Exhibit 10.2

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED
OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION
OF COUNSEL, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED
BY THE SECURITIES. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS
OF THIS NOTE. THE PRINCIPAL AMOUNT REPRESENTED BY THIS NOTE AND, ACCORDINGLY,
THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE LESS THAN THE AMOUNTS SET
FORTH ON THE FACE HEREOF.

 

INERGETICS, INC.

 

SENIOR SECURED CONVERTIBLE DEMAND PROMISSORY NOTE

 

Issuance Date: September 1, 2015   Original Principal Amount: U.S. $_______
Note: P.O. Note No-[__]    

 

FOR VALUE RECEIVED, Inergetics, Inc., a Delaware corporation (the “Company”),
hereby promises to pay to ______ or registered assigns (the “Holder”) $______
(the “Original Principal Amount,” and as reduced pursuant to the terms hereof
pursuant to any payment, conversion or otherwise, the “Principal”), and to pay
interest (“Interest”) on any outstanding Principal at the applicable Interest
Rate from the date set out above as the Issuance Date (the “Issuance Date”),
until all amounts due under this 12% Senior Secured Convertible Promissory Note
(including all Notes issued in exchange, transfer or replacement hereof this
“Note”), have been paid in full by the Company to the Holder. This Note was
issued to the original Holder by the Company on the Issuance Date pursuant to
the Master Purchase Order Assignment Agreement, dated as of September 1, 2015,
by and among, ______ (“______”),______ (“______”) and the Company (the “P.O.
Agreement”), solely in exchange for a 12% $______ aggregate principal amount
Convertible Promissory Note of the Company owed by the Holder; Issue Date
______, 2015 (the “Exchange Note”). The $______ Original Principal Amount of
this Note equaled the sum of (i) the $______ aggregate principal amount, plus
(ii) $______ accrued but unpaid interest outstanding on the Exchange Note
through and including the Issuance Date. Certain capitalized terms used here are
defined in Section 22. This Note is one of a series of 12% Senior Secured
Convertible Demand Promissory Notes issued pursuant to the P.O. Agreement.

 

(i) This Note and all obligations of the Company under this Note to the original
Holder (the “Obligations”), and (ii) certain other obligations of the Company to
the original Holder, ______ and ______ (the original Holder, ______ and ______
shall collectively be referred to as the “Secured Parties”), pursuant to various
other notes, debentures and/or other instruments (the “Other Instruments”), are
secured by and pursuant to a Security Agreement dated as of September 1, 2015,
by and among, the Company and the Secured Parties; and certain payment
obligations of the Company to the Subordinating Creditors (as defined below),
were expressly subordinated by the Subordinating Creditors to the Obligations of
the Company to (i) the Holder under this Note, and (ii) the Holder and the other
Secured Parties under the Other Instruments pursuant, to a Subordination
Agreement dated September 1, 2015 by, between and among, the Company, ______ and
______ (collectively, the “Subordinating Parties”), and the original Holder and
the other Secured Parties (the “Subordination Agreement”).

 

 

 

 

1)           MATURITY. This Note and all amounts due hereunder including, but
not limited to, the Principal and Interest thereon (or any portion of this Note
if the Demand (as defined below) states that a specific portion of the Principal
and Interest on this Note the Holder is declaring due and payable, with the
remaining portion of Principal and Interest continuing to be issued and
outstanding and continuing to accrue Interest as provided elsewhere herein)
shall be due and payable immediately upon the sending of a written demand by the
Holder to the Company (a “Demand”).

 

2)           INTEREST; INTEREST RATE.

 

a)    This Note shall accrue Interest daily on a compounding basis on all
amounts due under this Note commencing on the Issuance Date through and
including the date all amounts owed pursuant to this Note have been received in
full by the Holder at the Interest Rate. Interest on this Note shall be due and
payable upon (i) Demand, or (ii) upon conversion into shares of Common Stock
pursuant to Section 3 of the Principal related to the Interest (each an
“Interest Date”). If an Interest Date falls on a Holiday, the next day that is
not a Holiday shall be the Interest Date. All amounts due under this Note shall
be paid in cash.

 

b)    This Note shall accrue Interest on all Principal owed hereunder 
(“Interest”) at the rate of (i) 3.5% from the Issuance Date through and
including the date and thirty (30) days from the Issuance Date (the “30th Day”),
and (ii) for each ten (10) consecutive days (pro-rata for shorter than 10 day
periods) following the 30th Day, until the date all amounts owed to the Holder
under this Note are paid in full, one at one-half (1.5% percent)  (collectively,
the “Interest Rate”).

 

c)     From and after the occurrence and during the continuance of an Event of
Default, the Interest Rate shall be increased to 4.5% and 2.5% for the 30 day
period ending on the 30th Day and for each ten (10) consecutive days (pro-rata
for shorter than 10 day periods) following the 30th Day, respectively. In the
event that such Event of Default is subsequently cured, the adjustment referred
to in the preceding sentence shall cease to be effective as of the date of such
cure; provided, that the Interest as calculated and unpaid at such increased
rate during the continuance of such Event of Default shall continue to apply to
the extent relating to the days after the occurrence of such Event of Default
through and including the date of cure of such Event of Default.

 

3)     CONVERSION OF NOTES. This Note shall be convertible into shares of the
Company’s common stock, par value $0.001 per share (the “Common Stock”), on the
terms and conditions set forth in this Section 3.

 

a)      Conversion Right. Subject to the provisions of Section 3(d), at any time
or times following the Issuance Date, the Holder shall be entitled to convert
all or any portion of the outstanding and unpaid Conversion Amount (as defined
below) into fully paid and nonassessable shares of Common Stock in accordance
with Section 3(c), at the Conversion Rate (as defined below). The Company shall
not issue any fraction of a share of Common Stock upon any conversion. If the
issuance would result in the issuance of a fraction of a share of Common Stock,
the Company shall round such fraction of a share of Common Stock to the nearest
whole share. The Company shall pay any and all transfer, stamp and similar taxes
that may be payable with respect to the issuance and delivery of Common Stock
upon conversion of any Conversion Amount.

 

 2 

 

 

b)     Conversion Rate. The number of shares of Common Stock issuable upon
conversion of any Conversion Amount pursuant to Section 3(a) shall be determined
by dividing (x) such Conversion Amount by (y) the Conversion Price (the
“Conversion Rate”).

 

i)       “Conversion Amount” means the sum of (A) the portion of the Principal
to be converted, with respect to which this determination is being made, (B)
accrued and unpaid Interest with respect to such portion of the Principal, and
(C) all other amounts due to the Holder hereunder.

 

ii)      “Conversion Price” means, as of any Conversion Date (as defined below)
or other date of determination, the Market Price (as defined below).

 

c)     Mechanics of Conversion.

