Exhibit 10.4

 

SUBORDINATION AGREEMENT

 

THIS SUBORDINATION AGREEMENT (this “Agreement”) is made and executed as of the
1st day of September, 2015, by, between and among INERGETICS, INC., a
corporation incorporated under the laws of the State of Delaware (the
“Borrower”); ______ (“______”),______ (“______,” and together with ______,
collectively, the “______”) and ______ (“______,” and together with the ______,
collectively, the “Senior Lenders”) and ______, ______, ______ (each
individually referred to as a “Subordinating Creditor” and all of them
collectively sometimes referred to as the “Subordinating Creditors”).

 

WITNESSETH:

  

WHEREAS, each of the Subordinating Creditors made one or more loans to the
Borrower (collectively, the “Subordinated Debt”) all of which are identified in
Schedule I attached hereto, which Subordinated Debt is evidenced by certain
documents and/or other instruments and all other related documents and
agreements including, but not limited to, those set forth in Schedule I hereto,
the Security Agreement dated September 1, 2015, by and among the Borrower,
______ and ______ (as amended by the ______ and all exhibits, schedules,
annexes, supplements and modifications and/or amendments thereto collectively,
the “Subordinating Creditors’ Security Agreement”), all documents, instruments,
notes, debentures or other security agreements and other documents securing any
collateral for any Subordinated Debt and any U.C.C. 1 Financing Statements
and/or other documents evidencing or perfecting liens and/or security interests
in any assets of the Borrower created by any security agreements (all such
documents including, but not limited to, all amendments, supplements, exhibits,
schedules and/or annexes to such documents, collectively, the “Subordinated Debt
Loan Documents”); and

 

WHEREAS, the Contractors have made or will make loans, and/or advances (the
“Contractor Loans”), to the Borrower to, among other items, enable the Borrower
to have its products manufactured pursuant to a Master Purchase Order Assignment
Agreement dated as of September 1, 2015, by and between the Contractors and the
Borrowers (as amended, supplemented, renewed, modified and/or otherwise changed
from time to time, the “P.O. Agreement,” and, together with all other related
documents including, but not limited to, the security agreement dated September
1, 2015 by and among the Senior Lenders and the Borrower (the “Security
Agreement”), any U.C.C. 1 Financing Statements and/or other documents evidencing
liens created by the Security Agreement and other documents evidencing any such
liens or used to establish a lien or security interest in the assets of the
Borrower, all Distributor’s Notes, Exchange Notes, Prior Notes and all
modifications, exhibits, amendments, supplements, annexes of related items,
collectively, and including any and all instruments evidencing the Contractor
Loans and all exhibits, schedules, annexes, supplements, modifications and/or
amendments to any and/or all of such documents, all as amended, supplemented,
modified and/or otherwise changed, from time to time, collectively, the “P.O.
Transaction Documents”), which aggregate principal amount of Contractor Loans
under the P.O. Agreement cannot at any time exceed $1,000,000 aggregate
principal amount; and

 

WHEREAS, the Contractors have previously made $______ aggregate principal amount
of loans to the Borrower (the “Prior Loans”) as set forth on Schedule II, which
Prior Loans are evidenced by certain documents and/or instruments and all other
related documents including, but not limited to, any security agreements
securing any collateral for such Prior Loans and any U.C.C. 1 Financing
Statements and/or other documents evidencing liens created by the security
agreement and other documents evidencing any such liens or used to establish a
lien or security interest in the assets of the Borrower, (all such documents
including, but not limited to, all exhibits, schedules, annexes, supplements
and/or amendments to any of such documents, all as amended, supplemented,
modified and/or otherwise changed, collectively, the “Prior Loan Documents”),
which Prior Loans, pursuant to the P.O. Agreement, will be converted into
Contractor Loans and be evidenced by “Exchange Notes”; and

 

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WHEREAS, ______ previously made (and in the future may make additional) loans to
the Borrower (the “Other Loans”) as set forth on Schedule III hereto, which
Other Loans are (and in the future may be) evidenced by notes, debentures and/or
other instruments (all such notes, debentures and/or instruments together with
such other documents, agreements and other items related to the Other Loans
including, but not limited to, the Security Agreement and any U.C.C. 1 Financing
Statements and/or other documents evidencing liens created by the security
agreement and other documents evidencing any such liens or used to establish a
lien or security interest in the assets of the Borrower, and all exhibits,
schedules, annexes, supplements and/or amendments to any of such documents, all
as amended, supplemented, modified and/or otherwise changed, collectively, the
“Other Loan Documents”); and

