UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): December 28, 2017
Kiwa Bio-Tech Products Group Corporation
(Exact Name of Registrant as Specified in Charter)
| Nevada | 000-33167 | 77-0632186 | ||
| (State or Other Jurisdiction | (Commission | (IRS Employer | ||
| of Incorporation) | File Number) | Identification No.) |
| 3200 Guasti Road, Suite 100 | ||||
| Ontario, California | 91761 | |||
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (626) 715-5855
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4(c) |
TABLE OF CONTENTS
Item 1.01 Entry into a Material Definitive Agreement.
(1) On December 28, 2017, Kiwa Bio-Tech Products Group Corporation (“Kiwa” or the “Company”) entered into a Subscription and Debt Cancellation Agreement (the “Agreement”) with Wei Li pursuant to which the Company agreed to issue 811,148 shares of its newly-designated Series B Redeemable Convertible Preferred Stock (“Series B Preferred Stock”) in exchange for Mr. Li’s agreement to cancel $1,054,492 of accrued salary owing to him as of such date. The transaction contemplated by the Agreement was consummated on December 28, 2017. The Company’s Series B Preferred Stock has a liquidation preference which is pari passu with the Company’s Series A Preferred Stock, is entitled to vote on an as-converted basis, and is convertible into the Company’s Common Stock on a one-for-one basis at any time at the option of the holder. The Company is entitled to redeem the Series B Preferred Stock at an amount based upon its Original Issue Price ($1.30 per share).
(2) On December 22, 2017, the Company entered into a Common Stock Purchase Agreement with Tianao Zhang to purchase 1,540,000 shares of Company Common Stock for a total purchase price of $1,848,000 ($1.20 per share).
(3) On November 22, 2017, the Company entered into a Common Stock Purchase Agreement with Yongtao Yu to purchase 3,000,000 shares of Company Common Stock for a total purchase price of $3,600,000 ($1.20 per share).
Item 3.02 Unregistered Sales of Equity Securities.
(1) On December 28, 2017, the Company agreed to issue 811,148 shares of its newly-designated Series B Redeemable Convertible Preferred Stock (“Series B Preferred Stock”) to Wei Li in exchange for Mr. Li’s agreement to cancel $1,054,492 of accrued salary owing to him as of such date. The transaction contemplated by the Agreement was consummated on December 28, 2017. The Company’s Series B Preferred Stock has a liquidation preference which is pari passu with the Company’s Series A Preferred Stock, is entitled to vote on an as-converted basis, and is convertible into the Company’s Common Stock on a one-for-one basis at any time at the option of the holder. The Company is entitled to redeem the Series B Preferred Stock at an amount based upon its Original Issue Price ($1.30 per share).
(2) On December 22, 2017, the Company entered into a Common Stock Purchase Agreement with Tianao Zhang to purchase 1,540,000 shares of Company Common Stock for a total purchase price of $1,848,000 ($1.20 per share).
(3) On November 22, 2017, the Company entered into a Common Stock Purchase Agreement with Yongtao Yu to purchase 3,000,000 shares of Company Common Stock for a total purchase price of $3,600,000 ($1.20 per share).
Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
On December 28, 2017, the Company’s Board of Directors adopted a resolution designating a new series of Preferred stock—Series B Redeemable Convertible Preferred Stock (“Series B Preferred Stock”). The board designated 811,148 shares of its authorized Preferred Stock par value $0.001 as Series B Preferred Stock. The Series B Preferred Stock has a liquidation preference which is pari passu with the Company’s Series A Preferred Stock, is entitled to vote on an as-converted basis, and is convertible into the Company’s Common Stock on a one-for-one basis at any time at the option of the holder. The Company is entitled to redeem the Series B Preferred Stock at an amount based upon its Original Issue Price ($1.30 per share).
