Unassociated Document


    RESEARCH
      AND DEVELOPMENT AGREEMENT

    


    This
      Research and Development Agreement (this “Agreement”) is made and entered into
      as of the 11th day of August, 2006 by and among BioLargo Life Technologies,
      Inc., a corporation organized under the laws of the State of California, having
      its principal offices at 2603 Main Street, Suite 1155, Irvine, California
      92614(“BLTI”), NuWay Medical, Inc., a corporation organized under the laws of
      the State of Delaware, having its principal offices at 2603 Main Street, Suite
      1155, Irvine, California 92614 (“NuWay”), IOWC Technologies Inc., a corporation
      organized under the laws of Canada, having its principal address for service
      at
      17731-103 Avenue, Edmonton AB T5S 1N8 (“IOWC”) and Kenneth R. Code, whose
      address is #4, 1780 Glastonbury Boulevard N.W., Edmonton, Alberta TST 6P9
      (“Code”). BLTI, IOWC, NuWay and Code are sometimes referred to herein
      collectively as the “Parties” and individually as a “Party”.

    


    RECITALS

    


    A. BLTI
      is a
      party to a Marketing and Licensing Agreement (the “M&L Agreement’) pursuant
      to which, among other things, BLTI has the right to develop, market, sell and
      distribute certain industrial, commercial and consumer products and materials
      of
      trade which are incorporated mainly within air-laid, non-woven fabrics to
      produce disposable absorbent products (the “Products”).

    


    B. BLTI
      desires to develop and bring to market the Products and to protect the
      intellectual property embodied in the Products. 

    


    C. IOWC
      has
      certain knowledge and expertise in research, development, registration and
      commercialization of disposable absorbent products. IOWC is interested in
      providing its expertise and research and development services to BLTI in order
      to facilitate BLTI’s achievement of BLTI’s business goals.

    


    D. BLTI
      desires to engage IOWC to provide to BLTI research and development services
      on
      the terms and subject to the conditions set forth in this
      Agreement.

    


    E. 
      NuWay is
      the sole shareholder of BLTI. Code is the President and principal shareholder
      of
      IOWC.

    


    F. Code
      and
      NuWay are parties to a certain Consulting Agreement dated as of January 1,
      2006
      (the “Consulting Agreement”), pursuant to which Code has agreed, among other
      things, to provide to NuWay substantially all of Code’s commercial business time
      and attention.

    


    G. NuWay
      and
      Code have agreed that NuWay shall permit Code to provide his service to IOWC
      in
      order to assist IOWC in fulfilling its obligations pursuant to this Agreement,
      and other Agreements which accrue to the overall benefit of the Parties.


     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    In
      consideration of the premises and for other good and valuable consideration,
      the
      receipt and adequacy of which is hereby acknowledged, the parties hereto do
      hereby agree as follows:

    AGREEMENT

    


    1.  Engagement

     

    1.1  BLTI
      hereby engages IOWC to provide the research and development work, including
      the
      work described on Schedule “A” attached hereto as may be directed from time to
      time by BLTI (the “Work”) and IOWC hereby accepts the engagement and agrees to
      perform the Work in accordance with the terms of this Agreement and as further
      may be otherwise agreed among the parties from time to time.

     

    1.2 The
      Parties shall collaborate on the design and execution of a series of projects
      which shall be designed to advance the Work (each, a “Project”). Each Project
      shall be intended to develop the Products, the technologies embodied therein
      and
      other similar technologies. Each
      Project shall be described in a mutually agreed upon description (each, a
“Project Description”) defining the scope of work to be undertaken for such
      Project and defining any specific duties and responsibilities of the Parties
      with respect thereto in addition to the duties and responsibilities set forth
      in
      this Agreement. Each Project Description shall be subject to and deemed a part
      of this Agreement when affixed with the signatures of approval of the authorized
      parties. Promptly upon execution of each Project Description, the Parties shall
      proceed with the work specified in the Project Description, and, if agreed,
      meet
      any specific requirements contained therein. 

     

     

    
      	2.              
              	
