SECURITIES EXCHANGE AGREEMENT


 





This Securities Exchange
Agreement (this “Agreement”) is dated as of May 21, 2014, between Inergetics, Inc., a Delaware corporation,
with offices located at 550 Broad Street, Suite 1212, Newark, NJ 07102 (the “Company”), and 31 Group, LLC,
with offices located at 5 Hanover Square, New York, NY 10004 (the “Purchaser”).


 


WHEREAS, subject to
the terms and conditions set forth in this Agreement, the Company desires to exchange with the Purchaser, and the Purchaser desires
to exchange with the Company from time to time, securities of the Company as more fully described in this Agreement.


 


WHEREAS, pursuant to
certain Purchase Agreements set forth on Schedule A attached hereto (the “Purchase Agreements”), as supplemented from
time to time, the Purchaser will acquire certain debts of the Company from third parties (the “Purchased Debts”);


 


WHEREAS, Company and
Purchaser wish to provide for the exchange of the Purchased Debts upon consummation of the transactions contemplated by the Purchase
Agreements, for Debentures of the Company, which Debentures shall constitute securities under the Securities Act of 1933 (the “Securities
Act”);


 


NOW, THEREFORE, IN
CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the Company and the Purchaser agree as follows:


 


ARTICLE I.


DEFINITIONS


 


1.1          Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Debentures (as defined herein), and (b) the following terms have the meanings set forth
in this Section 1.1:


 


“Action”
shall have the meaning ascribed to such term in Section 3.1(i).


 


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.


 


“Board
of Directors” means the board of directors of the Company.


 


“Business
Day” means any day except Saturday, Sunday, any day which is a federal legal holiday in the United States or any day
on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.


 



    	 



    	 



    

 


“Closing”
means the closing of the purchase and sale of the Securities pursuant to Section 2.1.


 


“Closing
Date” means the Trading Day when all of the Transaction Documents have been executed and delivered by the applicable
parties thereto, and all conditions precedent to (i) the Purchaser’s obligations to deliver the Purchased Debts and (ii)
the Company’s obligations to deliver the Securities have been satisfied or waived.


 


“Commission”
means the United States Securities and Exchange Commission.


 


“Common
Stock” means the common stock of the Company, par value $.001 per share, and any other class of securities into which
such securities may hereafter be reclassified or changed into.


 


“Common
Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to
acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other
instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to
receive Common Stock.


 


“Company
Counsel” means Silverman Shin Byrne & Gilchrest PLLC.


 


“Debentures”
means the 12% Convertible Debentures, due, subject to the terms therein, twelve months from their date of issuance, issued by the
Company to the Purchaser hereunder, in the form of Exhibit A attached hereto.


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


 


“GAAP”
shall have the meaning ascribed to such term in Section 3.1(h).


 


“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 3.1(m).


 


“Liens”
means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


 


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 3.1(a).


 


“Material
Permits” shall have the meaning ascribed to such term in Section 3.1(k).


 


“Maximum
Rate”shall have the meaning ascribed to such term in Section 5.15.


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 



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“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.


 


“Required
Approvals” shall have the meaning ascribed to such term in Section 3.1(d).


 


“Rule
144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time
to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.


 


“SEC
Reports” shall have the meaning ascribed to such term in Section 3.1(g).


 


“Securities”
means the Debentures and the Underlying Shares.


 


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


 


“Short
Sales” means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall
not be deemed to include the location and/or reservation of borrowable shares of Common Stock).


 


“SRFF”
means Sichenzia Ross Friedman Ference LLP, 61 Broadway, New York, New York 10006.


 


“Subsidiary”
means any subsidiary of the Company of which the Company owns or controls at least 50% of the outstanding equity interest and shall,
where applicable, include any direct or indirect subsidiary of the Company formed or acquired after the date hereof.


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“Trading
Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date
in question: the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange, the OTC Bulletin Board, the OTCQX or OTCQB.


 


“Transaction
Documents” means this Agreement and the Debentures and all exhibits and schedules thereto and hereto and any other documents
or agreements executed in connection with the transactions contemplated hereunder.


 


“Underlying
Shares” means the shares of Common Stock issued and issuable upon conversion or redemption of the Debenturesand issued
and issuable in lieu of the cash payment of interest on the Debentures in accordance with the terms of the Debentures.


