CONVERSION AGREEMENT
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This Conversion Agreement (this "Agreement"), dated as of October 16,
2003, by and between NuWay Medical, Inc. (the "Company"), on the one hand, and
New Millennium Capital Partners LLC ("New Millennium") and Xxxxxx Xxxxxxx
(collectively, New Millennium, its assignee, if any, and Xxxxxx Xxxxxxx are
referred to herein as the "Holder"), on the other hand.
WHEREAS, the Holder holds a $1,120,000 promissory note (the "Note"),
which note has been assumed by the Company; and
WHEREAS, the Company has defaulted on a $100,000 principal payment on
the Note that was due on October 1, 2003, which default has accelerated payments
due under the Note; and
WHEREAS, pursuant to discussions between the Holder and a Committee
appointed by the Company's Board of Directors, and in order to accommodate the
Company's working capital needs, the Holder has agreed to convert the Note,
including accrued interest thereon, into shares of the Company's common stock on
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, BE IT RESOLVED, in consideration of the undertakings
hereinafter contained, the parties hereto, intending to be legally bound, do
hereby agree as follows:
SECTION 1. Conversion. Upon receipt by the Holder of a notice from the Company
that the Company has obtained the Requisite Disinterested Stockholder Approval
(as defined below), the Holder shall convert the outstanding principal due under
the Note, together with any interest accrued thereon through the date of
conversion, into shares of the Company's common stock, at the rate of $0.036 per
share (the "Conversion"). As soon as practicable after sending such notice, the
Company shall issue to the Holder a certificate for the number of shares of the
Company's common stock to which the Holder is entitled. The Conversion shall be
considered payment in full by the Company of the Note. The Holder shall deliver
the Note to the Company for cancellation. The term "Requisite Disinterested
Stockholder Approval" means the approval of the Conversion by the majority of
the shares of the Company's voting stock (excluding any shares held by the
Holder and its affiliates) present in person or represented by proxy at a
stockholders meeting duly held and noticed.
SECTION 2. Special Meeting. The Company agrees to use commercially reasonable
efforts to notice and hold a special meeting of its stockholders to approve the
Conversion.
SECTION 3. Termination. This Agreement will terminate in the event the Company
does not obtain the Requisite Disinterested Stockholder Approval by March 1,
2004.
SECTION 4. Miscellaneous.
4.1 Waiver. No purported waiver by either party or any default by the
other party of any term or provision contained herein shall be deemed to be a
waiver of such term or provision unless the waiver is in writing and signed by
the
waiving party. No such waiver shall, in any event, be deemed a waiver of any
subsequent default under the same or any other term or provision contained
herein.
4.2 Entire Agreement. This Agreement sets forth the entire
understanding between the parties concerning the subject matter of this
Agreement and incorporates all prior negotiations and understandings. There are
no covenants, promises, agreements, conditions or understandings, either oral or
written, between the parties relating to the subject matter of this Agreement
other than those set forth herein. No representation or warranty has been made
by or on behalf of either party to this Agreement (or any officer, director,
employee or agent thereof) to induce the other party to enter into this
Agreement or to abide by or consummate any transactions contemplated by any
terms of this Agreement, except representations and warranties expressly set
forth herein. No alteration, amendment, change or addition to this Agreement
shall be binding upon either party unless in writing and signed by the parties
to be charged.
4.3 Joint Preparation. This Agreement is to be deemed to have been
prepared jointly by the parties hereto and any uncertainty or ambiguity existing
herein shall be interpreted according to the application of the rules of
interpretation for arms' length agreements.
4.4 No Partnership. Nothing contained in this Agreement shall be deemed
or construed by the parties hereto or by any third person to create the
relationship of principal and agent or of partnership.
4.5 Successors. Each and all of the provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns; provided, however, that neither
this Agreement, nor any rights herein granted may be assigned, transferred or
encumbered.
4.6 Notice of Procedure. Any consent, waiver, notice, demand, request
or other instrument required or permitted to be given under this Agreement shall
be in writing and be deemed to have been properly given only when delivered in
person or by telecopy or other facsimile transmission (followed with hard copy
sent by prepaid courier service), addressed to the following:
If to the Holder New Millennium Capital Partners
00000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000 000-0000
Fax: 000 000-0000
If to the Company NuWay Medical, Inc.
00000 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Attn: President
Telephone: 000 000-0000
Fax: 000 000-0000
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Notice of change of address will be effective only upon receipt.
4.7 Captions. The captions and section numbers appearing in this
Agreement are inserted only as a matter of convenience. They do not define,
limit, construe or describe the scope or intent of the provisions of this
Agreement.
4.8 Partial Invalidity. If any term or provision of this Agreement, or
the application thereof to any person, firm, corporation or other entity or
circumstance, shall be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to persons, firms,
corporations or other entities or circumstances other than those as to which it
is held invalid, shall be unaffected thereby and each remaining term or
provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
4.9 Counterparts. This Agreement may be executed in any number of
counterparts, all of which shall constitute one and the same instrument, and the
parties hereto may execute this Agreement by signing one or more counterparts.
4.10 Third Parties. Nothing herein express or implied is intended or
shall be construed to confer upon or give any person, other than the parties
hereto and their respective heirs, successors or permitted assigns, any rights
or remedies under or by reason of this Agreement.
4.11 Governing Law. This Agreement shall be governed and construed by
the provisions hereof and in accordance with the laws of the State of Delaware
applicable to agreements to be performed in the State of Delaware.
4.12 Further Assurances. If, at any time, either of the parties hereto
shall consider or be advised that any further documents are necessary or
desirable to carry out the provisions hereof, the appropriate party or parties
hereto shall execute and deliver, or cause to be executed and delivered, any and
all such other documents and do, or cause to be done, all things necessary or
proper to fully carry out the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
NUWAY MEDICAL, INC.
By:
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Xxxxxx Xxxxxxxxxx, Vice President
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Xxxxxx Xxxxxxx, individually
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NEW MILLENIUM CAPITAL PARTNERS, LLC
By:
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Name: Xxxxxx Xxxxxxx
Title: Manager
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