Item 9.01 Financial Statements and Exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: December 29, 2017
| Kiwa Bio-Tech Products Group Corporation | ||
| /s/ Yvonne Wang | ||
| By: | Yvonne Wang | |
| Title: | Chief Executive Officer | |
EXHIBIT 4.1
CERTIFICATE OF DESIGNATION
FOR
SERIES B REDEEMABLE CONVERTIBLE PREFERRED STOCK
Par value $.001
OF
KIWA BIO-TECH PRODUCTS GROUP CORPORATION
Yvonne Wang and Lucy Li certify that they are the President and Secretary, respectively, of Kiwa Bio-Tech Products Group Corporation, a Nevada corporation (the “Company”); that, pursuant to the Company’s Articles of Incorporation and applicable Nevada law, on December 28, 2017 the Board of Directors of the Company adopted the following resolutions effective immediately; and that none of the Series B Redeemable Convertible Preferred Stock referred to in this Certificate of Designation has been issued.
Section A. Series B Redeemable Convertible Preferred Stock Designation; Amount; Rank.
The shares of such series shall be designated as “Series B Preferred Stock” (the “Series B Preferred Stock”), and the number of shares constituting such series shall be 811,148. The original issue price (“Series B Original Issue Price”) of each share of Series B Preferred Stock shall be $1.30.
The Series B Preferred Stock shall, with respect to dividend rights, rights upon liquidation, winding up or dissolution, and redemption rights, rank (1) junior to any other class or series of preferred stock hereafter duly established by the Board of Directors of the Corporation, the terms of which shall specifically provide that such class or series shall rank prior to the Series B Preferred Stock as to the payment of dividends or upon redemption and distribution of assets upon liquidation, winding up or dissolution (the “Senior Preferred Stock”), (2) pari passu with any other class or series of preferred stock hereafter duly established by the Board of Directors of the Corporation, the terms of which shall specifically provide that such class or series shall rank pari passu with the Series B Preferred Stock as to the payment of dividends or upon redemption and distribution of assets upon liquidation, winding up or dissolution (the “Parity Preferred Stock”) which shall include the Series A Redeemable Preferred Stock and (3) prior to any other class or series of preferred stock or other class or series of capital stock of or other equity interests in the Corporation, including, without limitation, all classes of the Common Stock of the Corporation, whether now existing or hereafter created (all of such classes or series of capital stock and other equity interests of the Corporation, including, without limitation, the Common. Stock, are collectively referred to herein as the “Junior Securities”).
Section B. Dividends.
1. Right to Receive Dividends. The holders of Series B Preferred Stock shall be entitled to receive dividends when, as and if declared by the Board of Directors of the Corporation. The right to dividends on shares of Series B Preferred Stock shall be non-cumulative and no right shall accrue to holders of Series B Preferred Stock by reason of the fact that dividends on said shares are not declared in any prior period.
Section C. Liquidation Preference.
1. Liquidation Preference. In the event of any liquidation, dissolution, or winding up of the Corporation, either voluntary or involuntary, distributions to the stockholders of the Corporation shall be made in. the following manner:
(a) Series B Preferred Stock Preference. With respect to such liquidation, dissolution or winding up, the holders of Series B Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Corporation to the holders of Junior Securities but after distribution of such assets among, or payment thereof to holders of any Senior Preferred Stock, an amount equal to the Series B Original Issue Price for each share of Series B Preferred Stock plus an amount equal to all declared but unpaid dividends on Series B Preferred Stock (the “Series B Liquidation Preference”).
(b) Distributions. After the payment of the full Series B Liquidation Preference as set forth in Section C(1), the remaining assets of the Corporation legally available for distribution, if any, shall be distributed ratably to the holders of the Common Stock in an amount equal to the Series B Liquidation Preference; after such distribution to the holders of the Common Stock, the remaining assets of the Corporation legally available for distribution, if any, shall be distributed ratably (subject to Section C(1)(c) among the Series B Preferred Stock and the Common Stock.
(c) Proportionate Payments. If the assets and funds legally available for distribution among the holders of Series B Preferred Stock shall be insufficient to permit the payment to the holders of the full Series B Liquidation Preference, then the assets and funds shall be distributed ratably among holders of Series B Preferred Stock in proportion to the number of shares of Series B Preferred Stock owned by each holder.
Section D. Voting Rights.
