Exhibit 2.01
MUTUAL RESCISSION AGREEMENT
This MUTUAL RESCISSION AGREEMENT (this "AGREEMENT") is entered into as of
October 14, 2004, by and between NuWay Medical, Inc., a Delaware corporation
("NMED"); Xxxxxxx X. Xxxx, an individual residing in Florida ("E-XXXX"); Xxxx X.
Xxxx, an individual residing in Florida ("L-XXXX"); and Premium Medical Group,
Inc., a Florida corporation ("PREMIUM MEDICAL GROUP"). In this Agreement, E-Xxxx
and L-Xxxx are collectively referred to as "PMG SHAREHOLDERS".
RECITALS
WHEREAS, the Parties entered into a Stock Purchase Agreement as of January
30, 2004 (the "PURCHASE AGREEMENT"), whereby NMED agreed to purchase one hundred
percent of the issued and outstanding stock (the "PMG SHARES") of Premium
Medical Group, a medical supply company, from L-Xxxx and E-Xxxx (the
"TRANSACTION"), with the effect to make Premium Medical Group a wholly owned
subsidiary of NMED;
WHEREAS, in exchange for the PMG Shares, the PMG Shareholders were
entitled to receive from NMED 30,000,000 shares of NMED's common stock (the
"NMED SHARES"), with a right to receive additional shares (or have shares
subtracted from the 30,000,000 amount) depending on the revenue generated by
Premium Medical Group during the one year following the closing of the
Transaction;
WHEREAS, a condition precedent to each party's obligation to close the
Transaction was the delivery of the PMG Shares to NMED and the NMED Shares to
the Premium Medical Group shareholders (E-Xxxx and L-Xxxx), which condition was
never met in that neither party delivered the required share certificates;
WHEREAS, subsequent to the Transaction date, Premium Medical Group failed
to engage an auditor to perform an audit of its books and records in accordance
with the requirements of Form 8-K, Item 7, as then in effect, and NMED did not
have the financial resources to pay for such engagement, and thus the audit was
never performed, and the amended Form 8-K was never filed;
WHEREAS, the Parties never fully consummated the Transaction, in that, in
addition to the above, the Parties never consolidated their operations, NMED
never appointed management or otherwise managed the affairs of Premium Medical
Group, and NMED never exercised any rights or powers (or received any benefits)
due a shareholder of a corporation; and
WHEREAS, given the foregoing, the Parties have determined that it is in
the best interest of the Parties mutually to rescind the Purchase Agreement and
return the Parties to their respective positions prior to the Transaction.
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, NMED, the PMG Shareholders, and Premium Medical Group agree as
follows:
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ARTICLE I
MUTUAL RESCISSION
1.1 Authority. Each party has the authority to enter into, execute and
deliver this Agreement and any other instruments and agreements required to be
executed and delivered pursuant to this Agreement and to consummate the
transactions contemplated herein. This Agreement is a valid and binding
obligation of each party, enforceable in accordance with its terms.
1.2. Rescission. The Purchase Agreement and all agreements entered into by
and among the Parties in connection therewith are hereby retroactively rescinded
and terminated as of January 31, 2004, are of no force or effect as if each of
the same had never been executed and delivered, and each of the Parties to this
Agreement will be restored to the position it was in immediately before each of
such agreements was executed, with respect to the NMED Shares, the PMG Shares,
and Premium Medical Group, in the manner and on the terms set forth hereinbelow.
1.3. Waiver of Right to receive Shares. Subject to the terms and
conditions set forth in this Agreement, (i) NMED hereby forever waives any right
to receive the PMG Shares from the PMG Shareholders, and (ii) the PMG
Shareholders hereby waive any right to receive the NMED Shares from NMED.
1.4. Board Resignation. Effective as of the date of this Agreement, Xxxx
Xxxx shall have resigned from the board of directors of NMED.
1.5. No Assignment. Each of the Parties to this Agreement represents and
warrants that he/she/it has not assigned or transferred or purported to assign
or transfer, voluntarily or involuntarily, or by operation of law, any matters
released pursuant to this Agreement or any portion of it, or any interest in the
Purchase Agreement or any agreements entered into in connection therewith, or
the NMED Shares or the PMG Shares. The Parties each further represent and
warrant that none of the NMED Shares or PMG Shares are subject to any lien,
claim, charge, encumbrance, pledge, security interest or claim of others.
