AMENDMENT NO. 1 TO TERM LOAN AGREEMENT This AMENDMENT NO. 1 TO TERM LOAN AGREEMENT (this "Amendment") is dated to be effective as of March 30, 2004 and is entered into between NUWAY MEDICAL, INC., a corporation organized under the laws of the state of Delaware (the "Borrower"), and AUGUSTINE II, LLC, a limited liability company formed under the laws of the State of Delaware (the "Lender"). BACKGROUND: Borrower and Lender are parties to that certain Term Loan Agreement dated as of June 10, 2003 (the "Agreement"). Pursuant to the Agreement, Borrower and Lender have also entered into that certain Pledge Agreement, and Borrower previously has delivered to Lender a Term Note and Warrant to Purchase Common Stock No. AG-1 (the "Warrant"), each dated as of June 10, 2003 (the Agreement, together with such Pledge Agreement, Term Note and Warrant, the "Loan Documents"). Borrower has requested that Lender extend the maturity date of the term loan evidenced by the Loan Documents, and in consideration of Lender's willingness to do so has agreed to reprice the Warrant. Capitalized terms used herein shall have the meanings ascribed to such terms in Section 8 of the Agreement. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged: 1. Extension of Maturity Date. The Term Loan Maturity Date is hereby extended to August 31, 2004, and the last sentence of Section 1.2 of the Agreement is amended accordingly. 2. Remedies Upon Default. Section 7.2 of the Agreement is hereby amended and restated in its entirety to read as follows: SECTION 7.2 REMEDIES. (a) Upon the occurrence of any Event of Default set forth in subsections (a)-(k) of Section 7.1 and during the continuance thereof, the Lender or any other holder of the Term Note may declare the Term Note and any other amounts owed to the Lender to be immediately due and payable, whereupon the Term Note and any other amounts owed to the Lender shall forthwith become due and payable. Upon the occurrence of any Event of Default set forth in subsection (l) of Section 7.1, the Term Note and any other amounts owed to the Lender shall be immediately and automatically due and payable without action of any kind on the part of the Lender or any other holder of the Term Note. The Borrower expressly waives presentment, demand, notice or protest of any kind in
connection herewith. The Lender shall promptly give the Borrower notice of any such declaration, but failure to do so shall not impair the effect of such declaration. No delay or omission on the part of the Lender or any holder of the Term Note in exercising any power or right hereunder or under the Term Note shall impair such right or power or be construed to be a waiver of any Event of Default or any acquiescence therein, nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof, or the exercise of any other power or right. (b) Upon and during the continuance of any Event of Default the Lender may exercise any and all remedies available to it under this Agreement or the Pledge Agreement, at law or in equity, or by statute or otherwise, including (a) exercise any rights of a secured lender under the UCC and/or any other applicable Uniform Commercial Code, and (b) conversion of the Term Note into Common Stock of the Company as provided therein. (c) The enumeration of Lender's rights and remedies set forth in this Agreement is not intended to be exhaustive. The exercise by Lender of any right or remedy under this Agreement or any other agreement or instrument executed and delivered in furtherance of the transactions contemplated by this Agreement does not preclude the exercise of any other rights or remedies, however existing. 3. AMENDED NOTE. The Term Note shall be replaced by an Amended and Restated Term Note in the form attached hereto as Exhibit A (the "Amended Note"), and upon delivery of the executed Amended Note to Lender, Lender shall deliver the existing Term Note to Borrower. Thereafter, all references in the Agreement to "Term Note" shall be deemed to be references to the Amended Note. 4. AMENDED WARRANT. The Warrant shall be replaced by an Amended and Restated Warrant in the form attached hereto as Exhibit B (the "Amended Warrant"), and upon delivery of the executed Amended Warrant to Lender, Lender shall deliver the existing Warrant to Borrower. Thereafter, all references in the Agreement to "Warrant" shall be deemed to be references to the Amended Warrant. 5. REPRESENTATIONS, WARRANTIES AND COVENANTS. (a) The representations of Borrower in the Agreement and the other Loan Documents, as amended hereby, are true and correct as of the date hereof as though each of said representations and warranties was made on the date hereof except for those representations and warranties which are made as of a specified date in the applicable Loan Document. (b) The parties acknowledge that, as of the date of this Amendment, Borrower does not have sufficient number of shares of authorized Common Stock to issue upon full exercise of the Warrant and/or full conversion of the Amended Note. Borrower represents and warrants to Lender that effective February 11, 2004 shareholders holding a majority of the issued and outstanding Common Stock approved an amendment to Borrower's articles of incorporation that would
increase the total number of authorized shares to 200,000,000 (the "Charter Amendment"). Borrower covenants to Lender that: (i) Borrower shall cause the Charter Amendment to become effective no later than August 31, 2004; (ii) Borrower has, by resolution of its Board of Directors dated February 4, 2004, reserved all [13,000,000] shares of Common Stock that currently are authorized but unissued for issuance upon exercise of the Warrant and/or conversion of the Amended Note; (iii) Beginning immediately after the Charter Amendment becomes effective, Borrower shall at all times reserve and keep available for issuance such number of shares of authorized but unissued Common Stock as will be sufficient to permit the exercise in full of the Warrant and the conversion in full of the Amended Note; and (iv) Any failure by Borrower to observe the foregoing covenants shall be an "Event of Default" under the Agreement. 6. ADDITIONAL COVENANT OF LENDER. Lender agrees that, at any time during which the Amended Note is outstanding and until the Amended Note has been repaid, converted, or otherwise satisfied in full, it will not engage in hedging transactions (including without limitation any short sales) with respect to the Common Stock. 7. AMENDMENT SUPPLEMENTARY. This Amendment is supplementary to the Loan Documents. All of the provisions of the Loan Documents, including without limitation the right to declare principal and accrued interest due for any cause specified in the Loan Documents, shall remain in full force and effect except as herein expressly modified. The Agreement and the other Loan Documents and all rights and powers created thereby and thereunder or under such other documents are in all respects ratified and confirmed. From and after the date hereof, the Agreement and the other Loan Documents shall be deemed to be amended and modified as herein provided, but, except as so amended and modified, the Agreement and the other Loan Documents shall continue in full force and effect and the Agreement, the other Loan Documents, and this Amendment shall be read, taken and construed as one and the same instrument. On and after the date hereof, any references in the Loan Documents to the Agreement shall mean the Agreement as amended hereby. 8. WAIVER OF CLAIMS. Borrower hereby acknowledges, agrees and affirms that it possesses no claims, defenses, offsets, recoupment or counterclaims of any kind or nature against or with respect to the enforcement of the Agreement, or any other Loan Document or any amendments thereto (collectively, the "Claims"), nor does Borrower now have knowledge of any facts that would or might give rise to any Claims. If facts exist as of the date of this Amendment which would or could give rise to any Claim against or with respect to the enforcement of the Agreement, or any other Loan Document, as amended by the amendments thereto, Borrower hereby unconditionally, irrevocably and unequivocally waives and fully releases any and all such Claims as if such Claims were the subject of
a lawsuit, adjudicated to final judgment from which no appeal could be taken and therein dismissed with prejudice. In furtherance of the intention of the parties, Borrower hereby expressly waives any and all rights conferred upon it by the provisions of any applicable law which would provide that "A general release does not extend to claims which the creditor does not know or suspect to EXIST in his favor at the time of executing the release which, if known by him, must have materially affected his settlement with the debtor." Borrower hereby understands and acknowledges the significance and consequences of the foregoing release and waiver. 9. Representation by Counsel. Borrower hereby represents that it has been represented by competent counsel of its choice in the negotiation and execution of this Amendment; that it has read and fully understands the terms hereof, that Borrower and its counsel have been afforded an opportunity to review, negotiate and modify the terms of this Amendment, and that it intends to be bound hereby. 10. Counterparts. This Agreement may be executed in one or more counterparts, which counterparts, when taken together and collated shall constitute one agreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written. NUWAY MEDICAL, INC.
