AGREEMENT ON EQUITY TRANSFER AND CAPITAL INCREASE BETWEEN WINNER GROUP LIMITED AND LOHMANN & RAUSCHER LIMITED, Hong Kong Project: Winner Xishui / PRC BEITEN BURKHARDT Hong Kong Office 14th Floor " Hong Kong Diamond Exchange Building 8-10 Duddell Street " Central " Hong Kong Tel + 852 2524 6468 " Fax + 852 2524 7028 Email : ***@*** Dated : 8 April 2005

2.1	The Parties agree that consideration for the Transferred Interest shall be determined as follows:

2.1.1

The consideration to be paid by the Buyer to the Seller for the Transferred Interest transferred by the Seller shall be United States Dollars two million four hundred thousand (US$ 2,400,000.00) ("Transfer Price").

2.1.2

The Buyer shall make the payment of the Transfer Price to the Seller in a lump sum within two (2) working days after the Buyer has received a written notice from the Seller informing that all necessary government approvals for this Agreement as mentioned in Article 6 have been obtained and the new business license of Xishui Winner showing its shareholders and their equity ratio comprised of the Seller (40%) and the Buyer (60%) has been duly issued together with certified true copies of all relevant supporting documents for verification. For the purpose of this Agreement, working days shall mean business days in Federal Republic of Germany.

2.2	The Buyer shall pay any amount due pursuant to Article to the following account of the Seller:

3.1	The Parties have estimated that an additional capital of US$ 400,0 shall be required for the following purpose:

3.1.1

construction and fitting cost of a new warehouse at the premises of Xishui Winner shall be around US$ 350,0; this is a capital investment; and

3.1.2

purchase of additional equipment and storage facilities for the new warehouse mentioned in Article ; costs shall be around USS 0; this is a capital investment

3.2

Both Parties unanimously agreed that they shall jointly increase the capital of the Xishui Winner by US$ 400,0 based on the registered and fully paid up capital of US$2,161,600 so that the registered capital of Xishui Winner will increase to US$2,561,6. Since Xishui Winner has already completed the procedure for registration of US$2,420,000 as its registered capital with local government departments, it only has to apply with the government department for a capital increase of US$141,600 ("Additional Capital") after the transfer of equity interest.

3.3	The Outstanding Capital together with the Additional Capital shall form the amount to meet the purpose mentioned in Article .

3.4	The Parties shall contribute the Outstanding Capital and Additional Capital in the following manner:

3.4.1

The Seller shall contribute 40%, amounting to United States Dollars one hundred and sixty thousand (US$ 160,000) in cash and remit such amount to the Xishui Winner's bank account in the following manner :-:

3.4.2

The Buyer shall contribute 60%, amounting to United States Dollars two hundred and forty thousand (US$ 240,0) in cash and remit a sum of US$ 141,6 to the Xishui Winner's bank account within 30 calendar days after receiving a written notice of the change of Winner Xishui's business licence and in any event no later than 30 days after the Effective Date. In view that the Seller has already prepaid a sum of US$98,4 as registered capital for the Buyer, so the Buyer shall directly remit that part of capital in a sum of US$98,4 to the designated account of the Seller.

3.5

Upon making of the above, the Seller will hold 40% of the registered capital equivalent to United States Dollars one million twenty-four thousand six hundred and forty (US$ 1,024,6) and the Buyer will hold 60% of the registered capital equivalent to United States Dollars one million five hundred thirty-six thousand nine hundred and sixty (US$ 1,536,9) of Xishui Winner.

3.6

Save as otherwise provided under Article 3 or in the revised Articles of Association of Xishui Winner, neither party is obliged to provide any financial assistance to Xishui Winner and any future financing matters shall be determined in accordance with the provision under the revised Articles of Association of Xishui Winner based on the business needs of Xishui Winner.

4.1	The Seller shall:

4.1.1

be solely responsible for all debts and liabilities of Xishui Winner existing or accrued before 1 March 2005;

4.1.2

entitled to all receivables of Xishui Winner existing or accrued before 1 March 2005;

4.1.3

undertake to keep Xishui Winner indemnified for any debts or liabilities accrued before 1 March 2005 if such debts or liabilities are not duly settled before 1 March 2005; and

4.1.4

pay in cash to balance the loss and the pre-operating expenses of Xishui Winner up to 28 February 2005 to become zero on the basis that the amortization of the relevant costs shall not be beyond 28 February 2005 and if this is not permissible under PRC accounting rules, then the Seller agrees to make special provision under the financial statements in order to achieve the same effect as if no loss will be carried forward to the period starting from 1 March 2005.

4.2	The Parties further mutually agree as follows:

4.2.1

to continue with the use of the current Chinese name of Xishui Winner NNW i.e. Wen Jian in Chinese) but shall rename the English name of Xishui Winner to "L+L Healthcare Hubei Co. Ltd";

4.2.2

the management structure and the appointment of key personnel of Xishui Winner shall be in accordance with the provision stipulated under the revised Articles of Association of Xishui Winner;

4.2.3

matters requiring unanimous consent of the Parties and the board of directors shall be in accordance with the provision stipulated under the revised Articles of Association of Xishui Winner;

4.2.4

the business, sales, pricing and non-competition issues in accordance with the provision stipulated under the revised Articles of Association of Xishui Winner;

4.2.5

provision of operational assistance from Winner Group and Mr. Li Jian Quan shall be in accordance with the provision stipulated under the revised Articles of Association of Xishui Winner;

4.2.6

transfer of equity interest by the Parties shall be in accordance with the provision stipulated under the revised Articles of Association of Xishui Winner;

4.2.7

the dividend policy in accordance with the provision stipulated under the revised Articles of Association of Xishui Winner.

