Document:

exv4w3

Exhibit 4.3

AMENDMENT NO. 2 TO RIGHTS AGREEMENT

     THIS AMENDMENT NO. 2 TO RIGHTS AGREEMENT (this “Amendment”), dated as of March 26, 2009,
between Endocare, Inc., a Delaware corporation (the “Company”), and Computershare Trust Company,
N.A. as successor Rights Agent to U.S. Stock Transfer Corporation (the “Rights Agent”), amends that
certain Rights Agreement, dated as of March 31, 1999, between the Company and the Rights Agent, as
first amended on June 24, 2005 (as amended, the “Rights Agreement”). All capitalized terms used
herein but not otherwise defined shall have the meanings given to them in the Rights Agreement.

     WHEREAS, the Company and the Rights Agent have heretofore executed and entered into the Rights
Agreement;

     WHEREAS, the Company and the Rights Agent previously executed and delivered an Amendment No. 2
to Rights Agreement, dated as of February 1, 2008 (the “Prior Amendment No. 2”);

     WHEREAS, the Prior Amendment No. 2 subsequently was nullified in its entirety pursuant to a
Nullification of Amendment No. 2 to Rights Agreement, dated as of February 6, 2008, between the
Company and the Rights Agent;

     WHEREAS, the Company and the Rights Agent now desire to enter into this Amendment;

     WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company may from time to time
supplement or amend the Rights Agreement in accordance with the provisions thereof and the Company
may direct the Rights Agent to execute such supplement or amendment to the Rights Agreement; and

     WHEREAS, all acts necessary to make this Amendment a valid agreement according to its terms
have been done and performed, and the execution and delivery of this Amendment by the Company and
the Rights Agent have been in all respects authorized by the Company and the Rights Agent.

     NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein and for
other good and valuable consideration the receipt and sufficiency of which the parties expressly
acknowledge, the parties hereto agree as follows:

     1. Amendment to Section 1.

     (a) The definition of “Acquiring Person” in Section 1 of the Rights Agreement is
hereby amended and restated in its entirety to read as follows:

	 	 	 	““Acquiring Person” shall mean (i) any Person (as such term is hereinafter
defined) who or which, together with all Affiliates and Associates (as such
terms are hereinafter defined) of such Person, shall be the Beneficial

 

 

	 	 	 	Owner (as such term is hereinafter defined) of 20% or more of the shares of
Common Stock of the Company then outstanding or (ii) any Person who is an
Adverse Person (as such term is hereinafter defined), but shall not include
(1) the Company, any Subsidiary (as such term is hereinafter defined) of the
Company, any employee benefit plan of the Company or any Subsidiary of the
Company, or any entity holding shares of Common Stock for or pursuant to the
terms of any such plan, or (2) any Person who becomes the Beneficial Owner
of 20% or more of the then-outstanding shares of Company Common Stock as a
result of the acquisition of (A) shares of Company Common Stock directly
from the Company or one of its Subsidiaries in one or more transactions
approved in advance by the Board of Directors, or (B) outstanding shares of
Company Common Stock from third parties, in one or more transactions
approved in advance by the Board of Directors. Notwithstanding the
foregoing:

	 	(i)	 	no Person shall become an “Acquiring Person” as the
result of an acquisition of shares of Common Stock by the Company or
one or more Subsidiaries of the Company which, by reducing the number
of shares outstanding, increases the proportionate number of shares
beneficially owned by such Person to 20% or more of the shares of
Common Stock of the Company then outstanding; provided, however, that
if a Person shall become the Beneficial Owner of 20% or more of the
shares of Common Stock of the Company then outstanding by reason of
share purchases by the Company or any of its Subsidiaries and shall,
after such share purchases by the Company or its Subsidiaries, become
the Beneficial Owner of any additional shares of Common Stock of the
Company, then, subject to clause (ii) below, such Person shall be
deemed to be an “Acquiring Person” hereunder; and
	 
	 	(ii)	 	if the Board of Directors of the Company determines in
good faith that a Person who would otherwise be an “Acquiring Person”
as defined pursuant to the foregoing provisions of this paragraph (a),
has become such inadvertently (including, without limitation, because
(A) such Person was unaware that it Beneficially Owned a percentage of
Company Common Stock that would otherwise cause such Person to be an
“Acquiring Person” or (B) such Person was aware of the extent of its
Beneficial Ownership of Company Common Stock but had no actual
knowledge of the consequences of such Beneficial Ownership under the
Rights Agreement), and without any intention of changing or influencing
control of the Company, and such Person divests as promptly as
practicable a sufficient number of shares of Common Stock so that such
Person would no longer be an “Acquiring Person” (as defined pursuant to
the foregoing provisions of this paragraph (a)), then such Person shall
not be deemed to be an “Acquiring Person” for any purpose of this
Agreement.”

