EX-10.1






Converted Organics Inc.

137A Lewis Wharf

Boston, MA 02110




March 12, 2012



Iroquois Master Fund Ltd.


c/o Iroquois Capital Management, LLC


641 Lexington Avenue, 26th Floor


New York, New York 10022



Hudson Bay Master Fund Ltd. (“Hudson Bay”)


c/o Hudson Bay Capital Management LP


777 Third Avenue, 30th Floor


New York, New York 10017




	 	 	 	Re: Securities Purchase Agreement (the “Purchase Agreement”), dated as of January
3, 2012, by and among the Company, Iroquois Master Fund Ltd. (“Iroquois”) and Iroquois
Capital Opportunity Fund LP





Dear Messrs. Silverman and Roth:



All capitalized terms used herein and not otherwise defined herein shall have the meanings
ascribed to such terms in the Purchase Agreement. Iroquois and Hudson Bay are sometimes
collectively referred to herein as the “Purchasers” and are also sometimes individually referred to
herein as a “Purchaser.”



A. The Company and Iroquois hereby agree that notwithstanding anything contained in the
Purchase Agreement or the Security Agreement (as the case may be) to the contrary:



(i) One extra Additional Closing shall occur on March 13, 2012, on the terms set forth in the
remainder of this paragraph A.



(ii) On March 13, 2012, the Company shall issue and sell to each Purchaser, and each Purchaser
severally, but not jointly, shall purchase from the Company, Additional Notes in the original
principal amount as is set forth opposite their respective name on Schedule 1 attached
hereto, along with Warrants to initially acquire up to the aggregate number of Warrant Shares as
determined pursuant to the terms thereof. The Company shall deliver to each Purchaser the
deliveries requested to be delivered by the Company pursuant to Section 7(b) of the Purchase
Agreement. Each Purchaser shall pay their respective Additional Purchase Price set forth across
from their respective name on Schedule 1 in accordance with Section 1(d)(ii) of the
Purchase Agreement. The consummation of the purchase and sale of the Additional Notes and Warrants
contemplated by this letter agreement is (x) an Additional Closing and (y) March 13, 2012, is an
Additional Closing Date, in each case, for all purposes of the Purchase Agreement and the other
Transaction Documents.



(iii) The proceeds received by the Company from the issuance and sale of the Additional Notes
contemplated hereby shall be used solely to consummate the purchase of Series A Preferred Stock
(the “I/P Stock”) of Innovate/Protect, Inc. contemplated by that certain Securities Purchase
Agreement, dated March 12, 2012, by and among the Company and Hudson Bay. The parties acknowledge
and agree that, without implication that the contrary would otherwise be true, the I/P Stock will
constitute Collateral under the Security Agreement upon the Company’s purchase thereof, and the
Company shall take all actions reasonably requested by any Secured Party (as defined in the
Security Agreement) to perfect the Secured Parties’ Security Interest (as defined in the Security
Agreement) therein in accordance with the terms of the Security Agreement.



B. Hudson Bay hereby (i) acknowledges and agrees to its obligations contemplated by Paragraph A
above and (ii) makes, as of the date hereof, all of the representations and warranties set forth in
Section 2 of the Purchase Agreement as to itself, other than with respect to Section 2(j). In lieu
of making the representations set forth in Section 2(j), Hudson Bay hereby represents and warrants
to the Company as follows:



Certain Trading Activities. As of the time of execution of this letter
agreement by Hudson Bay, Hudson Bay has not directly or indirectly, nor has any
Person acting on behalf of or pursuant to any understanding with Hudson Bay, engaged
in any transactions in the securities of the Company (including, without limitation,
any Short Sales (as defined below) involving the Company’s securities) during the
period commencing on the date that Hudson Bay first became aware of the transaction
contemplated by this letter agreement, and ending immediately prior to the execution
of this letter agreement (it being understood and agreed that for all purposes of
this letter agreement, and without implication that the contrary would otherwise be
true, transactions shall not include the location and/or reservation of borrowable
            shares of Common Stock). “Short Sales” means all “short sales” as defined in Rule
200 promulgated under Regulation SHO under the Securities Exchange Act of 1934, as
amended.