Voting Rights. The holders of the Series B Preferred Stock shall be entitled to vote, in the same manner and with the same effect as the holders of Common Stock, voting together with the holders of Common Stock as a single class. For this purpose, the holders of Series B Preferred Stock shall be given notice of any meeting of stockholders as to which the holders of Common Stock are given notice in accordance with the bylaws of the Corporation. As to any matter on which the holders of Series B Preferred Stock shall be entitled to vote, the holders of the outstanding Series B Preferred Stock shall have a number of votes calculated on an as-converted to Common Stock basis.
Section E. Redemption.
The Company shall have the right to redeem the Series B Preferred Stock, plus any accrued and unpaid dividends, in whole but not in part, at any time or from time to time (the “Redemption”), at a cash redemption price equal to the aggregate Series B Original Issue Price the Series B Preferred Stock being redeemed (the “Redemption Amount”) plus an amount equal to the amount of the accrued and unpaid dividend thereon. In the event the Company elects to redeem the Series B Preferred Stock, the Company shall deliver a written notice to the Holder of the Series B Preferred Stock at the Holder’s last known address as set forth in the Series B Preferred Stock Register, advising the Holder of the Redemption (the “Redemption Notice”). Upon delivery by the Company of the Redemption Notice, the Company shall have ten (10) days to redeem all, but not less than all, of the Series B Preferred Stock, plus the amount of the accrued and unpaid dividend thereon.
Section F. Conversion.
1. Each share of Series B Preferred Stock may be converted by any holder thereof, without any further consideration, at any time, into one (1) share of Common Stock (the “Conversion Rate”).
2. In the event of any conversion resulting in fractional shares, in lieu of issuance of fractional shares or securities representing fractional shares of Common Stock, the Company shall pay the holder in cash the fair value of fractions of a share as of the date of conversion as determined by the Company’s board of directors. For these purposes, the “date of conversion” shall mean the date the Corporation receives a written notice of a conversion by the holder.
3. The Company covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held by its treasury, or both, for the purpose of effective conversions of the Series B Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of the Series B Preferred Stock not theretofore converted. For purposes of this section, the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of the Series B Preferred Stock shall be computed as if at the time of computation all the outstanding shares were held by a single holder.
4. Adjustments of Conversion Rate.
| (a) | Adjustments for Stock Splits and Combinations. If the Company shall, at any time or from time to time after the date of issuance of the Series B Preferred Stock (“Issuance Date”), effect a split of the outstanding Common Stock, the Conversion Rate shall be proportionately adjusted. If the Company shall, at any time or from time to time after the Issuance Date, combine the outstanding shares of Common Stock, the Conversion Rate shall be proportionately adjusted. Any adjustments under this section shall be effective at the close of business on the date the stock split or combination becomes effective. |
| (b) | Adjustments for Certain Dividends and Distributions. If the Company shall, at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in shares of Common Stock, then, and in each event, the Conversion Rate shall be adjusted as of the time of such issuance or, in the event such record date shall have been fixed, as of the close of business on such record date, by multiplying the Conversion Price then in effect by a fraction: |
| (i) | the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date; and | |||
| (ii) | the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or Distribution. |
| (c) | Adjustment for Other Dividends and Distributions. If the Company shall, at any time or from time to time after the Issuance Date, make or issue or set a record date for the determination of holders of Common Stock entitled to receive a dividend or other Distribution payable in securities of the Company other than shares of Common Stock, then, and in each event, an appropriate revision to the applicable Conversion Rate shall be made and provision shall be made (by adjustments of the Conversion Rate or otherwise) so that the Series B Preferred Stockholders shall receive upon conversions thereof, in addition to the number of shares of Common Stock receivable thereon, the number of securities of the Company which they would have received had their shares of Series B Preferred Stock been converted into Common Stock on the date of such event and had such holder thereafter, during the period from the date of such event to and including the Conversion Date, retained such securities (together with any distributions payable thereon during such period), giving application to all adjustments called for during such period under this section with respect to the rights of the holders of the Series B Preferred Stock; provided, however, that if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Rate shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividends or Distributions; and provided further, however, that no such adjustment shall be made if the holders of the Series B Preferred Stock simultaneously receive a dividend or other distribution of shares of Common Stock in a number equal to the number of shares of Common Stock as they would have received if all outstanding shares of Series B Preferred Stock had been converted into Common Stock on the date of such event. |
