EX-10.3






EXHIBIT 10.3



REGISTRATION RIGHTS AGREEMENT




REGISTRATION RIGHTS AGREEMENT dated as of the 6th day of March, 2009 (this “Agreement”) by and
between CONVERTED ORGANICS, INC., a Delaware corporation (the “Corporation”), and PROFESSIONAL
OFFSHORE OPPORTUNITY FUND, LTD. (the “Investor”).



W I T N E S S E T H :




WHEREAS, the Investor owns or has the right to purchase or otherwise acquire shares of
the Common Stock (as hereinafter defined) of the Corporation; and



WHEREAS, the Corporation and the Investor deem it to be in their respective best interest to
set forth the rights of the Investor in connection with the registration of certain shares of
Common Stock under applicable securities laws; and



WHEREAS, the execution and delivery of this Agreement is a condition to the Securities
Purchase Agreement entered into by the Investor and the Corporation on the date hereof;



NOW, THEREFORE, in consideration of the premises and mutual covenants and obligations
hereinafter set forth, the Corporation and the Investor hereby agree as follows:



Section 1. Definitions.



As used in this Agreement the following terms shall have the following meanings:1



(a) “Class B Warrant Market Value” means the average closing bid price of the Class B Warrant
for the period which the Corporation has failed to comply with this Registration Rights Agreement.



(b) “Closing Date” means March 2, 2009, or such other date when the Securities Purchase
Agreement and other Transaction Documents were executed by the Corporation and the Investor.



(c) “Commission” means the Securities and Exchange Commission or any other Federal Agency at
the time administering the Securities Act.



(d) “Common Stock” means the common stock, par value $0.0001, of the Corporation.



(e) “Convertible Note” means the Convertible Note entered into between the Corporation and
Professional Offshore Opportunity Fund, Ltd., and dated the date hereof.



(f) “Exchange Act” means the Securities Exchange Act of 1934 or any successor Federal statute,
and the rules and regulations of the Commission promulgated thereunder, all as the same shall be in
effect from time to time.



(g) “Investor” means Professional Offshore Opportunity Fund, Ltd., and includes any successor
to, or assignee or transferee of, any such person who or which agrees in writing to be treated as
an Investor hereunder and to be bound by the terms and comply with all applicable provisions
hereof.



(h) “Other Shares” means at any time those shares of Common Stock which do not constitute
Primary Shares or Registrable Securities.



(i) “Primary Shares” means at any time the authorized but unissued shares of Common Stock held
by the Corporation in its treasury.



(j) “Registrable Securities” means (i) all shares of Common Stock issuable upon conversion in
full of the Convertible Note issued to the Investor upon Stockholder Approval (the “Conversion
Shares”); (ii) all shares of Common Stock issuable upon exercise of Warrants issued to the Investor
as of the date hereof (the “Warrant Shares”), (iii) the Warrants and (iv) any securities issued or
issuable upon any future conversion, stock split, dividend or other distribution, recapitalization
or similar event with respect to the foregoing.



(k) “Registration Statement” means any registration statement of the Corporation relating to
the registration for resale of Registrable Securities (in an amount permissible under the Rule 415
Interpretive Position) that is filed pursuant to the provisions of this Agreement.



(l) “Rule 144” means Rule 144 promulgated under the Securities Act or any successor rule
thereto.



(m) “Securities Act” means the Securities Act of 1933 or any successor Federal statute, and
the rules and regulations of the Commission thereunder, all as the same shall be in effect from
time to time.



(n) “Securities Purchase Agreement” shall have the meaning set forth in the Recitals.



(o) “Warrants” means the Class B Warrants (trading under symbol COINZ) issued pursuant to the
Securities Purchase Agreement.



Section 2. Registration.



(a) Mandatory Registration. Not later than ten (10) calendar days following the date
of the Corporation obtaining Stockholder Approval, the Corporation shall prepare and file with the
Commission a Registration Statement or Registration Statements (as necessary) on Form S-1 (or, if
such form is unavailable for such a registration, on such other form as is available for such a
registration), covering the resale of all Registrable Securities, which Registration Statement(s)
shall state that, in accordance with Rule 416 promulgated under the 1933 Act, such Registration
Statement also covers such indeterminate number of additional shares of Common Stock as may become
issuable upon future conversions, stock splits, stock dividends or similar transactions.