5.1	As per the Effective Date, the Articles of Association including its Annexes (if any) shall be modified as agreed in the "Third Amendment to the Articles of Association of "Winner Medical & Textile Ltd., Xishui ", attached as Annex 3 to this Agreement.

6.1	The closing (hereinafter referred to as the "Closing") will be effective on the date ("Effective Date") that all the conditions precedent (as specified in Article through Article ) are completed.

6.1.1

The board of directors of the Seller and the board of directors of the Buyer have approved the transactions contemplated by this Agreement. Such approvals shall forthwith be attached to this Agreement in the Annex 2.

6.1.2

The issuance of an approval certificate by the original examination and approval authority stating the shareholding ratio of the Seller and the Buyer is 40% : 60% as mentioned in Article 1 and the issuance of a corresponding business license export / import licence, customs registration etc. by the responsible registration authority in accordance with the applicable laws.

6.1.3

Written evidence of the audited financial statements of Xishui Winner for the period up to 28 February 2005 satisfactory to the Buyer proving that the Seller has at its own costs equalized the profit and loss of Xishui Winner to the effect that the opening balance of Xishui Winner is zero as at 1 March 2005.

6.1.4

The verification certificate issued by the competent examination authority in charge of Xishui Winner confirming that the Seller has contributed the Outstanding Capital.

6.1.5

The issuance of an approval certificate by the original examination and approval authority stating the registered capital of Winner Xishui has been increased to US$ 2,561,6 and the issuance of a corresponding business license by the responsible registration authority in accordance with the applicable laws.

6.1.6

The registration of this Agreement by the relevant PRC authority without altering its terms and conditions on any Party unless each Party has been notified in advance of and consented in writing to such alteration.

6.1.7

The approval document for the "Third Amendment to the Articles of Association of "Winner Medical & Textile Ltd., Xishui", attached as Annex 3 has been issued to Xishui Winner.

6.1.8

All the approval documents as mentioned under this Article to have been handed over to the Parties by the competent examination and approval authority in charge of Xishui Winner.

6.2

The Parties shall use their reasonable endeavors to ensure that the conditions precedent to the effectiveness of this Agreement shall be fulfilled within 2 months after the date of this Agreement. In the event that these conditions precedent have not been fulfilled within 2 months after the date of this Agreement or such other later date as the Parties may agree in writing, then the Buyer may rescind this Agreement in accordance with Article .

6.3	Each Party shall bear the costs incurred in the fulfillment of the conditions precedent to the effectiveness of this agreement by each Party.

7.1	The Seller undertakes that during the period from the date of execution of this Agreement until the Closing, the management of Xishui Winner:

7.1.1

will not engage in any activity or enter into any commitment in this respect outside the ordinary course of business of Xishui Winner;

7.1.2

will carry on the business of Xishui Winner consistently and without interruption, in particular with respect to settlement of claims, collection of outstanding debts, personnel and related costs;

7.1.3

will not hire or commit to hire any regular employees unless otherwise agreed with the Buyer; and

7.1.4

will grant the Buyer access to Xishui Winner's books and records, contracts, corporate files, lawsuit files and other documents, to the extent reasonably required by the Buyer in order to evaluate Xishui Winner's business and financial position. The Seller shall notify the Buyer of any confidentiality obligations owed to third parties and shall communicate to the Buyer in a reasonable way of the contents of such documents which the Seller cannot disclose because of such obligations.

8.1	The Buyer represents and warrants to the Seller that as of the date hereof and as of the Closing:

8.1.1

The Buyer is a company organized and validly existing under the laws of the Hong Kong, and has all requisite power and authority to enter into this Agreement and to consummate the transactions contemplated thereby. This Agreement constitutes legal, valid and binding obligations of the Buyer.

8.1.2

The execution of this Agreement, the consummation of the transactions contemplated hereby and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under or conflict with, any agreement to which the Buyer is a party, the Articles of Association/Charter of the Buyer, any decree of any court or governmental body or arbitrator by which the Buyer is bound or any law, rule or regulation applicable to the Buyer.

8.1.3

All consents, approvals, authorizations and other requirements described by law or otherwise which must be obtained or satisfied by the Buyer in order to permit the consummation of the transactions contemplated by this Agreement have been obtained and satisfied.

8.1.4

No lawsuit, arbitration or other legal or governmental proceeding is pending or, to the Buyer's knowledge, threatened against it that would affect Buyer's ability to perform its obligations under this Agreement.

8.2	If any of the representations and warranties assumed by the Buyer in Article above is totally or partially incorrect, the Buyer shall be liable for all direct damages incurred by the Seller because of this incorrectness or breach. The liability for any indirect losses or damages shall be excluded.

9.1	The Seller represents and warrants to the Buyer that as of the date hereof and as of the Closing:

9.1.1

The Seller has a good title to the Transferred Equity and good title will vest with the Buyer upon assignment and transfer of the Transferred Equity pursuant to this Agreement, free and clear of restrictions, encumbrances or any third party rights whatsoever. The Seller has obtained all consents, approvals and authorizations in order to permit the consummation of the transactions contemplated by this Agreement. This Agreement constitutes legal, valid and binding obligations of the Seller.

9.1.2

The execution of this Agreement, the consummation of the transactions contemplated hereby and the fulfillment of the terms hereof will not result in a breach of any of the terms or provisions of, or constitute a default under or conflict with, any agreement to which the Seller is a party, the Articles of Association/Charter of the Seller, any decree of any court or governmental body or arbitrator by which the Seller is bound or any law, rule or regulation applicable to the Seller.