              Compensation
                and Funding

            


    

     

    All
      Work
      shall proceed and be funded in accordance with the Project Description
      applicable to the series of tasks described in such Project Description.
      Further, 

     

    (a) A
      fee of
      US $5,500 per month in arrears shall be paid by BLTI to IOWC for each month
      during which no Work is being performed by IOWC, where no Project is underway
      which would otherwise contain offset for laboratory and/or office and IOWC
      employee expenses;

     

    (b) If
      a
      Project or Projects are halted or delayed for cause or causes not attributable
      to IOWC or its employees, or when funding by BLTI is delayed and IOWC incurs
      costs that would have been funded in accordance with the Project Description
      applicable to the halted or delayed Project or Projects but for such halt or
      delay, IOWC and BLTI shall consult with each other and, to the extent reasonably
      practicable, seek to minimize such costs;

     

    (c) Each
      of
      Code and IOWC may independently fund Projects from any combination of
      institutional grants or arrangements with third parties; provided, however,
      that
      no such independent funding shall relieve either Code or IOWC of its duties
      and
      obligations pursuant to this Agreement; and provided, further, that in no event
      shall any of such funding sources acquire any right, title or interest in or
      to
      any of the Developments, any portion thereof or any intellectual property
      embodied therein, including without limitation any rights to exploit or license
      others to exploit the same commercially, excepting only such Moral Rights to
      be
      known as an author of such Developments. Any such independent funding received
      by IOWC or Code as contemplated in the preceding sentence shall reduce, in
      equal
      amount, the obligations of BLTI to provide funding in accordance with the
      Project Descriptions for the Project or Projects which are the subject of such
      grants; 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    (d) With
      the
      prior written consent of BLTI, which consent shall not be unreasonably withheld,
      IOWC may reorganize at any time in either Canada or the United States in order
      to facilitate IOWC and Code’s efforts to attract and obtain research grants to
      fund portions of the Work, from sources other than any of the Parties; provided,
      however, that no such reorganization shall relieve either Code or IOWC of its
      duties and obligations pursuant to this Agreement; and provided, further, that
      in no event shall any of such funding sources acquire any right, title or
      interest in or to any of the Developments, any portion thereof or any
      intellectual property embodied therein, including without limitation any rights
      to exploit or license others to exploit the same commercially, excepting only
      such Moral Rights to be known as an author of such Developments . Any such
      grants or other funding received by IOWC or Code as contemplated in the
      preceding sentence shall reduce, in equal amount, the obligations of BLTI to
      provide funding in accordance with the Project Descriptions for the Project
      or
      Projects which are the subject of such grants; and

     

    (e) If
      IOWC
      or Code should receive any credits, subsidies, rebates or other similar benefits
      (the “Benefits”)`from any governmental or quasi-governmental entity in respect
      of any of the Work, the obligations of BLTI to fund Projects hereunder shall
      be
      reduced in an amount equal to the amount of such Benefits or, if BLTI shall
      have
      theretofor fully funded such Projects, IOWC shall make payments to BLTI in
      an
      amount equal the portion of such Benefits BLTI has not previously
      recouped.

     

    
      	3.               	
              Intellectual
                Property Matters

            


    

     

    3.1            
      For
      the
      purposes of this Agreement, “Development” or “Developments” includes,
      without limitation all:

     

    
      	(a)  	
              enhancements,
                modifications, additions or other improvements to the intellectual
                property or assets owned, licensed, sold, marketed or used by BLTI
                or any
                affiliates of BLTI in connection with the business of BLTI, and of
                any of
                their subsidiaries or affiliates;

            


    

     

    
      	(b)  	
              patents,
                copyrights, trade-marks, trade names, business names, logos, design
                marks
                and other proprietary marks; and

            


    

     

    
      	(c)  	
              inventions,
                devices, discoveries, concepts, ideas, formulae, know how, processes,
                techniques, systems, methods and any and all improvements, enhancements
                and modifications thereto, whether patented or not,
                

            


    

     

    developed,
      created, generated, contributed to or reduced by practice by Code, by IOWC
      or
      its employees, agents or contractors, alone or jointly with others while IOWC
      is
      providing the Work to BLTI pursuant to this Agreement.

     

    3.2  Each
      of
      Code and IOWC agrees to make full disclosure to BLTI of each Development,
      promptly upon its creation. Code and IOWC will disclose in writing on a regular,
      but no less than semi-annual basis in a log book or such other form reasonably
      requested by BLTI, the details of all Developments that Code or IOWC is involved
      with or responsible for. Each of Code and IOWC hereby irrevocably assigns and
      transfers to BLTI and agrees that BLTI will be the exclusive owner of all of
      their respective right title and interest in and to each Development, including
      all trade secret, patent, copyright, trade-mark, industrial design, and all
      other intellectual property rights of any kind therein, excepting Moral Rights
      as may not be alienable under applicable law. Notwithstanding the retention
      by
      Code and IOWC of such Moral Rights, it is the express intention of the Parties
      that BLTI shall have the sole and exclusive right to commercially exploit each
      Development. Each of Code and IOWC agrees to co-operate fully at all times
      during and subsequent to the term of this Agreement with respect to the
      execution of all further documents and the carrying out of all such acts and
      things as are reasonably
      requested by BLTI (at BLTI’s expense) to confirm the transfer of and/or
      establish the ownership of all rights, including all intellectual property
      rights, effective at or after the time the Development is created and to apply
      for and obtain patent, copyright, industrial design, trademark and other
      intellectual property registrations covering the Developments. BLTI will be
      exclusively entitled to make applications for registration of all such rights,
      in BLTI’s sole discretion, in any jurisdictions that BLTI deems necessary and
      each of Code and IOWC does hereby appoint BLTI, its officers and agents as
      their
      respective true and lawful attorney-in-fact to execute, deliver and prosecute,
      as BLTI shall deem necessary or desirable, in BLTI’s sole and absolute
      discretion, to confirm and protect such assignment and to protect all
      proprietary information and intellectual property covered thereby. 