Notwithstanding anything to the contrary herein, the Corporation and the Investor intend that
the number of shares to be registered shall be pursuant to Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended or interpreted from time to time, or
any similar rule or regulation hereafter adopted by the Commission having substantially the same
purpose and effect as such Rule (collectively “Rule 415”) and any interpretative positions of Rule
415 by the Commission. If the number of shares registered in the Registration Statement is less
than the Registrable Securities, the balance will be registered in a second registration statement
and any necessary subsequent registration statements as soon as permitted by securities laws. And,
in the event that any Registrable Securities are excluded from the Registration Statement due to
the interpretation of Rule 415, the Registrable Securities included in each registration statement
shall be allocated at the discretion of the Investor. 



(b) The Corporation shall have the Registration Statement filed with the Commission before the
expiration of ten (10) calendar days following Stockholder Approval (the “Filing Date”). If the
Registration Statement covering the Registrable Securities required to be filed by the Corporation
pursuant to Section 2(a) hereof is not filed on or before the Filing Date, then the Corporation
shall pay the Investor the sum of two percent (2%) of the face amount of each of the Convertible
Notes and two percent (2%) of the Class B Warrant Market Value of the Warrants as liquidated
damages, and not as a penalty, for each thirty (30) calendar day period, pro rata, following the
Filing Date until the Registration Statement is filed. The Corporation shall pay such liquidated
damages in cash.



Notwithstanding the foregoing, the amounts payable by the Corporation pursuant to this Section
shall not be payable to the extent any delay in the filing of the Registration Statement occurs
because of an act of, or a failure to act or to act timely by the Investor. The damages set forth
in this Section shall continue until the obligation is fulfilled and shall be paid within three (3)
business days after each thirty (30) day period, or portion thereof, until the Registration
Statement is filed. Failure of the Corporation to make payment within said three (3) business days
shall be considered a default.



The Corporation acknowledges that its failure to have the Registration Statement filed on or
prior to the Filing Date will cause the Investor to suffer damages in an amount that will be
difficult to ascertain. Accordingly, the parties agree that it is appropriate to include in this
Agreement a provision for liquidated damages. The parties acknowledge and agree that the liquidated
damages provision set forth in this section represents the parties’ good faith effort to quantify
such damages and, as such, agree that the form and amount of such liquidated damages are reasonable
and will not constitute a penalty. The payment of liquidated damages shall not relieve the
Corporation from its obligations to register the Common Stock and deliver the Common Stock pursuant
to the terms of this Agreement and the Subscription Agreement.



Notwithstanding the foregoing provisions of Section 2(b) providing for liquidated damages
under certain circumstances, as the sole exception to the requirement to pay such damages, in the
event the Commission disallows registration of the Registrable Securities pursuant to Rule 415
under the Securities Act, no such damages shall be payable so long as the Corporation then uses its
best efforts to register the maximum number of Registrable Securities in such registration
statements as the Commission permits and uses its best efforts thereafter to register in
appropriate registration statements any Registrable Securities not included in such registration
statements.



The Corporation shall have a Registration Statement be declared effective by the Commission on
or prior to ninety (90) days after the Filing Date. Following notification that the Commission has
no further comments on the Registration Statement, the Corporation shall have five (5) days to have
the Registration Statement declared effective. If the Registration Statement covering the
Registrable Securities required to be filed by the Corporation pursuant to Section 2(a) hereof is
not declared effective within ninety (90) days following the Filing Date, then the Corporation
shall pay the Investor the sum of two percent (2%) of the face amount of Convertible Note and
two percent (2%) of the Class B Warrant Market Value of the Warrants, as liquidated damages
and not as a penalty for each thirty (30) calendar day period, pro rata, following the ninety (90)
calendar day period after the Filing Date, until the Registration Statement is declared effective,
and two percent (2%) for each successive thirty (30) calendar day period thereafter. The
Corporation shall pay such liquidated damages in cash.