 



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ARTICLE II.


PURCHASE AND SALE


 


2.1           Closing.
On the Closing Date and any subsequent Closing Date from time to time, upon the terms and subject to the conditions set forth herein,
the Company and Purchaser agree that the Purchaser will, from time to time upon acquisition of the Purchased Debts under the Purchase
Agreements, exchange and will relinquish any and all other rights it may have in such Purchased Debts, in exchange for Debentures
of the Company. The Closing shall occur at the offices of SRFF or such other location as the parties shall mutually agree. On the
initial Closing Date, Purchased Debts in the aggregate amount of $500,000.00 as set forth on Schedule 2.1 attached hereto shall
be exchanged for Debentures. At any time after the Company engages a transfer agent willing to countersign an irrevocable letter
of instructions to the Company’s transfer agent, the Purchaser shall have the right in its sole discretion, but not the obligation,
to purchase up to $5,000,000 principal amount of additional Purchased Debts, which would then be exchanged for Debentures under
the terms and conditions of this Agreement.


 





With respect to any
Debentures issued to the Purchaser after the initial Closing Date, the minimum Conversion Price set forth in Section 1.2(a) of
the Debenture shall equal the lesser of (i) $.08 per share, or (ii) 70% of the value weighted average price of the Common Stock
on the trading day prior to the issuance date of any such Debenture.


 


2.2           Deliveries.


 


(a)          On
the Closing Date and any subsequent Closing Date, the Company shall deliver or cause to be delivered to the Purchaser the following:


 


(i)          this
Agreement duly executed by the Company;


 


(ii)         the
representation letter attached hereto as Exhibit 2.2(ii);


 


(iii)        a
Debenture with a principal amount equal to the Purchased Debts, registered in the name of the Purchaser; and


 





(iv)        On
any subsequent Closing, an irrevocable letter of instructions to the Company’s Transfer Agent in substantially the form of
Exhibit E attached hereto


 


(b)          On
the Closing Date, the Purchaser shall deliver or cause to be delivered to the Company the following:


 


(i)          this
Agreement and other Transaction Documents duly executed by the Purchaser.


 


2.3           Closing
Conditions.


 


(a)          The
obligations of the Company hereunder in connection with the Closing are subject to the following conditions being met:


 


(i)          the
accuracy in all material respects on each Closing Date of the representations and warranties of the Purchaser contained herein;
and


 



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(ii)         all
obligations, covenants and agreements of the Purchaser required to be performed at or prior to the Closing Date shall have been
performed.


 


(b)          The
obligations of the Purchaser hereunder in connection with the Closing are subject to the following conditions being met:


 


(i)          the
accuracy in all material respects when made and on each Closing Date of the representations and warranties of the Company contained
herein;


 


(ii)         all
obligations, covenants and agreements of the Company required to be performed at or prior to the Closing Date shall have been performed;


 


(iii)        the
delivery by the Company of the items set forth in Section 2.2(a) of this Agreement; and


 


(iv)        there
shall have been no Material Adverse Effect with respect to the Company since the date hereof.


 


ARTICLE III.


REPRESENTATIONS AND WARRANTIES


 


3.1           Representations
and Warranties of the Company.


 


The Company hereby makes the following
representations and warranties to the Purchaser:


 


(a)          Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation nor default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document
(any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction
revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification;provided however,
that none of the following shall be deemed in and of themselves, either alone or in combination, to constitute, and none of the
following shall be taken into account in determining whether there has been or will be, a Material Adverse Effect: (i) any change,
event, state of facts or development generally affecting the general political, economic or business conditions of the United States;
or (ii) acts of war (whether or not declared).


 



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(b)          Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery
of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company,
the Board of Directors or the Company’s stockholders in connection therewith other than in connection with the Required Approvals.
Each Transaction Document to which it is a party has been (or upon delivery will have been) duly executed by the Company and, when
delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except: (i) as limited by general equitable principles and applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally,
(ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and
(iii) insofar as indemnification and contribution provisions may be limited by applicable law.


 


(c)          No
Conflicts. The execution, delivery and performance by the Company of the Transaction Documents and the consummation by it to
which it is a party of the other transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate
any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational
or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would
become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary
is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary
is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably be
expected to result in a Material Adverse Effect.


