-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IPC29ILAxoOlKQc2SDrPzaIuriN7JWDhh9DnoS1ibt8HedryJ+bBUDm829mzdsyf tmfxDoTab5qlqWY6W/ujmw== 0001144204-06-000867.txt : 20060109 0001144204-06-000867.hdr.sgml : 20060109 20060109061009 ACCESSION NUMBER: 0001144204-06-000867 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20051231 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20060109 DATE AS OF CHANGE: 20060109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NUWAY MEDICAL INC CENTRAL INDEX KEY: 0000880242 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-AUTO DEALERS & GASOLINE STATIONS [5500] IRS NUMBER: 650159115 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-19709 FILM NUMBER: 06517887 BUSINESS ADDRESS: STREET 1: 23461 SOUTH POINTE DRIVE STREET 2: SUITE 200 CITY: LUGANA, HILLS STATE: CA ZIP: 92653 BUSINESS PHONE: 949-454-9011 MAIL ADDRESS: STREET 1: 23461 SOUTH POINTE DRIVE STREET 2: SUITE 200 CITY: LUGANA, HILLS STATE: CA ZIP: 92653 FORMER COMPANY: FORMER CONFORMED NAME: NUWAY ENERGY INC DATE OF NAME CHANGE: 20010815 FORMER COMPANY: FORMER CONFORMED NAME: LATIN AMERICAN CASINOS INC DATE OF NAME CHANGE: 19960520 FORMER COMPANY: FORMER CONFORMED NAME: REPOSSESSION AUCTION INC DATE OF NAME CHANGE: 19940823 8-K 1 v032929_8-k.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): December 31, 2005 NuWay Medical, Inc. ----------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 000-19709 65-0159115 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 2603 Main Street, Suite 1155, Irvine, CA 92614 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (949) 235-8062 Not Applicable --------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c)) 1 Item 1.01 Entry into a Material Definitive Agreement. On December 31, 2005, NuWay Medical, Inc. (the "Company") executed a Marketing and Licensing Agreement ("M&L Agreement") with IOWC Technologies, Inc., a federally registered Canadian corporation ("IOWC"), and Kenneth Reay Code, ("Code"), an individual (collectively referred to as "BioLargo"). Pursuant to the M&L Agreement the Company, through its wholly-owned subsidiary BioLargo Life Technologies, Inc., a California corporation ("BLTI") acquired certain rights ("Rights") from BioLargo to develop, market, sell and distribute products that were developed, and are in development, by BioLargo. BioLargo also assigned to BLTI its rights and obligations in its license agreements with BioLargo, LLC and Food Industry Technologies, Inc., as well as its rights set forth in a letter of intent with GTS Research, Inc. (collectively, the "Assigned Agreements"). The M&L Agreement provides that the Company is to receive any and all royalties, payments, license fees, and other consideration generated by the Assigned Agreements. As part of the assignment, IOWC has agreed to transfer its 20% interest in BioLargo, LLC. In consideration of the Rights and the Assigned Agreements, the Company has agreed to issue IOWC a total of 38% of its common stock. The parties further agreed to enter into additional agreements in furtherance of the July 2005 letter of intent between the Company and IOWC, including (i) an asset purchase agreement ("Asset Purchase Agreement") whereby the Company would acquire the two U.S. patents held by IOWC, (ii) a research and development agreement ("R&D Agreement") with a company to be managed and controlled by Mr. Code, and (iii) an employment agreement ("Employment Agreement") with Mr. Code. In consideration of the Asset Purchase Agreement, the Company has agreed to issue IOWC an additional one percent of its common stock. In consideration of the R&D Agreement and Employment Agreement the Company has agreed to issue to Mr. Code 17.6% of its common stock. The Company intends to enter into the Employment Agreement with Mr. Code in the near future. The Employment Agreement is anticipated to provide that Mr. Code will be appointed Chief Technology Officer of BLTI, and receive a monthly salary of $15,400. The Company is required to obtain the approval of its stockholders prior to the issuance of the common stock to IOWC required in the M&L Agreement. In the event that the Company's stockholders do not approve the issuance of stock, the M&L Agreement shall terminate, and all rights granted to the Company and its subsidiary BLTI shall revert to BioLargo. Item 3.02 Unregistered Sales of Equity Securities On December 31, 2005, the Company sold an aggregate amount of $299,500 of its promissory notes ("Notes") due and payable January 31, 2007 to twelve individual investors. Each Note bears interest at a rate of 10% per annum, and can be converted, in whole or in part, into shares ("Shares") of the common stock (the "Common Stock") of the Company, at an initial conversion price of $0.025 per share. 2 The Notes may not be converted by either the Company or the holder unless and until each of the following events has first occurred: (i) the Company's stockholders have approved an increase in the number of shares of common stock authorized by the Company's Certificate of Incorporation in an amount not less than the amount required to permit all warrants issued in this series to be converted into shares of the Company's Common Stock as provided herein, at a validly held meeting of stockholders at which a quorum is present and acting throughout; and (ii) the Company has filed with the Secretary of State of State of Delaware a Certificate of Amendment to the Company's Certificate of Incorporation to amend its Certificate of Incorporation to increase the number of shares of common stock authorized by the Company's Certificate of Incorporation. Purchasers of the Notes will receive, for no additional consideration, a stock purchase warrant (the "Warrant") entitling the holder to purchase a number of Shares of Common Stock equal to the number of Shares of Common Stock into which the Note is convertible. The Warrant is exercisable at an initial price of $0.05 per Share and will expire on January 31, 2008. These offerings and sales were made in reliance on the exemption from registration contained in Section 4(2) of the Securities Act of 1933 and/or Regulation D promulgated thereunder as not involving a public offering of securities. Item 9.01 Financial Statements and Exhibits (c) Exhibits Exhibit No. Description 10.1 Marketing and License Agreement 10.2 Form of Promissory Note 10.3 Form of Warrant SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: January 6, 2006 NUWAY MEDICAL, INC. By: /s/ Dennis Calvert ------------------------------------- Dennis Calvert Chief Executive Officer EX-10.1 2 v032929_ex10-1.txt Marketing and Licensing Agreement This