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    3.3  Neither
      IOWC nor Code shall disclose any information, documents, or Developments which
      are developed by IOWC or to which IOWC may have access by virtue of its
      performance of the services to any person not expressly authorized by BLTI
      to
      receive such information. IOWC shall comply, and shall cause its agents and
      employees to comply, with such directions as BLTI shall make to ensure the
      safeguarding or confidentiality of all such information, documents and
      Developments. BLTI may require the same of any agent or employee regarding
      the
      confidentiality of any of BLTI’s information, documents and
      Developments.
      .
      Concurrently
      with the parties’ execution of this Agreement, Code shall execute and deliver to
      the Company the Non-Disclosure and Confidentiality Agreement attached hereto
      as
Annex
      A (the
      “Confidentiality
      Agreement”), the
      provisions of which are incorporated herein by this reference. 

     

    3.4  
      Each of
      IOWC and Code agrees that they will not, except with the prior specific consent
      of BLTI, during the term of this Agreement and thereafter, except for the
      benefit of BLTI or its subsidiaries or its affiliates, carry on or engage in
      any
      business which directly competes with any aspect of the business of BLTI or
      its
      subsidiaries or affiliates or offer their services as a consultant to, or become
      employed with, accept payment from, invest in or participate in any way with
      any
      company, partnership or other business organization which competes with any
      aspect of the business of BLTI or any of its subsidiaries or affiliates. The
      restraint set out in this paragraph 3.4 will remain in force for the duration
      of
      this Agreement, and if this Agreement is terminated for any reason, for a period
      of one year following the termination of this Agreement.

     

    
      	4.                
              	
              Term
                and Termination

            


    

     

    4.1  This
      Agreement will be for an initial term of commencing on the date hereof and
      continuing to and including December 31, 2006 and may be renewed for successive
      periods of one year each upon the written agreement of the Parties.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    4.2  This
      Agreement may be terminated by NuWay and BLTI if:

     

    (a) IOWC
      or
      Code files a voluntary petition in bankruptcy, or is adjudicated as bankrupt
      or
      insolvent, or files any petition or answer seeking any reorganization,
      arrangement, composition, readjustment, liquidation, dissolution or similar
      relief under any present or future statue or law relating to bankruptcy,
      insolvency or other relief for debtors, or seeks, consents to, or acquiesces
      in
      the appointment of any trustee, receiver or liquidator of either of them, or
      of
      all or any substantial part of either of their properties, and the same remains
      unvacated and unstayed for an aggregate of sixty (60) days from the date of
      entry thereof; or any trustee, receiver, or liquidator of either of them or
      of
      all or any substantial part of their properties is appointed without their
      consent or acquiescence and such appointment remains unvacated and unstayed
      for
      an aggregate of sixty (60) days; or

     

    (b) IOWC
      fails to perform any of its services in the manner or within the time required
      herein or commits or permits a breach of or default in any of its duties,
      liabilities or obligations hereunder and fails to fully cure or remedy such
      failure, breach or default within ten (10) days after written notice by BLTI
      to
      IOWC specifying the nature of such failure, breach or default, or if such breach
      or default cannot reasonably be cured within ten (10) days, fails to commence
      such cure or remedy within the said 10 day period or at any time thereafter
      fails to diligently prosecute such cure or remedy to completion.

