Document:

EX-10.1

Converted Organics Inc.

137A Lewis Wharf

Boston, MA 02110

April 11, 2012

Iroquois Master Fund Ltd.

Iroquois Capital Opportunity Fund LP

c/o Iroquois Capital Management, LLC

641 Lexington Avenue, 26th Floor

New York, New York 10022

	 	 	 	Re: Securities Purchase Agreement, dated as of December 17, 2010, by and among
Converted Organics Inc. (the “Company”), Iroquois Master Fund Ltd. (“IMF”) and Iroquois
Capital Opportunity Fund LP (“ICOF” and together with IMF, the “Holders”), as has been
and may be amended from time to time (the “2010 SPA”)

Securities Purchase Agreement, dated as of April 1, 2011, by and among the Company
and the Holders, as has been and may be amended from time to time (the “2011 SPA”)

Securities Purchase Agreement, dated as of January 3, 2012, by and among the Company
and the Holders, as has been and may be amended from time to time (the “2012 SPA”)

Dear Mr. Silverman:

For purposes of this letter agreement, (x) “Warrants” means, collectively, (i) the Warrants
(as defined in the 2010 SPA), as have been and may be amended from time to time, (ii) the Warrants
(as defined in the 2011 SPA), as have been and may be amended from time to time and (iii) the
Warrants (as defined in the 2012 SPA) (including, without limitation, all Warrants issued after the
date hereof pursuant to the 2012 SPA), as have been and may be amended from time to time; and (y)
“Transaction Documents” means, collectively, (i) the Transaction Documents (as defined in the 2010
SPA), (ii) the Transaction Documents (as defined in the 2011 SPA) and (iii) the Transaction
Documents (as defined in the 2012 SPA).

A. The Company and each Holder hereby agree as follows with respect to each of the
Warrants held by such Holder:

(i) Section 2(b)(vi) of each of such Holder’s Warrants (to the extent contained in such
Holder’s Warrants) is hereby deleted in its entirety.

(ii) Section 2(c) of each of such Holder’s Warrants is hereby deleted in its entirety and
replaced with the following:

“(c) Simultaneously with any adjustment to the Exercise Price pursuant to
paragraphs (a) or (b) of this Section 2, the number of Warrant Shares that may be
purchased upon exercise of this Warrant shall be increased or decreased
proportionately, so that after such adjustment the aggregate Exercise Price payable
hereunder for the adjusted number of Warrant Shares shall be the same as the
aggregate Exercise Price in effect immediately prior to such adjustment (without
regard to any limitations on exercise contained herein).”

(iii) Section 2(d) of each of such Holder’s Series A Warrants (as defined in the 2010 SPA
and the 2011 SPA) is hereby deleted in its entirety and replaced with the following:

“[INTENTIONALLY OMITTED.]”

(iv) Section 4(c) of each of such Holder’s Warrants is hereby deleted in its entirety and
replaced with the following:

“(c) Fundamental Transaction Put Right. Notwithstanding the foregoing
and the provisions of Section 4(b) above, at the request of the Holder delivered at
any time commencing on the earliest to occur of (x) the public disclosure of any
Fundamental Transaction, (y) the consummation of any Fundamental Transaction and (z)
the Holder first becoming aware of any Fundamental Transaction through the date that
is ninety (90) days after the public disclosure of the consummation of such
Fundamental Transaction by the Company pursuant to a Current Report on Form 8-K
filed with the SEC, the Company or the Successor Entity (as the case may be) shall
purchase this Warrant from the Holder on the date of such request by paying to the
Holder cash in an amount equal to the greater of (i) the Black Scholes Value and
(ii) the product of (1) $0.10 multiplied by (2) the aggregate number of Warrant
Shares for which this Warrant is exercisable on the date of such request
(disregarding, for purposes of this clause (2) (including, without limitation, for
determining the number of Warrant Shares for which this Warrant is exercisable on
the date of such request), (I) all limitations on exercise contained in this Warrant
and (II) all decreases to the number of Warrant Shares that occurred from and after
April 11, 2012, pursuant to Section 2(c) hereof that arise solely from an adjustment
to the Exercise Price under clause (iii) of Section 2(a) hereof).”

(v) The defined term “Black Scholes Value” in each of such Holder’s Warrants is hereby
deleted in its entirety and replaced with the following:

““Black Scholes Value” means the value of the unexercised portion of this
Warrant remaining on the date of the Holder’s request pursuant to Section 4(c),
which value is calculated using the Black Scholes Option Pricing Model obtained from
the “OV” function on Bloomberg utilizing (i) an underlying price per share equal to
the greatest of (1) the highest Closing Sale Price of the Common Stock during the
period beginning on the Trading Day immediately preceding the earliest to occur of
(x) the public disclosure of the applicable Fundamental Transaction, (y) the
consummation of the applicable Fundamental Transaction and (z) the date on which the
Holder first became aware of the applicable Fundamental Transaction and ending on
the Trading Day of the Holder’s request pursuant to Section 4(c), (2) the sum of the
price per share being offered in cash in the applicable Fundamental Transaction (if
any) plus the value of the non-cash consideration being offered in the applicable
Fundamental Transaction (if any) and (3) without limiting clauses (1) and (2) above,
if the applicable Fundamental Transaction results from a sale of all or
substantially all of the assets of the Company or any of its Subsidiaries, a price
per share equal to the quotient of (A) the sum of (X) the total consideration
(including, without limitation, cash and non-cash consideration, the assumption of
indebtedness and other amounts, earn-outs and contingent consideration) offered in
the applicable Fundament Transaction plus (Y) the aggregate amount of cash then held
by the Company and its Subsidiaries divided by (B) the total number of shares of
Common Stock outstanding on the earlier to occur of the Trading Day of the Holder’s
request pursuant to Section 4(c) and the date of consummation of the applicable
Fundamental Transaction, (ii) a strike price equal to the Exercise Price in effect
on the date of the Holder’s request pursuant to Section 4(c), (iii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the
greater of (1) the remaining term of this Warrant as of the date of the Holder’s
request pursuant to Section 4(c) and (2) the remaining term of this Warrant as of
the date of consummation of the applicable Fundamental Transaction or as of the date
of the Holder’s request pursuant to Section 4(c) if such request is prior to the
date of the consummation of the applicable Fundamental Transaction and (iv) an
expected volatility equal to the greater of 100% and the 100 day volatility obtained
from the HVT function on Bloomberg (determined utilizing a 365 day annualization
factor) as of the Trading Day immediately following the earliest to occur of (x) the
public disclosure of the applicable Fundamental Transaction, (y) the consummation of
the applicable Fundamental Transaction and (z) the date on which the Holder first
became aware of the applicable Fundamental Transaction.”

B. The Company represents and warrants to the Holders that the information contained in Exhibit
A attached hereto is true and correct in all respects. The parties hereto acknowledge and agree
that, and the Company represents and warrants that, no adjustment to the exercise price under, or
number of shares of Common Stock (as defined in the Notes (as defined in the 2012 SPA)) issuable
upon exercise of, any of the warrants listed on Exhibit A attached hereto has occurred
other than the adjustments expressly set forth on Exhibit A attached hereto.

C. Notwithstanding anything contained in Section 4(c) of the Warrants (as amended by this letter
agreement), (i) the amount payable by the Company solely under clause (ii) of Section 4(c) of all
Warrants by the Holders shall not exceed $25,000,000 in the aggregate and (ii) to the extent the
immediately preceding clause (i) of this Paragraph C applies, then such $25,000,000 shall be
payable to the Holders on pro rata basis in relation to the aggregate amount that each Holder would
have received under such clause (ii) of Section 4(c) if the immediately preceding clause (i) of
this Paragraph C did not apply (it being expressly understood and agreed that nothing contained in
this Paragraph C shall limit any amount payable by the Company under clause (i) of Section 4(c) of
any Warrant held by any Holder).

D. The Company and the Holder further agree that, notwithstanding anything contained in any of the
Transaction Documents to the contrary, each issuance of shares of Common Stock upon conversion of
the Notes or the April Notes (as defined in the Notes) (i) does not constitute an issuance of
Excluded Securities (as defined in each of the Warrants) and (ii) will trigger the anti-dilution
adjustments under Section 2(b) and Section 2(c) of each of the Warrants.

E. Immediately following execution of this letter agreement by the parties, (i) all warrants listed
on Exhibit A attached hereto that were issued to either of the Holders prior to December
2010 and (ii) all of the Series B Warrants (as defined in the 2010 SPA and 2011 SPA) and Series C
Warrants (as defined in the 2010 SPA and 2011 SPA) issued to the Holders pursuant to the 2010 SPA
and 2011 SPA, in each case, are hereby cancelled.

F. The Warrant issued by the Company to IMF on March 13, 2012, is hereby amended to add the
following to such Warrant as Section 17:

“17. MANDATORY EXERCISE. If at any time after April 11, 2012, the daily
trading volume of the Common Stock (as reported by Bloomberg) on the applicable
Eligible Market is greater than 2,000,000 shares (as adjusted for splits,
combinations and other similar transaction occurring after April 11, 2012) per
Trading Day for a period of five (5) consecutive Trading Days (such five (5) Trading
Day period is referred to herein as the “Mandatory Exercise Measuring Period”), then
the Company shall have the right to require the Holder to exercise this Warrant in
accordance with Section 1 hereof on the Mandatory Exercise Date (as defined below)
for a number of Warrant Shares equal to the quotient of (x) $25,000 divided by (y)
the Exercise Price in effect on the Mandatory Exercise Date (a “Mandatory
Exercise”). The Company may exercise its right to require exercise under this
Section 17 by delivering (provided that the condition set forth above is then
satisfied), on the first (1st) Trading Day immediately following the end
of the Mandatory Exercise Measuring Period, a written notice thereof by facsimile to
the Holder (the “Mandatory Exercise Notice” and the date the Holder receives such
notice by facsimile is referred to as the “Mandatory Exercise Notice Date”). The
Mandatory Exercise Notice shall be irrevocable and shall state the Trading Day
selected for the Mandatory Exercise in accordance with this Section 17, which
Trading Day shall be at least two (2) Trading Days but not more than sixty (60)
Trading Days following the Mandatory Exercise Notice Date (the “Mandatory Exercise
Date”). Any portion of this Warrant exercised for cash by the Holder after the
Mandatory Exercise Notice Date shall reduce the number of Warrant Shares for which
this Warrant is required to be exercised on the Mandatory Exercise Date. If the
Company has elected a Mandatory Exercise, the mechanics of exercise for a cash
exercise set forth in Section 1 shall apply, to the extent applicable, as if the
Company had received from the Holder on the Mandatory Exercise Date an Exercise
Notice with respect to all of the Warrant Shares subject to the Mandatory Exercise
(but taking account of all reductions pursuant to the immediately preceding
sentence). Notwithstanding anything contained in this Section 17 to the contrary, if
the daily trading volume of the Common Stock (as reported by Bloomberg) on the
applicable Eligible Market on any Trading Day during the period commencing on the
Mandatory Exercise Notice Date and ending on the Trading Day immediately preceding
the Mandatory Exercise Date is less than 2,000,000 shares (as adjusted for splits,
combinations and other similar transaction occurring after April 11, 2012) per day,
then, the Mandatory Exercise Notice delivered to the Holder shall be null and void
ab initio and the Mandatory Exercise contemplated by such Mandatory Exercise Notice
shall not occur. If the Company elects to cause a Mandatory Exercise of this Warrant
pursuant to this Section 17, then it must simultaneously take the same action with
respect to all of the other Warrants then outstanding which contain a provision
similar to this Section 17.”

G. 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 each of the
Holders 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 Warrants to “this
Warrant,” “hereto,” “hereof,” “hereunder” or words of like import referring to the Warrants shall
mean the Warrants as amended by this letter agreement and (B) 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 any of the Holders
under any of the other 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) all the 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” for
purposes of all Transaction Documents. It is expressly understood and agreed that the transactions
contemplated by this letter agreement are being undertaken pursuant to Section 3(a)(9) of the 1933
Act (as defined in the 2012 SPA).

H. 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.

I. 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.

J. The Company shall, on or before 8:30 a.m., New York time, on April 12, 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 (as defined in the 2012 SPA). 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 (as defined in the 2012 SPA)
delivered to the Holders 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.

[signature page follows]Sincerely,

/s/ Edward 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:

	 	

	 

	 	 

Iroquois Capital Opportunity Fund LP

	 	 	 
	By:

	 	/s/ Authorized signatory
	 

	 	 
	Name:

	 	

	
 
	 	 
	Title:slfcx_41.htm

Exhibit 4.1

 

Extension of Expiry Time (this “Extension”), dated as of April 5, 2012 (“Effective Date”) by Stellar Pharmaceuticals Inc., organized under the laws of Ontario (the “Company”).

__________

Whereas, the Company issued to the undersigned holder (“Holder”) warrants pursuant to the following warrant certificates (collectively, the “Warrants”):

	
●  

	
Series 1 Warrant Certificate Number ___, representing the right to purchase an aggregate of _____ common shares of the Company, dated October 8, 2010;

	
●  

	
Series 2 Warrant Certificate Number ___, representing the right to purchase an aggregate of _____ common shares of the Company, dated October 8, 2010; and

	
●  

	
Series 3 Warrant Certificate Number ___, representing the right to purchase an aggregate of _____ common shares of the Company, dated October 8, 2010;

Whereas, the Company has determined to extend the Expiry Time (as defined in the Warrants) to 5:00 p.m. (Toronto time) on April 8, 2013; and

Whereas, the Company is executing this Extension to reflect the extension of the Expiry Time, and delivering this Extension to the Holder for notification purposes and his, her or its acknowledgement thereof.

Section 1.       Extension of Expiry Time.  The Expiry Time of 5:00 p.m. (Toronto time) on April 8, 2012 shall be extended one year to 5:00 p.m. (Toronto time) on April 8, 2013.

Section 2.       Effect on the Warrants.  Except as specifically set forth in this Extension, all terms, provisions and conditions of the Warrants shall remain in full force and effect.

Section 3.       Holder Signature.  This Extension shall be deemed effective without regard of whether the Holder executes the acknowledgment hereunder. This Agreement may be executed and delivered by electronic transmission (by facsimile or e-mail as a .pdf attachment), and a faxed or e-mailed signature shall be binding with the same force and effect as original signatures.

[Remainder of Page Intentionally Left Blank; Signature Page Follows]

  

  

  

In witness whereof, the Company has caused this Extension to be signed by its duly authorized officer as of the Effective Date.

 

	 	 	
Stellar Pharmaceuticals Inc.

	 
	 	 	 	 	 
	
 

	 	
By: 

	 	 
	 	 	 	Name:	 
	 	 	 	Title:	 
	 	 	 	 	 
	Acknowledged:	 	 	 	 
	 	 	 	 	 
	
Warrant Holder:

	 	 	    	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
Signature of Holder

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