Marketing and Licensing Agreement ("Agreement"), is executed by and between, in the first part, IOWC Technologies, Inc. ("IOWC"), a federally registered Canadian corporation, and Kenneth Reay Code ("Code"), an individual, (collectively referred to as "BioLargo"), and in the second part, NuWay Medical, Inc. ("NuWay"), a Delaware corporation, and BioLargo Life Technologies, Inc., a California corporation ("BLTI") and wholly owned subsidiary of NuWay. WHEREAS, IOWC and NuWay entered into a letter of intent in which NuWay would acquire from IOWC certain assets ("Assets"), including patents filed in the United States (the "Patents"), as well as existing distribution/license agreements with third parties, and in exchange issue to IOWC an agreed upon amount of its common stock; WHEREAS, the parties desire that NuWay, through its subsidiary, acquire certain rights prior to the formal transfer of the Patents to allow NuWay to utilize its resources to develop, market, sell and distribute the products based upon the Patents and technology currently in development; and WHEREAS, NuWay has formed a wholly owned subsidiary, BLTI, for the purposes of entering into this agreement and managing the marketing and development efforts related to the technology developed by Mr. Code and IOWC. NOW THEREFORE, in consideration of the mutual agreements and promises set forth herein, the parties agree as follows: DEFINITIONS 1. Definitions. In addition to terms otherwise defined herein, the following terms shall have the following meanings: A. "BioLargo Technology" shall mean generally the intellectual property estate primarily developed by Code, that includes two U.S. Patents and several related patents ready for the filing process, and relates to a unique process whereby highly effective disinfecting chemistry is incorporated into absorbent materials that can be then incorporated into products in multiple industries. B. "BioLargo Party" shall mean either IOWC or Code, individually or collectively. C. "BioLargo Products" shall mean shall refer to any product designed, manufactured, conceived or contemplated, either at the present time, or in the future, based on the BioLargo Technology or any derivation thereof. D. "Effective Date" shall mean January 1, 2006. E. "Patents" shall mean United States Patent numbers 6,146,725 and 6,328,929. BioLargo/NuWay Agreement Page 2 of 9 December 31, 2005 - -------------------------------------------------------------------------------- RIGHTS GRANTED 2. License Granted to BLTI. It is the intent of the parties that BLTI be granted a license, with respect to the BioLargo Technology and the BioLargo Products, to further develop the technology, to further develop existing and new products based on that technology, and to produce, market, sell and distribute any such products, through its own means, or by contract or assignment to third parties or otherwise. The parties intend that the rights granted hereto shall be interpreted broadly and inclusively, and shall include, without limitation, the rights as described below: A. Technology Development Rights. Subject to all terms, conditions, and limitations of this Agreement, BioLargo hereby grants to BLTI the exclusive worldwide right to expand and improve upon the existing BioLargo Technology, to conduct research and development activities based on the BioLargo technology, and to contract with third parties (such as IOWC USA, Inc.) for such research and development activities. Any improvements on the BioLargo Technology, or any new technology resulting such efforts of BLTI, shall be owned solely by BLTI. B. Product Development Rights. Subject to all terms, conditions, and limitations of this Agreement, BioLargo hereby grants to BTLI the exclusive worldwide right to expand and improve upon the existing BioLargo Products, to conduct research and development activities to create new products for market, and to contract with third parties for such research and development activities. Any new products created by BLTI resulting from these efforts shall be owned solely by BLTI. C. Marketing Rights. Subject to all the terms, conditions, and limitations set forth in this Agreement, BioLargo hereby grants to BTLI the worldwide exclusive right to market, advertise, and promote the BioLargo Technology and the BioLargo Products in any market and in any manner it deems commercially reasonable. D. Manufacturing Rights. Subject to all terms, conditions, and limitations of this Agreement, BioLargo hereby grants to BTLI a transferable, worldwide exclusive right to manufacture, or have manufactured, BioLargo Products. E. Selling Rights. Subject to all terms, conditions, and limitations of this Agreement, BioLargo hereby grants to BTLI a transferable, worldwide exclusive right to sell BioLargo Technologies and BioLargo Products. F. Distribution Rights. Subject to all terms, conditions, and limitations of this Agreement, BioLargo hereby grants to BTLI a transferable, worldwide exclusive right to inventory and distribute BioLargo Products. G. Licensing Rights. Subject to all terms, conditions, and limitations of this Agreement, BioLargo hereby grants to BTLI a transferable, worldwide exclusive right to license BioLargo Technologies and BioLargo Products to third parties. BioLargo/NuWay Agreement Page 3 of 9 December 31, 2005 - -------------------------------------------------------------------------------- H. Intellectual Property Rights. Subject to all terms, conditions, and limitations of this Agreement, BioLargo hereby grants to BTLI the right to file any document to establish or enforce any and all intellectual property rights, in the United States or abroad, concerning the name "BioLargo", or any derivation thereof, or of the BioLargo Technology, the Assets, the License Agreements, or any other materials, trade marks, service marks, copyrights, patents, or other intellectual property. BioLargo agrees to assist BLTI and cooperate in the completion of any documents, filings or notices necessary to be filed with any state or federal governmental agencies to effect the assignment or transfer of ownership in the Marks. The rights granted in this subparagraph shall include enforcement rights in any state, Federal or foreign court. 