Document:

EXHIBIT NO. 10.2

                         [FORM OF] CONVERTIBLE TERM 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.

Subscription Amount: [amount]                                 Irvine, California
                                                                   Dated: [date]

      FOR VALUE RECEIVED, NUWAY MEDICAL, INC., a corporation organized under the
laws of the  state of  Delaware  ("Borrower"),  promises  to pay to the order of
"Investor",  as that term is defined in the  Convertible  Loan  Agreement by and
between  Borrower  and  Investor  ("Convertible  Loan  Agreement")   (hereafter,
together with any subsequent holder hereof,  called "Lender"),  at its office at
"Investor's Address", as that term is defined in the Convertible Loan Agreement,
or at such other place as Lender may direct,  the "Subscription  Amount",  noted
above (the "Loan"), payable in full one year from the "Subscription Date", or at
an earlier  date as provided in Section 3.2 of the  Convertible  Loan  Agreement
(the "Maturity  Date").  This  Convertible Term Note is duly authorized issue of
the  Borrower  (the  "Issuer"),  issued on [date]  (the  "Issuance  Date"),  and
designated as its Convertible Term Note due one year from the Issuance Date (the
"Note").

      Borrower agrees to pay interest on the unpaid  principal  amount from time
to time outstanding hereunder on the dates and at the rate or rates as set forth
in the Convertible Loan Agreement.

      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 Preferred
Stock of the Borrower 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 preferred stock of the Issuer (the "Preferred  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 the Agreement
and this Note.

                                      -1-
<PAGE>

      The Note is subject to the following additional provisions:

            1. 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 U.S. Internal Revenue Code of 1986, as amended,
or other applicable laws at the time of such payments.

            2. 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  on
the  Issuer's  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.

            3. The Holder or Issuer may,  at its  option,  at any time up to and
including  [date],  convert  the  principal  amount of this Note or any  portion
thereof,  and any accrued interest  thereon,  into [number] shares of fully paid
and non assessable Series A Preferred 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 Holder or
Issuer.  Each  business day on which a Notice of  Conversion  is  telecopied  in
accordance with the provisions  hereof shall be deemed a "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
Conversion  Date,  provided,  the Issuer has received the original Note being so
converted  from the Holder.  If the Company has not received  the original  Note
being  converted  within three  Business Days after  Conversion  Date,  then the
Issuer shall  transmit  the  certificates  representing  the  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 five business days after
receipt of the original Notice of Conversion and original Note being converted.

            4. The  principal  amount of this  Note,  and any  accrued  interest
thereon,  shall be reduced as per that principal  amount indicated on the Notice
of Conversion  upon the proper receipt by the Holder of such  Conversion  Shares
due upon such Notice of Conversion.

                                      -2-
<PAGE>

            5. The number of Conversion Shares shall be adjusted as follows:

                  a. If the Issuer 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.

            6. No provision of this Note shall alter or impair the obligation of
the Issuer,  which is absolute and  unconditional,  upon an Event of Default (as
defined below), to pay the principal of, and interest on this Note at the place,
time, and rate, and in the coin or currency herein prescribed.

            7. The Issuer hereby  expressly  waives demand and  presentment  for
payment,  notice on nonpayment,  protest, notice of protest, notice of dishonor,
notice of  acceleration  or intent to  accelerate,  and  diligence in taking any
action to  collect  amounts  called  for  hereunder  and shall be  directly  and
primarily  liable  for the  payment  of all sums  owing and to be owing  hereon,
regardless  of and  without any  notice,  diligence,  act or omission as or with
respect to the collection of any amount called for hereunder.

            8. If one or more "Events of Default"  shall occur,  as that term is
used in the Convertible Loan Agreement,  then, or at any time thereafter, and in
each and every such case, unless such Event of Default shall have been waived in
writing by the Holder  (which  waiver  shall not be deemed to be a waiver of any
subsequent  default) or cured as provided  herein,  at the option of the Holder,
and in the Holder's sole discretion,  the Holder may consider this Note (and all
interest  through  such  date)  immediately  due and  payable  in cash,  without
presentment,  demand  protest  or notice of any  kind,  all of which are  hereby
expressly waived,  anything herein or in any note or other instruments contained
to the  contrary  notwithstanding,  and  Holder  may  immediately,  and  without
expiration  of any period of grace,  enforce any and all of the Holder's  rights
and remedies  provided  herein or any other  rights or remedies  afforded by law
(including but not limited to  consequential  damages if any). It is agreed that
in the event of such  action,  such  Holder  shall be  entitled  to receive  all
reasonable fees, costs and expenses incurred,  including without limitation such
reasonable fees and expenses of attorneys. The parties acknowledge that a change
in control  of the  Issuer  shall not be deemed to be an Event of Default as set
forth herein.