 



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(d)          Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than: (i)
such consents, waivers, or authorizations as have been obtained before the Closing, iii) if required, the notice and/or application(s)
to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Underlying Shares for trading
thereon in the time and manner required thereby and (iii) the filing of Form D with the Commission and such filings as are required
to be made under applicable state securities laws (collectively, the “Required Approvals”).


 


(e)          Issuance
of the Debentures. The Debentures are duly authorized and, when issued and paid for in accordance with the applicable Transaction
Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other
than restrictions on transfer provided for in the Transaction Documents. The Underlying Shares, when issued in accordance with
the terms of the Transaction Documents, will be validly issued, fully paid and nonassessable, free and clear of all Liens imposed
by the Company other than restrictions on transfer provided for in the Transaction Documents.


 


(f)          Capitalization.
The capitalization of the Company immediately prior to Closing is, in all material respects, as set forth in the SEC Reports. Except
pursuant to the operation of agreements filed as exhibits to the SEC Reports before the date of this Agreement, the issuance and
sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than
the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange
or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued,
fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities. No further approval
or authorization of any stockholder, the Board of Directors or others is required for the issuance and sale of the Securities.
Except as filed as exhibits to the SEC Reports, there are no stockholders agreements, voting agreements or other similar agreements
with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between
or among any of the Company’s stockholders.


 


(g)          SEC
Reports; Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required
to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof,
for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such
material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively
referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC
Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and
none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with
applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time
of filing. Such financial statements have been prepared in accordance with GAAP, except as may be otherwise specified in such financial
statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP,
and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for
the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments.


 



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(h)          Material
Changes. Since the date of the latest financial statements included in the SEC Reports: (i) there has been no event, occurrence
or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not
incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial
statements pursuant to generally accepted accounting principles (“GAAP”) or disclosed in filings made with the Commission,
(iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution
of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of
its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant
to existing Company equity incentive plans. The Company does not have pending before the Commission any request for confidential
treatment of information. Except for the issuance of the Securities contemplated by this Agreement, no event, liability or development
has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or
financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation
is made or deemed made that has not been publicly disclosed at least one Trading Day prior to the date that this representation
is made.


 


(i)          Litigation.
Except as disclosed in the SEC Reports, there is no action, suit, inquiry, notice of violation, proceeding or investigation pending
or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties
before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local
or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or
enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have
or reasonably be expected to result in a Material Adverse Effect. Except as disclosed in the SEC Reports, neither the Company nor
any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of
or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current
or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.


 



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(j)          Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other material agreement or instrument to which it is a party or by which it or any of its properties
is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator
or governmental body or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including
without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment,
except in each of the foregoing cases as could not have or reasonably be expected to result in a Material Adverse Effect.


 


(k)          Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.


 


(l)          Title
to Assets. Except as disclosed in the SEC Reports, the Company and the Subsidiaries have good and marketable title in fee simple
to all real property and good and marketable title in all personal property owned by it that, in each case, is material to the
business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect
the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company
and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor
subject to penalties in any material respect. Any real property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.


 


(m)          Patents
and Trademarks. To the Company’s knowledge: (i) the Company and the Subsidiaries have, or have rights to use, all patents,
patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses
and other intellectual property rights and similar rightsas described in the SEC Reports as necessary or material for use in connection
with their respective businesses and which the failure to so have could reasonably be expected to have a Material Adverse Effect
(collectively, the “Intellectual Property Rights”); (ii) neither the Company nor any Subsidiary has received
a notice (written or otherwise) that any of the Intellectual Property Rights violates or infringes upon the rights of any Person;
(iii) all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the
Intellectual Property Rights, except where the failure to be so enforceable or for such infringements as would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect; and (iv) the Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except
where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.


 



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(n)          Sarbanes-Oxley;
Internal Accounting Controls. Except as set forth in the SEC Reports, the Company is in material compliance with all provisions
of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date. The Company and the Subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed in accordance
with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted only in
accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The Company has
established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed
such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files
or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s
rules and forms. The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls
and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange
Act (such date, the “Evaluation Date”). The Company presented in its most recently filed periodic report under
the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based
on their evaluations as of the Evaluation Date. Since the Evaluation Date, there have been no changes in the Company’s internal
control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely
to materially affect, the Company’s internal control over financial reporting.


