Bylaws Of - CONVERTED ORGANICS INC. - 6-21-2006

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Bylaws Of - CONVERTED ORGANICS INC. - 6-21-2006 Powered By Docstoc
					EXHIBIT 3.2 BYLAWS OF CONVERTED ORGANICS INC. ARTICLE I OFFICES 1.1 The corporation may have offices at such places both within and without the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS 2.1 Place of Meetings. Meetings of the stockholders shall be held at such place within or without the State of Delaware as shall be designated by the Board of Directors or the person or persons calling the meeting. 2.2 Annual Meetings. The annual meeting of the stockholders for the election of directors and the transaction of such other business as may properly come before the meeting shall be held after the close of the corporation's fiscal year on such date and at such time as shall be designated by the Board of Directors. 2.3 Special Meetings. Special meetings may be called at any time by the President, at the request of a majority of the Board of Directors or at the written request of stockholders owning at least fifty percent (50%) of the entire capital stock of the corporation issued and outstanding and entitled to vote. Written notice of a special meeting shall state the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, and shall be given not fewer than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. Business transacted at each special meeting shall be confined to the purposes stated in the notice of such meeting. 2.4 Voting Lists. At least ten (10) days before every meeting of stockholders, the officer who has charge of the stock ledger of the corporation shall prepare and make a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. 2.5 Quorum; Adjournment. The holders of a majority of the stock issued and 1

outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted that might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. 2.6 Vote Required. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question. 2.7 One Vote. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period. 2.8 Action Without Meeting. Unless otherwise provided in the certificate of incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. ARTICLE III DIRECTORS COMPOSITION 3.1 Number of Directors. The Board of Directors shall consist initially of not less than two nor more than eight members as fixed from time to time by the Board of Directors. Directors need not be stockholders of the Corporation. The directors shall be elected by the stockholders at the annual meeting or any special meeting called for such purpose, except as provided in Section 3.2. Each director shall hold office until his or her successor shall be duly elected and qualified or until his or her earlier resignation or removal. A director may resign at any time upon written notice to the Corporation. 2

3.2 Vacancies. Vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then an election of directors may be held in the manner provided by statute. 3.3 Powers. The business of the corporation shall be managed by or under the direction of its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised or done by the stockholders. MEETINGS 3.4 Place of Meetings. The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. 3.5 Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors. 3.6 Special Meetings. Special meetings of the Board of Directors may be called by the President or Chairman on two (2) days' notice to each director by mail, telegram, facsimile, orally or electronically, unless waived by all directors. 3.7 Quorum. At all meetings of the Board of Directors a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute or by the certificate of incorporation. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. 3.8 Action Without Meeting. Unless otherwise restricted by the certificate of incorporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. 3.9 Attendance. Unless otherwise restricted by the certificate of incorporation or these bylaws, members of the Board of Directors, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors, or any committee, by means of conference telephone or similar communications equipment by means of which all persons 3

participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES 3.10 Composition; Appointment; Powers. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to the following matters: (i) approving or adopting, or recommending to the stockholders, any action or matter expressly required by the General Corporation Law of Delaware to be submitted to stockholders for approval or (ii) adopting, amending or repealing any provision of these bylaws. 3.11 Minutes. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required. COMPENSATION 3.12 Unless otherwise restricted by the certificate of incorporation or these bylaws, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings. REMOVAL 3.13 Unless otherwise restricted by the certificate of incorporation or these bylaws, any director or the entire Board of Directors may be removed: with or without cause by the holders of a majority of shares entitled to vote at an election of directors, or for cause by a majority of the Board of Directors. 4

ARTICLE IV NOTICES 4.1 Form of Notice. Whenever, under the provisions of the statutes or of the certificate of incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given in the manners enumerated in Article III. 4.2 Waiver of Notice. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation or of these bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS 5.1 The officers of the corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer and/or President, treasurer and a secretary. The Board of Directors may elect from among its members a Chairman of the Board and a Vice Chairman of the Board. The Board of Directors may also choose one or more vice-presidents, assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these bylaws otherwise provide. 5.2 The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors. 5.3 The salaries and compensation of all officers of the corporation shall be fixed by, or pursuant to authority delegated by, the Board of Directors. 5.4 The officers of the corporation shall hold office until their successors are chosen and qualify. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors. THE CHAIRMAN OF THE BOARD 5.5 The Chairman of the Board, if any, shall preside at all meetings of the Board of Directors and of the stockholders at which he shall be present. He shall have and may exercise such powers as are, from time to time, assigned to him by the Board of Directors and as may be provided by law. 5.6 In the absence of the Chairman of the Board, the Vice Chairman of the Board, if 5

any, shall preside at all meetings of the Board of Directors and of the stockholders at which he shall be present. He shall have and may exercise such powers as are, from time to time, assigned to him by the Board of Directors and as may be provided by law. CHIEF EXECUTIVE OFFICER, PRESIDENT AND VICE-PRESIDENTS 5.7 The Chief Executive Officer shall have, subject to the direction and control of the Board of Directors, general control and management of the business affairs and policies of the Corporation. The Chief Executive Officer shall participate in long-range planning for the Corporation and shall be available to the other officers of the Corporation for consultation. The Chief Executive Officer shall possess power to sign all certificates, contracts and other instruments of the Corporation. Unless a Chairman of the Board of Directors has been appointed and is present, the Chief Executive Officer shall preside at all meetings of the stockholders and of the Board of Directors. The Chief Executive Officer shall perform all such other duties as are incident to the office of Chief Executive Officer or are properly required by the Board of Directors. 5.8 The President shall be the chief operating officer of the corporation; and, in the absence of the Chairman and Vice Chairman of the Board, he shall preside at all meetings of the stockholders and the Board of Directors; he shall have general and active management of the business of the corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect. If no Chief Executive Officer is separately appointed, the President shall be the Chief Executive Officer, having such responsibilities and performing such duties of the Chief Executive Officer as set forth in this Article V. 5.9 Each of the President and the Chief Executive Officer may execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. 5.10 In the absence of the President or in the event of his inability or refusal to act, the Vice-President, if any (or in the event there be more than one vice-president, the vice-presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-presidents shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. THE SECRETARY AND ASSISTANT SECRETARY 5.11 The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other 6

duties as may be prescribed by the Board of Directors or President, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant secretary. The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. 5.12 The Assistant Secretary, or if there be more than one, the assistant secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. THE TREASURER AND ASSISTANT TREASURERS 5.13 The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. 5.14 He shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the president and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. 5.15 The Assistant Treasurer, or if there shall be more than one, the assistant treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election) shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe. ARTICLE VI STOCK AND STOCKHOLDERS CERTIFICATE OF STOCK 6.1 Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the Chairman or Vice Chairman of the Board of Directors, or the President or a vice-president and the Treasurer or an assistant treasurer, or the Secretary or an assistant secretary of the corporation, certifying the number of shares owned by him in the corporation. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the 7

consideration to be paid therefor, and the amount paid thereon shall be specified. If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualification, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, provided that, except as otherwise provided in Section 202 of the General Corporation Law of Delaware, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights. 6.2 Any of or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. LOST CERTIFICATES 6.3 The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. TRANSFER OF STOCK 6.4 Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. FIXING RECORD DATE 6.5 In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholder or any adjournment thereof, or to express consent to 8

corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. REGISTERED STOCKHOLDERS 6.6 The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VII GENERAL PROVISIONS DIVIDENDS 7.1 Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. 7.2 Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. 7.3 All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. FISCAL YEAR 7.4 The fiscal year of the corporation shall be fixed by resolution of the Board of Directors. 9

SEAL 7.5 The Board of Directors may adopt a corporate seal having inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. INDEMNIFICATION 7.6 The corporation shall, to the fullest extent authorized under the laws of the State of Delaware, as those laws may be amended and supplemented from time to time, indemnify any director made, or threatened to be made, a party to an action or proceeding, whether criminal, civil, administrative or investigative, by reason of being a director of the corporation or a predecessor corporation or, at the corporation's request, a director or officer of another corporation; provided, however, that the corporation shall indemnify any such agent in connection with a proceeding initiated by such agent only if such proceeding was authorized by the Board of Directors of the corporation. The indemnification provided for in this Section 7.6 shall: (i) not be deemed exclusive of any other rights to which those indemnified may be entitled under any bylaw, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) continue as to a person who has ceased to be a director, and (iii) inure to the benefit of the heirs, executors and administrators of such a person. The corporation's obligation to provide indemnification under this Section 7.6 shall be offset to the extent of any other source of indemnification or any otherwise applicable insurance coverage under a policy maintained by the corporation or any other person. Expenses incurred by a director of the corporation in defending a civil or criminal action, suit or proceeding by reason of the fact that he is or was a director of the corporation (or was serving at the corporation's request as a director or officer of another corporation) shall be paid by the corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such director to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the corporation as authorized by relevant sections of the General Corporation Law of Delaware. Notwithstanding the foregoing, the corporation shall not be required to advance such expenses to an agent who is a party to an action, suit or proceeding brought by the corporation and approved by a majority of the Board of Directors of the corporation that alleges willful misappropriation of corporate assets by such agent, disclosure of confidential information in violation of such agent's fiduciary or contractual obligations to the corporation or any other willful and deliberate breach in bad faith of such agent's duty to the corporation or its stockholders. The foregoing provisions of this Section 7.6 shall be deemed to be a contract between the corporation and each director who serves in such capacity at any time while this bylaw is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any action, suit or proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts. 10

The Board of Directors in its discretion shall have power on behalf of the corporation to indemnify any person, other than a director, made a party to any action, suit or proceeding by reason of the fact that he, his testator or intestate, is or was an officer or employee of the corporation. To assure indemnification under this Section 7.6 of all directors, officers and employees who are determined by the corporation or otherwise to be or to have been "fiduciaries" of any employee benefit plan of the corporation that may exist from time to time, Section 145 of the General Corporation Law of Delaware shall, for the purposes of this Section 7.6, be interpreted as follows: an "other enterprise" shall be deemed to include such an employee benefit plan, including without limitation, any plan of the corporation that is governed by the Act of Congress entitled "Employee Retirement Income Security Act of 1974," as amended from time to time; the corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to such Act of Congress shall be deemed "fines." ARTICLE VIII AMENDMENTS 8.1 These bylaws may be altered, amended or repealed or new bylaws may be adopted by the stockholders or by the Board of Directors, when such power is conferred upon the Board of Directors by the certificate of incorporation at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new bylaws be contained in the notice of such special meeting. If the power to adopt, amend or repeal bylaws is conferred upon the Board of Directors by the certificate or incorporation it shall not divest or limit the power of the stockholders to adopt, amend or repeal bylaws. CERTIFICATE OF SECRETARY OF CONVERTED ORGANICS INC. The undersigned, William A. Gildea, hereby certifies that he is the duly elected and acting Secretary of Converted Organics Inc., a Delaware corporation (the "Corporation"), and that the Bylaws attached hereto constitute the Bylaws of said Corporation as duly adopted by Action by Unanimous Written Consent of the board of Directors in Lieu of First Meeting on January 13, 2006. IN WITNESS WHEREOF, the undersigned has hereunto subscribed his name this 13th day of January, 2006.
/s/ William A. Gildea ---------------------------------------William A. Gildea, Secretary

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EXHIBIT 4.5 FORM OF WARRANT AGREEMENT BETWEEN CONVERTED ORGANICS INC. AND ____________________, INC. DATED AS OF ___________ __, 2006

FORM OF WARRANT AGREEMENT This Agreement, dated as of ____________ __, 2006, is between Converted Organics Inc., a Delaware corporation (the "Company") and ____________________, a ______________ corporation, (the "Warrant Agent"). The Company, at or about the time that it is entering into this Agreement, proposes to issue and sell to public investors up to ___________ Units (together with the additional units issuable as provided herein, the "Units"). Each Unit consists of one share of common stock, $0.0001 par value, of the Company, one Class A Warrant and one Class B Warrant. The Class A Warrants and the Class B Warrants are herein collectively referred to as the "Warrants." Each Warrant is exercisable to purchase one share of Common Stock upon the terms and conditions and subject to adjustment in certain circumstances, all as set forth in this Agreement. The Company proposes to issue to the Representative of the Underwriters in the public offering of Units referred to above warrants to purchase up to ________ additional Units. The Company wishes to retain the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing so to act, in connection with the issuance, transfer, exchange and replacement of the certificates evidencing the Warrants to be issued under this Agreement (the "Warrant Certificates") and the exercise of the Warrants; The Company and the Warrant Agent wish to enter into this Agreement to set forth the terms and conditions of the Warrants and the rights of the holders thereof ("Warrantholders") and to set forth the respective rights and obligations of the Company and the Warrant Agent. Each Warrantholder is an intended beneficiary of this Agreement with respect to the rights of Warrantholders herein. NOW, THEREFORE, in consideration of the premises and the mutual agreements herein set forth, the parties hereto agree as follows: 1. Appointment of Warrant Agent. The Company appoints the Warrant Agent to act as agent for the Company in accordance with the instructions in this Agreement and the Warrant Agent accepts such appointment. 2. Date, Denomination and Execution of Warrant Certificates. (a) The Warrant Certificates (and the Form of Election to Purchase and the Form of Assignment to be printed on the reverse thereof) shall be in registered form only and shall be substantially of the tenor and purport recited in Exhibit A hereto with respect to the Class A Warrants and Exhibit B hereto with respect to the Class B Warrants, and may have such letters, numbers or other marks of identification or designation and such legends, summaries or endorsements printed, lithographed or engraved thereon as the Company may deem appropriate and as are not inconsistent with the provisions of this Agreement, or as may be required to comply with any law, or with any rule or regulation made pursuant thereto, or with any rule or regulation of any stock exchange on which the Common Stock or the Warrants may be listed or 1

any automated quotation system, or to conform to usage. Each Class A Warrant Certificate shall entitle the registered holder thereof, subject to the provisions of this Agreement and of the Warrant Certificate, to purchase, on or after ____________, 2006 and on or before the close of business on _________, 2011 (the "Expiration Date"), one fully paid and non-assessable share of Common Stock for each Warrant evidenced by such Warrant Certificate for $_____. Each Class B Warrant Certificate shall entitle the registered holder thereof, subject to the provisions of this Agreement and of the Warrant Certificate, to purchase, on or after the Expiration Date, one fully paid and non-assessable share of Common Stock for each Warrant evidenced by such Warrant Certificate for $_____. The exercise price of the Warrants (the "Exercise Price") is subject to adjustments as provided in Section 6 hereof. Each Warrant Certificate issued as a part of a Unit offered to the public as described in the recitals, above, shall be dated _____________, 2006; each other Warrant Certificate shall be dated the date on which the Warrant Agent receives valid issuance instructions from the Company or a transferring holder of a Warrant Certificate or, if such instructions specify another date, such other date. (b) For purposes of this Agreement, the term "close of business" on any given date shall mean 5:00 p.m., Eastern time, on such date; provided, however, that if such date is not a business day, it shall mean 5:00 p.m., Eastern time, on the next succeeding business day. For purposes of this Agreement, the term "business day" shall mean any day other than a Saturday, Sunday, or a day on which banking institutions in New York, New York or in the State in which the Warrant Agent maintains the principal office in which it conducts business related to the Warrants are authorized or obligated by law to be closed. (c) Each Warrant Certificate shall be executed on behalf of the Company by the Chairman of the Board or its President or a Vice President, either manually or by facsimile signature printed thereon, and have affixed thereto the Company's seal or a facsimile thereof which shall be attested by the Secretary or an Assistant Secretary of the Company, either manually or by facsimile signature. Each Warrant Certificate shall be manually countersigned by the Warrant Agent and shall not be valid for any purpose unless so countersigned. In case any officer of the Company who shall have signed any Warrant Certificate shall cease to be such officer of the Company before countersignature by the Warrant Agent and issue and delivery thereof by the Company, such Warrant Certificate, nevertheless, may be countersigned by the Warrant Agent, issued and delivered with the same force and effect as though the person who signed such Warrant Certificate had not ceased to be such officer of the Company. 3. Subsequent Issue of Warrant Certificates. Subsequent to their original issuance, no Warrant Certificates shall be reissued except (i) Warrant Certificates issued upon transfer thereof in accordance with Section 4 hereof, (ii) Warrant Certificates issued upon any combination, split-up or exchange of Warrant Certificates pursuant to Section 4 hereof, (iii) Warrant Certificates issued in replacement of mutilated, destroyed, lost or stolen Warrant Certificates pursuant to Section 5 hereof, (iv) Warrant Certificates issued upon the partial exercise of Warrant Certificates pursuant to Section 7 hereof, and (v) Warrant Certificates issued to reflect any adjustment or change in the Exercise Price or the number or kind of shares purchasable thereunder pursuant to Section 22 hereof. The Warrant Agent is hereby irrevocably authorized to countersign and deliver, in accordance with the provisions of said Sections 4, 5, 7 and 22, the new Warrant Certificates required for purposes thereof, and the Company, whenever 2

required by the Warrant Agent, will supply the Warrant Agent with Warrant Certificates duly executed on behalf of the Company for such purposes. 4. Transfers and Exchanges of Warrant Certificates. (a) The Warrant Agent will keep or cause to be kept books for registration of ownership and transfer of the Warrant Certificates issued hereunder. Such registers shall show the names and addresses of the respective holders of the Warrant Certificates and the class and number of Warrants evidenced by each such Warrant Certificate. (b) The Warrant Agent shall, from time to time, register the transfer of any outstanding Warrants upon the books to be maintained by the Warrant Agent for that purpose, upon surrender of the Warrant Certificate evidencing such Warrants, with the Form of Assignment duly filled in and executed with such signature guaranteed by a banking institution or NASD member and such supporting documentation as the Warrant Agent or the Company may reasonably require, to the Warrant Agent at its stock transfer office in __________, ___________ at any time on or before the Expiration Date of such Warrant, and upon payment to the Warrant Agent for the account of the Company of an amount equal to any applicable transfer tax. Payment of the amount of such tax may be made in cash, or by certified or official bank check, payable in lawful money of the United States of America to the order of the Company. (c) Upon receipt of a Warrant Certificate, with the Form of Assignment duly filled in and executed, accompanied by payment of an amount equal to any applicable transfer tax, the Warrant Agent shall promptly cancel the surrendered Warrant Certificate and countersign and deliver to the transferee a new Warrant Certificate for the number of full Warrants of the same class transferred to such transferee; provided, however, that in case the registered holder of any Warrant Certificate shall elect to transfer fewer than all of the Warrants evidenced by such Warrant Certificate, the Warrant Agent in addition shall promptly countersign and deliver to such registered holder a new Warrant Certificate or Certificates for the number of full Warrants not so transferred. (d) Any Warrant Certificate or Certificates may be exchanged at the option of the holder thereof for another Warrant Certificate or Certificates of different denominations, of like tenor and representing in the aggregate the same class and number of Warrants, upon surrender of such Warrant Certificate or Certificates, with the Form of Assignment duly filled in and executed, to the Warrant Agent, at any time or from time to time after the close of business on the date hereof and prior to the close of business on the Expiration Date relating to such Warrant. The Warrant Agent shall promptly cancel the surrendered Warrant Certificate and deliver the new Warrant Certificate pursuant to the provisions of this Section. 5. Mutilated, Destroyed, Lost or Stolen Warrant Certificates. Upon receipt by the Company and the Warrant Agent of evidence reasonably satisfactory to them of the loss, theft, destruction or mutilation of any Warrant Certificate, and in the case of loss, theft or destruction, of indemnity or security reasonably satisfactory to them, and reimbursement to them of all reasonable expenses incidental thereto, and, in the case of mutilation, upon surrender and 3