2

 

     (b) The definition of “Business Day” in Section 1 of the Rights Agreement is hereby amended
and restated in its entirety to read as follows:

	 	 	 	““Business Day” shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in the Commonwealth of Massachusetts are
authorized or obligated by law or executive order to close or the national
securities exchanges in the United States are closed.”

     (c) The definition of “Close of Business” in Section 1 of the Rights Agreement is hereby
amended and restated in its entirety to read as follows:

	 	 	 	““Close of Business” on any given date shall mean 5:00 P.M., Massachusetts
time, on such date; provided, however, that if such date is not a Business
Day it shall mean 5:00 P.M., Massachusetts time, on the next succeeding
Business Day.”

     2. Amendment to Section 2. Section 2 of the Rights Agreement is hereby amended and
restated in its entirety to read as follows:

	 	 	 	“Section 2. Appointment of Rights Agent. The Company hereby appoints the
Rights Agent to act as agent for the Company in accordance with the terms
and conditions hereof, and the Rights Agent hereby accepts such appointment.
The Company may from time to time appoint such co-Rights Agents as it may
deem necessary or desirable upon ten (10) days’ prior written notice to the
Rights Agent. The Rights Agent shall have no duty to supervise, and shall
in no event be liable for, the acts or omissions of any such co-Rights
Agent.”

     3. Amendment to Section 3. The reference to “15%” in Section 3(a) of the Rights
Agreement is hereby amended to read “20%.”

     4. Amendment to Section 7. Section 7(a)(i) of the Rights Agreement is hereby amended
and restated in its entirety to read as follows: “(i) the Close of Business on March 31, 2011 (the
“Final Expiration Date”)”.

     5. Amendment to Section 21.

     (a) Section 21 of the Rights Agreement is hereby amended by adding the following sentence
after the existing first sentence:

	 	 	 	“In the event the transfer agency relationship in effect between the Company
and the Rights Agent terminates, the Rights Agent will be deemed to have
resigned automatically and be discharged from its duties under this
Agreement as of the effective date of such termination, and the Company
shall be responsible for sending any required notice of such termination of
the Rights Agent to the holders of the Rights Certificates.”

     (b) Section 21 of the Rights Agreement is hereby further amended by deleting the following
sentence in its entirety:

3

 

	 	 	 	“Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be a corporation organized and doing business under the laws of
the United States or of any state of the United States, in good standing,
authorized under such laws to exercise corporate trust or stock transfer
powers, and subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent a
combined capital and surplus of at least $50 million.”

and replacing such deleted sentence in its entirety with the following:

	 	 	 	“Any successor Rights Agent, whether appointed by the Company or by such a
court, shall be an entity organized and doing business under the laws of the
United States or of any state of the United States, in good standing,
authorized under such laws to exercise corporate trust or stock transfer
powers, and subject to supervision or examination by federal or state
authority and which has at the time of its appointment as Rights Agent,
along with its Affiliates, a combined capital and surplus of at least $50
million.”

     6. Amendment to Section 24. The reference to “15%” in Section 24(a) of the Rights
Agreement is hereby amended to read “20%.”

     7. Amendment to Section 32. Section 32 of the Rights Agreement is hereby amended and
restated in its entirety to read as follows:

	 	 	 	“This Agreement and each Rights Certificate issued hereunder shall be deemed
to be a contract made under the laws of the State of Delaware and for all
purposes shall be governed by and construed in accordance with the laws of
such State applicable to contracts to be made and performed entirely within
such State.”

     8. Addition of New Sections 35. New Section 35 is hereby added to the Rights
Agreement immediately after Section 34, as follows:

	 	 	 	“Section 35. Force Majeure. Notwithstanding anything to the contrary
contained herein, the Rights Agent shall not be liable for any delays or
failures in performance resulting from acts beyond its reasonable control
including, without limitation, acts of God, terrorist acts, shortage of
supply, breakdowns or malfunctions, interruptions or malfunction of computer
facilities, or loss of data due to power failures or mechanical difficulties
with information storage or retrieval systems, labor difficulties, war, or
civil unrest.