 


(o)          Private
Placement. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, no registration
under the Securities Act is required for the offer and sale of the Debentures by the Company to the Purchaser as contemplated hereby.


 


(p)          Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements.


 



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(q)          Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser and
the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation
as a result of the Company’s issuance of the Securities and the Purchaser’ ownership of the Securities.


 


(r)          Disclosure.
Except with respect to (i) the material terms and conditions of the transactions contemplated by the Transaction Documents and
(ii) information given to the Investor, if any, which the Company hereby confirms will not constitute material non-public information
six months from the date hereof, the Company confirms that neither it nor any other Person acting on its behalf has provided the
Purchaser or their agents or counsel with any information that it believes constitutes or might constitute material, nonpublic
information. The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions
in securities of the Company. All disclosure furnished in writing by or on behalf of the Company to the Purchaser regarding the
Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, is true and
correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated
by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made and when made, not misleading. The Company acknowledges and agrees
that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other
than those specifically set forth in Section 3.2 hereof.


 


(s)          No
Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2,
neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made
any offers or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering
of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require
the registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any
Trading Market on which any of the securities of the Company are listed or designated.


 



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(t)          Foreign
Corrupt Practices. Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of
the Company, has: (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful
expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials
or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully
any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation
of law or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.


 


(u)          No
Disagreements with Accountants and Lawyers; Outstanding SEC Comments. There are no disagreements of any kind presently existing,
or reasonably anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed
by the Company and the Company is or immediately after the Closing Date will be current with respect to any fees owed to its accountants
which could affect the Company’s ability to perform any of its obligations under any of the Transaction Documents. There
are no unresolved comments or inquiries received by the Company or its Affiliates from the Commission which remain unresolved as
of the date hereof


 


(v)         Bad
Actor Disqualification.


 


(i) No Disqualification
Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506 under the Securities Act ("Regulation
D Securities"), none of the Company, any of its predecessors, any affiliated issuer, any director, executive officer, other
officer of the Company participating in the offering, any beneficial owner of 20% or more of the Company's outstanding voting equity
securities, calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405 under the Securities
Act) connected with the Company in any capacity at the time of sale (each, an "Issuer Covered Person" and, together,
"Issuer Covered Persons") is subject to any of the "Bad Actor" disqualifications described in Rule 506(d)(1)(i)
to (viii) under the Securities Act (a "Disqualification Event"), except for a Disqualification Event covered by Rule
506(d)(2) or (d)(3). The Company has exercised reasonable care to determine whether any Issuer Covered Person is subject to a Disqualification
Event. The Company has complied, to the extent applicable, with its disclosure obligations under Rule 506(e), and has furnished
to the Placement Agent and the Purchaser a copy of any disclosures provided thereunder.


 


(ii) Other
Covered Persons. The Company is not aware of any person that (i) has been or will be paid (directly or indirectly) remuneration
for solicitation of Purchaser in connection with the sale of the Securities and (ii) who is subject to a Disqualification Event.


 


(iii) Notice
of Disqualification Events. The Company will notify the Purchaser in writing of (i) any Disqualification Event relating to any
Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification Event relating to any
Issuer Covered Person, prior to any Closing of this Offering.


 



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3.2           Representations
and Warranties of the Purchaser. The Purchaser hereby represents and warrants as of the date hereof and as of the Closing Date
to the Company as follows:


 


(a)          Organization;
Authority. The Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction
of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions
contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and
delivery of the Transaction Documents and performance by the Purchaser of the transactions contemplated by the Transaction Documents
have been duly authorized by all necessary corporate or similar action on the part of the Purchaser. Each Transaction Document
to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms
hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its
terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.


 


(b)          Own
Account. The Purchaser understands that the Securities are “restricted securities” and have not been registered
under the Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account
and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act
or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities
Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to
distribute or regarding the distribution of such Securities (this representation and warranty not limiting the Purchaser’s
right to sell the Securities pursuant to an effective registration statement or otherwise in compliance with applicable federal
and state securities laws) in violation of the Securities Act or any applicable state securities law. Such Purchaser is acquiring
the Securities hereunder in the ordinary course of its business.


