AMENDMENT
AGREEMENT
This Amendment Agreement (the “
Agreement ”), dated as of May 26, 2009, is by and
among Converted Organics Inc., a Delaware corporation (the “
Company ”) and the investors signatory hereto (each, a
“ Purchaser ” and collectively, the “
Purchasers ”).
Reference is made to that certain
Securities Purchase Agreement (the “ Purchase
Agreement ”), dated May 19, 2009, by and among the
Company and the Purchasers, pursuant to which the Purchasers were
issued warrants (the “ Existing Warrants ”) to
purchase shares of Common Stock, par value $0.0001 per share (the
“ Common Stock ”);
WHEREAS, the Existing Warrants were
issued pursuant to an effective registration statement, file
No. 333-158784 (the “ Registration Statement
”).
NOW, THEREFORE, IN CONSIDERATION of
the mutual covenants contained in this Agreement, and for good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the Purchasers and the Company agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions .
Capitalized terms not defined in this Agreement shall have the
meanings ascribed to such terms in the Purchase Agreement.
ARTICLE II
EXERCISE OF WARRANTS,
AMENDMENTS AND OTHER AGREEMENTS
Section 2.1 Exercise of
Existing Warrants . Each Purchaser hereby agrees, severally and
not jointly with the other Purchasers, to exercise all of such
Purchaser’s Existing Warrants at an exercise price of
$1.40 per share, for aggregate cash proceeds to the Company
from all Purchasers of $2,100,000 , otherwise pursuant to
the terms of the Existing Warrants. Each Purchaser shall execute
and deliver the aggregate cash exercise price for such Existing
Warrants to the bank account designated in writing by the Company;
provided , however , that a Purchaser shall not be
required to exercise such certain portion of its Existing Warrant
to the extent that Section 2(e) of the Existing Warrant is violated
by the resulting Common Stock issuance of such certain portion. The
shares underlying the Existing Warrants shall be delivered to the
Purchaser’s to the DTC account of such Purchaser set forth on
the signature page hereto.
Section 2.2 Issuance of New
Warrants . Each Purchaser shall be issued a new Common Stock
purchase warrant (collectively, the “ Warrants
”) off the Registration Statement to purchase up to a number
of shares of Common Stock equal to the number of shares issued to
such Purchaser pursuant to Section 2.1 (the “ Warrant
Shares ”), otherwise in the form of the Existing Warrant
issued pursuant to the Purchase Agreement, except that the Exercise
Price shall be $1.61 , the Termination Date shall be
August 14, 2009 and Section 2(f) shall be triggered at
a VWAP of $2.42 rather than $2.10. The Company shall have a
sufficient number of shares of Common Stock reserved and available
off the Registration Statement until the Termination Date of the
Warrant. The date of the closing of the exercise of the Existing
Warrants and other transactions contemplated hereunder shall be
referred to as the “ Closing ”.
Section 2.3 Effect on
Purchase Agreement . The covenants of the Company with respect
to the Warrants and Warrant Shares shall be identical in all
respects to the covenants of the Company with respect to the
Existing Warrants (and shares of Common Stock underlying the
Existing Warrants) issued pursuant to the Purchase Agreement.
Except as expressly set forth herein, all of the terms and
conditions of the Transaction Documents shall continue in full
force and effect after the execution of this Agreement, and shall
not be in any way changed, modified or superseded by the terms set
forth herein. This Agreement shall not constitute a novation or
satisfaction and accord of any Transaction Document.
Section 2.4 Press Release and
Prospectus Supplement . On or before 8:30 am ET on May 27, 2009
the Company shall issue a press release reasonably acceptable to
each Purchaser disclosing the material terms of the transactions
contemplated hereby. In addition, within 1 Trading Day of the date
hereof, the Company shall file a prospectus supplement under
Rule 424 under the Securities Act to the Registration
Statement disclosing the terms of the transactions hereunder.
Section 2.5 Conditions to
Purchasers Obligations . The respective obligations of the
Purchasers hereunder in connection with the Closing are subject to
the following conditions being met:
(a) the
accuracy in all material respects on the date of the Closing of the
representations and warranties of the Company contained herein;
(b) all
obligations, covenants and agreements of the Company required to be
performed at or prior to the Closing shall have been performed;
(c) the
delivery of an opinion of counsel to the Company regarding this
Agreement and the issuance of the Warrants hereunder, in form and
substance reasonably acceptable to the Purchasers;
(d) there
shall have been no Material Adverse Effect with respect to the
Company since the date hereof; and
(e) from the
date hereof to the Closing, trading in the Common Stock shall not
have been suspended by the Commission (except for any suspension of
trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing, trading in securities generally as
reported by Bloomberg Financial Markets shall not have been
suspended or limited, or minimum prices shall not have been
established on securities whose trades are reported by such
service, or on any Trading Market, nor shall a banking moratorium
have been declared either by the United States or New York State
authorities nor shall there have occurred any material outbreak or
escalation of hostilities or other national or international
calamity of such magnitude in its effect on, or any material
adverse change in, any financial market which, in each case, in the
reasonable judgment of each Purchaser, makes it impracticable or
inadvisable to consummate the transactions hereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations
and Warranties of the Company . The Company hereby make the
representations and warranties set forth below to the Purchasers as
of the date of its execution of this Agreement:
(a)
Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and to consummate the
transactions contemplated by this Agreement and otherwise to carry
out its obligations hereunder and thereunder. The execution and
delivery of this Agreement by the Company and the co