3. Assignment of License Agreements. IOWC has entered into two agreements and a letter of intent governing the marketing of products based on the BioLargo Technology in the food, medical, and biohazardous material transportation industries. Pursuant to the paragraphs below, IOWC shall assign its rights and obligations in those two agreements to BLTI. A. BioLargo, LLC. BioLargo hereby assigns to BTLI all of its rights, title and interest, including the benefits and the burdens, of the October 15, 2004 agreement by and between Kenneth R. Code, IOWC, Inc., BioLargo Technologies, Inc., or IOWC's assigns and Craig Sundheimer and Lloyd M. Jarvis (the "BLLCC Contract"). By this assignment, BTLI will have all rights granted to IOWC pursuant to the BLLLC Contract, including the rights to receive any payment of fees, royalties, or income, generated pursuant to the Agreement. B. FIT Agreement. BioLargo hereby assigns to BTLI all of its rights, title and interest, including the benefits and the burdens, of the January 15, 2005 agreement by and between Kenneth R. Code and IOWC, Inc. and Food Technologies, Inc. (the "FIT Contract"). By this assignment, BTLI will have all rights granted to IOWC pursuant to the FIT Agreement, including the rights to receive any payment of fees, royalties, or income generated pursuant to the Agreement. C. GTS Agreement. BioLargo hereby assigns to BTLI all of its rights, title and interest, including the benefits and the burdens, of the November 2004 letter of intent by and between Kenneth R. Code and IOWC and GTS Research, Inc. (the "GTS Agreement"). By this assignment, BTLI will have all rights granted to IOWC pursuant to the GTS Agreement, including the rights to receive any payment of fees, royalties, or income generated pursuant to the Agreement. D. Collectively, the BLLLC Agreement, the FIT Agreement, and the GTS Agreement are referred to herein as the "Assigned Contracts." From and after the Effective Date, BLTI will assume all of IOWC's rights and obligations arising after the Effective Date under the Assigned Contracts. It is expressly understood and agreed that neither BLTI or NuWay will be liable for any of the debts, obligations, or liabilities of IOWC relating to the Assigned Contracts incurred prior to the Effective Date. BioLargo/NuWay Agreement Page 4 of 9 December 31, 2005 - -------------------------------------------------------------------------------- CONSIDERATION 4. Stock Consideration. As full payment for IOWC's obligations set forth herein, NuWay will deliver to IOWC the following common stock (the "Stock Consideration") upon the approval of such issuances by NuWay's stockholders, which amounts shall be based upon the total outstanding common stock after the issuances of this stock consideration, as well as the conversion into common stock of any existing debt: A. Licensing Rights. As full payment for the license granted to BLTI pursuant to paragraph 2 (and its subparagraphs), NuWay will deliver to IOWC twenty-nine percent (29%) of its outstanding common stock, issued to "IOWC Technologies, Inc." B. Assigned Contracts. As full payment for the assignment of the contracts pursuant to paragraph 3 above, NuWay will deliver to IOWC nine percent (9%) of its outstanding common stock, issued to "IOWC Technologies, Inc." C. Research and Development Agreement. For Code's commitments to NuWay pursuant to the R&D Agreement, he shall receive 17.6% of the outstanding common stock of NuWay less any shares issued to Code pursuant to his employment agreement. D. The total common stock issued to IOWC and Code, collectively, for all components of this transaction, including the shares issued in this Agreement, the asset purchase agreement, the R&D Agreement, and those issued to Code pursuant to his Employment Agreement, shall total fifty-six point six percent (56.6%) of NuWay's total outstanding common stock as calculated on a fully diluted basis following the conversion of all outstanding notes and debts (as of the date of this Agreement) of NuWay into shares of common stock. 5. Escrow. NuWay is required to obtain the approval of its stockholders prior to the issuance of the Stock Consideration to IOWC. As such, the rights acquired by NuWay and its subsidiary BLTI shall be held in escrow subject to the issuance of the Stock Consideration after a stockholder's meeting, to be held as soon as practicable after the execution of this Agreement. NuWay and BLTI shall have full authority to execute and act upon the rights granted to it in this Agreement during the escrow and prior to the stock issuance. In the event that NuWay's stockholders do not approve the stock issuance, this Agreement shall terminate and all rights granted to NuWay and its subsidiary BLTI shall revert to IOWC and Code. REPRESENTATION AND WARRANTIES 6. Representations and Warranties of IOWC and Code. IOWC and Code represent and warrant as follows: BioLargo/NuWay Agreement Page 5 of 9 December 31, 2005 - -------------------------------------------------------------------------------- A. Organization, Standing and Corporate Power. IOWC is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted. B. Authority; Enforceability; Effect of Agreement. IOWC has full power and authority to enter into, execute and deliver this Agreement and perform its obligations hereunder. This Agreement has been duly authorized by all necessary corporate action of IOWC. This Agreement has been duly executed and delivered by IOWC and, assuming this Agreement is duly executed and delivered by BLTI and NuWay, constitutes a valid and legally binding obligation of IOWC and Code, enforceable against each in accordance with its terms. C. No Conflict. The execution and delivery by each BioLargo Party of this Agreement does not, and compliance by each BioLargo Party with the provisions of this Agreement will not, (i) conflict with or result in a breach or default under any of the terms, conditions or provisions of any contract to which any BioLargo Party is a party or otherwise bound, or to which any property or asset of any BioLargo Party is subject; (ii) violate any Law applicable to any BioLargo Party; or (iii) result in the creation or imposition of any Lien on any asset of any BioLargo Party. D. Assigned Contracts. True and correct copies of each Assigned Contract, including all amendments and modifications thereof and waivers thereunder, have been delivered to BLTI or its counsel. The Assigned Contracts constitute all contracts pursuant to which IOWC receives (or may receive) income, royalties or revenues. Each Assigned Contract is a valid, binding contract, and fully enforceable by or against IOWC. E. Litigation and Proceedings. There is no pending or, to the best knowledge of IOWC or Code, threatened legal action (or basis for any legal action) to which IOWC or Code is or may be a party or involving the Assigned Rights or the Assigned Contracts which could materially effect (i) any IOWC or Code's ability to execute and deliver this Agreement and perform the transactions contemplated