chapter XII RULES AND REGULATIONS	  	11
	Chapter XIII APPENDICES	  	11
	 Exhibit A.
	  	i
	 Exhibit B.
	  	ii

  

 - i - 

 Chapter I GENERAL PROVISIONS 
 ARTICLE 1. Pursuant to the Law of the People’s Republic of China (the “PRC”) on Joint Ventures Using Chinese and Foreign Investment and other relevant Chinese laws and regulations and the Joint Venture
Contract (the “Contract”) between Shijiazhuang Pharmaceutical Group Company, Ltd. (“Party A”) and Unigene Laboratories, Inc. (“Party B”) (each of Party A and Party B, a “JV Party”) for the establishment of
“Shijiazhuang – Unigene Pharmaceutical Corporation Limited” (the “JV”) signed on the 15th day of June, 2000, these Articles of Association for the JV are hereby adopted by Party A and Party B. 
 ARTICLE 2. The name of the JV in Chinese is: 
 and the name of the JV in
English is: 
 “Shijiazhuang – Unigene Pharmaceutical Corporation Limited”. 
 ARTICLE 3. The JV’s address: High and New Technology Industrial Development Zone, Shijiazhuang, Hebei Province. 
 ARTICLE 4. Parties to the JV: 
 Party A: Shijiazhuang Pharmaceutical
Group Company, Ltd. 
 Legal Address: 276 Zhongshan West Road Shijiazhuang, Hebei Province, PRC 
 Legal Representative: Mr. Cai Dong Chen, Chairman and President 
 Telephone: 0086-311-7039508 
 Fax: 0086-311-7039608 
 Party B: Unigene Laboratories, Inc.

 Legal Address: 110 Little Falls Road, Fairfield, New Jersey, 07004, USA 
 Legal Representative: Dr. Warren P. Levy, President 
 Telephone: 001-973-882-0860 
 Fax: 001-973-227-6088 
 ARTICLE 5. The JV takes the form of a Limited
Liability Company. 
 ARTICLE 6. The JV is a legal person of the PRC under the jurisdiction and protection of the laws of the PRC. All the activities of the
JV shall conform to the pertinent laws, decrees, rules and regulations of the PRC. 

 Chapter II PURPOSE AND SCOPE OF OPERATION 
 ARTICLE 7. The purpose of the JV is to use advanced technology and scientific operational management expertise to carry out the manufacture of pharmaceutical-grade
recombinant salmon calcitonin (the “Calcitonin”) in injectable and nasal formulations (the “JV Products”) using the processes of Party B that include the use of an amidating enzyme that the JV will purchase from Party B (the
“AE”) and the distribution and sale of JV Products in the PRC and such other regions as decided by the Board of Directors of the JV (the “Territory”) in order to obtain a satisfactory return on investment for all parties.

 ARTICLE 8. The business scope of the JV is (a) to construct, equip, own, manage, and operate a manufacturing facility in the PRC that has the
capacity to manufacture Calcitonin in accordance with the terms and conditions of the Contract (the “JV Facility”) and prepare, fill, label and package injectable and nasal formulations thereof; and (b) to market, distribute and sell
the JV Products in the Territory. 
 ARTICLE 9. Scale of Production: 
 1. Upon completion of the JV Facility, the JV intends its scale of production to be an annual output of *** of bulk Calcitonin and JV Products in the following quantities: 
  

	 	•	 	 *** 

  

	 	•	 	 *** 

  

	 	•	 	 Four million (4,000,000) vials *** for the *** nasal spray product. 