     9 References to Rights Agent. All references in the Rights Agreement to “U.S. Stock
Transfer Corporation” shall for all purposes be deemed to refer to “Computershare Trust Company,
N.A.”

4

 

     10. Amendment to Summary of Rights. The Summary of Rights to Purchase Shares of
Series A Preferred Stock, attached as Exhibit C to the Rights Agreement (the “Summary of Rights”)
is hereby amended by deleting the Summary of Rights in its entirety and replacing it with the
amended Summary of Rights to Purchase Shares of Series A Preferred in the form attached hereto as
Exhibit A.

     11. Entire Agreement. This Amendment and the Rights Agreement (including schedules
and exhibits thereto) set forth the entire understanding of the parties relating to the subject
matter hereof and thereof and supersede all prior agreements and understandings among or between
any of the parties relating to the subject matter hereof.

     12. Benefits of this Amendment. Nothing in this Amendment shall be construed to give
to any Person other than the Company, the Rights Agent and the registered holders of the Rights
Certificates (and, prior to the Distribution Date, the registered holders of the shares of Common
Stock) any legal or equitable right, remedy or claim under this Amendment; but this Amendment shall
be for the sole and exclusive benefit of the Company, the Rights Agent and the registered holders
of the Rights Certificates (and, prior to the Distribution Date, the registered holders of the
shares of Common Stock).

     13. Severability. If any term, provision, covenant or restriction of this Amendment
is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Amendment
shall remain in full force and effect and shall in no way be affected, impaired or invalidated;
provided, however, that notwithstanding anything in this Amendment to the contrary, if any such
term, provision, covenant or restriction is held by such court or authority to be invalid, void or
unenforceable and the Board of Directors of the Company determines in its good faith judgment that
severing the invalid language from this Amendment would adversely affect the purpose or effect of
this Amendment, if terminated, the right of redemption set forth in Section 23 of the Rights
Agreement shall be reinstated and shall not expire until the tenth Business Day following the date
of such determination by the Board of Directors of the Company.

     14. Governing Law. This Amendment shall be governed by and construed in accordance
with the laws of the State of Delaware applicable to contracts to be made and performed entirely
within such State.

     15. Counterparts. This Amendment may be executed in any number of counterparts and
each of such counterparts shall for all purposes be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.

     16. Descriptive Headings. Descriptive headings of the several sections of this
Amendment are inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

     17. Continued Full Force and Effect. Except as expressly amended above, the Rights
Agreement shall continue in full force and effect in accordance with its terms.

[Signature Page Follows]

5

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
attested, all as of the day and year first above written.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ATTEST	 	 	 	 	 	ENDOCARE, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Clint B. Davis
	 	 	 	By:
	 	/s/ Michael R. Rodriguez
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Clint B. Davis
	 	 	 	 	 	Name:
	 	Michael R. Rodriguez	 	 
	 

	 	Title:
	 	Senior Vice President, Legal
Affairs,
 General Counsel and
Secretary
	 	 	 	 	 	Title:
	 	Senior Vice President, Finance
and Chief Financial Officer	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ATTEST:	 	 	 	 	 	COMPUTERSHARE TRUST COMPANY, N.A.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	/s/ Suzanne L. Schaming
	 	 	 	By:
	 	/s/ Dennis V. Moccia
	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	Suzanne L. Schaming
	 	 	 	 	 	Name:
	 	Dennis V. Moccia	 	 
	 

	 	Title:
	 	Corporate Counsel
	 	 	 	 	 	Title:
	 	Managing Director	 	 

SIGNATURE PAGE TO AMENDMENT NO. 2 TO RIGHTS AGREEMENT

 

 

Exhibit C

AMENDED SUMMARY OF RIGHTS TO PURCHASE

SHARES OF SERIES A PREFERRED STOCK

 

 

ENDOCARE, INC.

