Advance Agreement
Party A: China Star Investment Management Co. Ltd.
Party B: Kiwa Bio-Tech Products (Shandong) Co. Ltd.
The Advance Agreement is signed on December 31, 2005 by both parties, to
clarify the following advance transactions:
1. During October to December 2005, Party A advanced an aggregate sum of
RMB109,740.60 to Party B through its bank accounts in China. The details
of date and amounts are as followed:
Date RMB
------------------------------------------------------------
25-Oct-05 9,770.30
25-Nov-05 33,970.30
15-Dec-05 66,000.00
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Total 109,740.60
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2. Both parties agreed the abovementioned advances (RMB749,800 (i.e.
$13,598.25) in total) bear interest at 12% per annum starting from date of
draw down. Party B agreed to settle the advances within 180 days since the
date of draw down. It is agreed that Party B has the option to repay or
settle the advances on or before the expiry.
3. Both parties agreed that Party B will issue to Party A warrants that
entitle Party A to purchase up to 67,991 shares of common stock based on
the conversion price specified in Clause 4. Party A shall have the right
to exercise the warrants within next 24 months.
4. Conversion: At the option and instruction of Party A, Party A shall at
any time make an application to exercise any warrants for the issuance of
shares of Party B's holding company, Kiwa Bio-Tech Products Group
Corporation ("KWBT"). Party A shall have the right to exercise the
warrants based on a conversion price equal to the closing quote of the
shares of KWBT, listed on the Over-the-counter Bulletin Board (the
"Shares") on the date of drawing down the fund. A list of the closing
quotes of KWBT during the dates of the draw down is attached in the
Appendix A. The mechanics of the conversion are as follows:
(1) Shares issued upon Exercise will be registered within six months or
as soon as practicable on behalf of such Person or Persons as Party
A shall direct at Party B or KWBT's expense. Party A shall have
unlimited piggyback right.
(2) Party B or KWBT shall procure that all taxes and capital, stamp,
issue and registration duties (if any) arising in connection with
the Exercise.
(3) Party B or KWBT shall procure that on or as soon as possible after
conversion evidence satisfactory to Party A shall be delivered to
Party A in respect of its legal title to the Shares and that
definitive certificates are delivered to Party A in respect of the
Shares as soon as practicable.
(4) Fractions of shares will not be made available and any cash
adjustment to be made shall be paid to Party A.
(5) Party B or KWBT shall promptly notify Party A in written form of any
potential changes in majority holding or events that would have a
substantial impact on KWBT's asset structure or business control
(which are collectively called "changes in majority holding"). This
notification and other proper assistance shall be promptly delivered
to Party A so as to allow it to make decisions as to whether to
exercise its right of converting the loan according to clause 4. In
case of failure to promptly deliver the notification to Party A,
Party A reserves the right to request a proper adjustment on the
conversion price so as to keep consistent with the result of
conversion prior to the changes in majority holding.
Party A: China Star Investment Management Co. Ltd.
Signature: Xxxxxx Xxxxx
---------------------------
Director
Party B: Kiwa Bio-Tech Products (Shandong) Co. Ltd.
Signature: Xxxxxxx Xxx
---------------------------
Director
Date: December 31, 0000
Xxxxxxxx A
List of closing quotes
List of the closing quotes of Kiwa Bio-Tech Products Group Corporation during
the dates of the draw down are as followed:
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Date RMB Closing quote on date of No. of warrants
drawdown granted
----------------------------------------------------------------------------
25-Oct-05 9,770.30 0.011 6053
25-Nov-05 33,970.30 0.011 21047
15-Dec-05 66,000.00 0.014 40891
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Total 109,740.60 67,991
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