 

WHEREAS, all of Borrower’s current and future obligations to (i) the Contractors
pursuant to the P.O. Documents including, but not limited to, the Contractor
Loans, Distributor’s Notes and Prior Notes and upon exchange of the Prior Notes
for the Exchange Notes, the Exchange Notes, and (ii) ______ under the Other
Loans and Other Loan Documents are secured by the Security Agreement, which
Security Agreement provides the Senior Lenders with a continuing and
unconditional first priority security interest (the “Security Interest”) in the
collateral stated therein and also in the case of the Contractors to all
Collateral (collectively, the “Collateral”); and

 

WHEREAS, each Subordinating Creditor has agreed pursuant to this Agreement to
subordinate: (i) all of their respective Subordinated Debt; and (ii) each
Subordinating Creditor’s security interests of any nature or kind to the Senior
Lenders’ property and assets, to the Senior Debt (as hereinafter defined) and to
the Security Interest, all as more specifically hereinafter set forth; and

 

WHEREAS, all capitalized terms used in this Agreement and not otherwise defined
herein shall have the same meanings ascribed to such terms in the P.O.
Agreement;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth herein and other good and valuable consideration, the Senior Lenders and
the Subordinating Creditors do hereby agree as follows:

 

1.            Recitals. The recitals set forth above are true and correct and
are incorporated herein by reference.

 

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2.            Subordination. Until all (i) Contactor Loans, Exchange Notes,
Prior Loans, Distributor Notes, Other Loans, and all other obligations of any
nature or kind of Borrower to the Senior Lenders including, but not limited to,
under and/or pursuant to (a) the P.O. Agreement, (including, but not limited to,
the Contractor Expenses, the Commitment Fee, all Contractors Deal Fees), (b) the
Security Agreement, (c) all other P.O. Transaction Documents, (d) the Other Loan
Documents, (e) the Other Loans and (f) the Prior Loan Documents (the items set
forth in (a) - (f), are each a “Senior Debt Document”, and collectively, the
“Senior Debt Documents”), whether now existing or hereafter arising, together
with all accrued and unpaid interest thereon, all other fees and charges due,
owing or payable by the Borrower to one or more of the Senior Lenders together
with all costs of collection with respect to any of the above (including, but
not limited to, attorneys’ fees and court costs and expenses throughout all
trial and appellate levels and all negotiations, mediations, arbitrations and
bankruptcy proceedings), and any and all other obligations of the Borrower to
the Senior Lenders whether now existing or arising hereafter (collectively, the
“Senior Debt”) are indefeasibly paid in full in immediately available funds to
the Senior Lenders (hereinafter referred to as a “Discharge” or as the Senior
Debt being “Discharged”), each Subordinating Creditor does hereby fully and
unconditionally subordinate: (i) any right to payment or distribution by or on
behalf of the Senior Lenders, directly or indirectly, of assets of the Borrower
of any kind or character for or on account of the Subordinated Debt; and (ii)
any and all security interests, liens, charges, encumbrances or other interests
that each Subordinating Creditor may have or obtain at any time in any assets or
property of the Borrower to secure the Subordinated Debt, or any portion thereof
(collectively, the “Subordinating Creditors Liens”), to the prior payment in
full of the Senior Debt, and to the Security Interests in the Collateral, and
each Subordinating Creditor agrees that until such time as the Senior Debt has
been Discharged, any and all Subordinating Creditors Liens shall be junior and
subordinate to the Security Interests, and the Security Interests shall be
first, senior and prior to each of the Subordinating Creditors Liens. The
priority specified in the preceding sentence shall be applicable and effective
irrespective of: (a) the dates, times or order of attachment or perfection of
the Subordinating Creditors Liens or the Security Interests; (b) the time or
order of filing of any Subordinating Creditors Liens or the Security Interests;
(c) the time or order of filing of any financing statements relating to any of
the Subordinating Creditors Liens or the Security Interests; (d) the time or
order of obtaining control or possession of any Collateral or any other assets
of the Borrower; (e) the giving or failure to give notice of the acquisition or
expected acquisition of any purchase money liens; or (f) the failure to perfect
or maintain the perfection or priority of the Security Interests or the failure
of the Senior Lenders to obtain control or possession of any Collateral. Each
Subordinating Creditor, to the fullest extent permitted by applicable law,
waives as to the Senior Lenders, any requirement regarding, and agrees not to
demand, request, plead or otherwise claim the benefit of, any marshaling,
appraisement, valuation or other similar right that may otherwise be available
to any Subordinating Creditor under applicable law with respect to any
Collateral. For avoidance of doubt, each of the Senior Lenders and each
Subordinating Creditor hereby clarify for each other that the Senior Debt and
the Security Interests shall be senior in all respects to the Subordinated Debt
and the Subordinating Creditors Liens, and that the Subordinated Debt and the
Subordinating Creditors Liens shall be junior and subordinate in all respects to
the Senior Debt and the Security Interests.