9.1.3

The Articles of Association of Xishui Winner and their amendments, enclosed in the Annex 4, are the currently valid Articles of Association of Xishui Winner. The revised Articles of Association as agreed between the Seller and the Buyer, are attached in the Annex 3.

9.1.4

The Seller is not a party to, subject to or bound by any agreement or judgment or decree of any court or governmental body which would prevent the execution or performance of this Agreement including all Annexes by the Seller or the transfer of the Transferred Equity pursuant to the terms in this Agreement.

9.1.5

The registered capital of Xishui Winner has been fully paid in as described in Preamble (C)and not been repaid to the Seller in whole or in part.

9.1.6

Xishui Winner is the legal and exclusive owner of the land use rights (basically 50 years) as described in the state land use right certificate and building ownership certificate attached hereto in the Annex 6. Xishui Winner has paid the total amount of the land use right grant fees and relevant taxes applicable in full, and the respective official receipts have been issued to Xishui Winner.

9.1.7

All of the payment obligations of Xishui Winner arising out of or related to any tenancy agreements (if any) entered into by Xishui Winner have been fulfilled.

9.1.8

The Annex of this Agreement contains a true, correct and complete list of all the employees of Xishui Winner and the salaries and wages applicable upon the execution of this Agreement.

9.1.9

All contracts or agreements concluded prior to the signing of this Agreement to which Xishui Winner is a party have been performed by Xishui Winner pursuant to the contractual terms and conditions.

9.1.10

Within the time and manner prescribed by law or. if it was not the case, without ensuing legal effects, Xishui Winner has filed all PRC national and/or local tax returns including Individual Income Tax returns for its staff and personnel and/or tax returns of foreign countries, having jurisdiction to levy taxes upon Xishui Winner and Xishui Winner has paid all customs duties and social security contributions and social benefits for its employees (except those "part time jobs" which are more or less free of social costs under PRC's rules) required by PRC laws and regulations. Up to the date of the Closing for which taxes, customs duties and social security contributions will become due, such taxes, customs duties and social security contributions have been paid in full.

9.1.11

No action, lawsuit or proceeding to which Xishui Winner is a party (either as plaintiff, defendant or any type of intervening party) is pending before any court or governmental agency, authority or body or arbitrator, and there is no action, suit or proceeding threatened against Xishui Winner.

9.1.12

Xishui Winner has upon Closing no liabilities or obligations of any nature except for those arisen from the ordinary course of business and except for the salaries, wages and other costs related to the employment of the employees for the calendar month in which the Closing takes place.

9.1.13

Xishui Winner has not entered into any license agreements (except the item mentioned under Article ) whatsoever.

9.1.14

Xishui Winner is under no regulations, stipulations or agreements obliged to erect any other buildings in addition to the existing buildings.

9.1.15

There are no other contracts resulting in material liabilities and entered into by Xishui Winner than those listed in this Article .

9.1.16

Xishui Winner has obtained all valid environmental and operational approvals and permits (including its own import and export license) required under PRC law necessary for its legally valid existence and the continuation of production as defined in its business scope.

9.1.17

With the exception of the existing license (not in writing) from the affiliated company of the Seller to permit Xishui Winner to use the trademark [Chinese character] (i.e. Wen Jian in Chinese)" as described in the trademark registration certificate attached hereto in the Annex 7, Xishui Winner does not own any patents, service marks and similar industrial property rights and there is no other license agreement regarding such industrial property rights and there are no infringement claims with respect to such industrial property rights.

9.1.18

The Seller undertakes that the affiliated company of the Seller will provide a written license to allow Xishui Winner to use the trademark mentioned in Article and will provide the Buyer with all necessary filing documents upon Closing.

9.1.19

The fixed and movable assets as listed in the Annex 8 are owned by and in the possession of Xishui Winner and there are no fixed and movable assets belonging to Xishui Winner but leased to a third party.

9.1.20

The Seller herewith assigns to the Buyer its 60% of all claims and rights which may arise or have arisen against Xishui Winner, including but not limited to rights to dividends and profits derived out of business commencing from 1 March 2005 and the Seller confirms that by virtue of such assignment the Seller's claims have been reduced to 40% against Xishui Winner.

9.1.21

All certificates, approvals and other official documents, all contracts, receipts and other accounting documents, all construction plans and all other files, no matter whether original or copy, will be and stay upon Closing in the possession of Xishui Winner. In the event that a document referred to in the foregoing sentence is missing the Parties shall use their best efforts to obtain such document.

9.1.22

The Seller herewith agrees that the Buyer may transfer any rights or obligations under this Agreement to any affiliated company of the Buyer.

9.1.23

All information (including but not limited to those translated into English language) given to the Buyer in the context of this Agreement is correct and complete, and the Seller has disclosed any information which is relevant for the decision of the Buyer to enter into this Agreement at all and at the terms and conditions provided for herein.

9.1.24

Between the date of signing this Agreement and the date of the issuance of the new business license as defined in Article above or the date of the successful increase of registered capital as defined in Article above, whichever is later, Xishui Winner shall not, except for the needs of normal production operations, entered into any contract which incurs liability exceeding fifty thousand (RMB 50,000); neither the land, the land-use right as defined in Article above refers to, nor any buildings or structures on such land have been damaged or destroyed, nor other changes been made. However, indispensable and urgent expenditures exceeding fifty thousand (RMB 0) outside the scope of normal production operations and required by the course of business may only be made after obtaining the written approval of the Buyer.