| (d) | Adjustments for Reclassification, Exchange or Substitution. If the Common Stock issuable upon conversion of the Series B Preferred Stock at any time or from time to time after the Issuance Date shall be changed to the same or different number of shares of any class or classes of stock, whether by reclassification, exchange, substitution or otherwise (other than by way of a stock split or combination of shares or stock dividends provided for in Sections 4(E)(i), (ii) and (iii), or a reorganization, merger, consolidation, or sale of assets provided for in Section 4(E)(v), then, and in each event, an appropriate revision to the Conversion Rate shall be made and provisions shall be made (by adjustments of the Conversion Rate or otherwise) so that the holders of Series B Preferred Stock shall have the right thereafter to convert their shares of Series B Preferred Stock into the kind and amount of shares of stock and other securities receivable upon reclassification, exchange, substitution or other change, by holders of the number of shares of Common Stock into which such shares of Series B Preferred Stock might have been converted immediately prior to such reclassification, exchange, substitution or other change, all subject to further adjustment as provided herein. | ||
| (e) | Adjustments for Reorganization, Merger, Consolidation or Sales of Assets. If at any time or from time to time after the Issuance Date there shall be a capital reorganization of the Company (other than by way of a stock split or combination of shares or stock dividends or Distributions provided for in Section 4(E)(i), (ii) and (iii), or a reclassification, exchange or substitution of shares provided for in Section 4(E)(iv)), or a merger or consolidation of the Company with or into another corporation where the holders of the Company’s outstanding voting securities prior to such merger or consolidation do not own over 50% of the outstanding voting securities of the merged or consolidated entity, immediately after such merger or consolidation, or the sale of all or substantially all of the Company’s properties or assets to any other person (an “Organic Change”), then as a part of such Organic Change an appropriate revision to the Conversion Rate shall be made if necessary and provision shall be made if necessary (by adjustments of the Conversion Rate or otherwise) so that the holders of the shares of Series B Preferred Stock shall have the right thereafter to convert their shares of Series B Preferred Stock into the kind and amount of shares of stock and other securities or property of the Company or any successor corporation resulting from Organic Change. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4(E)(v) with respect to the rights of the holders of shares of Series B Preferred Stock after the Organic Change to the end that the provisions of this Section 4(E)(v) (including any adjustment in the Conversion Rate then in effect and the number of shares of stock or other securities deliverable upon conversion of the Series B Preferred Stock) shall be applied after that event in as nearly an equivalent manner as may be practicable. |
| (f) | Consideration for Stock. In case any shares of Common Stock or Convertible Securities other than the Series B Preferred Stock, or any rights or warrants or options to purchase any such Common Stock or Convertible Securities, shall be issued or sold: |
| (i) | in connection with any merger or consolidation in which the Company is the surviving corporation (other than any consolidation or merger in which the previously outstanding shares of Common Stock of the Company shall be changed to or exchanged for the stock or other securities of another corporation), the amount of consideration therefore shall be deemed to be the fair value, as determined reasonably and in good faith by the Board of Directors of the Company, of such portion of the assets and business of the non-surviving corporation as such Board may determine to be attributable to such shares of Common Stock, Convertible Securities, rights or warrants or options, as the case may be; or | |||
| (ii) | in the event of any consolidation or merger of the Company in which the Company is not the surviving corporation or in which the previously outstanding shares of Common Stock of the Company shall be changed into or exchanged for the stock or other securities of another corporation, or in the event of any sale of all or substantially all of the assets of the Company for stock or other securities of any corporation, the Company shall be deemed to have issued a number of shares of its Common Stock for stock or securities or other property of the other corporation computed on the basis of the actual exchange ratio on which the transaction was predicated, and for a consideration equal to the fair market value on the date of such transaction of all such stock or securities or other property of the other corporation. If any such calculation results in adjustment