SUMMARY OF RIGHTS TO PURCHASE

SHARES OF SERIES A PREFERRED STOCK

     On March 5, 1999 the Board of Directors of ENDOCARE, INC. (the “Company”) declared a dividend
of one preferred share purchase right (a “Right”) for each outstanding share of Common Stock (the
“Common Stock”), par value $0.001 per share, of the Company. The dividend was paid on April 15,
1999 (the “Record Date”) to the stockholders of record on that date. The Board of Directors of the
Company further authorized and directed the issuance of one Right with respect to each share of
Common Stock that shall become outstanding between the Record Date and the Distribution Date (or
earlier redemption or expiration of the Rights). Each Right entitled the registered holder to
purchase from the Company one one-thousandth of a share (a “Unit”) of Series A Junior Participating
Preferred Stock, par value $0.001 per share (the “Series A Preferred Stock”), of the Company at an
initial price of $25.00 per Unit (the “Purchase Price”), subject to adjustment. The Purchase Price
was adjusted to $75.00 per Unit as a result of the one-for-three reverse stock split of the Common
Stock on August 20, 2007. The following is a brief summary of the Rights. The description and
terms of the Rights are set forth in a Rights Agreement dated as of March 31, 1999, as amended on
June 24, 2005 and as further amended on March 26, 2009 (as amended, the “Rights Agreement”)
between the Company and COMPUTERSHARE TRUST COMPANY, N.A. as successor to U.S. STOCK TRANSFER
CORPORATION, as Rights Agent (the “Rights Agent”), which are incorporated herein by this reference.

     Until the earlier to occur of (i) the tenth business day after a public announcement that a
person or group of affiliated or associated persons (an “Acquiring Person”) has acquired beneficial
ownership of 20% or more of the outstanding Common Stock (subject to certain exceptions as provided
in the Rights Agreement) and (ii) ten (10) business days (or such later date as may be determined
by action of the Board of Directors prior to such time as any Person becomes an Acquiring Person)
following the commencement of, or announcement of an intention to make, a tender offer or exchange
offer the consummation of which would result in the beneficial ownership by a person or group of
20% or more of such outstanding Common Stock (the earlier of such dates being called the
“Distribution Date”), the Rights will be evidenced, with respect to any of the Common Stock
certificates outstanding as of the Record Date, by such Common Stock certificate with a copy of
this Summary of Rights attached thereto.

     The Rights Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Stock. Until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued after the Record
Date, upon transfer or new issuance of Common Stock will contain a notation incorporating the
Rights Agreement by reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Stock, which become
outstanding on or after the Record Date, but prior to the Distribution Date or Expiration Date,
even without such notation or a copy of this Summary of Rights being attached thereto, will also
constitute the transfer of the Rights associated with the Common Stock represented by such

 

 

certificate. As soon as practicable following the Distribution Date, separate certificates
evidencing the Rights (“Rights Certificates”) will be mailed to holders of record of the Common
Stock as of the Close of Business on the Distribution Date and thereafter such separate Rights
Certificates alone will evidence the Rights. The Rights are not exercisable until the Distribution
Date. The Rights will expire at the close of business on March 31, 2011 (the “Final Expiration
Date”), unless the Final Expiration Date is amended or unless the Rights are earlier redeemed or
exchanged by the Company, in each case as described below.

     The Purchase Price payable, and the number of Units of Preferred Stock or other securities or
property issuable, upon exercise of the Rights are subject to adjustment from time to time to
prevent dilution (i) in the event of a stock dividend on, or a subdivision, combination or
reclassification of, the Preferred Stock, (ii) upon the grant to holders of the Units of Preferred
Stock of certain rights or warrants to subscribe for or purchase Units of Preferred Stock at a
price, or securities convertible into Units of Preferred Stock with a conversion price, less than
the then current market price of the Units of Preferred Stock or (iii) upon the distribution to
holders of the Units of Preferred Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends payable in Units of
Preferred Stock) or of subscription rights or warrants (other than those referred to above).

     The number of outstanding Rights and the number of Units of Preferred Stock issuable upon
exercise of each Right are also subject to adjustment in the event of a stock split of the Common
Stock or a stock dividend on the Common Stock payable in Common Stock or subdivisions,
consolidations or combinations of the Common Stock occurring, in any such case, prior to the
Distribution Date.

     Units of Preferred Stock purchasable upon exercise of the Rights will not be redeemable. Each
Unit of Preferred Stock will be entitled to a dividend equal to any dividend declared per share of
Common Stock. In the event of liquidation, each Unit of Preferred Stock will be entitled to a
payment equal to any payment made per share of Common Stock. Each Unit of Preferred Stock will
have one vote, voting together with the Common Stock. Finally, in the event of any merger,
consolidation or other transaction in which shares of Common Stock are exchanged, each Unit of
Preferred Stock will be entitled to receive an amount equal to the amount received per share of
Common Stock. These rights are protected by customary antidilution provisions.

     Because of the nature of the dividend, liquidation and voting rights, the value of each Unit
of Preferred Stock purchasable upon exercise of the Rights should approximate the value of one
share of Common Stock.