            9. In  case  any  provision  of  this  Note  is  held by a court  of
competent  jurisdiction  to be  excessive  in  scope  or  otherwise  invalid  or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent  possible,  and the validity and
enforceability  of the remaining  provisions of this Note will not in any way be
affected or impaired thereby.

                                      -3-
<PAGE>

            10. The Holder shall have the right,  if applicable,  to include all
of the Conversion Shares underlying this Note (the "Registrable  Securities") as
part of any  registration  of  securities  filed by the  Issuer  (other  than in
connection with a transaction  contemplated by Rule 145(a) promulgated under the
Act or  pursuant  to Form S-4 or S-8) and must be  notified  in  writing of such
filing as soon as reasonably  practicable;  PROVIDED,  HOWEVER,  that the Holder
agrees it shall not have any  piggy-back  registration  rights  pursuant to this
Note if the  Conversion  Shares  underlying  this Note may be sold in the United
States pursuant to the provisions of Rule 144 without any restriction on resale.
Holder shall have five business days after receipt of the aforementioned  notice
from the Issuer,  to notify the Issuer in writing as to whether the Issuer is to
include  Holder or not include  Holder as part of such  registration;  PROVIDED,
HOWEVER,   that  if  any  registration  pursuant  to  this  paragraph  shall  be
underwritten,  in whole or in part, the Issuer may require that the  Registrable
Securities requested for inclusion pursuant to this paragraph be included in the
underwriting on the same terms and conditions as the securities  otherwise being
sold through the underwriters.  If in the good faith judgment of the underwriter
evidenced  in  writing of such  offering  only a limited  number of  Registrable
Securities  should be included  in such  offering,  or no such shares  should be
included,  the Holder, and all other selling  stockholders,  shall be limited to
registering  such  proportion  of their  respective  shares  as shall  equal the
proportion  that the number of shares of selling  stockholders  permitted  to be
registered by the  underwriter in such offering bears to the total number of all
shares then held by all selling  stockholders  desiring to  participate  in such
offering. All registration expenses incurred by the Issuer in complying with the
terms  of this  Note  shall be paid by the  Issuer,  exclusive  of  underwriting
discounts, commissions and legal fees and expenses for counsel to the Holder.

            11.  This Note does not  entitle  the  Holder  hereof to any  voting
rights or other rights as a  shareholder  of the Issuer prior to the  conversion
into Preferred Stock thereof, except as provided by applicable law. If, however,
at the time of the surrender of this Note and conversion the Holder hereof shall
be entitled to convert this Note, the  Conversion  Shares so issued shall be and
be deemed to be issued to such  holder as the record  owner of such shares as of
the close of business on the Conversion Date.

            12.  Except as expressly  provided  herein or as required by law, so
long as this Note  remains  outstanding,  the  Issuer  shall  not,  without  the
approval by vote or written  consent by the  Holder,  take any action that would
adversely affect the rights, preferences or privileges of this Note.

            IN WITNESS WHEREOF, the Issuer has caused this Convertible Term Note
to be duly executed by an officer thereunto duly authorized.

NUWAY MEDICAL, INC.

By: /s/ Dennis Calvert
    -------------------------------
Name: Dennis Calvert, its President

                                      -4-
<PAGE>

NOTICE OF CONVERSION

      (To be Executed by the Registered Holder in order to Convert the Note)

      The undersigned hereby  irrevocably  elects to convert  ___________ of the
principal amount of the above Note into ___________ Shares of Series A Preferred
Stock of NuWay Medical,  Inc. according to the conditions hereof, as of the date
written below.

Date of Conversion:
                    ---------------------------------

Signature:
           ------------------------------------------

Name:
     ------------------------------------------------

Address:
        ---------------------------------------------

Date of Conversion:
                    ---------------------------------

Signature:
           ------------------------------------------

Name:
     ------------------------------------------------

Address:
        ---------------------------------------------

                                      -5-EXHIBIT NO. 10.3

                      [FORM OF] CONVERTIBLE LOAN AGREEMENT

                    Dated as of [date] ("Subscription Date")

      This CONVERTIBLE LOAN AGREEMENT (this "Agreement") is entered into between
NUWAY  MEDICAL,  INC., a  corporation  organized  under the laws of the state of
Delaware (the "Borrower"), and [investor], 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.