cancellation of the Warrant Certificate, the Warrant Agent shall countersign and deliver a new Warrant Certificate of like tenor for the same class and number of Warrants. 6. Adjustments of Number and Kind of Shares Purchasable and Exercise Price. The number and kind of securities or other property purchasable upon exercise of a Warrant shall be subject to adjustment from time to time upon the occurrence, after the date hereof, of any of the following events: (a) In case the Company shall (1) pay a dividend in, or make a distribution of, shares of capital stock on its outstanding Common Stock, (2) subdivide its outstanding shares of Common Stock into a greater number of such shares or (3) combine its outstanding shares of Common Stock into a smaller number of such shares, the total number of shares of Common Stock purchasable upon the exercise of each Warrant outstanding immediately prior thereto shall be adjusted so that the holder of any Warrant Certificate thereafter surrendered for exercise shall be entitled to receive at the same aggregate Exercise Price the number of shares of capital stock (of one or more classes) which such holder would have owned or have been entitled to receive immediately following the happening of any of the events described above had such Warrant been exercised in full immediately prior to the record date with respect to such event. Any adjustment made pursuant to this Subsection shall, in the case of a stock dividend or distribution, become effective as of the record date therefor and, in the case of a subdivision or combination, be made as of the effective date thereof. If, as a result of an adjustment made pursuant to this Subsection, the holder of any Warrant Certificate thereafter surrendered for exercise shall become entitled to receive shares of two or more classes of capital stock of the Company, the Board of Directors of the Company (whose determination shall be conclusive and shall be evidenced by a Board resolution filed with the Warrant Agent) shall determine the allocation of the adjusted Exercise Price between or among shares of such classes of capital stock. (b) In the event of a capital reorganization or a reclassification of the Common Stock (except as provided in Subsection (a) above or Subsection (d) below), any Warrantholder, upon exercise of Warrants, shall be entitled to receive, in substitution for the Common Stock to which he would have become entitled upon exercise immediately prior to such reorganization or reclassification, the shares (of any class or classes) or other securities or property of the Company (or cash) that he would have been entitled to receive at the same aggregate Exercise Price upon such reorganization or reclassification if such Warrants had been exercised immediately prior to the record date with respect to such event; and in any such case, appropriate provision (as determined by the Board of Directors of the Company, whose determination shall be conclusive and shall be evidenced by a certified Board resolution filed with the Warrant Agent) shall be made for the application of this Section 6 with respect to the rights and interests thereafter of the Warrantholders (including but not limited to the allocation of the Exercise Price between or among shares of classes of capital stock), to the end that this Section 6 (including the adjustments of the number of shares of Common Stock or other securities purchasable and the Exercise Price thereof) shall thereafter be reflected, as nearly as reasonably practicable, in all subsequent exercises of the Warrants for any shares or securities or other property (or cash) thereafter deliverable upon the exercise of the Warrants. (c) Whenever the number of shares of Common Stock or other securities purchasable upon exercise of a Warrant is adjusted as provided in this Section 6, the Company 4

will promptly file with the Warrant Agent a certificate signed by a Chairman or co-Chairman of the Board or the President or a Vice President of the Company and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Company setting forth the number and kind of securities or other property purchasable upon exercise of a Warrant, as so adjusted, stating that such adjustments in the number or kind of shares or other securities or property conform to the requirements of this Section 6, and setting forth a brief statement of the facts accounting for such adjustments. Promptly after receipt of such certificate, the Company, or the Warrant Agent at the Company's request, will deliver, by first-class, postage prepaid mail, a brief summary thereof (to be supplied by the Company) to the registered holders of the outstanding Warrant Certificates; provided, however, that failure to file or to give any notice required under this Subsection, or any defect therein, shall not affect the legality or validity of any such adjustments under this Section 6; and provided, further, that, where appropriate, such notice may be given in advance and included as part of the notice required to be given pursuant to Section 12 hereof. (d) In case of any consolidation of the Company with, or merger of the Company into, another corporation (other than a consolidation or merger which does not result in any reclassification or change of the outstanding Common Stock), or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or substantially as an entirety, the corporation formed by such consolidation or merger or the corporation which shall have acquired such assets, as the case may be, shall execute and deliver to the Warrant Agent a supplemental warrant agreement providing that the holder of each Warrant then outstanding shall have the right thereafter (until the expiration of such Warrant) to receive, upon exercise of such Warrant, solely the kind and amount of shares of stock and other securities and property (or cash) receivable upon such consolidation, merger, sale or transfer by a holder of the number of shares of Common Stock of the Company for which such Warrant might have been exercised immediately prior to such consolidation, merger, sale or transfer. Such supplemental warrant agreement shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided in this Section. The above provision of this Subsection shall similarly apply to successive consolidations, mergers, sales or transfers. The Warrant Agent shall not be under any responsibility to determine the correctness of any provision contained in any such supplemental warrant agreement relating to either the kind or amount of shares of stock or securities or property (or cash) purchasable by holders of Warrant Certificates upon the exercise of their Warrants after any such consolidation, merger, sale or transfer or of any adjustment to be made with respect thereto, but subject to the provisions of Section 20 hereof, may accept as conclusive evidence of the correctness of any such provisions, and shall be protected in relying upon, a certificate of a firm of independent certified public accountants (who may be the accountants regularly employed by the Company) with respect thereto. (e) Irrespective of any adjustments in the number or kind of shares issuable upon exercise of Warrants, Warrant Certificates theretofore or thereafter issued may continue to express the same price and number and kind of shares as are stated in the similar Warrant Certificates initially issuable pursuant to this Warrant Agreement. 5

(f) The Company may retain a firm of independent public accountants of recognized standing, which may be the firm regularly retained by the Company, selected by the Board of Directors of the Company or the Executive Committee of said Board, and not disapproved by the Warrant Agent, to make any computation required under this Section, and a certificate signed by such firm shall, in the absence of fraud or gross negligence, be conclusive evidence of the correctness of any computation made under this Section. (g) For the purpose of this Section, the term "Common Stock" shall mean (i) the Common Stock or (ii) any other class of stock resulting from successive changes or reclassifications of such Common Stock consisting solely of changes in par value, or from par value to no par value, or from no par value to par value. In the event that at any time as a result of an adjustment made pursuant to this Section, the holder of any Warrant thereafter surrendered for exercise shall become entitled to receive any shares of capital stock of the Company other than shares of Common Stock, thereafter the number of such other shares so receivable upon exercise of any Warrant shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in this Section, and all other provisions of this Agreement, with respect to the Common Stock, shall apply on like terms to any such other shares. (h) The Company may, from time to time and to the extent permitted by law, reduce the Exercise Price of the Warrants by any amount for a period of not less than 20 days. If the Company so reduces the Exercise Price of such Warrants, it will give not less than 15 days' notice of such decrease, which notice may be in the form of a press release, and shall take such other steps as may be required under applicable law in connection with any offers or sales of securities at the reduced price. 7. Exercise of Warrants; Redemption of Class A Warrants. Except with respect to Class A Warrants that have been redeemed as provided in this Section 7, the registered holder of any Warrant Certificate may exercise the Warrants evidenced thereby, in whole at any time or in part from time to time at or prior to the close of business, on the Expiration Date, subject to the provisions of Section 9, at which time the Warrant Certificates shall be and become wholly void and of no value. Warrants may be exercised by their holders or redeemed by the Company as follows: (a) Exercise of Warrants shall be accomplished upon surrender of the Warrant Certificate evidencing such Warrants, with the Form of Election to Purchase on the reverse side thereof duly filled in and executed, to the Warrant Agent at its stock transfer office in _________, ________, together with payment to the Company of the Exercise Price (as of the date of such surrender) of the Warrants then being exercised and an amount equal to any applicable transfer tax and, if requested by the Company, any other taxes or governmental charges which the Company may be required by law to collect in respect of such exercise. Payment of the Exercise Price and other amounts may be made by wire transfer of good funds, or by certified or bank cashier's check, payable in lawful money of the United States of America to the order of the Company. No adjustment shall be made for any cash dividends, whether paid or declared, on any securities issuable upon exercise of a Warrant. 6

(b) Upon receipt of a Warrant Certificate, with the Form of Election to Purchase duly filled in and executed, accompanied by payment of the Exercise Price of the Warrants being exercised (and of an amount equal to any applicable taxes or government charges as aforesaid), the Warrant Agent shall promptly request from the Transfer Agent with respect to the securities to be issued and deliver to or upon the order of the registered holder of such Warrant Certificate, in such name or names as such registered holder may designate, a certificate or certificates for the number of full shares of the securities to be purchased, together with cash made available by the Company pursuant to Section 8 hereof in respect of any fraction of a share of such securities otherwise issuable upon such exercise. If the Warrant is then exercisable to purchase property other than securities, the Warrant Agent shall take appropriate steps to cause such property to be delivered to or upon the order of the registered holder of such Warrant Certificate. In addition, if it is required by law and upon instruction by the Company, the Warrant Agent will deliver to each Warrantholder a prospectus which complies with the provisions of Section 9 of the Securities Act of 1933, and the Company agrees to supply the Warrant Agent with sufficient number of prospectuses to effectuate that purpose. (c) In case the registered holder of any Warrant Certificate shall exercise fewer than all of the Warrants evidenced by such Warrant Certificate, the Warrant Agent shall promptly countersign and deliver to the registered holder of such Warrant Certificate, or to his duly authorized assigns, a new Warrant Certificate or Certificates evidencing the number and class of Warrants that were not so exercised. (d) Each person in whose name any certificate for securities is issued upon the exercise of Warrants shall for all purposes be deemed to have become the holder of record of the securities represented thereby as of, and such certificate shall be dated, the date upon which the Warrant Certificate was duly surrendered in proper form and payment of the Exercise Price (and of any applicable taxes or other governmental charges) was made; provided, however, that if the date of such surrender and payment is a date on which the stock transfer books of the Company are closed, such person shall be deemed to have become the record holder of such shares as of, and the certificate for such shares shall be dated, the next succeeding business day on which the stock transfer books of the Company are open (whether before, on or after the Expiration Date relating to such Warrant) and the Warrant Agent shall be under no duty to deliver the certificate for such shares until such date. The Company covenants and agrees that it shall not cause its stock transfer books to be closed for a period of more than 20 consecutive business days except upon consolidation, merger, sale of all or substantially all of its assets, dissolution or liquidation or as otherwise provided by law. (e) The Class A Warrants (but not the Class B Warrants) outstanding at the time of a redemption may be redeemed at the option of the Company, in whole or in part on a pro-rata basis, by giving not less than 30 days prior notice as provided in Section 7(f) below, which notice may not be give before, but may be given at any time after, the later of ________________, 200_ and the date on which closing price of the Common Stock on the principal exchange or trading facility on which it is then traded has equaled or exceeded $______ per share on each of five consecutive trading days. The price at which Class A Warrants may be redeemed (the "Redemption Price") is $0.25 per Warrant. On and after the redemption date the holders of record of redeemed Class A Warrants shall be entitled to payment 7

of the Redemption Price upon surrender of such redeemed Class A Warrants to the Company at the office of the Warrant Agent designated for that purpose. (f) Notice of redemption of Class A Warrants shall be given at least 30 days prior to the redemption date by mailing, by registered or certified mail, return receipt requested, a copy of such notice to the Warrant Agent and to all of the holders of record of Class A Warrants at their respective addresses appearing on the books or transfer records of the Company or such other address designated in writing by the holder of record to the Warrant Agent not less than 40 days prior to the redemption date. (g) From and after the redemption date, all rights of the Class A Warrantholders with respect to the redeemed Class A Warrants (except the right to receive the Redemption Price) shall terminate, but only if (i) no later than one day prior to the redemption date the Company shall have irrevocably deposited with the Warrant Agent as paying agent a sufficient amount to pay on the redemption date the Redemption Price for all Class A Warrants called for redemption and (ii) the notice of redemption shall have stated the name and address of the Warrant Agent and the intention of the Company to deposit such amount with the Warrant Agent no later than one day prior to the redemption date. (h) On the Redemption Date, the Warrant Agent shall pay to the holders of record of redeemed Class A Warrants all monies received by the Warrant Agent for the redemption of Class A Warrants to which the holders of record of such redeemed Class A Warrants who shall have surrendered their Warrants are entitled. The Warrant Agent shall have no obligation to pay for the redemption of Class A Warrants except to the extent that funds for such payment have been provided to it by the Company. (i) Any amounts deposited with the Warrant Agent that are not required for redemption of Class A Warrants may be withdrawn by the Company. Any amounts deposited with the Warrant Agent that shall be unclaimed after six months after the redemption date shall be redelivered back to the Company, and thereafter the holders of the Class A Warrants called for redemption for which such funds were deposited shall look solely to the Company for payment. The Company shall be entitled to the interest, if any, on funds deposited with the Warrant Agent and the holders of redeemed Class A Warrants shall have no right to any such interest. At the instruction of the Company, the Warrant agent shall deposit or invest any and all funds deposited with it by the Company in connection with any redemption in federally insured, interest bearing accounts with a financial institution or institutions designated by the Company but shall have no liability with respect to the performance of any such investments other than, in the case of funds deposited in accounts maintained by the Warrant Agent, the liability of the Warrant Agent to its depositors in such accounts, generally. (j) If the Company fails to make a sufficient deposit with the Warrant Agent as provided above, the holder of any Warrants called for redemption may at the option of the holder (i) by notice to the Company declare the notice of redemption a nullity as to such holder, or (ii) maintain an action against the Company for the Redemption Price. If the holder brings such an action, the Company will pay reasonable attorneys' fees of the holder. If the holder fails to bring an action against the Company for the Redemption Price within 60 days after the redemption date, the holder shall be deemed to have elected to declare the notice of redemption 8

to be a nullity as to such holder and such notice shall be without any force or effect as to such holder. Except as otherwise specifically provided in this Paragraph 7(j), a notice of redemption, once mailed by the Company as provided in Paragraph 7(f) shall be irrevocable. (k) Notwithstanding anything to the contrary in this Section 7, the Company may not provide notice of any redemption pursuant to this Section 7 at any time at which the Warrants are not currently exercisable as a result of the application of Section 9. If, during the period between notice of redemption and the Redemption Date, the Warrants become not currently exercisable as a result of the application of Section 9, the Redemption Date shall be extended to be the tenth business day after such restriction on exercise lapses. 8. Fractional Interests. The Company shall not be required to issue any Warrant Certificate evidencing a fraction of a Warrant or to issue fractions of shares of securities on the exercise of the Warrants. If any fraction (calculated to the nearest one-hundredth) of a Warrant or a share of securities would, except for the provisions of this Section, be issuable on the exercise of any Warrant, the Company shall purchase such fraction for an amount in cash equal to the current value of such fraction computed on the basis of the closing market price of a Warrant of the same class (as quoted on the principal exchange or trading facility on which such class of Warrants is traded) on the trading day immediately preceding the day upon which such Warrant Certificate was surrendered for exercise in accordance with Section 7. By accepting a Warrant Certificate, the holder thereof expressly waives any right to receive a Warrant Certificate evidencing any fraction of a Warrant or to receive any fractional share of securities upon exercise of a Warrant, except as expressly provided in this Section 8. 9. Reservation of Equity Securities. The Company covenants that it will at all times reserve and keep available, free from any pre-emptive rights, out of its authorized and unissued equity securities, solely for the purpose of issue upon exercise of the Warrants, such number of shares of equity securities of the Company as shall then be issuable upon the exercise of all outstanding Warrants ("Equity Securities"). The Company covenants that all Equity Securities which shall be so issuable shall, upon such issue, be duly authorized, validly issued, fully paid and non-assessable. The Company covenants that if any equity securities, required to be reserved for the purpose of issue upon exercise of the Warrants hereunder, require registration with or approval of any governmental authority under any federal or state law before such shares may be issued upon exercise of Warrants, the Company will use all commercially reasonable efforts to cause such securities to be duly registered, or approved, as the case may be, and, to the extent practicable, take all such action in anticipation of and prior to the exercise of the Warrants, including, without limitation, filing any and all post-effective amendments to the Company's Registration Statement on Form SB-2 (Registration No. 333-_____) necessary to permit a public offering of the securities underlying the Warrants at any and all times during the term of this Agreement; provided, however, that in no event shall such securities be issued, and the Company is authorized to refuse to honor the exercise of any Warrant, if such exercise would result in the opinion of the Company's Board of Directors, upon advice of counsel, in the violation of any law; and provided further that, in the case of a Warrant exercisable solely for securities listed on a securities exchange or for which there are at least three independent market makers, in lieu of obtaining such registration or approval, the Company may elect to redeem Warrants submitted to 9