     In the event that, after the Rights become exercisable, the Company is acquired in a merger or
other business combination transaction with an Acquiring Person or an affiliate thereof, or 50% or
more of its consolidated assets or earning power are sold to an Acquiring Person or an affiliate
thereof, proper provision will be made so that each holder of a Right will thereafter have the
right to receive, upon exercise thereof at the then current exercise price of the Rights, that
number of shares of common stock of the acquiring company which at the time of such transaction
will have a market value of two times the exercise price of the Rights.

2

 

     In the event that any person or group of affiliated or associated persons becomes the
beneficial owner of 20% or more of the outstanding shares of Common Stock (subject to certain
exceptions) proper provision shall be made so that each holder of a Right, other than Rights
beneficially owned by the Acquiring Person (which will thereafter be void), will thereafter have
the right to receive upon exercise that number of shares of Common Stock or Units of Preferred
Stock (or cash, other securities or property) having a market value of two times the exercise price
of the Rights.

     At any time after the acquisition by a person or group of affiliated or associated persons of
beneficial ownership of 20% or more (subject to certain exceptions) of the outstanding shares of
Common Stock and prior to the acquisition by any person or group of affiliated or associated
persons of 50% or more of the outstanding Common Stock, the Board of Directors of the Company may
exchange all or part of the Rights (other than Rights owned by such person or group which have
become void) for Units of Preferred Stock at an exchange ratio (subject to adjustment) which shall
equal, subject to adjustment to reflect stock splits, stock dividends and similar transactions,
that number obtained by dividing the Purchase Price by the then current per share market price per
Unit of Preferred Stock on the earlier of (i) the date on which any Person becomes an Acquiring
Person and (ii) the date on which a tender or exchange offer is announced by any Person, if upon
consummation thereof such Person would be the Beneficial Owner of 20% or more (subject to certain
exceptions) of the shares of Company Common Stock then outstanding.

     With certain exceptions, no adjustment in the Purchase Price will be required until cumulative
adjustments require an adjustment of at least 1% in such Purchase Price. No fractional shares of
Preferred Stock will be issued (other than fractions which are integral multiples of one
one-thousandth of a share of Preferred Stock, which may, at the election of the Company, be
evidenced by depositary receipts) and, in lieu thereof, an adjustment in cash will be made based on
the market price of the Units of Preferred Stock on the last trading day prior to the date of
exercise.

     At any time within ten (10) business days after the date a person or group of affiliated or
associated persons acquires beneficial ownership of 20% or more (subject to certain exceptions) of
the outstanding Common Stock, the Board of Directors of the Company may redeem the Rights in whole,
but not in part, at a price of $.03 per Right (the “Redemption Price”). The redemption of the
rights may be made effective at such time on such basis and with such conditions as the Board of
Directors in its sole discretion may establish. Immediately upon any redemption of the Rights, the
right to exercise the Rights will terminate and the only right of the holders of Rights will be to
receive the Redemption Price. The Rights are also redeemable under other circumstances as
specified in the Agreement.

     The terms of the Rights may be amended by the Board of Directors of the Company without the
consent of the holders of the Rights except that from and after a Distribution Date no such
amendment may adversely affect the interests of the holders of the Rights.

     Until a Right is exercised, the holder thereof, as such, will have no rights as a stockholder
of the Company, including, without limitation, the right to vote or to receive dividends.

3

 

     The Rights have certain anti-takeover effects. The Rights will cause substantial dilution to
a person or group that attempts to acquire the Company on terms not approved by the Company’s Board
of Directors, except pursuant to an offer conditioned on a substantial number of rights being
acquired. The Rights should not interfere with any merger or other business combination approved
by the Board of Directors because the Rights may be redeemed by the Company at the Redemption Price
prior to the occurrence of a Distribution Date.

     A copy of the Rights Agreement has been filed with the Securities and Exchange Commission as
an Exhibit to a Registration Statement on Form 8-A of the Company. A copy of the Rights Agreement
is available free of charge from the Company. This summary description of the Rights does not
purport to be complete and is qualified in its entirety by reference to the Rights Agreement, which
is hereby incorporated herein by reference.

4exv4w13

EXHIBIT
4.13

AMENDMENT TO

SECURED CONVERTIBLE DEBENTURE

     This amendment (“Amendment”) to the Secured Convertible Debenture dated January 24, 2008
(“Debenture”) is made as of January 29, 2009 by and between Converted Organics, Inc., a Delaware
corporation (“Borrower”) and                      1 (“Lender”). Terms not defined herein
shall have the meaning as set forth in the Debenture.