      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:

                                SECTION 1. LOAN

      SECTION  1.1.  TERM  LOAN.  Subject  to the terms and  conditions  of this
Agreement, the Lender agrees to loan to the Borrower, and the Borrower agrees to
borrow from the Lender,  in the aggregate  principal amount of the "Subscription
Amount", (collectively,  the "Term Loan"). The Lender hereby agrees to make such
loan to the Borrower on the date so  indicated,  with such payment to be made in
immediately available funds via wire transfer or cashier's check.

      SECTION 1.2. TERM NOTE.  The Term Loan shall be evidenced by a convertible
promissory  note (the  "Convertible  Term Note"),  substantially  in the form of
Exhibit A, with appropriate  insertions,  dated the date hereof,  payable to the
order of the  Lender and in the  initial  principal  amount of the  Subscription
Amount.  The Term Loan shall be due and payable one year from the  "Subscription
Date",  or at an earlier  date as provided in Section 3.2 hereof (the "Term Loan
Maturity Date").

                          SECTION 2. INTEREST AND FEES

      SECTION 2.1.  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%).

      SECTION 2.2. INTEREST PAYMENT DATE. Accrued interest shall be paid in full
on the Term Loan Maturity Date.

<PAGE>

      SECTION  2.3.  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.

                       SECTION 3. CONVERSION AND PAYMENTS

      SECTION 3.1. PAYMENTS.

Place of Payment. Cash payments required to be made under this Agreement and the
Convertible  Term Note of principal,  interest,  fees and other amounts  payable
hereunder,  shall be made to the  Lender at its  office  located  at:  [INVESTOR
ADDRESS]

            (a) Form of Payment. All payments of principal and interest shall be
      made by wire transfer to the Lender.

      SECTION 3.2. PREPAYMENT.

            (a) Optional  Prepayment.  The Borrower may from time to time prepay
      the Term Loan or any portion thereof without premium or penalty.

            (b) Mandatory Prepayment.

                        (i) Within ten (10) days of the occurrence of any of the
                        following  events,  the Borrower shall make a prepayment
                        of the Term  Loan in an  amount  equal  to the  proceeds
                        received by the  Borrower,  in each case up to the total
                        amount then due under the Term Loan, from:

                              (A)  the  sale  of any of  the  Borrower's  assets
                              outside the ordinary course of business; and

                              (B) any insurance  payouts or condemnation  awards
                              payable  by reason of  theft,  loss,  destruction,
                              damage,  taking or any other  similar  event  with
                              respect to any  property or assets of the Borrower
                              (provided, however, so long as no Event of Default
                              or Unmatured  Event of Default has occurred and is
                              continuing  the  Borrower  may use such  insurance
                              payouts or condemnation  awards within thirty (30)
                              days after  receipt by the Borrower to replace any
                              such property with property performing the same or
                              similar function).

<PAGE>

      SECTION 3.3. CONVERSION.

            (a)  Conversion  into  Common  Stock .  Pursuant  to the  conversion
      provisions  set forth in the  Convertible  Term Note, the Term Loan may be
      converted  into series Common Stock of the Borrower  pursuant to the terms
      set forth in the Convertible Term Note.

                    SECTION 4. REPRESENTATIONS AND WARRANTIES

      To induce the Lender to make the Term Loan,  the Borrower  represents  and
warrants to the Lender that (except in each case as  otherwise  disclosed in the
Borrower's filings with the SEC):

      SECTION 4.1.  ORGANIZATION.  The Borrower is a corporation existing and in
good standing under the laws of the State of Delaware;  each of its subsidiaries
is a corporation,  limited liability company or partnership duly existing and in
good  standing  under the laws of the state of its  formation;  the Borrower and
each of its subsidiaries are duly qualified,  in good standing and authorized to
do  business  in  each  jurisdiction  where,  because  of the  nature  of  their
activities  or  properties,  such  qualification  is required,  except where the
failure  to be so  qualified  would not have a  material  adverse  effect on the
Borrower's  business,  financial condition or results of operations (a "Material
Adverse  Effect");  and the Borrower and each of its subsidiaries have the power
and authority to own their  properties  and to carry on their  businesses as now
being conducted.