the Warrant Agent for exercise for a price equal to the difference between the aggregate low asked price, or closing price, as the case may be, of the securities for which such Warrant is exercisable on the date of such submission and the Exercise Price of such Warrants; in the event of such redemption, the Company will pay to the holder of such Warrants the above-described redemption price in cash within 10 business days after receipt of notice from the Warrant Agent that such Warrants have been submitted for exercise. If, at the Expiration Date, the Warrants are not currently exercisable as a result of the provisions of this paragraph, the Expiration Date shall be extended to a date that is 30 calendar days following notice to the holders of Warrants that the Warrants are again exercisable and references to the Expiration Date herein shall thereafter refer to such extended Expiration Date. 10. Reduction of Conversion Price Below Par Value. Before taking any action that would cause an adjustment pursuant to Section 6 hereof reducing the portion of the Exercise Price required to purchase one share of capital stock below the then par value (if any) of a share of such capital stock, the Company will use its best efforts to take any corporate action which, in the opinion of its counsel, may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such capital stock. 11. Payment of Taxes. The Company covenants and agrees that it will pay when due and payable any and all federal and state documentary stamp and other original issue taxes which may be payable in respect of the original issuance of the Warrant Certificates, or any shares of Common Stock or other securities upon the exercise of Warrants. The Company shall not, however, be required (a) to pay any tax which may be payable in respect of any transfer involved in the transfer and delivery of Warrant Certificates or the issuance or delivery of certificates for Common Stock or other securities in a name other than that of the registered holder of the Warrant Certificate surrendered for purchase or (b) to issue or deliver any certificate for shares of Common Stock or other securities upon the exercise of any Warrant Certificate until any such tax shall have been paid, all such tax being payable by the holder of such Warrant Certificate at the time of surrender. 12. Notice of Certain Corporate Action. In case the Company after the date hereof shall propose (a) to offer to the holders of Common Stock, generally, rights to subscribe to or purchase any additional shares of any class of its capital stock, any evidences of its indebtedness or assets, or any other rights or options or (b) to effect any reclassification of Common Stock (other than a reclassification involving merely the subdivision or combination of outstanding shares of Common Stock) or any capital reorganization, or any consolidation or merger to which the Company is a party and for which approval of any stockholders of the Company is required, or any sale, transfer or other disposition of its property and assets substantially as an entirety, or the liquidation, voluntary or involuntary dissolution or winding-up of the Company, then, in each such case, the Company shall file with the Warrant Agent and the Company, or the Warrant Agent on its behalf, shall mail (by first-class, postage prepaid mail) to all registered holders of the Warrant Certificates notice of such proposed action, which notice shall specify the date on which the books of the Company shall close or a record be taken for such offer of rights or options, or the date on which such reclassification, reorganization, consolidation, merger, sale, transfer, other disposition, liquidation, voluntary or involuntary dissolution or winding-up shall take place or commence, as the case may be, and which shall also specify any record date for determination of holders of Common Stock entitled to vote thereon or participate therein and 10

shall set forth such facts with respect thereto as shall be reasonably necessary to indicate any adjustments in the Exercise Price and the number or kind of shares or other securities purchasable upon exercise of Warrants which will be required as a result of such action. Such notice shall be filed and mailed in the case of any action covered by clause (a) above, at least ten days prior to the record date for determining holders of the Common Stock for purposes of such action or, if a record is not to be taken, the date as of which the holders of shares of Common Stock of record are to be entitled to such offering; and, in the case of any action covered by clause (b) above, at least 20 days prior to the earlier of the date on which such reclassification, reorganization, consolidation, merger, sale, transfer, other disposition, liquidation, voluntary or involuntary dissolution or winding-up is expected to become effective and the date on which it is expected that holders of shares of Common Stock of record on such date shall be entitled to exchange their shares for securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, sale, transfer, other disposition, liquidation, voluntary or involuntary dissolution or winding-up. Failure to give any such notice or any defect therein shall not affect the legality or validity of any transaction listed in this Section 12. 13. Disposition of Proceeds on Exercise of Warrant Certificates, etc. The Warrant Agent shall account promptly to the Company with respect to Warrants exercised and concurrently pay to the Company all moneys received by the Warrant Agent for the purchase of securities or other property through the exercise of such Warrants. The Warrant Agent shall keep copies of this Agreement available for inspection by Warrantholders during normal business hours at its stock transfer office. Copies of this Agreement shall be obtainable upon written request addressed to the Warrant Agent at its stock transfer office in __________, __________. 14. Warrantholder Not Deemed a Stockholder. No Warrantholder, as such, shall be entitled to vote, receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise of the Warrants represented thereby for any purpose whatever, nor shall anything contained herein or in any Warrant Certificate be construed to confer upon any Warrantholder, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise), or to receive notice of meetings or other actions affecting stockholders (except as provided in Section 12 hereof), or to receive dividend or subscription rights, or otherwise, until such Warrant Certificate shall have been exercised in accordance with the provisions hereof and the receipt of the Exercise Price and any other amounts payable upon such exercise by the Warrant Agent. 15. Right of Action. All rights of action in respect of this Agreement are vested in the respective registered holders of the Warrant Certificates; and any registered holder of any Warrant Certificate, without the consent of the Warrant Agent or of any other holder of a Warrant Certificate, may, in his own behalf for his own benefit, enforce, and may institute and maintain any suit, action or proceeding against the Company suitable to enforce, or otherwise in 11

respect of, his right to exercise the Warrants evidenced by such Warrant Certificate, for the purchase of shares of the Common Stock in the manner provided in the Warrant Certificate and in this Agreement. 16. Agreement of Holders of Warrant Certificates. Every holder of a Warrant Certificate by accepting the same consents and agrees with the Company, the Warrant Agent and with every other holder of a Warrant Certificate that: (a) the Warrant Certificates are transferable on the registry books of the Warrant Agent only upon the terms and conditions set forth in this Agreement; and (b) the Company and the Warrant Agent may deem and treat the person in whose name the Warrant Certificate is registered as the absolute owner of the Warrant (notwithstanding any notation of ownership or other writing thereon made by anyone other than the Company or the Warrant Agent) for all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. 17. Cancellation of Warrant Certificates. In the event that the Company shall purchase or otherwise acquire any Warrant Certificate or Certificates after the issuance thereof, such Warrant Certificate or Certificates shall thereupon be delivered to the Warrant Agent and be canceled by it and retired. The Warrant Agent shall also cancel any Warrant Certificate delivered to it for exercise, in whole or in part, or delivered to it for transfer, splitup, combination or exchange. Warrant Certificates so canceled shall be delivered by the Warrant Agent to the Company from time to time, or disposed of in accordance with the instructions of the Company. 18. Concerning the Warrant Agent. The Company agrees to pay to the Warrant Agent from time to time, on demand of the Warrant Agent, reasonable compensation for all services rendered by it hereunder and also its reasonable expenses, including counsel fees, and other disbursements incurred in the administration and execution of this Agreement and the exercise and performance of its duties hereunder. The Company also agrees to indemnify the Warrant Agent for, and to hold it harmless against, any loss, liability or expense, incurred without gross negligence, bad faith or willful misconduct on the part of the Warrant Agent, arising out of or in connection with the acceptance and administration of this Agreement. 19. Merger or Consolidation or Change of Name of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated, or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party, or any corporation succeeding to the corporate trust business of the Warrant Agent, shall be the successor to the Warrant Agent hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto, provided that such corporation would be eligible for appointment as a successor warrant agent under the provisions of Section 21 hereof. In case at the time such successor to the Warrant Agent shall succeed to the agency created by this Agreement, any of the Warrant Certificates shall have been countersigned but not delivered, any such successor to the Warrant Agent may adopt the countersignature of the original Warrant Agent and deliver such Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, any successor to the Warrant Agent may 12

countersign such Warrant Certificates either in the name of the predecessor Warrant Agent or in the name of the successor Warrant Agent; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement. In case at any time the name of the Warrant Agent shall be changed and at such time any of the Warrant Certificates shall have been countersigned but not delivered, the Warrant Agent may adopt the countersignature under its prior name and deliver Warrant Certificates so countersigned; and in case at that time any of the Warrant Certificates shall not have been countersigned, the Warrant Agent may countersign such Warrant Certificates either in its prior name or in its changed name; and in all such cases such Warrant Certificates shall have the full force provided in the Warrant Certificates and in this Agreement. 20. Duties of Warrant Agent. The Warrant Agent undertakes the duties and obligations imposed by this Agreement upon the following terms and conditions, by all of which the Company and the holders of Warrant Certificates, by their acceptance thereof, shall be bound: (a) The Warrant Agent may consult with counsel satisfactory to it (who may be counsel for the Company), and the opinion of such counsel shall be full and complete authorization and protection to the Warrant Agent as to any action taken, suffered or omitted by it in good faith and in accordance with such opinion; provided, however, that the Warrant Agent shall have exercised reasonable care in the selection of such counsel. Fees and expenses of such counsel, to the extent reasonable, shall be paid by the Company. (b) Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by a certificate signed by a Chairman or co-Chairman of the Board or the President or a Vice President or the Secretary of the Company and delivered to the Warrant Agent; and such certificate shall be full authorization to the Warrant Agent for any action taken or suffered in good faith by it under the provisions of this Agreement in reliance upon such certificate. (c) The Warrant Agent shall be liable hereunder only for its own gross negligence, bad faith or willful misconduct. (d) The Warrant Agent shall not be liable for or by reason of any of the statements of fact or recitals contained in this Agreement or in the Warrant Certificates (except its countersignature on the Warrant Certificates and such statements or recitals as describe the Warrant Agent or action taken or to be taken by it) or be required to verify the same, but all such statements and recitals are and shall be deemed to have been made by the Company only. (e) The Warrant Agent shall not be under any responsibility in respect of the validity of this Agreement or the execution and delivery hereof (except the due execution hereof by the Warrant Agent) or in respect of the validity or execution of any Warrant Certificate (except its countersignature thereof); nor shall it be responsible for any breach by the Company 13

of any covenant or condition contained in this Agreement or in any Warrant Certificate; nor shall it be responsible for the making of any change in the number of shares of Common Stock for which a Warrant is exercisable required under the provisions of Section 6 or responsible for the manner, method or amount of any such change or the ascertaining of the existence of facts that would require any such adjustment or change (except with respect to the exercise of Warrant Certificates after actual notice of any adjustment of the Exercise Price); nor shall it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common Stock to be issued pursuant to this Agreement or any Warrant Certificate or as to whether any shares of Common Stock will, when issued, be validly issued, fully paid and non-assessable. (f) The Warrant Agent shall be under no obligation to institute any action, suit or legal proceeding or take any other action likely to involve expense unless the Company or one or more registered holders of Warrant Certificates shall furnish the Warrant Agent with reasonable security and indemnity for any costs and expenses which may be incurred. All rights of action under this Agreement or under any of the Warrants may be enforced by the Warrant Agent without the possession of any of the Warrants or the production thereof at any trial or other proceeding relative thereto, and any such action, suit or proceeding instituted by the Warrant Agent shall be brought in its name as Warrant Agent, and any recovery of judgment shall be for the ratable benefit of the registered holders of the Warrant Certificates, as their respective rights or interests may appear. (g) The Warrant Agent and any stockholder, director, officer or employee of the Warrant Agent may buy, sell or deal in any of the Warrants or other securities of the Company or become pecuniarily interested in any transaction in which the Company may be interested, or contract with or lend money to or otherwise act as fully and freely as though it were not Warrant Agent under this Agreement. Nothing herein shall preclude the Warrant Agent from acting in any other capacity for the Company or for any other legal entity. (h) The Warrant Agent is hereby authorized and directed to accept instructions with respect to the performance of its duties hereunder from a Chairman or co-Chairman of the Board or President or a Vice President or the Secretary or the Controller of the Company, and to apply to such officers for advice or instructions in connection with the Warrant Agent's duties, and it shall not be liable for any action taken or suffered or omitted by it in good faith in accordance with instructions of any such officer. (i) The Warrant Agent will not be responsible for any failure of the Company to comply with any of the covenants contained in this Agreement or in the Warrant Certificates to be complied with by the Company. (j) The Warrant Agent may execute and exercise any of the rights or powers hereby vested in it or perform any duty hereunder either itself or by or through its attorneys, agents or employees and the Warrant Agent shall not be answerable or accountable for any act, default, neglect or misconduct of any such attorneys, agents or employees or for any loss to the Company resulting from such neglect or misconduct; provided, however, that reasonable care shall have been exercised in the selection and continued employment of such attorneys, agents and employees. 14

(k) The Warrant Agent will not incur any liability or responsibility to the Company or to any holder of any Warrant Certificate for any action taken, or any failure to take action, in reliance on any notice, resolution, waiver, consent, order, certificate, or other paper, document or instrument reasonably believed by the Warrant Agent to be genuine and to have been signed, sent or presented by the proper party or parties. (l) The Warrant Agent will act hereunder solely as agent of the Company in a ministerial capacity, and its duties will be determined solely by the provisions hereof. The Warrant Agent will not be liable for anything which it may do or refrain from doing in connection with this Agreement except for its own gross negligence, bad faith or willful conduct. 21. Change of Warrant Agent. The Warrant Agent may resign and be discharged from its duties under this Agreement upon 30 days' prior notice in writing mailed, by registered or certified mail, to the Company. The Company may remove the Warrant Agent or any successor warrant agent upon 30 days' prior notice in writing, mailed to the Warrant Agent or successor warrant agent, as the case may be, by registered or certified mail. If the Warrant Agent shall resign or be removed or shall otherwise become incapable of acting, the Company shall appoint a successor to the Warrant Agent and shall, within 15 days following such appointment, give notice thereof in writing to each registered holder of the Warrant Certificates. If the Company shall fail to make such appointment within a period of 15 days after giving notice of such removal or after it has been notified in writing of such resignation or incapacity by the resigning or incapacitated Warrant Agent, then the Company agrees to perform the duties of the Warrant Agent hereunder until a successor Warrant Agent is appointed. After appointment and execution of a copy of this Agreement in effect at that time, the successor Warrant Agent shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named as Warrant Agent without further act or deed; but the former Warrant Agent shall deliver and transfer to the successor Warrant Agent, within a reasonable time, any property at the time held by it hereunder, and execute and deliver any further assurance, conveyance, act or deed necessary for the purpose. Failure to give any notice provided for in this Section, however, or any defect therein shall not affect the legality or validity of the resignation or removal of the Warrant Agent or the appointment of the successor warrant agent, as the case may be. 22. Issuance of New Warrant Certificates. Notwithstanding any of the provisions of this Agreement or the several Warrant Certificates to the contrary, the Company may, at its option, issue new Warrant Certificates in such form as may be approved by its Board of Directors to reflect any adjustment or change in the Exercise Price or the number or kind of shares purchasable under the several Warrant Certificates made in accordance with the provisions of this Agreement. 23. Notices. Notice or demand pursuant to this Agreement to be given or made on the Company by the Warrant Agent or by the registered holder of any Warrant Certificate shall be sufficiently given or made if sent by firstclass or registered mail, postage prepaid, addressed (until another address is filed in writing by the Company with the Warrant Agent) as follows: 15

Converted Organics Inc. 7A Commercial Wharf West Boston, Massachusetts 02110 Attention: Chief Financial Officer Subject to the provisions of Section 21, any notice pursuant to this Agreement to be given or made by the Company or by the holder of any Warrant Certificate to or on the Warrant Agent shall be sufficiently given or made if sent by first-class or registered mail, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company) as follows:

Attention: __________________ Any notice or demand authorized to be given or made to the registered holder of any Warrant Certificate under this Agreement shall be sufficiently given or made if sent by first-class or registered mail, postage prepaid, to the last address of such holder as it shall appear on the registers maintained by the Warrant Agent. 24. Modification of Agreement. The Warrant Agent may, without the consent or concurrence of the Warrantholders, by supplemental agreement or otherwise, concur with the Company in making any changes or corrections in this Agreement that the Warrant Agent shall have been advised by counsel (who may be counsel for the Company) are necessary or desirable to cure any ambiguity or to correct any defective or inconsistent provision or clerical omission or mistake or manifest error herein contained, or to make any other provisions in regard to matters or questions arising hereunder and which shall not be inconsistent with the provisions of the Warrant Certificates and which shall not adversely affect the interests of the Warrantholders. As of the date hereof, this Agreement contains the entire and only agreement, understanding, representation, condition, warranty or covenant between the parties hereto with respect to the matters herein, supersedes any and all other agreements between the parties hereto relating to such matters, and may be modified or amended only by a written agreement signed by both parties hereto pursuant to the authority granted by the first sentence of this Section. 25. Successors. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the benefit of their respective successors and assigns hereunder. 26. Delaware Contract. This Agreement and each Warrant 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 construed in accordance with the laws of said State. 27. Termination. This Agreement shall terminate as of the close of business on the Expiration Date, or such earlier date upon which all Warrants shall have been exercised or redeemed, except that the Warrant Agent shall account to the Company as to all Warrants outstanding and all cash held by it as of the close of business on the Expiration Date. 16

28. Benefits of this Agreement. Nothing in this Agreement or in the Warrant Certificates shall be construed to give to any person or corporation other than the Company, the Warrant Agent, and their respective successors and assigns hereunder and the registered holders of the Warrant Certificates any legal or equitable right, remedy or claim under this Agreement; but this Agreement shall be for the sole and exclusive benefit of the Company, the Warrant Agent, their respective successors and assigns hereunder and the registered holders of the Warrant Certificates. 29. Descriptive Headings. The descriptive headings of the several Sections of this Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof. 30. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute one and the same instrument. (Remainder of page intentionally left blank; signature page follows.) 17

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed, all as of the day and year first above written. CONVERTED ORGANICS INC. By: Name: Title: By: Name: Title: By: Name: Title: 18

EXHIBIT A VOID AFTER 5 P.M. PACIFIC TIME ON _________________, 2011 CLASS A WARRANTS TO PURCHASE COMMON STOCK WA_____ _________ Warrants Converted Organics Inc. CUSIP ___________ THIS CERTIFIES THAT or registered assigns, is the registered holder of the number of Class A Warrants ("Warrants") set forth above. Each Warrant, unless and until redeemed by the Company as provided in the Warrant Agreement, hereinafter more fully described (the "Warrant Agreement") entitles the holder thereof to purchase from Converted Organics Inc., a corporation incorporated under the laws of the State of Delaware the ("Company"), subject to the terms and conditions set forth hereinafter and in the Warrant Agreement, at any time on or after ___________, 2006 and before the close of business on ________, 2011 ("Expiration Date"), one fully paid and non-assessable share of Common Stock of the Company ("Common Stock") upon presentation and surrender of this Warrant Certificate, with the instructions for the registration and delivery of Common Stock filled in, at the stock transfer office in __________, __________, of ____________________, Warrant Agent of the Company ("Warrant Agent") or of its successor warrant agent or, if there be no successor warrant agent, at the corporate offices of the Company, and upon payment of the Exercise Price (as defined in the Warrant Agreement) and any applicable taxes paid either in cash, or by certified or official bank check, payable in lawful money of the United States of America to the order of the Company. Each Warrant initially entitles the holder to purchase one share of Common Stock for $____. The number and kind of securities or other property for which the Warrants are exercisable are subject to adjustment in certain events, such as mergers, splits, stock dividends, splits and the like, to prevent dilution. The Company may redeem any or all outstanding and unexercised Warrants by giving not less than 30 days prior notice at any time after the later of _______________, 200_ and the date on which closing price of the Common Stock on the principal exchange or trading facility on which it is traded has equaled or exceeded $______ per share on each of five consecutive trading days. The Redemption Price is $0.25 per Warrant. All Warrants not theretofore exercised will expire on the Expiration Date. 1