 


(c)          Purchaser
Status. At the time the Purchaser was offered the Securities, it was, and as of the date hereof it is, and on each date on
which it converts any Debentures it will be either: (i) an “accredited investor” as defined in Rule 501(a)(1), (a)(2),
(a)(3), (a)(7) or (a)(8) under the Securities Act or (ii) a “qualified institutional buyer” as defined in Rule 144A(a)
under the Securities Act. Such Purchaser is not required to be registered as a broker-dealer under Section 15 of the Exchange Act.


 



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(d)          Experience
of Such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser is able to bear the economic risk
of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.


 


(e)          General
Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication
regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented
at any seminar or any other general solicitation or general advertisement.


 


(f)          Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, the Purchaser has not directly
or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with the Purchaser, executed any purchases
or sales, including Short Sales, of the securities of the Company during the period commencing as of the time that the Purchaser
first received a term sheet (written or oral) from the Company or any other Person representing the Company setting forth the material
terms of the transactions contemplated hereunder and ending immediately prior to the executionhereof. Notwithstanding the foregoing,
in the case of a Purchaser that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions
of the Purchaser’s assets and the portfolio managers have no direct knowledge of the investment decisions made by the portfolio
managers managing other portions of the Purchaser’s assets, the representation set forth above shall only apply with respect
to the portion of assets managed by the portfolio manager that made the investment decision to purchase the Securities covered
by this Agreement. Other than to other Persons party to this Agreement, the Purchaser has maintained the confidentiality of all
disclosures made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding
the foregoing, for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any
actions, with respect to the identification of the availability of, or securing of, available shares to borrow in order to effect
Short Sales or similar transactions in the future.


 


ARTICLE IV.


OTHER AGREEMENTS OF THE PARTIES


 


4.1           Transfer
Restrictions.


 


(a)          The
Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of Securities
other than pursuant to an effective registration statement or Rule 144, to the Company or in connection with a pledge as contemplated
in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the
transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to
the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities
Act. As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall
have the rights of a Purchaser under this Agreement.


 



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(b)          The
Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in the following
form:


 


[NEITHER] THIS SECURITY [NOR
THE SECURITIES INTO WHICH THIS SECURITY IS [CONVERTIBLE]] HAS [NOT] BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION
OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL
TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THIS SECURITY [AND THE
SECURITIES ISSUABLE UPON [CONVERSION] OF THIS SECURITY] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN
SECURED BY SUCH SECURITIES.


 


The Company
acknowledges and agrees that the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered
broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited
investor” as defined in Rule 501(a) under the Securities Act and who agrees in writing with the Company to be bound by the
provisions of this Agreement and, if required under the terms of such arrangement and subject to compliance with applicable federal
and state securities laws, the Purchaser may transfer pledged or secured Securities to the pledgees or secured parties. Absent
special circumstances, such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal
counsel of the pledgee, secured party or pledgor shall be required in connection therewith. Further, no notice shall be required
of such pledge. At the appropriate Purchaser’s expense, the Company will execute and deliver such reasonable documentation
as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities.


 



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(c)          Certificates
evidencing the Underlying Shares (or, if Underlying Shares are issued in uncertificated form, comparable share notices) shall not
contain any legend (including the legend set forth in Section 4.1(b) hereof): (i) while a registration statement covering the resale
of such security is effective under the Securities Act, or (ii) following any sale of such Underlying Shares pursuant to Rule 144,
or (iii) if such Underlying Shares are eligible for sale under Rule 144, without the requirement for the Company to be in compliance
with the current public information required under Rule 144 as to such Underlying Shares and without volume or manner-of-sale restrictions
or (iv) if such legend is not otherwise required under applicable requirements of the Securities Act (including judicial interpretations
and pronouncements issued by the staff of the Commission), as reasonably determined by the Company. Upon the Purchaser’s
request in connection with a proposed sale of Underlying Shares pursuant to Rule 144 (a “Legend Removal Request”) and
if the Company reasonably determines it is so required, upon receipt of customary documentation from Purchaser’s broker (if
the Underlying Shares are sold in brokers transactions), the Company shall, at its own cost and effort, retain legal counsel to
provide an opinion letter to the Company’s transfer agent opining that the Underlying Shares may be resold without registration
under the Securities Act, pursuant to Rule 144, promulgated thereunder, so long as the requirements of Rule 144 are met for any
Underlying Shares to be resold thereunder. So long as the requirements of Rule 144 are met, the Company shall arrange for any such
opinion letter to be provided and cause the Transfer Agent to issue such Underlying Shares without restrictive legend not later
than three (3) Trading Days after the date of delivery to and receipt by the Company and the Transfer Agent of a written Legend
Removal Request together with (if required in order to render the opinion) a seller’s representation letter by the Purchaser,
any broker’s representation letter of other customary documentation reasonably requested by the Company evidencing compliance
with Rule 144 (the “Legend Removal Date”), and such opinion letter may be a “blanket” opinion letter covering
Underlying Shares held by more than one Purchaser (if applicable to more than one Purchaser).


