Document:

ANNEX I

 

FORM OF NOTE

 

THIS NOTE HAS NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, TRANSFERRED,
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE
AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF, UNDER AN EXEMPTION
FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.

 

INERGETICS, INC.

 

Convertible Promissory Note

due December 1, 2014

 

	 	USD$110,000

Dated: May 1, 2014 (the “Issuance Date”)

 

For value received,
Inergetics, Inc., a Delaware corporation (the “Company”), hereby promises to pay to the order of Black
Mountain Equities, Inc. (together with its successors, representatives, and permitted assigns, the “Holder”),
in accordance with the terms hereinafter provided, up to an aggregate of $110,000 (One Hundred Ten Thousand Dollars) (the “Principal
Amount”), which includes the aggregate principal sum of $100,000 (One Hundred Thousand Dollars) advanced by the Holder
and 10% prepaid interest all of which is deemed earned on the Issuance Date. The Principal Amount outstanding shall be due and
payable on December 1, 2014 (the “Maturity Date”).

 

All payments under
or pursuant to this Note refer to and shall be made in United States Dollars in immediately available funds to the Holder at the
address of the Holder first set forth above or at such other place as the Holder may designate from time to time in writing to
the Company or by wire transfer of funds to the Holder’s account, instructions for which are attached hereto as Exhibit
A.

 

ARTICLE I

 

Section 1.1          Purchase
Agreement. This Note has been executed and delivered pursuant to the Security Purchase Agreement dated as of May 1, 2014 (the
“Purchase Agreement”) by and between the Company and the purchaser listed therein. Capitalized terms used and
not otherwise defined herein shall have the meanings set forth for such terms in the Purchase Agreement. 

 

Section
1.2          Interest. This Note shall not accrue interest.  

 

Section 1.3          Payment
on Non-Business Days. Whenever any payment to be made shall be due on a Saturday, Sunday or a public holiday under the laws
of the State of New York, such payment may be due on the next succeeding business day.

 

Section 1.4          Transfer.
This Note may be transferred or sold, subject to the provisions of Section 4.8 of this Note, or pledged, hypothecated or otherwise
granted as security by the Holder.

 

    	 

    	 

    

 

Section 1.5           Replacement.
Upon receipt of a duly executed, notarized and unsecured written statement from the Holder with respect to the loss, theft or destruction
of this Note (or any replacement hereof), and without requiring an indemnity bond or other security, or, in the case of a mutilation
of this Note, upon surrender and cancellation of such Note, the Company shall issue a new Note, of like tenor and amount, in lieu
of such lost, stolen, destroyed or mutilated Note.

 

ARTICLE II

 

EVENTS OF DEFAULT;
REMEDIES

 

Section 2.1          Events of Default.
The occurrence of any of the following events shall be an “Event of Default” under this Note:

 

(a)          the Company
shall fail to make the payment of any amount of principal outstanding on the date such payment is due hereunder;

 

(b)          the suspension
from listing, without subsequent listing on any one of, or the failure of the Company’s common stock, par value $0.01 per
share (the “Common Stock”) to be listed on at least one of the OTC Markets, the OTC Bulletin Board, NASDAQ Capital
Market, NASDAQ Global Market, NASDAQ Global Select Market, NYSE MKT or The New York Stock Exchange, Inc. for a period of five (5)
consecutive Trading Days;

 

(c)          the Company’s
notice to the Holder, including by way of public announcement, at any time, of its inability to comply or its intention not to
comply with proper requests for conversion of this Note into shares of Common Stock;

 

(d)          the Company
shall fail to (i) timely deliver the shares of Common Stock upon conversion of the Note, or (ii) make the payment of any fees and/or
liquidated damages under this Note or the Purchase Agreement, which failure in the case of items (i) and (ii) of this Section 2.1(d)
is not remedied within three (3) business days after the incurrence thereof;

 

(e)          default shall
be made in the performance or observance of (i) any material covenant, condition or agreement contained in this Note (other than
as set forth in clause (e) of this Section 2.1) and such default is not fully cured within five (5) business days after the occurrence
thereof or (ii) any material covenant, condition or agreement contained in the Purchase Agreement or any other Transaction Document
which is not covered by any other provisions of this Section 2.1 and such default is not fully cured within five (5) business days
after the occurrence thereof;

 

(f)          any material
representation or warranty made by the Company herein or in the Purchase Agreement or any other Transaction Document shall prove
to have been false or incorrect or breached in a material respect on the date as of which made;

 

(g)          the Company
shall (i) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian, trustee or liquidator
of itself or of all or a substantial part of its property or assets, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the United States Bankruptcy Code (as now or hereafter in effect) or under the comparable
laws of any jurisdiction (foreign or domestic), (iv) file a petition seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors’ rights generally, (v) acquiesce in writing to
any petition filed against it in an involuntary case under United States Bankruptcy Code (as now or hereafter in effect) or under
the comparable laws of any jurisdiction (foreign or domestic), (vi) issue a notice of bankruptcy or winding down of its operations
or issue a press release regarding same, or (vii) take any action under the laws of any jurisdiction (foreign or domestic) analogous
to any of the foregoing;

 

    	-2-

    	 

    

 