 

i)      Optional Conversion. To convert any Conversion Amount into shares of
Common Stock on any date (a “Conversion Date”), the Holder shall (A) transmit by
facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New
York time, on such date, a copy of an executed notice of conversion in the form
attached hereto as Exhibit I (the “Conversion Notice”) to the Company and the
Transfer Agent and (B) if required by Section 3(c)(iii), surrender this Note to
a common carrier for delivery to the Company as soon as practicable on or
following such date (or an indemnification undertaking with respect to this Note
in the case of its loss, theft or destruction). On or before the first (1st)
Business Day following the date of receipt of a Conversion Notice, the Company
shall transmit by facsimile a confirmation of receipt of such Conversion Notice
to the Holder and the Transfer Agent. On or before the third (3rd) Trading Day
following the date of receipt of a Conversion Notice (the “Share Delivery
Date”), the Company shall (x) provided that the Transfer Agent is participating
in the DTC Fast Automated Securities Transfer Program, credit such aggregate
number of shares of Common Stock to which the Holder shall be entitled to the
Holder’s or its designee’s balance account with DTC through its
Deposit/Withdrawal At Custodian system or (y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program, issue and
deliver to the address as specified in the Conversion Notice, a certificate,
registered in the name of the Holder or its designee, for the number of shares
of Common Stock to which the Holder shall be entitled. If required by Section
3(c)(iii), within three (3) Business Days following a conversion of this Note,
the Holder shall surrender this Note (or deliver an indemnification undertaking
with respect to this Note in the case of its loss, theft or destruction as
contemplated by Section 11(b)) to the Company. If this Note is physically
surrendered for conversion if required by Section 3(c)(iii) and the outstanding
Principal of this Note is greater than the Principal portion of the Conversion
Amount being converted, then the Company shall as soon as practicable and in no
event later than three (3) Business Days after receipt of this Note and at its
own expense, issue and deliver to the Holder a new Note (in accordance with
Section 11(d)) representing the outstanding Principal not converted. The Person
or Persons entitled to receive the shares of Common Stock issuable upon a
conversion of this Note shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on the Conversion Date, irrespective
of the date such Conversion Shares are credited to the Holder’s account with DTC
or the date of delivery of the certificates evidencing such Conversion Shares,
as the case may be.

 

 3 

 

 

ii)      Company’s Failure to Timely Convert. If the Company shall fail to issue
a certificate to the Holder or credit the Holder’s balance account with DTC, as
applicable, for the number of shares of Common Stock to which the Holder is
entitled upon conversion of any Conversion Amount on or prior to the Share
Delivery Date (a “Conversion Failure”), then (A) the Company shall pay damages
to the Holder for each Trading Day of such Conversion Failure in an amount equal
to 5.0% of the product of (1) the sum of the number of shares of Common Stock
not issued to the Holder on or prior to the Share Delivery Date and to which the
Holder is entitled, and (2) the Closing Sale Price of the Common Stock on the
Share Delivery Date and (B) the Holder, upon written notice to the Company, may
void its Conversion Notice with respect to, and retain or have returned, as the
case may be, any portion of this Note that has not been converted pursuant to
such Conversion Notice; provided that the voiding of a Conversion Notice shall
not affect the Company’s obligations to make any payments which have accrued
prior to the date of such notice pursuant to this Section 3(c)(ii) or otherwise.
In addition to the foregoing, if the Company shall fail on or prior to the Share
Delivery Date to issue and deliver a certificate to the Holder or credit the
Holder’s balance account with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion of any Conversion
Amount or on any date of the Company’s obligation to deliver shares of Common
Stock as contemplated pursuant to clause (ii) below, and if on or after such
Trading Day the Holder purchases (in an open market transaction or otherwise)
Common Stock to deliver in satisfaction of a sale by the Holder of Common Stock
issuable upon such conversion that the Holder anticipated receiving from the
Company (a “Buy-In”), then the Company shall, within three (3) Trading Days
after the Holder’s request and in the Holder’s discretion, either (i) pay cash
to the Holder in an amount equal to the Holder’s total purchase price (including
brokerage commissions and other out-of-pocket expenses, if any) for the shares
of Common Stock so purchased (the “Buy-In Price”), at which point the Company’s
obligation to issue and deliver such certificate or credit the Holder’s balance
account with DTC for the shares of Common Stock to which the Holder is entitled
upon the Holder’s conversion of the applicable Conversion Amount shall
terminate, or (ii) promptly honor its obligation to deliver to the Holder a
certificate or certificates representing such Common Stock or credit the
Holder’s balance account with DTC for the number of shares of Common Stock to
which the Holder is entitled upon the Holder’s conversion hereunder (as the case
may be) and pay cash to the Holder in an amount equal to the excess (if any) of
the Buy-In Price over the product of (A) such number of shares of Common Stock,
times (B) the Closing Sale Price on the Conversion Date.

 

iii)      Registration; Book-Entry. The Company shall maintain a register (the
“Register”) for the recordation of the name and address of the Holders of the
Note and the principal amount of the Note held by such Holders (the “Registered
Notes”). The entries in the Register shall be conclusive and binding for all
purposes absent manifest error. The Company and the Holders of the Note shall
treat each Person whose name is recorded in the Register as the owner of a Note
for all purposes, including, without limitation, the right to receive payments
of Principal and Interest, if any, hereunder, notwithstanding notice to the
contrary. The Registered Note may be assigned or sold in whole or in part only
by registration of such assignment or sale on the Register. Upon its receipt of
a written request to assign or sell all or part of any Registered Note by a
Holder, together with any required documentation under the Documents (as defined
in the Securities Purchase Agreement) including any legal opinions, if
applicable, the Company shall record the information contained therein in the
Register and issue one or more new Registered Notes in the same aggregate
Principal Amount as the Principal Amount of the surrendered Registered Note to
the designated assignee or transferee pursuant to Section 11. Notwithstanding
anything to the contrary set forth herein, upon conversion of any portion of
this Note in accordance with the terms hereof, the Holder shall not be required
to physically surrender this Note to the Company unless (A) the full Principal
amount represented by this Note is being converted or (B) the Holder has
provided the Company with prior written notice (which notice may be included in
a Conversion Notice) requesting reissuance of this Note upon physical surrender
of this Note. The Holder and the Company shall maintain records showing the
Principal and Interest, if any, converted and the dates of such conversions or
shall use such other method, reasonably satisfactory to the Holder and the
Company, so as not to require physical surrender of this Note upon conversion.

 

 4 

 

 

iv)      Disputes. In the event of a dispute as to the number of shares of
Common Stock issuable to the Holder in connection with a conversion of this
Note, the Company shall issue to the Holder the number of shares of Common Stock
not in dispute and resolve such dispute in accordance with Section 16.