     

    4.3  This
      Agreement may be terminated by IOWC and Code if:

     

    (a) NuWay
      or
      BLTI files a voluntary petition in bankruptcy, or is adjudicated as bankrupt
      or
      insolvent, or files any petition or answer seeking any reorganization,
      arrangement, composition, readjustment, liquidation, dissolution or similar
      relief under any present or future statue or law relating to bankruptcy,
      insolvency or other relief for debtors, or seeks, consents to, or acquiesces
      in
      the appointment of any trustee, receiver or liquidator of either of them, or
      of
      all or any substantial part of their properties, and the same remains unvacated
      and unstayed for an aggregate of sixty (60) days from the date of entry thereof;
      or any trustee, receiver, or liquidator of either of them or of all or any
      substantial part of its properties is appointed without the consent of or
      acquiescence of either of them and such appointment remains unvacated and
      unstayed for an aggregate of sixty (60) days; or

     

    (b) BLTI
      fails to perform any of its services in the manner or within the time required
      herein or commits or permits a breach of or default in any of its duties,
      liabilities or obligations hereunder and fails to fully cure or remedy such
      failure, breach or default within ten (10) days after written notice by IOWC
      to
      BLTI specifying the nature of such failure, breach or default, or if such breach
      or default cannot reasonably be cured within ten (10) days, fails to commence
      such cure or remedy within the said 10 day period or at any time thereafter
      fails to diligently prosecute such cure or remedy to completion.

     

    4.4  This
      Agreement shall terminate concurrently with the termination of the M&L
      Agreement. In the event of such termination, the Parties shall each restore
      the
      other to the conditions they would have held had this Agreement been void from
      its inception.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

       

    

    
      	5.                
              	
              Representations,
                Warranties and Covenants

            


    

     

    5.1             
      NuWay
      and
      BLTI each represent and warrant to IOWC and Code that:

     

    
      	(a)  	
              each
                has full corporate power and authority to enter into this
                Agreement;

            


    

     

    
      	(b)  	
              it
                is a valid and subsisting corporation in good standing under the
                laws of
                its jurisdiction of organization;
                and

            


    

     

    
      	(c)  	
              neither
                the execution and delivery of this Agreement nor the consummation
                of the
                transactions contemplated by this Agreement will conflict with, result
                in
                a breach of or accelerate the performance required by any agreement
                to
                which either of them is a party;

            


    

     

    5.2              
      IOWC
      and
      Code, jointly and severally, represent and warrant to BLTI and NuWay
      that:

     

    
      	(a)  	
              each
                has full power and authority to enter into this
                Agreement;

            


    

     

    
      	(b)  	
              IOWC
                is a valid and subsisting corporation in good standing under the
                laws of
                its jurisdiction of organization;
                and

            


    

     

    
      	(c)  	
              that
                neither the execution and delivery of this Agreement, nor the consummation
                of the transactions contemplated by the Agreement, will conflict
                with,
                result in the breach of or accelerate the performance required by
                any
                agreement to which IOWC and/or Code is a party, except the Consulting
                Agreement, as to which Nuway and BLTI waive any
                conflict.

            


    

     

    
      	6.                 
              	
              Miscellaneous

            


    

     

    6.1             
      No
      amendment, modification, supplement, termination, or waiver of any provision
      in
      this Agreement, and no consent to any departure therefrom, shall be effective
      unless in writing and signed by the Parties and then only in the specific
      instance and for the specific purpose given. 

    


    6.2   Any
      notices required or permitted to be given in writing will be deemed received
      when personally delivered or, if earlier, ten (10) days after mailing by
      registered or certified United States mail, postage prepaid, and return receipt
      requested. Each Party may change its address only by notice given to the other
      Parties in the manner set forth herein. 

     

    6.3  This
      Agreement may be executed in two or more counterparts, and the counterparts,
      taken together, shall constitute one original. Executed copies of this Agreement
      and any amendments or modifications thereto may be delivered by facsimile
      transmission in lieu of an original. 

    


    6.4  This
      Agreement shall be binding upon and inure to the benefit of the Parties and
      their respective permitted successors and assigns. This Agreement, including
      the
      rights and obligations hereunder, shall not be assigned, delegated or
      transferred by IOWC or Code without the prior written consent of BLTI.


    


    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    6.5  This
      Agreement (together with the appendices thereof) shall comprise the complete
      and
      integrated agreement of the Parties with respect to the subject matter hereof
      and shall supersede all prior agreements, written or oral, on the subject matter
      hereof. Neither party hereto shall have a provision construed against it by
      reason of such party having drafted the same. 

    


     6.6  The
      rights and obligations provided in Article 3 hereof shall survive
      termination of this Agreement. 

    


    6.7  This
      Agreement shall be governed by, and construed and enforced in accordance with,
      the laws of the State of California, without regard to the body of law known
      as
      conflict of laws. 