of the applicable Conversion Rate, or the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock, the determination of the applicable Conversion Rate or the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock immediately prior to such merger, consolidation or sale, shall be made after giving effect to such adjustment of the number of shares of Common Stock issuable upon conversion of the Series B Preferred Stock. In the event any consideration received by the Company for any securities consists of property other than cash, the fair market value thereof at the time of issuance or as otherwise applicable shall be as determined in good faith by the Board of Directors of the Company. In the event Common Stock is issued with other shares or securities or other assets of the Company for consideration which covers both, the consideration computed as provided in this section shall be allocated among such securities and assets as determined in good faith by the Board of Directors of the Company. |
| (iii) | No Impairment. The Company shall not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this section and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of Series B Preferred Stock against impairment. In the event any holder of Series B Preferred Stock shall elect to convert any shares of Series B Preferred Stock as provided herein, the Company cannot refuse conversion based on any claim that such holder or anyone associated or affiliated with such holder has been engaged in any violation of law, unless (i) the Company receives an order from the Securities and Exchange Commission prohibiting such conversion or (ii) an injunction from a court, on notice, restraining and/or enjoining conversion of all or of said shares of Series B Preferred Stock shall have been issued. | |||
| (iv) | Certificates as to Adjustments. Upon occurrence of each adjustment or readjustment of the Conversion Rate or number of shares of Common Stock issuable upon conversion of shares of Series B Preferred Stock pursuant to this section, the Company at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of shares of Series B Preferred Stock a certificate setting forth such adjustment and readjustment, showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon written request of the holder of such affected Series B Preferred Stock, at any time, furnish or cause to be furnished to such holder a like certificate setting forth such adjustments and readjustments, the Conversion Rate in effect at the time, and the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon the conversion of the shares of Series B Preferred Stock. Notwithstanding the foregoing, the Company shall not be obligated to deliver a certificate unless such certificate would reflect an increase or decrease of at least one percent of such adjusted amount. |
Section G. Additional Issuance of Preferred Shares.
The Company may issue additional shares of Preferred Stock in the future. If the Company desires to issue additional shares of Preferred Stock, the Company shall file such amendments to its Article of Incorporation as may be necessary to effect such designation.
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation to be duly executed by its President and attested to by its Secretary as of the 28th day of December, 2017, who, by signing their names hereto, acknowledge that this Certificate of Designation is the act of the Company and state to the best of their knowledge, information and belief, under penalties of perjury, that the above matters and facts are true in all material respects.
| KIWA BIO-TECH PRODUCTS GROUP CORPORATION | ||
| By: | /s/ Yvonne Wang | |
| President | ||
| By: | /s/ Lucy Li | |
| Secretary |
EXHIBIT 10.1
SUBSCRIPTION AND DEBT CANCELLATION AGREEMENT
Series B Redeemable Convertible Preferred Stock of Kiwa Bio-Tech Products Group Corporation
The undersigned, Wei Li (the “Purchaser”), hereby subscribes for the purchase of 811,148 shares (the “Shares”) of Series B Redeemable Convertible Preferred Stock of Kiwa Bio-Tech Products Group Corporation, a Nevada corporation (the “Company”), for an aggregate amount of $1,054,492 (the “Subscription Price”). In payment of the Subscription Price, the Purchaser agrees to the concurrent cancellation of $1,054,492 amount of accrued salary owing to the Purchaser by the Company (“Debt Cancellation”) in full payment for such Shares. In exchange for the Debt Cancellation, the Purchaser shall receive from the Company 811,148 shares of Company Series B Redeemable Convertible Preferred Stock. The Purchaser agrees to execute this Subscription and Debt Cancellation (the “Agreement”) and any other documentation required in connection with this investment (collectively, the “Transaction Documents”).
Consummation of the sale of the Shares to the Purchaser and to any other purchaser(s) of Company Shares shall be consummated on or before December 28, 2017 (the “Closing Date”), unless such Closing Date shall be extended by the mutual agreement of the parties hereto.
1. Certain Representations of the Subscriber
In connection with, and in consideration of, the sale of the Shares to the Purchaser, the Purchaser hereby represents and warrants to the Company and its officers, directors, employees, agents and shareholders that the Purchaser:
(a) Has had an opportunity to perform due diligence related to the Company and ask questions of an officer of the Company.