 2. Proper adjustment will be made to the intended scale of production to reflect the development of operations and market changes. 
 Chapter III TOTAL INVESTMENT AND REGISTERED CAPITAL 
 ARTICLE 10. The total investment of the JV is Fifteen Million
U.S. Dollars (US$15,000,000). 
 ARTICLE 11. The registered capital of the JV is *** The contributions from Party A and Party B are as follows:

 Party A shall contribute the Renminbi equivalent of ***, in cash, to the capital of the JV, for an equity share of 55%. 
 Party B shall contribute cash and technology valued, in the aggregate, at *** for an equity share of 45%. 
 ARTICLE 12. Both parties shall make their respective contributions at the time and in the manner described in the Contract. After capital contribution has been effected
by a party, the 

  

 - 2 - 

 
amount of such contribution shall be recorded in the JV’s accounts and a certificate of capital contribution shall be issued to such party by the JV (a
“Certificate of Capital Contribution”). 
 The Certificate of Capital Contribution will include the following items: the name of the JV, the
establishment date of the JV, the names of the joint venture parties and their respective contributions to date, the date of the applicable contribution, and the date of issuance of the Certificate of Capital Contribution. 
 ARTICLE 13. Neither Party may sell, assign, transfer, convey, pledge, encumber or liquidate, in whole or in part, its rights under the Contract, except as provided for
in Chapter XIII of the Contract. 
 ARTICLE 14. Any change in the registered capital shall be made only in accordance with the Contract. 
 Chapter IV BOARD OF DIRECTORS 
 ARTICLE 15. The Board
of Directors of the JV shall be the highest body of authority of the JV. 
 ARTICLE 16. The Board of Directors of the JV shall decide all major issues
concerning the JV. Without limiting the generality of the foregoing, the major authorities and responsibilities of the Board of Directors shall include the following: 
 1. Approving on an annual basis the operating plan; 
 2. Investigating and approving any expenditures by the
JV in excess of ***; 
 3. Investigating and approving the obtainment by the JV of all third party financing; 
 4. Selecting and approving any foreign country market regions for sale of the JV Products and determining the ratio of export sales to domestic sales;

 5. Examining and approving the fiscal budget, financial statements and balance sheets of the JV; 
 6. Approving any change to the profit allocation procedures set forth in Article 58 of the JV Contract, approving any failure to make a distribution of
profits otherwise required by Article 58 of the JV Contract, and determining and approving the loss offset plan for the JV; 
 7. Approving
any change in the registered capital for the JV; 
 8. Approving the transfer of the registered capital of the JV to a third party;

 9. Approving any merger, separation, acquisition, dissolution, liquidation or alteration of the JV; 
 10. Amending the Articles of Association; 
  

 - 3 - 

 11. Formulating and approving the major rules and regulations of the JV; 
 12. Formulating the management structure of the JV; 
 13. Determining the terms of employment, termination and treatment of the general manager, deputy general manager, chief engineer, chief accountant and chief auditor of the JV; 
 14. Approving the marketing and/or development of products by the JV other than the JV Products, including without limitation the use of the Marks (as
defined in the JV Contract) in advertising and promotional materials; 
 15. Approving the banks at which to open accounts for the JV;

 16. Approving insurance carriers to provide insurance coverage to the JV; 
 17. Approving the accounting firm to provide accounting services to the JV; 
 18. Approving the transfer, sale or licensing to a third party of any improvements in technology that belong to the JV or contractually may be transferred, sold or licensed by the JV; 
 19. Determining allocations to the Three Funds (as defined below); and 
 20. Other issues of importance so deemed by the Board of Directors. 
 ARTICLE 17. The Board of Directors shall be composed
of five (5) directors. Three (3) directors will be selected by Party A and two (2) directors will be selected by Party B. Each director shall be appointed for a term of four (4) years, subject to renewal, but may be replaced at
any time during his term by the party that appointed him, upon prior written notice to the other party. 
 ARTICLE 18. The Board of Directors of the JV shall
have one (1) director who shall serve as Chairman and one (1) director who shall serve as Vice-Chairman. The Chairman shall be appointed by Party A, and the Vice-Chairman shall be appointed by Party B. The Chairman of the Board of
Directors is the legal representative of the JV. When the Chairman is unable to perform his responsibilities, the Vice-Chairman shall be authorized to represent the JV. 
 ARTICLE 19. A Board of Directors’ meeting is to be convened at least once a year. Four (4) directors present in person or by proxy shall constitute a quorum for the transaction of business. No business shall
be transacted in the absence of a quorum. The Chairman of the Board shall convene interim Board meetings upon proposal by two or more directors. 
 ARTICLE
20. Board meetings shall be called and presided over by the Chairman. The Vice-Chairman will call and preside over the board meeting in the absence of the Chairman. Each director (chairman and deputy chairman included) shall only have one vote.