    


     6.8  Any
      provision in this Agreement that is held to be inoperative, unenforceable,
      or
      invalid in any jurisdiction shall be, as to that jurisdiction only, inoperative,
      unenforceable, or invalid without affecting the remaining provisions in that
      jurisdiction or the operation, enforceability, or validity of those provisions
      in any other jurisdiction, and to this end the provisions of this Agreement
      shall be severable. 

    


    6.9  Headings
      of this Agreement are included for convenience only and shall not be considered
      a part of this Agreement for any other purpose.

    


    6.10   In
      the
      event of any litigation or other dispute arising as a result of or by reason
      of
      this Agreement, the prevailing party in any such litigation or other dispute
      shall be entitled to, in addition to any other damages assessed, its reasonable
      attorneys’ fees, and all other costs and expenses incurred in connection with
      settling or resolving such dispute. The attorneys’ fees which the prevailing
      party is entitled to recover shall include fees for prosecuting or defending
      any
      appeal and shall be awarded for any supplemental proceedings until the final
      judgment is satisfied in full. In addition to the foregoing award of attorneys’
fees to the prevailing party, the prevailing party in any lawsuit on this
      Agreement shall be entitled to its reasonable attorneys’ fees incurred in any
      post judgment proceedings to collect or enforce the judgment This attorneys’
fees provision is separate and several and shall survive the merger of this
      Agreement into any judgment. 

    


    6.11  No
      Party’s to exercise any right under this Agreement shall constitute a waiver of
      any other term or condition of this Agreement with respect to any other
      preceding, concurrent, or subsequent breach, nor shall it constitute a waiver
      by
      such Party of its rights at any time 

    thereafter
      to require exact and strict compliance with any of the terms of this Agreement.
      The rights and remedies set forth in this Agreement shall be in addition to
      any
      other rights or remedies which may be granted by law. 

     

    7.      Stock
      Issuance.

     

    7.1  As
      further consideration to Code to enter into this Agreement and in reliance
      on
      the representations and warranties of Code set forth in the Subscription
      Agreement described in paragraph 7.2 below, NuWay shall issue to Code 15,515,913
      shares of NuWay’s Common Stock (the “Code
      Stock”),
      which
      will amount to 19.9% of the Common Stock of NuWay issued and outstanding
      immediately following the issuance of the Code Stock. Upon issuance, the Code
      Stock will be duly authorized, validly issued, fully paid and nonassessable.
      Certificates representing shares of the Code Stock shall bear a legend in the
      following form:

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    THE
      SHARES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
      SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE
      SECURITIES LAWS (COLLECTIVELY, “SECURITIES LAWS”) AND MAY NOT BE OFFERED, SOLD
      OR OTHERWISE TRANSFERRED UNLESS REGISTERED OR QUALIFIED FOR SALE UNDER ALL
      APPLICABLE SECURITIES LAWS OR UNLESS, IN THE OPINION OF COUNSEL SATISFACTORY
      TO
      THE ISSUER, IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER, ANY SUCH OFFER,
      SALE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION OR QUALIFICATION
      REQUIREMENTS OF SUCH SECURITIES LAWS.

     

    7.2  Code
      shall execute and deliver to NuWay a subscription agreement in the form of
      Annex
      B
      attached
      hereto (the “Subscription
      Agreement”)
      the
      provisions of which are incorporated herein by this reference.

     

          IN
      WITNESS WHEREOF, the Parties hereto have executed this Agreement effective
      as of
      the date first set forth above.

    


     

    BIOLARGO
      LIFE TECHNOLOGIES, INC.

    


     

    By: /s/
      Dennis Calvert  

    Title:
      President

     

    NUWAY
      MEDICAL, INC.

     

    By:
      /s/
      Dennis Calvert

    Title:
      President

    


     

    IOWC
      TECHNOLOGIES INC.

    


    By:
      /s/
      Kenneth R. Code

    Title:
      President

    


     

    /s/
      Kenneth R. Code

     

    KENNETH
      R. CODE

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    SCHEDULE
      “A”

     

    [Description
      of the Work]

     

    
      	1.  	
              The
                ongoing research and development of industrial, commercial and consumer
                products and materials of trade which are incorporated mainly within
                air-laid, non-woven fabrics to produce disposable products that are
                lightweight, super-absorbent, yield a safe yet disinfecting dose
                of
                iodine, are biodegradable, and can be disposed of as normal household
                waste.