(h)          a proceeding
or case shall be commenced in respect of the Company, without its application or consent, in any court of competent jurisdiction,
seeking (i) the liquidation, reorganization, moratorium, dissolution, winding up, or composition or readjustment of its debts,
(ii) the appointment of a trustee, receiver, custodian, liquidator or the like of it or of all or any substantial part of its assets
in connection with the liquidation or dissolution of the Company or (iii) similar relief in respect of it under any law providing
for the relief of debtors, and such proceeding or case described in clause (i), (ii) or (iii) shall continue undismissed, or unstayed
and in effect, for a period of sixty (60) days or any order for relief shall be entered in an involuntary case under United States
Bankruptcy Code (as now or hereafter in effect) or under the comparable laws of any jurisdiction (foreign or domestic) against
the Company or action under the laws of any jurisdiction (foreign or domestic) analogous to any of the foregoing shall be taken
with respect to the Company and shall continue undismissed, or unstayed and in effect for a period of sixty (60) days; or

 

(i)          the failure
of the Company to instruct its transfer agent to remove any legends from shares of Common Stock eligible to be sold under Rule
144 of the Securities Act and issue such unlegended certificates to the Holder within five (5) business days of the Holder’s
request so long as the Holder has provided reasonable assurances and opinions of counsel to the Company that such shares of Common
Stock can be resold pursuant to Rule 144; or

 

(j)          the failure
of the Company to pay any amounts due to the Holder herein within three (3) business days of receipt of notice to the Company.

 

Section 2.2          Remedies
Upon An Event of Default. If an Event of Default shall have occurred and shall be continuing, the Holder of this Note may at
any time at its option, (a) declare the entire unpaid principal balance of this Note due and payable, and thereupon, the same shall
be accelerated and so due and payable, without presentment, demand, protest, or notice, all of which are hereby expressly unconditionally
and irrevocably waived by the Company; provided, however, that upon the occurrence of an Event of Default described in (i) Sections
2.1 (j), the outstanding principal balance shall be automatically due and payable and (ii) Sections 2.1 (a)-(i), demand the prepayment
of this Note pursuant to Section 3.6 hereof, (b) subject to Section 3.4 hereof, demand that the principal amount of this Note then
outstanding shall be converted into shares of Common Stock at a Conversion Price (as defined in Section 3.2(a) hereof) per share
calculated pursuant to Section 3.1 hereof assuming that the date that the Event of Default occurs is the Conversion Date, or (c)
exercise or otherwise enforce any one or more of the Holder’s rights, powers, privileges, remedies and interests under this
Note, the Purchase Agreement, other Transaction Document or applicable law. No course of delay on the part of the Holder shall
operate as a waiver thereof or otherwise prejudice the right of the Holder. No remedy conferred hereby shall be exclusive of any
other remedy referred to herein or now or hereafter available at law, in equity, by statute or otherwise.

 

ARTICLE III

CONVERSION; ANTIDILUTION; PREPAYMENT

 

Section 3.1          Conversion Option.

 

(a)          At any time
after the Issuance Date, this Note shall be convertible (in whole or in part), at the option of the Holder (the “Conversion
Option”), into such number of fully paid and non-assessable shares of Common Stock (the “Conversion Rate”)
as is determined by dividing that portion of the outstanding principal balance under this Note as of such date that the Holder
elects to convert by the Conversion Price (as defined in Section 3.2(a) hereof) then in effect on the date on which the Holder
delivers a notice of conversion (the “Conversion Notice”), duly executed, to the Company (the “Voluntary
Conversion Date”), provided, however, that the Conversion Price shall be subject to adjustment as described in Section
3.5 below. The Holder shall deliver this Note to the Company at the address designated in the Purchase Agreement at such time that
this Note is fully converted. With respect to partial conversions of this Note, the Company shall keep written records of the amount
of this Note converted as of each Conversion Date.

 

    	-3-

    	 

    

 

(b)          On any Voluntary
Conversion Date, the Holder may cause the any outstanding Principal Amount of this Note to convert into a number of fully paid
and nonassessable shares of Common Stock equal to the quotient of the elected outstanding principal amount of this Note divided
by the Conversion Price as described in Section 3.2(a) below.

 

(c)          Conversion
Limitations; Holder’s Restriction on Conversion. The Company shall not effect any conversion of this Note, and
the Holder shall not have the right to convert any portion of this Note, to the extent that after giving effect to such conversion,
the Holder (together with the Holder’s affiliates), as set forth on the applicable Conversion Notice, would beneficially
own in excess of 4.99% of the number of shares of the 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 the 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, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act. To the extent that
the limitation contained in this section applies, the determination of whether this Note is convertible (in relation to other securities
owned by the Holder) and of which a portion of this Note is convertible shall be in the sole discretion of such Holder. To ensure
compliance with this restriction, the Holder will be deemed to represent to the Company each time it delivers a Conversion Notice
that such Conversion Notice has not violated the restrictions set forth in this paragraph and the Company shall have no obligation
to verify or confirm the accuracy of such determination. For purposes of this Section, 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 20-F or Form 6-K (or such related form), as the case may be, (y) a more recent public announcement by the Company
or (z) any other notice by the Company or the Company’s Transfer Agent setting forth the number of shares of Common Stock
outstanding.  Upon the written or oral request of the Holder, the Company shall within two Trading Days 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.
The provisions of this Section may be waived by the Holder upon, at the election of the Holder, not less than 61 days’ prior
notice to the Company, and the provisions of this Section shall continue to apply until such 61st day (or such later date, as determined
by the Holder, as may be specified in such notice of waiver).

 

    	-4-

    	 

    

 

Section 3.2          Conversion Price.          

 

(i)          The
“Conversion Price” shall equal the lesser of (i) $0.25 or (ii) 75% of the lowest trade of the Company’s
Common Stock during the 20 trading day period immediately preceding the date at which the Holder, by written notice (by email,
facsimile, or otherwise) gives notice to the Company of its election to convert this Note into the shares of the Company’s
Common Stock. In no event will the Conversion Price be less than $0.12.