9.1.25

The Seller has ensured that the bankers of Xishui Winner are notified on the equity transfer if any existing agreement requires such disclosure prior to any equity transfer.

9.2	If any of the representations and warranties assumed by the Seller in Article above is totally or partially incorrect, the Seller shall be liable for all direct damages incurred by the Buyer and/or Xishui Winner accordingly. The liability for any indirect losses or damages shall be excluded.

9.3

Notwithstanding Articles 9.1 and 9.2 above, the Seller undertakes to fully indemnify Xishui Winner and the Buyer in case Xishui Winner is or may be held liable by any PRC authorities or any third parties for any and all liabilities of Xishui Winner arising out of or related to Xishui Winner's operations prior to 1 March 2005, including but not limited to tax liabilities, labor liabilities (overtime payment, social insurance contributions, annual leave payments and etc.), land use liabilities, contractual liabilities.

10.1

If any of the representations and warranties of either Party made in Article above and Article above are found to be untrue, misleading or incorrect, or if any Party defaults its obligations under this Agreement and fails to remedy the same within 30 days after receiving a written notice from the other Party to do so, then the other Party shall have the right to terminate this Agreement by written notice without liability on its part but without prejudice to any other rights it may have under this Agreement and / or the laws of the PRC.

10.2	This Agreement may be terminated by the Buyer by giving written notice to the other if:

10.2.1

this Agreement has not been approved by the responsible authorities in the PRC within two (2) months of the date of execution of this Agreement or such later date as the Parties may agree in writing, or

10.2.2

the conditions precedent have not all been fulfilled within two (2) months of the date of execution of this Agreement or such later date as the Parties may agree in writing.

10.3

In the case of a termination pursuant to Articles 10.1 or 10.2 above, each Party shall have no further obligations and/or rights resulting from this Agreement and/or from the previous negotiations with exception of those obligations and/or rights which have arisen prior to the termination date. However, Articles 12, and shall remain effective.

10.4	The Parties agree to use their best endeavours to solve any and all legal and/or administrative problems which may impede the accomplishment of the matters contemplated under this Agreement.

11.1

Each Party shall bear the costs and expenses incurred during and for the preparation of this Agreement, in particular fees of advisors such as attorneys and engineers engaged by such Party. The stamp duty and any fees occurring from or related to the implementation of this Agreement, if any, unless such fees shall be borne by the Seller and/or the Buyer as set forth in the relevant applicable PRC laws and regulations, shall be equally shared by the Parties. The registration fees, if any, shall be borne by Xishui Winner.

11.2	Each Party shall bear the costs incurred in the fulfillment of the conditions precedent to the Closing to be fulfilled by each Party respectively.

11.3

All taxes related to the transaction, except for the stamp duty as provided in Article above, shall be borne by the respective Party in accordance with the applicable laws. In case any Party is required under the relevant PRC laws to act as a withholding agent for any taxes arising out of or related to any payment to the other under this Agreement, then the Party's fulfillment of such withholding tax obligation shall not be recognized as a breach of this Agreement.

12.1	The formation, validity. interpretation and implementation of this Agreement, and any disputes arising out of or related to this Agreement, shall be governed by the laws of the PRO.

12.2	All disputes, controversy or claim arising from the execution of, or in connection with this Agreement, or the breach termination or invalidity thereof, shall be settled through friendly consultations between the Parties.

13.1

Any notice or written communication provided for in this Agreement from one Party to the other Party shall be made in writing in English and sent by courier service delivered letter or by facsimile with a confirmation copy sent by courier service delivered letter. The date of receipt of a notice or communication hereunder shall be deemed to be seven (7) days after the letter is given to the courier service or three (3) working days of the receiving party after sending in the case of a facsimile, provided it is evidenced by a confirmation receipt and the confirmation letter is sent. All notices and communications shall be sent to the appropriate individuals and addresses set forth below, until the same is changed by notice given in writing to the other Party.

13.2

This Agreement including all Annexes supersedes any other agreement, whether written or oral, that may have been made or entered into by the Buyer and the Seller prior to the execution of this Agreement relating to the matters contemplated hereby. This Agreement constitutes the entire agreement by and between the Parties and there are no further agreements or commitments by or between the Parties. Any amendments must be made in writing. This requirement shall also apply to the amendment of the written form requirement.

13.3	If one or several provisions of this Agreement is or becomes invalid or unenforceable, or if this Agreement is incomplete, the validity and enforceability of the other provisions of this Agreement shall not be affected thereby.

13.4

All information and data exchanged between the Parties in respect of the transfer of the Transferred Equity in Xishui Winner shall remain confidential unless they are publicly known or become publicly known without the fault of the other Party. The Parties agree that this clause does not affect the right of either Party to disclose such information and data to any third party which is by law obliged to keep such information and data confidential, in particular professional advisers and bank personnel. The Parties further agree that the Buyer is permitted to disclose to the Chairman of the supervisory board of Lohmann & Rauscher GmbH all information or data, which may at its discretion, facilitate the transaction.

13.5	Neither Party shall issue any press release or otherwise communicate with any news medium concerning the transfer of the Transferred Equity without the prior written consent of the other Party.

13.6	Any conversion of RMB to US$, if necessary, shall be made on the basis of the intermediate exchange rate between RMB and US$ announced by the People's Bank of China on the date payment in RMB is effected (Article 3; payments are in US$).

13.7	To the extent permitted by PRC law, failure or delay on the part of either Party hereto to exercise a right under this Agreement and the Annexes hereto shall not operate as a waiver thereof, nor shall any single or partial exercise of a right preclude any future exercise thereof.