 

3.            No Payments or Enforcement. Until the Senior Debt is Discharged,
and except only as expressly permitted by this Section 3 below, each
Subordinating Creditor agrees that it will not demand or receive from Borrower,
and Borrower will not pay to any Subordinating Creditor, all or any part of the
Subordinated Debt, by way of payment, prepayment, setoff, lawsuit or otherwise,
nor will any Subordinating Creditor exercise any remedy with respect to the
Subordinated Debt or any of the Subordinating Creditors Liens against any assets
or property of Borrower, nor will any Subordinating Creditor commence, or cause
to commence, prosecute or participate in any administrative, legal or equitable
action against Borrower, or any one of them, in connection with the Subordinated
Debt or the Subordinating Creditors Liens; provided, however, that so long as,
and only to the extent that, Subordinating Creditors have not received a written
notice from the Senior Lenders advising as to the existence of an uncured
default or “Event of Default” (as such or similar defined term may be defined in
any of the Senior Debt Documents) by Borrower under any of the Senior Debt
Documents, Borrower may pay regularly scheduled payments of interest only
through the issuance of Borrower’s Common Stock or preferred stock (as the case
may be in accordance with the documents underlying the Subordinated Debt) to
each Subordinating Creditor on account of the Subordinated Debt (provided that
once the Senior Lenders deliver to Subordinating Creditors any notice as to the
existence of any such default or Event of Default by Borrower, no such payments
or issuances shall be further made by Borrower or accepted by Subordinating
Creditors).

 

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4.            Subordination Upon Any Distribution of Assets of the Borrower.  In
the event of any payment or distribution of assets of Borrower of any kind or
character, whether in cash, property, or securities, upon the dissolution,
winding up, or total or partial liquidation or reorganization, readjustment,
arrangement, or similar proceeding relating to the Borrower or its property and
assets, whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership, arrangement, or similar proceedings or upon an assignment for the
benefit of creditors, or upon any other marshaling or composition of the assets
and liabilities of the Borrower, or otherwise (such events, collectively, the
“Insolvency Events”): (i) all amounts owing on account of the Senior Debt shall
first be paid in full and in cash, or payment provided for in cash or in cash
equivalents, before any payment or distribution is made on account of the
Subordinated Debt; and (ii) to the extent permitted by applicable law, any
payments or distributions on account of the Subordinated Debt to which any
Subordinating Creditor would be entitled except for the provisions hereof, shall
be paid or delivered by the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, or other liquidating agent making such payment or
distribution directly to the Senior Lenders for application to the payment of
the Senior Debt in accordance with clause (i), after giving effect to any
concurrent payment or distribution or provision therefor to the Senior Lenders
in respect of such Senior Debt.

 

5.            Payment Over to Senior Lenders.  In the event that,
notwithstanding the provisions of this Agreement, any payments or distributions
on account of the Subordinated Debt or in any way relating to the Collateral or
any assets or property of any of the Borrower shall be received in contravention
of this Agreement by any Subordinating Creditor before all Senior Debt is
Discharged, such payments or distributions shall be held in trust for the
benefit of the Senior Lenders and shall be immediately paid over or delivered to
the Senior Lenders, in the same form as received, with any necessary
endorsements, for application to the payment of the Senior Debt remaining
unpaid, after giving effect to any concurrent payments or distributions to the
Senior Lenders in respect of the Senior Debt.

 

6.            Release of Collateral Upon Permitted Collateral Sale. In
connection with any sale, lease, exchange, transfer or other disposition of
Collateral or any other assets of the Borrower by the Senior Lenders (or on
behalf of, or for the benefit of, the Senior Lenders), each Subordinating
Creditor hereby agrees: (i) that upon the written request of the Senior Lenders
with respect to the Collateral or other assets subject to such sale or other
disposition (which written request shall specify the proposed closing date),
release or otherwise terminate any Subordinating Creditors Liens on such
Collateral or other assets; (ii) to promptly deliver such terminations of
financing statements, partial lien releases, mortgage satisfactions and
discharges, endorsements, assignments or other instruments of transfer,
termination or release (collectively, “Release Documents”) and take such further
actions as the Senior Lenders shall reasonably require in order to release
and/or terminate the Subordinating Creditors Liens or any other claims that any
Subordinating Creditor may have on the Collateral or any other assets of any of
the Borrower subject to such sale or other disposition; provided that no such
Release Documents shall be filed or become effective until the closing of such
sale or other disposition; and (iii) shall be deemed to have consented under the
documents evidencing the Subordinated Debt to such sale or disposition free and
clear of such Subordinating Creditors Liens or other claims or security
interests any Subordinating Creditor may have and to have waived the provisions
of the documents evidencing the Subordinated Debt to the extent necessary to
permit such transaction.