If the Registration Statement covering the Registrable Securities required to be filed by the
Corporation pursuant to Section 2(a) hereof is declared effective, but after the effective date the
Investor’s right to sell is suspended due to the Registration Statement being no longer effective,
then the Corporation shall pay the Investor the sum of two percent (2%) of the face amount of the
Convertible Note and two percent (2%) of the Class B Warrant Market Value of the Warrants for each
thirty (30) calendar day period, pro rata, following the suspension until such suspension ceases.



Notwithstanding the foregoing, the amounts payable by the Corporation pursuant to this Section
shall not be payable to the extent any delay in the effectiveness of the Registration Statement
occurs because of an act of or a failure to act or to act timely by the Investor. The damages set
forth in this Section shall continue until the obligation is fulfilled and shall be paid within
three (3) business days after each thirty (30) day period, or portion thereof, until the
Registration Statement is declared effective or such suspension is released. Failure of the
Corporation to make payment within said three (3) business days shall be considered a default.



The Corporation acknowledges that its failure to have the Registration Statement declared
effective within one hundred and twenty (120) days following the Closing Date or to permit the
suspension of the effectiveness of the Registration Statement will cause the Investor to suffer
damages in an amount that will be difficult to ascertain. Accordingly, the parties agree that it is
appropriate to include in this Agreement a provision for liquidated damages. The parties
acknowledge and agree that the liquidated damages provision set forth in this section represents
the parties’ good faith effort to quantify such damages and, as such, agree that the form and
amount of such liquidated damages are reasonable and will not constitute a penalty. The payment of
liquidated damages shall not relieve the Corporation from its obligations to register the Common
Stock and deliver the Common Stock pursuant to the terms of this Agreement and the Securities
Purchase Agreement.



(c) The Corporation agrees not to include any other securities in this Registration Statement
except securities holding currently effective resale or piggyback registration rights as disclosed
in the Securities Purchase Agreement between the Corporation and the Investor or as disclosed in
filings that the Corporation has made with the Commission as of the date hereof without Investor’s
prior written consent. Furthermore, the Corporation agrees that it will not file any other
Registration Statement for other securities (other than those for the equity credit line financing,
strategic partners or in connection with a merger, acquisition or other transaction that is not a
New Transaction, as such term is defined in the Convertible Note), until ninety (90) calendar days
after the Registration Statement for the Registrable Securities is declared effective.



(d) Piggyback Registration. Without limiting the obligations set forth in Section
2(a) through and including 2(d) of this Agreement, until the sooner of the date whereby an
exemption from registration is available under Rule 144 (without restrictions) of the rules and
regulations of the Securities and Exchange Commission, as amended, promulgated pursuant to the
Securities Act or the date that all of the Conversion Shares have been sold if the Corporation at
any time proposes for any reason to register Primary Shares, Registrable Securities or Other Shares
under the Securities Act (other than on Form S-4 or Form S-8 promulgated under the Securities Act
or any successor forms thereto), it shall give written notice to the Investor of its intention so
to register such Primary Shares, Registrable Securities or Other Shares at least 30 days before the
initial filing of such registration statement and, upon the written request, delivered to the
Corporation within 20 days after delivery of any such notice by the Corporation, of the Investor to
include in such registration Registrable Securities (which request shall specify the number of
Registrable Securities proposed to be included in such registration and shall state that the
Investor desires to sell such Registrable Securities in the public securities markets), the
Corporation shall cause all such Registrable Securities to be included in such registration on the
same terms and conditions as the securities otherwise being sold in such registration;
provided, however, that if the managing underwriter advises the Corporation that
the inclusion of all Registrable Securities requested to be included in such registration would
interfere with the successful marketing (including pricing) of the Primary Shares, Registrable
Securities or Other Shares proposed to be registered by the Corporation, then the number of Primary
Shares, Registrable Securities and Other Shares proposed to be included in such registration shall
be included in the following order:




(i) if the Corporation proposes to register Primary Shares, or Primary Shares and Other
Shares:




First, the Primary Shares; and




Second, the Registrable Securities and Other Shares requested
to be included in such registration (or, if necessary, such Registrable
Securities and Other Shares pro rata among the holders
thereof based upon the number of Registrable Securities and Other Shares
requested to be registered by each such holder); or




(ii) if the Corporation proposes to register Other Shares pursuant to a request for
registration by the holders of such Other Shares (other than pursuant to Section 2 hereof):




First, the Other Shares held by the parties demanding such
registration; and




Second, the Registrable Securities and Other Shares requested
to be registered by the holders hereof (or, if necessary, pro
rata among the holders thereof based on the number of Registrable
Securities and Other Shares requested to be registered by such holders).



Section 3. Preparation and Filing.



If and whenever the Corporation is under an obligation pursuant to the provisions of this
Agreement to effect the registration of any Registrable Securities, the Corporation shall as
expeditiously as practicable:



(a) prepare and file with the Commission a registration statement with respect to such
Registrable Securities and use its best efforts to cause such registration statement to become
effective and, upon the request of the holders of a majority of the Registrable Securities being
registered thereunder, keep such registration statement effective for a period of up to twelve
months or until the distribution contemplated in the registration statement has been completed;
provided, however, that (i) such twelve month period shall be extended for a period
of time equal to the period the holders of Registrable Securities refrain from selling any
securities included in such registration at the request of an underwriter of Common Stock (or other
securities) of the Corporation; and (ii) in the case of any registration of Registrable Securities
on Form S-3 which are intended to be offered on a continuous or delayed basis, such twelve month
period shall be extended, if necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule under the Securities
Act, permits an offering on a continuous or delayed basis; and provided
further that applicable rules under the Securities Act governing the obligation to file a
post-effective amendment permit (in lieu of filing a post-effective amendment which (I) includes
any prospectus required by Section 10(a)(3) of the Securities Act or (II) reflects facts or events
representing a material or fundamental change in the information set forth in the registration
statement) the incorporation by reference, in the registration statement, of information required
to be included in (I) and (II) above to be contained in periodic reports filed pursuant to Section
13 or 15(d) of the Exchange Act.



(b) prepare and file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement.



(c) use its best efforts to register or qualify such Registrable Securities under such other
securities or blue sky laws of such jurisdictions as the Investor reasonably requests and do any
and all other acts and things which may be reasonably necessary or advisable to enable the Investor
to consummate the disposition in such jurisdictions of the Registrable Securities owned by the
Investor; provided, however, that the Corporation will not be required to qualify
generally to do business, subject itself to general taxation or consent to general service of
process in any jurisdiction where it would not otherwise be required to do so but for this
paragraph (e) or to provide any material undertaking or make any changes in its By-laws or
Certificate of Incorporation which the Board of Directors determines to be contrary to the best
interests of the Corporation or to modify any of its contractual relationships then existing;



(d) furnish, upon request, to the Investor holding such Registrable Securities such number of
copies of a summary prospectus, if any, or other prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other documents as the Investor
may reasonably request in order to facilitate the public sale or other disposition of such
Registrable Securities;



(e) without limiting subsection (c) above, use its best efforts to cause such Registrable
Securities to be registered with or approved by such other governmental agencies or authorities as
may be necessary by virtue of the business and operations of the Corporation to enable the Investor
holding such Registrable Securities to consummate the disposition of such Registrable Securities;



(f) notify the Investor holding such Registrable Securities on a timely basis at any time when
a prospectus relating to such Registrable Securities is required to be delivered under the
Securities Act within the appropriate period mentioned in subparagraph (a) of this Section 3, of
the happening of any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing and, at the request of the Investor, prepare
and furnish to the Investor a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the offerees of such
shares, such prospectus shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;