13.8	Except as otherwise provided herein, this Agreement may not be assigned in whole or in part by either Party without the prior written consent of the other Party.

13.9

This Agreement is executed in the Chinese language in five (5) originals and in the English language in five (5) originals with the English and the Chinese version equally binding. Each Party shall hold one (1) set of each language version. The other sets shall be used for the examination and approval authorities.

2.1	First Investor ("Investor A") :-

2.2	Second Investor ("Investor B"):-

3.1	The name of the Company in Chinese shall remain as: [Chinese characters]

3.2	Investor B will provide to the Company the right to use in its corporate name and in the course of trade the trade names and trademark [Chinese character] i.e. ”Wen Jian in Chinese " royalty free.

7.1	The business scope of the Company shall be the development, production, sale distribution and servicing of such medical disposal product such as surgical dressing, medical gauze products, non-woven face mask, non-woven surgical gowns, drapes, non-woven caps etc..

7.2	Products of the Company shall be medical health materials and protection items ("Products").

7.3	The Products shall be mainly for export outside the PRC as well as for the domestic market in the PRC. The Company shall only act as private label manufacturer unless the Investors come to a new arrangement.

7.4	The Company may establish branch offices and representative offices inside or outside the PRC with the consent of the Board of Directors and approval from the relevant PRC governmental authorities.

10.1	The manner, amount, and ratio of contribution to the registered capital:

11.1	The Investor shall make their capital contribution, as defined in Article 10.1, within thirty (30) days after the date of issuance of the new business license of the Company in accordance with the terms of the Contract.

12.1

Capital contributions shall be verified by a registered certified public accountant of the PRC, who shall issue a report verifying the capital contributions of the Investors within sixty (60) days after the respective capital contribution has been made. The Company, on the receipt of satisfactory verification reports, shall issue a Certificate of Capital Contribution to each of the Investors.

12.2

If any assessed value exceeds the value set forth in Article 10.1, any surpassing amount shall be treated as capital surplus of the Company. Any assessed value less than the value set forth in Article 10 shall be covered by the respective Investor in cash in US dollars within 20 days after receipt of the capital contribution certificate.

13.1	During the duration of the Company, the Investors may not reduce the registered capital of the Company, and neither Party may reduce its amount of capital contribution if not otherwise permitted by the PRC laws and regulations.

13.2	The registration procedures for changes due to increase or transfer of registered capital shall be carried out with the competent department of the Administration of Industry and Commerce.

13.3

During the duration of the Company, neither Investor may sell, assign, transfer , mortgage, pledge or in any other way encumber its share of the registered capital or part thereof to a third party without the prior written consent of the other Investor (unless the procedure mentioned under Chapter 8 hereof has been followed ) and approval of the original examination and approval authority..

16.1	The Board of Directors shall be the highest organ of authority of the Company and shall decide all major policy issues of the Company.

16.2	The main functions of the Board of Directors are to:

1.	Approve the important reports submitted by the General Manager;

2.	Approve the annual financial reports, income and expenditure accounts, profit and loss accounts, and to approve proposals for the distribution of the profits for the year;

3.	Pass important rules and regulations of the Company;

4.	Decide in establishing branch organizations;

5.	Decide on any formation of joint ventures or any merger with any third party;

6.	Approve any amendment or alteration of these Articles of Association;

7.	Apply for dissolution of the Company in case of expiration or early termination;

8.	Approve the appointment of and engage the General Manager, Deputy General Manager, Chief Accountant, Deputy Chief Accountant, other senior staff and Auditors;

9.	Approve the salary of the high ranking administrative personnel of the Company;

10.	Being in charge for the liquidation matters upon the expiration or early termination of the Company;

11.	Any other matter which shall be decided by the Board of Directors according to the Contract between the Investors or the Articles of Association and any other important matters that require the decision of the Board of Directors:

12.	Price structure, staff planning.

18.1	The Board of Directors shall convene at least once every year. The meeting shall be called and presided over by the Chairman of the Board. The Chairman of the Board shall call and preside over a special meeting of the Board of Directors after receiving the request made by any two (2) Directors.

18.2

If the Chairman of the Board is unable to attend a meeting, he shall appoint the Vice-Chairman to preside at the meeting, and if the Vice-Chairman is unable to attend, the Chairman shall appoint another Director to preside over the meeting. Notice of each Board of Directors meeting specifying the date, time and place of a Board meeting together with relevant papers including the proposed agenda shall be given in writing and shall be delivered by the Chairman of the Board to each Director not later than thirty (30) days prior to the date set for such meeting. Notice shall be given by telex or telefax to the Directors residing outside Hong Kong.

18.3

Complete and accurate written minutes of all meetings in Chinese and English language shall be made for each Board meeting by the Chairman of the Board and signed by all Directors who attended the meeting in person or by proxy right after each meeting. Minutes of all meetings shall be placed on file and copies sent to the Investor within thirty (30) days after each meeting.

18.4	The meetings of the Board of Directors shall generally be held at the legal address of the Company or Hong Kong, unless otherwise agreed by the Board of Directors.

18.5

A quorum of (two-thirds) Directors is required for a meeting of the Board of Directors. If a quorum is not met at such meeting, the Chairman shall call another meeting. If again the quorum is not met at such meeting a quorum shall not be required if the chairman so informed all members of the Board of Directors when calling the meeting. Any decision adopted at a Board meeting at which a quorum, if necessary, was not present shall be invalid.