  

 - 4 - 

 ARTICLE 21. Written notice shall be provided by the Chairman or the Vice-Chairman, as appropriate, to all Directors
forty-five (45) days prior to the date of each Board meeting, which notice shall state the time and place of the meeting and the topics for discussion at such meeting. No topic that has not been included in such notice shall be acted upon at a
meeting without the unanimous consent of all Directors. Board meetings may be conducted with the assistance of modern communication facilities, including, without limitation, by means of telephone conference or similar communications equipment by
which all persons participating in the meeting can hear, and make himself heard, to the other participants, or in such other manner as unanimously agreed by the Board. 
 ARTICLE 22. When a director is unable to attend a Board of Directors meeting, he may issue a proxy in writing entrusting another to represent him in attendance. Without being present or issuing a duly appointed proxy
for a meeting, a director will be regarded as absent from the meeting. 
 ARTICLE 23. All Board meetings shall be conducted both in Chinese and English. All
topics for Board meeting discussion and all minutes and resolutions by the Board shall be written in both English and Chinese which versions shall each have equal force. Minutes of all decisions or other actions taken at any meeting of the Board
shall be circulated to all directors as soon as practicable after such meeting. The minutes of each meeting shall be submitted for approval, subject to appropriate amendment, at the next meeting of the Board. Once approved, the minutes of any
meeting shall be signed by the Chairman and Vice-Chairman and entered into a minute-book that shall be kept at the JV’s principal place of business and shall be conclusive of the proceedings in question. Such minute-book shall be available for
inspection by any director or his authorized representative at any reasonable time. A copy of the signed minutes of each meeting shall be sent to each director. 
 ARTICLE 24. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing and if such writing or writings are filed
with the minutes of proceedings of the Board of Directors. Such consent shall have the same effect as a unanimous vote of the Board for all purposes. 
 ARTICLE 25. The vote of four of the five members of the Board of Directors (or their duly appointed proxies) shall be sufficient to constitute action of the Board on all matters except the matters set forth in sections 1–10, 14 and 18
of Article 16, as to which the Board may take action only by unanimous decision of the five (5) members (or their duly appointed proxies). 
 Chapter V MANAGEMENT ORGANIZATION 
 ARTICLE 26. The Board of Directors of the JV shall establish operation and management organs for the JV,
to be responsible for daily operational and managerial work. Each organ shall have a department manager reporting to the general manager. The structure of organization and responsibilities for each position shall be proposed by the general manager
and approved by the Board of Directors. 
  

 - 5 - 

 ARTICLE 27. The JV shall establish an Advisory Board that will provide business development, marketing and technological
assistance to the JV in accordance with Exhibit A attached hereto. 
 ARTICLE 28. The JV shall have one general manager, who shall be selected by Party B,
and one deputy general manager, who shall be selected by Party A. 
 ARTICLE 29. The term of service of each of the general manager and the deputy general
manager is four (4) years, which term may be renewed by the Board of Directors. The general manager and the deputy general manager may be removed for cause by the vote of the Board of Directors and otherwise by the selecting party. Upon removal
of the general manager or the deputy general manager or expiration of their respective terms without renewal, the party that selected the general manager or deputy general manager, as the case may be, shall have the right to select the replacement
general manager or deputy general manager, as the case may be. 
 ARTICLE 30. The qualifications of the general manager are described in Exhibit B attached
hereto. The qualifications and responsibilities of the deputy general manager shall be established by the general manager and approved by the Board. 
 ARTICLE 31. The general manager shall report to the Board of Directors, and shall be responsible for the daily management of the JV. Without limiting the generality of the foregoing, the general manager shall be vested with the following
authorities and responsibilities: 
  

	 	1.	Carrying out various resolutions of the Board of Directors and organizing and leading the daily operation and management of the JV; 

  

	 	2.	Preparing the JV annual Business Plan; 

  

	 	3.	Developing and proposing to the Board of Directors for approval the internal management structure of the JV; 

  