hereby, or (ii) BLTI's ability to perform its obligations assumed in the Assigned Contracts. F. No Consents Required. There are no approvals, authorizations, consents, orders or other actions of, or filings with, any person that are required to be obtained or made by BioLargo in connection with the execution of, and the consummation of the transactions contemplated under, this Agreement, including, without limitation, the effective transfer to BLTI of the Assets, including the Assigned Contracts. G. Material Misstatements and Omissions. No representations and warranties by IOWC or Code in this Agreement, nor any exhibit, schedule or certificate furnished by IOWC or Code to BLTI or NuWay pursuant to this Agreement, contains or will contain any untrue statement of material fact or omits or will omit to state any material fact necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading. BioLargo/NuWay Agreement Page 6 of 9 December 31, 2005 - -------------------------------------------------------------------------------- 7. Representations and Warranties of NuWay. NuWay represents and warrants to BioLargo as follows: A. Organization, Standing and Corporate Power. NuWay is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted. B. Authority; Enforceability; Effect of Agreement. NuWay has full power and authority to enter into, execute and deliver this Agreement and perform its obligations hereunder. This Agreement has been duly authorized by all necessary action of NuWay. This Agreement has been duly executed and delivered by NuWay and constitutes a valid and legally binding obligation of NuWay and is enforceable against NuWay. C. No Consents Required. There are no approvals, authorizations, consents, orders or other actions of, or filings with, any Person that are required to be obtained or made by NuWay in connection with the execution of, and the consummation of the transactions contemplated under, this Agreement. 8. Representations and Warranties of BLTI. BLTI represents and warrants to BioLargo as follows: A. Organization, Standing and Corporate Power. BLTI is a corporation duly organized, validly existing and in good standing under the laws of the State of California and has all requisite power and authority to own, lease and operate its properties and assets and to carry on its business as now being conducted. B. Authority; Enforceability; Effect of Agreement. BLTI has full power and authority to enter into, execute and deliver this Agreement and perform its obligations hereunder. This Agreement has been duly authorized by all necessary action of BLTI. This Agreement has been duly executed and delivered by BLTI and constitutes a valid and legally binding obligation of BLTI and is enforceable against BLTI. C. No Consents Required. There are no approvals, authorizations, consents, orders or other actions of, or filings with, any Person that are required to be obtained or made by BLTI in connection with the execution of, and the consummation of the transactions contemplated under, this Agreement. BioLargo/NuWay Agreement Page 7 of 9 December 31, 2005 - -------------------------------------------------------------------------------- COVENANTS OF THE PARTIES 9. Agreements. The parties covenant and agree to enter into the following agreements: A. An asset purchase agreement, in which NuWay shall issue to IOWC 1% of its then outstanding common stock, in exchange for the two United States patents held by IOWC; B. A research and development agreement ("R&D Agreement") with an entity to be owned and managed by Code, in order to further develop the BioLargo Technology and products based on the technology; C. An employment agreement with Code, effective January 1, 2006, whereby Code will become an employee of BLTI, to include the issuance of 12,411,875 shares of NuWay's common stock; D. Documentation effecting the transfer of IOWC's ownership of BioLargo LLC to NuWay. GENERAL PROVISIONS 10. Entire Agreement; Waivers. This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them, and may not be modified or amended in any manner other than as provided herein; and no waiver of any breach or condition of this Agreement shall be deemed to be a waiver of any subsequent breach or condition of a like or different nature. 11. 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 any jurisdiction, then such term shall be enforced to the maximum extent permitted by law, rather than voided, and the remaining terms of this Agreement shall remain in full force and effect to the fullest extent provided by law. 12. 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. 13. 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: BioLargo/NuWay Agreement Page 8 of 9 December 31, 2005 - -------------------------------------------------------------------------------- TO: NuWay Medical, Inc. / BLTI 2603 Main Street, Suite 1155 Irvine, CA 92614 Attn: President TO: IOWC Technologies, Inc. Unit 4, 1780 Glastonbury Blvd NW Edmonton, AB, Canada T5T 6P9 TO: Kenneth R. Code Unit 4, 1780 Glastonbury Blvd NW Edmonton, AB, Canada T5T 6P9 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. 14. Attorneys' Fees and Costs. In the event that any legal proceeding is brought to enforce or interpret any of the rights or obligations under provisions of 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 whether or not the action or proceeding proceeds to final judgment. 15. 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 relating to this Agreement shall be in the state or federal courts of the county of Orange, State of California. 16. 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. [remainder of page intentionally left blank; signature page follows] BioLargo/NuWay Agreement Page 9 of 9 December 31, 2005 - -------------------------------------------------------------------------------- It witness whereof, the parties hereto have executed this Marketing and License Agreement as of the date indicated. NuWay Medical, Inc. IOWC Technologies, Inc. By: /s/ By: /s/ ------------------------------ --------------------------------- Dennis Calvert, President Kenneth R. Code, President Date Executed: 12/31/05 Date Executed: 12/31/05 BioLargo Life Technologies, Inc. Kenneth R. Code, an individual By: /s/ By: /s/ ------------------------------ --------------------------------- Dennis Calvert, President Date Executed: 12/31/05 Date Executed: 12/31/05 BioLargo Life Technologies, Inc. By: /s/ ------------------------------ Kenneth R. Code, Board Member Date Executed: 12/31/05 EX-10.2 3 v032929_ex10-2.txt FORM OF CONVERTIBLE 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: $XXX.XX Irvine, California