This Warrant Certificate is subject to all of the terms, provisions and conditions of the Warrant Agreement, dated as of ________________, 2006, between the Company and the Warrant Agent, to all of which terms, provisions and conditions the registered holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is incorporated herein by reference and made a part hereof and reference is made to the Warrant Agreement for a full description of the rights, limitations of rights, obligations, duties and immunities of the Warrant Agent, the Company and the holders of the Warrant Certificates. Copies of the Warrant Agreement are available for inspection at the stock transfer office of the Warrant Agent or may be obtained upon written request addressed to the Company at Converted Organics Inc., 7A Commercial Wharf West, Boston, Massachusetts 02110, Attention: Chief Financial Officer. The Company shall not be required upon the exercise of the Warrants evidenced by this Warrant Certificate to issue fractions of Warrants, Common Stock or other securities, but shall make adjustment therefor in cash on the basis of the current market value of any fractional interest as provided in the Warrant Agreement. In certain cases, the sale of securities by the Company upon exercise of Warrants may violate the securities laws of the United States, certain states thereof or other jurisdictions. The Company has agreed to use all commercially reasonable efforts to cause a registration statement to continue to be effective during the term of the Warrants with respect to such sales under the Securities Act of 1933, and to take such action under the laws of various states as may be required to cause the sale of securities upon exercise to be lawful. However, the Company will not be required to honor the exercise of Warrants if, in the opinion of the Board of Directors, upon advice of counsel, the sale of securities upon such exercise would be unlawful. In certain cases, the Company may, but is not required to, purchase Warrants submitted for exercise for a cash price equal to the difference between the market price of the securities obtainable upon such exercise and the exercise price of such Warrants. If the Warrants would otherwise expire while not exercisable as a result of any such determination by the Board of Directors, their Expiration Date will be extended to a date 30 days after the Warrants once again become exercisable. This Warrant Certificate, with or without other Certificates, upon surrender to the Warrant Agent, any successor warrant agent or, in the absence of any successor warrant agent, at the corporate offices of the Company, may be exchanged for another Warrant Certificate or Certificates evidencing in the aggregate the same number of Warrants as the Warrant Certificate or Certificates so surrendered. If the Warrants evidenced by this Warrant Certificate shall be exercised in part, the holder hereof shall be entitled to receive upon surrender hereof another Warrant Certificate or Certificates evidencing the number of Warrants not so exercised. No holder of this Warrant Certificate, as such, shall be entitled to vote, receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose whatever, nor shall anything contained in the Warrant Agreement or herein be construed to confer upon the holder of this Warrant Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof or give or withhold consent to any corporate action (whether upon any matter submitted to stockholders at any meeting thereof, or give or withhold consent to any merger, recapitalization, issuance of stock, reclassification of stock, change of par value or change of 2

stock to no par value, consolidation, conveyance or otherwise) or to receive notice of meetings or other actions affecting stockholders (except as provided in the Warrant Agreement) or to receive dividends or subscription rights or otherwise until the Warrants evidenced by this Warrant Certificate shall have been exercised and the Common Stock purchasable upon the exercise thereof shall have become deliverable as provided in the Warrant Agreement. If this Warrant Certificate shall be surrendered for exercise within any period during which the transfer books for the Company's Common Stock or other class of stock purchasable upon the exercise of the Warrants evidenced by this Warrant Certificate are closed for any purpose, the Company shall not be required to make delivery of certificates for shares purchasable upon such transfer until the date of the reopening of said transfer books. Every holder of this Warrant Certificate by accepting the same consents and agrees with the Company, the Warrant Agent, and with every other holder of a Warrant Certificate that: (a) this Warrant Certificate is transferable on the registry books of the Warrant Agent only upon the terms and conditions set forth in the Warrant Agreement, and (b) the Company and the Warrant Agent may deem and treat the person in whose name this Warrant Certificate is registered as the absolute owner hereof (notwithstanding any notation of ownership or other writing thereon made by anyone other than the Company or the Warrant Agent) for all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. The Company shall not be required to issue or deliver any certificate for shares of Common Stock or other securities upon the exercise of Warrants evidenced by this Warrant Certificate until any tax which may be payable in respect thereof by the holder of this Warrant Certificate pursuant to the Warrant Agreement shall have been paid, such tax being payable by the holder of this Warrant Certificate at the time of surrender. This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Warrant Agent. (Remainder of page intentionally left blank; signature page follows.) 3

WITNESS the facsimile signatures of the proper officers of the Company and its corporate seal. Dated: CONVERTED ORGANICS INC. By: Name: Title: Chief Executive Officer Attest: Secretary Countersigned: By: Authorized Officer 4

EXHIBIT B VOID AFTER 5 P.M. PACIFIC TIME ON _________________, 2011 CLASS B WARRANTS TO PURCHASE COMMON STOCK WB_____ _________ Warrants Converted Organics Inc. CUSIP ___________ THIS CERTIFIES THAT or registered assigns, is the registered holder of the number of Class B Warrants ("Warrants") set forth above. Subject to the terms of the Warrant Agreement, hereinafter more fully described (the "Warrant Agreement"), each Warrant entitles the holder thereof to purchase from Converted Organics Inc., a corporation incorporated under the laws of the State of Delaware the ("Company"), subject to the terms and conditions set forth hereinafter and in the Warrant Agreement, at any time on or after ___________, 2006 and before the close of business on ________, 2011 ("Expiration Date"), one fully paid and non-assessable share of Common Stock of the Company ("Common Stock") upon presentation and surrender of this Warrant Certificate, with the instructions for the registration and delivery of Common Stock filled in, at the stock transfer office in ____________, ____________, of ____________________ Company, Inc., Warrant Agent of the Company ("Warrant Agent") or of its successor warrant agent or, if there be no successor warrant agent, at the corporate offices of the Company, and upon payment of the Exercise Price (as defined in the Warrant Agreement) and any applicable taxes paid either in cash, or by certified or official bank check, payable in lawful money of the United States of America to the order of the Company. Each Warrant initially entitles the holder to purchase one share of Common Stock for $____. The number and kind of securities or other property for which the Warrants are exercisable are subject to adjustment in certain events, such as mergers, splits, stock dividends, splits and the like, to prevent dilution. All Warrants not theretofore exercised will expire on the Expiration Date. This Warrant Certificate is subject to all of the terms, provisions and conditions of the Warrant Agreement, dated as of ________________, 2006, between the Company and the Warrant Agent, to all of which terms, provisions and conditions the registered holder of this Warrant Certificate consents by acceptance hereof. The Warrant Agreement is incorporated herein by reference and made a part hereof and reference is made to the Warrant Agreement for a 1

full description of the rights, limitations of rights, obligations, duties and immunities of the Warrant Agent, the Company and the holders of the Warrant Certificates. Copies of the Warrant Agreement are available for inspection at the stock transfer office of the Warrant Agent or may be obtained upon written request addressed to the Company at Converted Organics Inc., 7A Commercial Wharf West, Boston, Massachusetts 02110, Attention: Chief Financial Officer. The Company shall not be required upon the exercise of the Warrants evidenced by this Warrant Certificate to issue fractions of Warrants, Common Stock or other securities, but shall make adjustment therefor in cash on the basis of the current market value of any fractional interest as provided in the Warrant Agreement. In certain cases, the sale of securities by the Company upon exercise of Warrants may violate the securities laws of the United States, certain states thereof or other jurisdictions. The Company has agreed to use all commercially reasonable efforts to cause a registration statement to continue to be effective during the term of the Warrants with respect to such sales under the Securities Act of 1933, and to take such action under the laws of various states as may be required to cause the sale of securities upon exercise to be lawful. However, the Company will not be required to honor the exercise of Warrants if, in the opinion of the Board of Directors, upon advice of counsel, the sale of securities upon such exercise would be unlawful. In certain cases, the Company may, but is not required to, purchase Warrants submitted for exercise for a cash price equal to the difference between the market price of the securities obtainable upon such exercise and the exercise price of such Warrants. If the Warrants would otherwise expire while not exercisable as a result of any such determination by the Board of Directors, their Expiration Date will be extended to a date 30 days after the Warrants once again become exercisable. This Warrant Certificate, with or without other Certificates, upon surrender to the Warrant Agent, any successor warrant agent or, in the absence of any successor warrant agent, at the corporate offices of the Company, may be exchanged for another Warrant Certificate or Certificates evidencing in the aggregate the same number of Warrants as the Warrant Certificate or Certificates so surrendered. If the Warrants evidenced by this Warrant Certificate shall be exercised in part, the holder hereof shall be entitled to receive upon surrender hereof another Warrant Certificate or Certificates evidencing the number of Warrants not so exercised. No holder of this Warrant Certificate, as such, shall be entitled to vote, receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the exercise hereof for any purpose whatever, nor shall anything contained in the Warrant Agreement or herein be construed to confer upon the holder of this Warrant Certificate, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof or give or withhold consent to any corporate action (whether upon any matter submitted to stockholders at any meeting thereof, or give or withhold consent to any merger, recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, conveyance or otherwise) or to receive notice of meetings or other actions affecting stockholders (except as provided in the Warrant Agreement) or to receive dividends or subscription rights or otherwise until the Warrants evidenced by this Warrant Certificate shall have been exercised and the Common Stock purchasable upon the exercise thereof shall have become deliverable as provided in the Warrant Agreement. 2

If this Warrant Certificate shall be surrendered for exercise within any period during which the transfer books for the Company's Common Stock or other class of stock purchasable upon the exercise of the Warrants evidenced by this Warrant Certificate are closed for any purpose, the Company shall not be required to make delivery of certificates for shares purchasable upon such transfer until the date of the reopening of said transfer books. Every holder of this Warrant Certificate by accepting the same consents and agrees with the Company, the Warrant Agent, and with every other holder of a Warrant Certificate that: (a) this Warrant Certificate is transferable on the registry books of the Warrant Agent only upon the terms and conditions set forth in the Warrant Agreement, and (b) the Company and the Warrant Agent may deem and treat the person in whose name this Warrant Certificate is registered as the absolute owner hereof (notwithstanding any notation of ownership or other writing thereon made by anyone other than the Company or the Warrant Agent) for all purposes whatsoever and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. The Company shall not be required to issue or deliver any certificate for shares of Common Stock or other securities upon the exercise of Warrants evidenced by this Warrant Certificate until any tax which may be payable in respect thereof by the holder of this Warrant Certificate pursuant to the Warrant Agreement shall have been paid, such tax being payable by the holder of this Warrant Certificate at the time of surrender. This Warrant Certificate shall not be valid or obligatory for any purpose until it shall have been countersigned by the Warrant Agent. (Remainder of page intentionally left blank; signature page follows.) 3

WITNESS the facsimile signatures of the proper officers of the Company and its corporate seal. Dated: CONVERTED ORGANICS INC. By: Name: Title: Chief Executive Officer Attest: Secretary Countersigned: By: Authorized Officer 4

EXHIBIT 4.6 THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND IS NOT TRANSFERABLE EXCEPT AS PROVIDED HEREIN Converted Organics Inc. Form of PURCHASE WARRANT Issued to: PAULSON INVESTMENT COMPANY, INC. Exercisable to Purchase _____ Units of CONVERTED ORGANICS INC. Void after ____________, 2011

This is to certify that, for value received and subject to the terms and conditions set forth below, the Warrantholder (hereinafter defined) is entitled to purchase, and the Company promises and agrees to sell and issue to the Warrantholder, at any time on or after ______________, 2006 and on or before _____________, 2011, up to ____ Units (hereinafter defined) at the Exercise Price (hereinafter defined). This Warrant Certificate is issued subject to the following terms and conditions: 1. Definitions of Certain Terms. Except as may be otherwise clearly required by the context, the following terms have the following meanings: (a) "Act" means the Securities Act of 1933, as amended. (b) "Cashless Exercise" means an exercise of Warrants in which, in lieu of payment of the Exercise Price, the Holder elects to receive a lesser number of Securities such that the value of the Securities that such Holder would otherwise have been entitled to receive but has agreed not to receive, as determined by the closing price of such Securities on the date of exercise or, if such date is not a trading day, on the next prior trading day, is equal to the Exercise Price with respect to such exercise. A Holder may only elect a Cashless Exercise if Securities issuable by the Company on such exercise are publicly traded securities. (c) "Class A Warrant" means a Warrant defined as a Class A Warrant in the Warrant Agreement. (d) "Class B Warrant" means a Warrant defined as a Class B Warrant in the Warrant Agreement. (e) "Closing Date" means the date on which the Offering is closed. (f) "Commission" means the Securities and Exchange Commission. (g) "Common Stock" means the common stock, par value $0.0001, of the Company. (h) "Company" means Converted Organics Inc., a Delaware corporation. (i) "Company's Expenses" means any and all expenses payable by the Company or the Warrantholder in connection with an offering described in Section 6 hereof, except Warrantholder's Expenses. (j) "Corporate Financing Rule" means Rule 2710 of the rules of the National Association of Securities Dealers, Inc. (k) "Effective Date" means the date on which the Registration Statement is declared effective by the Commission. 1

(l) "Exercise Price" means the price at which the Warrantholder may purchase one Unit upon exercise of Warrants as determined from time to time pursuant to the provisions hereof. The initial Exercise Price is $________ per Unit. (m) "Offering" means the public offering of Units made pursuant to the Registration Statement. (n) "Participating Underwriter" means any underwriter participating in the sale of the Securities pursuant to a registration under Section 6 of this Warrant Certificate. (o) "Registration Statement" means the Company's registration statement (File No. 333 -___________) as amended on the Closing Date. (p) "Rules and Regulations" means the rules and regulations of the Commission adopted under the Act. (q) "Securities" means the securities obtained or obtainable upon exercise of the Warrant or securities obtained or obtainable upon exercise, exchange, or conversion of such securities. (r) "Unit" means one share of Common Stock and one Class A Warrant and one Class B Warrant. (s) "Unit Warrant" means either a Class A Warrant or a Class B Warrant. (t) "Warrant Agreement" means that certain Warrant Agreement, dated as of ______________, 2006, by and between the Company and ________________________ relating to the issuance of Unit Warrants. (u) "Warrant Certificate" means a certificate evidencing the Warrant. (v) "Warrantholder" means a record holder of the Warrant or Securities. The initial Warrantholder is Paulson Investment Company, Inc. (w) "Warrantholder's Expenses" means the sum of (i) the aggregate amount of cash payments made to an underwriter, underwriting syndicate, or agent in connection with an offering described in Section 6 hereof multiplied by a fraction the numerator of which is the aggregate sales price of the Securities sold by such underwriter, underwriting syndicate, or agent in such offering and the denominator of which is the aggregate sales price of all of the securities sold by such underwriting syndicate in such offering and (ii) all out-of-pocket expenses of the Warrantholder, except for the fees and disbursements of one firm retained as legal counsel for the Warrantholder that will be paid by the Company. (x) "Warrant" means the warrant evidenced by this certificate, any similar certificate issued in connection with the Offering, or any certificate obtained upon transfer or partial exercise of the Warrant evidenced by any such certificate. 2

2. Exercise of Warrant. All or any part of the Warrant represented by this Warrant Certificate may be exercised commencing on the first anniversary of the Effective Date and ending at 5:00 p.m. Pacific Time on the fifth anniversary of the Effective Date by surrendering this Warrant Certificate, together with appropriate instructions, duly executed by the Warrantholder or by its duly authorized attorney, at the office of the Company, 7A Commercial Wharf West, Boston, Massachusetts 02110; or at such other office or agency as the Company may designate. The date on which such instructions are received by the Company shall be the date of exercise. If the Holder has elected a Cashless Exercise, such instructions shall so state. Upon receipt of notice of exercise, the Company shall immediately instruct its transfer agent to prepare certificates for the Securities to be received by the Warrantholder upon completion of the Warrant exercise. When such certificates are prepared, the Company shall notify the Warrantholder and deliver such certificates to the Warrantholder or as per the Warrantholder's instructions immediately upon payment in full by the Warrantholder, in lawful money of the United States, of the Exercise Price payable with respect to the Securities being purchased, if any. If the Warrantholder shall represent and warrant that all applicable registration and prospectus delivery requirements for their sale have been complied with upon sale of the Securities received upon exercise of the Warrant, such certificates shall not bear a legend with respect to the Act. If fewer than all the Securities purchasable under the Warrant are purchased, the Company will, upon such partial exercise, execute and deliver to the Warrantholder a new Warrant Certificate (dated the date hereof), in form and tenor similar to this Warrant Certificate, evidencing that portion of the Warrant not exercised. The Securities to be obtained on exercise of the Warrant will be deemed to have been issued, and any person exercising the Warrants will be deemed to have become a holder of record of those Securities, as of the date of the payment of the Exercise Price. 3. Adjustments in Certain Events. The number, class, and price of Securities for which this Warrant Certificate may be exercised are subject to adjustment from time to time upon the happening of certain events as follows: (a) If the outstanding shares of the Company's Common Stock are divided into a greater number of shares or a dividend in stock is paid on the Common Stock, the number of shares of Common Stock for which the Warrant is then exercisable will be proportionately increased and the Exercise Price will be proportionately reduced; and, conversely, if the outstanding shares of Common Stock are combined into a smaller number of shares of Common Stock, the number of shares of Common Stock for which the Warrant is then exercisable will be proportionately reduced and the Exercise Price will be proportionately increased. The increases and reductions provided for in this Section 3(a) will be made with the intent and, as nearly as practicable, the effect that neither the percentage of the total equity of the Company obtainable on exercise of the Warrants nor the price payable for such percentage upon such exercise will be affected by any event described in this Section 3(a). (b) In case of any change in the Common Stock through merger, consolidation, reclassification, reorganization, partial or complete liquidation, purchase of substantially all the assets of the Company, or other change in the capital structure of the Company, then, as a condition of such change, lawful and adequate provision will be made so 3

that the holder of this Warrant Certificate will have the right thereafter to receive upon the exercise of the Warrant the kind and amount of shares of stock or other securities or property to which he would have been entitled if, immediately prior to such event, he had held the number of shares of Common Stock obtainable upon the exercise of the Warrant. In any such case, appropriate adjustment will be made in the application of the provisions set forth herein with respect to the rights and interest thereafter of the Warrantholder, to the end that the provisions set forth herein will thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable upon the exercise of the Warrant. The Company will not permit any change in its capital structure to occur unless the issuer of the shares of stock or other securities to be received by the holder of this Warrant Certificate, if not the Company, agrees to be bound by and comply with the provisions of this Warrant Certificate. (c) When any adjustment is required to be made in the number of shares of Common Stock, other securities, or the property purchasable upon exercise of the Warrant, the Company will promptly determine the new number of such shares or other securities or property purchasable upon exercise of the Warrant and (i) prepare and retain on file a statement describing in reasonable detail the method used in arriving at the new number of such shares or other securities or property purchasable upon exercise of the Warrant and (ii) cause a copy of such statement to be mailed to the Warrantholder within thirty (30) days after the date of the event giving rise to the adjustment. (d) No fractional shares of Common Stock or other securities will be issued in connection with the exercise of the Warrant, but the Company will pay, in lieu of fractional shares, a cash payment therefor on the basis of the mean between the bid and asked prices of the Common Stock in the over-the-counter market or the last sale price of the Common Stock on the principal exchange or other trading facility on which the Common Stock is traded on the day immediately prior to exercise. (e) If securities of the Company or securities of any subsidiary of the Company are distributed pro rata to holders of Common Stock, such number of securities will be distributed to the Warrantholder or its assignee upon exercise of its rights hereunder as such Warrantholder or assignee would have been entitled to if this Warrant Certificate had been exercised prior to the record date for such distribution. The provisions with respect to adjustment of the Common Stock provided in this Section 3 will also apply to the securities to which the Warrantholder or its assignee is entitled under this Section 3(e). (f) Notwithstanding anything herein to the contrary, there will be no adjustment made hereunder on account of the sale by the Company of the Common Stock or other Securities purchasable upon exercise of the Warrant. (g) If, immediately prior to any exercise of Warrants, there shall be outstanding no securities of a class or series that, but for the provisions of this Section 3, would be issuable upon such exercise (the "Formerly Issuable Securities"), then, upon such exercise, and in lieu of the Formerly Issuable Securities, the Company shall issue that number and kind of other securities or property for which the Formerly Issuable Securities were most recently exercisable or into which the Formerly Issuable Securities were most recently convertible, as the case may be. 4