/s/ By: --------------------------------------
Its: President AUGUSTINE II, LLC By: AUGUSTINE CAPITAL MANAGEMENT, L.L.C., its manager
/s/ By: --------------------------------------
EX. 10.26 EXHIBIT A AMENDED AND RESTATED CONVERTIBLE TERM NOTE $ 420,000 Chicago, Illinois Originally Executed: June 10, 2003 Amended and Restated Effective: March 30, 2004 Maturity Date: August 31, 2004 FOR VALUE RECEIVED, NUWAY MEDICAL, INC., a corporation organized under the laws of the state of Delaware ("BORROWER"), promises to pay to the order of AUGUSTINE II, LLC, a limited liability company formed under the laws of the State of Delaware (hereafter, together with any subsequent holder hereof, called "LENDER"), at its office 141 West Jackson Blvd., Suite 2182, Chicago, Illinois 60604, or at such other place as Lender may direct, the principal sum of FOUR HUNDRED TWENTY THOUSAND United States Dollars ($420,000) (the "LOAN"), payable in full on August 31, 2004 or at an earlier date as provided in Section 3.2 of the Term Loan Agreement (as defined hereinafter). This Note is convertible at the Lender's option as provided below. Borrower agrees to pay interest on the unpaid principal amount from time to time outstanding hereunder on the dates and at the rate or rates as set forth in the Term Loan Agreement. This Note evidences borrowings under and has been issued by the Borrower in accordance with the terms of the Term Loan Agreement. This Note amends and restates in its entirety the Term Note which was previously executed and delivered by Borrower to Lender on June 10, 2003 (the "ORIGINAL NOTE"). It is the intent of the parties hereto that the Original Note, as restated hereby, shall re-evidence the Term Loan under the Loan Agreement and is in no way intended to constitute repayment or a novation of any of the indebtedness which is evidenced by the Loan Agreement or the Original Note or any of the other Loan Documents executed in connection therewith. The Lender and any holder hereof is entitled to the benefits of the Loan Agreement and the other Loan Documents, and may enforce the agreements of the Borrower contained therein, and any holder hereof may exercise the respective remedies provided for thereby or otherwise available in respect thereof, all in accordance with the respective terms thereof. All capitalized terms used in this Note and not otherwise defined herein shall have the same meanings herein as in the Loan Agreement. Payments of both principal and interest are to be made in immediately available funds in lawful money of the United States of America, or in Common Stock of the Borrower as set forth in the Term Loan Agreement. This Note evidences indebtedness incurred under a Term Loan Agreement dated as June 10, 2003, as amended by Amendment No. 1 to Term Loan Agreement dated as of the date hereof executed by and between Borrower and Lender (and, if amended, restated or replaced, all amendments, restatements and replacements thereto or therefor, if any) (the "TERM LOAN AGREEMENT"), to which Term Loan Agreement reference is hereby made for a statement of its terms and provisions, including without limitation those under which this Note may be paid prior to its due date or have its due date accelerated.
This Note and any document or instrument executed in connection herewith shall be governed by and construed in accordance with the internal law of the State of Illinois, and shall be deemed to have been executed in the State of Illinois. Unless the context requires otherwise, wherever used herein the singular shall include the plural and vice versa. This Term Note shall bind Borrower successors and assigns, and shall inure to the benefit of Lender, its successors and assigns, except that Borrower may not transfer or assign any of its rights or interest hereunder without the prior written consent of Lender. Borrower agrees to pay upon demand all expenses (including without limitation reasonable attorneys' fees, legal costs and expenses, and time charges of attorneys who may be employees of Lender, in each case whether in or out of court, in original or appellate proceedings or in bankruptcy) incurred or paid by Lender or any holder hereof in connection with the enforcement or preservation of its rights hereunder or under any document or instrument executed in connection herewith. Borrower expressly and irrevocably waives presentment, protest, demand and notice of any kind in connection herewith. CONVERSION (a) Lender may, at any time while the Note is outstanding prior to or on the Term Loan Maturity Date and thereafter during the continuance of any Event of Default, convert (a "CONVERSION EVENT") some or all of the outstanding principal and, if Lender so elects, some or all accrued and unpaid interest hereunder into Common Stock of the Borrower, par value $0.00067 (the "COMMON STOCK"). (b) To effect a Conversion Event Lender shall execute and deliver to the Company a CONVERSION NOTICE (attached hereto as Exhibit 1), and, in the event that the entire amount outstanding under this Note is converted, Lender shall also surrender this Note to the Company for cancellation. (c) The number of shares to be received by Lender upon any Conversion Event shall be equal to the (i) the total sum of indebtedness specified in the Conversion Notice as being subject to conversion, divided by (ii) the product of 0.85 and the average of the last five closing bids for the Company's Common Stock received prior to the date of the Conversion Notice. (d) All principal and accrued and unpaid interest that is not converted at the time of a Conversion Event, shall be paid in cash by the Company on the Term Loan Maturity Date. Interest hereunder shall cease to accrue with respect to that portion of principal then being converted to equity in connection with a Conversion Event upon the Company's receipt of a Conversion Notice.
(e) No fractional shares of Common Stock will be issued on conversion of this Note. If any conversion of this Note results in an obligation to issue a fraction of a share of Common Stock, the Company will pay the value of that fractional share in cash. (f) All shares of Common Stock issued upon the conversion of this Note shall be duly authorized, validly issued, non-assessable and free and clear of all claims, liens or encumbrances. If the shares of Common Stock are certificated, certificates representing the shares of Common Stock issued upon conversion hereof shall be delivered to Lender. The Company shall deliver such certificates or make appropriate notations to show Lender as the record and beneficial owner of the Conversion Shares within two (2) Trading Days of receiving a Conversion Notice from Lender, with "Trading Days" defined for purposes of this Note as a day on which the Common Stock is traded. (g) This Note does not by itself entitle Lender to any voting rights or other rights as a equity holder. In the absence of conversion of this Note, no provisions of this Note, and no enumeration herein of the rights or privileges of Lender shall cause Lender to be an equity holder or for any purpose by virtue hereof. (h) Notwithstanding anything to the contrary herein, Lender may not use its ability to convert this Note if such conversion would result in the total number of shares of Common Stock deemed beneficially owned by Lender (together with all shares of Common Stock deemed beneficially owned by any of Lender's affiliates that would be aggregated for purposes of determining a group under Section 13(d) of the Exchange Act) exceeding, when issued, 4.9% of the total issued and outstanding shares of the Company's Common Stock (the "RESTRICTED OWNERSHIP PERCENTAGE"); provided, however, that (i) Lender shall have the right at any time and from time to time to increase or decrease its Restricted Ownership Percentage and otherwise waive in whole or in part the restrictions of this subparagraph (h) immediately upon written notice to the Company, and (ii) Lender can make subsequent adjustments pursuant to the preceding clause (i) any number of times; and provided further that nothing in the foregoing shall prevent the partial conversion of this Note for such number of shares of Common Stock as do not exceed the Restricted Ownership Percentage. IN WITNESS WHEREOF, the parties have caused this Note to be duly executed as of the day and year first above written. NUWAY MEDICAL, INC. By: Title:
EXHIBIT 1 NOTICE OF CONVERSION (To be executed by holder upon conversion of the Note) TO: NUWAY MEDICAL, INC. The undersigned, holder of that certain Amended and Restated Convertible Term Note in the original Principal Amount of $420,000, originally dated as of June 10, 2003 and amended and restated as of __________, 2004 (the "NOTE"), issued by Nuway Medical, Inc. (the "COMPANY"), hereby exercises his/her/its right to convert unpaid principal amount of the Note, equal to $_______________, and accrued but unpaid interest of the Note, equal to $_____________, into shares of Common Stock of the Company pursuant to the terms of the Note. Please issue the shares of Common Stock as follows:
Print or Type Name of Stockholder Social Security or Other Identifying Number Street Address City State Zip Code and deliver it to the above address, unless a different address is indicated below.
