Sino-foreign Joint Venture Contract

EXHIBIT 10.11A


Sino-Foreign Joint Venture Contract


Part I General Rules and Definitions


The Nanjing Medical Group Company Limited (hereafter abbreviated to Party A) and Allwin Newtech Ltd. of the British Virgin Islands (hereafter abbreviated to Party B), in accordance with "the Law of the People's Republic of China Governing Sino-Foreign Joint Ventures in Operations of Enterprises" and other relevant regulations of China and the principle of equality and mutual benefits, have agreed through cordial negotiations to jointly invest, set up and operate a Sino-Foreign joint-venture enterprise in Nanjing City, Jiangsu Province, the People's Republic of China Therefore the parties agree as follows.


The phrases and terminology below shall be interpreted in accordance with the definitions as follows:


"Approving Authority": The Nanjing City Committee for External Economic Trade;


"Commencing Operating Date": refers to the date that the Board of Directors has decided for the Joint-Venture Company to commence operation;


"The Date of Contract": refers to the date of signing the Contract by all Parties;


"Employees": refers to all employees other than the high-ranking management personnel of the Company;


"The Incorporation Date of the Joint-Venture Company": refers to the date of issuance of the business licence by the Nanjing City Industrial and Commercial Administration Board after the Joint-Venture Parties have submitted application and made registration in accordance with Clause 11 of the "Enforced Detailed Rules Pertaining to the Law of the People's Republic of China Governing Sino-Foreign Joint Ventures in Operations of Enterprises" and the Administration Rules on Registration of Sino-Foreign Joint Ventures. On the day of the Joint-Venture company is incorporated, it shall be organised in accordance with Clause 2 of the Contract.


"High-ranking Management Personnel": refers to the Joint-Venture Company's Chairman, Vice Chairman and other high-ranking management personnel recognised by the Board of Directors;


"Government": the overall reference to the central and provincial district governments that include all departments and authorised organisations of every level of the governments;


"The Laws of China": refers to the collective reference to the relevant laws, regulations, ordinances, enforced detailed rules and other supplementary regulations published by the "Government" of the People's Republic of China.


Part II Joint-Venture Parties


1. The Parties to the Contract are:


Party A: The Nanjing Medical Group Company Limited Place of Registration: 486 Zhongshan East Road, Baixia District, Nanjing City Registered Address: 486 Zhongshan East Road, Baixia District, Nanjing City


Legal Representative: Name: Ni, Zhongxaing, Position: General Manager, Nationality: Chinese


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Party B: Allwin Newtech Ltd. Place of Incorporation: British Virgin Islands Registered Address: Arawak Chambers, P. O. Box 173, Road Town
Tortola, British Virgin Islands


Legal Representative: Name: Liu, Longbin, Position: President Nationality: Canadian


Part III Incorporation of the Joint-Venture Company


2. In accordance with "the Law of the People's Republic of China Governing Sino-Foreign Joint Ventures in Operations of Enterprises" and other relevant regulations, Party A and Party B agree to set up in China the Nanjing Huaxin Biotech Co. Limited (hereafter abbreviated as Joint-Venture Company).


3. The name and registered address of the Joint-Venture Company: Name in Chinese: Nanjing Huaxin Biotech Co. Limited Registered Address: 293 Zhongshan East Road, Xuenwu District, Nanjing City Postal Code: 210005


4. The Joint-Venture Company shall abide by the "Laws of China" in respect of all its activities and shall be protected by the "Laws of China".


5. The Joint-Venture Company is a limited company in terms of structure. Under the "Laws of China" the Joint-Venture Company shall be a Sino-Foreign joint-venture enterprise with the entity as an independent legal person. In accordance with the proportion of their capital contributions in the register of capital, the Joint-Venture Parties shall share their rights and profits and undertake responsibilities, risks and losses. In accordance with the "Law of the People's Republic of China Governing Sino-Foreign Joint Ventures in Operations of Enterprises" and the published detailed rules under this law, all Parties shall draw up the Contract and the Articles of Association for submission to the "Approving Authority" for their approval and these shall become binding on all Parties on the approval date.


Part IV The Objective, Scope and Capacity of the Production and Operation


6. The purpose of the co-operation between Party A and Party B are to utilize biological engineering technology, to research and to manufacture new medicines as to cure patients and to enhance health standards, level, and to have social and economic effects, based on the principle of mutual benefits.


This investment falls under the encouraged category of the Industrial Guide for Foreign Investment promulgated by the State Council of China:
(13) pharmaceutical industry
(11) new medicine manufactured by using bio-engineering technology


7. The business scope of the Joint-Venture Company shall be: production, research, development of a series of biological and chemical medicines and drugs, and the same of the products of the Joint-Venture Company.