	 	4.	Developing the management systems of the JV; 

  

	 	5.	Proposing the nomination and dismissal of the deputy general manager and persons in charge of finance and accounting for the JV; 

  

	 	6.	Hiring and dismissing other managers or working staff not within the retaining and dismissal responsibility of the Board of Directors; 

  

	 	7.	Implementing a confidentiality and security policy; 

  

	 	8.	Performing Human Resource Management functions; and 

  

	 	9.	Other responsibilities assigned to the general manager by the Board of Directors. 

 ARTICLE 32. The Chairman, Vice-Chairman and directors of the Board of Directors may not act concurrently in the capacity of the general manager, deputy general manager or other high-level managerial positions of the JV. 
 ARTICLE 33. The general manager or the deputy general managers may not concurrently act as general managers or deputy general managers of any other economic
organizations, and may not participate in activities in competition with the JV. 
 ARTICLE 34. The JV shall establish the position of one chief accountant
and one chief auditor, each to be selected by the Board of Directors. 
  

 - 6 - 

 ARTICLE 35. Both Parties agree that the JV shall operate as an independent entity from the parent companies.
Relationships between the JV and its parent companies outside the responsibilities described by the Contract and the Article of Association shall be conducted on an arms-length basis and shall be regarded as normal business relationships.

 Chapter VI CONFIDENTIALITY 
 ARTICLE
36. In order to keep confidentiality of the trade secrets of the JV, the JV shall establish a Confidentiality Policy, which shall be substantially similar to the Confidentiality Agreement entered into by and between Party A and Party B on
October 29,1998 and shall comply with Article 74 of the Contract. 
 ARTICLE 37. The JV shall require all directors, managers, employees, staff,
workers, independent contractors, agents and representatives of the JV to agree to be subject to such Confidentiality Policy in writing, in accordance with the terms of Article 74 of the Contract. 
 Chapter VII FINANCE AND ACCOUNTING 
 ARTICLE 38. The
financial and accounting system of the JV shall be formulated according to, and consistent with, the relevant laws and regulations of the PRC. 
 ARTICLE 39.
The fiscal year of the JV shall be January 1 through December 31 (the Gregorian calendar year). 
 ARTICLE 40. All vouchers, accounts, books, and
financial and reporting statements shall be written in Chinese. All monthly and annual statements, and quarterly reports shall be prepared both in Chinese and English with both versions having equal force and effect. The JV shall render assistance
to each party for review of such documents by such party. 
 ARTICLE 41. The JV shall adopt Renminbi as the standard currency for the keeping of accounts.
Except as otherwise expressly provided herein, the conversion between Renminbi and other foreign currencies shall be computed at the posted exchange rate announced by the PRC Administration for Foreign Exchange Control for the purchase of such
currencies on the day payment is made. 
 ARTICLE 42. The JV shall open Renminbi and foreign exchange accounts with a bank or banks approved to handle
foreign currency business by the PRC national administrative agencies for foreign exchange control, as determined by the Board of Directors. 
 ARTICLE 43.
The JV shall adopt the internationally used accrual system and debit and credit method for the keeping of accounts. 
 ARTICLE 44. The JV shall keep full and
accurate books of account showing all revenues and disbursements and all assets and liabilities of the JV. Without limiting the generality of the foregoing, such books of account shall include the following items: 
 1. All cash receipts and expenses of the JV; 
  