--------------------------------------Signature (Signature must conform in all respects to name of holder as specified on the face of the Note)
Ex. 10.27 CONSULTING AGREEMENT This Consulting Agreement (this "Agreement") is made as of September 22, 2002, (the "Effective Date") by and between Nuway Energy, Inc., a Delaware Corporation (the "Company"), and, Mark Anderson ("Consultant"). RECITALS WHEREAS, the Company is shifting its business focus toward the medical technology and healthcare services industries (the "Healthcare Industries"); WHEREAS, Consultant has expertise in the identification and acquisition of businesses in the Healthcare Industries, WHEREAS, Consultant has previously provided the Company with services relate to the acquisition of businesses in the Healthcare Industries; NOW, THEREFORE, in consideration of the foregoing and of the covenants, agreements, representations and warranties hereinafter contained, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Consultant agree as follows: 1. RETENTION. The Company hereby agrees to retain Consultant and Consultant agrees to be available to serve the Company during the Consulting Period (as hereinafter defined), as a consultant and advisor, which shall include such reasonable consulting and advisory services for the Company as defined herein and as may be requested by the Company or someone acting pursuant to its authorization. 2. DUTIES OF CONSULTANT. The Consultant agrees to perform the consulting services (the "Services") set forth on Schedule A attached hereto and made a part hereof. Consultant shall perform the services and shall devote such time and attention to consulting and advising as shall be reasonably requested by the Company. Consultant may, at Consultant's own expense, use employees or other subcontractors to assist Consultant with the performance of the services. 3. TERM. The consulting period shall commence as of the effective date of this Agreement, and shall continue for a period of one year (the "Consulting Period"). 4. STATUS OF CONSULTANT. Consultant understands and agrees that Consultant is not an employee of the Company and that Consultant is not entitled to receive employee benefits from the Company, including, but not limited to, sick leave, vacation, retirement, death benefits or automobile expense. Consultant shall be responsible for providing, at Consultant's expense and in Consultant's name, disability, worker's compensation or other insurance as well as licenses and permits usual or necessary for conducting the services hereunder. Furthermore, Consultant shall pay, when and as due, any and all taxes incurred as a result of Consultant's compensation hereunder, including estimated taxes, and shall provide Company with proof of said payments, upon demand. Consultant hereby agrees to indemnify the Company for any claims, losses, costs, fees, liabilities, damages or injuries suffered by the Company arising out of Consultant's breach of this Section 4. Page 1 of 10 Consultant Initials Company Initials
5. COMPENSATION. The Company shall compensate Consultant with the payment of a fee (the "Consulting Fee") as described in the Fee Schedule attached hereto as Schedule B and made a part hereof. Payment of amounts due pursuant to the Fee Schedule shall at all times refer to cash compensation, in US dollars ("Cash Compensation"), provided, however, that the Company shall have the right, in it's sole discretion, to pay said Consulting Fees in Cash Compensation or to issue to Consultant shares of common stock of the Company of an equivalent value in lieu of Cash Compensation, which shares will be registered on Form S-9 pursuant to the Company's 2002 Consultant Equity Plan. 6. TERMINATION. 6.1 TERMINATION ON NOTICE. The Company may terminate this Agreement at any time by giving fifteen (15) days written notice to Consultant. Consultant shall have the obligation to provide services up to and until the effective date of such termination, should the Company request such services in writing. 6.2 AUTOMATIC TERMINATION. This Agreement terminates automatically on the occurrence of the death or disability of Consultant. 6.3 RETURN OF COMPANY PROPERTY. Upon the termination or expiration of this Agreement, Consultant shall immediately transfer to the Company all files (including, but not limited to, electronic files), records, documents, drawings, specifications, equipment and similar items in Consultant's possession relating to the business of the Company or its Confidential Information (as defined herein) (including the work product of Consultant created pursuant to this Agreement). 7. NONDISCLOSURE. 7.1 PROPERTY BELONGING TO COMPANY. Consultant agrees that all developments, ideas, devices, improvements, discoveries, apparatus, practices, processes, methods, concepts and products (collectively the "Inventions") developed by Consultant during the term of this Agreement are the exclusive property of the Company and shall belong to the Company. Consultant agrees to assign the Inventions to the Company, provided, however, notwithstanding the foregoing, Consultant shall not be required to assign its rights in any invention which Consultant developed entirely on Consultant's own time without using the Company's equipment, supplies, facilities or trade secret information except for those inventions that either (i) relate at the time of conception or reduction to practice of the invention to the Company's business, or actual or demonstrably anticipated research of development of the Company or (ii) result from any work performed by Consultant for the Company. Consultant understands that Consultant bears the full burden of proving to the Company that any invention qualifies under this Section 7.1. Page 2 of 10 Consultant Initials Company Initials
7.2 ACCESS TO CONFIDENTIAL INFORMATION. Consultant agrees that during the term of the business relationship between Consultant and the Company, Consultant will have access to and become acquainted with confidential proprietary information ("Confidential Information") which is owned by the Company and is regularly used in the operation of the Company's business. Consultant agrees that the term "Confidential Information" as used in this Agreement is to be broadly interpreted and includes (i) information that has, or could have, commercial value for the business in which the Company is engaged, or in which the Company may engage at a later time, and (ii) information that, if disclosed without authorization, could be detrimental to the economic interests of the Company. Consultant agrees that the term "Confidential Information" includes, without limitation, any patent, patent application, copyright, trademark, trade name, service mark, service name, "know-how," negative "know-how," trade secrets, customer and supplier identities, characteristics and terms of agreement, details of customer or consultant contracts, pricing policies, operational methods, marketing plans or strategies, product development techniques or plans, business acquisition plans, science or technical information, ideas, discoveries, designs, computer programs (including source codes), financial forecasts, unpublished financial information, budgets, processes, procedures, formulae, improvements or other proprietary or intellectual property of the Company, whether or not in written or tangible form, and whether or not registered, and including all memoranda, notes, summaries, plans, reports, records, documents and other evidence thereof. Consultant acknowledges that all Confidential Information, whether prepared by Consultant or otherwise acquired by Consultant in any way, shall remain the exclusive property of the Company. 7.3 NO UNFAIR USE BY CONSULTANT. Consultant promises and agrees that Consultant (which shall include Consultant's employees and contractors) shall not misuse, misappropriate, or disclose in any way to any person or entity any of the Company's Confidential Information, either directly or indirectly, nor will Consultant use the Confidential Information in any way or at any time except as required in the course of Consultant's business relationship with the Company. Consultant agrees that the sale or unauthorized use of the Company's Confidential Information constitutes unfair competition. Consultant promises and agrees not to engage in any unfair competition with the Company and will take measures that are appropriate to prevent its employees or contractors from engaging in unfair competition with the Company. Page 3 of 10 Consultant Initials Company Initials
7.4 FURTHER ACTS. Consultant agrees that, at any time during the term of this Agreement or any extension thereof, upon the request of the Company and without further compensation, but at no expense to Consultant, Consultant shall perform any lawful acts, including the execution of papers and oaths and the giving of testimony, that in the opinion of the Company, its successors or assigns, may be necessary or desirable in order to obtain, sustain, reissue and renew, and in order to enforce perfect, record and maintain, patent applications and United States and foreign patents on the Company's inventions, and copyright registrations on the Company's inventions. 7.5 OBLIGATIONS SURVIVE AGREEMENT. Consultant's obligations under this Section 7 shall survive the expiration or termination of this Agreement for a period of five (5) years. 8. REPRESENTATIONS BY CONSULTANT. Consultant represents that Consultant has the qualifications and ability to perform the services in a professional manner, without the advice, control or supervision of the Company. Consultant shall indemnify, defend and hold harmless the Company, and the Company's officers, directors and shareholders from and against any and all claims, demands, losses, costs, expenses, obligations, liabilities, damages, recoveries and deficiencies, including, without limitation, interest, penalties and reasonable attorney fees and costs, that the Company may incur or suffer and that arise, result from or are related to any breach or failure of Consultant to perform any of the representations, warranties and agreements contained in this Agreement. 9. NO ASSIGNMENT OF RIGHTS OR DELEGATION OF DUTIES BY CONSULTANT; COMPANY'S RIGHT TO ASSIGN. Consultant's rights and benefits under this Agreement are personal to Consultant and therefore no such right or benefit shall be subject to voluntary or involuntary alienation, assignment or transfer. The Company may assign its rights and delegate its obligations under this Agreement to any other person or entity. 10. ENTIRE AGREEMENT. This Agreement supersedes any and all other agreements, either oral or in writing, between the parties with respect to the subject matter hereof and contains all of the covenants and agreements between the parties with respect to the services to be rendered by Consultant to the Company in any manner whatsoever. Each party to this Agreement acknowledges that no representations, inducements, promises or agreements, orally or otherwise, have been made by any party, or anyone acting on behalf of any party, which are not embodied herein, and that no other agreement, statement or promise not contained in this Agreement shall be valid or binding on either party. 11. WAIVER. No waiver of any term or provisions of this Agreement will be valid unless such waiver is in writing signed by the party against whom enforcement of the waiver is sought. No waiver or breach of any agreement or provision of this Agreement shall be deemed a waiver of any preceding or succeeding breach thereof or a waiver or relinquishment of any other agreement or provision or right or power contained in this Agreement. Page 4 of 10 Consultant Initials Company Initials
12. NO THIRD PARTY BENEFICIARY. Nothing in this Agreement, whether expressed or implied, is intended to create any third party beneficiary obligations and the parties hereto specifically declare that no person or entity, other than as set forth in this Agreement, shall have any rights hereunder or any right of enforcement hereunder. 13. SEVERABILITY. If any term or provision of this Agreement is found to be invalid, illegal or unenforceable under present or future laws effective during the term of this Agreement, then and, in that event (i) the performance of the offending term or provision (but only to the extent its application is invalid, illegal or unenforceable) shall be excused as if it had never been incorporated in to this Agreement, and, in lieu of such excused provision, there shall be added a provision as similar in terms and amount to such excused provision as may be possible and be legal, valid and enforceable, and (ii) the remaining part of this Agreement shall not be affected thereby and shall continue in full force and effect to the fullest extent provided by law. 14. PREPARATION OF AGREEMENT. It is acknowledged by each party that such party either had separate and independent advice of counsel or the opportunity to avail itself or himself of same. In light of these facts it is acknowledged that no party shall be construed to be solely responsible for the drafting hereof, and therefore any ambiguity shall not be construed against any party as the alleged draftsman of this Agreement. 15. NOTICES. All notices, requests, demands, and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) on the date of service if served personally on the party to whom notice is to be given, (ii) by private airborne/overnight delivery service or on the fifth day after mailing if mailed to the party to whom notice is to be given, by first class mail, registered or certified, postage prepaid, and properly addressed as follows:
To Company: Nuway Energy, Inc. 23461 South Pointe Drive, Suite 200 Laguna Hills, CA 92653 Fax: 949-553-8110 Phone: 949-553-8002
Mark Anderson c/o Camden Holdings, Inc. 9595 Wilshire Blvd. Beverly Hills, CA 90210 Fax: (310) 823-4027 Phone: (310) 710-6425
Any party may change his/her or its address for purposes of this paragraph by giving written notice of the new address to each of the other parties in the manner set forth above. Page 5 of 10 Consultant Initials Company Initials
16. ATTORNEYS' FEES AND COSTS. In the event that any legal proceeding is brought to enforce or interpret any of the rights or obligations under this Agreement, the prevailing party shall be entitled to recover reasonable attorneys' fees, costs and disbursements in addition to any other relief to which the prevailing party may be entitled. 17. GOVERNING LAW; VENUE. This Agreement shall be governed by and construed in accordance with the laws of the State of California. Venue for any legal or equitable action between the Company and Consultant which relates to this Agreement shall be in the county of Los Angeles. 18. REMEDIES. Each party acknowledges that the Company may, as a result of Consultant's breach of the covenants and obligations in Section 7 of this Agreement, sustain immediate and long-term substantial and irreparable injury and damages which cannot be reasonably or adequately compensated by damages at laws. Each party agrees that in the event of Consultant's breach or threatened breach of the covenants and obligations in Section 7, the Company shall be entitled to obtain equitable relief from a court of competent jurisdiction or arbitration without proof of any actual damages that have been, or may be caused to the Company by such breach or threatened breach and without the posting of a bond or other security in connection therewith. 19. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same instrument. [REMINDER OF PAGE INTENTIONALLY LEFT BLANK] Page 6 of 10 Consultant Initials Company Initials
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above. COMPANY Nuway Energy, Inc.