 

Section 3.3          Mechanics
of Conversion.

 

(a)          Not later than
three (3) Trading Days after any Conversion Date, the Company or its designated transfer agent, as applicable, shall issue and
deliver to the Depository Trust Company (“DTC”) account on the Holder’s behalf via the Deposit Withdrawal
Agent Commission System (“DWAC”) as specified in the Conversion Notice, 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. In the alternative, not later
than three (3) Trading Days after any Conversion Date, the Company shall deliver to the applicable Holder by express courier a
certificate or certificates which shall be free of restrictive legends and trading restrictions (other than those required by Section
5.1 of the Purchase Agreement) representing the number of shares of Common Stock being acquired upon the conversion of this Note
(the “Delivery Date”). Notwithstanding the foregoing to the contrary, the Company or its transfer agent shall
only be obligated to issue and deliver the shares to the DTC on the Holder’s behalf via DWAC (or certificates free of restrictive
legends) if such conversion is in connection with a sale and the Holder has complied with the applicable prospectus delivery requirements.
If in the case of any Conversion Notice such certificate or certificates are not delivered to or as directed by the applicable
Holder by the Delivery Date, the Holder shall be entitled by written notice to the Company at any time on or before its receipt
of such certificate or certificates thereafter, to rescind such conversion, in which event the Company shall immediately return
this Note if tendered for conversion, whereupon the Company and the Holder shall each be restored to their respective positions
immediately prior to the delivery of such notice of revocation, except that any amounts described in Sections 3.3(b) and (c) shall
be payable through the date notice of rescission is given to the Company.

 

(b)          The Company understands
that a delay in the delivery of the shares of Common Stock upon conversion of this Note beyond the Delivery Date could result in
economic loss to the Holder. If the Company fails to deliver to the Holder such shares via DWAC or a certificate or certificates
pursuant to this Section hereunder by the Delivery Date, the Company shall pay to such Holder, in cash, an amount per Trading Day
for each Trading Day until such shares are delivered via DWAC or certificates are delivered, together with interest on such amount
at a rate of 10% per annum, accruing until such amount and any accrued interest thereon is paid in full, equal to the greater of
(A) (i) 1% of the aggregate principal amount of the Note requested to be converted for the first five (5) Trading Days after the
Delivery Date and (ii) 2% of the aggregate principal amount of the Note requested to be converted for each Trading Day thereafter
and (B) $2,000 per day (which amount shall be paid as liquidated damages and not as a penalty). Nothing herein shall limit a Holder’s
right to pursue actual damages for the Company’s failure to deliver certificates representing shares of Common Stock upon
conversion within the period specified herein and such Holder shall have the right to pursue all remedies available to it at law
or in equity (including, without limitation, a decree of specific performance and/or injunctive relief). Notwithstanding anything
to the contrary contained herein, the Holder shall be entitled to withdraw a Conversion Notice, and upon such withdrawal the Company
shall only be obligated to pay the liquidated damages accrued in accordance with this Section 3.3(b) through the date the Conversion
Notice is withdrawn.

 

    	-5-

    	 

    

 

(c)          In addition to
any other rights available to the Holder, if the Company fails to cause its transfer agent to transmit to the Holder a certificate
or certificates representing the shares of Common Stock issuable upon conversion of this Note on or before the Delivery Date, and
if after such date the Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of the shares of Common Stock issuable upon conversion of this Note which
the Holder anticipated receiving upon such exercise (a “Buy-In”), then the Company shall (1) pay in cash to
the Holder the amount by which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares
of Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of shares of Common Stock issuable upon
conversion of this Note that the Company was required to deliver to the Holder in connection with the conversion at issue times
(B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Holder,
either reinstate the portion of the Note and equivalent number of shares of Common Stock for which such conversion was not honored
or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with
its conversion and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price
of $11,000 to cover a Buy-In with respect to an attempted conversion of shares of Common Stock with an aggregate sale price giving
rise to such purchase obligation of $10,000, under clause (1) of the immediately preceding sentence the Company shall be required
to pay the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In, together with applicable confirmations and other evidence reasonably requested by the Company. Nothing herein shall
limit a Holder’s right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates
representing shares of Common Stock upon conversion of this Note as required pursuant to the terms hereof.

 

Section 3.4          Ownership Cap
and Certain Conversion Restrictions.

 

Notwithstanding anything
to the contrary set forth in Section 3 of this Note, at no time may the Holder convert all or a portion of this Note if the number
of shares of Common Stock to be issued pursuant to such conversion would exceed, when aggregated with all other shares of Common
Stock owned by the Holder at such time, the number of shares of Common Stock which would result in the Holder beneficially owning
(as determined in accordance with Section 13(d) of the Exchange Act and the rules thereunder) more than 9.9% of all of the Common
Stock outstanding at such time; provided, however, that upon the Holder providing the Company with sixty-one (61) days notice (pursuant
to Section 4.1 hereof) (the “Waiver Notice”) that the Holder would like to waive this Section 3.4 with regard to any
or all shares of Common Stock issuable upon conversion of this Note, this Section 3.4 will be of no force or effect with regard
to all or a portion of the Note referenced in the Waiver Notice; provided, further, that this provision shall be of no further
force or effect during the sixty-one (61) days immediately preceding the Maturity Date.

 

Section 3.5          Taxes; No Fractional
Shares; Reservation of Shares.

