EXHIBIT
10.1
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.
|
Amount:
$XX,XXX.XX
|
Irvine,
California
|
|
|
Date: _____________,
2006
|
FOR VALUE RECEIVED, NUWAY MEDICAL,
INC ., a corporation organized under the laws of the state
of Delaware (“ Issuer ”), promises to pay to the
order of _______________________(hereafter, together with any
subsequent holder hereof, called “ Holder ”), at
its office, at “Holder’s Address” (as that term
is defined below), or at such other place as Holder may direct, the
“Amount” noted above (the “Loan Amount”),
payable on September 13, 2008, or at an earlier date as provided
herein (the “ Maturity Date ”). This convertible
note is duly authorized issue of the Issuer, issued on the
“Date” noted (the “ Issuance Date
”), and designated as its Convertible Note due September 13,
2008 (the “ Note ”).
The Issuer agrees to pay interest on the unpaid
principal amount of the Loan Amount from time to time outstanding
hereunder at the following rates per year, compounded annually: (i)
before maturity of the Loan Amount, whether by acceleration or
otherwise, at the rate per annum equal to ten percent (10%); (ii)
after the maturity of the Loan Amount, 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
Issuer as set forth below.
Accrual of interest shall commence as of the
Issuance Date. Interest shall be payable by the Issuer, at the
Issuer’s option, in cash or in that number of shares of
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 this Note and the Subscription Agreement
(the “ Agreement ”) that the Holder executed at
the time of making an investment in the Issuer.
The Note is subject to the following additional
provisions:
|
|
|
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 Internal Revenue Code of 1986, as amended, or
other applicable laws at the time of such payments.
|
|
|
|
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 in the 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.
|
|
|
|
Subject to the “Conversion
Contingencies” set forth in paragraph 5 below, the Holder
may, at its option, at any time convert the principal amount of
this Note or any portion thereof, and any accrued and unpaid
interest thereon, into such number of shares of fully paid and
non-assessable Common Stock of the Issuer (“ Conversion
Shares ”) as is obtained by dividing the Loan Amount by
$0.0275 (“ Conversion Price ”). The right to
convert the Note may be exercised by the Issuer by telecopying,
mailing (via first class mail, postage prepaid) or personally
delivering an executed and completed notice of conversion (the
“ Notice of Voluntary Conversion ”) to the
Issuer. The business day (a “ Business Day ”) on
which a Notice of Voluntary Conversion is delivered in accordance
with the provisions hereof shall be deemed the “ Voluntary
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 later to occur of (i) the Voluntary
Conversion Date or (ii) the Business Day on which the Issuer has
received from the Holder the original Note being so converted.
Notwithstanding the preceding sentence, the conversion of this Note
may require that the Issuer amend its charter to increase the
number of shares of its Common Stock 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.
|
|
|
4.
|
Subject to the “Conversion
Contingencies” set forth in paragraph 5 below, the Issuer
may, at its option, (i) on or after September 13, 2007, if the
Company has received one or more written firm commitments, or has
closed on one or more transactions, or a combination of the
foregoing, of at least $3 million gross proceeds of equity or debt;
or (ii) on the Maturity Date, require the
Holder to convert the Note or any portion thereof, and any accrued
and unpaid interest thereon, into such number of Conversion Shares
as is obtained by dividing the Loan Amount by the Conversion Price.
The obligation of the Holder to convert the Note may be exercised
by the Company by telecopying, mailing (via first class mail,
postage prepaid) or personally delivering an e
|
|