(b) Realizes and accepts the personal financial risk attendant to the fact that that purchase of the Shares represents a speculative investment involving a high degree of risk, and should not be purchased by any persons not prepared to lose their entire investment.
(c) Can bear the economic risk of an investment in the Shares for an indefinite period of time, can afford to sustain a complete loss of such investment, has no need for liquidity in connection with an investment in the Shares, and can afford to hold the Shares indefinitely.
(d) Realizes that the Shares have not been registered for sale under the Securities Act of 1933, as amended (the “Act”), or applicable state securities laws (the “State Laws”), and they may be sold only pursuant to registration under the Act and State Law, or an opinion of counsel that such registration is not required.
(e) Is experienced and knowledgeable in financial and business matters, capable of evaluating the merits and risks of investing in the Shares and does not need or desire the assistance of a knowledgeable representative to aid in the evaluation of such risks (or, in the alternative, has a knowledgeable representative whom such investor intends to use in connection with a decision as to whether to purchase the Shares).
(f) Realizes that (a) there are substantial restrictions on the transfer of the Shares; (b) there is not currently a public market for the Shares, and it is unlikely that in the future there will exist a public market for the Shares, and accordingly, for the above and other reasons, the Purchaser may not be able to liquidate an investment in such Shares for an indefinite period.
2. Investment Intent
The Purchaser has been advised that the Shares have not been registered under the Act or relevant State Laws but are being offered, and will be offered, and sold pursuant to exemptions from the Act and State Laws, and that the Company’s reliance upon such exemption is predicated in part on the Purchaser’s representations contained herein. The Purchaser represents and warrants that the Shares are being purchased for the Purchaser’s own account and for long term investment and without the intention of reselling or redistributing the Shares; that the Purchaser has made no agreement with others regarding any of the Shares; and that the Purchaser’s financial condition is such that it is not likely that it will be necessary for the Purchaser to dispose of any of the Shares in the foreseeable future. The Purchaser is aware that (1) there is presently no public market for the Shares, and in the view of the Securities and Exchange Commission a purchase of Shares with an intent to resell by reason of any foreseeable specific contingency or anticipated change in market values, or any change in the liquidation or settlement of any loan obtained for the acquisition of any of the Shares and for which the Shares were or may be pledged as security would represent an intent inconsistent with the investment representations set forth above, and (2) the transferability of the Shares is restricted and (a) requires the written consent of the Company, and (b) will be further restricted by a legend placed on the certificate(s) representing the Shares containing substantially the following language:
The Shares represented by this certificate have not been registered under either the Securities Act of 1933, as amended, or applicable state securities laws and may not be sold, transferred, assigned, offered, pledged or otherwise distributed for value unless there is an effective registration statement under such Act and such laws covering such Shares, or the Company receives an opinion of counsel acceptable to the Company stating that such sale, transfer, assignment, offer, pledge or other distribution for value is exempt from the registration and prospectus delivery requirements of such Act and such laws.
The Purchaser further represents and agrees that if contrary to the Purchaser’s foregoing intentions, the Purchaser should later desire to dispose of or transfer any of the Shares in any manner, the Purchaser shall not do so without first obtaining (1) an opinion of counsel satisfactory to the Company that such proposed disposition or transfer may be made lawfully without the registration of such Shares pursuant to the Act and applicable State Laws, or (2) registration of such Shares (it being expressly understood that the Company shall not have any obligation to register such Shares except as explicitly provided by written agreement).
3. Residence
The Purchaser represents and warrants that the Purchaser is a bona fide resident of the Peoples Republic of China and that the Shares are being accepted by the Purchaser in the Purchaser’s name solely for the Purchaser’s own beneficial interest and not as nominee for, on behalf of, for the beneficial interest of, or with the intention to transfer to, any other person, trust or organization.