 

d)     Limitations on Conversions. The Company shall not effect any conversion
of this Note, and the Holder of this Note shall not have the right to convert
any portion of this Note pursuant to the terms and conditions of this Note, to
the extent that after giving effect to such conversion, the Holder (together
with the Holder’s Affiliates) would beneficially own in excess of 4.99% (the
“Maximum Percentage”) of the number of shares of Common Stock outstanding
immediately after giving effect to such conversion. For purposes of the
foregoing sentence, the number of shares of Common Stock beneficially owned by
the Holder and its Affiliates shall include the number of shares of Common Stock
issuable upon conversion of this Note with respect to which the determination of
such sentence is being made, but shall exclude the number of shares of Common
Stock which would be issuable upon (A) conversion of the remaining, nonconverted
portion of this Note beneficially owned by the Holder or any of its Affiliates
and (B) exercise or conversion of the unexercised or nonconverted portion of any
other securities of the Company (including, without limitation, any Other Notes
or warrants) subject to a limitation on conversion or exercise analogous to the
limitation contained herein beneficially owned by the Holder or any of its
Affiliates. Except as set forth in the preceding sentence, for purposes of this
Section 3(d)(i), beneficial ownership shall be calculated in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended (the “ Exchange
Act ”). For purposes of this Section 3(d)(i), in determining the number of
outstanding shares of Common Stock, the Holder may rely on the number of
outstanding shares of Common Stock as reflected in (x) the Company’s most recent
Form 10-K, Form 10-Q, Form 8-K or other public filing with the SEC, as the case
may be, (y) a more recent public announcement by the Company or (z) any other
notice by the Company or the Transfer Agent setting forth the number of shares
of Common Stock outstanding. For any reason at any time, upon the written or
oral request of the Holder, the Company shall within one (1) Business Day
confirm orally and in writing to the Holder the number of shares of Common Stock
then outstanding. In any case, the number of outstanding shares of Common Stock
shall be determined after giving effect to the conversion or exercise of
securities of the Company, including this Note, by the Holder or its Affiliates
since the date as of which such number of outstanding shares of Common Stock was
reported. By written notice to the Company, the Holder may increase or decrease
the Maximum Percentage to any other percentage not in excess of 9.99% specified
in such notice; provided that (i) any such increase will not be effective until
the sixty-first (61 st ) day after such notice is delivered to the Company, and
(ii) any such increase or decrease will apply only to the Holder and not to any
other holder of Notes. The provisions of this paragraph shall be construed and
implemented in a manner otherwise than in strict conformity with the terms of
this Section 3(d)(i) to correct this paragraph (or any portion hereof) which may
be defective or inconsistent with the intended beneficial ownership limitation
herein contained or to make changes or supplements necessary or desirable to
properly give effect to such limitation.

 

 5 

 

 

4)     EVENTS OF DEFAULT; RIGHTS UPON EVENT OF DEFAULT.

 

a)      Event of Default. Each of the following events shall constitute an
“Event of Default”:

 

i)      if the Common Stock is or becomes DTC Eligible, then at any time
thereafter that the Common Stock is no longer DTC Eligible or DTC has issued a
“freeze” or “chill” on the Common Stock;

 

ii)      the suspension from trading or quotation eligibility or failure of the
Common Stock to be listed or eligible for quotation on an Eligible Market for a
period of five (5) consecutive Trading Days or for more than an aggregate of ten
(10) Trading Days in any 360-day period;

 

iii)    the Company’s (A) failure to cure a Conversion Failure by delivery of
the required number of shares of Common Stock within five (5) days after the
applicable Conversion Date or (B) notice, written or oral, to the Holder,
including by way of public announcement or through any of its agents, at any
time, of its intention not to comply with a request for conversion of the Note
into shares of Common Stock that is tendered in accordance with the provisions
of the Note, other than as a result of Section 3(d);

 

iv)    the Company’s failure to pay to the Holder any amount of Principal,
Interest or other amounts when and as due under this Note, the Security
Agreement, the P.O. Agreement, any Other Notes and/or any other document,
agreement and/or instruments related to any of such items, together with all
exhibits, schedules and annexes to any of the above, and as amended supplemental
and/or modified from time to time (collectively the “Documents”);

 

v)    any default under or acceleration prior to maturity of an aggregate amount
of Indebtedness in excess of $50,000 of the Company;

 

vi)    the Company, pursuant to or within the meaning of Title 11, U.S. Code, or
any similar Federal, foreign or state law for the relief of debtors
(collectively, “Bankruptcy Law”), (A) commences a voluntary case, (B) consents
to the entry of an order for relief against it in an involuntary case, (C)
consents to the appointment of a receiver, trustee, assignee, liquidator or
similar official (a “Custodian”), (D) makes a general assignment for the benefit
of its creditors or (E) admits in writing that it is generally unable to pay its
debts as they become due;

 

vii)   a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that (A) is for relief against the Company in an involuntary
case, (B) appoints a Custodian of the Company or (C) orders the liquidation of
the Company;

 

viii)  a final judgment or judgments for the payment of money aggregating in
excess of $50,000 are rendered against the Company and which judgments are not,
within sixty (60) days after the entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within sixty (60) days after the
expiration of such stay;

 

ix)    other than as specifically set forth in another clause of this Section
4(a), the Company breaches any representation, warranty, agreement, covenant,
condition and/or term of this Note and/or any other Document, except, in the
case of a breach of a covenant or other term or condition of any Document which
is capable of being cured and is cured no later than five (5) Trading Days
following such breach; or

 

 6 

 

 

x)     any event of default occurs (or with the passage of time or giving of
notice, would occur) with respect to any Indebtedness.

 

b)     Remedies Upon an Event of Default. Upon the occurrence and, continuance
of any Event of Default, notwithstanding anything to the contrary provided
herein, and/or in the other Documents and/or elsewhere, Holder may, in its sole
and absolute discretion, among other actions declare all Principal, Interest
and/or other amounts owed to the Holder by the Company under this Note and any
of the other Documents, all through and including the date all amounts owed to
the Holder from the Company pursuant to this Note, the other Documents, and/or
otherwise, are received in full by the Holder in cash by the payment of
immediately available funds by wire transfer pursuant to wire transfer
instruction provided to the Company from the Holder (the “Owed Amount”), to be
immediately due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby expressly waived by the Company, and the
Company shall pay to Holder an amount equal to (i) the product of 140%
multiplied by (ii) the Owed Amount (collectively, the “Event of Default Payment
Amount”); provided, that upon the occurrence of an Event of Default under
Section 5(a)(vi)-(vii) hereof, all amounts set forth in this Section 5(b) shall
automatically become forthwith due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby expressly waived by
the Company and the Company shall pay to Holder the Event of Default Payment
Amount;

 

c)      Remedies Are Severable and Cumulative. All provisions contained herein
pertaining to any remedy of the Holder shall be and are severable and cumulative
and in addition to all other rights and remedies available herein and in the
other Documents, at law and in equity, and any one or more may be exercised
simultaneously or successively. Any notification required pursuant to this
Section 4 or under applicable law shall be reasonably and properly given to
Company at the address and by any of the methods of giving such notice as set
forth in the P.O. Agreement.

