AMENDMENT NO. 1
TO
TERM LOAN AGREEMENT
This AMENDMENT NO. 1 TO TERM LOAN AGREEMENT (this "Amendment") is dated
to be effective as of March 30, 2004 and is entered into between NUWAY MEDICAL,
INC., a corporation organized under the laws of the state of Delaware (the
"Borrower"), and XXXXXXXXX XX, LLC, a limited liability company formed under the
laws of the State of Delaware (the "Lender").
BACKGROUND:
Borrower and Lender are parties to that certain Term Loan Agreement
dated as of June 10, 2003 (the "Agreement"). Pursuant to the Agreement, Borrower
and Lender have also entered into that certain Pledge Agreement, and Borrower
previously has delivered to Lender a Term Note and Warrant to Purchase Common
Stock No. AG-1 (the "Warrant"), each dated as of June 10, 2003 (the Agreement,
together with such Pledge Agreement, Term Note and Warrant, the "Loan
Documents"). Borrower has requested that Lender extend the maturity date of the
term loan evidenced by the Loan Documents, and in consideration of Lender's
willingness to do so has agreed to reprice the Warrant.
Capitalized terms used herein shall have the meanings ascribed to such
terms in Section 8 of the Agreement.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged:
1. Extension of Maturity Date. The Term Loan Maturity Date is hereby
extended to August 31, 2004, and the last sentence of Section 1.2 of the
Agreement is amended accordingly.
2. Remedies Upon Default. Section 7.2 of the Agreement is hereby
amended and restated in its entirety to read as follows:
SECTION 7.2 REMEDIES.
(a) Upon the occurrence of any Event of Default set forth in
subsections (a)-(k) of Section 7.1 and during the continuance thereof,
the Lender or any other holder of the Term Note may declare the Term
Note and any other amounts owed to the Lender to be immediately due and
payable, whereupon the Term Note and any other amounts owed to the
Lender shall forthwith become due and payable. Upon the occurrence of
any Event of Default set forth in subsection (l) of Section 7.1, the
Term Note and any other amounts owed to the Lender shall be immediately
and automatically due and payable without action of any kind on the
part of the Lender or any other holder of the Term Note. The Borrower
expressly waives presentment, demand, notice or protest of any kind in
connection herewith. The Lender shall promptly give the Borrower notice
of any such declaration, but failure to do so shall not impair the
effect of such declaration. No delay or omission on the part of the
Lender or any holder of the Term Note in exercising any power or right
hereunder or under the Term Note shall impair such right or power or be
construed to be a waiver of any Event of Default or any acquiescence
therein, nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof, or the exercise
of any other power or right.
(b) Upon and during the continuance of any Event of Default
the Lender may exercise any and all remedies available to it under this
Agreement or the Pledge Agreement, at law or in equity, or by statute
or otherwise, including (a) exercise any rights of a secured lender
under the UCC and/or any other applicable Uniform Commercial Code, and
(b) conversion of the Term Note into Common Stock of the Company as
provided therein.
(c) The enumeration of Lender's rights and remedies set forth
in this Agreement is not intended to be exhaustive. The exercise by
Lender of any right or remedy under this Agreement or any other
agreement or instrument executed and delivered in furtherance of the
transactions contemplated by this Agreement does not preclude the
exercise of any other rights or remedies, however existing.
3. AMENDED NOTE. The Term Note shall be replaced by an Amended and
Restated Term Note in the form attached hereto as Exhibit A (the "Amended
Note"), and upon delivery of the executed Amended Note to Lender, Lender shall
deliver the existing Term Note to Borrower. Thereafter, all references in the
Agreement to "Term Note" shall be deemed to be references to the Amended Note.
4. AMENDED WARRANT. The Warrant shall be replaced by an Amended and
Restated Warrant in the form attached hereto as Exhibit B (the "Amended
Warrant"), and upon delivery of the executed Amended Warrant to Lender, Lender
shall deliver the existing Warrant to Borrower. Thereafter, all references in
the Agreement to "Warrant" shall be deemed to be references to the Amended
Warrant.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The representations of Borrower in the Agreement and the
other Loan Documents, as amended hereby, are true and correct as of
the date hereof as though each of said representations and warranties
was made on the date hereof except for those representations and
warranties which are made as of a specified date in the applicable
Loan Document.