 - 7 - 

 2. All records of sales, losses and purchases by the JV; 
 3. The registered capital and liability of the JV; 
 4. The timing of registered capital contributions, distributions,
changes and assignment. 
 ARTICLE 45. The JV shall provide accounting reports in both English and Chinese to the Board of Directors and each of Party A and
Party B on a quarterly and annual basis, and shall include such information in the reports to each of Party A and Party B. The JV’s management shall provide the annual report of the JV to the Board of Directors for approval within two
(2) months following the end of each fiscal year. 
 ARTICLE 46. An annual audit of the JV’s accounts shall be carried out by an internationally
known and recognized accounting firm (registered in the PRC) appointed by the Board of Directors. The auditor shall submit reports to the Board of Directors and to the general manager. All costs and expenses incurred in connection with such annual
audit shall be borne by the JV. Party A and Party B shall each have the right to procure a special audit of the JV’s books and records, provided that the external auditor is from an internationally known and recognized accounting firm, whose
reports shall likewise be submitted to the Board of Directors and the general manager. The costs and expenses incurred in connection with such additional audit shall be borne by the requesting party, unless such audit shall disclose one or more
errors in the regular audit totaling at least one percent (1%) of the aggregate expenses of the JV for such year, in which case the JV shall bear such costs and expenses. Party A and Party B may designate duly authorized personnel to inspect,
at reasonable business hours, the books and records of the JV at the expense of such party. 
 ARTICLE 47. The period of the capital assets depreciation
shall be determined by the Board of Directors in accordance with the relevant laws and regulations of PRC. 
 ARTICLE 48. All matters concerning foreign
exchange of the JV shall be handled in accordance with the “Provisional Regulations for Foreign Exchange of the PRC” and other relevant regulations. 
 Chapter VIII PROFITS AND LOSSES 
 ARTICLE 49. The Board of Directors shall determine the amounts to be allocated to
the reserve fund, the enterprise expansion fund, and the staff and workers welfare and incentive fund (collectively, the “Three Funds”) before any distribution of profits is made to Party A and Party B. The JV may not make allocations to
such funds (or any similar funds) if such allocations exceed, in the aggregate *** of the after-tax profits of the JV, without the unanimous prior consent of the Board of Directors. 
 ARTICLE 50. Profits of the JV (calculated after (a) repayment of any loans to third parties (other than Party A or Party B); (b) payment of any and all taxes
owing by the JV; (c) satisfaction of losses for any previous years; and (d) allocations to the Three Funds in accordance with Article 

  

 - 8 - 

 
49)(the “JV Profit”) shall be distributed to Party A and Party B annually in accordance with Chapter XV of the Contract, unless the Board of
Directors unanimously determines that no such distribution should be made. The distribution of the JV Profit shall be made within three (3) months of the end of each fiscal year. All distributions to Party B shall be made in US dollars and all
distributions to Party A shall be made in Renminbi. 
 ARTICLE 51. Neither Party A nor Party B shall have any liability of any sort for the debts or
obligations of the JV beyond their contributions to capital pursuant to the Contract, except to the extent of any third-party financing guaranteed by such party pursuant to Article 16 of the Contract. 
 Chapter IX STAFF AND WORKERS 
 ARTICLE 52. Matters
relating to the staff and workers of the JV such as recruitment, employment, dismissal, resignation, wages, labor insurance, welfare benefits, incentive and penalty systems, and labor disciplines are to be dealt with in accordance with “The PRC
Labor Law” and other relevant regulations. 
 ARTICLE 53. All staff and workers for the JV shall be recruited through an open and competitive process
from the general public. Employment is to be on merit. 
 ARTICLE 54. The JV has the right to issue warnings, record demerits, and reduce wages to those
staff and workers who violate the rules, policies and disciplines of the JV. The JV may dismiss those staff and workers who violate the rules, policies and disciplines of the JV. Such dismissal shall be reported to the local labor administrative
department. 
 ARTICLE 55. The wage system for the staff and workers of the JV shall be decided by the Board of Directors in accordance with the relevant PRC
regulations and the specific conditions of the JV, and shall be specified in the labor contract. Matters relating to the recruitment, wage treatment, social insurance, welfare benefits and standard of travel expenses of high level managerial
personnel shall be subject to approval of the Board of Directors. 
 ARTICLE 56. Matters relating to the welfare benefits, incentives, labor protection and
labor insurance shall be stipulated by the JV in clearly specified internal policies in order to ensure production and work carried out under normal conditions by the staff and workers. 
 Chapter X TRADE UNION 
 ARTICLE 57. Staff and workers of the JV have the right to establish
trade unions and conduct trade union activities in accordance with the “Trade Union Law of the PRC.” 
 ARTICLE 58. The trade union of the JV, if
any, is the representative of the interests of the staff and workers. Its mission will be to protect the democratic rights and material interests of the staff and workers, to assist the JV with the arrangement and reasonable use of welfare and
incentive funds, to organize the staff and workers in the study of political, professional and 