 

d)      No Waiver. No waiver or failure to exercise at any time any default
and/or remedy or right upon a default shall operate as a direct and/or indirect
waiver of any other default or right or of the same default or right on any
subsequent occasion..

 

5)     DISTRIBUTION OF ASSETS; RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER
CORPORATE EVENTS.

 

a)      Distribution of Assets. If the Company shall declare or make any
dividend or other distributions of its assets (or rights to acquire its assets)
to any or all holders of shares of Common Stock, by way of return of capital or
otherwise (including without limitation, any distribution of cash, stock or
other securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or other
similar transaction) (the “ Distributions ”), then the Holder will be entitled
to such Distributions as if the Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without taking into
account any limitations or restrictions on the convertibility of this Note)
immediately prior to the date on which a record is taken for such Distribution
or, if no such record is taken, the date as of which the record holders of
Common Stock are to be determined for such Distributions (provided, however,
that to the extent that the Holder’s right to participate in any such
Distribution would result in the Holder exceeding the Maximum Percentage, then
the Holder shall not be entitled to participate in such Distribution to such
extent (or beneficial ownership of such shares of Common Stock as a result of
such Distribution to such extent) and the portion of such Distribution shall be
held in abeyance for the Holder until such time, if ever, as its right thereto
would not result in the Holder exceeding the Maximum Percentage).

 

 7 

 

 

b)      Purchase Rights. If at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants,
securities or other property pro rata to the record holders of any class of
Common Stock (the “Purchase Rights”), then the Holder will be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete conversion of this
Note (without taking into account any limitations or restrictions on the
convertibility of this Note) immediately prior to the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of shares of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, that to the extent that the Holder’s right to participate in
any such Purchase Right would result in the Holder exceeding the Maximum
Percentage, then the Holder shall not be entitled to participate in such
Purchase Right to such extent (or beneficial ownership of such shares of Common
Stock as a result of such Purchase Right to such extent) and such Purchase Right
to such extent shall be held in abeyance for the Holder until such time, if
ever, as its right thereto would not result in the Holder exceeding the Maximum
Percentage, at which time the Holder shall be granted such right to the same
extent as if there had been no such limitation).

 

c)      Other Corporate Events. In addition to and not in substitution for any
other rights hereunder, prior to the consummation of any Major Transaction
pursuant to which holders of shares of Common Stock are entitled to receive
securities or other assets with respect to or in exchange for shares of Common
Stock (a “Corporate Event”), the Company shall make appropriate provision to
insure that the Holder will thereafter have the right to receive upon a
conversion of this Note, at the Holder’s option, (i) in addition to the shares
of Common Stock receivable upon such conversion, such securities or other assets
to which the Holder would have been entitled with respect to such shares of
Common Stock had such shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event (without taking into account any
limitations or restrictions on the convertibility of this Note) or (ii) in lieu
of the shares of Common Stock otherwise receivable upon such conversion, such
securities or other assets received by the holders of shares of Common Stock in
connection with the consummation of such Corporate Event in such amounts as the
Holder would have been entitled to receive had this Note initially been issued
with conversion rights for the form of such consideration (as opposed to shares
of Common Stock) at a conversion rate for such consideration commensurate with
the Conversion Rate. Provision made pursuant to the preceding sentence shall be
in a form and substance satisfactory to the Holder. The provisions of this
Section shall apply similarly and equally to successive Corporate Events and
shall be applied without regard to any limitations on the conversion or
redemption of this Note.

 

6)     RIGHTS UPON ISSUANCE OF OTHER SECURITIES.

 

a)      Adjustment of Conversion Price upon Subdivision or Combination of Common
Stock. If the Company at any time on or after the Subscription Date subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more
classes of its outstanding shares of Common Stock into a greater number of
shares, the Conversion Price in effect immediately prior to such subdivision
will be proportionately reduced. If the Company at any time on or after the
Subscription Date combines (by combination, reverse stock split or otherwise)
one or more classes of its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect immediately prior to such
combination will be proportionately increased.

 

 8 

 

 

b)      Issuance of Securities Below the Conversion Price. If and whenever on or
after the Subscription Date, the Company issues or sells, or in accordance with
this Section 6 is deemed to have issued or sold, any shares of Common Stock
(including the issuance or sale of shares of Common Stock owned or held by or
for the account of the Company, but excluding any Excluded Securities issued or
sold or deemed to have been issued or sold) for a consideration per share (the
“New Issuance Price”) less than a price equal to the Conversion Price in effect
immediately prior to such issue or sale or deemed issuance or sale (such
Conversion Price then in effect is referred to as the “Applicable Price”) (the
foregoing a “ Dilutive Issuance”), then immediately after such Dilutive
Issuance, the Conversion Price then in effect shall be reduced to an amount
equal to the New Issuance Price. For purposes of determining the adjusted
Conversion Price under this Section 6(b), the following shall be applicable:

 

i)      Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is
issuable upon the exercise of any such Option or upon conversion, exercise or
exchange of any Convertible Securities issuable upon exercise of any such Option
is less than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company at the
time of the granting or sale of such Option for such price per share. For
purposes of this Section 6(b)(i), the “lowest price per share for which one
share of Common Stock is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option” shall be equal to (1) the lower of (x) the sum of
the lowest amounts of consideration (if any) received or receivable by the
Company with respect to any one share of Common Stock upon the granting or sale
of such Option, upon exercise of such Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such Option and
(y) the lowest exercise price set forth in such Option for which one share of
Common Stock is issuable upon the exercise of any such Options or upon
conversion, exercise or exchange of any Convertible Securities issuable upon
exercise of any such Option minus (2) the sum of all amounts paid or payable to
the holder of such Option (or any other Person) upon the granting or sale of
such Option, upon exercise of such Option and upon conversion, exercise or
exchange of any Convertible Security issuable upon exercise of such Option plus
the value of any other consideration received or receivable by, or benefit
conferred on, the holder of such Option (or any other Person). Except as
contemplated below, no further adjustment of the Conversion Price shall be made
upon the actual issuance of such shares of Common Stock or of such Convertible
Securities upon the exercise of such Options or upon the actual issuance of such
shares of Common Stock upon conversion, exercise or exchange of such Convertible
Securities.