      SECTION 4.2.  AUTHORIZATION;  NO CONFLICT.  The borrowings hereunder,  the
execution and delivery of this  Agreement  and the  Convertible  Term Note,  the
performance  by the Borrower of its  obligations  under this  Agreement  and the
Convertible  Term Note are within the  Borrower's  corporate  powers,  have been
authorized  by all  necessary  corporate  action,  have  received all  necessary
governmental  approval  (if any  shall  be  required)  and do not and  will  not
contravene or conflict with any provision of law or of the charter or by-laws of
the Borrower or any subsidiary or of any agreement  binding upon the Borrower or
any subsidiary.

      SECTION 4.3. FINANCIAL STATEMENTS. The Borrower's un-audited consolidating
and consolidated  financial  statements as at January 31, 2003,  copies of which
have been made  available to the Lender,  have been prepared in conformity  with
GAAP applied on a basis  consistent with that of the preceding  fiscal year, and
accurately present the financial  condition of the Borrower and its subsidiaries
as at such dates and the results of their operations for the respective  periods
then ended.

      SECTION 4.4.  LIENS.  None of the assets of the Borrower or any subsidiary
thereof are subject to any  mortgage,  pledge,  title  retention  lien, or other
lien, encumbrance or security interest.

<PAGE>

      SECTION  4.5.  ADVERSE  CONTRACTS.  Neither  the  Borrower  nor any of its
subsidiaries is a party to any agreement or instrument or subject to any charter
or other  corporate  restriction,  nor is it subject to any judgment,  decree or
order of any court or governmental  body,  which may have a material and adverse
effect on the business, property, assets, operations, conditions or prospects of
the  Borrower  and its  subsidiaries  taken as a whole or on the  ability of the
Borrower to perform its  obligations  under this  Agreement and the  Convertible
Term Note.  Neither  the  Borrower  nor any of its  subsidiaries  has,  nor with
reasonable  diligence  should  have had,  knowledge  of or notice  that it is in
default in the performance, observance or fulfillment of any of the obligations,
covenants  or   conditions   contained  in  any  such   agreement,   instrument,
restriction, judgment, decree or order.

      SECTION 4.6. REGULATION U. The Borrower is not engaged principally in, nor
is one of the Borrower's important activities,  the business of extending credit
for the purpose of purchasing or carrying  "margin  stock" within the meaning of
Regulation U of the Board of Governors of the Federal  Reserve System as now and
from time to time hereinafter in effect.

      SECTION  4.7.  LITIGATION  AND  CONTINGENT   LIABILITIES.   No  litigation
(including   derivative  actions),   arbitration   proceedings  or  governmental
proceedings  are  pending  or  threatened  against  the  Borrower  or any of its
subsidiaries which would (singly or in the aggregate),  if adversely determined,
have a  material  and  adverse  effect  on  the  business,  properties,  assets,
operations, conditions or prospects of the Borrower or any subsidiary.

                              SECTION 5. COVENANTS

      Until all obligations of the Borrower  hereunder and under the Convertible
Term Note are paid and fulfilled in full, the Borrower agrees that it shall, and
shall cause each of its  subsidiaries  to, comply with the following  covenants,
unless the Lender consents otherwise in writing:

      SECTION  5.1.  CORPORATE  EXISTENCE,  MERGERS,  ETC. The Borrower and each
subsidiary  shall  preserve  and  maintain  its  corporate  existence,   rights,
franchises, licenses and privileges, and will not liquidate, dissolve, or merge,
or consolidate with or into any other corporation,  or sell, lease,  transfer or
otherwise  dispose  of all or a  substantial  part of its assets  (except  those
assets sold in the ordinary course of its business), except that:

            (a) Any  subsidiary  may  merge  or  consolidate  with  or into  the
      Borrower or any one or more wholly-owned subsidiaries; and

            (b) Any subsidiary may sell, lease, transfer or otherwise dispose of
      any  of  its  assets  to  the   Borrower  or  one  or  more   wholly-owned
      subsidiaries.
<PAGE>

      SECTION 5.2. INSPECTION. The Borrower and each subsidiary shall permit the
Lender and its agents at any time during normal  business hours to inspect their
properties  and to inspect and make copies of their books and records,  provided
that the Lender agrees to enter into confidentiality  agreements with respect to
the foregoing.

