EXHIBIT 10.7
CONTRACT OF PROJECT OF VENTURE CAPITAL OF
ZHOUCHENG SCIENCE & TECHNOLOGY
PLAN
CONTRACT NO: 2002
PROJECT NAME: PHOTOSYNTHETIC BIOCATALYST (PBC)
ENTRUSTING PARTY (PARTY A): ZOUCHENG MUNICIPAL PEOPLE'S GOVERNMENT
ENTRUSTED PARTY (PARTY B): KIWA BIO-TECH PRODUCTS GROUP LTD.
COOPERATIVE UNIT:
INTERMEDIARY BANK (PARTY C): ZHOUCHENG BRANCH OF CHINA COMMERCIAL BANK OF ICBC
Party A: ZOUCHENG MUNICIPAL PEOPLE'S GOVERNMENT
Party B: KIWA BIO-TECH PRODUCTS LTD
PBC (Photosynthetic Biocatalyst) is a world leading hi-tech bioengineering
project appraised by the Ministry of Agriculture of China. It was approved by
the State Economic and Trade Commission of China as a state key technical
renovation project for the year of 2001. To industrialize this project, try to
put the products of this project into home and abroad market at the earliest
possible time, and benefit the society and the environment, through amicable
consultation, both parties agree to conclude this Investment Agreement and
guarantee to abide by this Agreement.
I. Party A shall create conditions positively, strive for the investment
construction of the industrialization base of PBC project in the
development zone of Zhoucheng, and provide this project with much
better and practical support than other provinces and municipalities.
Therefore, the stockholders' meeting and the meeting of the board of
directors of Party B have decided and agreed to invest to construct the
production base in the economic development zone of Zhoucheng. Party
B's projected total investment towards this project construction shall
be RMB150--200 million YUAN. The annual output shall be PBC 1500 tons.
After this project reaches the designed capacity, it is estimated the
annual sales income will be RMB 750 million YUAN, and the annual tax
and profit will be RMB 200 million YUAN.
II. Party A shall give full support to the industrialization of Party B's
PBC project, and provide with all-round preferential policies and
efficient quality services. In terms of tax, make sure to implement the
following preferential policies:
a. As agricultural productive materials, PBC products can enjoy
the preferential tax policies towards agricultural productive
materials;
b. As hi-tech products, PBC products can enjoy the preferential
tax policies towards hi-tech products;
c. As a hi-tech enterprise, PBC project enterprise can enjoy the
preferential tax policies of the state and the provinces and
municipalities towards hi-tech enterprises;
d. As a enterprises with key protection and support by Zhoucheng,
PBC project enterprise can enjoy all the preferential policies
towards enterprises with key protection and support;
e. On the basis of the aforesaid preferential tax policies of the
state, give preferential policy treatment to PBC project as to
reduce the local income tax by half for additional three
years;
f. During project construction, exempt all administrative charges
and fees within the functions and powers of Zhoucheng
Municipal Government.
III. After this agreement is signed, Party B shall start to register in
Zhoucheng city an
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enterprise with foreign investment wholly-funded by Party B, namely
Kiwa Bio-Tech Group (Shandong) Co., Ltd., with RMB50 million YUAN as
the registered capital. According to the provisions of the Law of the
People's Republic of China on Investment for Enterprise with Foreign
Investment, after Party B provides the original certificate of
registration and the certificate of creditworthiness from overseas
bank, Party A shall be responsible for providing with all-round
services for registration of wholly foreign-owned enterprise, and shall
make sure to help Party B in getting the certificate of approval for
foreign investment and the business license within 30 days. Party B
shall contribute the registered capital by installments in accordance
with the Law of the People's Republic of China on Enterprises with
Foreign Investment.
IV. Party A shall provide Party B Kiwa Bio-Tech Group (Shandong) Co., Ltd.
with over 100-mu (1 mu=2000/3 square meters) land in the economic
development zone as the PBC production base site, and settle the land
takeover formalities and apply for the land use certificate, and make
sure the external pipeline net is with LIU TONG YI PING (six available
and one flat) at the positions which are 2 meters away from the red
line for the factory site. The land price shall be left open and the
land shall be used for 10 years free of charge. After PBC project is
put into production and the profits are made, if Party B pays the land
transfer fee, the price shall not be more than RMB80,000 YUAN per mu.
Before the land transfer fee is fully paid, Party B shall not resell or
mortgage the land lot for loan.
V. To push the PBC project for early implementation, Party B shall invest
RMB 5 million YUAN in November to Kiwa Bio-Tech Group (Shandong) Co.,
Ltd. as the startup capital. Party A shall provide Party B Kiwa
Bio-Tech Group (Shandong) Co., Ltd. with a loan of up to RMB 10 million
YUAN (no interest and no shares) in accordance with relating
provisions. Within 10 days after the startup capital is paid by Party B
in place, Party A shall complete the plan registration and capital use
approval, the capital shall remitted to the special account of Party B
Kiwa Bio-Tech Group (Shandong) Co., Ltd. once for all. The use of the
capital shall be supervised jointly by both parties, and shall be used
for this project. After this project is put into production and the
profits are made, the load shall be paid off with the profits made from
this project within three years.
VI. To strengthen the technical construction for PBC project, Party B shall
move the bio-germ bank, experimental shop equipment and scientific
research instruments etc., of its Zhuhai experimental base, Shanghai
Ecological Biology Research Institute and Beijing Hongdi Kanghua
Bioengineering Technology Co., Ltd. to the economic development zone of
Zhoucheng in June, and move its PBC achievements, bio-nanometer
research personnel and professionals to Zhoucheng city, not only do
well the construction of the industrialization production base for PBC
project, but also carry out all-round bio-tech research and
development, provide more and better achievements and projects for the
construction of the hi-tech biologic park of Zhoucheng. Party A shall
be responsible for providing with the premises for scientific research
and production for the transition period. When the conditions mature,
Party B shall set up Kiwa Bioscience School and construct Kiwa
Bio-industrial Park at Party A's facility. Party A shall give support
as for the preferential conditions for PCB project.
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VII. Both parties agree that the construction of PBC project base shall be
started in July. Party B shall present the specific project
implementation plan and schedule, and shall make great efforts to
implement the plan. Both parties shall join hands to push the project
forward.
VIII. After this agreement is signed, the former contract for PBC project
concluded by and between KIWA INTERNATIONAL GROUP CO., LTD. and JINING
City shall be terminated.
IX. Matters not covered herein shall be settled through consultation
otherwise.
X. The representatives of both parties shall execute this Agreement. This
Agreement shall be made in both Chinese language and English language,
which shall be equally authentic.
Party A: Zhoucheng Municipal People's Party B: Kiwa Bio-Tech Products Ltd.
Government
/S/ BO LIN /S/ DEJUN ZOU
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Representative: Bo Liu Representative: Dejun Zou
Date: May 26, 2002 Date: May 26, 2002
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