By: /s/ -------------------------------------Name: Dennis Calvert Title: President
CONSULTANT Mark Anderson, an individual
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SCOPE OF SERVICES SCHEDULE A CONSULTANT HAS AGREED TO: 1. Provide advice and evaluation regarding (i) the disposal of certain assets of the Company and (ii) the review of acquisition candidates for the Company. 2. Consultant shall review financial statements, review contracts, identify potential companies which the Company may acquire and develop a business plan for the expansion of the Company. Page 8 of 10 Consultant Initials Company Initials
FEE SCHEDULE SCHEDULE B 1. PAYMENT FOR PAST SERVICES AND IN CONSIDERATION OF ENTERING INTO THIS AGREEMENT: Upon execution of this Agreement, Consultant shall be entitled to receive a fee of $125,000 2. PAYMENT FOR SERVICES DURING THE TERM OF THIS AGREEMENT: $15,000 per month, payable on the first of each month. Page 9 of 10 Consultant Initials Company Initials
FIRST AMENDMENT TO CONSULTING AGREEMENT First Amendment to the following agreement Consulting Agreement made as of September 23, 2002 (the "Effective Date") by and between Nuway Energy, Inc., a Delaware corporation (the "Company") and Mark Anderson, and individual ("Consultant"). Confirmation of Fees due but not yet paid as of 10-17-02 $42,000 as of this date Shares to be issued: Two Hundred Fifty Thousand (250,000) Pursuant to Consultant's Equity Plan
Signed: /s/ --------------------------------------------Mark Anderson
Signed: /s/ --------------------------------------------Denis Calvert
Page 10 of 10 Consultant Initials Company Initials
EX. 10.29 CONVERTIBLE LOAN AGREEMENT Dated as of October 1, 2004 ("Subscription Date") This CONVERTIBLE LOAN AGREEMENT (this "AGREEMENT") is entered into between NUWAY MEDICAL, INC., a corporation organized under the laws of the state of Delaware (the "BORROWER"), and David Moon and James Burchard, the "Investor". The Investor shall be referred to herein as the "Lender". Capitalized terms used herein shall have the meanings ascribed to such terms in SECTION 8 of this Agreement. In consideration of the mutual covenants and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby agree as follows: SECTION 1. LOAN SECTION 1.1. TERM LOAN. Subject to the terms and conditions of this Agreement, the Lender agrees to loan to the Borrower, and the Borrower agrees to borrow from the Lender, in the aggregate principal amount of the "Subscription Amount", (collectively, the "TERM LOAN"). The Lender hereby agrees to make such loan to the Borrower on the date so indicated, with such payment to be made in immediately available funds via wire transfer or cashier's check. SECTION 1.2. TERM NOTE. The Term Loan shall be evidenced by a convertible promissory note (the "CONVERTIBLE TERM NOTE"), substantially in the form of EXHIBIT A, with appropriate insertions, dated the date hereof, payable to the order of the Lender and in the initial principal amount of the Subscription Amount. The Term Loan shall be due and payable one year from the "Subscription Date", , or at an earlier date as provided in SECTION 3.2 hereof (the "TERM LOAN MATURITY DATE"). SECTION 2. INTEREST AND FEES SECTION 2.1. INTEREST. The Borrower agrees to pay interest on the unpaid principal amount of the Term Loan from time to time outstanding hereunder at the following rates per year, compounded annually: (a) before maturity of the Term Loan, whether by acceleration or otherwise, at the rate per annum equal to ten percent (10%). (b) after the maturity of the Term Loan, whether by acceleration or otherwise, until paid, at a rate per annum equal to fifteen percent (15%). SECTION 2.2. INTEREST PAYMENT DATE. Accrued interest shall be paid in full on the Term Loan Maturity Date. -1-
SECTION 2.3. BASIS OF COMPUTATION. Interest shall be computed for the actual number of days elapsed on the basis of a year consisting of 360 days, including the date the Term Loan is made and excluding the date the Term Loan or any portion thereof is paid or prepaid. SECTION 3. CONVERSION AND PAYMENTS SECTION 3.1. PAYMENTS. (a) PLACE OF PAYMENT. Cash payments required to be made under this Agreement and the Convertible Term Note of principal, interest, fees and other amounts payable hereunder, shall be made to the Lender at its office located at 8290 W. Sahara, #175, Las Vegas, NV 89117 (the "Investor's Address"). (b) FORM OF PAYMENT. All payments of principal and interest shall be made by wire transfer to the Lender. SECTION 3.2. PREPAYMENT. (a) OPTIONAL PREPAYMENT. The Borrower may from time to time prepay the Term Loan or any portion thereof without premium or penalty. (b) MANDATORY PREPAYMENT. (i) Within ten (10) days of the occurrence of any of the following events, the Borrower shall make a prepayment of the Term Loan in an amount equal to the proceeds received by the Borrower, in each case up to the total amount then due under the Term Loan, from: (A) the sale of any of the Borrower's assets outside the ordinary course of business; and (B) any insurance payouts or condemnation awards payable by reason of theft, loss, destruction, damage, taking or any other similar event with respect to any property or assets of the Borrower (PROVIDED, HOWEVER, so long as no Event of Default or Unmatured Event of Default has occurred and is continuing the Borrower may use such insurance payouts or condemnation awards within thirty (30) days after receipt by the Borrower to replace any such property with property performing the same or similar function). SECTION 3.3. CONVERSION. (a) CONVERSION INTO PREFERRED STOCK. Pursuant to the conversion provisions set forth in the Convertible Term Note, the Term Loan may be converted into series A preferred stock of the Borrower pursuant to the terms set forth in the Convertible Term Note. -2-
(b) ONE YEAR BUY BACK OF PREFERRED SHARES. At the Lender's sole option, the Lender may require the Borrower to repurchase the shares of preferred stock issued to the Lender herein at the end of a one year period for a price of 110% of the Subscription Amount. If the Borrower is unable to buy back the shares upon said terms, the Borrower's president, as indicated below, will buy back the shares from the Lender upon those terms. SECTION 4. REPRESENTATIONS AND WARRANTIES To induce the Lender to make the Term Loan, the Borrower represents and warrants to the Lender that (except in each case as otherwise disclosed in the Borrower's filings with the SEC): SECTION 4.1. ORGANIZATION. The Borrower is a corporation existing and in good standing under the laws of the State of Delaware; each of its subsidiaries is a corporation, limited liability company or partnership duly existing and in good standing under the laws of the state of its formation; the Borrower and each of its subsidiaries are duly qualified, in good standing and authorized to do business in each jurisdiction where, because of the nature of their activities or properties, such qualification is required, except where the failure to be so qualified would not have a material adverse effect on the Borrower's business, financial condition or results of operations (a "Material Adverse Effect"); and the Borrower and each of its subsidiaries have the power and authority to own their properties and to carry on their businesses as now being conducted. SECTION 4.2. AUTHORIZATION; NO CONFLICT. The borrowings hereunder, the execution and delivery of this Agreement and the Convertible Term Note, the performance by the Borrower of its obligations under this Agreement and the Convertible Term Note are within the Borrower's corporate powers, have been authorized by all necessary corporate action, have received all necessary governmental approval (if any shall be required) and do not and will not contravene or conflict with any provision of law or of the charter or by-laws of the Borrower or any subsidiary or of any agreement binding upon the Borrower or any subsidiary. SECTION 4.3. FINANCIAL STATEMENTS. The Borrower's un-audited consolidating and consolidated financial statements as at December 31, 2003, copies of which have been made available to the Lender, have been prepared in conformity with GAAP applied on a basis consistent with that of the preceding fiscal year, and accurately present the financial condition of the Borrower and its subsidiaries as at such dates and the results of their operations for the respective periods then ended. SECTION 4.4. LIENS. None of the assets of the Borrower or any subsidiary thereof are subject to any mortgage, pledge, title retention lien, or other lien, encumbrance or security interest. -3-