 

(a)          Issue
Taxes. The Company shall pay any and all issue and other taxes, excluding federal, state or local income taxes, that may be
payable in respect of any issue or delivery of shares of Common Stock on conversion of this Note pursuant thereto; provided,
however, that the Company shall not be obligated to pay any transfer taxes resulting from any transfer requested by the
Holder in connection with any such conversion.

 

(b)          Fractional
Shares. No fractional shares of Common Stock shall be issued upon conversion of this Note. In lieu of any fractional shares
to which the Holder would otherwise be entitled, the Company shall, at its option, (1) pay cash equal to the product of such fraction
multiplied by the average of the Closing Bid Prices of the Common Stock for the five (5) consecutive Trading Days immediately preceding
the Conversion Date or (2) round up to the next whole share.

 

    	-6-

    	 

    

 

(c)          Reservation
of Common Stock. The Company shall at all times reserve and keep available out of its authorized Common Stock the full number
of shares of Common Stock issuable upon conversion of all outstanding amounts under this Note; and within five (5) Business Days
following the receipt by the Company of a Holder's notice that such minimum number of Underlying Shares is not so reserved, the
Company shall promptly reserve a sufficient number of shares of Common Stock to comply with such requirement. The Company will
at all times reserve at least 1,100,000 shares of Common Stock for conversion.

 

(d)          Regulatory
Compliance. If any shares of Common Stock to be reserved for the purpose of conversion of this Note require registration or
listing with or approval of any governmental authority, stock exchange or other regulatory body under any federal or state law
or regulation or otherwise before such shares may be validly issued or delivered upon conversion, the Company shall, at its sole
cost and expense, in good faith and as expeditiously as possible, endeavor to secure such registration, listing or approval, as
the case may be.

 

Section 3.6          Prepayment.

 

(a)          Prepayment
Upon an Event of Default. Notwithstanding anything to the contrary contained herein, upon the occurrence of an Event of Default
described in Sections 2.1(a)-(i) hereof, the Holder shall have the right, at such Holder’s option, to require the Company
to prepay in cash all or a portion of this Note at a price equal to one hundred thirty percent (130%) of the aggregate principal
amount of this Note (the “Event of Default Prepayment Price”). Nothing in this Section 3.6(a) shall limit the
Holder’s rights under Section 2.2.

 

(b)          Prepayment
Option Upon Major Transaction. In addition to all other rights of the Holder contained herein, simultaneous with the occurrence
of a Major Transaction (as defined in Section 3.6(d) hereof), the Holder shall have the right, at the Holder’s option, to
require the Company to prepay all or a portion of the Holder’s Note at a price equal to one hundred thirty percent (130%)
of the aggregate principal amount of this Note (the “Major Transaction Prepayment Price”).

 

(c)          Prepayment
Option Upon Triggering Event. In addition to all other rights of the Holder contained herein, after a Triggering Event (as
defined below), the Holder shall have the right, at the Holder’s option, to require the Company to prepay all or a portion
of this Note in cash at a price equal to the sum of (i) the greater of (A) one hundred thirty percent (130%) of the aggregate principal
amount of this Note and (B) in the event at such time the Holder is unable to obtain the benefit of its conversion rights through
the conversion of this Note and resale of the shares of Common Stock issuable upon conversion hereof in accordance with the terms
of this Note and the other Transaction Documents, the aggregate principal amount of this Note, divided by the Conversion Price
on (x) the date the Prepayment Price (as defined below) is demanded or otherwise due or (y) the date the Prepayment Price is paid
in full, whichever is less, multiplied by the VWAP on (x) the date the Prepayment Price is demanded or otherwise due, and (y) the
date the Prepayment Price is paid in full, whichever is greater, and (ii) all other amounts, costs, expenses and liquidated damages
due in respect of this Note and the other Transaction Documents (the “Triggering Event Prepayment Price,” and, collectively
with the “Major Transaction Prepayment Price,” the “Prepayment Price”).

 

(d)           Major Transaction.
A “Major Transaction” shall be deemed to have occurred at such time as any of the following events:

 

(i)          the consolidation,
merger or other business combination of the Company with or into another Person (other than (A) pursuant to a migratory merger
effected solely for the purpose of changing the jurisdiction of incorporation of the Company or (B) a consolidation, merger or
other business combination in which holders of the Company’s voting power immediately prior to the transaction continue after
the transaction to hold, directly or indirectly, the voting power of the surviving entity or entities necessary to elect a majority
of the members of the board of directors (or their equivalent if other than a corporation) of such entity or entities); or

 

    	-7-

    	 

    

 

(ii)          the sale or
transfer of more than fifty percent (50%) of the Company’s assets (based on the fair market value as determined in good faith
by the Company’s Board of Directors) other than inventory in the ordinary course of business in one or a related series of
transactions; or

 

(iii)          closing of
a purchase, tender or exchange offer made to the holders of more than fifty percent (50%) of the outstanding shares of Common Stock
in which more than fifty percent (50%) of the outstanding shares of Common Stock were tendered and accepted.

 

(e)           Triggering
Event. A “Triggering Event” shall be deemed to have occurred at such time as any of the following events:

 

(i)          the suspension
from listing, without subsequent listing on any one of, or the failure of the Common Stock to be listed on at least one of the
OTC Markets, the OTC Bulletin Board, NASDAQ Capital Market, NASDAQ Global Market, NASDAQ Global Select Market, NYSE MKT or The
New York Stock Exchange, Inc. for a period of five (5) consecutive Trading Days;

 

(ii)          the Company’s
notice to any holder of the Note, including by way of public announcement, at any time, of its inability to comply (including for
any of the reasons described in Section 3.7) or its intention not to comply with proper requests for conversion of any Note into
shares of Common Stock; or

 

(iii)          the Company’s
failure to comply with a Conversion Notice tendered in accordance with the provisions of this Note within ten (10) business days
after the receipt by the Company of the Conversion Notice; or

 

(iv)          the Company
deregisters its shares of Common Stock and as a result such shares of Common Stock are no longer publicly traded; or

 

(v)          the Company
consummates a “going private” transaction and as a result the Common Stock is no longer registered under Sections 12(b)
or 12(g) of the Exchange Act.

