STOCK PURCHASE AGREEMENT
Party
A:
Xxx
Xxxx
Party
B:
Xxx
Xx
Party
C:
Kiwa
Bio-Tech Products Group Corporation
This
Stock
Purchase Agreement
(this
"Agreement")
is
made and entered into as of
24th day
of
October
2007, by
and between Xxx Xxxx (the “Party
A”),
Xxx
Xx (the “Party
B”)
and
Kiwa Bio-Tech Products Group Corporation (the “Company”),
a
company incorporated under the laws of the State of Delaware in the United
States of America whose registered office is at 000 X. Xxxxxxxx Xxxx, Xxxxx#
000, Xxxxxxxxx XX 00000, XXX.
Background
Party
B
owes Party A money and the Company owes Party B money. The Company, Party A
and
Party B are willing to enter into a three-way agreement wherein the Company
will
issue a total of 1,000,000 newly issued, restricted shares (the "Shares") of
the
Common Stock of the Company, par value $0.001 per share to Party A, Party A
will
cancel a portion of the debt owed to it by Party B, and Party B will cancel
a
portion of the debt owed to it by the Company.
Now,
Therefore, for and in consideration of the premises and mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
do
hereby represent, warrant, covenant, and agree as follows:
Article
1.
Issuance and Sale of Shares
Based
upon the representations, warranties, and covenants and subject to the terms,
provisions, and conditions contained in this Agreement, the Company agrees
to
sell and deliver the Shares to Party
A,
free and clear of all liens, pledges, encumbrances, and adverse claims, and
Party A agrees to purchase the Shares from the Company for the consideration
hereinafter set forth.
Article
2.
Purchase Price
The
total
purchase price for the Shares is US$75,100
(the "Purchase Price"). The Purchase Price is discounted 30% based on an average
of the close prices of the Company’s common stock on the OTC Bulletin Board
during the thirty (30) Trading Day period ending on October 19,
2007.
Article
3.
Three-Way Agreement and Mutual Consideration
The
Company agrees to issue the Shares to
Party
A. In consideration, Party A agrees to cancel debt owed to him by Party B in
the
amount of US$75,100. In consideration of Party A’s cancellation of such debt,
Party B agrees to cancel debt owed by the Company to him in the amount of
US$75,100. All three parties acknowledge that the benefits to them of
participating in the three-way transaction are sufficient consideration for
performing their part of the transaction.
1
Article
4. Deliveries
The
Shares will be deemed issued, and the debt of Party A and Party B will deemed
cancelled, as of the effective date of this Agreement, which is the date
first
written above. Upon execution and delivery of this Agreement by each party
to
the other parties, this Agreement will be effective. The parties agree to
tender
appropriate documentation to the other parties evidencing the cancellation
of
the debt.
Article
5.
Trading Restriction
Party
A
acknowledges that
the
Shares have not been, and will not be registered under the Securities Act
of
1933, as amended (the “Securities Act”), by reason of a specific exemption from
the registration provisions of the Securities Act that depends upon, among
other
things, the bona fide nature of the investment intent and the accuracy of
Party
A’s representations expressed in this Agreement. Party A understands that the
Shares are “restricted securities” under applicable U.S. federal and state
securities laws and that, pursuant to these laws, such Party A must hold
the
Shares indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available.
Each
certificate representing the Shares will be stamped or otherwise imprinted
with
a legend in substantially the following form (in addition to any legends
required by agreement or by applicable state securities laws):
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE
SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH A
REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE
ACT.
Article
6.
Risk factors
Party
A
agrees
that investment in the Common Stock of the Company involves a high degree
of
risk and should be regarded as speculative. Party A further represents and
agrees that it can afford a loss of its entire investment. In addition to
the
other information contained in this document, Party A has considered carefully
the following factors.
|
a)
|
Limited
Operating History.
The Company has only a limited operating history from which Party
A can
evaluate its business and prospects for future success. The Company
has
recognized only very limited revenues to date.
|
|
b)
|
Full
Disclosure.
Party A acknowledges that it has reviewed the Company’s public disclosure
documents filed with the SEC which can be found at
xxx.xxx.xxx.
|
|
c)
|
Lack
of Transferability, Marketability and Liquidity of the
Shares.
The Common Stock is currently quoted for trading on the OTC Bulletin
Board, but trading volume is low and liquidity is limit. Consequently,
Party A is prepared to remain a shareholder of the Company for
long time.
The Shares may not be sold in the public market except pursuant
to an
effective registration statement or an exemption from registration
under
the Securities Act.
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2
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d)
|
Minimal
Capital.