Subscription Date: _______, 2005 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 below (hereafter, together with any subsequent holder hereof, called "Holder"), at its office at "Investor's Address", as that term is defined below, or at such other place as Holder may direct, the "Subscription Amount", noted above (the "Loan"), payable on January 31, 2007, or at an earlier date as provided herein (the "Maturity Date"). This Convertible Note is duly authorized issue of the Borrower (the "Issuer"), issued on the Subscription Date (the "Issuance Date"), and designated as its Convertible Note due January 31, 2007 (the "Note"). The Borrower agrees to pay interest on the unpaid principal amount of the Loan from time to time outstanding hereunder at the following rates per year, compounded annually: (i) before maturity of the Loan, whether by acceleration or otherwise, at the rate per annum equal to ten percent (10%); (ii) after the maturity of the Loan, whether by acceleration or otherwise, until paid, at a rate per annum equal to fifteen percent (15%). 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 below. In the event that the Borrower chooses to pay the Note prior to the Maturity Date, the Borrower shall give notice to the Holder of such election, and the Holder shall have 10 days thereafter to elect, if the Holder so chooses, to convert the Note into Common Stock pursuant to the terms 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 Common stock of the Issuer (the "Common 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. 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, subject to the "Conversion Contingencies" (set forth below), at any time convert the principal amount of this Note or any portion thereof, and any accrued interest thereon, into a number shares of fully paid and non assessable Common Stock of the Issuer pursuant to the following formula: the Subscription Amount divided by $0.025 ("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. The Conversion of this note may require that the Issuer amend its charter to increase the number of common shares authorized and therefore, the conversion may not take place prior to the Issuer's completion of that process. Any delay due to such circumstance shall not be an event of default under this Note. Issuer shall promptly take action to affect such amendments to its charter. 4. Conversion Contingencies: Notwithstanding anything else herein to the contrary, the Holder shall not have the right, and the Company shall not have the obligation, to convert all or any portion of this Note, unless and until each of the following events has first occurred: (i) the Company's stockholders have approved an increase in the number of shares of common stock authorized by the Company's Certificate of Incorporation in an amount not less than the amount required to permit all warrants issued in this series to be converted into shares of the Company's Common Stock as provided herein, at a validly held meeting of stockholders at which a quorum is present and acting throughout; and (ii) the Company has filed with the Secretary of State of State of Delaware a Certificate of Amendment to the Company's Certificate of Incorporation to amend its Certificate of Incorporation to increase the number of shares of common stock authorized by the Company's Certificate of Incorporation. -2- 5. 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. 6. 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. 7. 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. 8. 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. 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 c. 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 d. 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 e. Insolvency. The Borrower 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. 9. If one or more "Events of Default" shall occur, 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 elect to consider this Note (and all interest through such date) immediately due and payable. In order to so elect, the Holder must deliver written notice of the -3- election and the amount due to the Borrower via certified mail, return receipt requested, at the Borrower's address as set forth herein (or any other address provided to the Holder), and thereafter the Borrower shall have ten business days upon receipt to cure the Event of Default, pay the Note, or convert the amount due on the Note pursuant to the conversion formula set forth above. 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. 10. 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. 11. This Note does not entitle the Holder hereof to any voting rights or other rights as a stockholder of the Issuer prior to the conversion into Common 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. 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 --------------------------------- Name: Dennis Calvert, its President ACKNOWLEDGED AND ACCEPTED: Investor Name (print): -------------------------- Investor Signature: ----------------------------- Address: ----------------------------- ----------------------------- -4- 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 Common 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: ---------------------------------- ---------------------------------- -1- EX-10.3 4 v032929_ex10-3.txt THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES ACT OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACTS COVERING THIS WARRANT AND THE SECURITIES REPRESENTED BY THIS WARRANT OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACTS. NUWAY MEDICAL, INC. FORM OF WARRANT TO PURCHASE COMMON STOCK Issued: XXXX, 2005 WARRANT NO. XXXX THIS CERTIFIES THAT, for value received, XXXXXXX, an individual (the "Holder"), is entitled to subscribe for and purchase from NUWAY MEDICAL, INC., a corporation organized under the laws of the state of Delaware (the "Company"), subject to Section 1(b) hereof, commencing at the time periods prescribed herein and ending at 5:00 p.m. California on January 31, 2008, XXXX shares (the "Shares") of common stock, par value, $0.00067, of the Company (the "Common Stock"). The exercise price for each Share subject to this Warrant (the "Warrant Price") is equal to $0.05. The number of Shares and the Warrant Price are subject to adjustment from time to time as provided in Section 4 of this Warrant. This Warrant is issued in connection with and as consideration for the Convertible Note dated the date hereof and issued by the Company in favor of the Holder, which Convertible Note has been issued pursuant the Holder's investment in the Company. 