 

(f)          Mechanics of
Prepayment at Option of Holder Upon Major Transaction. No sooner than fifteen (15) days nor later than ten (10) days prior
to the consummation of a Major Transaction, but not prior to the public announcement of such Major Transaction, the Company shall
deliver written notice thereof via facsimile and overnight courier (“Notice of Major Transaction”) to the Holder of
this Note. At any time after receipt of a Notice of Major Transaction (or, in the event a Notice of Major Transaction is not delivered
at least ten (10) days prior to a Major Transaction, at any time within ten (10) days prior to a Major Transaction), any holder
of the Notes then outstanding may require the Company to prepay, effective immediately prior to the consummation of such Major
Transaction, all of the holder’s Notes then outstanding by delivering written notice thereof via facsimile and overnight
courier (“Notice of Prepayment at Option of Holder Upon Major Transaction”) to the Company, which Notice of Prepayment
at Option of Holder Upon Major Transaction shall indicate (i) the number of Notes that such holder is electing to prepay and (ii)
the applicable Major Transaction Prepayment Price, as calculated pursuant to Section 3.6(b) above.

 

    	-8-

    	 

    

 

(g)          Mechanics of
Prepayment at Option of Holder Upon Triggering Event. Within one (1) business day after the occurrence of a Triggering Event,
the Company shall deliver written notice thereof via facsimile and overnight courier (“Notice of Triggering Event”)
to each holder of the Notes. At any time after the earlier of a holder’s receipt of a Notice of Triggering Event and such
holder becoming aware of a Triggering Event, any holder of this Note may require the Company to prepay all of the Notes on a pro
rata basis by delivering written notice thereof via facsimile and overnight courier (“Notice of Prepayment at Option of
Holder Upon Triggering Event”) to the Company, which Notice of Prepayment at Option of Holder Upon Triggering Event shall
indicate (i) the amount of the Note that such holder is electing to have prepaid and (ii) the applicable Triggering Event Prepayment
Price, as calculated pursuant to Section 3.6(c) above. A holder shall only be permitted to require the Company to prepay the Note
pursuant to Section 3.6 hereof for the greater of a period of ten (10) days after receipt by such holder of a Notice of Triggering
Event or for so long as such Triggering Event is continuing.

 

(h)           Payment of
Prepayment Price. Upon the Company’s receipt of a Notice(s) of Prepayment at Option of Holder Upon Triggering Event or
a Notice(s) of Prepayment at Option of Holder Upon Major Transaction from any holder of the Notes, the Company shall immediately
notify each holder of the Notes by facsimile of the Company’s receipt of such Notice(s) of Prepayment at Option of Holder
Upon Triggering Event or Notice(s) of Prepayment at Option of Holder Upon Major Transaction and each holder which has sent such
a notice shall promptly submit to the Company such holder’s certificates representing the Notes which such holder has elected
to have prepaid. The Company shall deliver the applicable Triggering Event Prepayment Price, in the case of a prepayment pursuant
to Section 3.6(i), to such holder within five (5) business days after the Company’s receipt of a Notice of Prepayment at
Option of Holder Upon Triggering Event and, in the case of a prepayment pursuant to Section 3.6(f), the Company shall deliver the
applicable Major Transaction Prepayment Price immediately prior to the consummation of the Major Transaction; provided that a holder’s
original Note shall have been so delivered to the Company; provided further that if the Company is unable to prepay all of the
Notes to be prepaid, the Company shall prepay an amount from each holder of the Notes being prepaid equal to such holder’s
pro-rata amount (based on the number of Notes held by such holder relative to the number of Notes outstanding) of all Notes being
prepaid. If the Company shall fail to prepay all of the Notes submitted for prepayment (other than pursuant to a dispute as to
the arithmetic calculation of the Prepayment Price), in addition to any remedy such holder of the Notes may have under this Note
and the Purchase Agreement, the applicable Prepayment Price payable in respect of such Notes not prepaid shall bear interest at
the rate of two percent (2%) per month (prorated for partial months) until paid in full. Until the Company pays such unpaid applicable
Prepayment Price in full to a holder of the Notes submitted for prepayment, such holder shall have the option (the “Void
Optional Prepayment Option”) to, in lieu of prepayment, require the Company to promptly return to such holder(s) all of the
Notes that were submitted for prepayment by such holder(s) under this Section 3.6 and for which the applicable Prepayment Price
has not been paid, by sending written notice thereof to the Company via facsimile (the “Void Optional Prepayment Notice”).
Upon the Company’s receipt of such Void Optional Prepayment Notice(s) and prior to payment of the full applicable Prepayment
Price to such holder, (i) the Notice(s) of Prepayment at Option of Holder Upon Triggering Event or the Notice(s) of Prepayment
at Option of Holder Upon Major Transaction, as the case may be, shall be null and void with respect to those Notes submitted for
prepayment and for which the applicable Prepayment Price has not been paid, (ii) the Company shall immediately return any Notes
submitted to the Company by each holder for prepayment under this Section 3.6(h) and for which the applicable Prepayment Price
has not been paid and (iii) the Conversion Price of such returned Notes shall be adjusted to the lesser of (A) the Conversion Price
as in effect on the date on which the Void Optional Prepayment Notice(s) is delivered to the Company and (B) the lowest Closing
Bid Price during the period beginning on the date on which the Notice(s) of Prepayment of Option of Holder Upon Major Transaction
or the Notice(s) of Prepayment at Option of Holder Upon Triggering Event, as the case may be, is delivered to the Company and ending
on the date on which the Void Optional Prepayment Notice(s) is delivered to the Company; provided that no adjustment shall be made
if such adjustment would result in an increase of the Conversion Price then in effect. A holder’s delivery of a Void Optional
Prepayment Notice and exercise of its rights following such notice shall not effect the Company’s obligations to make any
payments which have accrued prior to the date of such notice. Payments provided for in this Section 3.6 shall have priority to
payments to other stockholders in connection with a Major Transaction.