SECTION 4.5. ADVERSE CONTRACTS. Neither the Borrower nor any of its subsidiaries is a party to any agreement or instrument or subject to any charter or other corporate restriction, nor is it subject to any judgment, decree or order of any court or governmental body, which may have a material and adverse effect on the business, property, assets, operations, conditions or prospects of the Borrower and its subsidiaries taken as a whole or on the ability of the Borrower to perform its obligations under this Agreement and the Convertible Term Note. Neither the Borrower nor any of its subsidiaries has, nor with reasonable diligence should have had, knowledge of or notice that it is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any such agreement, instrument, restriction, judgment, decree or order. SECTION 4.6. REGULATION U. The Borrower is not engaged principally in, nor is one of the Borrower's important activities, the business of extending credit for the purpose of purchasing or carrying "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereinafter in effect. SECTION 4.7. LITIGATION AND CONTINGENT LIABILITIES. No litigation (including derivative actions), arbitration proceedings or governmental proceedings are pending or threatened against the Borrower or any of its subsidiaries which would (singly or in the aggregate), if adversely determined, have a material and adverse effect on the business, properties, assets, operations, conditions or prospects of the Borrower or any subsidiary. SECTION 5. COVENANTS Until all obligations of the Borrower hereunder and under the Convertible Term Note are paid and fulfilled in full, the Borrower agrees that it shall, and shall cause each of its subsidiaries to, comply with the following covenants, unless the Lender consents otherwise in writing: SECTION 5.1. CORPORATE EXISTENCE, MERGERS, ETC. The Borrower and each subsidiary shall preserve and maintain its corporate existence, rights, franchises, licenses and privileges, and will not liquidate, dissolve, or merge, or consolidate with or into any other corporation, or sell, lease, transfer or otherwise dispose of all or a substantial part of its assets (except those assets sold in the ordinary course of its business), except that: (a) Any subsidiary may merge or consolidate with or into the Borrower or any one or more wholly-owned subsidiaries; and (b) Any subsidiary may sell, lease, transfer or otherwise dispose of any of its assets to the Borrower or one or more wholly-owned subsidiaries. SECTION 5.2. INSPECTION. The Borrower and each subsidiary shall permit the Lender and its agents at any time during normal business hours to inspect their properties and to inspect and make copies of their books and records, provided that the Lender agrees to enter into confidentiality agreements with respect to the foregoing. -4-
SECTION 5.3. USE OF PROCEEDS. (a) USE OF PROCEEDS. The Borrower shall use the proceeds from the Term Loan solely for operating costs, including but not limited to, employee salaries and costs associated with filing SEC compliance documents. (b) MARGIN REGULATIONS. Neither the Borrower nor any subsidiary shall use or permit any proceeds of the Term Loan to be used, either directly or indirectly, for the purpose, whether immediate, incidental or ultimate, of "purchasing or carrying any margin stock" within the meaning of Regulations U or X of the Board of Governors of the Federal Reserve System, as amended from time to time. (c) TENDER OFFERS AND GOING PRIVATE. Neither the Borrower nor any subsidiary shall use (or permit to be used) any proceeds of the Term Loan to acquire any security in any transaction which is subject to Section 13 or 14 of the Securities Exchange Act of 1934, as amended, or any regulations or rulings thereunder. SECTION 5.4. COMPLIANCE WITH LAW. The Borrower and each of its subsidiaries shall comply in all material respects with all laws and regulations (whether federal, state or local and whether statutory, administrative, judicial or otherwise) and with every lawful governmental order or similar action (whether administrative or judicial) applicable to it, except in each case as would not have a Material Adverse Effect. SECTION 5.5. AFFILIATE TRANSACTIONS. Not enter into any transaction with an affiliate, except for transactions in the ordinary course of business pursuant to the reasonable requirements of the Borrower's or each subsidiaries' business and upon fair and reasonable terms no less favorable to the Borrower or the subsidiaries than the Borrower or the subsidiaries would obtain in a comparable arms-length transaction. SECTION 6. CONDITIONS OF LENDING The obligation of the Lender to make the Term Loan is subject to the following conditions precedent: SECTION 6.1. DOCUMENTATION. In addition to the conditions precedent set forth in SECTION 6.2 and SECTION 6.3, the obligation of the Lender to make the Term Loan is subject to the conditions precedent that the Lender shall have received all of the following, each duly executed and dated a date acceptable to the Lender, in form and substance satisfactory to the Lender and its counsel, at the expense of the Borrower, and in such number of signed counterparts as the Lender may request (except for the Convertible Term Note, of which only the original shall be signed): (a) AGREEMENT. This Agreement; -5-
(b) NOTE. The Convertible Term Note; (c) RESOLUTION. A copy of a resolution of the Board of Directors of the Borrower authorizing or ratifying the execution, delivery and performance, respectively, of this Agreement, the Convertible Term Note and the other documents provided for in this Agreement, certified by the secretary or assistant secretary of the Borrower; and (d) MISCELLANEOUS. Such other documents and certificates as the Lender may request. SECTION 6.2. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. (a) REPRESENTATIONS AND WARRANTIES. At the date of the Term Loan, the Borrower's representations and warranties set forth herein shall be true and correct in all material respects as at such date with the same effect as though those representations and warranties had been made on and as at such date. (b) NO DEFAULT. At the time of the Term Loan, and immediately after giving effect to the Term Loan, the Borrower shall be in compliance with all the terms and provisions set forth herein on its part to be observed or performed, and no Event of Default or Unmatured Event of Default shall have occurred and be continuing at the time of the Term Loan, or would result from the making of the Term Loan. SECTION 6.3. NO MATERIAL ADVERSE CHANGE. No material adverse change in, or effect on, (a) the business, assets, properties, operations, condition or prospects of the Borrower or any of its subsidiaries or (b) the ability of the Borrower to perform its obligations under this Agreement or the Convertible Term Note, in all cases whether due to a single circumstance or event or an aggregation of circumstances or events, shall have occurred. SECTION 7. DEFAULT SECTION 7.1. EVENTS OF DEFAULT. Each of the following occurrences is hereby defined as an "Event of Default": (a) NONPAYMENT. The Borrower shall fail to make any payment of principal, interest, or other amounts payable hereunder when and as due; or (b) DEFAULT UNDER RELATED DOCUMENTS. Any default, event of default, or similar event shall occur or continue under any instrument, document, note, agreement, or guaranty delivered to the Lender in connection with the Term Loan (including without limitation the Convertible Term Note), or any such instrument, document, note, agreement, or guaranty shall not be, or shall cease to be, enforceable in accordance with its terms; or -6-
(c) CROSS-DEFAULT. There shall occur any default or event of default, or any event which might become such with notice or the passage of time or both, or any similar event, or any event which requires the prepayment of borrowed money or the acceleration of the maturity thereof, under the terms of any evidence of indebtedness or other agreement issued or assumed or entered into by the Borrower, any of its subsidiaries or under the terms of any indenture, agreement or instrument under which any such evidence of indebtedness or other agreement is issued, assumed, secured or guaranteed, in each case in respect of an amount that exceeds $100,000, and such event shall continue beyond any applicable period of grace; or (d) DISSOLUTIONS, ETC. The Borrower or any subsidiary shall fail to comply with any provision concerning its existence or any prohibition against dissolution, liquidation, merger, consolidation or sale of assets; or (e) WARRANTIES. Any representation, warranty, schedule, certificate, financial statement, report, notice or other writing furnished by or on behalf of the Borrower or any of its subsidiaries to the Lender is false or misleading in any material respect on the date as of which the facts therein set forth are stated or certified; or (f) ERISA. (i) Institution of any steps by the Borrower or any subsidiary to terminate a Plan if as a result of such termination the Borrower or such subsidiary could be required to make a contribution to such Plan, or could incur a liability or obligation to such Plan, in either case in excess of $100,000; (ii) a contribution failure occurs with respect to any plan sufficient to give rise to a lien under Section 302(f) of ERISA with respect to any Plan; (iii) there shall occur any withdrawal or partial withdrawal from a Multiemployer Plan and the withdrawal liability (without unaccrued interest) to Multiemployer Plans as a result of such withdrawal (including any outstanding withdrawal liability that the Borrower or any subsidiary and any ERISA Affiliate have incurred on the date of such withdrawal) exceeds $100,000; or (iv) any "reportable" event shall occur under ERISA in respect of any employee benefit plan maintained for employees of the Borrower or any subsidiary; or (g) LITIGATION. Any suit, action or other proceeding (judicial or administrative) commenced against the Borrower or any of its subsidiaries, or with respect to any assets of the Borrower or such subsidiary, shall threaten to have a material and adverse effect on the asset, condition (financial or otherwise) or future operations of the Borrower or such subsidiary; or a final judgment or settlement in excess of $100,000 in excess of insurance shall be entered in, or agreed to in respect of, any such suit, action or proceeding; or (h) NONCOMPLIANCE WITH THIS AGREEMENT. The Borrower shall fail to comply in any material respect with any provision hereof, which failure does not otherwise constitute an Event of Default, and such failure shall continue for ten (10) days after the occurrence of such failure; or -7-