18.6

If any Director is unable to attend a meeting, he may by a written proxy designate another person to attend the meeting in his place and vote on his behalf. If a Director who is unable to attend a meeting fails to so designate another person, he shall have no rights to participate in, or vote at such meeting.

18.7	The quorum of the Board of Directors may by written consent waive the notice requirements for meetings.

18.8

The Board of Directors shall have the right to adopt resolutions without meeting. pursuant to an unanimous written consent resolution of all Directors of the Board]. In such case, the resolution shall be made in writing, including facsimile, in which case the circulation of the original for signature shall immediately follow but the resolution be deemed passed upon signature by the necessary number of Directors on the facsimile.

18.9	The first meeting of the Board of Directors of the Company shall be held within sixty (60) days after the issue of the new business license of the Company.

1.	changes or amendment to the Articles of Association of the Company;

2.	termination or dissolution of the Company;

3.	any increase or decrease in the registered capital of the Company or assignment of a share of such registered capital or a part thereof;

4.	merger of the Company with another economic entity and the division or restructuring (except for internal reorganization) of the Company;

5.	approval of annual financial budget plan for operation of the business of the Company (but if no unanimous agreement, then the annual financial budget shall remain the same as the one adopted in the preceding year);

6.	any material change in the Company's business scope, strategy and nature;

7.	any change in the profit distribution plan of the Company from the provision mentioned in Article 52.2 ;

8.	any decision to provide a guarantee or other security (including creation of mortgage) for the benefit of a third party, to give a loan to a third party, or to invest in other entity;

9.	approval for obtaining a loan for the Company in excess of RMB 1,000,000 in a single or repeated transaction;

10.	approval for pricing principle and payment method for contracts that the Company signs with any of its shareholder(s), directors or other affiliated parties;

11.	approval for employment of senior management personnel by the Company with yearly remuneration of RMB 100,000.00 or above;

12.	matters which require signatures of any two directors.

20.1

The members of the Board of Directors shall not be entitled to any remuneration for services rendered to the Company. Each of the Investors shall be responsible to pay for the expenses incurred by its own nominated directors for attending the board meetings including travel expenses, accommodations and other related expenses.

20.2	No member of the Board of Directors shall have any personal liability for any act performed in his capacity as Board member except for such acts as would constitute violations of the laws of any jurisdiction to which the Company or the relevant Board member is subject to.

21.1	The Company shall establish a management office which shall be responsible for its daily management. The management office shall have a General Manager, and two Deputy General Managers if business so requires.

21.2	The General Manager and Deputy General Managers shall be nominated by the Investors and appointed by the Board of Directors and their maximum term of office shall be four (4) years.

21.3	The Board of Directors may reappoint or revoke the appointment at any time upon the consent of the Investor.

21.4	The management office shall proceed in accordance with the Articles of Association.

22.1

The General Manager shall have the responsibility of implementing the general policies and decisions of the Board of Directors, and of organizing and conducting the daily management of the Company and, within the scope empowered to him by the Board of Directors, to represent the Company in dealing with third parties.

22.2	The Deputy General Manager shall be responsible to and report to the General Manager.

22.3	Within fifty (50) days after the end of each fiscal year, the General Manager shall report to the Board of Directors on the state of the business during such year and submit a final annual financial report.

28.1

Labor contracts covering the hiring of workers, their qualifications and testing, employment, dismissals, resignation, salaries and wages, labor insurance, welfare, rewards and bonuses, safety, labor discipline, and other matters concerning the staff and workers of the Company shall be based on the "Foreign Investment Enterprises Labor Management Provisions", the "PRC Labor Law", as supplemented, and other relevant promulgated rules and regulations of the PRC and the Hubei Provincial Government.

28.2	The Company shall sign labor contracts with individual staff and workers and shall submit a form of them to the local labor management bureau for record.

28.3	Investor B undertakes to use its best endeavours to retain the existing personnel in charge of the operation and production in the Company to continue their employment.

30.1	The qualification and number of staff and workers of the Company shall be in accordance with the operating needs of the Company.

30.2	The salary of the staff and workers shall be increased corresponding to the proposal made by the General Manager having regard to the development of business of the Company and local wages level , but subject always to final approval of the Board of Directors.

33.1	Investor B further agrees to do the following when the management of the Company so requires:-

35.1

If one Investor ("Disposing Party") wishes to assign, or otherwise transfer all or any part of its share of the registered capital to a third party, the other Investor ("Other Party") shall have a pre-emptive right to purchase the entire share of the registered capital ("Offered Equity") of the Disposing Party. The Disposing Party must first offer the whole of its equity interest to the Other Party on terms and conditions no less preferential than those offered to the third party and the price of the Offered Equity shall be determined in accordance with Article 37 ("Offered Price") .

35.2	In the event that:

38.1	The Investors agree that any increase of registered capital or share transfer carried out in accordance with Article 37 shall be completed within 12 months of the First Notice issued by Investor A under Article 37.

38.2

The right given to Investor A under Article 37 shall be repeated whenever the business turnover of the Company generated by Investor A reaches 80% again after any increase of registered capital and there shall be no limitation on the number of times for Investor A to exercise its rights given under Article 36.

39.1	It is the plan that the Products shall mainly be sold for overseas market outside the PRC (excluding Hong Kong, Taiwan and Macao).

39.2	The Company shall only be allowed to sell its Products directly to L&R Group and Winner Group (depending on the circumstances), and shall not be allowed to sell through any other third party.