 

ii)     Issuance of Convertible Securities. If the Company in any manner issues
or sells any Convertible Securities and the lowest price per share for which one
share of Common Stock is issuable upon the conversion, exercise or exchange
thereof is less than the Applicable Price, then such share of Common Stock shall
be deemed to be outstanding and to have been issued and sold by the Company at
the time of the issuance or sale of such Convertible Securities for such price
per share. For the purposes of this Section 6(b)(ii), the “lowest price per
share for which one share of Common Stock is issuable upon the conversion,
exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of
the lowest amounts of consideration (if any) received or receivable by the
Company with respect to one share of Common Stock upon the issuance or sale of
the Convertible Security and upon conversion, exercise or exchange of such
Convertible Security and (y) the lowest conversion price set forth in such
Convertible Security for which one share of Common Stock is issuable upon
conversion, exercise or exchange thereof minus (2) the sum of all amounts paid
or payable to the holder of such Convertible Security (or any other Person) upon
the issuance or sale of such Convertible Security plus the value of any other
consideration received or receivable by, or benefit conferred on, the holder of
such Convertible Security (or any other Person). Except as contemplated below,
no further adjustment of the Conversion Price shall be made upon the actual
issuance of such shares of Common Stock upon conversion, exercise or exchange of
such Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of this
Warrant has been or is to be made pursuant to other provisions of this Section
6(b), except as contemplated below, no further adjustment of the Conversion
Price shall be made by reason of such issue or sale.

 

 9 

 

 

iii)    Change in Option Price or Rate of Conversion. If the purchase or
exercise price provided for in any Options, the additional consideration, if
any, payable upon the issue, conversion, exercise or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are convertible into
or exercisable or exchangeable for shares of Common Stock increases or decreases
at any time, the Conversion Price in effect at the time of such increase or
decrease shall be adjusted to the Conversion Price which would have been in
effect at such time had such Options or Convertible Securities provided for such
increased or decreased purchase price, additional consideration or increased or
decreased conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 6(b)(iii), if the terms of any
Option or Convertible Security that was outstanding as of the Issuance Date are
increased or decreased in the manner described in the immediately preceding
sentence, then such Option or Convertible Security and the shares of Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have been issued as of the date of such increase or decrease. No
adjustment pursuant to this Section 6(b) shall be made if such adjustment would
result in an increase of the Conversion Price then in effect.

 

iv)    Calculation of Consideration Received. In case any Option is issued in
connection with the issue or sale of other securities of the Company, together
comprising one integrated transaction in which no specific consideration is
allocated to such options by the parties thereto, (x) the Options will be deemed
to have been issued for the Option Value of such Options and (y) the other
securities issued or sold in such integrated transaction shall be deemed to have
been issued or sold for the difference of (I) the aggregate consideration
received by the Company less any consideration paid or payable by the Company
pursuant to the terms of such other securities of the Company, less (II) the
Option Value. If any shares of Common Stock, Options or Convertible Securities
are issued or sold or deemed to have been issued or sold for cash, the
consideration received therefor will be deemed to be the net amount received by
the Company therefor. If any shares of Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the amount of
such consideration other than cash received by the Company will be the fair
value of such consideration, except where such consideration consists of
publicly traded securities, in which case the amount of consideration received
by the Company for such securities will be the Closing Sale Price of such
security on the date of receipt. If any shares of Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in
connection with any merger in which the Company is the surviving entity, the
amount of consideration therefor will be deemed to be the fair value of such
portion of the net assets and business of the non-surviving entity as is
attributable to such shares of Common Stock, Options or Convertible Securities,
as the case may be. The fair value of any consideration other than cash or
publicly traded securities will be determined jointly by the Company and the
Holder. If such parties are unable to reach agreement within ten (10) days after
the occurrence of an event requiring valuation (the “Valuation Event”), the fair
value of such consideration will be determined within five (5) Trading Days
after the tenth (10th) day following the Valuation Event by an independent,
reputable appraiser selected by the Holder. The determination of such appraiser
shall be final and binding upon all parties absent manifest error and the fees
and expenses of such appraiser shall be borne by the Company.

 

 10 

 

 

v)    Record Date. If the Company takes a record of the holders of shares of
Common Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in shares of Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase shares of Common Stock, Options
or Convertible Securities, then such record date will be deemed to be the date
of the issue or sale of the shares of Common Stock deemed to have been issued or
sold upon the declaration of such dividend or the making of such other
distribution or the date of the granting of such right of subscription or
purchase (as the case may be).

 

c)      Voluntary Adjustment By Company. The Company may at any time during the
term of this Note reduce the then current Conversion Price to any amount and for
any period of time deemed appropriate by the Board of Directors of the Company.

 

7)     RESERVATION OF AUTHORIZED SHARES.

 

a)      Reservation. Following the date the Company effectuates a reverse split
of its issued and outstanding Common Stock and/or increase its authorized but
unissued shares of Common Stock, the Company shall initially reserve out of its
authorized and unissued Common Stock a number of shares of Common Stock for this
Note equal to 400% of the Conversion Rate with respect to the Conversion Amount
of this Note as of the Issuance Date. So long as any of the Notes are
outstanding, the Company shall take all action necessary to reserve and keep
available out of its authorized and unissued Common Stock, solely for the
purpose of effecting the conversion of this Note, 400% of the number of shares
of Common Stock as shall from time to time be necessary to effect the conversion
of this Note and the Other Notes (not taking into effect any Beneficial
Ownership Limitation, but giving effect to any event set forth in Section 5 and
Section 6); provided that at no time shall the number of shares of Common Stock
so reserved be less than the number of shares required to be reserved by this
sentence (without regard to any limitations on conversions) (the “Required
Reserve Amount”).

 

b)      Insufficient Authorized Shares. If at any time while this Note remain
outstanding the Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon conversion of this Note at least a number of shares of Common
Stock equal to the Required Reserve Amount (an “Authorized Share Failure”), then
the Company shall immediately take all action necessary to increase the
Company’s authorized shares of Common Stock to an amount sufficient to allow the
Company to reserve the Required Reserve Amount for this Note. Without limiting
the generality of the foregoing sentence, as soon as practicable after the date
of the occurrence of an Authorized Share Failure, but in no event later than
sixty (60) days after the occurrence of such Authorized Share Failure, the
Company shall either (x) obtain the written consent of its stockholders for the
approval of an increase in the number of authorized shares of Common Stock and
provide each stockholder with an information statement with respect thereto or
(y) hold a meeting of its stockholders for the approval of an increase in the
number of authorized shares of Common Stock. In connection with such meeting,
the Company shall provide each stockholder with a proxy statement and shall use
its best efforts to solicit its stockholders’ approval of such increase in
authorized shares of Common Stock and to cause its board of directors to
recommend to the stockholders that they approve such proposal.

 

 11 

 

 

The above Sections 7(a) and 7(b) are subject to Section 17(h) of the P.O.
Agreement, which takes precendent over any conflicting provisions set forth in
these Sections 7(a) and 7(b).