 

7.            Authorization to Senior Lenders.  If, while any Subordinated Debt
is outstanding, any Insolvency Event shall occur and be continuing with respect
to the Borrower or its property or assets that constitutes a default or Event of
Default under the Senior Debt Documents, each Subordinating Creditor shall
promptly take such action as the Senior Lenders reasonably may request to
effectuate the provisions of this Agreement: (A) to collect the Subordinated
Debt for the account of the Senior Lenders and to file appropriate claims or
proofs of claim in respect of the Subordinated Debt; (B) to execute and deliver
to the Senior Lenders such powers of attorney, assignments, and other
instruments as it may request to enable it to enforce any and all claims with
respect to the Subordinated Debt consistent with the terms of this Agreement;
and (C) to collect and receive any and all payments and distributions on account
of the Subordinated Debt as provided herein until the Senior Debt is Discharged.

 

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8.            Power of Attorney. Effective upon the occurrence of an Event of
Default by the Borrower under the Senior Debt Documents, each Subordinating
Creditor hereby irrevocably constitutes and appoints the Senior Lenders, and any
agent or representative of the Senior Lenders, with full power of substitution,
as its true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of each Subordinating Creditor and in the name
of each Subordinating Creditor or in the Senior Lenders’ own name, from time to
time in the Senior Lenders’ discretion, for the purpose of carrying out the
terms of this Agreement, to take any and all action and to execute any and all
documents and instruments, in each case, which may be necessary or commercially
reasonable and appropriate to accomplish the purposes of this Agreement,
including any Release Documents, such power of attorney being coupled with an
interest and irrevocable. Each Subordinating Creditor hereby ratifies all that
said attorneys shall lawfully do or cause to be done pursuant to the power of
attorney granted in this Section. No Person to whom this power of attorney is
presented, as authority for the Senior Lenders to take any action or actions
contemplated hereby, shall be required to inquire into or seek confirmation from
any Subordinating Creditor as to the authority of the Senior Lenders to take any
action described herein, or as to the existence of or fulfillment of any
condition to this power of attorney, which is intended to grant to the Senior
Lenders the authority to take and perform the actions contemplated herein.

 

9.             Certain Agreements of Subordinating Creditors.

 

(a)          No Benefits.  Each Subordinating Creditor understands that there
are various agreements between the Senior Lenders and the Borrower evidencing
and governing the Senior Debt, and each Subordinating Creditor acknowledges and
agrees that such agreements are not intended to confer any benefits on
Subordinating Creditors, and that the Senior Lenders shall not have any
obligation to any Subordinating Creditor, or any other Persons, to exercise any
rights, enforce any remedies, or take any actions which may be available to them
under such agreements.

 

(b)          No Interference.  Each Subordinating Creditor acknowledges that the
Borrower has granted to the Senior Lenders security interests in all of the
Collateral, and each agrees not to interfere with or in any manner oppose a
disposition of any Collateral by the Senior Lenders in accordance with
applicable law and the terms of the Senior Debt Documents.

 

(c)          Reliance by Senior Lenders.  Each Subordinating Creditor
acknowledges and agrees that the Senior Lenders have relied upon and will
continue to rely upon the subordination provisions provided for herein and the
other provisions hereof in consenting to any loans or other financial
accommodations by the Senior Lenders to the Borrower.