  

 - 9 - 

 
scientific and technical knowledge, and develop literary, recreational and sports activities, and to educate the staff and workers to observe labor
discipline and strive to fulfill various economic tasks of the JV. 
 ARTICLE 59. No trade union activities shall intervene in the regular production and
business activities of the JV. All trade union members must participate in regular production activities and perform their professional responsibilities. By the decision of the general manager, the heads of trade union may be engaged in other job
responsibilities. 
 ARTICLE 60. Trade union representatives have the right to attend as nonvoting delegates, making known the opinions and demands of the
staff and workers, at meetings of the Board of Directors at which such major matters as development plans and production and operational activities of the JV are under discussion. 
 ARTICLE 61. The trade union of the JV shall participate in the meditation of the disputes between staff and workers and the JV. 
 ARTICLE 62. In the event of the establishment of a trade union and to the extent required by applicable law in the PRC, the JV shall each month allot two percent (2%) out of the total amount of the real wages of the JV’s staff and
workers for payment into the trade union fund, for the trade union to use in accordance with the Regulations of the Trade Union Funds promulgated by the All-China Federation of Trade Unions of the PRC. 
 Chapter XI TERM, TERMINATION AND LIQUIDATION 
 ARTICLE
63. These Articles of Association shall come into force and effect, and the JV shall be deemed to have been established, as of the date of the issuance of the JV’s business license in accordance with the laws of the PRC. Subject to Article 64,
the term of the JV shall be thirty (30) years unless earlier dissolved in accordance with these Articles of Association. 
 ARTICLE 64. Upon the
proposal of one party and unanimous approval by the Board of Directors, the JV may extend the term of the JV by filing an application for extension of the JV term with the original examination and approval organ six (6) months before the date
of expiration of the JV term. The JV shall undertake appropriate registration procedures with the original Administrative Bureau for Industry and Commerce. 
 ARTICLE 65. The JV shall be dissolved (a) upon expiration of the term of the Contract, unless extended by the parties thereto, and (b) upon termination of the Contract, in accordance therewith. 
 ARTICLE 66. Upon the dissolution of the JV, the Board of Directors shall formulate the procedures and principles for liquidation and shall select the members of the
liquidation committee, which shall include at least one representative from Party A and one representative from Party B. 
 ARTICLE 67. The tasks of the
liquidation committee shall be to conduct a complete check of the JV’s property and its creditors’ rights and debts, to prepare a statement of assets and liabilities 

  

 - 10 - 

 
and a list of properties, to submit a valuation of the property and the basis of calculation, to formulate a liquidation plan, and to submit these to a
meeting of the Board of Directors and implement them after adoption by the Board of Directors. 
 ARTICLE 68. During the period of liquidation, the
liquidation committee shall represent the JV in suing and being sued. The liquidation expenses (which the liquidation committee shall ensure are reasonable) and the remuneration of members of the liquidation committee shall be paid from the existing
resources of the JV and shall be given priority over other obligations of the JV. The remuneration of members of the liquidation committee shall be subject to approval by the Board. 
 ARTICLE 69. The property remaining after discharge of all the debts of the JV (including, without limitation, the payment of any liquidation expense) shall be distributed in accordance with the respective Distribution
Ratios (as defined in the Contract) of Party A and Party B. 
 ARTICLE 70. Upon completion of the liquidation, the JV is to submit a report to the original
examination and approval organ. Cancellation of registration procedures are to be undertaken with the Administrative Bureau for Industry and Commerce and the business license handed in for cancellation. Public announcement shall be made thereafter.