 

8)     VOTING RIGHTS. The Holder shall have no voting rights as the holder of
this Note, except as required by law and/or as expressly provided in this Note.

 

9)     COVENANTS.

 

a)      Cash Dividend. So long as this Note is outstanding, the Company shall
not directly or indirectly, declare or pay any cash dividends or distributions
on any Equity Interests of the Company or of its Subsidiaries.

 

b)      Restricted Payments. The Company shall not directly or indirectly,
redeem, defease, repurchase, repay or make any payments in respect of, by the
payment of cash or Cash Equivalents (in whole or in part, whether by way of open
market purchases, tender offers, private transactions or otherwise), all or any
portion of any Indebtedness (other than with respect to this Note, Other Notes
and/or Permitted Indebtedness), whether by way of payment in respect of
principal of (or premium, if any) or interest on, such Indebtedness (or
otherwise);

 

c)      Restriction on Redemption. Until all of this Note has been converted or
otherwise satisfied in accordance with its terms, the Company shall not,
directly or indirectly, redeem or repurchase its Equity Interests without in
each case the prior express written consent of the Holder.

 

d)      Change in Nature of Business. The Company shall not make any material
change in the nature of its business as described in the Company’s most recent
annual report filed on Form 10-K with the SEC. The Company shall not modify its
corporate structure or purpose.

 

e)      Intellectual Property. The Company shall not directly or indirectly,
encumber or allow any Liens on, any of its copyright rights, copyright
applications, copyright registrations and like protections in each work of
authorship and derivative work, whether published or unpublished, any patents,
patent applications and like protections, including improvements, divisions,
continuations, renewals, reissues, extensions, and continuations-in-part of the
same, trademarks, service marks and, to the extent permitted under applicable
law, any applications therefor, whether registered or not, and the goodwill of
the business of the Company connected with and symbolized thereby, know-how,
operating manuals, trade secret rights, rights to unpatented inventions, and any
claims for damage by way of any past, present, or future infringement of any of
the foregoing, other than Permitted Liens.

 

f)      Preservation of Existence, Etc. The Company shall maintain and preserve
its existence, rights and privileges, and become or remain duly qualified and in
good standing in each jurisdiction in which the character of the properties
owned or leased by it or in which the transaction of its business makes such
qualification necessary, except where the failure to be so qualified would not
result in a Material Adverse Effect (as defined in the Securities Purchase
Agreement).

 

 12 

 

 

g)      Maintenance of Properties, Etc. The Company shall maintain and preserve
all of its properties which are necessary or useful in the proper conduct of its
business in good working order and condition, ordinary wear and tear excepted,
and comply in all material respects to comply in all material respects, at all
times with the provisions of all leases to which it is a party as lessee or
under which it occupies property, so as to prevent any material loss or
forfeiture thereof or thereunder.

 

h)      Maintenance of Insurance. The Company shall maintain insurance with
responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, hazard, rent and business
interruption insurance) with respect to its properties (including all real
properties leased or owned by it) and business, in such amounts and covering
such risks as is required by any governmental authority having jurisdiction with
respect thereto or as is carried generally in accordance with sound business
practice by companies in similar businesses similarly situated.

 

i)      Transactions with Affiliates. The Company shall not enter into, renew,
extend or be a party to, any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease, transfer or exchange
of property or assets of any kind or the rendering of services of any kind) with
any Affiliate.

 

10)    TRANSFER. This Note and any shares of Common Stock issued and/or issuable
upon conversion of this Note may be offered, sold, assigned or transferred by
the Holder without the consent of the Company, subject only to compliance with
applicable securities laws.

 

11)    REISSUANCE OF THIS NOTE.

 

a)      Transfer. If this Note is to be transferred, the Holder shall surrender
this Note to the Company, whereupon the Company will forthwith issue and deliver
upon the order of the Holder a new Note (in accordance with Section 11(d)),
registered as the Holder may request, representing the outstanding Principal
being transferred by the Holder and, if less then the entire outstanding
Principal is being transferred, a new Note (in accordance with Section 11(d)) to
the Holder representing the outstanding Principal not being transferred. The
Holder and any assignee, by acceptance of this Note, acknowledge and agree that,
by reason of the provisions of Section 3(c)(iii) following conversion or
redemption of any portion of this Note, the outstanding Principal represented by
this Note may be less than the Principal stated on the face of this Note.

 

b)      Lost, Stolen or Mutilated Note. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or
mutilation of this Note, and, in the case of loss, theft or destruction, of any
indemnification undertaking by the Holder to the Company in customary form and,
in the case of mutilation, upon surrender and cancellation of this Note, the
Company shall execute and deliver to the Holder a new Note (in accordance with
Section 11(d)) representing the outstanding Principal.

 

c)      Note Exchangeable for Different Denominations. This Note is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Note or Notes (in accordance with Section 11(d) and in
principal amounts of at least $25,000) representing in the aggregate the
outstanding Principal of this Note, and each such new Note will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of such surrender.

 

 13 

 

 

d)      Issuance of New Notes. Whenever the Company is required to issue a new
Note pursuant to the terms of this Note, such new Note (i) shall be of like
tenor with this Note, (ii) shall represent, as indicated on the face of such new
Note, the Principal remaining outstanding (or in the case of a new Note being
issued pursuant to Section 11(a) or Section 11(c), the Principal designated by
the Holder which, when added to the principal represented by the other new Notes
issued in connection with such issuance, does not exceed the Principal remaining
outstanding under this Note immediately prior to such issuance of new Notes),
(iii) shall have an issuance date, as indicated on the face of such new Note,
which is the same as the Issuance Date of this Note, (iv) shall have the same
rights and conditions as this Note, and (v) shall represent accrued and unpaid
Interest, if any, on the Principal of this Note, from the Issuance Date.

 

12)   REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE
RELIEF . The remedies provided in this Note shall be cumulative and in addition
to all other remedies available under this Note and any of the other Documents
at law or in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the Holder’s right to pursue
actual and consequential damages for any failure by the Company to comply with
the terms of this Note. Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by the Holder and shall not, except as expressly provided
herein, be subject to any other obligation of the Company (or the performance
thereof). The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Holder and that the remedy at law
for any such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, the Holder shall be entitled, in
addition to all other available remedies, to an injunction restraining any
breach, without the necessity of showing economic loss and without any bond or
other security being required.

 

13)   PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a) this Note is
placed in the hands of an attorney for collection or enforcement or is collected
or enforced through any legal proceeding or the Holder otherwise takes action to
collect amounts due under this Note or to enforce the provisions of this Note or
(b) there occurs any bankruptcy, reorganization, receivership of the Company or
other proceedings affecting Company creditors’ rights and involving a claim
under this Note, then the Company shall pay the costs incurred by the Holder for
such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including, but not limited to,
attorneys’ fees and disbursements.