 

(d)          Obligations of Borrower Not Affected.  Each Subordinating Creditor
hereby agrees that at any time and from time to time, without notice to or the
consent of any Subordinating Creditor, without incurring any responsibility or
obligation to any Subordinating Creditor, and without impairing or releasing the
subordination provided for herein or otherwise impairing the rights of the
Senior Lenders hereunder: (i) the time for Borrower’s performance of or
compliance with any of its agreements contained in the Senior Debt Documents may
be extended or such performance or compliance may be waived by the Senior
Lenders; (ii) the agreements of Borrower under the Senior Debt Documents may
from time to time be modified by the Senior Lenders and the Borrower for the
purpose of adding any requirements thereto or changing in any manner the rights
and obligations of the respective parties thereunder; (iii) the manner, place,
or terms for payment of the Senior Debt or any portion thereof may be altered or
the terms for payment extended, or the Senior Debt may be increased, renewed,
modified or amended, in whole or in part, all in accordance with the terms of
the Senior Debt Documents; (iv) the maturity of the Senior Debt may be
accelerated in accordance with the terms of any present or future agreement
between the Borrower and the Senior Lenders; (v) any Collateral may be sold,
exchanged, released, or substituted and any of the Security Interests may be
terminated, subordinated, or fail to be perfected or become unperfected; (vi)
any guarantor or obligor or other Person liable in any manner for Senior Debt
may be discharged, released, or substituted; and (vii) all other rights against
the Borrower, any other party, or with respect to any Collateral, may be
exercised by the Senior Lenders (or the Senior Lenders may waive or refrain from
exercising such rights); provided, however, notwithstanding the foregoing to the
contrary, the Senior Lenders agree that, without the prior written consent of
the Subordinating Creditors (such consent not to be unreasonably withheld,
conditioned or delayed): (y) the Senior Lenders shall not increase the principal
amount of the Senior Debt beyond the current $1,000,000 credit limit; and (z)
the Senior Lenders shall not further subordinate the Senior Debt to other debt
obligations incurred by the Borrower in a manner that would, as a result of this
Agreement, push the Subordinating Creditors Liens to a third position.

 

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(e)          Rights of Senior Lender Not to Be Impaired.  No right of the Senior
Lenders to enforce the subordination provided for herein or to exercise its
other rights hereunder shall at any time in any way be prejudiced or impaired by
any act or failure to act by the Borrower or the Senior Lenders hereunder or
under or in connection with the Senior Debt Documents, or by any noncompliance
by the Borrower with the terms and provisions and covenants herein, in the
Senior Debt Documents, regardless of any knowledge thereof the Senior Lenders
may have or otherwise be charged with.

 

(f)           Financial Condition of the Borrower.  No Subordinating Creditor
shall have any right to require the Senior Lenders to obtain or disclose any
information with respect to: (i) the financial condition or assets or
liabilities of the Borrower, or the ability of the Borrower to pay the Senior
Debt, or perform its obligations under the Senior Debt Documents; (ii) the
Senior Debt; (iii) the Collateral or other security for any or all of the Senior
Debt; (iv) the existence or nonexistence of any guarantees of, or any other
subordination agreements with respect to, all or any part of the Senior Debt;
(v) any action or inaction on the part of the Senior Lenders or any other party;
or (vi) any other matter, fact, or occurrence whatsoever, except that the Senior
Lenders agree to provide written notice of any default or Event of Default by
Borrowers under the Senior Debt Documents; provided, however, that no rights or
benefits conferred upon the Senior Lenders by this Agreement or under the Senior
Debt Documents shall be impaired or adversely affected by any failure of the
Senior Lenders to provide such notice.

 

(g)          Notices of Default. Each Subordinating Creditor hereby agrees to
deliver to the Senior Lenders, concurrently with the giving thereof to the
Borrower: (i) a copy of any written notice by such Subordinating Creditor of a
breach, default, or “Event of Default” (as such or similar defined term may be
defined in any of the Senior Debt Documents) under or in connection with the
Subordinated Debt, or any written notice of demand for payment from the
Borrower; and (ii) a copy of any written notice sent by any Subordinating
Creditor to Borrower stating any Subordinating Creditor’s intention to exercise
any enforcement rights or remedies against the Borrower, including written
notice pertaining to any foreclosure on all or any part of any assets or
properties of the Borrower at any time securing the Subordinated Debt.

 

(h)          No Increase in Subordinating Creditor Debt. Each Subordinating
Creditor and the Borrower hereby represent and warrant unto the Senior Lenders
that the maximum amount of debt currently permitted under the Subordinated Debt
existing as of the date hereof, or the documents or instruments evidencing same,
is as stated on Schedule I (for each Subordinating Creditor, as applicable, the
“Maximum Limit”). In this regard, each Subordinating Creditor and Borrower
hereby covenant and agree that: (i) the Subordinated Debt (in each case for each
Subordinating Creditor) shall never exceed the Maximum Limit; and (ii) no
Subordinating Creditor will make any other or additional loans, advances, or
financial accommodations to the Borrower, directly or indirectly, whether
related to the Subordinated Debt, new loans, advances, or accommodations, or
otherwise, unless first approved in writing by the Senior Lenders, which
approval may be withheld or conditioned in the Senior Lenders’ sole and absolute
discretion.