 

    	-9-

    	 

    

 

(i)          Company Prepayment
Option upon Major Transaction. Upon the consummation of a Major Transaction, the Company may prepay in cash all or any portion
of the outstanding principal amount of this Note upon at least thirty (30) days prior written notice to the Holder (the “Company’s
Prepayment Notice”) at a price equal to one hundred twenty percent (120%) of the aggregate principal amount of this Note
(the “Company’s Prepayment Price”); provided, however, that if a holder has delivered a Conversion Notice
to the Company or delivers a Conversion Notice within such thirty (30) day period following delivery of the Company’s Prepayment
Notice, the principal amount of the Notes designated to be converted may not be prepaid by the Company and shall be converted in
accordance with Section 3.3 hereof; provided further that if during the period between delivery of the Company’s Prepayment
Notice and the Company’s Prepayment Date (as defined below), a holder shall become entitled and elects to deliver a Notice
of Prepayment at Option of Holder Upon Major Transaction or Notice of Prepayment at Option of Holder upon Triggering Event, then
such rights of the holders shall take precedence over the previously delivered Company Prepayment Notice if the holder so elects.
The Company’s Prepayment Notice shall state the date of prepayment which date shall be the date of the consummation of the
Major Transaction (the “Company’s Prepayment Date”), the Company’s Prepayment Price and the principal
amount of Notes to be prepaid by the Company. The Company shall deliver the Company’s Prepayment Price on the Company’s
Prepayment Date, provided, that if the holder(s) delivers a Conversion Notice before the Company’s Prepayment Date, then
the portion of the Company’s Prepayment Price which would be paid to prepay the Notes covered by such Conversion Notice shall
be returned to the Company upon delivery of the Common Stock issuable in connection with such Conversion Notice to the holder(s).
On the Company’s Prepayment Date, the Company shall pay the Company’s Prepayment Price, subject to any adjustment pursuant
to the immediately preceding sentence, to the holder(s) on a pro rata basis. If the Company fails to pay the Company’s Prepayment
Price by the third (3rd) business day after the Company’s Prepayment Date, the prepayment will be declared null and void
and the Company shall lose its right to serve a Company’s Prepayment Notice pursuant to this Section 3.6(i) in the future.
Notwithstanding the foregoing to the contrary, the Company may effect a prepayment pursuant to this Section 3.6(i) only if trading
in the Common Stock shall not have been suspended by the Securities and Exchange Commission or the NASDAQ Market (or other exchange
or market on which the Common Stock is trading), and the Company is in material compliance with the terms and conditions of this
Note and the other Transaction Documents.

 

Section 3.7          Inability to
Fully Convert.

 

(a)          Holder’s
Option if Company Cannot Fully Convert. If, upon the Company’s receipt of a Conversion Notice, the Company cannot issue
shares of Common Stock for any reason, including, without limitation, because the Company (w) does not have a sufficient number
of shares of Common Stock authorized and available, or (x) is otherwise prohibited by applicable law or by the rules or regulations
of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Company or
any of its securities from issuing all of the Common Stock which is to be issued to the Holder pursuant to a Conversion Notice,
then the Company shall issue as many shares of Common Stock as it is able to issue in accordance with the Holder’s Conversion
Notice and, with respect to the unconverted portion of this Note, the Holder, solely at Holder’s option, can elect to:

 

(i)          require the
Company to prepay that portion of this Note for which the Company is unable to issue Common Stock in accordance with the Holder’s
Conversion Notice (the “Mandatory Prepayment”) at a price per share equal to the Triggering Event Prepayment
Price as of such Conversion Date (the “Mandatory Prepayment Price”);

 

    	-10-

    	 

    

 

(ii)          void its Conversion
Notice and retain or have returned, as the case may be, this Note that was to be converted pursuant to the Conversion Notice (provided
that the Holder’s voiding its Conversion Notice shall not effect the Company’s obligations to make any payments which
have accrued prior to the date of such notice).

 

In the event a Holder
shall elect to convert any portion of its Notes as provided herein, the Company cannot refuse conversion based on any claim that
such Holder or any one associated or affiliated with such Holder has been engaged in any violation of law, violation of an agreement
to which such Holder is a party or for any reason whatsoever, unless, an injunction from a court, on notice, restraining and or
adjoining conversion of all or of said Notes shall have been issued and the Company posts a surety bond for the benefit of such
Holder in an amount equal to 130% of the principal amount of the Notes the Holder has elected to convert, which bond shall remain
in effect until the completion of arbitration/litigation of the dispute and the proceeds of which shall be payable to such Holder
in the event it obtains judgment.