 


4.2           Non-Public
Information. Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents,
the Company covenants and agrees that after the Closing Date neither it, nor any other Person acting on its behalf, will provide
Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information,
unless prior thereto the Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.
The Company understands and confirms that the Purchaser shall be relying on the foregoing covenant in effecting transactions in
securities of the Company. Each Purchaser acknowledges that it is aware that the United States securities laws prohibit any person
who has material non-public information about a company from purchasing or selling securities of such company, or from communicating
such information to any other person under circumstances in which it is reasonably foreseeable that such person is likely to purchase
or sell such securities, and the Purchaser agrees not to engage in any unlawful trading in securities of the Company or unlawful
misuse or misappropriation of any such information. Purchaser agrees to maintain the confidentiality of and not disclose or use
(except for purposes relating to the transactions contemplated by this Agreement) any confidential, proprietary or non-public information
disclosed by the Company to Purchaser.


 


4.3           Transfer
Agent. The Company covenants and agrees that it will at all times while the Debentures remain outstanding maintain a duly qualified
independent transfer agent.


 



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4.4           Right
of First Refusal. At any time when Debentures remain outstanding, if the Company proposes to offer and sell any New Securities
(as defined below) subsequent to the date of this Agreement in a transaction primarily for purposes of financing the operations
or business of the Company and its Subsidiaries,the Company shall provide to thePurchaser written notice (the “Offering Notice”)
stating the number of New Securities proposed to be offered and sold, the total purchase price, the terms of payment, and any other
material terms of the offer (to the extent then known). For a period of three (3) Trading Days after its receipt of the Offering
Notice (the “Respond Deadline”), the Purchaser(s) may, by written notice delivered to the Company within such time
period, accept such offer and elect to purchase all or any portion of such New Securities to the extent of the Ownership Limitation(as
defined in the Debenture) isnot violated, on the terms set forth in the Offering Notice and similar terms as other investors that
purchase New Securities in such offering, pro rata based on the amount of Debentures purchased by the Purchaser. If the Purchaser
so elects to participate, the Purchaser shall execute and deliver the same agreements and instruments as other purchasers of the
New Securities. For purposes of this Section, “New Securities” shall mean any equity or convertible debt securities
of the Company issued in a transaction primarily for purposes of financing the operations or business of the Company and its Subsidiaries.


 


4.5           No
Short Selling. The Purchaser has and shall not, directly or indirectly, his, her or itself, through related parties, affiliates
or otherwise, (i) sell “short” or “short against the box” (as those terms are generally understood) any
equity security of the Company or (ii) otherwise engage in any transaction that involves hedging of the Purchaser’s position
in any equity security of the Company, until the later of (i) the date the Debenture owned by the Purchaser is no longer owned
by the Purchaser, or (ii) the Maturity Date (as such term is defined in the Debenture) and the Conversion Date.


 


4.6           Exclusivity.
Until August 15, 2014, the Company shall not, directly or indirectly, publicly announce, seek, negotiate, enter into or discuss
with any Person other than the Purchaser, any transaction involving the sale or issuance of any securities of the Company.


 


4.7           Non-Frustration
of Purpose. So long as the Purchaser or its affiliates hold any Debentures or Conversion Shares (as defined in the Debenture),
neither the Company nor any of its affiliates or subsidiaries, nor any of its or their respective officers, employees, directors,
agents or other representatives, will effect, enter into, announce or recommend to its stockholders any agreement, plan, arrangement
or transaction the terms of which would or would reasonably be expected to (i) have a material adverse effect on the Purchaser’s
investment in the Debenture or Conversion Shares or (ii) restrict, delay, conflict with or impair the ability or right of the Company
to timely perform its obligations under this Agreement or the Debentures, including, without limitation, the obligation of the
Company to timely deliver shares of Common Stock to the Purchaser or its affiliates in accordance with this
Agreement or the Debenture.