1. Method of Exercise; Payment; Issuance of New Warrant. (a) The purchase right represented by this Warrant may be exercised by the Holder, in whole or in part, subject to the limitation set forth below, and from time to time, by (i) the surrender of this Warrant (with a notice of exercise in the form attached hereto as Exhibit A, duly executed) at the principal office of the Company and (ii) the payment to the Company, by check or wire transfer of funds to an account specified in writing by the Company, of an amount equal to the aggregate Warrant Price. The Shares so purchased, representing the aggregate number of shares specified in the executed Exhibit A, shall be delivered to the Holder within a reasonable time, not exceeding ten (10) business days, after this Warrant shall have been so exercised. Upon receipt by the Company of this Warrant at the office of the Company, in proper form for exercise and accompanied by the amount equal to the aggregate Warrant Price, the Holder shall be deemed to be the holder of record of the Shares issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Shares shall not then be actually delivered to the Holder. (b) Notwithstanding anything else herein to the contrary, the Holder shall not have the right, and the Company shall not have the obligation, to exercise all or any portion of this Warrant, unless and until each of the following events has first occurred: (i) the Company's stockholders have approved an increase in the number of shares of common stock authorized by the Company's Certificate of Incorporation in an amount not less than the amount required to permit all warrants issued in this series to be converted into shares of the Company's Common Stock as provided herein, at a validly held meeting of stockholders at which a quorum is present and acting throughout; and (ii) the Company has filed with the Secretary of State of State of Delaware a Certificate of Amendment to the Company's Certificate of Incorporation to amend its Certificate of Incorporation to increase the number of shares of common stock authorized by the Company's Certificate of Incorporation. (c) If this Warrant shall have been exercised only in part, the Company shall, at the time of delivery of such Shares, deliver to the Holder a new Warrant evidencing the right to purchase the remaining Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant, or, at the request of Holder, appropriate notation may be made on this Warrant which shall then be returned to Holder. 2. Stock Fully Paid; Reservation of Shares. All Shares that may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be fully paid and nonassessable, and free from all preemptive rights, taxes, liens and charges with respect to the issue thereof; provided, however, that the Company shall not be required to pay any transfer taxes with respect to the issue of shares in any name other than that of the registered holder hereof. During the period within which the rights represented by this Warrant may be exercised, the Company will at all times have authorized, and reserved for the purpose of the issue upon exercise of the purchase rights evidenced by this Warrant, a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant. The Company shall at all times take all such action and obtain all such permits or orders as may be necessary to enable the Company lawfully to issue such Common Stock as duly and validly issued, fully paid and nonassessable shares upon exercise in full of this Warrant. 3. Fractional Shares. No fractional shares of Common Stock will be issued in connection with any exercise hereunder, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Fair Market Value of such Shares. 4. Adjustment. This Warrant shall be subject to adjustment from time to time upon the occurrence of certain events, as follows: (a) Adjustment for Stock Splits and Combinations. If the Company shall at any time or from time to time after the date hereof effect a subdivision of the outstanding Common Stock, the Warrant Price then in effect immediately before that subdivision shall be proportionately decreased. If the Company shall at any time or from time to time after the date hereof combine the outstanding Common Stock, the Warrant Price then in effect immediately before the combination shall be proportionately increased. Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective. (b) Adjustment for Certain Dividends and Distributions. In the event the Company at any time or from time to time after the date hereof shall make or issue a dividend or other distribution payable in additional shares of Common Stock, then and in each such event the Warrant Price shall be decreased as of the time of such issuance, by multiplying the Warrant Price by a fraction: -2- (x) the numerator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance; and (y) the denominator of which shall be the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance plus the number of shares of Common Stock issuable in payment of such dividend or distribution. (c) Adjustment of Number of Shares. Upon each adjustment of the Warrant Price pursuant to either Section 4(a) or 4(b) of this Warrant, the number of shares of Common Stock purchasable upon exercise of this Warrant shall be adjusted to the number of shares of Common Stock, calculated to the nearest one hundredth of a share, obtained by multiplying the number of shares of Common Stock purchasable immediately prior to such adjustment upon the exercise of the Warrant by the Warrant Price in effect prior to such adjustment and dividing the product so obtained by the new Warrant Price. (d) Adjustment for Reclassification, Exchange and Substitution. If the Common Stock issuable upon the exercise of this Warrant are changed into the same or different number of shares of any class or classes of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination provided for in Section 4(a) above, a dividend or distribution provided for in Section 4(b) above, or a reorganization, merger, consolidation or sale of assets, provided for in Section 4(e) below), then and in any such event the Holder shall have the right thereafter to exercise this Warrant into the kind and amount of stock and other securities receivable upon such recapitalization, reclassification or other change, by holders of the number of shares of Common Stock for which this Warrant might have been exercised immediately prior to such recapitalization, reclassification or change. (e) Reorganization, Mergers, Consolidations or Sales of Assets. If at any time or from time to time there is a capital reorganization of