(i) BANKRUPTCY. Any bankruptcy, insolvency, reorganization, arrangement, readjustment, liquidation, dissolution, or similar proceeding, domestic or foreign, is instituted by or against the Borrower or any of its subsidiaries, or the Borrower or any of its subsidiaries shall take any step toward, or to authorize, such a proceeding; or (j) INSOLVENCY. The Borrower or any of its subsidiaries shall become insolvent, generally shall fail or be unable to pay its debts as they mature, shall admit in writing its inability to pay its debts as they mature, shall make a general assignment for the benefit of its creditors, shall enter into any composition or similar agreement, or shall suspend the transaction of all or a substantial portion of its usual business. SECTION 7.2. REMEDIES. Upon the occurrence of any Event of Default set forth in SUBSECTIONS (A)(K) of SECTION 7.1 and during the continuance thereof, the Lender or any other holder of the Convertible Term Note may declare the Convertible Term Note and any other amounts owed to the Lender to be immediately due and payable, whereupon the Convertible Term Note and any other amounts owed to the Lender shall forthwith become due and payable. Upon the occurrence of any Event of Default set forth in SUBSECTIONS (L)-(M) of SECTION 7.1, the Convertible Term Note and any other amounts owed to the Lender shall be immediately and automatically due and payable without action of any kind on the part of the Lender or any other holder of the Convertible Term Note. The Borrower expressly waives presentment, demand, notice or protest of any kind in connection herewith. The Lender shall promptly give the Borrower notice of any such declaration, but failure to do so shall not impair the effect of such declaration. No delay or omission on the part of the Lender or any holder of the Convertible Term Note in exercising any power or right hereunder or under the Convertible Term Note shall impair such right or power or be construed to be a waiver of any Event of Default or any acquiescence therein, nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof, or the exercise of any other power or right. SECTION 8. DEFINITIONS SECTION 8.1. GENERAL. As used herein: (a) "AFFILIATE" of any Person means (a) any Person that, directly or indirectly, is in control of, is controlled by, or is under common control with such Person, (b) any Person who is a director or officer (i) of such Person, (ii) of any subsidiary of such Person or (iii) of any Person described in CLAUSE (A) above or (c) in the case of a trust, its protectors or trustees, any Person who is or has been a beneficiary thereof, or any Person who is or has been able to appoint a beneficiary thereof. For purposes of this definition, control of a Person shall mean the power, direct or indirect (i) to vote 25% or more of the securities having ordinary voting power for the election of directors of such Person, whether by ownership of securities, contract, proxy or otherwise, or (ii) to direct or cause the direction of the management and policies of such Person, whether by ownership of securities, contract, proxy or otherwise. -8-
(b) "AGREEMENT" shall have the meaning set forth in the PREAMBLE. (c) "BORROWER" shall have the meaning set forth in the PREAMBLE. (d) "CODE" means the Internal Revenue Code of 1986, as amended from time to time. (e) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. (f) "ERISA AFFILIATE" means any corporation or trade or business which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Code) as such Borrower or is under common control (within the meaning of Section 414(c) of the Code) with the Borrower. (g) "GAAP" shall mean generally accepted accounting principles in the United States of America as in effect on the date of this Agreement, consistently applied. (h) "INVESTOR" shall have the meaning set forth in the PREAMBLE. (i) "INVESTOR'S ADDRESS" shall have the meaning set forth in Section 3.1. (j) "LENDER" shall have the meaning set forth in the PREAMBLE. (k) "MULTIEMPLOYER PLAN" means a multiemployer plan defined as such in Section 3(37) of ERISA to which contributions have been made by the Borrower or any ERISA Affiliate as a "contributing sponsor" (within the meaning of Section 4001(a)(13) of ERISA). (l) "PBGC" means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA. (m) "PERSON" shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, limited liability company, institution, public benefit corporation, other entity or government (whether federal, state, county, city, municipal, local, foreign, or otherwise, including any instrumentality, division, agency, body or department thereof). (n) "PLAN" means any plan, program or arrangement which constitutes an "employee benefit plan" within the meaning of Section 3(3) of ERISA and which is maintained or contributed to by the Borrower or its ERISA Affiliates for the benefit of their employees, including former employees. -9-
(o) "SUBSIDIARY" means any corporation, partnership, joint venture, trust, or other legal entity of which the Borrower owns directly or indirectly 50% or more of the outstanding voting stock or interest, or of which the Borrower has effective control, by contract or otherwise. (p) "SUBSCRIPTION AMOUNT" shall equal $50,000. (q) "SUBSCRIPTION DATE" shall have the meaning set forth in the PREAMBLE. (r) "TERM LOAN MATURITY DATE" shall have the meaning set forth in SECTION 1.2. (s) "CONVERTIBLE TERM NOTE" shall have the meaning set forth in SECTION 1.2. (t) "UNMATURED EVENT OF DEFAULT" means an event or condition, which would become an Event of Default with notice or the passage of time or both. Except as and unless otherwise specifically provided herein, all accounting terms in this Agreement shall have the meanings given to them by GAAP and shall be applied and all reports required by this Agreement shall be prepared, in a manner consistent with the audited financial statements referred to in SECTION 4.3. SECTION 8.2. APPLICABILITY OF SUBSIDIARY AND AFFILIATE REFERENCES. Terms hereof pertaining to any subsidiary or affiliate shall apply only during such times as the Borrower has any subsidiary or affiliate. SECTION 9. MISCELLANEOUS SECTION 9.1. WAIVER OF DEFAULT. The Lender may, by written notice to the Borrower, at any time and from time to time, waive any Event of Default or Unmatured Event of Default, which shall be for such period and subject to such conditions as shall be specified in any such notice. In the case of any such waiver, the Lender and the Borrower shall be restored to their former position and rights hereunder and under the Convertible Term Note, respectively, and any Event of Default or Unmatured Event of Default so waived shall be deemed to be cured and not continuing; but no such waiver shall extend to or impair any right consequent thereon or to any subsequent or other Event of Default or Unmatured Event of Default. SECTION 9.2. NOTICES. All notices, requests and demands to or upon the respective parties hereto shall be deemed to have been given or made when deposited in the mail, postage prepaid, addressed: (a) if to the Lender to the Investor's Address, (b) if to the Borrower to NuWay Medical, Inc., 2603 Main Street, Suite 1150, Irvine, California 92614 Attention: Chief Executive Officer. - 10 -
or to such other address as may be hereafter designated in writing by the respective parties hereto. SECTION 9.3. NONWAIVER; CUMULATIVE REMEDIES. No failure to exercise, and no delay in exercising, on the part of the Lender of any right, power or privilege hereunder shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of the Lender herein provided are cumulative and not exclusive of any rights or remedies provided by law. SECTION 9.4. SURVIVAL OF AGREEMENTS. All agreements, representations and warranties made herein shall survive the delivery of the Convertible Term Note and the making of the Term Loan. SECTION 9.5. SUCCESSORS. This Agreement shall, upon execution and delivery by the Borrower and acceptance by the Lender, become effective and shall be binding upon and inure to the benefit of the Borrower, the Lender and their respective successors and assigns, except that the Borrower may not transfer or assign any of its rights or interest hereunder without the prior written consent of the Lender. SECTION 9.6. CAPTIONS. Captions in this Agreement are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. References herein to Sections or provisions without reference to the document in which they are contained are references to this Agreement. SECTION 9.7. SINGULAR AND PLURAL. Unless the context requires otherwise, wherever used herein the singular shall include the plural and vice versa, and the use of one gender shall also denote the others where appropriate. SECTION 9.8. COUNTERPARTS. This Agreement may be executed by the parties on any number of separate counterparts, and by each party on separate counterparts; each counterpart shall be deemed an original instrument; and all of the counterparts taken together shall be deemed to constitute one and the same instrument. SECTION 9.9. FEES. The Borrower agrees to pay or reimburse the Lender for all costs and expenses of enforcing this Agreement or the Convertible Term Note, or preserving its rights hereunder or under any document or instrument executed in connection herewith (including legal fees and reasonable time charges of attorneys who may be employees of the Lender, whether in or out of court, in original or appellate proceedings or in bankruptcy). SECTION 9.10. CONSTRUCTION. This Agreement, the Convertible Term Note, and any other document or instrument executed in connection herewith shall be governed by, and construed and interpreted in accordance with, the internal laws of the State of California and shall be deemed to have been executed in the State of California. [SIGNATURE PAGE FOLLOWS] - 11 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the day and year first above written. BORROWER NUWAY MEDICAL, INC.
