TERM SHEET FOR REDEMPTION OF CONVERTIBLE NOTES
TERM
SHEET
FOR REDEMPTION OF
CONVERTIBLE
NOTES
This
Term
Sheet is entered into by and among Kiwa
Bio-Tech Products Group Corporation (the
“Company”) and AJW
Offshore Ltd., AJW Qualified Partners LLC, AJW Partners LLC,
and
New
Millennium Capital Partners II LLC (collectively
the “NIR Group.”) as of September 25, 2008.
WHEREAS,
the Company issued to the NIR Group Callable Secured Convertible Notes (the
“6%
Notes”), pursuant to a Securities Purchase Agreement dated as of June 29, 2006
(the “Purchase Agreement”);
WHEREAS,
on January 31, 2008 the Company issued to the NIR Group Callable Secured
Convertible Notes (the “2% Notes”) in connection with outstanding interest
accrued on the 6% Notes;
WHEREAS,
pursuant to Section 4(e) of the Purchase Agreement, the NIR Group has certain
rights of participation with respect to new equity financings (or debt
financings with an equity component) (the “Participation Right”);
and
WHEREAS,
the Company is seeking to obtain new financing and desires to prepay all amounts
outstanding under the 6% Notes and 2% Notes, including principal and accumulated
interest.
NOW
THEREFORE, both parties agree on the following terms and
conditions:
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NIR
Group waives its participation right with respect to any new financing
that closes before October 31, 2008;
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NIR
Group hereby agrees to suspend conversions of principal and accrued
interest under the 6% Notes and 2% Notes from September 25, 2008 until
October 31, 2008;
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The
Company agrees that if a new financing is completed, all of the6% Notes
and 2% Notes held by NIR Group shall be redeemed for an aggregate payment
of $2,400,000 (the “Payment Amount”), which, when paid will constitute
final settlement and satisfaction of all outstanding claims amounts
due to
NIR Group under such Notes.
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The
Company shall pay NIR Group the Payment Amount within thirty (30) days
of
the closing of new financing, but no later than October 31,
2008.
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The
Company hereby agrees that if payment of the Payment Amount is not
made to
NIR Group by October 31, 2008, the 6% Notes and 2% Notes shall
automatically be amended to remove any and all limitations on NIR Group’s
right to convert the 6% Notes and 2% Notes pursuant to Section 1.2(a)
of
the 6% Notes and 2% Notes or the Acknowledgement and Agreement Regarding
Terms of 6% Secured Convertible Notes, by and among the signatories
thereto, and all rights and consents hereby granted by NIR Group to
the
Company to raise new financing shall be null and void as if never
granted.
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AJW
OFFSHORE, LTD.
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AJW
QUALIFIED PARTNERS, LLC
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AJW
PARTNERS, LLC
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KIWA
BIO-TECH PRODUCTS GROUP
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NEW
MILLENNIUM CAPITAL PARTNERS II, LLC
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CORPORATION
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By:
/s/
XXXXX X.
XXXXXXXX
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By:/s/XXX
XX
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Xxxxx
X. Xxxxxxxx
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Xxx
Xx
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Managing
Member
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Chief
Executive Officer
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