 Chapter XII RULES AND REGULATIONS 
 ARTICLE 71. Regulations and rules to be adopted by the Board of Directors are as follows: 
  

	1.	Operation and management rules; 

  

	2.	Policy for staff and workers; 

  

	3.	Labor and wages system; 

  

	4.	Welfare system for staff and workers; 

  

	5.	Financial and accounting systems; 

  

	6.	Internal confidentiality and security system; 

  

	7.	Other necessary rules and regulations. 

 Chapter XIII
APPENDICES 
 ARTICLE 72. Amendments to this Articles of Association shall be adopted by the unanimous agreement by the Board of Directors and reported
to the original examination and approval organ for approval. 
 ARTICLE 73. These Articles of Association are written in both Chinese and English, which
versions shall each have equal force. The original is made in eight copies. 
  

 - 11 - 

 These Articles of Association are signed by representatives of Party A and Party B in Parsippany, New Jersey, United
States of America, on June (month) 15 (day), 2000. 
  

	
	 /s/ Cai Dong Chen

	Legal Representative

 SHIJIAZHUANG PHARMACEUTICAL GROUP COMPANY, LTD 
  

	
	 /s/ Dr. Warren P. Levy

	Legal Representative

 UNIGENE LABORATORIES, INC. 
  

 - 12 - 

 Exhibit A. 
 Advisory Board 
  

			
	The Mission:	 	The Advisory Board shall be a non-standing body of the JV, established to assist the JV and the General Manager in bringing advanced business expertise (e.g. marketing, management, information
technology, medical, etc) to the JV. The Advisory Board shall operate in accordance with the following procedures and such other procedures as may be established from time to time by the General Manager or the Board. The membership of the Advisory
Board shall change on an as-needed basis.

  

	1.	The Advisory Board shall provide recommendations at the request of the General Manager with respect to the operation of the JV, including without limitation with respect to
marketing, management, information technology and medical issues. The General Manager shall determine whether, and the manner in which, to implement any such recommendations. In the event of any dispute regarding such matters between a Permanent
Member (as defined below) and the General Manager, such Permanent Member may bring such dispute to the attention of the Board of Directors. Neither the Advisory Board nor any of its members in their capacity as such shall have authority to act for
or represent the JV. 

  

	2.	The General Manager may nominate members of the Advisory Board to the Board of Directors, who shall have the right to approve or dismiss such members (the “Permanent
Members”). Each Permanent Member shall serve as such for a term of two (2) years, unless earlier removed by the Board of Directors. The General Manager may select, or a Permanent Member may nominate for approval by the General Manager,
additional members to serve on the Advisory Board (in either case, a “Temporary Member”). The General Manager may, in his discretion, dismiss any Temporary Member unless otherwise provided by the Board of Directors or may recommend that a
Permanent Member be dismissed by the Board of Directors. The membership of the Advisory Board may include third parties as well as employees of a JV Party; provided, however, that no more than three (3) Permanent Members may be
employees of a JV Party and provided, further, that in no event shall an employee of a JV Party be obligated to serve as a member of the Advisory Board. 

  

	3.	Members of the Advisory Board who are also employed by a JV Party shall not receive additional compensation from the JV for their service as members of the Advisory Board unless
otherwise agreed by the Board of Directors. Other members of the Advisory Board may be compensated for their services as required by Chinese law and as otherwise agreed by the Board of Directors. 

  

	4.	Any expenses resulting from or related to duties performed by members of the Advisory Board, including but not limited to expenses for travel, lodging and meals, will be paid by the
JV as required by Chinese law and as otherwise agreed by the Board of Directors, to the extent such expenses are pre-approved by the General Manager. 

  

 - i - 

 Exhibit B. 
 Qualifications of the General Manager 
  

			
	Statement of Purpose:	 	The General Manager shall be responsible for meeting all responsibilities and obligations of the JV as specified in the JV Contract

 To ensure the above, the General Manager should have the following qualifications: 
  

	1.	Fluent knowledge of both Chinese and English, strong communication skills, and considerable level of computer literacy. 

  

	2.	Minimum 3 years experience in an upper management position in a foreign JV in the PRC. 

  

	3.	A Masters Degree from a reputable university (MBA highly preferred.) 

  

	4.	Appropriate and proven educational and practical background providing for knowledge and experience in both Chinese and Western (preferably American) business practices.

  

	5.	Proven record of integrity (with a minimum of four references from upper management required.) 

  

 - ii -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00138-of-00352.parquet"}]]