ADVANCE AGREEMENT
Party A(pound)(0)China Star Investment Management Co. LTd.
Party B(pound)(0)Kiwa Bio-Tech Products (Shandong) CO. Ltd.
The Advance Agreement is signed on March 31, 2006 by both parties, to
clarify the following advance transactions:
1. During January to March 2006, Party A advanced an aggregate sum of
RMB309,900 to Party B in China. The details of date and amounts are as
followed:
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Date RMB
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25-Jan-06 61,388.00
25-Feb-06 110,141.00
25-Mar-06 138,371.00
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TOTAL 309,900.00
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2. Both parties agreed the abovementioned advances (RMB309,900 (i.e.
$38,655.36) 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 193,276 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
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Director
Party B: Kiwa Bio-Tech Products (Shandong) Co. Ltd.
Signature: Xxxxxxx Xxx
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Director
Date: March 31, 2006
APPENDIX 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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Closing quote No.
on date of of warrants
Date RMB US$ drawdown granted
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25-Jan-06 61,388.00 7,657.23 0.0081 38,286
25-Feb-06 110,141.00 13,738.43 0.016 68,692
25-Mar-06 138,371.00 17,259.70 0.07 86,298
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TOTAL 309,900.00 38,655.36 193,276
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