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Part V The Total Investment and the Registered Capital


8. The total investment in the Joint-Venture Company is 14 million US dollars (about the equivalent of 116.2 million yuan in Renminbi)


9. The Joint-Venture Company's registered capital is 5.6 million US dollars (about the equivalent of 46.48 yuan in Renminbi) in which
Party A shall contribute 1.4 million US dollars or 25% of the registered
capital; and Party B shall contribute 4.2 million US dollars or 75% of
the registered capital. The exchange rate used to calculate the contribution amount of each party shall be based on the exchange rates published by China's National Foreign Exchange on the day such a contribution is made.


The mode and time of contribution by each Party are: (1) Party A shall contribute its capital to the Joint-Venture Company in accordance with twenty-five per cent (25%) of the shares held in Nanjing Huaxin Biotech Co. Limited.


Party A shall, in accordance with its proportional share of 25% in the registered capital, contribute the equivalent of 1.4 million US dollars calculated in Renminbi of 116.2 million yuan and shall pay up the whole sum before 31 August 1999.


Schedule for Payment of Registered Capital


Unit: 10,000 Renminbi/dollars


Particulars Country Date Amount Purpose Total Amount % of Registered -------- ------- --------- -------------- ------------- ----------------
Renminbi US$ Renminbi US$ Capital
---------- --------- --------- --------- ----------------


Foreign 99.10.31 2021.25 243.52 buying 51.25% of 2021.25 243.52 43.49%
the rights in shares -------------------------------------------------------------------------------------------------------------------
99.12.31 453.75 54.67 buying 75% of 2737.5 329.82 58.90%
the rights in shares -------------------------------------------------------------------------------------------------------------------
99.12.31 262.5 31.63 payment of capital
in cash -------------------------------------------------------------------------------------------------------------------
2000.1.31 748.5 90.18 payment of capital 3486.00 420 75.00%
in cash ------------------------------------------------------------------------------------------------------------------- China 1999.8 1162 140 payment of capital 25.00%
by rights in shares -------------------------------------------------------------------------------------------------------------------


Note: Before 31 October 1999 both parties' paid-up capital has reached 31.83 million yuan or68.49% of the registered capital of 5.6 million US dollars (equivalent to 46.48 million Renminbi yuan @ 1:8.3). From six months after the business licence was pre-issued until 31 January 2000, Party B's registered capital was paid up.


(2) Using two modes of contributing its capital to the Joint-Venture Company,
Party B shall pay cash to purchase seventy-five per cent (75%) of the rights
in shares being held by Party A in Nanjing Huaxin Biotech Co. Limited and
shall pay cash for the capital. These include the capital contribution for
the rights in shares: the equivalent of 24.75 million Renminbi yuan in US
dollars (about 2.9819 million US dollars) and the capital contribution in
cash: the equivalent of 10.11 million Renminbi yuan in US dollars (about
1.2181 million US dollars), making a total of the equivalent of 34.86
million Renminbi yuan in US dollars (about 4.20 million dollars).


(i) Before 31 October 1999 the payment for the transfer of rights in shares
shall amount to the equivalent of 20.2125 million Renminbi in US dollars
(of which 12 million Renminbi yuan being paid in cash for capital
contribution). (ii) Before 31 December 1999 there shall be paid the equivalent of 7.1625
million Renminbi yuan, including the sum in US dollars which are
equivalent to 4.5375 million Renminbi yuan for the completion of the
purchase of 75% of the rights in shares, leaving a sum in US dollars
equivalent to 2.625 million Renminbi yuan to be paid in cash for the
contribution of capital.


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(iii) In accordance with its proportional share of 75% of the registered
capital, Party B shall contribute a capital of 4.2 million US dollars,
any shortfall to be made good with a sight draft in US dollars within
half a year of the business licence of being issued. That is to say:
before 31 January 2000 Party B shall contribute a capital in US dollars
equivalent to 7.485 million Renminbi yuan. By then Party B shall have
completed the investment in the registered capital in US dollars
equivalent to 34.86 million Renminbi yuan.


Party B shall use the amount it has actually paid for the rights in the shares transferred as a proportion of the rights in shares of the Joint-Venture Company to exercise its rights as an investor in the Joint-Venture Company and to enjoy its share of income.


10. Where either Party A or Party B transfers wholly or partially its share of capital to a party other than the either Party, consent shall be obtained from the other Party and application submitted to the authority for approval. Where one Party transfers all or part of its rights in the shares, the other Party shall have the preferential purchase right. However, the following transfers do not fall into the transfers being stipulated in the Contract and the other Party shall have no preferential purchase right in the transfers preferential purchase right:


(1) a transfer that arises from the requirement of a Joint-Venture Party's
shares being listed in the stock market; (2) a transfer by a Joint-Venture Party to its subsidiary or parent company; (3) a transfer agreed upon by all Parties.