C. The parties hereto acknowledge and agree that (1) this letter agreement constitutes a
joinder to the Security Agreement and Hudson Bay will become (without any further action) a Secured
Party thereunder simultaneously with the occurrence of the extra Additional Closing contemplated by
this letter agreement; (2) Hudson Bay shall only have those rights of a Buyer under the Purchase
Agreement that are contained in Sections 4, 5 and 9 thereof (provided that Hudson Bay shall not
have any rights, or any obligations, as a Buyer under Sections 4(a), 4(h), 4(j), 4(k), 4(n), 4(o),
4(q), 4(s) and 4(t) of the Purchase Agreement; (3) without limitation of the immediately preceding
clause (2) and without implication that the contrary would otherwise be true, Hudson Bay shall not
have any obligations or rights with respect to any Additional Closing other than the extra
Additional Closing contemplated by this letter agreement; and (4) the consent of Hudson Bay shall
not be required for any amendment to the Purchase Agreement or the Security Agreement unless (x)
Hudson Bay holds an Additional Note at the time of such amendment and (y) such amendment adversely
affects Hudson Bay in a manner that is disproportionate to Iroquois, taking into account all
securities then held by Iroquois and Hudson Bay and any securities that are contemplated to be
purchased by Iroquois and/or Hudson Bay at the time of such amendment, in which case the consent of
Hudson Bay shall be required (it being understood and agreed that no amendment affecting any
Additional Closing occurring after March 13, 2012, shall require the consent of Hudson Bay). The
Company hereby acknowledges and agrees that (i) none of the rights of Hudson Bay contemplated
hereunder as a Buyer shall limit any rights of Iroquois in any manner, (ii) Hudson Bay shall be
entitled to rely on all representations and warranties contained in Section 3 of the Purchase
Agreement as if such representations and warranties were made to Hudson Bay on the date of
consummation of the transactions contemplated by this letter agreement and (iii) none of the I/P
Stock may be transferred, sold or otherwise disposed of by the Company without the prior written
consent of each Purchaser then holding Notes or April Notes. Notwithstanding the foregoing and the
provisions of Section 17 of the Security Agreement, the parties acknowledge and agree that any
proceeds received by a Secured Party from the sale or other disposition by such Secured Party of
I/P Stock that constitutes Collateral shall (i) first, be used to repay all amounts outstanding (at
the time of such sale or other disposition) under the Additional Notes issued on March 13, 2012
(pro rata based on the principal amount of such Additional Notes outstanding at the time of such
sale or other disposition) and (ii) then, if any proceeds remain after application pursuant to the
immediately preceding clause (i), be applied pursuant to, and in accordance with, Section 17 of the
Security Agreement.



D. Except as expressly set forth herein, (i) each of the Transaction Documents and each of the
obligations of the Company thereunder, and each of the rights of and benefits to Iroquois
thereunder, is, and shall continue to be, in full force and effect and each is hereby ratified and
confirmed in all respects, except that from and after the date hereof, without implication that the
contrary would otherwise be true, (A) all references in the Purchase Agreement to “this Agreement,”
“hereto,” “hereof,” “hereunder” or words of like import referring to the Purchase Agreement shall
mean the Purchase Agreement as amended by this letter agreement, (B) all references in the
Transaction Documents to “the Purchase Agreement,” “thereto,” “thereof,” “thereunder” or words of
like import referring to the Purchase Agreement shall mean the Purchase Agreement as amended by
this letter agreement, (C) all references in the Security Agreement to “this Agreement,” “hereto,”
“hereof,” “hereunder” or words of like import referring to the Security Agreement shall mean the
Security Agreement as amended by this letter agreement, (D) all references in the Transaction
Documents to “the Security Agreement,” “thereto,” “thereof,” “thereunder” or words of like import
referring to the Security Agreement shall mean the Security Agreement as amended by this letter
agreement and (E) all references in the Transaction Documents to “the Transaction Documents,”
“thereto,” “thereof,” “thereunder” or words of like import referring to the Transaction Documents
shall mean the Transaction Documents as amended by this letter agreement and (ii) the execution,
delivery and effectiveness of this letter agreement shall not operate as an amendment or waiver of
any right, power or remedy of Iroquois under any of the Transaction Documents, nor constitute an
amendment or waiver of any provision of any of the Transaction Documents and each of the
Transaction Documents shall continue in full force and effect, as amended or modified by this
letter agreement. The parties hereto agree that this letter agreement (i) amends (and constitutes
an amendment to) the Purchase Agreement and all the other Transaction Documents as expressly
contemplated by this letter agreement to give full force and effect to the terms and conditions of
this letter agreement and (ii) constitutes a Transaction Document.



E. This letter agreement may be executed in two or more counterparts, all of which 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. In the event that any signature is delivered by
facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an
executed signature page, such signature page 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 signature page were an original thereof.



F. The Company shall, on or before 8:30 a.m., New York time, on March 14, 2012, file a Current
Report on Form 8-K describing all the material terms of the transactions contemplated by this
letter agreement in the form required by the 1934 Act. From and after the filing of such 8-K, the
Company confirms that it will have disclosed all material, non-public information (if any)
regarding the Company and its Subsidiaries delivered to Iroquois and/or Hudson Bay by the Company
or any of its Subsidiaries, or any of their respective officers, directors, employees or agents in
connection with the transactions contemplated by this letter agreement.