the Common Stock (other than a subdivision or combination provided for in Section 4(a) above, a dividend or distribution provided for in Section 4(b) above, or a reclassification or exchange of shares provided for in Section 4(d) above) or a merger or consolidation of the Company with or into another entity, or a sale of all or substantially all of the Company's properties and assets to any other person or entity, then, as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant the number of shares of stock or other securities, money or property of the Company, or of the successor entity resulting from such merger or consolidation or sale, to which a holder of Common Stock deliverable upon conversion would have been entitled on such capital reorganization, merger, consolidation, or sale. The Company shall not effect any reorganization, merger, consolidation or sale unless prior to the consummation thereof each entity or person (other than the Company) that may be required to deliver any cash, securities or other property upon the exercise of this Warrant shall assume, by written instrument delivered to the Holder, the obligation to deliver to the Holder such cash, securities or other property as in accordance with the foregoing provisions the Holder may be entitled to receive. The foregoing provisions of this Section 4(e) shall similarly apply to successive reorganizations, mergers, consolidations and sales. (f) No Impairment. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all -3- times in good faith assist in the carrying out of all the provisions of this Section and in the taking of all such action as may be necessary or appropriate in order to protect the conversion rights of the Holder against dilution or other impairment. Without limiting the generality of the foregoing, the Company will not issue any capital stock of any class which is preferred as to dividends or as to the distribution of assets upon the voluntary or involuntary dissolution, liquidation or winding up of the Company. (g) Notice of Adjustments. Whenever this Warrant shall be adjusted pursuant to this Section 4, the Company shall make a certificate signed by an officer of the Company setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the new Warrant Price and the type or the number of Shares purchasable after giving effect to such adjustment, and shall cause copies of such certificate to be mailed (by first class mail, postage prepaid) to the Holder. 5. The Company's Obligation to Make Payments. (a) Dividends and Distributions. In the event the Company at any time or from time to time after the date hereof shall make or issue a dividend or other distribution, whether payable in cash, securities or other property of the Company, with respect to any of its capital stock for which an adjustment is not made pursuant to Section 4 of this Warrant, then and in each such event, the Company shall concurrently make a cash payment to the Holder equal to the product of (i) the quotient obtained by dividing (x) the amount of cash plus the fair value of any property or securities distributed by (y) the number of shares of Common Stock outstanding on the record date for such dividend or distribution and (ii) the number of Shares on such record date. (b) Redemption of Capital Stock. In the event the Company at any time or from time to time after the date hereof shall repurchase or redeem any of its capital stock or any rights, including without limitation, options, warrants or other convertible or exchangeable securities, to acquire such capital stock, then and in each such event, the Company shall concurrently make a cash payment to the Holder equal to the product of (i) the quotient obtained by dividing (x) the aggregate amount of cash and the aggregate fair value of any property paid out by the Company in connection with any such repurchase or redemption by (y) the number of shares of Common Stock outstanding on a fully diluted basis immediately after such repurchase or redemption and (2) the number of Shares. 6. Notice of Record Date. In the event: (1) that the Company declares a dividend (or any other distribution) on any of its capital stock (including without limitation, its Common Stock); (2) that the Company repurchases or redeems any of its capital stock (including without limitation, its Common Stock) or any rights to acquire such capital stock; (3) that the Company subdivides or combines its outstanding shares of Common Stock; (4) of any reclassification of the Common Stock, or of any consolidation, merger or share exchange of the Company into or with another entity, or of the sale of all or substantially all of the assets of the Company; -4- (5) of the involuntary or voluntary dissolution, liquidation or winding up of the Company; or (6) of any offer of its Common Stock or any rights to acquire such Common Stock for consideration paid per share of Common Stock less than the Warrant Price then in effect. then the Company shall notify the Holder at least 30 days prior to the date specified in (A), (B) or (C) below, in writing stating: (A) the record date of such dividend, distribution, repurchase, redemption, subdivision or combination, or, if a record is not to be taken, the date as to which the holders of Common Stock of record to be entitled to such dividend, distribution, repurchase, redemption, subdivision or combination are to be determined; (B) the date on which such reclassification, consolidation, merger, share exchange, sale, dissolution, liquidation or winding up is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property deliverable upon such reclassification, consolidation, merger, sale, dissolution or winding up; or (C) the date on which such offering of its Common Stock or any rights to acquire such Common Stock for consideration paid per share of Common Stock less than the Warrant Price is expected to become consummated. 