 

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(i)           No Other Obligations. Each Subordinating Creditor and the Borrower
hereby represent and warrant unto the Senior Lenders that, except for the
Subordinated Debt and Subordinating Creditors Liens, no Subordinating Creditor
has any other liabilities or obligations owing to them by the Borrower, or any
other liens or security interests associated with any such other liabilities or
obligations, and to the extent there are any such other liabilities or
obligations, or other liens or security interests, for purposes of this
Agreement, same shall be included as part of the Subordinated Debt and the
Subordinating Creditors Liens, and be subject to all of the terms and provisions
of this Agreement in the same manner as the Subordinated Debt and the
Subordinating Creditors Liens.

 

10.          Restrictions on Transferability of Subordinated Debt. Each
Subordinating Creditor agrees that it shall not transfer, assign, encumber,
hypothecate or subordinate, at any time while this Agreement remains in effect,
any right, claim or interest of any kind in or to any of the Subordinated Debt,
either principal or interest or otherwise, and there shall promptly be placed on
each promissory note or other document or agreement constituting a portion of
the Subordinated Debt, a legend reciting that the same is subject to this
Agreement; provided, however, notwithstanding the foregoing to the contrary,
prior to the occurrence of an Event of Default by any the Borrower under the
Senior Debt Documents, a Subordinating Creditor shall have the right to transfer
or assign any portion of the Subordinated Debt for such Subordinating Creditor,
but only if the transferee or assignee first executes an agreement reasonably
acceptable to the Senior Lenders pursuant to which such transferee or assignee
agrees to the terms and provisions of this Agreement for the benefit of the
Senior Lenders (after the occurrence of an Event of Default by the Borrower
under the Senior Debt Documents, no such assignment or transfer of any portion
of the Subordinated Debt shall be permitted).

 

11.          Statement of Account. Each Subordinating Creditor hereby agrees
that, from time to time, but only upon and after the occurrence of an Event of
Default by the Borrower under the Senior Debt Documents, it will provide and
deliver to the Senior Lenders, upon demand, a statement of the account of the
Borrower with each Subordinating Creditor.

 

12.          Miscellaneous.

 

(a)          Subrogation.  Each Subordinating Creditor hereby agrees that until
the Senior Debt is Discharged, each shall waive any claims and shall not
exercise any right or remedy, direct or indirect, arising by way of subrogation
or otherwise, against the Borrower.

 

(b)          Continuing Agreement.  This Agreement is a continuing agreement of
subordination and shall continue in effect and be binding upon the Borrower and
each Subordinating Creditor until the Senior Debt is Discharged.  The
subordinations, agreements, and priorities set forth herein shall remain in full
force and effect regardless of whether any party hereto in the future seeks to
rescind, amend, terminate, or reform, by litigation or otherwise, its respective
agreements with the Borrower.

 

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(c)          Reinstatement.  This Agreement shall continue to be effective or
shall be reinstated, as the case may be, if, for any reason, any payment of the
Senior Debt by or on behalf of the Borrower shall be rescinded or must otherwise
be restored or returned by the Senior Lenders, whether as a result of an
Insolvency Event or otherwise.

 

(d)          Obligations of the Borrower Not Affected.  The provisions of this
Agreement are intended solely for the purpose of defining the relative rights of
Subordinating Creditors, on the one hand, and of the Senior Lenders, on the
other hand, with respect to the obligations of the Borrowers to the Senior
Lenders and Subordinating Creditors.  Nothing contained in this Agreement shall:
(i) impair, as between Subordinating Creditors and the Borrowers, the obligation
of the Borrowers to pay their respective obligations with respect to the
Subordinated Debt as and when the same shall become due and payable (subject,
however, to the terms of this Agreement as applicable to the Senior Lenders’
rights hereunder); or (ii) otherwise affect the relative rights of Subordinating
Creditors against the Borrowers, on the one hand, and of the other creditors
(other than the Senior Lenders) of the Borrower against the Borrower, on the
other hand.

 

(e)          Further Assurances and Additional Acts.  Each Subordinating
Creditor shall execute, acknowledge, deliver, file, notarize, and register at
its own expense all such further agreements, instruments, certificates,
financing statements, documents, and assurances, and perform such acts as the
Senior Lenders reasonably shall deem necessary to effectuate the purposes of
this Agreement, and promptly provide the Senior Lenders with evidence of the
foregoing reasonably satisfactory to the Senior Lenders.

