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Sample Business Contracts

Letter of Intent - Cheung Laboratories Inc. and Gao Yu Wen

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                                 LETTER OF INTENT


     This  Letter of Intent  is made  this  27th day of May,  1996 in  Columbia,
Maryland between Mr. Sun Shou Yi ("Mr.  Sun"),  representative of Mr. Gao Yu Wen
("Mr.  Gao") and Cheung  Laboratories,  Inc., a public company  incorporated  in
Maryland ("CLI").

                                    RECITALS

     WHEREAS, in February 1995, Mr. Gao subscribed to purchase 20,000,000 shares
of the common stock of CLI,  4,000,000  shares for $2,000,000 US cash (the "Cash
Shares")  and  16,000,000  shares for a 9.6%  interest in Aester  Fine  Chemical
Company  (the "Aster  Shares")  and has  purchased  both the Cash Shares and the
Aester Shares;

     WHEREAS,  the  purpose of the  transaction  with Mr. Gao was to utilize the
facilities  to Aester to create a cosmetic  business in China with joint venture
partners that would be beneficial to CLI and Mr. Gao;

     WHEREAS on May 10, 1995, CLI deposited  $700,000 US cash with Mr. Gao in an
investment  account for Mr. Gao to manage and return an annual  interest rate of
17% and $190,000 US of the account has been  returned to CLI,  leaving a balance
owing of $510,000 plus interest;

     WHEREAS,  despite  significant  efforts  by Mr. Gao and CLI,  the  cosmetic
business  objectives  are unlikely to be achieved due to the impaired  health of
Mr. Gao;

     WHEREAS,  Mr. Gao has incurred expenses in operating an Hong Kong office to
pursue the cosmetic  business  objectives and other business for CLI and has not
been reimbursed for such expenses;

     WHEREAS,  Mr. Sun has taken over,  as a principal,  the Aester  Shares from
Mr.Gao, and represents Mr. Gao with regard to the Cash Shares and the investment
account; and


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     WHEREAS,  Mr. Gao is not in a position to pursue the cosmetic business plan
due to his  impaired  health and CLI is not in a position to pursue the cosmetic
business  plan,  as it will  utilize its  resources  to pursue its  hyperthermia
business:

     NOW,  THEREFORE,  in consideration of furthering their respective  business
interests, Mr. Sun, as the representative of Mr. Gao, and CLI do hereby agree as
follows,  with the  intention  that this Letter of Intent will be binding and be
implemented under the terms of a definitive contract to be prepared in Hong Kong
and  executed  by the  parties on or before  June 8, 1996,  which shall serve to
provide the details for closing the transaction, but shall not vary the terms of
this Letter of Intent.

         1. The above  recitals  are hereby  incorporated  in and made a part of
this Agreement.

         2. CLI agrees to purchase all of the Cash Shares and pay Mr. Gao or his
designated  recipient  on  or  before  November  30,  1996,  a  sum  total of US
$2,200,000 (four million shares at $0.55/share).

         3. Upon signing of the  definitive  contract on or before June 8, 1996,
the  transactions  pertinent to the Aester Shares and Cash Shares are considered
rescinded. Mr. Gao (or his representative) will deposit both the CLI Cash Shares
and the Aester Shares in an escrow  account held by a mutually  agreeable  third
party.  The Aester Shares and Cash Shares are held in escrow as  collateral  for
full payment of the $2,200,000 mentioned in paragraph above. The Cash Shares and
the Aester Shares shall be returned  immediately to CLI once the full payment of
$2,200,000 has been made.

         4. The closing of the transaction  contemplated by paragraphs and shall
occur on or before  November 30 in Hong Kong under the  procedures  agreed to in
the  definitive  contract.  At closing,  Mr. Gao (or his  representative)  shall
deliver  the Cash  Shares and the Aester  Shares  free and clear of any liens or
encumbrances and CLI will deliver a cash sum total of US $2,200,000.

         5. Mr. Gao will provide an expense  accounting  promptly to CLI for the
expenses  incurred in work on the cosmetic  business and other businesses of CLI
and,  following  review of the  accounting by CLI,  will be reimbursed  from the
investment  account for the  expenses  approved by CLI.  CLI is to exercise  its
reasonable  business  judgment.  This expenses  accounting shall be completed by
both parties by June 15, 1996 and the investment  account balance fully resolved
by such date.

         6. This the full agreement of the parties concerning the subject matter
and is to be implemented by the definitive contract described above. This Letter
of Intent shall be  interpreted  and enforced under the internal law of Maryland

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the English version of this Letter of Intent shall control its terms.  The terms
and conditions defined in the definitive contract to be signed on or before June
8, 1996 shall govern.

         IN  WITNESS  WHEREOF,  intending  to be bound,  the  parties  do hereby
execute this Letter of Intent.

                                         CHEUNG LABORATORIES, INC.



                                         By:/s/__________________________

                                            MR. GAO'S REPRESENTATIVE



                                         By:/s/__________________________





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                              REDEMPTION AGREEMENT


         THIS REDEMPTION AGREEMENT (the "Agreement") is  made  this 6th  day  of
June, 1996 in Hong Kong between Mr. Sun Shou Yi ("Mr.  Sun"),  representative of
Mr.  Gao Yu Wen ("Mr.  Gao") and Cheung  Laboratories,  Inc.,  a public  company
incorporated in Maryland, USA ("CLI" and/or the "Company").