      SECTION 5.3. USE OF PROCEEDS.

            (a) Use of Proceeds.  The Borrower  shall use the proceeds  from the
      Term Loan  solely for  operating  costs,  including  but not  limited  to,
      employee   salaries  and  costs  associated  with  filing  SEC  compliance
      documents.

            (b) Margin  Regulations.  Neither the  Borrower  nor any  subsidiary
      shall  use or permit  any  proceeds  of the Term  Loan to be used,  either
      directly or indirectly, for the purpose, whether immediate,  incidental or
      ultimate,  of "purchasing or carrying any margin stock" within the meaning
      of  Regulations  U or X of the Board of Governors  of the Federal  Reserve
      System, as amended from time to time.

            (c) Tender  Offers and Going  Private.  Neither the Borrower nor any
      subsidiary  shall use (or permit to be used) any proceeds of the Term Loan
      to acquire any security in any transaction  which is subject to Section 13
      or 14 of  the  Securities  Exchange  Act  of  1934,  as  amended,  or  any
      regulations or rulings thereunder.

      SECTION  5.4.   COMPLIANCE   WITH  LAW.  The  Borrower  and  each  of  its
subsidiaries shall comply in all material respects with all laws and regulations
(whether federal, state or local and whether statutory, administrative, judicial
or  otherwise)  and with  every  lawful  governmental  order or  similar  action
(whether  administrative  or judicial)  applicable to it, except in each case as
would not have a Material Adverse Effect.

      SECTION 5.5. AFFILIATE  TRANSACTIONS.  Not enter into any transaction with
an  affiliate,  except  for  transactions  in the  ordinary  course of  business
pursuant to the reasonable  requirements of the Borrower's or each subsidiaries'
business and upon fair and reasonable terms no less favorable to the Borrower or
the  subsidiaries  than the  Borrower  or the  subsidiaries  would  obtain  in a
comparable arms-length transaction.

                        SECTION 6. CONDITIONS OF LENDING

      The  obligation  of the  Lender  to make the Term Loan is  subject  to the
following conditions precedent:

      SECTION 6.1.  DOCUMENTATION.  In addition to the conditions  precedent set
forth in Section 6.2 and Section 6.3, the  obligation  of the Lender to make the
Term Loan is  subject to the  conditions  precedent  that the Lender  shall have
received all of the following, each duly executed and dated a date acceptable to
the Lender, in form and substance satisfactory to the Lender and its counsel, at
the expense of the Borrower,  and in such number of signed  counterparts  as the
Lender may request  (except  for the  Convertible  Term Note,  of which only the
original shall be signed):

<PAGE>

            (a) Agreement. This Agreement;

            (b) Note. The Convertible Term Note;

            (c)  Miscellaneous.  Such other  documents and  certificates  as the
      Lender may request.

      SECTION 6.2. REPRESENTATIONS AND WARRANTIES; NO DEFAULT.

            (a)  Representations  and Warranties.  At the date of the Term Loan,
      the  Borrower's  representations  and warranties set forth herein shall be
      true and  correct in all  material  respects as at such date with the same
      effect as though those representations and warranties had been made on and
      as at  such  date.  Lender  further  represents  that  it  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").

            (b) No Default.  At the time of the Term Loan, and immediately after
      giving effect to the Term Loan, the Borrower  shall be in compliance  with
      all the terms and  provisions  set forth herein on its part to be observed
      or performed,  and no Event of Default or Unmatured Event of Default shall
      have  occurred and be  continuing  at the time of the Term Loan,  or would
      result from the making of the Term Loan.

      SECTION 6.3. NO MATERIAL ADVERSE CHANGE. No material adverse change in, or
effect  on, (a) the  business,  assets,  properties,  operations,  condition  or
prospects of the Borrower or any of its  subsidiaries  or (b) the ability of the
Borrower to perform its obligations under this Agreement or the Convertible Term
Note,  in all  cases  whether  due  to a  single  circumstance  or  event  or an
aggregation of circumstances or events, shall have occurred.