 

(b)          Mechanics
of Fulfilling Holder’s Election. The Company shall immediately send via facsimile to the Holder, upon receipt of a facsimile
copy of a Conversion Notice from the Holder which cannot be fully satisfied as described in Section 3.7(a) above, a notice of the
Company’s inability to fully satisfy the Conversion Notice (the “Inability to Fully Convert Notice”).
Such Inability to Fully Convert Notice shall indicate (i) the reason why the Company is unable to fully satisfy such holder’s
Conversion Notice, (ii) the amount of this Note which cannot be converted and (iii) the applicable Mandatory Prepayment Price.
The Holder shall notify the Company of its election pursuant to Section 3.7(a) above by delivering written notice via facsimile
to the Company (“Notice in Response to Inability to Convert”).

 

(c)          Payment
of Prepayment Price. If the Holder shall elect to have its Notes prepaid pursuant to Section 3.7(a)(i) above, the Company shall
pay the Mandatory Prepayment Price to the Holder within thirty (30) days of the Company’s receipt of the Holder’s Notice
in Response to Inability to Convert, provided that prior to the Company’s receipt of the Holder’s Notice in
Response to Inability to Convert the Company has not delivered a notice to the Holder stating, to the satisfaction of the Holder,
that the event or condition resulting in the Mandatory Prepayment has been cured and all Conversion Shares issuable to the Holder
can and will be delivered to the Holder in accordance with the terms of this Note. If the Company shall fail to pay the applicable
Mandatory Prepayment Price to the Holder on a timely basis as described in this Section 3.7(c) (other than pursuant to a dispute
as to the determination of the arithmetic calculation of the Prepayment Price), in addition to any remedy the Holder may have under
this Note and the Purchase Agreement, such unpaid amount shall bear interest at the rate of two percent (2%) per month (prorated
for partial months) until paid in full. Until the full Mandatory Prepayment Price is paid in full to the Holder, the Holder may
(i) void the Mandatory Prepayment with respect to that portion of the Note for which the full Mandatory Prepayment Price has not
been paid, (ii) receive back such Note, and (iii) require that the Conversion Price of such returned Note be adjusted to the lesser
of (A) the Conversion Price as in effect on the date on which the Holder voided the Mandatory Prepayment and (B) the lowest Closing
Bid Price during the period beginning on the Conversion Date and ending on the date the Holder voided the Mandatory Prepayment.

 

(d)          Pro-rata
Conversion and Prepayment. In the event the Company receives a Conversion Notice from more than one holder of the Notes on
the same day and the Company can convert and prepay some, but not all, of the Notes pursuant to this Section 3.7, the Company shall
convert and prepay from each holder of the Notes electing to have its Notes converted and prepaid at such time an amount equal
to such holder’s pro-rata amount (based on the principal amount of the Notes held by such holder relative to the principal
amount of the Notes outstanding) of all the Notes being converted and prepaid at such time.

 

    	-11-

    	 

    

 

Section 3.8          No
Rights as Shareholder. Nothing contained in this Note shall be construed as conferring upon the Holder, prior to the conversion
of this Note, the right to vote or to receive dividends or to consent or to receive notice as a shareholder in respect of any meeting
of shareholders for the election of directors of the Company or of any other matter, or any other rights as a shareholder of the
Company.

 

ARTICLE IV

MISCELLANEOUS

 

Section 4.1          Notices.
Any notice, demand, request, waiver or other communication required or permitted to be given hereunder shall be in writing and
shall be effective (a) upon hand delivery by telex (with correct answer back received), telecopy or facsimile at the address or
number designated in the Purchase Agreement (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 Company will
give written notice to the Holder at least ten (10) days prior to the date on which the Company takes a record (x) with respect
to any dividend or distribution upon the Common Stock, (y) with respect to any pro rata subscription offer to holders of Common
Stock or (z) for determining rights to vote with respect to any Major Transaction, dissolution, liquidation or winding-up and in
no event shall such notice be provided to such holder prior to such information being made known to the public. The Company will
also give written notice to the Holder at least ten (10) days prior to the date on which any Major Transaction, dissolution, liquidation
or winding-up will take place and in no event shall such notice be provided to the Holder prior to such information being made
known to the public.

 

Section 4.2          Governing
Law. This Note shall be governed by and construed in accordance with the internal laws of the State of New York, without giving
effect to any of the conflicts of law principles which would result in the application of the substantive law of another jurisdiction.
This Note shall not be interpreted or construed with any presumption against the party causing this Note to be drafted.

 

Section 4.3          Headings.
Article and section headings in this Note are included herein for purposes of convenience of reference only and shall not constitute
a part of this Note for any other purpose.

 

Section 4.4          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, at law or in equity (including, without limitation, a decree of
specific performance and/or other injunctive relief), no remedy contained herein shall be deemed a waiver of compliance with the
provisions giving rise to such remedy and nothing herein shall limit a holder’s right to pursue actual 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 thereof 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 and material harm to the Holder and that the remedy at law for
any such breach may be inadequate. Therefore the Company agrees that, in the event of any such breach or threatened breach, the
Holder shall be entitled, in addition to all other available rights and remedies, at law or in equity, to seek and obtain such
equitable relief, including but not limited to an injunction restraining any such breach or threatened breach, without the necessity
of showing economic loss and without any bond or other security being required.

 

    	-12-

    	 

    

 

Section 4.5          Enforcement
Expenses. The Company agrees to pay all costs and expenses of enforcement of this Note, including, without limitation, reasonable
attorneys’ fees and expenses.

 

Section 4.6          Binding
Effect. The obligations of the Company and the Holder set forth herein shall be binding upon the successors and assigns of
each such party, whether or not such successors or assigns are permitted by the terms hereof.