4. Reservation of Securities. The Company agrees that the number of shares of Common Stock or other Securities sufficient to provide for the exercise of the Warrant upon the basis set forth above will at all times during the term of the Warrant be reserved for exercise. 5. Validity of Securities. All Securities delivered upon the exercise of the Warrant will be duly and validly issued in accordance with their terms, and the Company will pay all documentary and transfer taxes, if any, in respect of the original issuance thereof upon exercise of the Warrant. 6. Registration of Securities Issuable on Exercise of Warrant Certificate. (a) The Company will register the Securities with the Commission pursuant to the Act so as to allow the unrestricted sale of the Securities to the public from time to time commencing on the first anniversary of the Effective Date and ending at 5:00 p.m. Pacific Time on the fifth anniversary of the Effective Date (the "Registration Period"). The Company will also file such applications and other documents necessary to permit the sale of the Securities to the public during the Registration Period in those states in which the Units were qualified for sale in the Offering or such other states as the Company and the Warrantholder agree to. In order to comply with the provisions of this Section 6(a), the Company is not required to file more than one registration statement. No registration right of any kind, "piggyback" or otherwise, will last longer than five years from the Effective Date. (b) The Company will pay all of the Company's Expenses and each Warrantholder will pay its pro rata share of the Warrantholder's Expenses relating to the registration, offer, and sale of the Securities. (c) Except as specifically provided herein, the manner and conduct of the registration, including the contents of the registration, will be entirely in the control and at the discretion of the Company. The Company will file such post-effective amendments and supplements as may be necessary to maintain the currency of the registration statement during the period of its use. In addition, if the Warrantholder participating in the registration is advised by counsel that the registration statement, in their opinion, is deficient in any material respect, the Company will use its best efforts to cause the registration statement to be amended to eliminate the concerns raised. (d) The Company will furnish to the Warrantholder the number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Act, and such other documents as it may reasonably request in order to facilitate the disposition of Securities owned by it. (e) The Company will, at the request of Warrantholders holding at least 50 percent of the then outstanding Warrants, (i) furnish an opinion of the counsel representing the Company for the purposes of the registration pursuant to this Section 6, addressed to the Warrantholders and any Participating Underwriter, (ii) furnish an appropriate letter from the independent registered public accountants of the Company, addressed to the Warrantholders and any Participating Underwriter, and (iii) make representations and warranties to the Warrantholders and any Participating Underwriter. A request pursuant to this subsection (e) may 5

be made on three occasions. The documents required to be delivered pursuant to this subsection (e) will be dated within ten days of the request and will be, in form and substance, equivalent to similar documents furnished to the underwriters in connection with the Offering, with such changes as may be appropriate in light of changed circumstances. 7. Indemnification in Connection with Registration. (a) If any of the Securities are registered, the Company will indemnify and hold harmless each selling Warrantholder, any person who controls any selling Warrantholder within the meaning of the Act, and any Participating Underwriter against any losses, claims, damages, or liabilities, joint or several, to which any Warrantholder, controlling person, or Participating Underwriter may be subject under the Act or otherwise; and it will reimburse each Warrantholder, each controlling person, and each Participating Underwriter for any legal or other expenses reasonably incurred by the Warrantholder, controlling person, or Participating Underwriter in connection with investigating or defending any such loss, claim, damage, liability, or action, insofar as such losses, claims, damages, or liabilities, joint or several (or actions in respect thereof), arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained, on the effective date thereof, in any such registration statement or any preliminary prospectus or final prospectus, or any amendment or supplement thereto, 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; provided, however, that the Company will not be liable in any case to the extent that any loss, claim, damage, or liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission made in any registration statement, preliminary prospectus, final prospectus, or any amendment or supplement thereto, in reliance upon and in conformity with written information furnished by a Warrantholder for use in the preparation thereof. The indemnity agreement contained in this subparagraph (a) will not apply to amounts paid to any claimant in settlement of any suit or claim unless such payment is first approved by the Company, such approval not to be unreasonably withheld. (b) Each selling Warrantholder, as a condition of the Company's registration obligation, will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed any registration statement or other filing or any amendment or supplement thereto, and any person who controls the Company within the meaning of the Act, against any losses, claims, damages, or liabilities to which the Company or any such director, officer, or controlling person may become subject under the Act or otherwise, and will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, or controlling person in connection with investigating or defending any such loss, claim, damage, liability, or action, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any untrue or alleged untrue statement of any material fact contained in said registration statement, any preliminary or final prospectus, or other filing, or any amendment or supplement thereto, or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or alleged untrue statement or omission or alleged omission was made in said registration statement, preliminary or final prospectus, or other filing, or amendment or supplement, in reliance upon and in conformity with written information furnished by such Warrantholder for use in the 6

preparation thereof; provided, however, that the indemnity agreement contained in this subparagraph (b) will not apply to amounts paid to any claimant in settlement of any suit or claim unless such payment is first approved by the Warrantholder, such approval not to be unreasonably withheld. (c) Promptly after receipt by an indemnified party under subparagraphs (a) or (b) above of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, notify the indemnifying party of the commencement thereof; but the omission to notify the indemnifying party will not relieve it from any liability that it may have to any indemnified party otherwise than under subparagraphs (a) and (b). (d) If any such action is brought against any indemnified party and it notifies an indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate in, and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party; and after notice from the indemnifying party to such indemnified party of its election to assume the defense thereof, the indemnifying party will not be liable to such indemnified party for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. 8. Restrictions on Transfer. This Warrant Certificate and the Warrant may not be sold, transferred, assigned, pledged, or hypothecated, or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition of the securities by any person for a period of 180 days immediately following the Effective Date, except as permitted in subparagraph (g)(2) of the Corporate Financing Rule. The Warrant may be divided or combined, upon request to the Company by the Warrantholder, into a certificate or certificates evidencing the same aggregate number of Warrants. 9. No Rights as a Shareholder. Except as otherwise provided herein, the Warrantholder will not, by virtue of ownership of the Warrant, be entitled to any rights of a shareholder of the Company but will, upon written request to the Company, be entitled to receive such quarterly or annual reports as the Company distributes to its shareholders. 10. Notice. Any notices required or permitted to be given hereunder will be in writing and may be served personally or by mail; and if served will be addressed as follows: If to the Company: Converted Organics Inc. 7A Commercial Wharf West Boston, Massachusetts 02110 Attention: Chief Financial Officer 7

If to the Warrantholder: at the address furnished by the Warrantholder to the Company for the purpose of notice. Any notice so given by mail will be deemed effectively given 48 hours after mailing when deposited in the United States mail, registered or certified mail, return receipt requested, postage prepaid and addressed as specified above. Any party may by written notice to the other specify a different address for notice purposes. 11. Applicable Law. This Warrant Certificate will be governed by and construed in accordance with the laws of the State of Oregon, without reference to conflict of laws principles thereunder. All disputes relating to this Warrant Certificate shall be tried before the courts of Oregon located in Multnomah County, Oregon to the exclusion of all other courts that might have jurisdiction.
Dated as of , 2006 -------------CONVERTED ORGANICS INC.

By: -----------------------------------Name: ---------------------------------Title: ---------------------------------

Agreed and Accepted as of

, 2006 ---------------PAULSON INVESTMENT COMPANY, INC.

By: -----------------------------------Name: ---------------------------------Title: ---------------------------------

8

Exhibit 10.1 CONVERTED ORGANICS INC. 7A COMMERCIAL WHARF WEST BOSTON, MA 02210 TEL: 617 624-0111 FAX 617 624-0333 EMAIL: EGILDEA@ECAPGLOBAL.COM MARCH 2, 2006 FINANCING TERMS AGREEMENT FOR SALE OF BRIDGE NOTES AND SHARES
ISSUER: CONVERTED ORGANICS INC. ("CONVERTED ORGANICS" or the "COMPANY"). $1,200,000 in ninety-six (96) UNITS of $12,500 in exchange for bridge notes ("BRIDGE NOTE(S)") and securities of the COMPANY ("BRIDGE EQUITY UNITS"). "Accredited" investors, including High Capital Funding, LLC ("HCF"), as defined in Regulation D of the Securities Act of 1933. See signature pages hereto for names, addresses, and the number of UNITS being purchased. PURCHASERS have read and agree to the terms contained in Exhibit D hereto. INTEREST AND PRE-PAYMENT: Interest will accrue on the principal amount of the BRIDGE NOTE(S) at the rate of eight (8%) percent per annum, based on a 360-day year. The Company will have the right to prepay without penalty any amount owed under the BRIDGE NOTE(S) in whole or in part at any time. Accrued interest shall be paid quarterly, beginning three months after the FIRST CLOSING and every three months thereafter. MATURITY DATE: The Company plans to raise approximately $8-10 million in an initial public offering (the "PUBLIC OFFERING"). The principal amount and accrued and unpaid interest on the BRIDGE NOTE(S) will be due and payable at the earlier of: six months from the FIRST CLOSING (as defined in "Closing Date/Escrow" below); or the closing of a PUBLIC OFFERING ("MATURITY DATE"). After the MATURITY DATE, unpaid principal on the BRIDGE NOTES shall bear interest at eighteen (18%) per annum. BRIDGE SECURITIES: Upon the closing of the PUBLIC OFFERING, the COMPANY shall deliver to each PURCHASER, BRIDGE EQUITY UNITS consisting of securities identical in form to the securities offered for sale in the PUBLIC OFFERING ("PRIMARY BRIDGE EQUITY UNITS"), except that the certificates for the PRIMARY BRIDGE EQUITY UNITS may bear restrictive legends. Each PURCHASER shall receive the number of

AMOUNT:

PURCHASERS:

TERM OF NOTES:

-1-

PRIMARY BRIDGE EQUITY UNITS equal to the principal of such PURCHASER'S BRIDGE NOTE(S) divided by the public offering price of the securities comprising the PRIMARY BRIDGE EQUITY UNIT. The securities issued to PURCHASERS shall have the same CUSIP numbers as the corresponding securities in the PUBLIC OFFERING. If a PUBLIC OFFERING shall not have occurred prior to six months from the FIRST CLOSING, then on the first business day following the end of such six month period the COMPANY shall issue to the PURCHASER alternate BRIDGE EQUITY UNITS ("ALTERNATE BRIDGE EQUITY UNITS") consisting of that number of shares of common stock of the COMPANY as shall equal the principal amount of the BRIDGE NOTE(S) divided by $3.00 plus an equal number of non-callable warrants exercisable at $3.00 per share for a period of five years from such issuance, and which shall have a cashless exercise feature at any time after one year from the FIRST CLOSING that the underlying shares of common stock are not covered by an effective registration statement with a current prospectus available. The number of ALTERNATE BRIDGE EQUITY UNITS shall be adjusted, pro rata, on account of any stock splits, reverse stock splits, stock dividends paid on common stock, etc. which occur after the date of issuance of the BRIDGE NOTE(S) and prior to the issuance of the ALTERNATE BRIDGE EQUITY UNITS. PRIMARY BRIDGE EQUITY UNITS and Alternate BRIDGE EQUITY UNITS are sometimes referred to herein as "BRIDGE EQUITY UNITS." The PURCHASERS shall have the right for a period of one year and one month from the issuance of the ALTERNATE BRIDGE EQUITY UNITS to exchange them for PRIMARY BRIDGE EQUITY UNITS of an equivalent worth issued in a public offering of the COMPANY such that the PURCHASERS will own the same securities as if the public offering had closed on or prior to the six month anniversary of the FIRST CLOSING. PURCHASE PRICE: The aggregate purchase price for each BRIDGE NOTE and BRIDGE EQUITY UNIT shall be the original principal amount of the BRIDGE NOTE(S) included in such UNIT. The purchase price allocable to the BRIDGE NOTE(S) included in such UNIT shall be not less than 75% of such aggregate purchase price and the purchase price allocable to the BRIDGE EQUITY UNITS included in such UNIT shall be not more than 25% of such aggregate purchase price. The tax value of the BRIDGE EQUITY UNITS shall be equal to the portion of the purchase price allocated to the BRIDGE EQUITY UNITS. Repayment of the BRIDGE NOTE(S) shall be secured by a lien on all tangible and intangible assets of the COMPANY to be evidenced by a SECURITY AGREEMENT in form and substance satisfactory to HCF, the lead investor.

SECURITY:

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DOCUMENT PREPARATION SECURITIES:

In lieu of reimbursing HCF, for the cost of preparing the legal documents for this transaction, CONVERTED ORGANICS shall issue to HCF, BRIDGE EQUITY UNITS with a tax value of $25,000 ("DOCUMENT PREPARATION SECURITIES"). The DOCUMENT PREPARATION SECURITIES shall be in all respects identical to the BRIDGE EQUITY UNITS with identical attendant rights. If a PUBLIC OFFERING shall not have occurred prior to six months from the FIRST CLOSING, then the BRIDGE EQUITY UNITS comprising the DOCUMENT PREPARATION SECURITIES shall automatically convert to 33,333 ALTERNATE BRIDGE EQUITY UNITS. CONVERTED ORGANICS and PURCHASERS agree that CONVERTED ORGANICS shall be solely responsible for the payment of placement agent fees to Investors Capital Corporation ("Placement Agent"). PURCHASERS and CONVERTED ORGANICS shall each be responsible for their own expenses in connection with this transaction. PURCHASERS shall have the right, subject to applicable securities laws, to transfer and/or assign the BRIDGE NOTES and/or the BRIDGE EQUITY UNITS, and HCF shall have the right to transfer and/or assign the DOCUMENT PREPARATION SECURITIES. Any PURCHASER, transferee or assignee of a BRIDGE NOTE, BRIDGE EQUITY UNITS, or DOCUMENT PREPARATION SECURITIES is a "HOLDER" or collectively "HOLDERS." The first closing of this transaction (" FIRST CLOSING") will be on the second business day following the receipt by David A. Rapaport (Executive V.P. and General Counsel of HCF), as ESCROW AGENT, of (a) not less than an aggregate of $500,000 ("FIRST CLOSING PROCEEDS") from HCF and other PURCHASERS, (b) executed BRIDGE NOTES for an aggregate of the FIRST CLOSING PROCEEDS, (c) a fully executed SECURITY AGREEMENT with evidence of the filing of UCC-1's, and (d) a LEGAL OPINION (as defined in "Jurisdiction/Choice of Law" below). At the FIRST CLOSING the ESCROW AGENT shall transfer the FIRST CLOSING PROCEEDS - minus Placement Agent fees - to CONVERTED ORGANICS and shall deliver the BRIDGE NOTE(S) to PURCHASERS. ADDITIONAL CLOSINGS shall be held at the mutual agreement of the parties, including HCF, provided that no ADDITIONAL CLOSINGS shall be held after 30 days following the FIRST CLOSING without the written consent of HCF. The Company has delivered to HCF the unaudited financial statements of Mining Organics Management LLC for the years ended December 31, 2004 and December 31, 2003, or the federal tax returns of Mining Organics Management LLC for the years 2004 and 2003. The Company shall deliver unaudited financial statements of Mining Organics Management LLC for the year ended December 31, 2005 or the federal tax return of Mining

PLACEMENT AGENT FEE:

EXPENSES:

TRANSFER AND ASSIGNMENT:

CLOSING DATE/ESCROW:

FINANCIAL INFORMATION:

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Organics Management LLC for the year 2005 by March 31, 2006. The Company also has delivered to HCF the form of Asset Purchase Agreements between the Company and Mining Organics Management LLC, and between the Company and Mining Organics HRRY LLC, identifying the assets to be transferred from the LLC's to the Company. REGISTRATION RIGHTS: The Company will (1) file a resale registration statement within 180 days of the PUBLIC OFFERING closing: (2) cause it to be effective within 240 days of the PUBLIC OFFERING closing if the registration statement is not reviewed by the Securities and Exchange Commission ("SEC") and 270 days of the PUBLIC OFFERING closing if the registration statement is reviewed by the SEC covering the resale of the BRIDGE EQUITY UNITS and the DOCUMENT PREPARATION SECURITIES (including the resale of any shares of common stock issuable upon the exercise or conversion of any BRIDGE EQUITY UNITS); and (3) cause it to remain effective with a current prospectus available for a period of the longer of two years, or until the expiration or exercise in full of any warrants contained in the BRIDGE EQUITY UNITS. If the Company fails to satisfy requirements (1) or (2) above it will be subject to a 2% cash late registration fee (i.e. 2% of the outstanding BRIDGE NOTE(S) principal) per month or part thereof that such failure continues ("LATE FEE"); provided such LATE FEE shall not be accrued for any month after one year from the FIRST CLOSING that the Company is current in its reporting obligations under the Exchange Act and has been subject to such reporting requirements for at least 90 days, unless any Holder is the beneficial owner of more than 1% of CONVERTED ORGANICS's issued and outstanding common stock, in which case the LATE FEE shall continue to accrue for no more than two years from the FIRST CLOSING. If the COMPANY fails to satisfy requirement (3) above, the LATE FEE shall continue until the longer of the period set forth in the preceding paragraph, or the expiration or exercise in full of any warrants included in the BRIDGE EQUITY UNITS. JURISDICTION/CHOICE OF LAW: All transaction documents shall be governed by and construed under the laws of the state of Delaware as applied to agreements entered into and to be performed entirely within the state of Delaware, without giving effect to principles of conflicts of law. The parties irrevocably consent to the jurisdiction and venue of the state and federal courts located in Wilmington, DE in connection with any action relating to this transaction. At or prior to the FIRST CLOSING and each ADDITIONAL CLOSING, PURCHASERS shall receive a legal opinion from Company counsel in form and substance satisfactory to HCF it as to (a) the due formation and existence of the COMPANY (under Delaware law), (b) the validity and enforceability of this Financing Terms