1.6. Section 16 Reports. Each of L-Xxxx and E-Xxxx shall file any
necessary reports (or amend any existing reports) pursuant to Section 16 of the
Securities Exchange Act of 1934 reflect the terms of this Agreement.
1.7 Covenant to Cooperate with Audit if Necessary. Premium Medical Group,
and the PMG Shareholders, hereby covenant and agree to use their maximum best
efforts to cooperate with NMED and provide NMED any necessary documentation
and/or records and/or information to assist NMED in any filing or disclosure
matter required by the Securities and Exchange Commission or Federal/State law,
including but not limited to any exhibits required by Item 9.01 in Form 8-K
(audited financial statements of Premium Medical Group). NMED shall be solely
responsible to bear the expense of any required fees paid to an auditing firm.
1.8 Covenant to File Appropriate Documentation with Florida Secretary of
State. Each party shall mutually cooperate and file any documents deemed
necessary to be filed with the Florida Secretary of State.
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1.9 Release. Each of the Parties hereby forever discharge and release each
other party, and each of its past and present employees, agents, executors,
administrators, trustees, representatives, assigns, subsidiaries, parents,
affiliates, predecessors, successors and related entities, from any and all
claims, damages, actions, judgments, obligations, attorneys' fees, indemnities,
subrogations, duties, demands, controversies and liabilities of every nature at
law or in equity, liquidated, or unliquidated, known or unknown, matured or
unmatured, foreseeable or unforeseeable, which as of the effective date of this
Agreement, each of the parties has, had, may cause to have or may claim against
each other party in any way arising out of, based on, connected with or
incidental to any debts, duties or liabilities concerning the Transaction, the
Purchase Agreement or any agreements executed in connection therewith.
(a) Waiver of Unknown Claims. The Parties understand and agree that
their respective releases set forth above extend to all claims of every kind,
nature and description whatsoever, known or unknown, suspected or unsuspected
and any and all rights under the provisions of Section 1542 of the Civil Code of
California or under any comparable statute of any other jurisdiction. The
Parties expressly acknowledge that they are familiar with and expressly waive
and relinquish every right or benefit they have or may have under the provisions
of Section 1542 of the Civil Code of California which reads as follows:
"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."
ARTICLE II
INDEMNIFICATION OBLIGATIONS
2.1 Indemnification by NMED. In addition to any other remedies available
under applicable law, NMED will indemnify, defend, and hold harmless Premium
Medical Group and the PMG Shareholders (collectively, "PMG") and its officers,
directors, managers, employees and consultants (collectively, the "PMG
INDEMNITEES") against and in respect of any and all claims, demands, losses,
recoveries, and deficiencies, including interest, penalties, and reasonable
attorneys' fees (collectively, "LOSSES") that the PMG Indemnitees will incur or
suffer after the effective date of this Agreement and which arise out of (i) the
incorrectness, untruth, or breach of any warranty, representation or covenant
made in this Agreement by NMED and (ii) any liabilities of, or claims against,
NMED and/or PMG related to the business of NMED that are not the result of
negligence or intentional misconduct of the PMG Indemnitees.
2.2 Indemnification by PMG. In addition to any other remedies available
under applicable law, PMG shall indemnify, defend, and hold harmless NMED and
its officers, directors, managers, employees and consultants (collectively, the
"NMED INDEMNITEES") against and in respect of any and all Losses that the NMED
Indemnitees shall incur or suffer after the effective date of this Agreement and
which arise out of (i) the incorrectness, untruth, or breach of any warranty,
representation or covenant made in this Agreement by PMG or (ii) any liabilities
of, or claims against PMG and/or NMED related to the business of Premium Medical
Group arising from events that were not a result of negligence or intentional
misconduct of the NMED Indemnitees.
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2.3. Indemnification Procedures for Third Party Claims.