RECITALS

     WHEREAS, Borrower has issued Lender the Debenture in principal amount of
$                    2 which maturity date was January 24, 2009;

     WHEREAS, Lender has agreed to extend the maturity date of the Debenture until July 24, 2009
and, Borrower has agreed to modify certain terms of the Debenture as set forth herein; and

     WHEREAS, Capitalized terms used herein and not otherwise defined herein shall have the
meanings set forth in the Debenture

     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto, for themselves, their successors and assigns, hereby agree
as follows:

     1. The “Maturity Date” of the Debenture is hereby extended until July 24, 2009.

     2. During the period from January 24, 2009 until the Maturity Date, the Borrower shall not be
required to pay interest on the Debenture.

     3. At any time prior to the Maturity Date, Lender may convert the principal amount of the
Debenture into shares of Borrower’s Common Stock at the Default Conversion Price calculated as of
the date of any such conversion. On any conversion date, Lender agrees to send to Borrower’s
Transfer Agent and to Borrower a calculation of the Default Conversion Price and amount of
Debenture principal being converted. If Borrower disputes any amounts in the foregoing notice it
shall respond in writing to Lender within one (1) business day. Assuming Borrower is in agreement
with the Lender conversion notice, Borrower agrees to deliver the shares subject to the conversion
notice within three (3) business days of the conversion date, and agrees that any failure to so
deliver the shares shall subject it to the liquidated damage provisions set forth in Section 3(c)
of the Debenture.

          Lender acknowledges that unless it sends Borrower a notice in writing stating that it is an
“affiliate” of the Borrower as such term is defined in the Securities Act of 1933, as amended
(“Act”), in connection with Borrower’s issuance of the shares pursuant to this section, Borrower
and its counsel shall be permitted to rely on Lender’s execution of this Amendment as its
representation that it is not, and will not become prior to the Maturity Date, an “affiliate” of
the Borrower as such term is defined in the Act.

     4. Commencing on the date hereof until the Maturity Date, Lender agrees that it will not sell
shares of Borrower Common Stock on any trading day in an amount greater than 12% of the daily
volume of the Borrower’s Common Stock for such trading day as reported by the NASDAQ Stock Market;
provided that such limitation shall not apply at any time at which the Borrower’s Common Stock is
trading at above $3.25 per share.

     5. So long as any principal or interest is due under the Debenture and shall remain unpaid,
unless the Lender shall otherwise consent in writing, the Borrower shall not complete any financing
arrangement in which Borrower raises greater than $2.0 million; provided that such prohibition
shall not be applicable if the principal amount of the Debenture outstanding on the closing of any
financing is less than $1,600,000.

 

			
	1	 	Form used for Professional Offshore Opportunity Fund,
Ltd., Professional Traders Fund, LLC and High Capital Funding, LLC.
	 
	2	 	Form used for Borrower’s portion of $4.5 million
issuance.

44

 

     6. Upon execution of this Amendment, Borrower will issue Lender ___3
shares of restricted Borrower Common Stock.

     7. Lender’s counsel shall issue a Rule 144 opinion letter to the transfer agent for the Lender
within two (2) business days of execution of this Agreement regarding the shares underlying the
conversion. Borrower agrees that if such opinion is not effective for a period of three (3)
business days after a Conversion Date then the Borrower agrees that that any failure to deliver a
valid legal opinion shall subject it to the liquidated damage provisions set forth in Section 3(c)
of the Debenture.

     8. Lender hereby waives as of January 24, 2009 any and all Events of Default that have
occurred prior to the execution of this Amendment.

     9. All other provisions of the Debenture not amended or modified herein shall continue to have
their full force and effect.

     10. This Amendment may be changed, waived, discharged or terminated only by a writing signed
by the Lender and Borrower.

     11. This Amendment shall be construed and interpreted in accordance with the Sections 13 and
14 of the Debenture.

     12. This Amendment may be executed in two or more counterparts, which when so executed shall
constitute one and the same agreement.

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of January
29, 2009.

	 	 	 	 	 	 	 
	Converted Organics Inc.	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	  	 	
	 

	 	     
	 	Edward J. Gildea, CEO	 	 
	 
	 	 	 	 	 	 
	[Lender Name]	 	 
	 
	 	 	 	 	 	 
	By:
	 	 	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 	 	 
	Print Name:	 	 	 	 
	 

	 	 	 	 	 	 

 

			
	3	 	Represents the Lender’s pro rata portion of an
aggregate of 200,000 restricted shares of Borrower common stock.

45

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