TERMINATION AGREEMENT
TERMINATION AGREEMENT, dated June 6, 1997 but effective January 1, 1997 by
and between NATURAL WAY TECHNOLOGIES, INC., a Nevada corporation (hereinafter
"NWYT"), CHINA MEDICAL DEVELOPMENT CO., LTD. (hereinafter "CMDC") and NEW SILVER
EAGLE HOLDINGS LIMITED (hereinafter the "Shareholders") and collectively the
"Parties".
RECITALS
WHEREAS, NWYT and the shareholders of CMDC entered into an Exchange
Agreement (the "Agreement") on June 30, 1996 pursuant to which NWYT agreed to
acquire, and the shareholders of CMDC agreed to sell, 100% of the outstanding
securities of CMDC in exchange (the "Exchange") for 7,000,000 shares of common
stock (the "Exchange Shares") and 100,000 shares of Series B Preferred Stock
(the "Series B Shares");
WHEREAS, the Exchange was undertaken based upon various representations of
NWYT, including representation that NWYT was a reporting company under the
Securities Exchange Act of 1934, which, among other things, were intended to
assure that NWYT would be an attractive vehicle through which to raise capital;
WHEREAS, NWYT has been unable to raise the capital necessary to fully fund
the obligations of CMDC under its joint venture known as Dunhua Huakang
Pharmaceutical Co., Ltd. and
WHEREAS, it has come to the attention of NWYT that a significant amount of
the joint venture's receivables may be uncollectible, thereby acquiring
additional capital which NWYT does not have;
WHEREAS, in order to resolve any disputes arising with respect to
performance under the Agreement and the representations made therein, the
parties thereto desire to terminate the Agreement.
NOW THEREFORE, in consideration of the premises herein contained and the
mutual covenants hereinafter set forth, the parties hereto covenant and agree as
follows;
1. Termination of Agreement. The parties hereto hereby terminate the
Agreement effective as of January 1, 1997.
2. Obligations of NWYT. NWYT hereby agrees:
a. to transfer all of the issued and outstanding shares of CMDC
held by NWYT to such persons as the Shareholder shall
instruct;
b. to utilize the funds to be provided pursuant to paragraph
3.b. below to redeem outstanding Series A Shares; and
c. to return to CMDC all corporate records and documents of or
pertaining to CMDC.
3. Obligations of CMDC and the Shareholder. CMDC and the Shareholder
hereby jointly agree;
a. to cause all of the Exchange Shares and Series B Shares to
be returned to NWYT for cancellation. Should CMDC and/or the
Shareholder be unable to return all of the Exchange Shares
and Series B Shares to NWYT, CMDC and/or the Shareholder
shall acquire in the open market such number of shares of
common stock and/or Series B Shares as shall be necessary to
cause a total of 7,000,000 shares of common stock an 100,000
shares of Series B Preferred Stock to be surrendered to NWYT
for cancellation. Should CMDC and/or the Shareholder be
unable to return all of the Exchange Shares and Series B
Shares, notwithstanding their efforts to acquire shares in
the open market, CMDC and/or the Shareholder shall pay to
NWYT an amount in cash equal to the fair market value or any
shares not so delivered as agreed upon by NWYT, CMDC and the
Shareholder or, at the election of the Shareholder, shall
offset those shares against the shares issuable pursuant to
paragraph 4 below;
b. to cause the sum of $4,607,100 to be paid to NWYT as
repayment of all amounts advanced to CMDC from NWYT pursuant
to the sale of the Series A Shares. If agreed to by NWYT,
CMDC may pay the sum of $4,607,100 directly to the holders
of the Series A Shares in redemption of such shares which
payment shall be deemed to satisfy CMDC's obligations
hereunder as well as the obligations of NWYT pursuant to
paragraph 2.b;
c. to cause the holders of the Series A Shares to agree, and to
execute such documents as shall be necessary, to permit the
redemption of the Series A Shares for $4,607,100; and
d. to return to NWYT all corporate records and documents of or
pertaining to NWYT.
e. to assume all accrued expenses of NWYT (net of any cash of
NWYT).
4. Closing. The parties hereto shall hold a formal closing of this
Termination Agreement as soon as possible at such time and place as
the parties shall mutually agree ("Closing"). At Closing, NWYT shall
deliver the items called for by paragraph 2. CMDC and/or the
Shareholder shall deliver the items called for by paragraph 3.
5. Release and Indemnification. Effective on Closing,
a. NWYT releases CMDC and each of the pre-Exchange shareholders of
CMDC from all obligations and liability under or arising from the
Agreement and agrees to indemnify and hold CMDC and each of the
pre-Exchange shareholders of CMDC harmless from and against any
liability, cost, expense or claim which may be asserted or
imposed from time to time as a result of the Agreement or the
termination of the Agreement pursuant hereto.
b. CMDC and the Shareholder release NWYT from all obligations and
liability under or arising from the Agreement except as such
liability arise in connection with third party claims asserted as
a result of the Agreement or the termination of the Agreement
pursuant hereto.
7. Miscellaneous.
a. By execution of this Agreement, each of the parties hereto hereby
represents that it has the requisite power and authority to enter
into this Termination Agreement.
b. Unless required by applicable law or regulatory authority, none
of the parties will issue any report, statement or press release
to the general public, to the trade, to the general trade or
trade press, or to any third party (other than its advisors and
representatives ion connection herewith) or file any document,
relating to this Termination Agreement, except as may be mutually
agreed by the parties.
c. Each party hereto will bear its own expenses, including legal,
accounting and professional fees, incurred in connection with the
transactions contemplated hereby.
d. This Termination Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all
of which taken together shall be but a single instrument.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the date of year first above written.
NATURAL WAY TECHNOLOGIES, INC.
By:
---------------------------
President
CHINA MEDICAL DEVELOPMENT LTD.
By:
----------------------------
Title:
-------------------------
SHAREHOLDER:
NEW SILVER EAGLE HOLDINGS LTD.
By:
----------------------------
Title:
-------------------------