(a) Promptly after receipt by any person entitled to indemnification
hereunder (an "INDEMNIFIED PARTY") of notice of the commencement of
any action, suit or proceeding by a person not a party to this
Agreement in respect of which the indemnified party will seek
indemnification hereunder (a "THIRD PARTY ACTION"), the indemnified
party shall notify the person that is obligated to provide such
indemnification (the "INDEMNIFYING PARTY") thereof in writing, but
any failure to so notify the indemnifying party shall not relieve it
from any liability that it may have to the indemnified party
hereunder, except to the extent that the indemnifying party is
prejudiced by the failure to give such notice. The indemnifying
party shall be entitled to participate in the defense of such Third
Party Action and to assume control of such defense (including
settlement of such Third Party Action) with counsel reasonably
satisfactory to such indemnified party; provided, however, that:
(b) the indemnified party shall be entitled to participate in the
defense of such Third Party Action and to employ counsel at its own
expense to assist in the handling of such Third Party Action;
(c) the indemnifying party shall obtain the prior written approval of
the indemnified party before entering into any settlement of such
Third Party Action or ceasing to defend against such Third Party
Action, if pursuant to or as a result of such settlement or
cessation, injunctive or other equitable relief would be imposed
against the indemnified party or the indemnified party would be
adversely affected thereby;
(d) no indemnifying party shall consent to the entry of any judgment or
enter into any settlement that does not include as an unconditional
term thereof the giving by each claimant or plaintiff to each
indemnified party of a release from all liability in respect of such
Third Party Action; and
(e) the indemnifying party shall not be entitled to control the defense
of any Third Party Action unless the indemnifying party confirms in
writing its assumption of such defense and continues to pursue the
defense reasonably and in good faith. After written notice by the
indemnifying party to the indemnified party of its election to
assume control of the defense of any such Third Party Action in
accordance with the foregoing, (i) the indemnifying party shall not
be liable to such indemnified party hereunder for any legal expenses
subsequently incurred by such indemnified party attributable to
defending against such Third Party Action, and (ii) as long as the
indemnifying party is reasonably contesting such Third Party Action
in good faith, the indemnified party shall not admit any liability
with respect to, or settle, compromise or discharge the claim
underlying, such Third Party Action without the indemnifying party's
prior written consent. If the indemnifying party does not assume
control of the defense of such Third Party Action in accordance with
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this Section 2.3, the indemnified party shall have the right to
defend and/or settle such Third Party Action in such manner as it
may deem appropriate at the cost and expense of the indemnifying
party, and the indemnifying party will promptly reimburse the
indemnified party in accordance with this Section 2.3. The
reimbursement of fees, costs and expenses required by this Section
2.3 shall be made by periodic payments during the course of the
investigation or defense, as and when bills are received or expenses
incurred.
(f) If an indemnified party has actual knowledge of any facts or
circumstances other than the commencement of a Third Party Action
which cause in good faith it to believe that it is entitled to
indemnification hereunder then such indemnified party shall promptly
give the indemnifying party notice thereof in writing, but any
failure to so notify the indemnifying party shall not relieve it
from any liability that it may have to the indemnified party
hereunder, as the case may be, except to the extent that the
indemnifying party is prejudiced by the failure to give such notice.
2.4. Indemnification Procedures for Other Claims. A claim for
indemnification for any matter not involving a Third Party Action may be
asserted by notice from the indemnified party to the indemnifying party made
promptly after the discovery by the indemnified party of the matter giving rise
to the claim, but in no event more than ninety (90) days after discovery
thereof. Such notice shall be in writing and shall set forth in reasonable
detail the nature of and basis for the claim.
ARTICLE III
GENERAL PROVISIONS
3.1. Survival. The representations and warranties made by the parties
hereto in this Agreement, and their respective obligations to be performed under
the terms hereof at, prior to or after the Closing hereunder, shall not expire
with, or be terminated or extinguished by, such Closing, notwithstanding any
investigation of the facts constituting the basis of the representations and
warranties of any party by any other party hereto.
3.2. Further Assurances. At the request of any of the parties hereto, and
without further consideration, the other parties agree to execute such documents
and instruments and to do such further acts as may be necessary or desirable to
effectuate the transactions contemplated hereby.
3.3. Each Party to Bear Own Costs. Each of the parties shall pay all costs
and expenses incurred or to be incurred by him or it in negotiating and
preparing this Agreement and in closing and carrying out the transactions
contemplated by this Agreement.
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3.4. Headings. The subject headings of the Articles and Sections of this
Agreement are included for purposes of convenience only, and shall not affect
the construction or interpretation of any of its provisions.
3.5. Entire Agreement; Waivers. This Agreement and the exhibits and
schedules hereto constitute the entire agreement between the parties pertaining
to the contemporaneous agreements, representations, and understandings of the
parties, and this Agreement supersedes in their entirety any and all prior
verbal or written agreements pertaining to the subject matter hereof, including,
without limitation, any letter of intent. No supplement, modification, or
amendment of this Agreement shall be binding unless executed in writing by all
parties. No waiver of any of the provisions of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision, whether or not similar,
nor shall any waiver constitute a continuing waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.