 

14)   CONSTRUCTION; HEADINGS. This Note shall be deemed to be jointly drafted by
the Company and all the Purchasers and shall not be construed against any person
as the drafter hereof. The headings of this Note are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Note. Terms used in this Note but defined in the other shall have the meanings
ascribed to such terms on the Initial Closing Date in such other Transaction
Documents unless otherwise consented to in writing by the Holder.

 

15)   FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part of the
Holder in the exercise of any power, right or privilege hereunder shall operate
as a waiver thereof, nor shall any single or partial exercise of any such power,
right or privilege preclude other or further exercise thereof or of any other
right, power or privilege.

 

16)   DISPUTE RESOLUTION. In the case of a dispute as to the determination of
the Closing Bid Price, the Closing Sale Price or the Weighted Average Price or
the arithmetic calculation of the Conversion Rate, the Conversion Price or any
Redemption Price, the Company shall submit the disputed determinations or
arithmetic calculations via facsimile within one (1) Business Day of receipt, or
deemed receipt, of the Conversion Notice or Redemption Notice or other event
giving rise to such dispute, as the case may be, to the Holder. If the Holder
and the Company are unable to agree upon such determination or calculation
within one (1) Business Day of such disputed determination or arithmetic
calculation being submitted to the Holder, then the Company shall, within one
Business Day submit via facsimile (a) the disputed determination of the Closing
Bid Price, the Closing Sale Price or the Weighted Average Price to an
independent, reputable investment bank selected by the Holder, or (b) the
disputed arithmetic calculation of the Conversion Rate, Conversion Price or any
Redemption Price to an independent, outside accountant, selected by the Holder.
The Company, at the Company’s expense, shall cause the investment bank or the
accountant, as the case may be, to perform the determinations or calculations
and notify the Company and the Holder of the results no later than five (5)
Business Days from the time it receives the disputed determinations or
calculations. Such investment bank’s or accountant’s determination or
calculation, as the case may be, shall be binding upon all parties absent
demonstrable error.

 

 14 

 

 

17)   NOTICES; PAYMENTS.

 

a)      Notices. Whenever All notices, demands, requests, consents, approvals,
and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, email or facsimile,
addressed as set forth below or to such other address as such party shall have
specified most recently by written notice.  Any notice or other communication
required or permitted to be given hereunder shall be deemed effective (a) upon
hand delivery, delivery by email, or delivery by facsimile, with accurate
confirmation generated by the transmitting facsimile machine, at the address or
number designated below (if delivered on a Business Day during normal business
hours where such notice is to be received), or the first Business Day following
such delivery (if delivered other than on a Business Day during normal business
hours where such notice is to be received) or (b) on the second Business Day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur.  The addresses for such communications shall be:

 

  If to the Company, to:           INERGETICS, INC.     550 BROAD STREET, SUITE
1212     NEWARK, NJ 07652     Attn: Mr. Michael C. James, CEO     Email:
MJames@inergetics.com     Fax:               If to the Holder:                  
            Attn:       Email:       Fax:    

 

 15 

 

 

b)      Payments. Whenever any payment of cash is to be made by the Company to
any Person pursuant to this Note, such payment shall be made in lawful money of
the United States of America by a check drawn on the account of the Company and
sent via overnight courier service to such Person at such address as previously
provided to the Company in writing (which address, in the case of each of the
Purchasers, shall initially be as set forth on the Schedule of Buyers attached
to the Securities Purchase Agreement); provided that the Holder may elect to
receive a payment of cash via wire transfer of immediately available funds by
providing the Company with prior written notice setting out such request and the
Holder’s wire transfer instructions. Whenever any amount expressed to be due by
the terms of this Note is due on any day which is not a Business Day, the same
shall instead be due on the next succeeding day which is a Business Day and, in
the case of any Interest Date which is not the date on which this Note is paid
in full, the extension of the due date thereof shall not be taken into account
for purposes of determining the amount of Interest due on such date.

 

18)    CANCELLATION. After all Principal, accrued Interest and other amounts at
any time owed on this Note have been paid in full, this Note shall automatically
be deemed canceled, shall be surrendered to the Company for cancellation and
shall not be reissued.

 

19)    WAIVER OF NOTICE. To the extent permitted by law, the Company hereby
waives demand, notice, protest and all other demands and notices in connection
with the delivery, acceptance, performance, default or enforcement of this Note
and the Securities Purchase Agreement.

 

20)    GOVERNING LAW; JURISDICTION; JURY TRIAL. This Note shall be construed and
enforced in accordance with, and all questions concerning the construction,
validity, interpretation and performance of this Note shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in
The City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. The Company hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address it set forth
on the signature page hereto and agrees that such service shall constitute good
and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. Nothing contained herein shall be deemed or operate to
preclude the Holder from bringing suit or taking other legal action against the
Company in any other jurisdiction to collect on the Company’s obligations to the
Holder, to realize on any collateral or any other security for such obligations,
or to enforce a judgment or other court ruling in favor of the Holder. THE
COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION WITH OR ARISING OUT OF THIS NOTE OR ANY TRANSACTION CONTEMPLATED
HEREBY.

 

 16 

 

 

21)   SEVERABILITY If any provision of this Note is prohibited by law or
otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest extent that it
would be valid and enforceable, and the invalidity or unenforceability of such
provision shall not affect the validity of the remaining provisions of this Note
so long as this Note as so modified continues to express, without material
change, the original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the provision(s) in
question does not substantially impair the respective expectations or reciprocal
obligations of the parties or the practical realization of the benefits that
would otherwise be conferred upon the parties. The parties will endeavor in good
faith negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes as close as
possible to that of the prohibited, invalid or unenforceable provision(s).

 

22)   CERTAIN DEFINITIONS. For purposes of this Note, the following terms shall
have the following meanings:

 

a)      “Affiliate” means, with respect to any Person, any other Person that
directly or indirectly controls, is controlled by, or is under common control
with, such Person, it being understood for purposes of this definition that
“control” of a Person means the power directly or indirectly either to vote 10%
or more of the stock having ordinary voting power for the election of directors
of such Person or direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.

 

b)     “Approved Stock Plan” means any employee benefit or incentive plan which
has been approved by the Board of Directors of the Company, pursuant to which
the Company’s securities may be issued to any employee, officer or director for
services provided to the Company.

 

c)      “Bloomberg” means Bloomberg Financial Markets.

 

d)     “Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in The City of New York are authorized or required by law
to remain closed.

 

e)      “Closing Bid Price” and “Closing Sale Price” means, for any security as
of any date, the last closing bid price and last closing trade price,
respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade price, respectively, is reported for such security by
Bloomberg, the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the OTC Link or “pink sheets”
by OTC Markets Group Inc. (formerly the Pink OTC Markets Inc.). If the Closing
Bid Price or the Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid Price or the
Closing Sale Price, as the case may be, of such security on such date shall be
the fair market value as mutually determined by the Company and the Holder. If
the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to Section 16. All
such determinations to be appropriately adjusted for any stock dividend, stock
split, stock combination, reclassification or similar transaction during the
applicable calculation period.