The Company currently believes it will need additional capital
to sustain
its operation. There can be no assurances we will be successful
in
obtaining this financing. If the amount of funding is not sufficient
to
obtain profitable business operations and the Company is liquidated,
there
will very likely not be any assets in the Company for payment to
the
shareholders.
|
|
e)
|
Dependence
on Key Personnel.
The Company’s development of its concept and business is dependent on its
management team and the loss of any one of these persons could
have a
material adverse effect on the
Company.
|
Article
7.
Representations and Warranties of Party A
In
connection with the transactions contemplated hereby, Party A hereby represents
and warrants to the Company that:
|
a)
|
Party
A understands that the Common Stock of the Company is quoted on
the OTC
Bulletin Board of the NASD, and that the Shares have not been registered
under the Securities Act. At the present trading of the Company’s stock is
subject to rules governing trading in xxxxx
stock.
|
|
b)
|
Party
A has such knowledge and experience in financial and business matters
that
it is capable of seeking out and evaluating the information relevant
to
evaluating the Company, the proposed activities thereof, and the
merits
and risks of the prospective investment, and to make an informed
investment decision in connection
therewith.
|
|
c)
|
Party
A will hold the Shares subject to all of the applicable provisions
of the
Securities Act, and Party A will not at any time make any sale,
transfer,
or other disposition of the Shares in contravention of the Securities
Act.
Party A’s overall commitment to investments which are not readily
marketable is not disproportionate to Party A’s net worth; Party A’s
investment in the Company will not cause such overall commitment
to become
excessive; and Party A can afford to bear the loss of Party A’s entire
investment in the Company.
|
|
d)
|
Party
A understands that all information which Party A has provided to
the
Company concerning Party A, Party A’s financial position and knowledge of
financial and business matters is correct and complete as of the
date set
forth above and, if there should be any material change in such
information prior to the acceptance of this subscription, Party
A shall
promptly notify the Company
thereof.
|
|
e)
|
If
Party A is a United States person or entity, Party A represents
that Party
A satisfies any suitability or other applicable requirements of
Party A’s
state of residence and/or state in which the Common Stock are
purchased.
|
|
f)
|
If
Party A is not a United States person or entity, such Party A hereby
represents that he, she or it has satisfied himself, herself or
itself as
to the full observance of the laws of his, her or its jurisdiction
in
connection with any invitation to subscribe for the Common Stock
or any
use of this Agreement, including (i) the legal requirements within
his, her or its jurisdiction for the purchase of the Common Stock,
(ii) any foreign exchange restrictions applicable to such purchase,
(iii) any governmental or other consents that may need to be
obtained, and (iv) the income tax and other tax consequences, if any,
that may be relevant to the purchase, holding, redemption, sale
or
transfer of the Common Stock. Such Party A’s subscription and payment for,
and his, her or its continued beneficial ownership of the Common
Stock,
will not violate any applicable securities or other laws of his,
her or
its jurisdiction.
|
3
|
g)
|
If
an individual, Party A is over 21 years of
age.
|
|
h)
|
Party
A understands that the Shares have not been registered under the
Securities Act by reason of a claimed exemption under the provisions
of
the Securities Act which depends, in part, upon Party A’s investment
intention.
|
|
i)
|
Party
A understands that no securities administrator of any state or
any other
jurisdiction has made any finding or determination relating to
the
fairness of this investment and that no securities administrator
of any
state or any other jurisdiction has recommended or endorsed, or
will
recommend or endorse, the offering of the Common
Stock.
|
|
j)
|
Party
A has relied solely upon the advice of Party A’s own tax and legal
advisors with respect to the tax and other legal aspects of the
investment.
|
|
k)
|
Party
A warrants that Party A is an “accredited investor” within the meaning of
Rule 501(a) of Regulation D promulgated by the Securities and Exchange
Commission under the Act.
|
|
l)
|
The
sale of the Shares to Party A is being made without any public
solicitation or advertisements.
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Article
8.
Representations and Warranties of the Company
In
connection with the transactions contemplated hereby, the Company hereby
represents and warrants to Party
A
as follows:
8.1.
Organization, Standing and Power.
The
Company is duly organized, validly existing and in good standing under the
laws
of the jurisdiction (the State of
Delaware in the United States of America) in which it is incorporated and
has
the requisite corporate power and authority to carry on its business as now
being conducted. The Company is duly qualified or licensed to do business
and is
in good standing in each jurisdiction in which the nature of its business
or the
ownership or leasing of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed (individually or in the aggregate) would not have a Company Material
Adverse Effect. For purposes of this Agreement, the term "Company Material
Adverse Effect" means any material adverse effect with respect to the Company,
taken as a whole, or any change or effect that adversely, or is reasonably
expected to adversely, affect the ability of the Company to maintain its
current
business operations or to consummate the transactions contemplated by this
Agreement in any
material
respect.