                               SECTION 7. DEFAULT

      SECTION  7.1.  EVENTS OF DEFAULT.  Each of the  following  occurrences  is
hereby defined as an "Event of Default":

            (a)  Nonpayment.  The  Borrower  shall  fail to make any  payment of
      principal,  interest,  or other amounts payable hereunder when and as due;
      or

            (b) Default under Related Documents.  Any default, event of default,
      or similar event shall occur or continue under any  instrument,  document,
      note,  agreement,  or guaranty  delivered to the Lender in connection with
      the Term Loan (including without limitation the Convertible Term Note), or
      any such instrument,  document, note, agreement, or guaranty shall not be,
      or shall cease to be, enforceable in accordance with its terms; or

<PAGE>

            (c)  Cross-Default.  There  shall  occur  any  default  or  event of
      default,  or any event which might  become such with notice or the passage
      of time or both,  or any similar  event,  or any event which  requires the
      prepayment of borrowed money or the acceleration of the maturity  thereof,
      under the terms of any evidence of indebtedness or other agreement  issued
      or assumed or entered into by the  Borrower,  any of its  subsidiaries  or
      under the terms of any indenture,  agreement or instrument under which any
      such  evidence of  indebtedness  or other  agreement  is issued,  assumed,
      secured or  guaranteed,  in each case in respect of an amount that exceeds
      $100,000,  and such event shall continue  beyond any applicable  period of
      grace; or

            (d) Dissolutions,  etc. The Borrower or any subsidiary shall fail to
      comply with any  provision  concerning  its  existence or any  prohibition
      against dissolution, liquidation, merger, consolidation or sale of assets;
      or

            (e) Warranties. Any representation, warranty, schedule, certificate,
      financial  statement,  report,  notice or other writing furnished by or on
      behalf of the Borrower or any of its  subsidiaries  to the Lender is false
      or  misleading  in any material  respect on the date as of which the facts
      therein set forth are stated or certified; or

            (f)  ERISA.  (i)  Institution  of any steps by the  Borrower  or any
      subsidiary  to  terminate  a Plan if as a result of such  termination  the
      Borrower or such  subsidiary  could be required to make a contribution  to
      such Plan,  or could  incur a liability  or  obligation  to such Plan,  in
      either case in excess of $100,000; (ii) a contribution failure occurs with
      respect to any plan sufficient to give rise to a lien under Section 302(f)
      of ERISA with respect to any Plan;  (iii) there shall occur any withdrawal
      or  partial  withdrawal  from a  Multiemployer  Plan  and  the  withdrawal
      liability (without unaccrued  interest) to Multiemployer Plans as a result
      of such withdrawal  (including any outstanding  withdrawal  liability that
      the Borrower or any  subsidiary  and any ERISA  Affiliate have incurred on
      the date of such withdrawal)  exceeds  $100,000;  or (iv) any "reportable"
      event  shall occur under  ERISA in respect of any  employee  benefit  plan
      maintained for employees of the Borrower or any subsidiary; or

            (g) Litigation.  Any suit,  action or other proceeding  (judicial or
      administrative) commenced against the Borrower or any of its subsidiaries,
      or with  respect to any assets of the Borrower or such  subsidiary,  shall
      threaten  to have a material  and adverse  effect on the asset,  condition
      (financial  or  otherwise)  or future  operations  of the Borrower or such
      subsidiary;  or a final  judgment or  settlement  in excess of $100,000 in
      excess of  insurance  shall be entered in, or agreed to in respect of, any
      such suit, action or proceeding; or

<PAGE>

            (h)  Noncompliance  with this Agreement.  The Borrower shall fail to
      comply in any material  respect with any provision  hereof,  which failure
      does not otherwise  constitute an Event of Default, and such failure shall
      continue for ten (10) days after the occurrence of such failure; or

            (i)   Bankruptcy.   Any  bankruptcy,   insolvency,   reorganization,
      arrangement,   readjustment,    liquidation,   dissolution,   or   similar
      proceeding,  domestic or foreign, is instituted by or against the Borrower
      or any of its  subsidiaries,  or the  Borrower or any of its  subsidiaries
      shall take any step toward, or to authorize, such a proceeding; or

            (j) Insolvency. The Borrower or any of its subsidiaries shall become
      insolvent,  generally  shall  fail or be  unable  to pay its debts as they
      mature,  shall  admit in writing  its  inability  to pay its debts as they
      mature,  shall make a general assignment for the benefit of its creditors,
      shall enter into any  composition or similar  agreement,  or shall suspend
      the transaction of all or a substantial portion of its usual business.

      SECTION 7.2.  REMEDIES.  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  Convertible  Term Note may  declare  the
Convertible Term Note and any other amounts owed to the Lender to be immediately
due and payable,  whereupon the Convertible 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  subsections  (l)-(m)  of  Section  7.1,  the
Convertible  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  Convertible  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
Convertible  Term Note in exercising  any power or right  hereunder or under the
Convertible  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.