Unless otherwise being specially stipulated, all obligations or liabilities specified in the Contract shall not be assigned without the consent of both Joint-Venture Parties.


Where as a result of the Joint-Venture Company borrowing from others and the lender requires property as a collateral, either of the Joint-Venture Parties may use all or part of its investment as such a collateral but in doing so a unanimous consent shall be obtained from both Parties.


Part VI Responsibilities of the Joint-Venture Parties


11. The Joint-Venture Parties shall be responsible to complete the following matters:


Both Parties' joint responsibilities (1) Both Parties shall contribute the capital in accordance with what is
stipulated in Part V in terms of the amounts of capital, the modes of
payment and the date of payment. (2) Both Parties shall designate the personnel concerned to take part in the
management, research and development, production, sale and operation of the
Joint-Venture Company.


Party A's responsibilities In accordance with the Joint-Venture Company's requirements and its provision of technological specifications, Party A shall provide the following services to the Joint-Venture Company: (1) To assist securing the Chinese government's approval for the Joint-Venture
Company; (2) To assist the Joint-Venture Company in obtaining the necessary facilities
or land-use right through rental or purchase. (3) To assist, in respect the items below under feasible circumstances, the
Joint-Venture Company to select and purchase in China property and
equipment, facilities, fuel, raw materials, etc., the expenditure to be
borne by the Joint-Venture Company.


Party B's Responsibilities In accordance with the Joint-Venture Company's requirements and its provision of technological specifications, Party B shall provide the following services to the Joint-Venture Company:


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(1) On establishing the Joint-Venture Company's facilities, to assist the
Joint-Venture Company by providing technological and management support; (2) To assist the Joint-Venture Company, whether in or outside China, to select
and purchase in China building and equipment, facilities, fuel, raw
materials, etc.; (3) To assist the Joint-Venture Company to train the Joint-Venture Company's
personnel, such training including the application of business management
and production technology in order to achieve the objectives of the
Contract; (4) To assist the Joint-Venture Company to obtain the necessary property and
equipment; (5) To assist the Joint-Venture Company in taking necessary measures to keep
the Joint-Venture Company's foreign exchange in balance; (6) In order to materialise the objectives in the Contract, to perform other
reasonable obligations that it has accepted.


If reasonable expenses are incurred in the course of carrying out the responsibilities above, both Party A and Party B may have these reimbursed by the Joint-Venture Company after the other Party's consent is obtained.


Part VII Sale of Products


12. Both Parties agree that the sale policy of the Joint-Venture Company's products shall be determined by the Company's Board of Directors in the best interests of the Joint-Venture Company. The best interests of the Joint-Venture Company shall be its best interests as an entity and not the best interests of one single party.


13. When the Joint-Venture Company sells its products in China and overseas, the Chinese Drugs and Health Department and commercial departments may become the wholesalers or agents in respect of sales in China or the Company may make direct sales, and Party B shall provide the necessary guidance and assistance. When its products are sold in international markets, Party A shall provide the necessary guidance and assistance.


14. The Joint-Venture Company's products shall use the trademark of "Ninghongxin".


Part VIII Board of Directors


15. The date when the business licence is obtained by the Joint-Venture Company shall be the date when the Board of Directors of the Joint-Venture Company is formed.


16. The Board of Directors shall consist of five directors of whom Party A may appoint two members and Party B three members. The Chairman shall be appointed by Party B and Vice Chairman by Party A. The Chairman and the directors shall serve a term of four years and may, if further being appointed, continue in office. Either Party shall have the right to change its appointed directors but shall have to inform the other Party of the Joint-Venture Company.


17. The Board of Directors shall be the highest authority structure of the Joint-Venture Company and shall decide on all important matters. The following matters shall be only be resolved after being passed unanimously by all attending directors at a directors' meeting:


(1) amendments to the Joint-Venture Company's Articles of Association; (2) liquidation of the Joint-Venture Company; (3) increases or decreases in or transfers of the Joint-Venture Company's
registered capital; (4) mortgage of the Joint-Venture Company's assets; (5) the Joint-Venture Company's merging with other economic bodies, division or
changes in the organisational form.


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Other matters than those mentioned above shall be passed and determined with a simple majority at the directors' meetings.


18. The Chairman is the legal representative of the Joint-Venture Company. Where the Chairman is unable to perform duties, another director may be temporarily authorised as the representative.


The duties and obligations of the directo ...