                                    RECITALS

         WHEREAS,  on the 27th day of May,  1996,  the  parties  entered  into a
binding Letter of Intent for CLI to redeem 20,000,000 shares of the common stock
of CLI from Mr.  Gao under the terms and  conditions  set forth in the Letter of
Intent,  such terms and conditions to be fully  implemented  by this  Redemption
Agreement.

         NOW,  THEREFORE,   in  consideration  of  furthering  their  respective
business interests, Mr. Sun, as the representative of Mr. Gao, and CLI do hereby
agree as follows:

         1.       The  Letter  of  Intent   dated  May  27,  1996,   is   hereby
incorporated in and made a part of this Agreement.

         2.       Mr.  Sun  and  CLI  do  hereby  jointly  appoint Leung To Kwan
Pauline,  solicitor,  as the escrow agent ("Escrow  Agent") to carry forth those
responsibilities set forth in this Agreement to be executed by the Escrow Agent.
The attached  Escrow  Agreement shall be executed by Mr. Sun, CLI and the Escrow
Agent.

         3.      CLI does hereby  rescind and renounce the 9.6%  interest it has
held in Aester Fine Chemical  Incorporated  Limited, a corporation  incorporated
under the laws of China  ("Aester") and Mr. Sun does hereby rescind and renounce
the  20,000,000  share  interest  which Mr.  Gao has held in CLI.  The books and
records of CLI shall show that the 20,000,000 CLI shares  previously held by Mr.
Gao have been  rescinded  and the books and records of Aester shall reflect that
the 9.6% interest previously held by CLI has been rescinded,  all as of the date
that CLI delivers US $2,200,000 to Mr. Sun as described in this Agreement.

         4.      Mr. Sun shall deliver to the Escrow Agent, within ten (10) days
of execution of this Agreement, the 20,000,000 CLI shares previously held by Mr.
Gao and such shares  shall serve as security  for the  obligations  of CLI to be
performed under this Agreement (as described in paragraph  below).  If CLI shall


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fail to perform its  obligations  under this  Agreement by November 30, 1996 (as
set forth in paragraph below), a penalty of 3/4% per month shall be added to the
amount payable by CLI, it being the intention of the parties that the payment be
made  and the CLI  stock  be  released  to CLI.  If CLI  fails  to  perform  its
obligations  after three months past  November  30, 1996,  the Escrow Agent will
return the 20,000,000 shares to Mr. Sun for his disposition.

         5. Within ten (10) days of the execution of this  Agreement,  CLI shall
deliver to the  Escrow  Agent all  evidence  of CLI's  9.6%  interest  in Aester
previously  held by CLI.  The  Escrow  Agent  shall mark such  documentation  as
rescinded and cancelled under this Agreement and transmit such  documentation to
Mr. Sun.

         6. On or before the close of business on November 29, 1996 in Columbia,
Maryland,   USA,  CLI  shall  wire   transfer  $2.2  million  (US)  pursuant  to
instructions provided by Mr. Sun. Upon confirmation by CLI's bank that such wire
transfer has been  initiated  by the bank,  CLI shall have fully  performed  its
obligations   under  this   Agreement.   CLI's  bank  shall  send  by  facsimile
transmission  to the  Escrow  Agent  evidence  of  having  initiated  such  wire
transfer.  Upon  receipt by such  notice,  the Escrow  Agent  shall  release the
20,000,000 shares of CLI stock to CLI.

         7. Mr. Gao has given  notice to the Company that he will not be able to
serve on the Board of  Directors  and CLI shall  accept this notice as Mr. Gao's
resignation  from the  Board of  Directors  of CLI,  effective  the date of this
Agreement.  Mr. Gao will provide an expense  accounting  promptly to CLI for the
expenses  incurred in work on the cosmetic  business and other businesses of CLI
and,  following  review of the  accounting by CLI,  will be reimbursed  from the
investment  account for the  expenses  approved by CLI.  CLI is to exercise  its
reasonable  business  judgment.  This expenses  accounting shall be completed by
both parties by June 15, 1996, and the investment account balance fully resolved
by such date.  After  signing this  Agreement,  Mr. Gao will transfer the voting
power of his shares to Dr. A. Cheung,  the  representative of CLI. It is further
acknowledged  that upon signing this Agreement,  Mr. Gao and his  representative
will no longer be  financially  and legally  responsible to the operation of CLI
business.

         This Agreement reflects the full understanding of the parties and shall
be  interpreted  and enforced  under the internal laws of the State of Maryland,
USA, and the English version of this Agreement shall control its terms.


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         IN WITNESS  WHEREOF,  the  parties,  intending  to be bound,  do hereby
execute this Agreement as of the date above written.

WITNESS                                         CHEUNG LABORATORIES, INC.



/s/_________________________                    By: /s/_______________________


                                                    MR. SUN SHOU YI, AS
                                                    REPRESENTATIVE OF MR. GAO
                                                    YU WEN



/s/_________________________                    By: /s/_______________________
                                                    Mr. Sun Shou Yi

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