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Agreement (under Delaware law), the BRIDGE NOTE(S) (under Delaware law), and the SECURITY AGREEMENT (under Delaware law), including specifically that neither this Financing Terms Agreement nor the BRIDGE NOTE(S) violate any laws of the state of Delaware relating directly or indirectly to the maximum rate of interest that may be charged in this transaction, subject to standard carve-outs for equitable remedies and insolvency laws, and (c) the valid authorization to issue the BRIDGE EQUITY UNITS and the DOCUMENT PREPARATION SECURITIES (under Delaware law) ("LEGAL OPINION"). The LEGAL OPINION shall be updated and reissued at each ADDITIONAL CLOSING. BINDING AGREEMENT: All parties executing this Financing Terms Agreement, including Exhibit D, shall be legally bound by the above terms and shall execute such further documents ("FURTHER DOCUMENTS"), including without limitation BRIDGE NOTE(S), a SECURITY AGREEMENT, AND AN ESCROW AGREEMENT substantially in the forms of Exhibit A, Exhibit B, and Exhibit C attached hereto, respectively. If there are any inconsistencies between this Financing Terms Agreement (Exclusive of Exhibits A, B & C) and any such FURTHER DOCUMENTS executed in connection with this transaction, the terms of this Financing Terms Agreement shall govern. This Financing Terms Agreement may be signed in two or more counterparts, all of which taken together shall constitute an original. Facsimile signatures shall be deemed to be original signatures. This Financing Terms Agreement supersedes all prior oral and/or written agreements concerning the subject matter hereof, including without limitation the Financing Terms Agreement by and among the parties hereto dated January 18, 2006, the Promissory Note dated February 28, 2006 in the principal amount of $500,000, and the Promissory Note dated March 1, 2006 in the principal amount of $300,000, both notes being void ab initio,

CONVERTED ORGANICS INC. By: Date: March ____, 2006

(signature) Edward J. Gildea, President (name and title) -5-

DAVID A. RAPAPORT, ESCROW AGENT Date: March _____, 2006 333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Tel: 404 257-9150 Fax: 404 257-9125 Email: drapaport@highcapus.com -6-

SIGNATURES OF PURCHASERS
High Capital Funding, LLC Number of Units: -----------------------

By: --------------------------------Fred A. Brasch, CFO Date: , 2006 -------------------------

Principal Amount of Bridge Notes: $_____

333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Attn: Fred A. Brasch, CFO Tel: 404 257-9150 Fax: 404 257-9125 Email: fredbrasch@mindspring.com Tax ID#/SS#: 13-3921591 With copy to: David A. Rapaport, Escrow Agent 333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Tel: 404 257-9150 Fax: 404 257-9125 Email: drapaport@highcapus.com -7-

EXHIBIT A FORM OF BRIDGE NOTE THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, PLEDGED, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (B) EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS ARE AVAILABLE.
Certificate No. __________ $_______________ Principal Amount CONVERTED ORGANICS INC. SECURED PROMISSORY NOTE _________, 2006

FOR VALUE RECEIVED, CONVERTED ORGANICS INC., a Delaware corporation, ("Borrower") promises to pay to the order of ___________________________ ("Lender") the principal amount of ___________________________ Dollars ($______________), together with interest on the unpaid principal amount at the rate of 8 percent (8%) per annum based on a 360-day year, all upon the terms set forth below. This Secured Promissory Note (the "Note") is issued pursuant to that certain Financing Terms Agreement for Sale of Bridge Notes and Shares, dated as of January 18, 2006, by and between Lender and Borrower (the "Financing Agreement"). This Note is subject to the terms and conditions of the Financing Agreement. To the extent that any of the terms specifically set forth in the Financing Agreement is inconsistent with the provisions of this Note specifically relating to such matters, the Financing Agreement shall govern with respect to such inconsistencies. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Financing Agreement. 1. MATURITY. Accrued interest shall be paid in arrears on a quarterly basis, beginning three months after the First Closing and every three months thereafter. Except as otherwise provided herein, the principal hereunder shall become due and payable in full on the date six months from the First Closing, except that in the event of the closing of a Public Offering, the principal amount and accrued and unpaid interest will become immediately due and payable. After the Maturity Date, the Note shall bear interest at 18 percent per annum. 2. PREPAYMENT. Borrower may prepay any or all amounts due under this Bridge Note at any time without penalty. A-1

3. METHOD OF PAYMENT. Any payment of principal or interest hereunder shall be made by certified or bank cashier's check unless Holder has provided Borrower with appropriate wire instructions, in which event, the payment shall be made by wire transfer of "same day" funds. For the purpose of any interest calculation, payment shall be deemed made when the check is sent by overnight delivery or when the wire is sent. Any partial payment shall be applied first to accrued and unpaid interest and thereafter to a reduction of principal. 4. Security. REPAYMENT OF THE NOTE SHALL BE SECURED BY A LIEN ON ALL TANGIBLE AND INTANGIBLE ASSETS OF THE BORROWER AS DESCRIBED IN THAT CERTAIN SECURITY AGREEMENT EXECUTED CONTEMPORANEOUSLY HEREWITH. 5. ANTI DILUTION ADJUSTMENTS. The number and kind of securities or other property into which this Note may become convertible shall be subject to adjustment as follows: (a) If a split or a reverse split shall have occurred with respect to the Common Stock, the conversion rate shall be appropriately adjusted to cause the Holder to receive, upon conversion, a number of shares of Common Stock representing the same percentage of the equity of the Company to which the Holder would have been entitled on such conversion if the split had not occurred. (b) If a dividend or other distribution shall be made in favor of the Common Stock, appropriate adjustment shall be made so that, upon conversion of the Note, the Holder shall receive, in addition to the Common Stock otherwise obtainable on such conversion, the cash, securities or other property that it would have received had the Note been so converted immediately prior to the split, dividend or distribution. (c) If the Common Stock shall, as the result of a merger or otherwise, be converted into the right to receive other securities or property, appropriate adjustment shall be made so that, upon conversion of the Note, the Holder shall receive, in lieu of Common Stock, the securities and/or property that it would have received as a result of the merger or other such transaction had the Note been so converted immediately prior to the record date therefor. 6. DEFAULT. In the event of an occurrence of any event of default specified below, the principal of, and all accrued and unpaid interest on, the Note shall become immediately due and payable without notice, except as specified below: (a) Borrower fails to make any payment hereunder when due, which failure has not been cured within 10 days following such due date. (b) Any defined event of default occurs under any contract or instrument pursuant to which Borrower has incurred any liability for borrowed money in excess of $50,000, which event of default has not been waived within five business days following such occurrence, and which event of default is reasonably likely to materially affect the Company's business. A-2

(c) Borrower files a petition to take advantage of any insolvency act; makes an assignment for the benefit of its creditors; commences a proceeding for the appointment of a receiver, trustee, liquidator or conservator of itself of a whole or any substantial part of its property; files a petition or answer seeking reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state. (d) A court of competent jurisdiction enters an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of Borrower or of the whole or any substantial part of its properties, or approves a petition filed against Borrower seeking reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the Untied States of America or any state; or if, under the provisions of any other law for the relief or aid of debtors, a court of competent jurisdiction assumes custody or control of Borrower or of the whole or any substantial part of its properties; or there is commenced against Borrower any proceeding for any of the foregoing relief and such proceeding or petition remains undismissed for a period of 30 days; or if Borrower by any act indicates its consent to or approval of any such proceeding or petition. (e) If (i) any judgment remaining unpaid, unstayed or undismissed for a period of 60 days is rendered against Borrower which by itself or together with all other such judgments rendered against Borrower remaining unpaid, unstayed or undismissed for a period of 60 days, is in excess of $50,000, or (ii) there is any attachment or execution against Borrower's properties remaining unstayed or undismissed for a period of 60 days which by itself or together with all other attachments and executions against Borrower's properties remaining unstayed or undismissed for a period of 60 days is for an amount in excess of $50,000. 7. SUCCESSORS AND ASSIGNS. The Note is transferable and assignable by Lender or any subsequent permitted assignee subject to the requirement that any such assignment or transfer be, in the opinion of Borrower's counsel, in compliance with applicable federal and state securities laws. The assignee shall be referred to herein as a "Holder." All covenants, agreements and undertakings in the Note by or on behalf of any of the parties shall bind and inure to the benefit of the respective successors and assigns of the parties whether so expressed or not. 8. NOTICES. Any and all notices, requests, consents and demands required or permitted to be given hereunder shall be in writing and shall be deemed given and received (i) upon personal delivery, (ii) upon the first business day following the receipt of confirmation of facsimile transmission to the telefax number as indicated below, or (iii) upon the third business day after deposit in the United States mail, by certified or registered mail, postage prepaid and addressed as follows:
To Lender: [to the address and facsimile provided on the signature page of the Agreement]

To Borrower: Converted Organics Inc. 7A Commercial Wharf West

A-3

Boston, MA 02210 Tel: (617) 624-0111 Fax: (617) 624-0333 Email: egildea@ecapgolbal.com Either party may change by notice the address to which notices to that party are to be addressed. 9. WAIVER/AMENDMENT. Borrower hereby waives presentment for payment, demand, protest and notice of protest for nonpayment of the Note and consents to any extension or postponement of the time of payment or any other indulgence. The Note may only be amended or modified by written agreement signed by Borrower and Holder. 10. EXPENSES. In the event that Holder brings legal action against Borrower, or Borrower brings legal action against Holder, to enforce or otherwise determine the meaning or enforceability of the Note or any provision hereof, each party shall bear its own expenses, including attorney fees, directly attributable to such action. However, in any action for breach of the Note, including nonpayment, the prevailing party in any such dispute shall be entitled to recover all reasonable costs and attorney fees incurred in connection with such action. In addition, Borrower shall be entitled to recover from Lender all reasonable costs of collection, including without limitation, legal fees and expenses incurred in any bankruptcy and/or state insolvency proceeding. 11. CHOICE OF LAW. The Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware. The parties agree that venue for any suit, action, proceeding or litigation arising out of or in relation to this Note will be in any federal or state court in Wilmington, Delaware having subject matter jurisdiction, and the parties hereby submit to the jurisdiction of that Court. WITH RESPECT TO ANY CLAIM OR ACTION ARISING UNDER THIS NOTE, EACH PARTY HEREBY (A) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND THE UNITED STATES DISTRICT COURT LOCATED IN THE CITY OF WILMINGTON, STATE OF DELAWARE, AND (B) IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH CLAIM, SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS NOTE WILL BE DEEMED TO PRECLUDE THE LENDER FROM BRINGING AN ACTION OR PROCEEDING IN RESPECT HEREOF IN ANY OTHER JURISDICTION. A-4

IN WITNESS WHEREOF, the Note has been executed and delivered on the date specified on the first page hereof by the duly authorized representative of Borrower. CONVERTED ORGANICS INC. By: Edward J. Gildea, President A-5

EXHIBIT B FORM OF SECURITY AGREEMENT THIS SECURITY AGREEMENT, ("Agreement") is made this 2nd day of March, 2006, by and between CONVERTED ORGANICS INC., a Delaware Corporation, 7A Commercial Wharf West, Boston, MA 02210 (hereinafter "Borrower"), and Lender(s) as listed on Schedule "1" of this Agreement. WHEREAS, this Agreement is given to secure performance of the obligations ("Obligations") under the Secured Promissory Note(s) ("Secured Notes") of even date herewith, executed by Borrower, to Lenders as lenders and in the amounts listed on Schedule "1" attached hereto and incorporated herein by reference, together with interest thereon as provided for in the Secured Notes. NOW, THEREFORE, in consideration of the loans made by the Lenders to Borrower, and further consideration of the covenants and promises contained in this Agreement, and for other good and valuable consideration, the parties agree as follows: 1. Defined Terms. As used in this Agreement, the following terms shall have the following meanings: (a) "Collateral" has the meaning set forth in paragraph 2 hereof. (b) "PTO" means the United States Patent and Trademark Office. (c) "UCC" means the Uniform Commercial Code as in effect in the State of Delaware. (d) Terms Defined in UCC. Where applicable in the context of this Agreement and except as otherwise defined herein, terms used in this Agreement shall have the meanings assigned to them in the UCC. (e) Construction. In this Agreement, the following rules of construction and interpretation shall be applicable: (i) no reference to "proceeds" in this Agreement authorizes any sale, transfer, or other disposition of any Collateral by Borrower; (ii) "includes" and "including" are not limiting; (iii) "or" is not exclusive; and (iv) "all" includes "any" and "any" includes "all." 2. Security Interest. (a) Grant of Security Interest. As security for the payment and performance of the Obligations, Borrower hereby assigns, transfers and conveys to Lenders, and grants to Lenders a security interest in and to all of Borrower's right, title and interest in, to and under the following property, in each case whether now or hereafter existing or arising or in which Borrower now has B-1

or hereafter owns, acquires or develops an interest and wherever located (collectively, the "Collateral"): (i) Accounts; (ii) Chattel Paper and Electronic Chattel Paper; (iii) Fixtures; (iv) Goods; (v) Inventory; (vi) Software; (vii) all patents, trademark, patent applications and trademark applications, domestic or foreign, all licenses relating to any of the foregoing and all income and royalties with respect to any licenses (including such patents, trademark, patent applications and trademark applications as described in Schedule "2"), all rights to sue for past, present or future infringement thereof, all rights arising therefrom and pertaining thereto and all reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof. Borrower represents and warrants to Lenders that a true and correct list of all of the existing Collateral consisting of U.S. patents, trademark, patent applications and trademark applications or registrations owned by Borrower, in whole or in part, is set forth in Schedule "2"; (viii) all General Intangibles and all intangible intellectual or other similar property of Borrower of any kind or nature, associated with or arising out of any of the aforementioned properties and assets and not otherwise described above; and (ix) all Proceeds of any and all of the foregoing Collateral (including license royalties, rights to payment, accounts and proceeds of infringement suits) and, to the extent not otherwise included, all payments under insurance (whether or not Lenders is the loss payee thereof) or any indemnity, warranty or guaranty payable by reason of loss or damage to or otherwise with respect to the foregoing Collateral. (b) Continuing Security Interest. Borrower agrees that this Agreement shall create a continuing security interest in the Collateral which shall remain in effect until terminated in accordance herewith. 3. Collateral Free of Other Security Interests. Borrower warrants that no financing statement covering any of the Collateral or its proceeds is on file in any public office at this date or will be on file with respect to the Collateral at the time the Collateral becomes subject to this Agreement (except any purchase money security interests). No other security interest of any kind affects the Collateral at this date, and no arrangement exists whereby the Collateral will in the future become subject to a security interest senior to the Agreement. B-2

Borrower will not sell, assign or otherwise alienate the ownership of the Collateral or its use or operation except any sale or replacement in the ordinary course of Borrower's business; and Borrower will not use the Collateral in violation of any ordinance or state or federal statute or any administrative rule or regulation of law. Borrower authorizes Lenders at their option and their sole discretion to discharge any taxes, charges, assessments, liens or other security interests or other encumbrances to which the Collateral may become subject. Lenders may pay amounts to preserve and maintain the Collateral, if Borrower fails to do so. Borrower agrees to reimburse Lenders within ten (10) days after demand for any payment made or any expense incurred by Lenders pursuant to the foregoing authorization, together with interest on the amount expended at the rate of eighteen percent (18%) per annum from the date of the payment. Any such amounts shall be secured by and under this Agreement. 4. Fees and Taxes. Borrower will timely pay any and all license fees, taxes, assessments and public charges, general and special, that may at any time be levied or assessed upon or against Collateral. 5. Maintenance of Collateral. Borrower will, at Borrower's expense, maintain and keep the Collateral at its present location in good order and repair, ordinary wear and tear excepted, and shall not remove, demolish or substantially alter the Collateral, except any sale or replacement in the ordinary course of Borrower's business, without the prior written consent of the Lenders. Borrower will not attempt to or actually dispose of, lend, transfer, lease or assign the Collateral, except any sale or replacement in the ordinary course of Borrower's business, without the prior written consent of Lenders. Borrower may remove the Collateral in its ordinary course of business, provided, that such Collateral shall be replaced with property of a similar nature of equal or greater value. The security interest created by this Agreement will immediately attach to the substitute property when it is acquired, and the substitute property will become part or the Collateral defined in this Agreement. Borrower will not permit the Collateral to be attached or seized by any legal process. Borrower will defend and indemnify Lenders from all expense and liability of every kind to any person or to the property of any person by reason of or in connection with the delivery, possession or use of the Collateral. 6. [Reserved]. 7. Further Acts. On a continuing basis, Borrower shall make, execute, acknowledge and deliver, and file and record in the proper filing and recording places, all such instruments and documents, and take all such action as may be necessary or advisable or may be requested by Lenders to carry out the intent and purposes of this Agreement, or for assuring, confirming or protecting the grant or perfection of the security interest granted or purported to be granted hereby, to ensure Borrower's compliance with this Agreement or to enable Lenders to exercise B-3

and enforce its rights and remedies hereunder with respect to the Collateral, including any documents for filing with the PTO or any applicable state office. Lenders may record this Agreement, an abstract thereof, or any other document describing Lenders' interest in the Collateral with the PTO, at the expense of Borrower. In addition, Borrower authorizes Lenders to file financing statements describing the Collateral in any UCC filing office deemed appropriate by Lenders. If the Borrower shall at any time hold or acquire a commercial tort claim arising with respect to the Collateral, the Borrower shall immediately notify Lenders in a writing signed by the Borrower of the brief details thereof and grant to the Lenders in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Lenders. 8. Authorization to Supplement. If Borrower shall obtain rights to any new patentable inventions or become entitled to the benefit of any patent application or patent for any reissue, division, or continuation, of any patent or trademark, the provisions of this Agreement shall automatically apply thereto. Borrower shall give prompt notice in writing to Lenders with respect to any such new patent or trademark rights. Without limiting Borrower's obligations hereunder, Borrower authorizes Lenders unilaterally to modify this Agreement by amending Schedule "2" to include any such new patent or trademark rights. Notwithstanding the foregoing, no failure to so modify this Agreement or amend Schedule "2" shall in any way affect, invalidate or detract from Lenders' continuing security interest in all Collateral, whether or not listed on Schedule "2." 9. Default. The breach or failure of any term, agreement, covenant or term of this Agreement or the occurrence of an event or default upon any term contained in the Secured Note(s) shall constitute a default hereunder. 10. Remedies. Upon the occurrence of any default as defined above, Lenders will have the right at their option to enforce and to exercise any or all of their rights under this Agreement or otherwise. In addition to all other rights and remedies, Lenders shall have the remedies of a secured party under the UCC. In exercising these remedies, Lenders and Borrower agree as follows: (a) Lenders may, at their option, required Borrower to assemble the Collateral and make it available to Lenders at a place to be designated by Lenders which is reasonably convenient to both parties. In the event Borrower fails or refuses to assemble the Collateral, Lenders shall have the right, and Borrower hereby authorizes and empowers Lenders, to enter the premises upon which the Collateral is located in order to remove the same. (b) Lenders will give Borrower reasonable notice of the time and place of any public sale of the Collateral, or of the time after which any private sale or other intended disposition of the collateral is to be made, unless the Collateral is perishable, threatens to decline speedily in value, or is of a type customarily sold on a recognized market. The requirement of reasonable notice shall be met if a written notice is mail to Borrower, postage prepaid, to the address of Borrower last known to Lenders, at least ten (10) days prior to the date of the sale or disposition. B-4

(c) Borrower agrees to surrender possession of the Collateral to Lenders in event Lenders elects to foreclose this security interest. Borrower waives any notice of the exercise of any and all options reserved to Lenders by this Agreement. (d) Borrower will, upon Lenders' request, deliver to Lenders all original invoices, bills, charge or credit card receipts, books and records and other documents evidencing or describing any of the account receivable constituting a part of the Collateral. Borrower will also execute and deliver to Lenders an assignment of the right to receive payments under all such Accounts. The parties recognize, however, that in the event of default such Accounts shall be deemed assigned to Lenders, whether or not the assignments described above are actually delivered. (e) Lenders shall have the right and are hereby authorized to collect all amounts due under the Accounts; sue or take other actions to collect the same in their own name or as assignee of or in the name of Borrower; compromise or give acquittance for amounts due; and use such other measures as Lenders may in its sole discretion deem appropriate for collection of the Accounts. All such actions shall be taken at the sole expense of Borrower, who agrees to reimburse Lenders for all reasonable amounts expended (including a reasonable attorney's fee), together with interest thereon from the date of expenditure at the rate then applicable under the Secured Notes. (f) This Agreement constitutes a direction to and full authority to any Account debtor to pay directly to Lenders any such accounts. No proof of default shall be required. Any such debtor is herby irrevocably and unconditionally authorized to rely upon and comply with any notice from Lenders. The debtor shall not be liable to Borrower or any person claiming under Borrower for making any payment or rendering any performance to Lenders. The debtor shall have no obligation or right to inquire whether any default has occurred or is then existing. By its execution of this Agreement, Borrower irrevocably and unconditionally joins in, authorizes and consents to the above instructions. (g) The proceeds of any sale of the Collateral shall be applied to the following items in the following order: (a) the reasonable expenses of repossessing the Collateral and preparing for the holding the sale, including without limitation all reasonable attorney's fees incurred by Lenders; (b) interest an principal then due (by acceleration or otherwise) under the Secured Notes and any other debts specifically secured by the Agreement; (c) interest and principal then due (by acceleration or otherwise) under any other debts of Borrower to Lenders (to be applied in whatever order Lenders may in their sole discretion determine); (d) indebtedness of Borrower to other secured parties, provided written notice of demand therefore is received by Lenders before the sale (to bee applied in the order Lenders receives the requires); and (e) the balance, if any, to Borrower. 11. Set-off. Upon default by Borrower under this Agreement, Lenders (or the holder or owner of any debt secured by this Agreement) shall immediately have the right without further notice to Borrower to set off against the Secured Notes and any other debts secured by this Agreement all debts of Lenders (or such holder or owner) to Borrower, whether or not then due. B-5

12. Notice. Any and all notices, requests, consents and demands required or permitted to be given hereunder shall be in writing and shall be deemed given and received (i) upon personal delivery, (ii) upon the first business day following the receipt of confirmation of facsimile transmission to the telefax number as indicated below, or (iii) upon the third business day after deposit in the United States mail, by certified or registered mail, postage prepaid and addressed to the appropriate party at the address provided for herein. Any party may change by notice the address to which notices to that party are to be addressed. 13. Miscellaneous. The following provisions are additional terms of this Agreement: (a) Lenders have no duty to maintain, repair or protect the Collateral. (b) No waiver by Lenders of any default shall operate as a waiver of any other default or of the same default on a future occasion. (c) All rights and remedies of Lenders are cumulative and may be exercised successively or concurrently, and shall inure to the benefit of Lenders' assigns. (d) All obligations of Borrower shall bind his trustees, custodians, general partners, successors and assigns. (e) The captions of the sections of this Agreement are inserted for convenience only and shall not be used in the interpretation or construction of any provisions hereof. (f) If any provisions of this Agreement is held invalid or unenforceable, the holding shall affect only the provision in question and all other provisions on this Agreement shall remain in full force and effect. (g) This Agreement supersedes all prior oral and/or written agreements concerning the subject matter hereof, including without limitation the Security Agreement by and among the parties hereto dated February 28, 2006. IN WITNESS WHEREOF, Borrower has executed this Agreement the day and year first above written. CONVERTED ORGANICS INC. a Delaware corporation By: Edward J. Gildea, President B-6

SCHEDULE "1" LENDERS
NAME AND ADDRESS ---------------High Capital Funding, LLC Fred A. Brasch, CFO 333 Sandy Springs Circle, Suite 240 Atlanta, GA Tel: 404.257 9150 Fax: 404.257.9125 Email: fredbrasch@mindspring.com AMOUNT -----$_______________

By: Fred A. Brasch, CFO Date: B-7

SCHEDULE "2" PATENTS, TRADEMARKS AND APPLICATIONS None. B-8

EXHIBIT C FORM OF ESCROW AGREEMENT David A. Rapaport, Esq. 333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Dear Mr. Rapaport: The undersigned hereby appoints you as my (our) agent, and you hereby accept such appointment, to act on my (our) behalf in connection with my (our) purchase of Secured Promissory Note(s) ("Note") and Bridge Equity Units from Converted Organics Inc. ("Organics" or "Company") pursuant to a Financing Terms Agreement For Sale of Bridge Notes and Shares dated March 2, 2006 ("Financing Terms Agreement"). You are hereby authorized and directed to hold for my (our) benefit the Bridge Notes and Primary Bridge Equity Units, Alternate Bridge Equity Units, if any, being issued, or to be issued in the future, to me (us) as partial consideration for my (our) purchase of the Note. You are also authorized to act on my behalf in the enforcement of my (our) rights under the Note, the Security Agreement dated March 2, the Primary Bridge Equity Units and the Alternate Bridge Equity Units. 1. The Agent's duties hereunder may be altered, amended, modified or revoked only by a writing signed by Investor and the Agent. 2. The Agent shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by the Agent to be genuine and to have been signed or presented by the property party or parties. The Agent shall not be personally liable for any act the Agent may do or omit to do hereunder as Agent while acting in good faith, except for fraud, willful misconduct, or gross negligence, and any act done or omitted by the Agent pursuant to the advice of the Agent's attorneys-at-law shall be evidence of such good faith. 3. The fees, if any, and disbursements of the Agent chargeable in respect of services provided in the capacity as Agent pursuant to this Escrow Agreement will be responsibility of Investor, except to the extent recoverable from the Company. 4. The Agent is hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case the Agent obeys or complies with any such order, judgment or decree, the Agent shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 5. The Agent shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Note, Security Agreement, or any documents or papers deposited or called for hereunder. C-1

6. The Agent shall be entitled to employ such legal counsel and other experts as the Agent may deem necessary properly to advise the Agent in connection with the Agent's duties hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor. The Agent is the Executive Vice President and General Counsel of High Capital Funding, LLC ("HCF") and has acted as legal counsel for HCF in connection with the Financing Terms Agreement and may continue to act as legal counsel for HCF and/or its affiliates from time to time, notwithstanding its duties as Agent hereunder. Investor waives any and all claims and allegations of conflict in relation to the Agent's continued representation of HCF and/or its affiliates as its attorney. 7. The Agent's responsibilities as Agent hereunder shall terminate if the Agent shall resign by three (3) business days prior written notice to Investor and Organics. In the event of any such resignation, Investor may, but shall not be required to, appoint a successor Agent. 8. If the Agent reasonably requires other or further instruments in connection with Escrow Agreement or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 9. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the property held by the Agent hereunder, the Agent is authorized and directed in the Agent's sole discretion (1) to retain in the Agent's possession without liability to anyone all or any part of such property until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but the Agent shall be under no duty whatsoever to institute or defend any such proceedings or (2) to deliver the property held by the Agent hereunder to a state or federal court having competent subject matter jurisdiction in accordance with the applicable procedure therefore. 10. The Investor agrees to indemnify and hold harmless the Agent from any and all claims, liabilities, costs or expenses in any way arising from or relating to the duties or performance of the Agent hereunder other than any such claim, liability, cost or expense to the extent the same shall have been determined by final, unappealable judgment of a court of competent jurisdiction to have resulted from fraud, gross negligence or willful misconduct of the Agent. 11. In the event of any action or proceeding brought by any party against another under Escrow Agreement the prevailing party or parties shall be entitled to recover all expenses incurred through the date of final collection, including without limitation, all attorneys' fees. 12. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given upon personal delivery, overnight courier, facsimile, email or other form of electronic transmission, or three business days after deposit in the United States Postal Service, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at the addresses listed below their signature, or at such other addresses as a party may designate by ten days advance written notice to each of the other parties hereto. 13. This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns and shall be governed by the laws of the State of Georgia without giving effect to principles governing the conflicts of laws. Facsimile C-2

transmissions of the signatures to these instructions shall be legal and binding on all parties hereto. 14. Organics shall be entitled to rely upon the authority of Agent under this Escrow Agreement unless and until Organics is notified in writing by Agent and/or Investor that such authority has been terminated and/or revoked in conformity with the terms herein. 15. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided in the Financing Terms Agreement. 16. This Escrow Agreement supersedes all prior oral and/or written agreements concerning the subject matter hereof, including without limitation the Escrow Agreement by and among the parties hereto dated January 18, 2006. (Signature page follows) C-3

AGENT Date: David A. Rapaport 333 Sandy Springs Circle Suite 230 Atlanta, GA 30328 Tel: (404) 257-9150 Fax: (404) 257-9125 Email: drapaport@highcapus.com INVESTOR Date: C-4

EXHIBIT D REPRESENTATIONS OF PURCHASER (1) ACCREDITED INVESTOR STATUS. The PURCHASER is an "accredited investor" within the meaning of Securities and Exchange Commission Rule 501 of Regulation D. (2) PURCHASE ENTIRELY FOR OWN ACCOUNT. The BRIDGE EQUITY UNITS to be received by the PURCHASER will be acquired for investment for the PURCHASER'S own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the PURCHASER has no present intention of selling, granting any participation in, or otherwise distributing the same. The PURCHASER further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the BRIDGE EQUITY UNITS. (3) DISCLOSURE OF INFORMATION. The PURCHASER represents that it has received the disclosure it believes relevant and necessary to its investment decision and has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of this transaction and the business, properties, prospects and financial condition of the Company and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) and/or conduct its own independent investigation necessary to verify the accuracy of any information furnished to the PURCHASER or to which the PURCHASER had access. (4) INVESTMENT EXPERIENCE. The PURCHASER (i) is experienced in evaluating and investing in private placement transactions in securities of companies similar to the Company and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the UNITS and (ii) acknowledges that it can bear the economic risk of its investment, including the loss of the entire investment. (5) RESTRICTED SECURITIES. The PURCHASER understands that the BRIDGE EQUITY UNITS are being sold pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). The PURCHASER also understands that the BRIDGE EQUITY UNITS and, with certain limited exceptions, any securities issuable on exercise or conversion thereof may not be resold by the PURCHASER without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the BRIDGE EQUITY UNITS or an available exemption from registration under the Securities Act, the BRIDGE EQUITY UNITS may be restricted from resale in a transaction to which United States securities laws apply for an indefinite period of time. (6) ILLIQUID INVESTMENT. The PURCHASER understands that no market for the BRIDGE EQUITY UNITS exists and no such market may ever exist. (7) RESIDENCE. The PURCHASER resides, or its office primarily responsible for the purchase of the BRIDGE EQUITY UNITS is located, at the address listed on the signature page. (8) BROKERS OR FINDERS. All negotiations on the part of the PURCHASER relative to the transactions contemplated hereby have been carried on by the PURCHASER without the intervention of any person or as the result of any act of the PURCHASER in such manner as to give rise to any valid D-1

claim for a brokerage commission, finder's fee, or other like payment, except for Investors Capital Corporation. (9) RELIANCE. The PURCHASER understands that this agreement is made with the PURCHASER in reliance upon the PURCHASER'S representations to the Company, as set forth above. D-2

NAME: ___________________ AMOUNT: $________________ SUBSCRIPTION AGREEMENT CONVERTED ORGANICS INC. A DELAWARE COMPANY The undersigned hereby applies to become an investor in CONVERTED ORGANICS INC., a Delaware company (the "Company"), and subscribes to purchase the number of units consisting of Bridge Notes and Bridge Equity Units (the "Units") specified herein. 1. REPRESENTATIONS AND WARRANTIES. The undersigned represents and warrants to the Company as follows: (a) I have received, read and understand the Confidential Memorandum dated ________, 2006 (the "Memorandum"), and in making this investment I am relying only on the information provided therein. I have not relied on any statements or representations inconsistent with those contained in the Memorandum. I understand that by signing this subscription agreement, I am agreeing to be bound by all of the terms and conditions of the Financing Terms Agreement For Sale of Bridge Notes And Shares dated _________, 2006 (the "Financing Terms Agreement"), including the Security Agreement and Escrow Agreement attached to the Financing Terms Agreement as Exhibits B and C, respectively, which are included in the Memorandum, and my signature on this agreement is deemed to be a signature on the Financing Terms Agreement, Security Agreement, and Escrow Agreement. (b) I, or the fiduciary account for which I am purchasing, meet the suitability standards set forth in EXHIBIT D, "Representations of Purchaser," to the Financing Terms Agreement.. (c) I am aware that this subscription may be rejected in whole or in part by the Company or its designees in its sole and absolute discretion; that my investment, if accepted, is subject to certain risks described in part in "RISK FACTORS" set forth in the Memorandum; and that, among other restrictions on sale or transfer of the Units, there will be no public market for the Units, and accordingly, it may not be possible for me to readily liquidate my investment in the Company. (d) I have been informed of all pertinent facts relating to the lack of liquidity or marketability of this investment. I am aware that any transfer of the Units or the Bridge Notes and/or Bridge Equity Units is subject to numerous restrictions described in the Memorandum. I have liquid assets sufficient to assure myself that such purchase will cause me no undue financial difficulties and that I can provide for my current needs and possible personal contingencies, or if I am the trustee of a retirement trust, that the limited liquidity of the Units will not cause difficulty in Subscription Agreement -1-

meeting the trust's obligations to make distributions to plan participants in a timely manner. (e) I am of the age of majority (as established in the state in which I am domiciled) if I am an individual, and in any event, I have full power, capacity, and authority to enter into a contractual relationship with the Company. If acting in a representative or fiduciary capacity for a corporation, fund or trust, or as a custodian or agent for any person or entity, I have full power or authority to enter into this subscription agreement in such capacity and on behalf of such corporation, fund, trust, person or entity. (f) I am buying the Units solely for my own account, or for the account of a member or members of my immediate family or in a fiduciary capacity for the account of another person or entity and not as an agent for another. I understand that the sale, transfer and assignment of the Units are subject to restrictions and may not be sold, transferred or assigned except in accordance with the terms of the Financing Terms Agreement, and I am aware that the certificates evidencing the Bridge Notes and the Bridge Equity Unit securities will bear a legend in substantially the following form: THIS [NAME OF SECURITY] HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, PLEDGED, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (B) EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS ARE AVAILABLE. As appropriate, other legends required by applicable state securities laws also will be affixed to certificates evidencing the Bridge Notes and/or Bridge Equity Unit securities. (g) I acknowledge and agree that counsel representing the Company and its affiliates do not represent me and shall not be deemed under the applicable codes of professional responsibility to have represented or to be representing me or any of the Company's members in any respect. (h) If I am buying the Units in a fiduciary capacity or as a custodian for the account of another person or entity, I have been directed by that person or entity to purchase the Unit(s), and such person or entity is aware of my purchase of Units on their behalf, and consents thereto and is aware of the merits and risks involved in the investment in the Company. -2-