 


4.8           Restrictions
on Exchange Transactions. So long as any of the securities being sold to the Purchaser in this offering remain outstanding,
including Conversion Shares, the Company shall not consummate any exchange of any security of the Company or any of its subsidiaries
for any other security of the Company or any of its subsidiaries except to the extent consummated pursuant to an exchange registered
under a registration statement of the Company filed pursuant to the Securities
Act and declared effective by the Securities and Exchange Commission.The
Purchaser shall be entitled to obtain injunctive relief against the Company and its subsidiaries to preclude any such transaction,
which remedy shall be in addition to any right to collect damages.


 



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4.9           Prohibition
on Variable Rate Transactions. So long as any of the securities being sold to the Purchaser in this offering remain
outstanding, including Conversion Shares, the Company shall not, directly or indirectly, (i) issue or sell any convertible securities
either (A) at a conversion, exercise or exchange rate or other price that is based upon and/or varies with the trading prices of,
or quotations for, the shares of Common Stock at any time after the initial issuance of such convertible securities, or (B) with
a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such
convertible securities or upon the occurrence of specified or contingent events directly or indirectly related to the business
of the Company or the market for the Common Stock, or (ii) enter into any agreement (including, without limitation, an “equity
line of credit” or an “at-the-market offering”) whereby the Company or any of its subsidiaries may sell securities
at a future determined price (other than standard and customary “preemptive” or “participation” rights).
The Purchaser shall be entitled to obtain injunctive relief against the Company and its subsidiaries to preclude any such issuance,
which remedy shall be in addition to any right to collect damages


 


ARTICLE V.


MISCELLANEOUS


 


5.1           Fees
and Expenses. The Company has agreed to reimburse the Purchaser the non-accountable sum of $20,000 for legal fees, of which
$5,000 has previously been paid.Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay
the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such
party incident to the negotiation, preparation, execution, delivery and performance of this Agreement. The Company shall pay all
transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser.


 


5.2           Entire
Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of
the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with
respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.


 


5.3           Notices.
Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and
shall be deemed given and effective on the earliest of: (a) one Trading Day after the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto prior to 5:30 p.m. (New York
City time) on a Trading Day, with written confirmation of successful transmission, (b) the next Trading Day after the date of transmission,
if such notice or communication is delivered via facsimile at the facsimile number set forth on the signature pages attached hereto
on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the second Trading Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (d) upon actual receipt by the
party to whom such notice is required to be given. The address for such notices and communications shall be as set forth on the
signature pages attached hereto.


 


5.4           Amendments;
Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in a written instrument signed,
in the case of an amendment, by the Company and the Purchaser holding at least 50% in interest of the Securities then outstanding
or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought. No waiver of any default
with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future
or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay
or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.


 



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5.5           Headings.
The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.


 


5.6           Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted
assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of
the Purchaser (other than by merger). The Purchaser may assign any or all of its rights under this Agreement to any Person to whom
the Purchaser assigns or transfers any Securities, provided that such transfer complies with all applicable federal and state securities
laws and that such transferee agrees in writing with the Company to be bound, with respect to the transferred Securities, by the
provisions of the Transaction Documents that apply to the “Purchaser.”


 


5.7           No
Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise
set forth herein.


 


5.8           Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall
be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the
principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement
and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party
hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in
the state and federal courts sitting in the City of New York. Each party 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 (including with respect to the enforcement
of any of the Transaction Documents), 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 improper
or is an inconvenient venue for such proceeding. Each party 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 via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement 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 other manner permitted by law. If either party shall commence an action or
proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall
be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.


 


5.9           Survival.
The representations and warranties shall survive the Closing and the delivery of the Debentures until, with respect to the Purchaser,
the Debenture held by the Purchaser has been paid in full or converted into Underlying Shares, at which time they shall expire
such respect to Purchaser and shall no longer be of any force or effect.


 



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5.10         Execution.
This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same
agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission
or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the
party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf”
signature page were an original thereof.


 


5.11         Severability.
If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that
they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.