                             SECTION 8. DEFINITIONS

      SECTION 8.1. GENERAL. As used herein:

            (a) "Affiliate" of any Person means (a) any Person that, directly or
      indirectly, is in control of, is controlled by, or is under common control
      with such Person,  (b) any Person who is a director or officer (i) of such
      Person,  (ii) of any  subsidiary  of such  Person  or (iii) of any  Person
      described  in  clause  (a)  above  or (c)  in the  case  of a  trust,  its
      protectors  or  trustees,  any  Person  who is or has  been a  beneficiary
      thereof,  or any Person  who is or has been able to appoint a  beneficiary
      thereof.  For purposes of this definition,  control of a Person shall mean
      the power,  direct or indirect  (i) to vote 25% or more of the  securities
      having ordinary voting power for the election of directors of such Person,
      whether by ownership of securities,  contract, proxy or otherwise, or (ii)
      to direct or cause the  direction of the  management  and policies of such
      Person, whether by ownership of securities, contract, proxy or otherwise.

            (b) "Agreement" shall have the meaning set forth in the Preamble.

            (c) "Borrower" shall have the meaning set forth in the Preamble.

            (d) "Code" means the Internal  Revenue Code of 1986, as amended from
      time to time.

            (e) "ERISA"  means the Employee  Retirement  Income  Security Act of
      1974, as amended from time to time.

            (f) "ERISA  Affiliate"  means any  corporation  or trade or business
      which is a member of the same controlled group of corporations (within the
      meaning of Section 414(b) of the Code) as such Borrower or is under common
      control  (within  the  meaning  of  Section  414(c) of the Code)  with the
      Borrower.

            (g) "GAAP" shall mean generally  accepted  accounting  principles in
      the United  States of America as in effect on the date of this  Agreement,
      consistently applied.

            (h) "Investor" shall have the meaning set forth in the Preamble.

            (i) "Investor's Address" shall have the meaning set forth in Section
      3.1.

            (j) "Lender" shall have the meaning set forth in the Preamble.

            (k) "Multiemployer  Plan" means a multiemployer plan defined as such
      in  Section  3(37) of ERISA to which  contributions  have been made by the
      Borrower or any ERISA  Affiliate as a "contributing  sponsor"  (within the
      meaning of Section 4001(a)(13) of ERISA).

            (l) "PBGC" means the Pension  Benefit  Guaranty  Corporation  or any
      entity succeeding to any or all of its functions under ERISA.

            (m)  "Person"  shall  mean  any  individual,   sole  proprietorship,
      partnership,    joint   venture,   trust,   unincorporated   organization,
      association,  corporation,  limited liability company, institution, public
      benefit corporation,  other entity or government (whether federal,  state,
      county,  city,  municipal,  local,  foreign,  or otherwise,  including any
      instrumentality, division, agency, body or department thereof).

<PAGE>

            (n) "Plan" means any plan,  program or arrangement which constitutes
      an "employee benefit plan" within the meaning of Section 3(3) of ERISA and
      which  is  maintained  or  contributed  to by the  Borrower  or its  ERISA
      Affiliates for the benefit of their employees, including former employees.

            (o) "Subsidiary" means any corporation,  partnership, joint venture,
      trust,  or other  legal  entity of which the  Borrower  owns  directly  or
      indirectly 50% or more of the outstanding voting stock or interest,  or of
      which the Borrower has effective control, by contract or otherwise.

            (p) "Subscription Amount" shall equal $[amount].

            (q)  "Subscription  Date"  shall have the  meaning  set forth in the
      Preamble.

            (r) "Term Loan  Maturity  Date"  shall have the meaning set forth in
      Section 1.2.

            (s)  "Convertible  Term Note"  shall have the  meaning  set forth in
      Section 1.2.

            (t) "Unmatured Event of Default" means an event or condition,  which
      would  become an Event of Default  with  notice or the  passage of time or
      both.

Except as and unless  otherwise  specifically  provided  herein,  all accounting
terms in this Agreement  shall have the meanings given to them by GAAP and shall
be applied and all reports  required by this Agreement  shall be prepared,  in a
manner consistent with the audited financial  statements  referred to in Section
4.3.