 

 17 

 

 

f)      “Eligible Market” shall mean any of the following markets or exchanges
on which the Common Stock (or any other common stock of any other Person that
references the Trading Market for its common stock) is listed or quoted for
trading on the date in question: the OTC Bulletin Board, The NASDAQ Global
Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York
Stock Exchange, NYSE Arca, the NYSE MKT, or the OTCQX Marketplace, the OTCQB
Marketplace, the OTCPink Marketplace or any other tier operated by OTC Markets
Group Inc. (or any successor to any of the foregoing)..

 

g)      “Equity Interests” means (a) all shares of capital stock (whether
denominated as common stock or preferred stock), equity interests, beneficial,
partnership or membership interests, joint venture interests, participations or
other ownership or profit interests in or equivalents (regardless of how
designated) of or in a Person (other than an individual), whether voting or
non-voting and (b) all securities convertible into or exchangeable for any of
the foregoing and all warrants, options or other rights to purchase, subscribe
for or otherwise acquire any of the foregoing, whether or not presently
convertible, exchangeable or exercisable.

 

h)      “GAAP” means United States generally accepted accounting principles,
consistently applied.

 

i)       “Holiday” means a day other than a Business Day or on which trading
does not take place on the Principal Market.

 

j)       “Indebtedness” of any Person means, without duplication (i) all
indebtedness for borrowed money, (ii) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services, including
(without limitation) “capital leases” in accordance with GAAP (other than trade
payables entered into in the ordinary course of business), (iii) all
reimbursement or payment obligations with respect to letters of credit, surety
bonds and other similar instruments, (iv) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses,
(v) all indebtedness created or arising under any conditional sale or other
title retention agreement, or incurred as financing, in either case with respect
to any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (vi) all
monetary obligations under any leasing or similar arrangement which, in
connection with GAAP, consistently applied for the periods covered thereby, is
classified as a capital lease, (vii) all indebtedness referred to in clauses (i)
through (vi) above secured by (or for which the holder of such Indebtedness has
an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person,
even though the Person which owns such assets or property has not assumed or
become liable for the payment of such indebtedness, and (viii) all Contingent
Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (i) through (vii) above.

 

k)      “Interest Rate” means has the meaning set forth in Section 3(b).

 

l)      “Liens” means a lien, mortgage, charge pledge, security interest,
encumbrance, right of first refusal, preemptive right or other restriction,
clouds on title and/or encumbrances

 

 18 

 

 

m)      “Market Price” means the lower of (i) $0.07, and (ii) 62% of the lowest
price any share of Common Stock was bought or sold at on the Principal Market
during the ten (10) consecutive Trading Days immediately preceding the
applicable date of determination. All such determinations to be appropriately
adjusted for any stock split, stock dividend, stock combination,
reclassification or other similar transaction during such period.

 

n)      “Options” means any rights, warrants or options to subscribe for or
purchase shares of Common Stock or Convertible Securities.

 

o)      “Permitted Indebtedness” means

 

p)      “Permitted Liens” means

 

q)      “Person” means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.

 

r)      “Principal Market” means the Trading Market on the date in question on
which the Common Stock trades or is quoted on.

 

s)      “SEC” means the United States Securities and Exchange Commission or the
successor thereto.

 

t)      “Trading Day” means any day on which the Common Stock is traded on the
Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or
securities market on which the Common Stock is then traded; provided that
“Trading Day” shall not include any day on which the Common Stock is scheduled
to trade on such exchange or market for less than 4.5 hours or any day that the
Common Stock is suspended from trading during the final hour of trading on such
exchange or market (or if such exchange or market does not designate in advance
the closing time of trading on such exchange or market, then during the hour
ending at 4:00:00 p.m., New York Time).

 

u)      “Trading Market” shall mean any of the following markets or exchanges on
which the Common Stock (or any other common stock of any other Person that
references the Trading Market for its common stock) is listed or quoted for
trading on the date in question: the OTC Bulletin Board, The NASDAQ Global
Market, The NASDAQ Global Select Market, The NASDAQ Capital Market, the New York
Stock Exchange, NYSE Arca, the NYSE MKT, or the OTCQX Marketplace, the OTCQB
Marketplace, the OTCPink Marketplace or any other tier operated by OTC Markets
Group Inc. (or any successor to any of the foregoing).

 

23)    DISCLOSURE. Upon receipt or delivery by the Company of any notice in
accordance with the terms of this Note, unless the Company has in good faith
determined that the matters relating to such notice do not constitute material,
nonpublic information relating to the Company, the Company shall within one (1)
Business Day after any such receipt or delivery publicly disclose such material,
nonpublic information on a Current Report on Form 8-K or otherwise. In the event
that the Company believes that a notice contains material, nonpublic information
relating to the Company or its Subsidiaries, the Company so shall indicate to
such Holder contemporaneously with delivery of such notice, and in the absence
of any such indication, the Holder shall be allowed to presume that all matters
relating to such notice do not constitute material, nonpublic information
relating to the Company or its Subsidiaries.

 

[Signature Page Follows]

 

 19 

 

 

IN WITNESS WHEREOF, the Company has caused this Note to be duly executed as of
the Issuance Date set out above.

 

  INERGETICS, INC.           By:       Name: Michael James     Title: Chief
Executive Officer

 

 20 

 

 

Exhibit I

 

NOTICE OF CONVERSION

 

The undersigned hereby elects to convert $________________ of the Principal of
the Note (defined below) into shares of Common Stock of Inergetics, Inc., a
Delaware corporation (the “Company”) according to the conditions of the Senior
Secured Demand Convertible Promissory Note of the Company; Issuance Date:
September 1, 2015 (the “Note”). No fee will be charged to the Holder or Holder’s
Custodian for any conversion, except for transfer taxes, if any.

 

Box Checked as to applicable instructions:

 

¨The Borrower shall electronically transmit the Common Stock issuable pursuant
to this Notice of Conversion to the account of the undersigned or its nominee
with DTC through its Deposit Withdrawal Agent Commission system (“DWAC
Transfer”).

 

  Name of DTC Prime Broker:  

 

  Account Number:  

 

¨The undersigned hereby requests that the Borrower issue a certificate or
certificates for the number of shares of Common Stock set forth below (which
numbers are based on the Holder’s calculation attached hereto) in the name(s)
specified immediately below:

 

_______________________________________

 

Date of Conversion:           Conversion Price:             Shares to Be
Delivered:          

Remaining Principal Balance Due

After This Conversion:

          Signature                 Print Name: