Document:

EX-10.1

Exhibit 10.1

Converted Organics Inc.

137A Lewis Wharf

Boston, MA 02110

October 19, 2011

Iroquois Master Fund Ltd.

Iroquois Capital Opportunity Fund LP

c/o Iroquois Capital Management, L.L.C.

641 Lexington Avenue, 26th Floor

New York, New York 10022

	 	 	 	Re: Securities Purchase Agreement, dated as of April 1, 2011 (the “Purchase
Agreement”), by and among Converted Organics Inc. (the “Company”) and Iroquois Master
Fund Ltd. (“Holder”) and Iroquois Capital Opportunity Fund LP

Dear Mr. Silverman:

Pursuant to the Purchase Agreement, the Company issued a certain secured convertible note in
the original principal amount of $3,850,000 (the “Note”) to the Holder. All capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to such terms in the
Purchase Agreement.

A. The Company and the Holder hereby agree as follows with respect to the Note:

The term Conversion Price (as defined in the Note) is hereby deleted in its entirety and
replaced with the following:

“Conversion Price” means, as of any Conversion Date or other date of determination,
the lowest of (i) $0.40 (subject to adjustment as provided herein), (ii) the price
which is equal to the product of (1) 85% multiplied by (2) the quotient of (A) the
sum of each of the three (3) lowest Closing Sale Prices of the Common Stock during
the twenty (20) consecutive Trading Day period immediately preceding the applicable
Conversion Date or other date of determination (as the case may be) divided by (B)
three (3) and (iii) the price which is equal to the product of (I) 85% multiplied by
(II) the Closing Sale Price of the Common Stock on the Trading Day immediately
preceding the applicable Conversion Date or other date of determination (as the case
may be). All such determinations to be appropriately adjusted for any stock split,
stock dividend, stock combination or other similar transaction during any such
measuring period.

B. With respect to the First Installment Date (as defined in the Note), (i) the Company hereby
confirms that the Installment Amount (as defined in the Note) due on the First Installment Date
will be converted in whole pursuant to a Company Conversion (as defined in the Note), (ii) this
letter agreement constitutes a Company Installment Notice (as defined in the Note) and (iii) the
Company shall deliver to the Holder’s balance account with DTC (as defined in the Note) 7,332,258
Pre-Installment Conversion Shares (as defined in the Note) on October 20, 2011, and the issuance
and delivery of the remaining 22,624,170 Pre-Installment Conversion Shares with respect to the
First Installment Date are subject to Section 3(d)(i) of the Note.

C. The Company and the Holder further agree that no adjustment to the exercise price of any warrant
set forth on Schedule 1 attached hereto shall occur solely as a result of the amendment to
the definition of Conversion Price contemplated above.

D. Except as expressly set forth herein, (i) each of the Transaction Documents and each of the
obligations of the Company thereunder, and each of the rights of and benefits to the Holder
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 Note to “this Note,” “hereto,”
“hereof,” “hereunder” or words of like import referring to the Note shall mean the Note 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 the Holder 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 constitutes a
Transaction Document.

E. The Company shall, on or before 8:30 a.m., New York time, on October 20, 2011, 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.

[signature page follows]

Sincerely,

/s/ Edward J. Gildea

	 	 	Edward J. Gildea,

CEO

Agreed to and accepted:

Iroquois Master Fund Ltd.

By: Iroquois Capital Management, L.L.C.

Its: Investment Manager

	 	 	 
	By:

	 	/s/ Joshua Silverman
	 

	 	 
	Name:

	 	Joshua Silverman
	
 
	 	 
	Title:

	 	Member
	 

	 	 

Iroquois Capital Opportunity Fund LP

	 	 	 
	By:

	 	/s/ Joshua Silverman
	 

	 	 
	Name:

	 	Joshua Silverman
	
 
	 	 
	Title:

	 	Authorized Signatoryex10-1.htm

Exhibit 10.1

CHIMERA ENERGY CORP.

PROMISSORY NOTE

 

	
August 22, 2011

	  	
$100,000.00

FOR VALUE RECEIVED, Chimera Energy Corp., a Nevada corporation (the “Company”), promises to pay to the order of Kylemore Corp., or its permitted assigns, transferees and successors as provided herein (the “Holder”), or as the Holder may direct, at such location as the Holder may designate, One Hundred Thousand Dollars and Zero Cents ($100,000.00) plus simple interest on such principal amount from the date of this Promissory Note (the “Note”) at an annual interest rate equal to fifteen
percent (15%).

 

Interest will be computed on the basis of a year of 365 days for the actual number of days elapsed from the date of this Note. The number of days used to compute the interest will include the first day but exclude the last day during which any principal is outstanding.

 

ARTICLE I.

THE NOTE & SECURITY INTEREST

 

Section 1.01 This Note is issued by the Company on August 22, 2011 (the “Issuance Date”).  On August 22, 2011, Holder hereof made advances to the Company in the aggregate amount of $100,000.00.

 

Section 1.02 As security for the due performance and payment of Company's obligation under this Note, Company has granted to Holder a security interest in any and all of the assets, properties, goods, inventory, equipment, furniture, fixtures, leases, supplies, records, money, documents, instruments, chattel paper, accounts, intellectual property rights (including but not limited to, copyrights, moral rights, patents, patent applications, trademarks, service marks, trade names, trade secrets) and other general intangibles, whether owned by Company on the date of this Note or hereafter acquired, and all proceeds thereof.

 

ARTICLE II.

PRINCIPAL AND INTEREST PAYMENTS.

 

Section 2.01 The entire principal amount of this Note together with accrued and unpaid interest thereon will be due and payable on August 21, 2013 (the “Repayment Date”).

 

Section 2.02 The principal and interest on this Note will be payable in the lawful currency of the United States of America by wire transfer or other such immediately available funds and without set-off or counterclaim, free and clear of and without deduction for any present or future taxes, restrictions or conditions of any nature.

 

Section 2.03 All payments under this Note prior to demand or acceleration will be applied first, to any and all costs, expenses or charges then owed by the Company to the Holder, second, to accrued and unpaid interest, and third, to the unpaid principal balance. All payments so received after demand or acceleration will be applied in such manner as the Holder may determine in its sole and absolute discretion.

 

  

  

  

Section 2.04  Whenever any payment on this Note is stated to be due on a day which is not a business day, the payment will be made on the next succeeding business day and the extension of time will be included in the computation of the payment of interest of this Note.

 

Section 2.05 Overdue principal and interest will bear interest at a rate equal to the greater of (i) twenty-five percent (25%) or (ii) the highest rate permitted by applicable law. Overdue principal and interest will be payable on demand.

Section 2.06  This Note may be prepaid at any time.

 

ARTICLE III.

DEFAULT; ACCELERATION

 

The occurrence of any one or more of the following events with respect to the Company constitutes an event of default hereunder (“Event of Default”):

 

Section 3.01 The Company fails to pay: (a) the principal of this Note or the accrued interest thereon when due; or (b) the principal or the accrued interest on any other obligation of the Company to the Holder when due.

 

Section 3.02  The Company breaches, in any materially respect, any covenant, representation or warranty in this Note or the term of any other existing instrument or agreement between the Company and the Holder.

 

Section 3.03  The Company (a) voluntarily becomes subject to any proceeding under the Bankruptcy Code or any similar remedy under state statutory or common law, or (b) admits in writing its inability to pay debts generally as they become due.

 

Section 3.04  Within 60 days after the commencement of proceedings against the Company seeking any bankruptcy, insolvency, liquidation, dissolution or similar relief under any present or future statute, law or regulation (a) such action has not been dismissed or all orders or proceedings thereunder affecting the operations or the business of the Company stayed, or (b) the stay of any such order or proceedings has been set aside, or, within 60 days after the appointment without the consent or acquiescence of the Company of any trustee, receiver or liquidator of the Company or of all or any substantial part of the properties of the Company, the appointment has not been vacated.

 

Section 3.05 Any litigation is commenced against the Company by a person other than Holder, any of its affiliates, or any person acting in concert with them, if: (a) the damages sought are in excess of $250,000.

 

Section 3.06 The Company defaults under any instrument or agreement between the Company and any third party evidencing indebtedness of the Company in excess of $250,000.

 

  

  

  

Upon the occurrence of an Event of Default under this Note, the entire unpaid principal balance of this Note, together with all accrued interest thereon, shall become immediately due and payable regardless of any prior forbearance and without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Company. The Holder may exercise any and all rights and remedies available to the Holder under applicable law, including, without limitation, the right to collect from the Company all amounts due under this Note.

 

ARTICLE IV.

MISCELLANEOUS

 

Section 4.01 The Company waives diligence, presentment, protest, demand and notice of protest, demand, dishonor and nonpayment of this Note, and expressly agrees that this Note, and any payment under it, may be extended by the Holder from time to time without in any way affecting the liability of the Company.

 

Section 4.02 Any term of this Note may be amended or waived only with the written consent of the Company and the Holder; provided, however, that, in no event shall the principal amount of this Note be amended without the written consent of the Holder of this Note. By acceptance hereof, the Holder acknowledges that in the event consent is obtained pursuant to the foregoing sentence, any term of this Note (other than the principal amount thereof) may be amended or waived with or without the consent of the Holder. Any amendment or waiver effectuated in accordance with this Section
4.02 shall be binding upon the Company, the Holder and each transferee of this Note.

 

Section 4.03  All rights and obligations of the Company and the Holder shall be binding upon and benefit the successors, assigns, heirs and administrators of the parties. As used in this Note, the Company includes any corporation, partnership, Limited Liability Company or other entity that succeeds to or assumes the obligations of the Company under this Note. “Holder” means any person who is at the time the registered holder of this Note.

 

Section 4.04 The Company agrees to reimburse the Holder for all attorneys’ fees and expenses incurred by the Holder in connection with the collection and enforcement of this Note.

 

Section 4.05 The rights and remedies of the Holder under this Note and as may otherwise be available at law or in equity are cumulative and concurrent and at the sole discretion of the Holder may be pursued singly, successively or together and exercised as often as the Holder desires.

 

Section 4.06  This Note will be governed in accordance with the laws of the State of Texas.

 

Section 4.07  Any notice required or permitted hereunder shall be given in writing and shall be conclusively deemed effectively given upon personal delivery or delivery by courier, or five days after deposit in the United States mail, by registered or certified mail, postage prepaid.

 

Section 4.08  Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and, in the case of loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to the Company, or in the case of mutilation, upon surrender and cancellation of this Note, the Company, at its expense, will make and deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.

 

Section 4.09 If one or more provisions of this Note are held unenforceable under applicable law, the unenforceable provision will be excluded from this Note and the balance of this Note will be interpreted as if such provision were so excluded and will be enforceable in accordance with its terms. The parties to this Note agree to replace any void or unenforceable provision of this Note with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of the void or unenforceable provision.

  

  

  

IN WITNESS WHEREOF, the Company has executed this Note by its duly authorized officer as of the date and year first written above.

 

	  	
Chimera Energy Corp.

	
 

	  
	  	
/s/ Charles Grob

	  	
By: Charles Grob

	  	
Chairman and President

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