(g) subject to the execution of confidentiality agreements in form and substance satisfactory
to the Corporation, make available upon reasonable notice and during normal business hours, for
inspection by the Investor holding such Registrable Securities, any underwriter participating in
any disposition pursuant to such registration statement and any attorney, accountant or other agent
retained by the Investor or underwriter (collectively, the “Inspectors”), all pertinent financial
and other records, pertinent corporate documents and properties of the Corporation (collectively,
the “Records”), as shall be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Corporation’s officers, directors and employees to supply all
information (together with the Records, the “Information”) reasonably requested by any such
Inspector in connection with such registration statement. Any of the Information which the
Corporation determines in good faith to be confidential and of which determination the Inspectors
are so notified, shall not be disclosed by the Inspectors unless (i) the disclosure of such
Information is necessary to avoid or correct a misstatement or an omission in the registration
statement, (ii) the release of such Information is ordered pursuant to a subpoena or other order
from a court of competent jurisdiction or (iii) such Information has been made generally available
to the public; the Investor agree that they will, upon learning that disclosure of such information
is sought in a court of competent jurisdiction, give notice to the Corporation and allow the
Corporation, at the Corporation’s expense, to undertake appropriate action to prevent disclosure of
the Information deemed confidential;



(h) Intentionally omitted.



(i) use its best efforts to obtain from its counsel an opinion or opinions in customary form
addressed to the Corporation and any selling shareholders;



(j) in the event of any underwritten public offering, enter into and perform its obligations
under an underwriting agreement, in usual and customary form, with the managing underwriter of such
offering. Each holder of Registrable Securities participating in such underwriting shall also
enter into and perform its obligations under such an agreement;



(k) provide a transfer agent and registrar (which may be the same entity and which may be the
Corporation) for such Registrable Securities and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration;



(l) issue to any underwriter to which the Investor holding such Registrable Securities may
sell shares in such offering certificates evidencing such Registrable Securities;



(m) list such Registrable Securities on any national securities exchange on which any shares
of the Common Stock are listed or, if the Common Stock is not listed on a national securities
exchange, use its best efforts to qualify such Registrable Securities for inclusion on the
automated quotation system of the National Association of Securities Dealers, Inc. (the “NASDAQ”),
or such other national securities exchange as the holders of a majority of such Registrable
Securities shall reasonably request;



(n) otherwise use its best efforts to comply with all applicable rules and regulations of the
Commission and make available to its security holders, as soon as reasonably practicable, earnings
statements (which need not be audited) covering a period of 12 months beginning within three months
after the effective date of the registration statement, which earnings statements shall satisfy the
provisions of Section 11 (a) of the Securities Act; and



(o) subject to all the other provisions of this Agreement, use its best efforts to take all
other steps necessary to effect the registration of such Registrable Securities contemplated
hereby.



(p) Each holder of the Registrable Securities, upon receipt of any notice from the Corporation
of any event of the kind described in Section 3(f) hereof, shall forthwith discontinue disposition
of the Registrable Securities pursuant to the registration statement covering such Registrable
Securities until such holders’ receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3(f) hereof, and, if so directed by the Corporation, such holder shall
deliver to the Corporation all copies, other than permanent file copies then in such holder’s
possession, of the prospectus covering such Registrable Securities at the time of receipt of such
notice.



Section 4. Expenses.



All expenses (other than underwriting discounts and commissions relating to the Registrable
Securities, as provided in the last sentence of this Section 4) incurred by the Corporation in
complying with Section 3, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the Financial Industry Regulatory Authority, Inc.
“FINRA”), fees and expenses (including reasonable legal fees of Investor’s counsel) of complying
with securities and blue sky laws, printing expenses, fees and expenses of the Corporation’s
counsel and accountants, Corporation’s filings, shall be paid by the Corporation; provided,
however, (i) all underwriting discounts and selling commissions applicable to the
Registrable Securities and Other Shares shall be borne by the holders selling such Registrable
Securities and Other Shares, in proportion to the number of Registrable Securities and Other Shares
sold by each such holder and (ii) provided however the Corporation shall not be liable or
responsible to pay the fees of Investor’s attorney for the review of any registration statement.



Section 5. Indemnification.