      SECTION 8.2.  APPLICABILITY OF SUBSIDIARY AND AFFILIATE REFERENCES.  Terms
hereof  pertaining to any  subsidiary or affiliate  shall apply only during such
times as the Borrower has any subsidiary or affiliate.

                            SECTION 9. MISCELLANEOUS

      SECTION 9.1.  WAIVER OF DEFAULT.  The Lender may, by written notice to the
Borrower,  at any time and from  time to time,  waive any  Event of  Default  or
Unmatured  Event of Default,  which shall be for such period and subject to such
conditions  as shall be specified  in any such  notice.  In the case of any such
waiver,  the Lender and the Borrower shall be restored to their former  position
and rights hereunder and under the Convertible Term Note, respectively,  and any
Event of Default or  Unmatured  Event of Default so waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to or impair any right
consequent  thereon or to any  subsequent or other Event of Default or Unmatured
Event of Default.

      SECTION 9.2.  NOTICES.  All  notices,  requests and demands to or upon the
respective  parties  hereto  shall be  deemed  to have  been  given or made when
deposited in the mail, postage prepaid, addressed:

<PAGE>

      if to the Lender to the Investor's Address, at [investor]

            (a) if to the  Borrower to NuWay  Medical,  Inc.,  2603 Main Street,
      Suite 1150, Irvine,  California 92614 Attention:  Chief Executive Officer,
      with  a  Fax   to   949-625-9819.   Attention   Dennis   Calvert   (Email:
      Nuwaymedical@aol.com)

or to such  other  address  as may be  hereafter  designated  in  writing by the
respective parties hereto.

      SECTION 9.3. NONWAIVER;  CUMULATIVE REMEDIES. No failure to exercise,  and
no delay  in  exercising,  on the  part of the  Lender  of any  right,  power or
privilege  hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.  The rights and remedies of the
Lender  herein  provided  are  cumulative  and not  exclusive  of any  rights or
remedies provided by law.

      SECTION 9.4. SURVIVAL OF AGREEMENTS.  All agreements,  representations and
warranties made herein shall survive the delivery of the  Convertible  Term Note
and the making of the Term Loan.

      SECTION 9.5. SUCCESSORS. This Agreement shall, upon execution and delivery
by the Borrower and  acceptance  by the Lender,  become  effective  and shall be
binding  upon and inure to the  benefit  of the  Borrower,  the Lender and their
respective successors and assigns,  except that the Borrower may not transfer or
assign any of its rights or interest hereunder without the prior written consent
of the Lender.

      SECTION 9.6.  CAPTIONS.  Captions in this Agreement are for convenience of
reference  only and  shall not  define  or limit any of the terms or  provisions
hereof.  References  herein to Sections or provisions  without  reference to the
document in which they are contained are references to this Agreement.

      SECTION 9.7. SINGULAR AND PLURAL.  Unless the context requires  otherwise,
wherever used herein the singular  shall include the plural and vice versa,  and
the use of one gender  shall also denote the others where  appropriate.  SECTION
9.8.  COUNTERPARTS.  This Agreement may be executed by the parties on any number
of  separate  counterparts,  and by each party on  separate  counterparts;  each
counterpart shall be deemed an original instrument;  and all of the counterparts
taken together shall be deemed to constitute one and the same instrument.

      SECTION 9.9. FEES. The Borrower  agrees to pay or reimburse the Lender for
all costs and expenses of enforcing this Agreement or the Convertible Term Note,
or preserving its rights hereunder or under any document or instrument  executed
in connection  herewith  (including  legal fees and  reasonable  time charges of
attorneys  who may be  employees of the Lender,  whether in or out of court,  in
original or appellate proceedings or in bankruptcy).

<PAGE>

      SECTION 9.10. CONSTRUCTION. This Agreement, the Convertible Term Note, and
any other  document or  instrument  executed  in  connection  herewith  shall be
governed by, and construed and interpreted in accordance with, the internal laws
of the State of  California  and shall be  deemed to have been  executed  in the
State of California.

                            [SIGNATURE PAGE FOLLOWS]

<PAGE>

      IN WITNESS  WHEREOF,  the parties  have caused this  Agreement  to be duly
executed as of the day and year first above written.

                                              BORROWER
                                              NUWAY MEDICAL, INC.

                                              /s/ Dennis Calvert
                                              --------------------------
                                              Dennis Calvert, President

                                              LENDER

                                              /s/ INVESTOR
                                              --------------------------

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