/s/ -----------------------------Dennis Calvert, President
LENDER DAVID MOON
LENDER JAMES BURCHARD
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EXHIBIT A CONVERTIBLE TERM NOTE THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR APPLICABLE STATE SECURITIES LAWS, AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT THERE IS AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. Subscription Amount: $50,000 Irvine, California Dated: October 1, 2004 FOR VALUE RECEIVED, NUWAY MEDICAL, INC., a corporation organized under the laws of the state of Delaware ("BORROWER"), promises to pay to the order of "Investor", as that term is defined in the Convertible Loan Agreement by and between Borrower and Investor ("CONVERTIBLE LOAN AGREEMENT") (hereafter, together with any subsequent holder hereof, called "LENDER"), at its office at "Investor's Address", as that term is defined in the Convertible Loan Agreement, or at such other place as Lender may direct, the "Subscription Amount", noted above (the "LOAN"), payable in full one year from the "Subscription Date", or at an earlier date as provided in Section 3.2 of the Convertible Loan Agreement (the "MATURITY DATE"). This Convertible Term Note is duly authorized issue of the Borrower (the "ISSUER"), issued on October 1, 2004 (the "ISSUANCE DATE"), and designated as its Convertible Term Note due one year from the Issuance Date (the "NOTE"). Borrower agrees to pay interest on the unpaid principal amount from time to time outstanding hereunder on the dates and at the rate or rates as set forth in the Convertible Loan Agreement. Payments of both principal and interest are to be made in immediately available funds in lawful money of the United States of America, or in Preferred Stock of the Borrower as set forth below. Accrual of interest shall commence as of the Issuance Date. Interest shall be payable by the Issuer, at the Issuer's option, in cash or in that number of shares of preferred stock of the Issuer (the "PREFERRED STOCK") (at a price per share calculated pursuant to the conversion formula contained below), upon the earlier to occur of (i) upon conversion of this Note pursuant to the conversion features set forth below, or (ii) upon an Event of Default as defined below, and if an Event of Default occurs interest due hereunder shall be payable in cash or stock as set forth herein at the option of the Holder. Unless otherwise agreed in writing by both parties hereto, the interest so payable will be paid to the person in whose name this Note (or one or more predecessor Notes) is registered on the records of the Issuer regarding registration and transfers of the Note (the "NOTE Register"), provided, however, that the Issuer's obligation to a transferee of this Note arises only if such transfer, sale or other disposition is made in accordance with the terms and conditions contained in the Agreement and this Note. -1-
The Note is subject to the following additional provisions: 1. The Issuer shall be entitled to withhold from all payments of principal and/or interest of this Note any amounts required to be withheld under the applicable provisions of the U.S. Internal Revenue Code of 1986, as amended, or other applicable laws at the time of such payments. 2. This Note has been issued subject to investment representations of the original Holder hereof and may be transferred or exchanged only in compliance with the Securities Act and applicable state securities laws and in compliance with the restrictions on transfer provided in the Agreement. Prior to the due presentment for such transfer of this Note, the Issuer and any agent of the Issuer may treat the person in whose name this Note is duly registered on the Issuer's Note register as the owner hereof for the purpose of receiving payment as herein provided and all other purposes, whether or not this Note is overdue, and neither the Issuer nor any such agent shall be affected by notice to the contrary. The transferee shall be bound, as the original Holder by the same representations and terms described herein and under the Agreement. 3. The Holder or Issuer may, at its option, at any time up to and including December 31, 2004, convert the principal amount of this Note or any portion thereof, and any accrued interest thereon, into 10,000,000 shares of fully paid and non assessable Series A Preferred Stock of the Issuer ("CONVERSION SHARES"). The right to convert the Note may be exercised by telecopying an executed and completed notice of conversion (the "NOTICE OF CONVERSION") to the Holder or Issuer. Each business day on which a Notice of Conversion is telecopied in accordance with the provisions hereof shall be deemed a "Conversion Date". The Issuer will transmit the certificates representing Conversion Shares issuable upon such conversion of the Note (together with the certificates representing the Note not so converted) to the Holder via express courier, by electronic transfer (if applicable) or otherwise within ten Business Days after the Conversion Date, provided, the Issuer has received the original Note being so converted from the Holder. If the Company has not received the original Note being converted within three Business Days after Conversion Date, then the Issuer shall transmit the certificates representing the Conversion Shares issuable upon such conversion of the Note (together with the certificates representing the Note not so converted) to the Holder via express courier, by electronic transfer (if applicable) or otherwise within five business days after receipt of the original Notice of Conversion and original Note being converted. 4. The principal amount of this Note, and any accrued interest thereon, shall be reduced as per that principal amount indicated on the Notice of Conversion upon the proper receipt by the Holder of such Conversion Shares due upon such Notice of Conversion. -2-
5. The number of Conversion Shares shall be adjusted as follows: a. If the Issuer shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares of Common Stock, the number of Conversion Shares in effect immediately prior to such subdivision shall be proportionately increased, and conversely, in case the outstanding shares of Common Stock shall be combined into a smaller number of shares of Common Stock, the Conversion Price in effect immediately prior to such combination shall be proportionately reduced. 6. No provision of this Note shall alter or impair the obligation of the Issuer, which is absolute and unconditional, upon an Event of Default (as defined below), to pay the principal of, and interest on this Note at the place, time, and rate, and in the coin or currency herein prescribed. 7. The Issuer hereby expressly waives demand and presentment for payment, notice on nonpayment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereon, regardless of and without any notice, diligence, act or omission as or with respect to the collection of any amount called for hereunder. 8. If one or more "Events of Default" shall occur, as that term is used in the Convertible Loan Agreement, then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) or cured as provided herein, at the option of the Holder, and in the Holder's sole discretion, the Holder may consider this Note (and all interest through such date) immediately due and payable in cash, without presentment, demand protest or notice of any kind, all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law (including but not limited to consequential damages if any). It is agreed that in the event of such action, such Holder shall be entitled to receive all reasonable fees, costs and expenses incurred, including without limitation such reasonable fees and expenses of attorneys. The parties acknowledge that a change in control of the Issuer shall not be deemed to be an Event of Default as set forth herein. 9. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby. -3-
10. The Holder shall have the right, if applicable, to include all of the Conversion Shares underlying this Note (the "Registrable Securities") as part of any registration of securities filed by the Issuer (other than in connection with a transaction contemplated by Rule 145(a) promulgated under the Act or pursuant to Form S-4 or S-8) and must be notified in writing of such filing as soon as reasonably practicable; PROVIDED, HOWEVER, that the Holder agrees it shall not have any piggy-back registration rights pursuant to this Note if the Conversion Shares underlying this Note may be sold in the United States pursuant to the provisions of Rule 144 without any restriction on resale. Holder shall have five business days after receipt of the aforementioned notice from the Issuer, to notify the Issuer in writing as to whether the Issuer is to include Holder or not include Holder as part of such registration; PROVIDED, HOWEVER, that if any registration pursuant to this paragraph shall be underwritten, in whole or in part, the Issuer may require that the Registrable Securities requested for inclusion pursuant to this paragraph be included in the underwriting on the same terms and conditions as the securities otherwise being sold through the underwriters. If in the good faith judgment of the underwriter evidenced in writing of such offering only a limited number of Registrable Securities should be included in such offering, or no such shares should be included, the Holder, and all other selling stockholders, shall be limited to registering such proportion of their respective shares as shall equal the proportion that the number of shares of selling stockholders permitted to be registered by the underwriter in such offering bears to the total number of all shares then held by all selling stockholders desiring to participate in such offering. All registration expenses incurred by the Issuer in complying with the terms of this Note shall be paid by the Issuer, exclusive of underwriting discounts, commissions and legal fees and expenses for counsel to the Holder. 11. This Note does not entitle the Holder hereof to any voting rights or other rights as a shareholder of the Issuer prior to the conversion into Preferred Stock thereof, except as provided by applicable law. If, however, at the time of the surrender of this Note and conversion the Holder hereof shall be entitled to convert this Note, the Conversion Shares so issued shall be and be deemed to be issued to such holder as the record owner of such shares as of the close of business on the Conversion Date. 12. Except as expressly provided herein or as required by law, so long as this Note remains outstanding, the Issuer shall not, without the approval by vote or written consent by the Holder, take any action that would adversely affect the rights, preferences or privileges of this Note. IN WITNESS WHEREOF, the Issuer has caused this Convertible Term Note to be duly executed by an officer thereunto duly authorized. NUWAY MEDICAL, INC.
By /s/ -----------------------Name: Dennis Calvert, its President
NOTICE OF CONVERSION (To be Executed by the Registered Holder in order to Convert the Note) The undersigned hereby irrevocably elects to convert ___________ of the principal amount of the above Note into ___________ Shares of Series A Preferred Stock of NuWay Medical, Inc. according to the conditions hereof, as of the date written below. Date of Conversion: Signature: Name: Address: Date of Conversion: Signature: Name: Address: -5-
EX. 14.1 CODE OF ETHICS FOR SENIOR EXECUTIVE AND FINANCIAL OFFICERS NUWAY MEDICAL, INC. CODE OF ETHICS FOR SENIOR EXECUTIVE AND FINANCIAL OFFICERS OCTOBER 2004 PURPOSE The purpose of this Code of Ethics is to promote the honest and ethical conduct of the Senior Officers (as defined below) of NuWay Medical, Inc. (the "Company"), including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; full, fair, accurate, timely and understandable disclosure in periodic reports filed by the Company and compliance with all applicable rules and regulations applicable to the Company and its officers. APPLICABILITY This Code of Ethics is applicable to the Company's chief executive officer, chief financial officer and principal accounting officer (or persons performing similar functions), together, "Senior Officers." While we expect honest and ethical conduct in all aspects of our business from all of our employees, we expect the highest possible honest and ethical conduct from our Senior Officers. As a Senior Officer, you are an example for other employees and we expect you, through your leadership role, to foster a culture of transparency, integrity and honesty. Your responsibilities include maintaining a culture of high ethical standards and commitment to compliance and a work environment that encourages employees to raise concerns, and promptly addresses employee compliance concerns. The Company's Code of Business Conduct, which this Code of Ethics for Senior Executive and Financial Officers supplements, sets forth the fundamental principles and key policies and procedures that govern the conduct of all employees, officers and directors of the Company. You are bound by the requirements and standards set forth in the Code of Business Conduct, as well as those set forth in this Code of Ethics and other applicable policies and procedures. In the event of any conflict between the Code of Business Conduct and this Code of Ethics, this Code of Ethics shall govern your behavior or any required approvals or waivers. Compliance with this Code of Ethics is a condition of your employment and any violations of this Code may result in disciplinary action, up to and including termination of your employment. Waivers of this Code of Ethics may be made only by the board of directors of the Company or a committee of the board of directors comprised solely of independent directors. Any waivers of this Code of Ethics will be disclosed in accordance with applicable law, regulation or the requirements of any listing criteria of an exchange upon which the Company's stock may be traded. 1
COMPLIANCE WITH LAWS, RULES AND REGULATIONS You are expected to comply with both the letter and spirit of all applicable laws, rules and regulations governing the conduct of our business and to report any suspected violations of all applicable laws, rules and regulations to either the Chair of the Audit Committee or the Chair of the Corporate Governance Committee. You will not be subject to retaliation because of a good faith report of a suspected violation of this Code of Ethics. FRAUD, THEFT, BRIBERY AND SIMILAR CONDUCT Any act that involves theft, fraud, embezzlement, or misappropriation of any property, including that of the Company or any of its employees, suppliers or customers, is prohibited. Offering or accepting kickbacks or bribes are forbidden. AUDITORS Fraudulently influencing, misleading, coercing or manipulating the auditor of the Company's financial statements for the purpose of rendering those financial statements materially misleading is prohibited. REVENUE RECOGNITION Senior Officers must ensure that all revenue transactions are completed, to the best of the Senior Officer's knowledge, in accordance with the Company's revenue recognition policies. All commitments or representations made to customers or distributors or potential customers or distributors must be included in the final contract with the customer or distributor or related documentation submitted with customer or distributor orders. Employees must not make any commitments to the customer or distributor, orally or in writing, which have not been documented in the agreement or submitted to the the Company's finance and/or contract departments. The Company prohibits side-letters or kickbacks with customers or distributors or potential customers or distributors. ACCURATE PERIODIC REPORTING AND DISCLOSURE As a public company, the Company is required to file periodic and other reports with the Securities and Exchange Commission ("SEC"). The Company's policy is to make full, fair, accurate, timely and understandable disclosure in compliance with all applicable laws and regulations in all reports and documents that the Company files with, or submits to, the SEC and in all other public communications made by the Company. As a Senior Officer, you are required to promote compliance with this policy and to abide by all Company standards, policies and procedures designed to promote compliance with this policy. 2
ACCURATE RECORD KEEPING Every Senior Officer must maintain accurate and complete records, including providing accurate and complete information to the accounting and the finance departments. No false, misleading or artificial entries may be made on, or be provided for entry on, the Company's books and records. No funds or assets may be maintained by the Company for any illegal or improper purposes. All transactions must be fully and completely documented and recorded in the Company's accounting records. It is against Company policy to make entries that intentionally conceal or disguise the true nature of any transaction. CONFLICTS OF INTEREST It is the Company's policy that you should avoid transactions, commitments, and other activities which are not in the Company's best interests or which could involve an actual conflict, or the appearance of a conflict, between your interests and those of the Company. It is not possible to define all situations that could involve a conflict of interest; in most instances, however, sound business judgment should be sufficient to evaluate a situation. A conflict of interest exists when your loyalties are divided between the Company's interests and your own interests, those of your family, or those of a customer, supplier or competitor. You are expected to avoid both the fact and appearance of conflicts of interest. The prohibition against acting in a dual capacity in transacting Company business, and from acquiring interests adverse to the Company, is applicable irrespective of your intentions and without regard to whether the action caused, or has the potential to cause, injury to the Company. The following is presented as a guide in determining circumstances that might create conflicts of interest; they are not intended, however, to cover all possible situations. o Representing the Company in any transaction if your personal interests might affect your ability to represent the Company's interests fairly and impartially. You must not knowingly or voluntarily permit yourself to be placed in a position where your interests may become adverse to the Company's interests. You must not allow personal relationships with current or prospective customers or suppliers to influence business decisions. 3
o Investment by you or a member of your immediate family in a customer, supplier, or competitor (or any company/partnership affiliated with a customer, supplier, or competitor) of the Company is prohibited if you have or would have the opportunity to influence business transactions between the Company and the customer, supplier, or competitor. Passive investments in publicly traded companies shall not be a violation if you or a member of your immediate family owns less than 1% of such company's outstanding stock. o You must not take for yourself nor direct to others any existing business or any opportunities for prospective business that could be considered by the Company. o It is a conflict of interest to serve as a director of any company that competes with the Company. You may not serve as a director of a private company that is a supplier, customer, developer, or other business partner without first obtaining the approval of the Chair of the Corporate Governance Committee. You also may not become a director of any public company, without first obtaining the approval of the Chair of the Corporate Governance Committee. o You must not speculate or deal in materials, supplies, equipment or products that the Company buys or sells, or in property rights in which the Company may be interested. o Solicitation or acceptance by you or a member of your immediate family of any personal loan or guarantee from a customer, supplier or competitor. Before acting in a manner that creates or appears to create a conflict of interest, you must make full disclosure to and obtain written approval of either the Chair of the Audit Committee or the Chair of the Corporate Governance Committee. COMPLIANCE WITH THE CODE; REPORTING OF VIOLATIONS If you have questions about this Code of Ethics for Senior Executive and Financial Officers, you should seek guidance from the Company's legal counsel. If you know of or suspect a violation of applicable laws or regulations or this Code of Ethics for Senior Executive and Financial Officers, you must immediately report that information to either the Chair of the Audit Committee or the Chair of the Corporate Governance Committee. No one will be subject to retaliation because of a good faith report of a suspected violation. 4
NO RIGHTS CREATED This Code of Ethics is a statement of certain fundamental principles, policies and procedures that govern the Company's Senior Officers in the conduct of the Company's business. It is not intended to and does not create any rights in any employee, customer, supplier, competitor, stockholder or any other person or entity. ACKNOWLEDGMENT I have received and read the Code of Ethics for Senior Executive and Financial Officers, and I understand its contents. I agree to comply fully with the standards contained in the Code of Ethics and the Company's related policies and procedures. I understand that I have an obligation to promptly report to either the Chair of the Audit Committee or the Chair of the Corporate Governance Committee any suspected violation of the Code of Ethics for Senior Executive and Financial Officers. Print Name Signature Date_____________________________ 5
Exhibit 21.1 List of Subsidiaries of the Registrant Name Jurisdiction Names under which it does business NuWay Sports, LLC (1) California (same) (1) Joint venture company formed December 2003 but not active until January 2003
Exhibit 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the Registration Statement of NuWay Medical, Inc. and subsidiaries (the "Company") on Form S-8 (registration statement No. 333-113443), as filed on March 10, 2004, of our report dated May 12, 2003, relating to the consolidated balance sheet of the Company as of December 31, 2002, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended, appearing in the Annual Report of Form 10-KSB of the Company for the year ended December 31, 2003. Our report dated May 12, 2003 contains an explanatory paragraph that states that the Company exited several business lines during 2002 through the sale of interests in subsidiaries and the discontinuance of operations. Our report dated May 12, 2003 contains an additional explanatory paragraph that states the Company has limited liquid resources, recurring losses from operations and is seeking to implement its business plan with a new industry focus which raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ HASKELL & WHITE LLP HASKELL & WHITE LLP Irvine, California November 12, 2004
Exhibit 23.2 Consent of Independent Registered Public Accounting Firm To the Board of Directors NuWay Medical, Inc. I consent to the incorporation by reference in the Registration Statement of NuWay Medical, Inc. and subsidiary on Form S-8 (registration statement No. 333-113443), as filed on March 15, 2004, of our report dated October 26, 2004 relating to the consolidated balance sheet of NuWay Medical, Inc. as of December 31, 2003, and the related consolidated statements of operations, stockholders' equity, and cash flows for the year then ended, which report appears in the December 31, 2003 annual report on Form 10-KSB of NuWay Medical, Inc. My report dated October 26, 2004 contains an explanatory paragraph that states NuWay Medical, Inc. has discontinued its remaining operations. My report dated October 26, 2004 contains an explanatory paragraph that states NuWay Medical, Inc. has limited liquid resources, recurring losses from operations, and is seeking to implement its business plan, which requires the Company to acquire or develop a business which raise substantial doubt about its ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of that uncertainty.
/s/ Jeffrey S. Gilbert Jeffrey S. Gilbert, CPA
Los Angeles, California November 15, 2004
EXHIBIT 31.1 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 AND RULES 13A-14 AND 15D-14 UNDER THE SECURITIES EXCHANGE ACT OF 1934 I, Dennis Calvert, Chief Executive Officer and Interim Chief Financial Officer, certify that: 1. I have reviewed this 10-KSB of NuWay Medical, Inc. (the "Company"); 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company's as of, and for, the periods presented ire this report; 4. The Company's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company's and have: a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company's, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c. Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d. Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the Company's most recent fiscal quarter (the Company's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and 5. The Company's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions): a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting.
Date: November 15, 2004 /s/ Dennis Calvert -------------------------------Dennis Calvert
EXHIBIT 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 I, Dennis Calvert, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of NuWay, Inc. on Form 10-KSB for the fiscal year ended December 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-KSB fairly presents in all material respects the financial condition and results of operations of NuWay Medical, Inc.
Dated: November 15, 2004 By: /s/ Dennis Calvert --------------------------------Dennis Calvert President and Chief Executive Officer
A signed original of this written statement required by Section 906 has been provided to NuWay Medical, Inc. and will be retained by NuWay Medical, Inc. and furnished to the Securities and Exchange Commission or its staff upon request. I, Dennis Calvert, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Annual Report of NuWay Medical, Inc. on Form 10-KSB for the fiscal year ended December 31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-KSB fairly presents in all material respects the financial condition and results of operations of NuWay Medical, Inc.
Dated: November 15, 2004 By: /s/ Dennis Calvert ------------------------------Dennis Calvert Interim Chief Financial Officer
A signed original of this written statement required by Section 906 has been provided to NuWay Medical, Inc. and will be retained by NuWay Medical, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.