G. The obligations of each Purchaser under this letter agreement and the other Transaction
Documents are several and not joint with the obligations of any other Purchaser, and no Purchaser
shall be responsible in any way for the performance of the obligations of any other Purchaser under
this letter agreement or any other Transaction Document. Nothing contained herein or in any other
Transaction Document, and no action taken by any Purchaser pursuant hereto or thereto, shall be
deemed to constitute the Purchasers as, and the Company acknowledges that the Purchasers do not so
constitute, a partnership, an association, a joint venture or any other kind of group or entity, or
create a presumption that the Purchasers are in any way acting in concert or as a group or entity
with respect to such obligations or the transactions contemplated herein or by the other
Transaction Documents or any matters, and the Company acknowledges that the Purchasers are not
acting in concert or as a group, and the Company shall not assert any such claim, with respect to
such obligations or the transactions contemplated by this letter agreement and the other
Transaction Documents. The decision of each Purchaser to purchase Securities pursuant to this
letter agreement and the other Transaction Documents has been made by each Purchaser independently
of each other Purchaser. Each Purchaser acknowledges that no other Purchaser has acted as agent for
such Purchaser in connection with such Purchaser making its investment hereunder and that no other
Purchaser will be acting as agent of such Purchaser in connection with monitoring such Purchaser’s
investment in the Securities or enforcing its rights under this letter agreement or the other
Transaction Documents. The Company and each Purchaser confirms that each Purchaser has
independently participated with the Company and its Subsidiaries in the negotiation of the
transaction contemplated hereby and by the other Transaction Documents with the advice of its own
counsel and advisors. Each Purchaser shall be entitled to independently protect and enforce its
rights, including, without limitation, the rights arising out of this letter agreement or out of
any other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined
as an additional party in any proceeding for such purpose. The use of a single agreement to
effectuate the purchase and sale of the Securities contemplated hereby was solely in the control of
the Company, not the action or decision of any Purchaser , and was done solely for the convenience
of the Company and its Subsidiaries and not because it was required or requested to do so by any
Purchaser. It is expressly understood and agreed that each provision contained in this letter
agreement and in each other Transaction Document is between the Company, each Subsidiary and a
Purchaser, solely, and not between the Company, its Subsidiaries and the Purchasers collectively
and not between and among the Purchasers.



H. Each party shall do and perform, or cause to be done and performed, all such further acts and
things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as any other party may reasonably request in order to carry out the intent and
accomplish the purposes of this letter agreement and the consummation of the transactions
contemplated hereby.



I. The Company and Iroquois hereby agree that the definitions of Fixed Conversion Price (as defined
in each of the Notes and each of the April Notes) in each of the Notes issued prior to the date
hereof and each of the April Notes are each hereby amended to: “$0.105 (subject to adjustment as
provided herein) (the “Fixed Conversion Price”)”. The Company and Iroquois further agree that no
adjustment to the exercise price of any warrant set forth on Schedule 2 attached hereto
shall occur solely as a result of the amendment contemplated by the immediately preceding sentence.



[signature page follows]





Sincerely,



/s/ Edward J. Gildea




	 	 	Edward J. Gildea,






CEO



Agreed to and accepted:



Iroquois Master Fund Ltd.



By: Iroquois Capital Management, LLC





Its: Investment Manager



	 	 	 
	By:

	 	/s/ Authorized signatory
	 

	 	 
	Name:

	 	

	
 
	 	 
	Title:

	 	

	 

	 	 






Hudson Bay Master Fund Ltd.



By: Hudson Bay Capital Management LP


Its: Investment Manager



	 	 	 
	By:

	 	/s/ Authorized signatory
	 

	 	 
	Name:

	 	

	
 
	 	 
	Title:

	 	

	 

	 	 






Schedule 1 




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Number of	 	 	 	 	 	 
	 	 	Address and Facsimile Number
	 	Original Principal

Amount of

Additional Note
	 	—

Warrant Shares

underlying Warrants
	 	Additional Purchase

—

Price
	 	Legal Representative’s

—

Address and Facsimile Number

	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	Iroquois Master Fund Ltd.
	 	641 Lexington Avenue, 26th Floor

New York, New York 10022

Facsimile: (212) 207-3452
	 	$	275,000	 	 	 	1,309,524	 	 	$	250,000	 	 	Greenberg Traurig, LLP

77 W. Wacker Drive, Suite 3100

Chicago, Illinois 60601

Attention: Peter H. Lieberman

Todd A. Mazur

Facsimile: (312) 456-8435

	 
	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	Hudson Bay Master Fund Ltd.
	 	777 Third Avenue, 30th Floor

New York, New York 10017

Facsimile: (212) 207-3452
	 	$275,000





	 	1,309,524





	 	$250,000





	 	Elected Not To Provide






	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	








Schedule 2




Series A warrants issued December 17, 2010



Series A warrants issued March 7, 2011



Series B warrants issued April 15, 2011



Series A warrants issued April 15, 2011



Series C warrants issued April 15, 2011



Class C warrants



Class D warrants



Class E warrants



Class F warrants



Class G warrants



Warrants issued January 3, 2012



Warrants issued February 4, 2012



Warrants issued March 13, 2012