            


    

     

    
      	2.  	
              Such
                other Work that IOWC, Code and BLTI mutually
                agree.

            


    

     

    
      	a.  	
              Current
                Projects

            


    

     

    
      	i.  	
              Technical
                absorbents to include for iodine generation, and other dangerous
                goods
                management by use of strategic
                absorption

            


    

     

    
      	ii.  	
              Technical
                absorbents in an insulation role, to include for heat capacitance
                additions, microencapsulation of phase changing materials, and package
                designs

            


    

     

    
      	iii.  	
              Technical
                absorbents in a food safety role

            


    

     

    
      	iv.  	
              Temperature
                compensating hygiene products

            


    

     

    
      	v.  	
              Bi-phase
                change and disinfectant delivery by phase change
                materials

            


    

     

    
      	vi.  	
              Technical
                absorbents in an oil absorption role to include for in situ
                bioremediation

            


    

     

    
      	b.  	
              Electrodeposition
                of iodine

            


    

     

    
      	c.  	
              Installation
                and maintenance of an internet wide area
                network.

            


    


     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

       

    

    Annex
      A

     

    Form
      of
      Confidentiality Agreement

    


     

    CONFIDENTIALITY
      AND NON-DISCLOSURE AGREEMENT

     

    AGREEMENT
      (this “Agreement”)
      made
      and entered into as of this 20th day of June, 2006, by and between NUWAY
      MEDICAL, INC., a Delaware corporation (the “Company”)
      and
      the undersigned (“Recipient”).
      

     

    WHEREAS,
      Recipient is an stockholder or potential investor of the Company and has asked
      management of the Company to provide Recipient certain information which may
      be
      material to the Company and which has not been made public by the Company;
      and

     

    WHEREAS,
      the Company and Recipient are familiar with Regulation F-D promulgated by the
      Securities and Exchange Commission (the “Commission”)
      regarding disclosure of material non-public information and the parties wish
      to
      comply with said Regulation;

     

    NOW,
      THEREFORE, the Company and Recipient hereby agree as follows: 

     

    1. Confidentiality.
      (a) Recipient hereby acknowledges that Recipient will have access to, receive
      and learn confidential information (collectively, the “Confidential
      Information”)
      relating to the Company and/or any of its affiliates, including without
      limitation the Company’s financial condition, securities and certain regulatory
      matters, that is not generally known, or been disclosed, to the public. All
      Confidential Information is and shall remain the sole property of the Company.
      Recipient shall make no use of Confidential Information, other than as provided
      for herein, and shall not disclose Confidential Information to any third party,
      except as disclosure shall be necessary as required by law. 

     

    (b)
      Confidential Information shall mean and include, without limitation, all
      information considered proprietary by the Company and to which Recipient has
      access to, receives, or learns from the Company. Confidential Information may
      be
      written, recorded, or otherwise fixed in or on any medium, electronically
      communicated, or orally or visually communicated to Recipient. Confidential
      Information specifically includes, but is not limited to, any documents, records
      or information concerning the business, customers, clients, suppliers,
      consultants or affairs (financial, securities, regulatory or otherwise) of
      the
      Company and/or any of its affiliates. Confidential Information also includes,
      without limitation, software (in various stages of development), content (in
      various stages of development), designs, drawings, specifications, models,
      source code, object code, documentation, diagrams, flow charts, marketing and
      development plans, business plans, methods of doing business, financial
      information, customer lists, patent applications, studies and other similar
      information that is proprietary and/or confidential to the Company. Recipient
      shall not use or disclose such Confidential Information, except to the extent
      authorized representatives of the Company.

     

    (c)
      Notwithstanding anything contained herein to the contrary, Confidential
      Information shall not include information which: (i) is or becomes generally
      available to the public other than through any act or omission on Recipient’s
      part at or after the time of disclosure by the Company to Recipient; (ii)
      Recipient receives from a third party that is free to disclose such information
      without breach of any legal obligation to the Company or any third party; or
      (iii) is required to be disclosed pursuant to any statute, regulation, order,
      subpoena or document discovery request, provided that prior written notice
      of
      such disclosure is furnished by Recipient to the Company as soon as practicable
      in order to afford the Company an opportunity to seek a protective order (it
      being agreed that if the Company is unable to obtain or does not seek a
      protective order and Recipient is legally compelled to disclose such
      information, disclosure of such information may be made without
      liability).

     

    (d)
      Recipient recognizes and acknowledges that the Confidential Information is
      a
      valuable, special and unique asset of the Company and, moreover, that the
      Company has special obligations and responsibilities with respect to the
      Confidential Information as required by the Rules and Regulations of the
      Commission. Recipient further recognizes and acknowledges that any breach of
      this Agreement will cause irreparable harm to the Company, and Recipient hereby
      consents to the Company’s entitlement to a temporary and/or permanent injunction
      in addition to any other remedies available to the Company as a result of a
      breach by Recipient. The Company shall be entitled to such injunctive relief
      without the necessity of posting a bond or other security.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

     

    2. Governing
      Law.
      This
      Agreement shall be subject to, and be governed by, the laws of the State of
      California without regard to conflict of law principles thereof.