PARAGRAPHS 4 AND 5 BELOW ARE REQUIRED IN CONNECTION WITH EXEMPTIONS FROM THE ACT AND APPLICABLE STATE SHARES LAWS BEING RELIED ON BY THE COMPANY WITH RESPECT TO OFFER AND SALE OF THE SHARES. ALL OF SUCH INFORMATION WILL BE KEPT CONFIDENTIAL AND WILL BE REVIEWED ONLY BY THE COMPANY AND ITS COUNSEL. THE PURCHASER AGREES TO FURNISH ANY ADDITIONAL INFORMATION WHICH THE COMPANY OR ITS COUNSEL DEEMS NECESSARY IN ORDER TO VERIFY THE RESPONSES SET FORTH ABOVE.
4. Accredited/Non-Accredited Status
The Purchaser represents and warrants as follows (check if applicable):
a. Accredited Investor Status: Individual
(1)_______ The Purchaser is an individual with a net worth, or a joint net worth together with his or her spouse, in excess of $1,000,000. (In calculating net worth, you may include equity in personal property and real estate, including your principal residence, cash, short term investments, stock and Shares. Equity in personal property and real estate should be based on the fair market value of such property minus debt secured by such property.);
(2)________ The Purchaser is an individual who had an individual income in excess of $200,000 in each of the prior two years and reasonably expects an income in excess of $200,000 in the current year;
(3)________ The Purchaser is an individual who had with his/her spouse joint income in excess of $300,000 in each of the prior two years and reasonably expects an income in excess of $300,000 in the current year; or
(4)___x_____ Items 4(a)(1)-(3) are not applicable and the Purchaser is NOT an accredited investor.
(5)________ The Purchaser is a director or executive officer of the Company.
b. Accredited Investor Status: Entity
(1)________ The Purchaser is an entity all of whose equity owners meet one of the tests set forth in part a., above.
(2)________ The Purchaser is an entity and is an “Accredited Investor” as defined in Rule 501(a) of Regulation D under the Act. This representation is based on the following (check one or more, as applicable):
(a)______ The Purchaser (or in the case of a trust, the Purchaser trustee) is a bank or savings and loan association as defined in Sections 3(a)(2) and 3(a)(5)(A) of the Act, acting either in its individual or fiduciary capacity;
(b)______ The Purchaser is an insurance company as defined in Section 2(13) of the Act;
(c)_______ The Purchaser is an investment company registered under the Investment Company Act of 1940 or a business development company as defined in Section 2(a)(48) of that Act;
(d)________ The Purchaser is a Small Business Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958;
(e)________ The Purchaser is an employee benefit plan within the meaning of Title I of the Employee Retirement Income Security Act of 1974 and either (check one of more, as applicable):
(i)________ the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company, or registered investment advisor; or
(ii)________ the employee benefit plan has total assets in excess of $5,000,000; or
(iii)________ the plan is a self-directed plan with investment decisions made solely by persons who are “Accredited Investors” as defined under the 1933 Act.
(f)________ The Purchaser is a private business development company as defined in Section 202(a)(22) of the Investment Advisors Act of 1940.
(g)________ The Purchaser has total assets in excess of $5,000,000, was not formed for the specific purpose of acquiring the Shares and is one or more of the following (check one or more, as appropriate):
(i)________an organization described in Section 501(c)(3) of the Internal Revenue Code; or
(ii)________ a corporation; or
(iii)________ a Massachusetts or similar business, trust; or
(iv)________ a partnership.
(h)_________ The Purchaser is a trust with total assets exceeding $5,000,000, which was not formed for the specific purpose of acquiring the Shares and whose purchase is directed by a person who has such knowledge and experience in financial and business matters that he/she is capable of evaluating the merits and risks of the investment in the Shares. IF ONLY THIS RESPONSE IS CHECKED, PLEASE CONTACT THE COMPANY TO RECEIVE AND COMPLETE AN INFORMATION STATEMENT BEFORE THIS SUBSCRIPTION CAN BE CONSIDERED BY THE COMPANY.
(3)________Items 4(b)(1)-(2) are not applicable and the Purchaser is NOT an accredited investor.
