EXHIBIT 10.5
AMENDMENT NUMBER 1 TO PROMISSORY NOTE
(TO INCLUDE CONVERTIBLE LOAN TERMS )
Dated as of February 10, 2005
This AMENDMENT NUMBER 1 TO PROMISSORY NOTE (this "Amendment") is entered
into by and between NUWAY MEDICAL, INC., a corporation organized under the laws
of the state of Delaware (the "Borrower"), and [redacted], the "Investor". The
Investor shall be referred to herein as the "Lender". Capitalized terms used
herein shall have the meanings ascribed to such terms in Section 8 of this
Agreement.
On November 20, 2003 lender loaned to Borrower $50,000 pursuant to that
certain Promissory Note of the same date ("Note") . Payments on the Note were
made during 2004 by Borrower to Lender, reducing the amount due (including
outstanding interest) to approximately $35,000, which remains unpaid. The
parties hereto desire to extend the loan Maturity Date (all capitalized terms
have the meanings set forth in the Note) and add to the terms of the Note the
option to convert the Note into common stock of NuWay Medical, Inc.
In consideration of the mutual covenants and undertakings contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and the Lender hereby
agree as follows:
1. Maturity Date. The Maturity Date, as that term is defined in the Note,
shall be extended up to and including February 3, 2006.
2. Interest. The Borrower agrees to pay interest on the unpaid principal
amount of the Term Loan from time to time outstanding hereunder at the following
rates per year, compounded annually:
a. before maturity of the Term Loan, whether by
acceleration or otherwise, at the rate per annum equal
to ten percent (10%).
b. after the maturity of the Term Loan, whether by
acceleration or otherwise, until paid, at a rate per
annum equal to fifteen percent (15%).
c. Interest Payment Date. Accrued interest shall be paid in
full on the Maturity Date.
d. Basis Of Computation. Interest shall be computed for the
actual number of days elapsed on the basis of a year
consisting of 360 days, including the date the Term Loan
is made and excluding the date the Term Loan or any
portion thereof is paid or prepaid.
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3. Conversion. The Borrower or Lender may, at its option, convert the
principal amount of this Note or any portion thereof, and any accrued interest
thereon, into 7,000,000 shares of fully paid and non assessable Common Stock of
the Issuer ("Conversion Shares"). The right to convert the Note may be exercised
by telecopying an executed and completed notice of conversion (the "Notice of
Conversion") to the Borrower or Lender. Each business day on which a Notice of
Conversion is telecopied in accordance with the provisions hereof shall be
deemed a "Conversion Date". The Borrower 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
Lender via express courier or otherwise within ten Business Days after the
Conversion Date, provided the Borrower has received the original Note being so
converted from the Lender. The Conversion of this note may require that the
Borrower amend its charter to increase the number of common shares authorized
and therefore, in such an event, the conversion will not be allowed prior to the
Borrower's completion of that process. Borrower shall act promptly to affect
such amendments, if necessary.
a. The number of Conversion Shares shall be adjusted as follows: If
the Borrower shall at any time subdivide its outstanding shares of Common Stock
into a greater number of shares of Common Stock, the number of Conversion Shares
in effect immediately prior to such subdivision shall be proportionately
increased, and conversely, in case the outstanding shares of Common Stock shall
be combined into a smaller number of shares of Common Stock, the Conversion
Price in effect immediately prior to such combination shall be proportionately
reduced.
4. Lender represents that it is an "Accredited Investor" as that term is
defined in Rule 501 of Regulation D promulgated under the Securities Act of
1933, as amended (the "Securities Act")
5. The Amendment and the Note it amends set for the entire understanding
and agreement of the parties hereto with respect to the subject matter hereof,
and supersedes all prior or contemporaneous oral or written agreements,
arrangements, representations or understandings of any kind relating to the
subject matter hereof.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly
executed as of the day and year first above written.
BORROWER
NUWAY MEDICAL, INC.
/s/
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Dennis Calvert, President
LENDER
/s/
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[redacted]
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