     

    3. Severability.
      If any
      provision of this Agreement as applied to either party or to any circumstances
      shall be adjudged by a court of competent jurisdiction to be void or
      unenforceable, the same shall in no way affect any other provision of this
      Agreement or the validity or enforceability of the rest of this
      Agreement.

     

    4. Waiver.
      Waiver
      by either party of a breach of any provision of this Agreement shall not operate
      or be construed as a waiver of any subsequent breach of such provision or a
      waiver of any other provision of this Agreement.

     

    5. Headings.
      The
      headings set forth herein are included solely for the purpose of identification
      and shall not be used for the purpose bf construing the meaning of the
      provisions of this Agreement.

     

    


    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
      day
      and year first above written.

     

    
      	
              NUWAY
                MEDICAL, INC. 

              a
                Delaware corporation 

               

              By:
                /s/ Dennis Calvert

              Name:
                Dennis Calvert

              Title:
                President

            	
              RECIPIENT:
                ________________________

               

               

              By:
                /s/Kenneth R. Code

              Name:
                Kenneth Reay Code

              Title:
                ___________________

            


    

    


    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    


    Annex
      B

     

    NUWAY
      MEDICAL, INC.

     

    FORM
      OF
      SUBSCRIPTION AGREEMENT

    


    The
      undersigned hereby proposes to acquire shares of common stock (the “Shares”) of
      NuWay Medical, Inc., a Delaware corporation (the “Company”).

     

    The
      undersigned understands that the Securities are being offered and sold without
      registration under the Securities Act of 1933, as amended (the “Act”), in
      reliance upon either: (i) FOR
      U.S. INVESTORS ONLY:
      the
      exemption contained in Sections 4(2) of the Act and Regulation D promulgated
      thereunder; or (ii) FOR
      NON-U.S. PERSONS ONLY:
      the
      exemption contained in Regulation S promulgated under the Act, and, in either
      case, that such reliance is based on the undersigned’s representations set forth
      below.

     

    To
      induce
      the Company to accept this subscription and issue and deliver the Shares, the
      undersigned represents and warrants as follows:

     

     1.  The
      undersigned is acquiring the Shares for investment for his or her own account,
      and not with a view toward distribution thereof, and with no present intention
      of dividing his or her interest with others or reselling or otherwise disposing
      of all or any portion of the Shares. The undersigned has not offered or sold
      a
      participation in this purchase of the Shares, and will not offer or sell any
      of
      the Shares or interest therein or otherwise, in violation of the Act. The
      undersigned further acknowledges that he or she does not have in mind any sale
      of the Shares currently or after the passage of a fixed or determinable period
      of time or upon the occurrence or non-occurrence of any predetermined events
      or
      consequence; and that he or she has no present or contemplated agreement,
      undertaking, arrangement, obligation, indebtedness or commitment providing
      for
      or which is likely to compel a disposition of the Shares and is not aware of
      any
      circumstances presently in existence that are likely in the future to prompt
      a
      disposition of the Shares.

     

    2.  The
      undersigned acknowledges that the Shares have been offered to him or her in
      direct communication between himself or herself and the Company or through
      registered broker-dealers and not through any general solicitation or
      advertisement of any kind.

     

    3.  The
      undersigned acknowledges that he or she has read or has had access to all of
      the
      Company’s filings with the Securities and Exchange Commission under the
      Securities Exchange Act of 1934, as amended, and that the offer and sale of
      the
      Securities to the undersigned was based on the representations and warranties
      of
      the undersigned in this Subscription Agreement, and acknowledges that he or
      she
      has been encouraged to seek his or her own legal, tax and financial counsel
      to
      assist him or her in evaluating this investment. The undersigned acknowledges
      that the Company has given him or her and all of his or her counselors access
      to
      all information relating to the Company’s business that they or any one of them
      has requested. The undersigned acknowledges that he or she has sufficient
      knowledge, financial and business experience concerning the affairs and
      conditions of the Company so that he or she can make a reasoned decision as
      to
      this investment in the Company and is capable of evaluating the merits and
      risks
      of this investment. Based on the foregoing, the undersigned hereby agrees to
      indemnify the Company thereof and to hold each of such persons and entities,
      and
      the officers, directors and employees thereof harmless against all liability,
      costs or expenses (including reasonable attorneys’ fees) arising by reason of or
      in connection with any misrepresentation or any breach of such warranties of
      the
      undersigned, or arising as a result of the sale or distribution of the Shares
      by
      the undersigned in violation of the Act, the Securities Exchange Act of 1934,
      as
      amended, or any other applicable law, either federal or state. This subscription
      and the representations and warranties contained herein shall be binding upon
      the heirs, legal representatives, successors and assigns of the undersigned.
      