7. Compliance with Securities Act; Disposition of Warrant or Common Stock. (a) Compliance with Securities Act. The Holder, by acceptance hereof, agrees that this Warrant and the Shares to be issued upon exercise hereof are being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Warrant or any Common Stock to be issued upon exercise hereof except under circumstances which will not result in a violation of the Securities Act of 1933, as amended (the "Act"). All Shares issued upon exercise of this Warrant (unless registered under the Act or sold or transferred pursuant to Rule 144 promulgated under the Act) shall be stamped or imprinted with a legend in substantially the following form: "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES ACTS OF ANY STATE AND MAY NOT BE SOLD OR TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACTS COVERING THIS SECURITY OR PURSUANT TO AN EXEMPTION FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACTS." (b) Disposition of Warrant or Shares. Subject to the terms and conditions of this Warrant and applicable securities laws, this Warrant and the rights represented by this Warrant may be transferred, assigned or pledged, in whole or in part with prior written notice to the Company. Any transfer shall be accompanied by the Notice of Transfer form attached hereto as Exhibit B. -5- 8. Rights as Shareholders. The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein. 9. Representations and Warranties. The Company represents and warrants to the Holder as follows: (a) This Warrant has been duly authorized and executed by the Company and is a valid and binding obligation of the Company enforceable in accordance with its terms; (b) The Shares have been duly authorized and reserved for issuance by the Company and, when issued in accordance with the terms hereof, will be validly issued, fully paid and nonassessable; (c) The rights, preferences, privileges and restrictions granted to or imposed upon the Shares and the holders thereof are as set forth in the Company's Certificate of Incorporation; (d) The execution and delivery of this Warrant are not, and the issuance of the Shares upon exercise of this Warrant in accordance with the terms hereof will not be, inconsistent with the Company's Articles of Incorporation or by-laws, do not and will not contravene any law, governmental rule or regulation, judgment or order applicable to the Company, and, except for consents that have already been obtained by the Company, do not and will not conflict with or contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument of which the Company is a party or by which it is bound or require the consent or approval of, the giving of notice to, the registration with or the taking of any action in respect of or by, any federal, state or local government authority or agency or other person; and 10. Modification and Waiver. This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought. 11. Notices. Except as otherwise expressly provided herein, all notices and other communications provided for hereunder shall be in writing (including telegraphic, telex, telecopier or cable communication) and mailed, telegraphed, telexed, telecopied, cabled or delivered to the applicable party at its address specified opposite its signature below, or at such other address as shall be designated by such party in a written notice to the other. All such notices and communications shall, when mailed, telegraphed, telexed, telecopied or cabled or sent by overnight courier, be effective when deposited in the mails, delivered to the telegraph company, cable company or overnight courier, as the case may be, or sent by telex or telecopier. 12. Descriptive Headings. The descriptive headings of the several sections of this Warrant are inserted for convenience only and do not constitute a part of this Warrant. 13. Governing Law. THIS WARRANT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA. 14. Binding Effect on Successors. This Warrant shall be binding upon any entity succeeding the Company by merger, consolidation or acquisition of all or substantially all of the Company's assets, and all of the obligations of the Company relating to the Common Stock issuable upon the exercise of this Warrant shall survive the exercise, and termination of this Warrant and all of the -6- covenants and agreements of the Company shall inure to the benefit of the successors and assigns of the Holder. 15. Severability. In case any one or more of the provisions contained in this Warrant shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. The parties shall endeavor in good faith negotiations to replace the invalid, illegal or unenforceable provisions with valid provisions, the economic effect of which comes as close as possible to that of the invalid, illegal or unenforceable provisions. 16. Lost Warrants or Stock Certificates. The Company covenants to the Holder that upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction, or mutilation of this Warrant or any stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, the Company will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate. [Signature Page Follows] -7- IN WITNESS WHEREOF, the Company has caused this Warrant to be executed and delivered by its duly authorized officer on the day and year first above written. NUWAY MEDICAL, INC. By: ------------------------------------- Name: Dennis Calvert, President Address: 2603 Main Street, Suite 1155 Irvine, California 92614 Attention: Dennis Calvert Facsimile: 949 666-7297 ACKNOWLEDGED AND ACCEPTED: XXXXX By: ----------------------- Name: Title: Address: -8- EXHIBIT A NOTICE OF EXERCISE TO: NUWAY MEDICAL, INC. (1) The undersigned hereby elects to purchase __________ shares of Common Stock of NUWAY MEDICAL, INC. pursuant to the terms of the attached Warrant, and, unless such Warrant allows the exercise to be "cashless," tenders herewith payment of the Warrant Price for such shares in full. (2) Please issue a certificate or certificates representing said shares of Common Stock in the name of the undersigned or in such other name as is specified below: ------------------------------------- (Name) ------------------------------------- (Name) (3) Please issue a new Warrant for the unexercised portion of the attached Warrant in the name of the undersigned or in such other name as is specified below: ------------------------------------- (Name) ------------------------------------- (Name) ------------------------------------- (Signature) ------------------------------------- (Date) EXHIBIT B NOTICE OF TRANSFER (To be signed only upon transfer of Warrant) FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ____________________________________________ the right represented by the attached Warrant to purchase __________ shares of the Common Stock of NUWAY MEDICAL, INC., to which the attached Warrant relates, and appoints _____________________ as Attorney to transfer such right on the books of NUWAY MEDICAL, INC., with full power of substitution in the premises. Dated: ------------------------ -------------------------------------- (Signature must conform in all respects to the name of the Holder as specified on the face of the Warrant) -------------------------------------- -------------------------------------- (Address) Signed in the presence of: ---------------------------- -----END PRIVACY-ENHANCED MESSAGE-----