39.3

Each Investor shall use its best endeavours to bring business to the Company in order to fill up the Company's production capacity. but Investor A has already informed Investor B about L&R Group's current activities in having a supply arrangement for OR drapes, OR gowns and masks from a factory in Kunshan (near to Shanghai) and this shall not be affected. Insofar as Winner Group has or obtains any orders for producing private label products which the Company is capable of handling within its business scope, then Investor B agrees to procure that all such production orders be given to the Company exclusively and not to any other party whether inside or outside Winner Group as long as the production capacity of the Company could permit acceptance of orders.

39.4	The pricing policy of the Company's products shall be the same whether it is for sale to Winner Group or L& R Group. The Board of Directors shall determine the sales prices for the products for markets outside the PRC and/or in Hong Kong, Taiwan and Macao.

42.1	The Company shall pay taxes in accordance with the stipulations of Chinese national laws and regulations, provisions of the Hubei Provincial Government and other relevant rules and regulations.

42.2

The Investors' share of profit and other income shall be exempted from taxation in accordance with the "Foreign Investment Enterprises and Foreign Enterprises Tax Law of the People's Republic of China", as supplemented, the Encouragement Provision and other relevant rules and regulations, and shall be permitted for foreign remittance according to the Wholly Foreign Owned Enterprise Law.

42.3	The Company has been approved by the relevant tax authorities that it shall be completely exempted from income tax in its first and second profit-making years and be allowed a fifty-percent (50%) reduction in its third to fifth profit-making years,

45.1	The fiscal year of the Company shall be the calendar year, from January 1 s' to December 3151. All vouchers, receipts, financial statements, statistical and other reports and account books prepared by the Company shall be written in Chinese and English.

45.2	The first fiscal year of the Company shall be deemed to start from 1st March 2005 upon issuance of the new business licence of the Company, and shall end on December 315' of2005.

46.1	The financial and accounting system to be adopted by the Company shall be in accordance with international accounting standards and relevant laws, regulations and rules of the PRC governing finance and accounting systems and shall be reported to the relevant financial and tax bureaus.

46.2	Accounting statements shall also be prepared in accordance with international accounting standards and may be stated in a currency as requested by the Investor.

46.3	Assets of the Company shall be depreciated over a period of years mentioned below [starting fromis' March 2005:

50.1	The Company shall open with one or more banks authorized to do business in the PRC, RMB and foreign exchange accounts on the strength of its "Foreign Investment Enterprises Foreign Exchange Registration Certificate".

50.2	The Company may after obtaining the approval of the State Administration for Foreign Exchange, if an approval is requested by the relevant PRC laws and regulations, open an account with a bank outside the PRC or in Hong Kong, Taiwan or Macao.

50.3

The Company has the responsibility to submit applications to the relevant Chinese authorities for the approval of remittance in foreign exchange in order that dividends and other payments to be made to the Investors, payments for principal of and interest for foreign bank loans, payments for salaries and other legitimate income of the expatriate personnel, payments for purchase abroad, and all other expenses which must be paid in foreign exchange, can be freely transferred outside the PRC.

51.1	All matters concerning foreign exchange transactions of the Company shall be dealt with in accordance with the "Regulations of the People's Republic of China on Foreign Exchange Control" and other relevant laws and regulations in effect.

51.2

If, as a consequence of modifications in the currency system of the PRC at any time throughout the duration of the Company, other or additional restrictions on the convertibility of Chinese currency come into force, the Company shall ensure that it is able to make all payments which it is required to make in foreign exchange, and shall exert its best efforts to ensure that profits distributed to the Investors and all other payments to be made to the Investor are made in foreign exchange or in RMB readily convertible into foreign exchange which the Investors may freely repatriate.

51.3	Any costs incurred relating to the procurement of foreign exchange, shall be borne by the Company.

51.4	As required by PRC law, all payments to be made by the Company shall be made and settled in Renminbi, unless incurred outside the PRC.

52.1

The Company's annual profit shall be subject to taxation in accordance with relevant laws and as specified in Article 42. After making allocations to reserve funds, expansion funds and funds for staff and worker welfare and bonuses under Article 44, the Board of Directors shall declare the remainder as net profit for that year, which shall be declared and paid to the Investors according to the dividend policy under Article 52.2.

52.2	The Investors agree that the dividend policy of the Company shall be as follows:

52.3

When profits are distributed to the Investor, the Investors may have such profits remitted in Euro or United States Dollars by telegraphic transfer to the bank and account number designated by the Investor within ten (10) days after the declaration of profit distribution after deduction of Chinese taxes, if any, in accordance with the relevant tax laws of the PRC, or transferred on the Investor's RMB account respectively.

54.1

The Investors agreed that only if any of the following conditions arises, the Company may be terminated by either Investor prior to its expiration date by written notice to the other Investor and the Board of Directors shall submit an application for dissolution to be approved by the relevant examination and approval authority:

1.	If the Company suffers heavy losses for a long lasting period and the Investor decides to dissolve it;

2.	If the Company is unable to continue operations for a period of 4 months due to an event of force majeure, as defined in Article 57;

3.	If the Company is unable to attain the objectives stated in these Articles of Association and has no reasonable prospects for development;

4.	If the Company goes bankrupt;

5.	If the assets of the Company are expropriated or requisitioned;

6.	if the Investors mutually agree to dissolve the Company;

7.	the Board of Director resolve not to extend the duration of the Company upon its expiry of its term.

54.2	Only if any of the following conditions arises, the Contract may be terminated prior to its stated expiration date by written notice of the non-defaulting Party to the other Party:

54.3	Termination of the Contract shall be without prejudice to the accrued rights and obligations of the Parties, including, but not limited to, claims of damages directly caused by the failure of a Party to fulfill its obligations under the Contract.

