PBC PROJECT INVESTMENT AGREEMENT
THIS INVESTMENT AGREEMENT (the "AGREEMENT") is made and entered into as of the
25th of June, 2002, by and between Zoucheng Municipal Government (the
"GOVERNMENT") and KIWA BIO-TECH PRODUCTS GROUP Ltd., On PBC (Photosynthesis
Biological Catalyst) project.
PBC, the main bio-agricultural product of the COMPANY, is a breakthrough product
that helps crops and plants to grow more healthily and increase yield. PBC as a
new product has received the approval for commercialization from Chinese
Ministry of Agriculture. PBC project has also been listed in "2001 Major science
and Technology Innovative Projects in China" by Chinese State Economic and Trade
Commission. In order to commercialize and mass-produce PBC product and market it
in both domestically in China and internationally, the GOVERNMENT and the
COMPANY through sincere and friendly negotiation have entered into this
AGREEMENT on the terms and conditions hereinafter set forth:
I. The GOVERNMENT agrees to guarantee that the PBC project will receive more
practical and preferential support from the GOVERNMENT than those of other
provincial or municipal development zones when PBC mass-produced base is
established in Zoucheng Economic Development Zone. To receive and
reciprocate the support from the Government, a decision has been made
through the meetings of the shareholders and the board of directors of the
COMPANY that the COMPANY will invest and build the PBC mass-produced base
in Zoucheng Economic Development Zone. The total investment of the PBC
project by the COMPANY will reach RMB150 to 200 million when all phases of
the investment and commercialization of the product are completed. The
projected production capacity will be 1500 metric tons and when the full
production capacity is reached and it is estimated that the annual sales
revenue will be around XXX 000 million and the gross profit will be around
XXX 000 million when all 1500 metric tons of the product are sold.
II. The GOVERNMENT will undertake to support the PBC project fully by
providing high grade and high efficiency services and more preferential
policies, The following preferential policies will be specifically applied
to PBC project:
a. Because of the production materials nature of the PBC product, the
PBC project will receive the national tax preferential policies and
treatment for production material products used for farm
productions;
b. As a new and high-tech product, PBC project will receive the
national preferential tax policies for high-tech products;
c. As high-tech company, the COMPANY will receive both national and
provincial/municipal preferential tax policies and treatment for
high-tech companies;
d. As a major investment and production project of Zoucheng Municipal
Government, the PBC project will receive the entity preferential
policies and treatment for the project recognized by Zoucheng
Municipal Government.
e. Besides the above preferential policies and treatments, the PBC
project will also be given an additional preferential tax holiday of
fifty-percent (50%) for the local income tax for another three years
after the first national tax holidays of five-years are exhausted;
f. During the construction period, all administration charges and expenses
relating to the PBC project incurred by the agencies and departments of
the GOVERNMENT are exempted and free.
III. After this AGREEMENT is executed, the COMPANY will undertake to register a
wholly-owned foreign-investment enterprise in the name of Kiwa Bio-Tech
products (Shandong) Co., Ltd.,(the "BASE") within Zoucheng Economic
Development Zone. The registered capital is to be XXX 00 million. The
GOVERNMENT will undertake to facilitate a speedy registration of the BASE
and ensure the COMPANY will obtain the Approval Certificate for the
foreign-investment and Business License within 30 days after the COMPANY
provides its Registration Certificate and its overseas bank' reference in
accordance with to the Chinese Investment Article for Wholly-Owned
Foreign-investment Enterprise. The registered capital of the BASE will be
put in place in phases according to the Chinese Investment Article for
Foreign-investment Enterprise.
IV. The GOVERNMENT will provide at least 100 Mus of land to the BASE of the
COMPANY for PBC mass-production purposes. The GOVERNMENT will undertake
the expropriation of land, obtain and issue the land use certificate for
the benefit of the BASE, and cause the land to be ready for the
construction of the PBC production facilities prior to the end of October
2002. The GOVERNMENT also agrees and guarantees that the use charge for
the land will be exempted for ten (10) years. When and after the
BASE/COMPANY become fully operational and profitable, the GOVERNMENT will
then charge and collect from the BASE for the use of the land but the
charge will not exceed RMB80,000 per Mu. The BASE/COMPANY guarantees that
it will not assign or transfer, nor lease the land in any form before the
total land use charge for the land is paid off.
V. In order to realize a prompt implementation of the PBC project, the
COMPANY will inject RMB five (5) million into the BASE before the end of
June 2002 as the pre-phase start-up capital. The GOVERNMENT reciprocates
and guarantees that it will provide an interest-free loan of RMB ten (10)
million to the BASE/COMPANY within ten (10) days after the RMB five (5)
million pre-phase start-up capital is paid into the account of the BASE.
The COMPANY will undertake to seek approvals and complete the formalities
for the PBC project and its loan to the BASE. The GOVERNMENT further
guarantees that it will cause the RMB ten (10) million loan to be
deposited into a special account of the BASE. The use of the Loan will be
monitored jointly by the BASE/COMPANY and the GOVERNMENT. The Loan
repayment will be made in three years after the BASE becomes fully
operational and profitable.
VI. The COMPANY agrees and will relocate its R&D department (including the
pilot-scale base in Zhuhai, the bacteria storehouse, all the equipment and
instrument for the pilot-scale plant of Shanghai Bio-ecology Research
Institute and Beijing Hongdi Kanghua Bio-tech Ltd, which represent all the
achievements for the PBC and nano-tech research, and the R&D professionals
of the Company) to the Zoucheng Economic Development Zone in June 2002.
All bio-tech research work will commence while the construction of the
Base is in process. To support the GOVERNMENT's relocation efforts, the
GOVERNMENT will provide the BASE/COMPANY with temporary factory and
research facilities during the COMPANY's relocation and transition period.
The COMPANY may also set up KIWA Bio-tech Institute and KIWA Bio-tech
industry park in Zoucheng Economic Development Zone in the future, and
when this happens, the GOVERNMENT agrees to provide more preferential
policies and treatment to the COMPANY.
VII. The GOVERNMENT and the COMPANY confirm that the construction of the PBC
project and its production base will start July 2002. The COMPANY will
submit a detailed construction plan and work schedule before the end of
June 2002, and both parties will work together to implement the
construction plan.
VIII. The signing and execution of this AGREEMENT will supersede all other
previous agreements made and entered into by and between KIWA
INTERNATIONAL GROUP and Ji-Ning Municipal Government with respect to the
PBC project.
IX. Any and all other terms and conditions, which have not been covered in
this AGREEMENT will be discussed and agreed upon in the future in separate
agreements.
X. The AGREEMENT is made in both Chinese and English languages and both texts
being equally original and legally binding, becomes effective immediately
upon signing and execution by the two Parties.
SIGNED BY: SIGNED BY:
XX XXX XXXXXXX XXXX
FOR AND ON BEHALF OF : 26/5/2002 FOR AND ON BEHALF OF : 26/5/2002
ZHOUCHENG MUNICIPAL GOVERNMENT KIWA BIO-TECH PRODUCTS GROUP LTD.,
