Agreement on Joint Incorporation of Kiwa-CAU Bio-Tech Research & Development Center between China Agricultural University and Kiwa Bio-Tech Products (Shandong) Limited
Kiwa-CAU
Bio-Tech Research & Development Center between
China
Agricultural University and
Kiwa
Bio-Tech Products (Shandong) Limited
WHEREAS:
(1)
Kiwa
Bio-Tech Products (Shandong) Limited (hereinafter
referred to as ” Kiwa Shandong.”), a China-based subsidiary company
solely-funded by Kiwa Bio-Tech Products Group Corporation incorporated in
China,
engaging in the bio-tech products industry. Kiwa
Bio-Tech Products Group Corporation
(hereinafter referred to as ”Kiwa”,
a
company registered in Delaware, U.S.A. and listed in NASDAQ OTCBB, with bio-tech
industry as its strategic orientation, with bio-fertilizers as its starting
points and gradually extending to bio-feeds, bio-environment protection,
bio-pharmaceuticals, bio-seeds and bio-energy.
(2)
China
Agricultural University (hereinafter
referred to as ”CAU”)
and
its subordinated “CAU
Institute of Botany Ecological Engineering” (hereinafter
referred to as ”Eco-Institute”)
are
leading in the world in the agriculture-related technological fields such
as
plant pathology, plant nutrition, Plant Ecology and microorganism.
(3)
In
April 2004, Xxxx
signed
the Patent Rights Transfer Contract for the patented “High
Efficiency Hybrid Yield-Increasing Fungus and its Manufacturing Process” With
CAU.
(4)
Both
parties agree to take the market-driven R & D as the direction of
cooperation between Kiwa Group, Kiwa Shandong and CAU, mutually supplement
their
advantages, carry out technical renovation, speed up scientific and
technological achievements transformation and industrialization, and gradually
build the world leading bio-tech R & D Center. This Agreement is, through
friendly discussions, made by and between both parties on the subject matter
of
joint incorporating the ”Kiwa-CAU Bio-Tech Research & Development Center”
(hereinafter referred to as “R & D Center”). Both parties agree as
follows:
Article
1 Investment and Incorporation of the R & D Center
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1.1
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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)
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The
equipment, instruments and consumables added for the R & D project as
identified by both parties;
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(3)
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Other
costs and expenses related to the R & D activities of the
Center.
|
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1.3
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CAU
agrees to provide the R & D Center with the following
resources:
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(1)
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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;
|
|
(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.
|
|
1.4
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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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Page
1
Article
2 Objective and Task of the R & D Center
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2.1
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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.
|
|
2.2
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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÷
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Two
technological achievements pass the provincial level or ministerial
level
scientific and technological achievements
qualification;
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|
ø3÷
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Develop
two new products which can be
industrialized.
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2.3
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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.
|
|
2.4
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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
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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
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3.1
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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
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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
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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
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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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Before
Jan. 31 RMB300,000
Before
April 30 RMB 300,000
Before
July 31 RMB400,000
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3.5
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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
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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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Page
2
Article
4 Share, Xxxxxxxx and Acceptance of the Technical
Achievements
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4.1
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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)
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For
invention patent, Kiwa Shandong 2ôCAU
1.
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(2)
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For
provincial level or ministerial level qualification of scientific
and
technological achievements: Kiwa Shandong 1, CAU
1.
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(3)
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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
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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)
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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
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5.1
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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
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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
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6.1
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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
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CAU
and Kiwa Shandong shall be liable for keeping confidential the
technological achievements shared by the other
party.
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6.3
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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
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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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3
Article
7 Technical Implementation and Subsequent Improvement
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7.1
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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
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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
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8.1
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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
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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
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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
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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
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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 (Seal)
/s/:
Xx
xxx Xxx
Vice
chancellor
Date:
November 14, 2006
Kiwa
Bio-Tech Products (Shandong) Limited
(Seal)
/s/:
Xxx
Xx
Chief
Executive Officer
Date:
November 14, 2006
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