 

(f)           Entire Agreement. This Agreement: (i) is valid, binding and
enforceable against each Subordinating Creditor and the Borrowers in accordance
with its terms and provisions and no conditions exist as to its legal
effectiveness; and (ii) constitutes the entire agreement between the parties
with respect to the subject matter hereof. No promises, either expressed or
implied, exist between the Senior Lenders, Subordinating Creditors and the
Borrower, unless contained herein. This Agreement is the result of negotiations
between Subordinating Creditors, the Borrower and the Senior Lenders and has
been reviewed (or have had the opportunity to be reviewed) by counsel to all
such parties, and is the product of all parties. Accordingly, this Agreement
shall not be construed more strictly against the Borrower merely because of the
Borrower’s involvement in its preparation.

 

(g)          Amendments; Waivers. No delay on the part of the Senior Lenders in
the exercise of any right, power or remedy shall operate as a waiver thereof,
nor shall any single or partial exercise by the Senior Lenders of any right,
power or remedy preclude other or further exercise thereof, or the exercise of
any other right, power or remedy. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement shall in any event be
effective unless the same shall be in writing and acknowledged by the Senior
Lenders, and then any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given. The rights and remedies of the Senior Lenders under this Agreement are
cumulative and not exclusive of any rights, remedies, powers, and privileges
that may otherwise be available to the Senior Lenders provided by law.

 

(h)          MANDATORY FORUM SELECTION.  EACH SUBORDINATING CREDITORM EACH
SENIOR LENDER AND THE BORROWER IRREVOCABLY AGREE THAT ANY DISPUTE ARISING UNDER,
RELATING TO, OR IN CONNECTION WITH, DIRECTLY OR INDIRECTLY, THIS AGREEMENT OR
RELATED TO ANY MATTER WHICH IS THE SUBJECT OF OR INCIDENTAL TO THIS AGREEMENT,
OR THE COLLATERAL (WHETHER OR NOT SUCH CLAIM IS BASED UPON BREACH OF CONTRACT OR
TORT) SHALL BE SUBJECT TO THE EXCLUSIVE JURISDICTION AND VENUE OF THE STATE
AND/OR FEDERAL COURTS LOCATED IN NEW YORK COUNTY, NEW YORK.  THIS PROVISION IS
INTENDED TO BE A “MANDATORY” FORUM SELECTION CLAUSE AND GOVERNED BY AND
INTERPRETED CONSISTENT WITH NEW YORK LAW. EACH SUBORDINATING CREDITORS, EACH
SENIOR LENDER AND BORROWER HEREBY CONSENT TO THE EXCLUSIVE JURISDICTION AND
VENUE OF ANY STATE OR FEDERAL COURT HAVING ITS SITUS IN SAID COUNTY, AND EACH
HEREBY EXPRESSLY AND IRREVOCABLY WAIVES ANY OBJECTION BASED ON FORUM NON
CONVENIENS.

 

 8 

 

 

(i)           Governing Law. This Agreement shall be delivered and accepted in
and shall be deemed to be a contract made under and governed by the internal
laws of the State of New York, and for all purposes shall be construed in
accordance with the laws of such State, without giving effect to the choice of
law provisions of such State.

 

(j)           WAIVER OF JURY TRIAL. EACH SUBORDINATING CREDITOR, THE BORROWER
AND EACH SENIOR LENDER, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO
CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES
IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE
OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE COLLATERAL, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING
RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF
CONDUCT OR COURSE OF DEALING IN WHICH THE SENIOR LENDERS, SUBORDINATING
CREDITORS AND THE BORROWER ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

(k)          Notices. All notices of request, demand and other communications
hereunder shall be addressed to the parties as follows:

  

  If to the Borrower: Inergetics, Inc.     550 Broad Street, Suite 1212    
Newark, NJ 07102     Attn: Michael James     E-Mail: ______         With a copy
to (which shall ______   not constitute notice) ______     ______         If to
the Senior Lenders: ______     ______         If to Subordinating Creditors:
______     ______

 

 9 

 