54.4	Upon termination of the Contract under Article 54.2, the non-defaulting Party shall be entitled to acquire the other Party's share or to sell its share to the other Party or a third party, at a price determined according Article 37 and according to the rules under Article 35.

54.5	Upon termination of the Contract under Article and of the non-defaulting Party does not exercise its rights under Article 54.2, the members of the Board of Directors shall meet and vote in favor of dissolution.

54.6	Upon expiration or termination of the Contract the relevant provisions of the Contract shall remain applicable to the settlement of claims arising from or in connection with the Contract.

55.1

Upon expiration of these Articles of Association or their early termination pursuant to Article 54 the Company shall be liquidated in accordance with the "Methods on Liquidation of Foreign Investment Enterprises" dated July 9. 1996 ("Liquidation Methods"). In case of ordinary liquidation the Board of Directors shall, within fifteen (15) days upon the date of commencement of the Liquidation procedures, appoint a Liquidation Committee consisting of at least three (3) members to be selected from the members of the Board of Directors [and/or the members of the management office and/or other experts]. The Board of Directors shall appoint a Chairman of the Liquidation Committee.

55.2	In case of liquidation the procedures shall be handled in accordance with the Liquidation Methods.

55.3

The tasks of the Liquidation Committee are: to conduct thorough check of the property of the Company, its creditors, rights and liabilities, to work out the statement of assets and liabilities and the list of property, to formulate a liquidation plan, to prepare the final liquidation report and all other tasks as stipulated in the Liquidation Methods. All these shall, in case of an ordinary liquidation, be carried out upon approval of the Board of Directors and in case of a special liquidation under the supervision of the Company's examination and approval authority.

55.4	During the process of liquidation, the Liquidation Committee shall be the legal representative of the Company in suing and being sued.

55.5	The Company shall be liable for its debts with all its assets. The value of the land use rights of the Company shall be considered an asset.

55.6	The Liquidation Committee shall solicit offers for selling the business of the Company, or assets of the Company.

55.7	Upon the end of liquidation procedures the books of the Company shall be left with the organization designated by the examination and approval authority of the Company.

1.	Management regulations. including the powers and functions of the management organizations and its working rules and procedures;

2.	Rules for the staff and workers;

3.	System of labor management and salary;

4.	System of work attendance record, promotion and awards and penalty for staff and workers;

5.	Detailed rules of staff and workers' welfare;

6.	Financial system;

7.	Liquidation procedures upon the dissolution of the Company;

8.	Other necessary rules and regulations (including operation manual on Product price list).

57.1

If any of the Investors or the Company has been prevented from performing its obligations under these Articles of Associations because of an event of force majeure such as earthquake, storm, flood, fire, other acts of nature, epidemic, war, riot, hostility, public disturbance, acts of public enemies, prohibition or acts by a government or public agency, strikes or other labor disputes or work stoppage, or other events beyond the control of the Investor or the Company, and their occurrence is unpreventable and unavoidable, the Investor so prevented shall notify the Company or the Company so prevented shall notify the Investor by telefax, telex or cable in writing within fourteen (14) days after the occurrence of such event of force majeure, act to mitigate damages, if possible, and within thirty (30) days thereafter provide detailed information of the event, a certificate of evidence thereof issued by the relevant authorities and a statement explaining the reason for its inability to perform all or part of its obligations under these Articles of Association.

57.2

If an event of force majeure occurs, neither the Investor nor the Company shall be responsible for any damage, increased costs or loss which any of the Investors or the Company may sustain by reason of such failure or delay of performance. The party claiming force majeure shall take appropriate measures to minimize or remove the effect of force majeure and, within the shortest possible time, attempt to resume performance of the obligation(s) affected by the event of force majeure.

57.3	The Investor shall decide whether to modify or terminate the Company according to the effects of the event of force majeure.

58.1

If an Investor fails to pay all or part of its capital contribution when due in accordance with the Contract, such party shall pay as compensation for default to the Company 0.5 percent (D/D) per month for during the first 6 months of delay and thereafter at one percent (D/D) per month of the amount or portion thereof or of the value of the assets it has not contributed commencing from the first day of the month following the date such contribution was due.

58.2

The Investor that breaks any of the warranties set out in the Contract or fails to fulfill all or part of its obligations under the Contract and its Annexes or these Articles shall bear the losses [directly] caused to the Company and to the other Investor by such failure. Should such failure be attributable to the fault of both Investors, they shall be liable therefore according to their respective degree of fault.

58.3

A failure or delay by one Investor to require the enforcement on any provision of the Contract or these Articles shall not be construed as a waiver by such Investor of any of its rights nor shall it affect the validity of the Contract or these Articles or any provision thereof at any time thereafter.

59.1

The Investors shall keep the contents of the Contract , their negotiations and their project including information relating to management methods, technology, know-how, client lists, sales and marketing plans and data and financial affairs ("Confidential Information"), confidential and shall not disclose any part thereof to any entity or third party, except as required to obtain relevant government permits or licenses and except if prior written permission has been obtained from the other Investor; the Investors shall take all necessary care to prevent third parties from obtaining knowledge or making use in any way of Confidential Information.

59.2	The Investors shall take all such steps as shall be reasonably necessary at their own expense, to prevent or stop every violation of this secrecy obligation by a member of their personnel.

59.3	Confidentiality and non-competition contracts shall be signed by the Company with such senior employees for which either one of the Investors finds it necessary or appropriate.

59.4	This secrecy obligation shall apply for the duration of the Company and a period of five (5) years after its dissolution or termination.

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