(a) In connection with any registration of any Registrable Securities under the Securities Act
pursuant to this Agreement, the Corporation shall indemnify and hold harmless the holders of
Registrable Securities, each underwriter, broker or any other person acting on behalf of the
holders of Registrable Securities and each other person, if any, who controls any of the foregoing
persons within the meaning of the Securities Act against any losses, claims, damages or
liabilities, joint or several (or actions in respect thereof), to which any of the foregoing
persons may become subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue
statement or allegedly untrue statement of a material fact contained in the registration statement
under which such Registrable Securities were registered under the Securities Act, the Exchange Act
or any preliminary prospectus or final prospectus contained therein or otherwise filed with the
Commission, any amendment or supplement thereto or any document incident to registration or
qualification of any Registrable Securities, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading or, with respect to any prospectus, necessary to make
the statements therein in light of the circumstances under which they were made not misleading, or
any violation by the Corporation of the Securities Act or state securities or blue sky laws
applicable to the Corporation and relating to action or inaction required of the Corporation in
connection with such registration or qualification under such state securities or blue sky laws;
and shall reimburse the holders of Registrable Securities, such underwriter, such broker or such
other person acting on behalf of the holders of Registrable Securities and each such controlling
person for any legal or other expenses reasonably incurred by any of them in connection with
investigating or defending any such loss, claim, damage, liability or action; provided,
however, that the Corporation shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action (including any legal or other expenses incurred)
arises out of or is based upon an untrue statement or allegedly untrue statement or omission or
alleged omission made in said registration statement, preliminary prospectus, final prospectus,
amendment supplement or document incident to registration or qualification of any Registrable
Securities in reliance upon and in conformity with written information furnished to the Corporation
through an instrument duly executed by the holders of Registrable Securities or their counsel or
underwriter specifically for use in the preparation thereof; provided further,
however, that the foregoing indemnity agreement is subject to the condition that, insofar
as it relates to any untrue statement, omission or alleged omission made in any preliminary
prospectus but eliminated or remedied in the final prospectus (filed pursuant to Rule 424 of the
Securities Act), such indemnity agreement shall not inure to the benefit of any Investor,
underwriter, broker or other person acting on behalf of holders of the Restricted Shares from whom
the person asserting any loss, claim, damage, liability or expense purchased the Restricted Shares
which are the subject thereof, if a copy of such final prospectus had been made available to such
person and the Investor, underwriter, broker or other person acting on behalf of holders of the
Registrable Securities and such final prospectus was not delivered to such person with or prior to
the written confirmation of the sale of such Registrable Securities to such person.



(b) In connection with any registration of Registrable Securities under the Securities Act
pursuant to this Agreement, each holder of Registrable Securities shall severally and not jointly
indemnify and hold harmless (in the same manner and to the same extent as set forth in the
preceding paragraph of this Section 5) the Corporation, each director of the Corporation, each
officer of the Corporation who shall sign such registration statement, each underwriter, broker or
other person acting on behalf of the holders of Registrable Securities and each person who controls
any of the foregoing persons within the meaning of the Securities Act with respect to any statement
or omission from such registration statement, any preliminary prospectus or final prospectus
contained therein or otherwise filed with the Commission, any amendment or supplement thereto or
any document incident to registration or qualification of any Registrable Securities, if such
statement or omission was made in reliance upon and in conformity with written information
furnished to the Corporation or such underwriter specifically for use in connection with the
preparation of such registration statement, preliminary prospectus, final prospectus, amendment,
supplement or document; provided, however, that the maximum amount of liability in
respect of such indemnification shall be limited, in the case of each Seller of Registrable
Securities, to an amount equal to the net proceeds actually received by such Seller from the sale
of Registrable Securities effected pursuant to such registration.