 

unless the address is changed by the party by like notice given to the other
parties. Notice shall be in writing and shall be deemed delivered: (i) if mailed
by certified mail, return receipt requested, postage prepaid and properly
addressed to the address below, then three (3) business days after deposit of
same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by
Federal Express, UPS or other nationally recognized overnight courier service,
overnight delivery, then one (1) business day after deposit of same in a
regularly maintained receptacle of such overnight courier; or (iii) if hand
delivered, then upon hand delivery thereof to the address indicated on or prior
to 5:00 p.m., EST, on a business day. Any notice hand delivered after 5:00 p.m.,
EST, shall be deemed delivered on the following business day. Notwithstanding
the foregoing, notice, consents, waivers or other communications referred to in
this Agreement may be sent by e-mail, or other method of delivery, but shall be
deemed to have been delivered only when the sending party has confirmed (by
reply e-mail or some other form of written confirmation from the receiving
party) that the notice has been received by the other party, which receipt can
be evidenced by a regular notice on the party giving notice’s computer or other
device showing the email notice was “delivered” or any other similar verbiage
demonstrating receipt.

 

(l)           Binding Effect. This Agreement shall become effective upon
execution by the parties hereto and shall be binding on the parties hereto and
their respective successors and assigns.

 

(m)         Enforceability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited by,
unenforceable or invalid under any jurisdiction, such provision shall as to such
jurisdiction, be severable and be ineffective to the extent of such prohibition
or invalidity, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.

 

(n)          Counterparts; Electronic Signatures. This Agreement may be executed
in any number of counterparts and by the different parties hereto on separate
counterparts and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same Agreement.
Receipt of an executed signature page to this Agreement by facsimile or other
electronic transmission shall constitute effective delivery thereof.

 

(o)          Costs, Fees and Expenses. The Borrower shall pay or reimburse the
Senior Lenders for all reasonable costs, fees and expenses incurred by the
Senior Lenders or for which the Senior Lenders become obligated in connection
with the enforcement of this Agreement, including costs and expenses and
attorneys’ fees, costs and time charges of counsel to the Senior Lenders
throughout all court levels.

 

(p)         Termination. This Agreement shall not terminate until the Senior
Debt is Discharged, or until the Subordinated Debt is paid in full in accordance
with the provisions hereof.

 

(q)          Specific Performance.  The Senior Lenders are hereby authorized to
demand specific performance and/or any other equitable relief and;/or remedy
relating to any provision of this Agreement, the Security Agreement and/or any
related documents, whether or not the Borrower and/or the Subordinating
Creditors shall have complied with any of the provisions hereof and/or thereof
applicable to it, at any time when any Subordinating Creditor shall have failed
to comply (and/or have directly and/or indirectly indicated that any of such
persons intend not to comply) with any of the provisions of this Agreement, the
Security Agreement and/or any related documents, applicable to it. Each
Subordinating Creditor and the Borrower each hereby irrevocably waives any
defense based on the adequacy of a remedy at law, which might be asserted as a
bar to such remedy of specific performance and further knowingly waive after
consultation with their respective legal counsel any obligation and/or required
under applicable law requiring any Senior Lender to post a bond and/or make any
similar undertaking in connection with any action seeking equitable relief.

 

 10 

 

 

(r)          Authority. Each party hereby represents and warrants to the others
that each party has the requisite power and authority to enter into this
Agreement and otherwise to carry out its respective obligations hereunder, and
that the execution, delivery and performance by each party of this Agreement
have been duly authorized by all necessary action on the part of each party,
respectively and as applicable, and that the person executing this Agreement on
behalf of each party has been fully authorized to do so in accordance with
applicable law and the governing documents of each party.

 

(s)          Legal Fees and Expenses. In any action brought concerning and/or
arising directly and/or indirectly out of this Agreement and/or any of the other
Senior Debt Documents, the prevailing party shall be entitled to recover from
the other parties hereto all of its legal fees and expenses incurred by it with
respect to any such legal action.

  

[Signatures on the following page]

 

 11 

 

 

[Signatures page to subordination agreement]

 

IN WITNESS WHEREOF, the undersigned have executed this Subordination Agreement
as of the date first written above.

  

SUBORDINATING CREDITORS:

 

[______]

 

By:     Name:     Title:    

 

[______]

 

____________________________________

[______] (INDIVIDUALLY)

  

[______]

 

By:     Name:     Title:    

 

[______]

 

By:     Name:     Title:    

 

[Signatures page to subordination agreement

continued on next page]

 

 12 

 

 

[Signatures page to subordination agreement

continued from prior page]

 

BORROWER:

 

INERGETICS, INC., a Delaware corporation

 

By:     Name:     Title:    

 

SENIOR LENDERS:

 

[______]   By:       Name:     Title:  

 

[______]   By:       Name:     Title:  

 

[______]   By:       Name:     Title:  

 

[end of Signatures page to subordination agreement]

 

 13