8.2.
Validity of Transaction.
This
Agreement is valid and legally binding obligations of the Company, enforceable
in accordance with their respective terms against the Company, except as
limited
by bankruptcy, insolvency and similar laws affecting creditors generally,
and by
general principles of equity. At the time that the Shares are sold, assigned,
transferred and conveyed to Party A pursuant to this Agreement, the Shares
will
be duly authorized, validly issued, fully paid and non-assessable.
4
The
execution, delivery and performance of this Agreement have been duly authorized
by the Company and will not violate any applicable federal or state law,
any
order of any court or government agency or the articles or certificate of
incorporation of the Company.
8.3.
Capital Structure.
The
authorized stock of the Company consists of 200,000,000 shares of common
stock,
par value $0.001 per share and 20,000,000 shares of preferred stock, par
value
$0.001 per share.
As
of the
date of this Agreement, the Company has approximately 76,800,000 shares of
Common Stock outstanding, and there is no preferred stock outstanding. No
share
of Company
Common Stock
is held
by the Company in its treasury. No bonds debentures, notes or other indebtedness
of the Company having the right to vote. There are no outstanding stock
appreciation rights or similar derivative securities or rights of the
Company.
There
are
approximately 17,700,000 shares of warrants in relation to consultant services
and several loans outstanding. Under the Company’s 2004 Stock Incentive Plan, as
amended, 1,410,007 shares of Company Common Stock are reserved for issuance,
1,637,900 have been granted under the Plan.
In
addition, in the second half of 2006 the Company issued several 3-year
convertible notes in the aggregate principal amount of $2,450,000 (the “6%
Notes”). The conversion price of the 6% Notes is discounted 40% based on an
average of the trading price of the Company’s common stock on the OTC Bulletin
Board. As of the Closing date here, the outstanding principal balance of
6%
Notes is approximately $2,120,000.
8.4.
Authority: Non-contravention.
The
Company has the requisite corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated by this Agreement.
The
execution and delivery of this Agreement by the Company and the consummation
by
the Company of the transactions contemplated hereby have been duly authorized
by
all necessary corporate action on the part of the Company.
8.5.
Litigation, etc.
As
of the
date hereof, (a) there is no suit, claim, action or proceeding (at law or
in
equity) pending or, to the knowledge of the Company, threatened against the
Company (including, without limitation, any product liability claims) before
any
court or governmental or regulatory authority or body, and (b) the Company
is
not subject to any outstanding order, writ, judgment, injunction, order,
decree
or arbitration order that, in any such case described in clauses (a) and
(b),
(i) could reasonably be expected to have, individually or in the aggregate,
a
Company Material Adverse Effect or (ii) involves an allegation of criminal
misconduct or a violation of the Racketeer and Influenced Corrupt Practices
Act,
as amended. As of the date hereof, there are no suits, actions, claims or
proceedings pending or, to the Company's knowledge, threatened, seeking to
prevent, hinder, modify or challenge the transactions contemplated by this
Agreement.
Article
9.
Survival of Representations and Warranties
All
representations, warranties, covenants, and agreements contained herein shall
not be discharged or dissolved upon, but shall survive the closing.
5
Article
10.
Entirety and Modification
This
Agreement constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes any and all prior agreements
and understandings, whether oral or written, between the parties hereto relating
to such subject matter. No modification, alteration, amendment, or supplement
to
this Agreement shall be valid or effective unless the same is in writing
and
signed by all parties hereto.
Article
11.
Successors and Assigns
This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto, their successors and permitted assigns, heirs, and personal
representatives.
Article
12.
Governing Law.
This
Agreement shall be governed by and construed and enforced in accordance with
the
laws of the State of Delaware.
In
relation to any legal action or proceedings arising out of or in connection
with
this Agreement (“Proceedings”), each party irrevocably submits to the
jurisdiction of the courts of the state of Delaware and waives any objection
to
Proceedings in any such court on the grounds of venue or on the grounds that
the
Proceedings have been brought in an inconvenient forum.
IN
WITNESS WHEREOF, the parties hereto have duly executed this agreement as
of the
date first written above.
PARTY
A:
/s/:
Xxx
Xxxx
Name:
Xxx
Xxxx
PARTY
B:
/s/:
Xxx
Xx
Name:
Xxx
Xx
Party
C:
Kiwa
Bio-Tech Products Group Corporation
/s/:
Xxxxxxx
Xxx
Name:
Xxxxxxx Xxx
Title:
Director and CFO
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