(c) Promptly after receipt by an indemnified party of notice of the commencement of any action
involving a claim referred to in the preceding paragraphs of this Section 5, such indemnified party
will, if a claim in respect thereof is made against an indemnifying party, give written notice to
the latter of the commencement of such action. The failure of any indemnified party to notify an
indemnifying party of any such action shall not (unless such failure shall have a material adverse
effect on the indemnifying party) relieve the indemnified party on account of this Section 5. In
case any such action is brought against an indemnified party, the indemnifying party will be
entitled to participate in and to assume the defense thereof, jointly with any other indemnifying
party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party shall not be responsible for
any legal or other expenses subsequently incurred by the indemnified party in connection with the
defense thereof; provided, however, that if any indemnified party shall have
reasonably concluded that there may be one or more legal or equitable defenses available to such
indemnified party which are additional to or conflict with those available to the indemnifying
party, or that such claim or litigation involves or could have an effect upon matters beyond the
scope of the indemnity agreement provided in this Section 5, the indemnifying party shall not have
the right to assume the defense of such action on behalf of such indemnified party (but shall have
the right to participate therein with counsel of its choice) and such indemnifying party shall
reimburse such indemnified party and any person controlling such indemnified party for that portion
of the fees and expenses of any counsel retained by the indemnified party which is reasonably
related to the matters covered by the indemnity agreement provided in this Section 5. If the
indemnifying party is not entitled to, or elects not to, assume the defense of a claim, it will not
be obligated to pay the fees and expenses of more than one counsel with respect to such claim.



(d) If the indemnification provided for in this Section 5 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage,
liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified
party as a result of such loss, claim, damage, liability or action in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions which resulted in
such loss, claim, damage, liability or action as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or omission.
In no event shall contribution obligations of this Section 5(b) exceed the net profits from the
offering received by such holder after deducting underwriting fees, discounts and commissions. No
person guilty of fraudulent misrepresentation shall be entitled to contribution from any person.



Section 6. Underwriting Agreement.



Notwithstanding the provisions of Sections 2, 3, 4 and 5, to the extent that the Investor
shall enter into an underwriting or similar agreement, which agreement contains provisions covering
one or more issues addressed in such Sections, the provisions contained in such agreement
addressing such issue or issues shall control; provided, however, that any such
agreement to which the Corporation is not a party shall not be binding upon the Corporation. No
holder may participate in any underwritten registration hereunder unless such holder (a) agrees to
such holder’s securities on the basis provided in any underwriting arrangements and (b) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting agreements and other
documents reasonably and customarily required under the terms of such underwriting arrangements.



Section 7. Information by Investor.



The Investor shall furnish to the Corporation such written information regarding the Investor
and the distribution proposed by the Investor as the Corporation may reasonably request in writing
and shall be reasonably required in connection with any registration, qualification or compliance
referred to in this Agreement.



Section 8. Exchange Act Compliance.



With a view to making available to the Investor the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the Commission may at any time permit an Investor to sell
securities of the Corporation to the public without registration or pursuant to a registration on
Form S-3, the Corporation agrees, on and after becoming subject to reporting obligations under the
federal securities laws, to:



(a) make and keep public information available, as those terms are understood and defined in
Rule 144, at all times after ninety (90) days after the effective date of the first registration
statement filed by the Corporation for the offering of its securities to the general public;



(b) file with the Commission in a timely manner all reports and other documents required of
the Corporation under the Securities Act and the Exchange Act; and



(c) furnish to any Investor, so long as the Investor owns any Registrable Securities,
forthwith upon request (i) a written statement by the Corporation that it has complied with the
reporting requirements of Rule 144, and (ii) such other information as may be reasonably requested
in availing any Investor of any rule or regulation of the Commission which permits the selling of
any such securities without registration or pursuant to such form. Notwithstanding anything to the
contrary in this Section, so long as the Corporation makes all required filings under the Exchange
Act, it shall be deemed to comply with this Section without any further action or notice to the
Investor.



Section 9. No Conflict of Rights.



The Corporation shall not, after the date hereof, grant any registration rights which conflict
with or impair the registration rights granted hereby.



Section 10. Termination.



This Agreement shall terminate and be of no further force or effect when there shall no longer
be any Registrable Securities outstanding; provided that Sections 4 and 5 shall survive any
termination of this Agreement.



Section 11. Successors and Assigns.



This Agreement shall bind and inure to the benefit of the Corporation and the Investor and,
subject to Section 13, the respective successors and assigns of the Corporation and the Investor.



Section 12. Assignment.