 

Section 4.7          Amendments.
This Note may not be modified or amended in any manner except in writing executed by the Company and the Holder.

 

Section 4.8          Compliance
with Securities Laws. The Holder of this Note acknowledges that this Note is being acquired solely for the Holder’s own
account and not as a nominee for any other party, and for investment, and that the Holder shall not offer, sell or otherwise dispose
of this Note. This Note and any Note issued in substitution or replacement therefor shall be stamped or imprinted with a legend
in substantially the following form:

 

“THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR APPLICABLE STATE SECURITIES LAWS, AND MAY NOT
BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL IN THE FORM, SUBSTANCE
AND SCOPE REASONABLY SATISFACTORY TO THE COMPANY THAT THIS NOTE MAY BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF,
UNDER AN EXEMPTION FROM REGISTRATION UNDER THE ACT AND SUCH STATE SECURITIES LAWS.”

 

Section 4.9          Consent
to Jurisdiction. Each of the Company and the Holder (i) hereby irrevocably submits to the exclusive jurisdiction of the State
of New York for the purposes of any suit, action or proceeding arising out of or relating to this Note and (ii) hereby waives,
and agrees not to assert in any such suit, action or proceeding, any claim that it is not personally subject to the jurisdiction
of such court, that the suit, action or proceeding is brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Each of the Company and the Holder consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to it under the Purchase Agreement and agrees that
such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 4.9 shall affect
or limit any right to serve process in any other manner permitted by law. Each of the Company and the Holder hereby agree that
the prevailing party in any suit, action or proceeding arising out of or relating to this Note shall be entitled to reimbursement
for reasonable legal fees from the non-prevailing party.

 

Section 4.10          Parties
in Interest. This Note shall be binding upon, inure to the benefit of and be enforceable by the Company, the Holder and their
respective successors and permitted assigns.

 

    	-13-

    	 

    

 

Section 4.11          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.

 

Section 4.12          Company
Waivers. Except as otherwise specifically provided herein, the Company and all others that may become liable for all or any
part of the obligations evidenced by this Note, hereby waive presentment, demand, notice of nonpayment, protest and all other demands’
and notices in connection with the delivery, acceptance, performance and enforcement of this Note, and do hereby consent to any
number of renewals of extensions of the time or payment hereof and agree that any such renewals or extensions may be made without
notice to any such persons and without affecting their liability herein and do further consent to the release of any person liable
hereon, all without affecting the liability of the other persons, firms or Company liable for the payment of this Note, AND DO
HEREBY WAIVE TRIAL BY JURY.

 

(a)          No delay or omission
on the part of the Holder in exercising its rights under this Note, or course of conduct relating hereto, shall operate as a waiver
of such rights or any other right of the Holder, nor shall any waiver by the Holder of any such right or rights on any one occasion
be deemed a waiver of the same right or rights on any future occasion.

 

(b)          THE COMPANY ACKNOWLEDGES
THAT THE TRANSACTION OF WHICH THIS NOTE IS A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW, HEREBY
WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY
DESIRE TO USE.

 

	 	INERGETICS, INC.
	 	 
	 	By:	/s/ Michael C. James
	 	Name:	Michael C. James
	 	Title:	Chief Executive Officer
	 	 	Chief Financial Officer

 

    	-14-

    	 

    

 

EXHIBIT A

 

WIRE INSTRUCTIONS

 

    	-15-

    	 

    

 

FORM OF

 

CONVERSION NOTICE

 

(To be executed by the Holder in order
to Convert the Debenture)

 

TO: Inergetics,
Inc. 

 

The undersigned hereby
irrevocably elects to convert $                                              
of the principal amount of Debenture No. NRTI-1 into Shares of Common Stock of Inergetics, Inc. according to the conditions
stated therein, as of the Conversion Date written below.

 

	
        

        Note Balance Before Conversion
	 	$	 	 
	Conversion Date:	 	 	 	 
	Conversion Amount to be converted:	 	$	 	 
	Conversion Price:	 	$	 	 
	Number of shares of Common Stock to be issued:	 	 	 	 
	Note Balance After Conversion:	 	$	 	 

 

Please issue the shares of Common Stock in the following
name and to the following address:

 

	
        Issue to:

         

         
	 	
        BLACK MOUNTAIN EQUITIES, INC.

         

         
	 
	 	 	 	 
	Authorized Signature:	 	 	 
	Name:	 	 	 
	Title:	 	 	 
	Broker Name:	 	 	 
	Broker DTC Participant Code:	 	 	 
	Account Number:	 	 	 

 

    	-16-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.

 

    	2

    	 

    

 

“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.

 

    	3

    	 

    

 

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

 

    	4

    	 

    

 

(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).

 

    	5

    	 

    

 

(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.

 

    	6

    	 

    

 

(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.

 

    	7

    	 

    

 

(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.

 

    	8

    	 

    

 

(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.

 

    	9

    	 

    

 

(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.

 

    	10

    	 

    

 

(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.

 

    	11

    	 

    

 

(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.

 

    	12

    	 

    

 

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.

 

    	13

    	 

    

 

(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.

 

    	14

    	 

    

 

(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.

 

    	15

    	 

    

 

(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.

 

    	16

    	 

    

 

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.

 

    	17

    	 

    

 

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.

 

    	18

    	 

    

 

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.

 

    	19

    	 

    

 

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.

 

    	20

    	 

    

 

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)

 

    	21

    	 

    

 

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]

 

    	22

    	 

    

 

[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]

 

    	23

    	 

    

 

SCHEDULE A

 

    	24

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00231-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00231-of-00352.parquet"}]]