(b) The parties acknowledge that, as of the date of this
Amendment, Borrower does not have sufficient number of shares of
authorized Common Stock to issue upon full exercise of the Warrant
and/or full conversion of the Amended Note. Borrower represents and
warrants to Lender that effective February 11, 2004 shareholders
holding a majority of the issued and outstanding Common Stock approved
an amendment to Borrower's articles of incorporation that would
increase the total number of authorized shares to 200,000,000 (the
"Charter Amendment"). Borrower covenants to Lender that:
(i) Borrower shall cause the Charter Amendment to become
effective no later than August 31, 2004;
(ii) Borrower has, by resolution of its Board of Directors
dated February 4, 2004, reserved all [13,000,000] shares of Common
Stock that currently are authorized but unissued for issuance upon
exercise of the Warrant and/or conversion of the Amended Note;
(iii) Beginning immediately after the Charter Amendment
becomes effective, Borrower shall at all times reserve and keep
available for issuance such number of shares of authorized but unissued
Common Stock as will be sufficient to permit the exercise in full of
the Warrant and the conversion in full of the Amended Note; and
(iv) Any failure by Borrower to observe the foregoing
covenants shall be an "Event of Default" under the Agreement.
6. ADDITIONAL COVENANT OF LENDER. Lender agrees that, at any time
during which the Amended Note is outstanding and until the Amended Note has been
repaid, converted, or otherwise satisfied in full, it will not engage in hedging
transactions (including without limitation any short sales) with respect to the
Common Stock.
7. AMENDMENT SUPPLEMENTARY. This Amendment is supplementary to the Loan
Documents. All of the provisions of the Loan Documents, including without
limitation the right to declare principal and accrued interest due for any cause
specified in the Loan Documents, shall remain in full force and effect except as
herein expressly modified. The Agreement and the other Loan Documents and all
rights and powers created thereby and thereunder or under such other documents
are in all respects ratified and confirmed. From and after the date hereof, the
Agreement and the other Loan Documents shall be deemed to be amended and
modified as herein provided, but, except as so amended and modified, the
Agreement and the other Loan Documents shall continue in full force and effect
and the Agreement, the other Loan Documents, and this Amendment shall be read,
taken and construed as one and the same instrument. On and after the date
hereof, any references in the Loan Documents to the Agreement shall mean the
Agreement as amended hereby.
8. WAIVER OF CLAIMS. Borrower hereby acknowledges, agrees and affirms
that it possesses no claims, defenses, offsets, recoupment or counterclaims of
any kind or nature against or with respect to the enforcement of the Agreement,
or any other Loan Document or any amendments thereto (collectively, the
"Claims"), nor does Borrower now have knowledge of any facts that would or might
give rise to any Claims. If facts exist as of the date of this Amendment which
would or could give rise to any Claim against or with respect to the enforcement
of the Agreement, or any other Loan Document, as amended by the amendments
thereto, Borrower hereby unconditionally, irrevocably and unequivocally waives
and fully releases any and all such Claims as if such Claims were the subject of
a lawsuit, adjudicated to final judgment from which no appeal could be taken and
therein dismissed with prejudice. In furtherance of the intention of the
parties, Borrower hereby expressly waives any and all rights conferred upon it
by the provisions of any applicable law which would provide that "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." Borrower hereby
understands and acknowledges the significance and consequences of the foregoing
release and waiver.
9. Representation by Counsel. Borrower hereby represents that it has
been represented by competent counsel of its choice in the negotiation and
execution of this Amendment; that it has read and fully understands the terms
hereof, that Borrower and its counsel have been afforded an opportunity to
review, negotiate and modify the terms of this Amendment, and that it intends to
be bound hereby.
10. Counterparts. This Agreement may be executed in one or more
counterparts, which counterparts, when taken together and collated shall
constitute one agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
NUWAY MEDICAL, INC.
/s/
By:
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Its: President
XXXXXXXXX XX, LLC
By: AUGUSTINE CAPITAL
MANAGEMENT, L.L.C., its
manager
/s/
By:
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Its:
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