The Investor may assign its rights hereunder to any purchaser or transferee of Registrable
Securities; provided, however, that such purchaser or transferee shall, as a condition to the
effectiveness of such assignment, be required to execute and deliver to the Corporation a
counterpart to this Agreement agreeing to be treated as an Investor whereupon such purchaser or
transferee shall have the benefits of, and shall be subject to the restrictions contained in, this
Agreement as if such purchaser or transferee was originally included in the definition of an
Investor herein and had originally been a party hereto.



Section 13. Third Party Beneficiaries.



This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person



Section 14. Entire Agreement.



This Agreement and the other writings referred to herein or therein or delivered pursuant
hereto or thereto, contain the entire agreement among the Investor and the Corporation with respect
to the subject matter hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.



Section 15. Notices.



All notices, requests, consents and other communications hereunder to any party hereunder
shall be in writing and shall be deemed effectively given upon personal delivery; upon confirmed
transmission by telecopy or telex if sent during normal business hours of the recipient (or if not,
on the next Trading Day of the recipient); three days after deposit with the United States Post
Office, by registered or certified mail, postage prepaid; or otherwise upon delivery by hand or by
messenger or one day after deposit with a nationally recognized courier service, addressed to such
party at the address set forth below or such other address as may hereafter be designated in
writing by such party to the other parties:




if to the Corporation, to:




Converted Organics, Inc.


Attn: Ed Gildea


7A Commercial Wharf West


Boston, Massachusetts 02110


Telephone: (617) 624-0111


Fax: (617) 624-0333




with a copy to: (which shall not constitute notice):




Cozen O’Connor


Attn: Ralph V. De Martino, Esq.


The Army and Navy Building


1627 I Street, NW


Suite 1100


Washington, DC 20006


Telephone: 202-912-4800


Fax: 202-912-4830




if to the Investor, to:




Professional Offshore Opportunity Fund, Ltd.


? Professional Traders Management, LLC


Attn: Howard Berger


1400 Old Country Road, Suite 206


Westbury, New York 11590


Telephone: 516-228-0070


Fax: 516-228-8083




with a copy to (which shall not constitute notice):




Anslow & Jaclin LLP


Attn: Joseph M. Lucosky, Esq.




Eric M. Stein, Esq.




195 Route 9 South


Manalapan, NJ 07726


Telephone: (732) 409-1212


Facsimile: (732) 577-1188



All such notices, requests, consents and other communications shall be deemed to have
been delivered (a) in the case of personal delivery or delivery by telecopy, on the date of such
delivery, (b) in the case of dispatch by nationally-recognized overnight courier, on the next
business day following such dispatch and (c) in the case of certified or registered mail (return
receipt requested), on the third business day after the posting thereof.



Section 16. Modifications; Amendments; Waivers.



The terms and provisions of this Agreement may not be modified or amended, nor may any
provision be waived, except pursuant to a writing signed by the Corporation and the holders of at
least a majority of the Registrable Securities then outstanding.



Section 17. Counterparts.



This Agreement may be executed in any number of counterparts, and each such counterpart hereof
shall be deemed to be an original instrument, but all such counterparts together shall constitute
but one agreement.



Section 18. Facsimile Signature.



In the event that any signature is delivered by facsimile transmission, PDF, electronic
signature or other similar electronic means, 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 signature page were an original thereof.



Section 19. Headings.



The headings of the various sections of this Agreement have been inserted for convenience of
reference only and shall not be deemed to be a part of this Agreement.



Section 20. Governing Law.



This Agreement shall be governed by and construed in accordance with the internal laws of the
State of New York, without regard to conflicts of law principles.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





	1	 	All capitalized terms not otherwise defined
herein shall have the meaning ascribed to them in the Securities Purchase
Agreement.




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[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]




IN WITNESS WHEREOF, the undersigned have executed and delivered this Agreement as of the date first

set forth above.




CONVERTED ORGANICS, INC.



By:      

Name: Ed Gildea

Title: President and Chief Executive Officer




PROFESSIONAL OFFSHORE OPPORTUNITY



FUND, LTD.



By:      

Name: Howard Berger

Title: Manager





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