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    4.
      (a) The
      undersigned is aware of the restrictions of transferability of the Shares and
      further understands and acknowledges that any certificates evidencing the Shares
      will bear a legend substantially in the following form, to which such interests
      will be subject: 

     

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
      AMENDED, OR QUALIFIED FOR SALE UNDER ANY STATE SECURITIES LAWS (COLLECTIVELY,
      “SECURITIES LAWS”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED UNLESS
      REGISTERED OR QUALIFIED FOR SALE UNDER ALL APPLICABLE SECURITIES LAWS OR UNLESS,
      IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER, IN FORM AND SUBSTANCE
      SATISFACTORY TO THE ISSUER, ANY SUCH OFFER, SALE OR OTHER TRANSFER IS EXEMPT
      FROM THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF SUCH SECURITIES
      LAWS.

    


    (b) The
      undersigned understands that following the purchase of the Shares may only
      be
      disposed of pursuant to either (i) an effective registration statement under
      the
      Act, or (ii) an exemption from the registration requirements of the Securities
      Act of 1933.

     

    (c)
      The
      Company has neither filed such a registration statement with the SEC or any
      state authorities nor agreed to do so, nor contemplates doing so in the future
      with respect to the the Shares, and in the absence of such a registration
      statement or exemption, the undersigned may have to hold the Shares indefinitely
      and may be unable to liquidate them in case of an emergency.

     

     

    (d)
      The
      undersigned acknowledges that the Company is not obligated and does not propose
      to furnish the undersigned with information necessary to enable it to be able
      to
      make sales under Rule 144 of the Securities Act of 1933.

    5.
      The
      undersigned represents that he or she is either:
      

     

    ___X____ FOR
      NON-U.S. PERSONS ONLY:
      not a
“U.S. person” as defined in Rule 902 of Regulation S, a copy of which definition
      the investor acknowledges receiving and reviewing, and a citizen of the country
      of Canada and a resident of the country of Canada, 

     

    and,
      in
      either case, makes the following further representation: 

     

    I,
      THE
      UNDERSIGNED, REPRESENT THAT I HAVE A PRE-EXISTING PERSONAL OR BUSINESS
      RELATIONSHIP WITH THE COMPANY, ANY OFFICER, DIRECTOR OR CONTROLLING PERSON
      THEREOF OR HAVE, THROUGH MYSELF OR THROUGH MY UNAFFILIATED PROFESSIONAL ADVISER,
      THE BUSINESS OR FINANCIAL EXPERIENCE TO PROTECT MY INTERESTS IN CONNECTION
      WITH
      MY SUBSCRIPTION HERETO.

     

    FURTHER,
      I AM PURCHASING THE SECURITIES OFFERED HEREBY FOR INVESTMENT AND NOT WITH A
      VIEW
      TOWARD DISTRIBUTION THEREOF.

     

    6.
      The
      undersigned acknowledges that he or she has received and read and has reviewed
      the most recent and current public filings of the Company, as of August 11,
      2006.

     

    7.
      This
      Subscription Agreement has been delivered in, and shall be construed in
      accordance with the laws of the State of California. Any action in connection
      with this Subscription Agreement and the securities being offered shall be
      brought in the appropriate state or federal court in and for the County of
      Orange, State of California, which shall have exclusive jurisdiction over such
      action.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    


    8.
      Based
      on the foregoing, the undersigned hereby irrevocably subscribes to receive
      15,515,913 shares of its Common Stock to be issued by the Company pursuant
      to
      the Research and Development Agreement among the Company, the undersigned
      subscriber and others, of even date with this Subscription
      Agreement.

     

    
      	 	 	 
	 	Executed
              this 11th
              day of August, 2006
	 
 	 
 	 
 
	 	By:  	/s/ Kenneth
              R. Code
	 	Signature of Subscriber
	 	 
	 	Kenneth
              Reay Code




    The
      above
      and foregoing Subscription accepted this 11th
      day of
      August, 2006.

     

    
      	 	 	 
	 	NUWAY
              MEDICAL, INC.
	 
 	 
 	 
 
	 	By:  	/s/ Dennis
              Calvert
	 	Dennis Calvert, President
	 	 




     

    
      
        
        

      

      
        14