5. Entities
If the Purchaser is an entity, the individual signing on behalf of the entity and the entity jointly and severally agree and certify that:
| a. | the Purchaser was not organized for the specific purpose of acquiring the Shares; and | |
| b. | this Agreement has been duly authorized by all necessary action on the part of the Purchaser, and is a legal, valid, and binding obligation of the Purchaser enforceable in accordance with its terms. |
6. Manner in Which Title Is To Be Held
Please check one:
___x___Individual
______Joint Tenant with Right of Survivorship
______Partnership
______Tenants in Common
______Corporation
______Other (Specify_____________________)
7. Miscellaneous
(a) The Purchaser agrees that the Purchaser understands the meaning and legal consequences of the agreements, representations, and warranties contained herein; agrees that such agreements, representations and warranties shall survive and remain in full force and effect after the consummation of the transactions contemplated hereby; and further agrees to indemnify and hold harmless the Company, each current and future officer, director, employee, agent and shareholder from and against any and all loss, damage or liability due to, or arising out of, a breach of any agreement, representation or warranty of the Purchaser contained herein.
(b) The respective representations, warranties, agreements and covenants of the Company and the Investor set forth in this Agreement shall survive until the second anniversary of the Closing Date.
(c) This Agreement shall inure to the benefit of and be binding upon Investor and the Company and their respective successors and legal representatives, and nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained; this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person. Neither the Company nor any Investor may assign this Agreement or any rights or obligation hereunder without the prior written consent of the other party.
(d) No failure or delay on the part of the Company or Investor in exercising any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or remedy preclude any other or further exercise thereof or the exercise of any other right, power or remedy. The remedies provided for herein are cumulative and are not exclusive of any remedies that may be available to the Company or Investor at law or in equity or otherwise. No waiver of or consent to any departure by the Company or Investor from any provision of this Agreement shall be effective unless signed in writing by the party entitled to the benefit thereof, provided that notice of any such waiver shall be given to each party hereto as set forth below. Except as otherwise provided herein, no amendment, modification or termination of any provision of this Agreement shall be effective unless signed in writing by or on behalf of each of the Company and the Investor. Any amendment, supplement or modification of or to any provision of this Agreement, any waiver of any provision of this Agreement, and any consent to any departure by the Company or Investor from the terms of any provision of this Agreement shall be effective only in the specific instance and for the specific purpose for which made or given. Except where notice is specifically required by this Agreement, no notice to or demand on the Company in any case shall entitle the Company to any other or further notice or demand in similar or other circumstances.
(e) This Agreement, together with Transaction Documents, constitutes the entire agreement among the parties hereto and supersedes all prior agreements, understandings and arrangements, oral or written, among the parties hereto with respect to the subject matter hereof and thereof.
(f) If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby.
(g) THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT GIVING EFFECT TO PROVISIONS RELATING TO CONFLICTS OF LAW TO THE EXTENT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. THE PARTIES HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ACTIONS, SUITS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT MAY BE BROUGHT ONLY IN STATE OR FEDERAL COURTS LOCATED IN THE CITY OF ATLANTA, GEORGIA AND HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS FOR SUCH PURPOSE.
(h) This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
(i) The Company will not, by amendment of its Certificate of Incorporation, or through any reorganization, re-capitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of Shares or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, or take any action which would dilute or adversely affect the ownership interest of Investor in the Company upon conversion, but will at all times in good faith assist in carrying out of all of the provisions of this Agreement, and to take all such actions as may be necessary or appropriate in order to protect and issue the conversion rights of Investor against impairment.
(j) Facsimile signatures shall be construed and considered original signatures for purposes of enforcement of the terms of this agreement.
[Signature page follows – the balance of this page intentionally left blank]
INDIVIDUAL SUBSCRIBERS:
| /s/ Wei Li | |
| Signature | |
| Wei Li | |
| Name (Typed or Printed) | |
| Room 4108, Tower A Xintian Business Center, Shixia North 2th Street, | |
| Futian District, Shenzhen City, Guangdong Province, China | |
| N/A | |
| Social Security Number |
Kiwa Bio-Tech Products Group Corporation hereby acknowledges receipt of the Subscription Price and accepts this subscription of 811,148 Shares of Series B Redeemable Convertible Preferred Stock as of December 28, 2017.
| Kiwa Bio-Tech Products Group Corporation | |
| /s/ Yvonne Wang | |
| Yvonne Wang, President |