3.6. Third Parties. Nothing in this Agreement, whether express or implied,
is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties to it and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third person to any party to this
Agreement, nor shall any provision give any third persons any right of
subrogation or action over against any party to this Agreement.
3.7. Successors and Assigns. This Agreement shall be binding on, and shall
inure to the benefit of, the parties to it and their respective heirs, legal
representatives, successors, and assigns.
3.8. Notices. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, or on the third 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 Seller: Premium Medical Group, Inc.,
0000 XX 00 XX
Xxxxx, XX 00000
To Buyer: NuWay Medical, Inc.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Any party may change his or its address for purposes of this paragraph by giving
notice of the new address to each of the other parties in the manner set forth
above.
3.9. Attorneys' Fees. In the event that any legal proceeding is brought
to enforce or interpret any of the provisions of this Agreement, the prevailing
party shall be entitled to recover reasonable attorneys' fees whether or not the
action or proceeding proceeds to final judgment.
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3.10. Governing Law; Waiver of Jury Trial. This Agreement shall be
governed by and construed in accordance with the laws of the State of Delaware,
excluding that body of law relating to conflict of laws. To the fullest extent
permitted by law, and as separately bargained-for-consideration, each party
hereby knowingly and voluntarily waives and relinquishes any right to trial by
jury in any action, suit, proceeding, or counterclaim of any kind arising out of
or relating to this Agreement.
3.11. 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.
IN WITNESS WHEREOF, the parties have executed this Mutual Rescission
Agreement effective on the day and year first indicated above.
Dated: October 13, 2004 NUWAY MEDICAL, INC.
/s/ Xxxxxx Xxxxxxx
-----------------------------
Xxxxxx Xxxxxxx, President
Dated: October 14, 2004 PREMIUM MEDICAL GROUP, INC.
/s/ Xxxx X. Xxxx
-----------------------------
Xxxx X. Xxxx, President
Dated: October 14, 2004 XXXXXXX X. XXXX, an individual
/s/ Xxxxxxx Xxxx
-----------------------------
Dated: October 14, 2004 XXXX X. XXXX, an individual
/s/ Xxxx X. Xxxx
-----------------------------
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State of California
County of _Orange___
BEFORE ME, the undersigned authority, personally appeared Xxxxxx Xxxxxxx,
authorized agent of NuWay Medical, Inc., who is personally known to me or who
has produced CA driver's license (type of identification), who acknowledged that
he/she did sign and seal the foregoing instrument for, and on behalf of NuWay
Medical, Inc,, being there unto duly authorized by its Board of Directors and
that the same is his/her free act and deed.
MY COMMISSION EXPIRES: 6-6-2007 _/s/ Xxxxx Xxxx Park_____________
NOTARY PUBLIC
State of California [Seal]
State of Florida
County of Dade
BEFORE ME, the undersigned authority, personally appeared Xxxx X. Xxxx,
authorized agent of Premium Medical Group, Inc., who is personally known to me
or who has produced _______________ (type of identification), who acknowledged
that he/she did sign and seal the foregoing instrument for, and on behalf of
Premium Medical Group, Inc., being there unto duly authorized by its Board of
Directors and that the same is his/her free act and deed.
MY COMMISSION EXPIRES: /s/_Aura G. Urbina__________________
NOTARY PUBLIC
State of Florida [Seal]
State of Florida
County of Dade
BEFORE ME, the undersigned authority, personally appeared Xxxxxxx X. Xxxx, who
is personally known to me or who has produced _______________ (type of
identification), and who executed and acknowledged the foregoing instrument on
__14th_____ day of _October______, 2004_.
MY COMMISSION EXPIRES: /s/_Aura G. Urbina__________________
NOTARY PUBLIC
State of Florida [Seal]
State of Florida
County of Dade
BEFORE ME, the undersigned authority, personally appeared Xxxx X. Xxxx, who is
personally known to me or who has produced _______________ (type of
identification), and who executed and acknowledged the foregoing instrument on
____14th___ day of _October__, 200_4.
MY COMMISSION EXPIRES: /s/_Aura G. Urbina__________________
NOTARY PUBLIC
State of Florida [Seal]