 


5.12         Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
any of the other Transaction Documents, whenever Purchaser exercises a right, election, demand or option under a Transaction Document
and the Company does not timely perform its related obligations within the periods therein provided, then the Purchaser may rescind
or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election
in whole or in part without prejudice to its future actions and rights; provided, however, that in the case of a
rescission of a conversion of a Debenture, the Purchaser shall be required to return any shares of Common Stock subject to any
such rescinded conversion or exercise notice.


 


5.13         Replacement
of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company
shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or
in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory
to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under such circumstances shall
also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.


 


5.14         Remedies.
In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Purchaser
and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages
may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents
and hereby agree to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy
at law would be adequate.


 



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5.15         Usury.
To the extent it may lawfully do so, the Company hereby agrees not to insist upon or plead or in any manner whatsoever claim, and
will resist any and all efforts to be compelled to take the benefit or advantage of, usury laws wherever enacted, now or at any
time hereafter in force, in connection with any claim, action or proceeding that may be brought by Purchaser in order to enforce
any right or remedy under any Transaction Document. Notwithstanding any provision to the contrary contained in any Transaction
Document, it is expressly agreed and provided that the total liability of the Company under the Transaction Documents for payments
in the nature of interest shall not exceed the maximum lawful rate authorized under applicable law (the “Maximum Rate”),
and, without limiting the foregoing, in no event shall any rate of interest or default interest, or both of them, when aggregated
with any other sums in the nature of interest that the Company may be obligated to pay under the Transaction Documents exceed such
Maximum Rate. It is agreed that if the maximum contract rate of interest allowed by law and applicable to the Transaction Documents
is increased or decreased by statute or any official governmental action subsequent to the date hereof, the new maximum contract
rate of interest allowed by law will be the Maximum Rate applicable to the Transaction Documents from the effective date forward,
unless such application is precluded by applicable law. If under any circumstances whatsoever, interest in excess of the Maximum
Rate is paid by the Company to Purchaser with respect to indebtedness evidenced by the Transaction Documents, such excess shall
be applied by the Purchaser to the unpaid principal balance of any such indebtedness or be refunded to the Company, the manner
of handling such excess to be at the Purchaser’s election.


 


5.16         Construction.
The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction
Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting
party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.


 


5.17         WAIVER
OF JURY TRIAL. IN ANY ACTION, SUIT, OR PROCEEDING IN ANY JURISDICTION BROUGHT BY ANY PARTY AGAINST ANY OTHER PARTY, THE PARTIES
EACH KNOWINGLY AND INTENTIONALLY, TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY
AND EXPRESSLY WAIVES FOREVER TRIAL BY JURY.


 


(Signature Pages Follow)


 



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IN WITNESS WHEREOF,
the parties hereto have caused this Securities Exchange Agreement to be duly executed by their respective authorized signatories
as of the date first indicated above.


 


	INERGETICS, INC.	 	Address for Notice:
	 	 	 	550 Broad Street, Suite 1212,
	 	 	 	 Newark, NJ 07102
	 	 	 	 
	By:	/s/ Michael C. James	 	Fax:973-848-1313
	 	Name: Michael C. James	 	 
	 	Title: Chief Executive Officer	 	 
	 	   Chief Financial Officer	 	 
	 	 	 	 
	With a copy to (which shall not constitute notice):	 	 




 


[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK


SIGNATURE PAGE FOR PURCHASER FOLLOWS]


 



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[PURCHASER
SIGNATURE PAGES TO INERGETICS SECURITIES EXCHANGE AGREEMENT]


 


IN WITNESS WHEREOF,
the undersigned have caused this Securities Exchange Agreement to be duly executed by their respective authorized signatories as
of the date first indicated above.


 


Name of Purchaser: ________________________________________________________


 


Signature of Authorized Signatory of
Purchaser: __________________________________


 


Name of Authorized Signatory: ____________________________________________________


 


Title of Authorized Signatory: _____________________________________________________


 


Email Address of Authorized Signatory:
_____________________________________________


 


Facsimile Number of Authorized Signatory: __________________________________________


 


Address for Notice of Purchaser:


 


5 Hanover Square, New York, NY 10004


 


Address for Delivery of Securities for Purchaser (if not same
as address for notice):


 


5 Hanover Square, New York, NY 10004


 


EIN Number: [PROVIDE THIS UNDER SEPARATE COVER]


 


[SIGNATURE PAGES CONTINUE]


 




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SCHEDULE A


 



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