(i) I (or the entity on whose behalf I am signing) do not have a direct or indirect ownership interest in Investors Capital Corp., Paulson Investment Company, Inc. or any other NASD member firm (through the ownership of securities in the NASD member firm, its parent, affiliates or otherwise). (j) I (or the entity on whose behalf I am signing) do not have an "immediate family relationship" with Investors Capital Corp., Paulson Investment Company, Inc. or any other NASD member firm. For purposes of this statement, I understand that the NASD defines "immediate family relationship" as parents, mother-in-law, fatherin-law, husband or wife, brother or sister, brother-in-law or sister-in-law, son-in-law or daughter-in-law, and children, or any other person who is supported, directly or indirectly, to a material extent by an employee of, or person associated, with an NASD member. (k) I (or the entity on whose behalf I am signing) have not provided any consulting or other services to the Company. (l) I (or the entity on whose behalf I am signing) am not an "underwriter or a related person." For purposes of this statement, I understand that the NASD defines an "underwriter or a related person" with respect to a proposed offering as being an underwriter, underwriter's counsel, financial consultant or advisor, finder, member of the selling or distribution group, any member participating in a public offering, and any and all other person associated with or related to any of the aforementioned persons. (m) I (or the entity on whose behalf I am signing) do not have any oral or written agreements with any NASD member or any associated persons of such member concerning the dispositions of my securities of the Company. For purposes of this statement, I understand that the NASD defines a "person associated with an NASD member" as being every sole proprietor, partner, officer, director or branch manager of any NASD member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by an NASD member (for example, any employee), whether or not any such person is registered or exempt from registration with the NASD pursuant to its Bylaws. By making these representations, the subscriber has not waived any right of action available under applicable federal or state securities laws. 2. ACCEPTANCE. This subscription agreement will be accepted or rejected by the Company within five (5) days of its receipt by the Company. Upon acceptance, this subscription will become irrevocable, and will obligate the undersigned to purchase the number of Units and in the dollar amount specified herein. The Company will return a countersigned copy of this subscription agreement to accepted subscribers, which copy of the agreement will be evidence of the purchase of the Units. -3-

3. PAYMENT OF SUBSCRIPTION PRICE. The full purchase price for the Units, equal to the number of purchased Units shall be payable by check or wire concurrently with delivery of this subscription agreement. Checks shall be made payable to "David A. Rapaport, Escrow Agent. Wires shall be sent as follows:
BANK: ABA #: Wachovia Bank, N.A. 061-000-227

FOR CREDIT TO: David A. Rapaport, Attorney Escrow Account ACCT #: 101 008 605 4713

4. INDEMNIFICATION. THE UNDERSIGNED AGREES TO INDEMNIFY AND HOLD CONVERTED ORGANICS INC., A DELAWARE COMPANY, ITS DIRECTORS, OFFICERS, EMPLOYEES, ADVISOR AND OTHER AGENTS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, AND DAMAGES, INCLUDING, WITHOUT LIMITATION, ALL ATTORNEYS' FEES WHICH ANY OF THEM MAY INCUR, IN ANY MANNER OR TO ANY PERSON, BY REASON OF THE FALSITY, INCOMPLETENESS OR MISREPRESENTATION OF ANY INFORMATION FURNISHED BY THE UNDERSIGNED HEREIN OR IN ANY DOCUMENT SUBMITTED HEREWITH. 5. SUBSCRIPTION-RELATED UNDERTAKINGS, REPRESENTATIONS AND WARRANTIES. (a) General. Each of the undersigned represents that: (i) I have read this agreement and the Memorandum included herein in its entirety and that all the information provided by me is accurate and complete; and (ii) I will notify the Company immediately of any material adverse change in any of the information set forth herein which occurs prior to the acceptance of my subscription. (b) Type Of Ownership: (check one) [ ] SINGLE PERSON [ ] MARRIED PERSON - JTWROS [ ] MARRIED PERSONS-- TENANTS-IN-COMMON [ ] CORPORATION OR LLC (C): (Authorized party must sign) [ ] TRUST (TR) (Trustee signature required) [ ] PARTNERSHIP (P) (Authorized Party must sign) -4-

[ ] CUSTODIAN (CU) (Custodian signature required) [ ] OTHER (Explain) (c) If Investor is One or More Individuals. Type or print your name(s) exactly as it should appear in the account records of the Company. Complete this section for individual investors and all trusts. All checks and correspondence will go to this address unless another address is listed in Sections 2 or 5 below.

Individual Name Additional Name(s) if held in joint tenancy, community property or
tenants-in-common ______________________________________________________________________ Street Address ______________________________________________________________________ City State Zip Code ______________________________________________________________________ Daytime Phone Number Evening Phone Number ______________________________________________________________________ Mobile Phone Number ______________________________________________________________________ Email

Taxpayer ID# or Social Security # (A social security number or taxpayer identification number is required for individual investors. For most individual taxpayers, it is your social security number. NOTE: If the Units are to be held in more than one name, only one number will be used and will be that of the first person listed.)
______________________________________________________________________ Date of Birth ______________________________________________________________________ Citizenship: [ ] U.S. [ ] Other ______________________________________________________________________ Occupation Employer Name ______________________________________________________________________ Employer Address ______________________________________________________________________ City State Zip Code

Investment Objective (check one): [ ] Capital appreciation -5-

[ ] Other (please explain) Do you have a net worth, either individually or jointly with spouse, in excess of $1,000,000 [ ] YES [ ] NO Did you have an individual income in excess of $200,000 (or joint income with your spouse in excess of $300,000) during the last two years, and do you have a reasonable expectation of reaching the same or higher income level in the current year? [ ] YES [ ] NO Are you subject to any regulatory or other constraints that may preclude or limit your participation in any potential investment? [ ] YES [ ] NO If yes, please explain: (d) If Investor is an Entity:

Name of Investor Type of Legal Entity (e.g., corporation, trust, etc.):
______________________________________________________________________ Address ______________________________________________________________________ City State Zip Code ______________________________________________________________________ Daytime Tel ______________________________________________________________________ Evening Tel ______________________________________________________________________ Mobile ______________________________________________________________________ Email ______________________________________________________________________ Taxpayer ID# Tax Year End

Please print here the exact name of Custodian, Administrator or other signatory for the entity Investment Objective: (check one) [ ] Capital appreciation -6-

[ ] Other (please explain) If the Investor is an entity is the Investor any of the following?

(check applicable box, if any) [ ] A corporation, Massachusetts or similar business trust, limited liability company, or partnership with total assets in excess of $5,000,000 that was not formed for the specific purposed of acquiring the Units [ ] A trust with total assets in excess of $5,000,000 not formed for the specific purposed of acquiring the Units and whose purchase of the Units is directed by a person who has such knowledge and experience in financial and business matters that he/she is capable of evaluating the merits and risks of investment in the Units [ ] A trust in which all of the beneficiaries are accredited investors as defined in Rule 501 (c)(3) of the Securities Act of 1933. ARE THE FOREGOING REPRESENTATIONS AND WARRANTIES TRUE? [ ] YES [ ] NO Please provide your initials here 6. DISTRIBUTIONS INFORMATION. ALTERNATIVE ADDRESS FOR DELIVERY OF DOCUMENTS, SECURITIES, AND FUNDS (I.E., OTHER THAN THE ADDRESS GIVEN IN SECTION 5(C) OR 5(D) ABOVE). David A. Rapaport, Esq. 333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Tel: 404 257-9150 Fax: 404 257-9125 Email: drapap@gmail.com -7-

7. INVESTMENT. Amount of payment enclosed: $______________________________________________
[Minimum subscription is $5,000 with additional investments in increments of $1,000.] Payment by Check: Payment by Wire Transfer: 8. SIGNATURES. [ ] [ ] Check # _________________________________ Wire Reference # ________________________

(a) Individuals: Investor's primary residence is in:

--------------------------Signature of Subscriber

---------------------------------------Date

---------------------------------------------------------------------Print Name of Subscriber

--------------------------Signature of Co-Subscriber

---------------------------------------Date

---------------------------------------------------------------------Print Name of Co-Subscriber (b) Entities: ---------------------------------------------------------------------Print Name of Subscriber

--------------------------By

---------------------------------------Date

----------------------------------------------------------------------

Signature of Authorized Signatory Print Name and Title of Signatory By: Date Signature of Required Authorized Co-Signatory Print Name and Title of Co-Signatory 9. ACCEPTANCE. THE SUBSCRIPTION AGREEMENT WILL NOT BE AN EFFECTIVE AGREEMENT UNTIL IT OR A FACSIMILE IS SIGNED BY AN OFFICER OF CONVERTED ORGANICS INC., A DELAWARE COMPANY. (Office Use Only) -8-

______________________________________________________________________ Account Number ______________________________________________________________________ Investor Check/Wire Date ______________________________________________________________________ Check/Wire Amount ______________________________________________________________________ Check/Wire # ___________________________ Entered by ________________________________________ Date

Subscription has been: ____ Accepted ____ Rejected
--------------------------By: ---------------------------------------Dated

---------------------------------------------------------------------Print Name and Title

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EXHIBIT 10.1A CONVERTED ORGANICS INC. 7A COMMERCIAL WHARF WEST BOSTON, MA 02210 TEL: 617 624-0111 FAX 617 624-0333 EMAIL: EGILDEA@ECAPGLOBAL.COM APRIL 11, 2006 FINANCING TERMS AGREEMENT FOR SALE OF BRIDGE NOTES AND SHARES
ISSUER: CONVERTED ORGANICS INC. ("CONVERTED ORGANICS" or the "COMPANY"). $1,500,000 in one hundred (100) UNITS of $15,000 in exchange for bridge notes ("BRIDGE NOTE(S)") and securities of the COMPANY ("BRIDGE EQUITY UNITS"). "Accredited" investors, including High Capital Funding, LLC ("HCF"), as defined in Regulation D of the Securities Act of 1933. See signature pages hereto for names, addresses, and the number of UNITS being purchased. PURCHASERS have read and agree to the terms contained in Exhibit D hereto. INTEREST AND PRE-PAYMENT: Interest will accrue on the principal amount of the BRIDGE NOTE(S) at the rate of eight (8%) percent per annum, based on a 360-day year. The Company will have the right to prepay without penalty any amount owed under the BRIDGE NOTE(S) in whole or in part at any time. Accrued interest shall be paid quarterly, beginning three months after the FIRST CLOSING and every three months thereafter.

AMOUNT:

PURCHASERS:

TERM OF NOTES:

MATURITY DATE: The Company plans to raise approximately $8-10 million in an initial public offering (the "PUBLIC OFFERING"). The principal amount and accrued and unpaid interest on the BRIDGE NOTE(S) will be due and payable at the earlier of: October 16, 2006 or the closing of a PUBLIC OFFERING ("MATURITY DATE"). After the MATURITY DATE, unpaid principal on the BRIDGE NOTES shall bear interest at eighteen (18%) per annum.

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BRIDGE SECURITIES:

Upon the closing of the PUBLIC OFFERING, the COMPANY shall deliver to each PURCHASER, BRIDGE EQUITY UNITS consisting of securities identical in form to the securities offered for sale in the PUBLIC OFFERING ("PRIMARY BRIDGE EQUITY UNITS"), except that the certificates for the PRIMARY BRIDGE EQUITY UNITS may bear restrictive legends. Each PURCHASER shall receive the number of PRIMARY BRIDGE EQUITY UNITS equal to the principal of such PURCHASER'S BRIDGE NOTE(S) divided by the public offering price of the securities comprising the PRIMARY BRIDGE EQUITY UNIT. The securities issued to PURCHASERS shall have the same CUSIP numbers as the corresponding securities in the PUBLIC OFFERING. If a PUBLIC OFFERING shall not have occurred prior to October 16, 2006, then on October 17, 2006 the COMPANY shall issue to the PURCHASER alternate BRIDGE EQUITY UNITS ("ALTERNATE BRIDGE EQUITY UNITS") consisting of that number of shares of common stock of the COMPANY as shall equal the principal amount of the BRIDGE NOTE(S) divided by $3.00 plus an equal number of non-callable warrants exercisable at $3.00 per share for a period of five years from such issuance, and which shall have a cashless exercise feature at any time after October 16, 2007 that the underlying shares of common stock are not covered by an effective registration statement with a current prospectus available. The number of ALTERNATE BRIDGE EQUITY UNITS shall be adjusted, pro rata, on account of any stock splits, reverse stock splits, stock dividends paid on common stock, etc. which occur after the date of issuance of the BRIDGE NOTE(S) and prior to the issuance of the ALTERNATE BRIDGE EQUITY UNITS. PRIMARY BRIDGE EQUITY UNITS and Alternate BRIDGE EQUITY UNITS are sometimes referred to herein as "BRIDGE EQUITY UNITS." The PURCHASERS shall have the right for a period of one year and one month from the issuance of the ALTERNATE BRIDGE EQUITY UNITS to exchange them for PRIMARY BRIDGE EQUITY Units of an equivalent worth issued in a public offering of the COMPANY such that the PURCHASERS will own the same securities as if the public offering had closed on or prior to the six month anniversary of the FIRST CLOSING.

PURCHASE PRICE:

The aggregate purchase price for each BRIDGE NOTE and BRIDGE EQUITY UNIT shall be the original principal amount of the BRIDGE NOTE(S) included in such UNIT. The purchase price allocable to the BRIDGE NOTE(S) included in such UNIT shall be not less than 75% of such aggregate purchase price and the purchase price

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allocable to the BRIDGE EQUITY UNITS included in such UNIT shall be not more than 25% of such aggregate purchase price. The tax value of the BRIDGE EQUITY UNITS shall be equal to the portion of the purchase price allocated to the BRIDGE EQUITY UNITS.
SECURITY: Repayment of the BRIDGE NOTE(S) shall be secured by a lien on all tangible and intangible assets of the COMPANY to be evidenced by a SECURITY AGREEMENT in form and substance satisfactory to HCF, the lead INVESTOR.

DOCUMENT PREPARATION SECURITIES: In lieu of reimbursing HCF, for the cost of preparing the legal documents for this transaction, CONVERTED ORGANICS shall issue to HCF, BRIDGE EQUITY UNITS with a tax value of $25,000 ("DOCUMENT PREPARATION SECURITIES"). The DOCUMENT PREPARATION SECURITIES shall be in all respects identical to the BRIDGE EQUITY UNITS with identical attendant rights. If a PUBLIC OFFERING shall not have occurred prior to six months from the FIRST CLOSING, then the BRIDGE EQUITY UNITS comprising the DOCUMENT PREPARATION SECURITIES shall automatically convert to 33,333 ALTERNATE BRIDGE EQUITY UNITS. PLACEMENT AGENT FEE: CONVERTED ORGANICS and PURCHASERS agree that CONVERTED ORGANICS shall be solely responsible for the payment of placement agent fees to Investors Capital Corporation ("Placement Agent"). PURCHASERS and CONVERTED ORGANICS shall each be responsible for their own expenses in connection with this transaction. PURCHASERS shall have the right, subject to applicable securities laws, to transfer and/or assign the BRIDGE NOTES and/or the BRIDGE EQUITY UNITS, and HCF shall have the right to transfer and/or assign the DOCUMENT PREPARATION SECURITIES. Any PURCHASER, transferee or assignee of a BRIDGE NOTE, BRIDGE EQUITY UNITS, or DOCUMENT PREPARATION SECURITIES is a "HOLDER" or collectively "HOLDERS." The first closing of this transaction ("FIRST CLOSING") was on March 2, 2006 for $500,000 principal amount of Bridge Note(s) which followed the receipt by David A. Rapaport (Executive V.P. and General Counsel of HCF), as ESCROW AGENT, of (a) $500,000 ("FIRST CLOSING PROCEEDS") from HCF, (b) executed BRIDGE NOTES for an aggregate of the FIRST CLOSING PROCEEDS, (c) a fully executed SECURITY AGREEMENT with evidence of

EXPENSES:

TRANSFER AND ASSIGNMENT:

CLOSING DATE/ESCROW:

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the filing of UCC-1's, and (d) a LEGAL OPINION (as defined in "Jurisdiction/Choice of Law" below). At the FIRST CLOSING the ESCROW AGENT transferred the FIRST CLOSING PROCEEDS - minus Placement Agent fees - to CONVERTED ORGANICS and delivered the BRIDGE NOTE(S) to HCF. ADDITIONAL CLOSINGS shall be held at the mutual agreement of the parties, including HCF, provided that no ADDITIONAL CLOSINGS shall be held after April 30, 2006 without the written consent of HCF. FINANCIAL INFORMATION: The Company has delivered to HCF the unaudited financial statements of Mining Organics Management LLC for the years ended December 31, 2004 and December 31, 2003, or the federal tax returns of Mining Organics Management LLC for the years 2004 and 2003. The Company shall deliver unaudited financial statements of Mining Organics Management LLC for the year ended December 31, 2005 or the federal tax return of Mining Organics Management LLC for the year 2005 by March 31, 2006. The Company also has delivered to HCF the form of Asset Purchase Agreements between the Company and Mining Organics Management LLC, and between the Company and Mining Organics HRRY LLC, identifying the assets to be transferred from the LLC's to the Company. The Company will (1) file a resale registration statement within 180 days of the PUBLIC OFFERING closing: (2) cause it to be effective within 240 days of the PUBLIC OFFERING closing if the registration statement is not reviewed by the Securities and Exchange Commission ("SEC") and 270 days of the PUBLIC OFFERING closing if the registration statement is reviewed by the SEC covering the resale of the BRIDGE EQUITY UNITS and the DOCUMENT PREPARATION SECURITIES (including the resale of any shares of common stock issuable upon the exercise or conversion of any BRIDGE EQUITY UNITS); and (3) cause it to remain effective with a current prospectus available for a period of the longer of two years, or until the expiration or exercise in full of any warrants contained in the BRIDGE EQUITY UNITS. If the Company fails to satisfy requirements (1) or (2) above it will be subject to a 2% cash late registration fee (i.e. 2% of the outstanding BRIDGE NOTE(S) principal) per month or part thereof that such failure continues ("LATE FEE"); provided such LATE FEE shall not be accrued for any month after one year from the FIRST CLOSING that the Company is current in its reporting obligations under the Exchange Act and has been subject to such reporting requirements for at least 90 days, unless any Holder is

REGISTRATION RIGHTS:

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the beneficial owner of more than 1% of CONVERTED ORGANICS's issued and outstanding common stock, in which case the LATE FEE shall continue to accrue for no more than two years from the FIRST CLOSING. If the COMPANY fails to satisfy requirement (3) above, the LATE FEE shall continue until the longer of the period set forth in the preceding paragraph, or the expiration or exercise in full of any warrants included in the BRIDGE EQUITY UNITS.
JURISDICTION/CHOICE OF LAW: All transaction documents shall be governed by and construed under the laws of the state of Delaware as applied to agreements entered into and to be performed entirely within the state of Delaware, without giving effect to principles of conflicts of law. The parties irrevocably consent to the jurisdiction and venue of the state and federal courts located in Wilmington, DE in connection with any action relating to this transaction. At or prior to each ADDITIONAL CLOSING, PURCHASERS shall receive a legal opinion from Company counsel in form and substance satisfactory to HCF it as to (a) the due formation and existence of the COMPANY (under Delaware law), (b) the validity and enforceability of this Financing Terms Agreement (under Delaware law), the BRIDGE NOTE(S) (under Delaware law), and the SECURITY AGREEMENT (under Delaware law), including specifically that neither this Financing Terms Agreement nor the BRIDGE NOTE(S) violate any laws of the state of Delaware relating directly or indirectly to the maximum rate of interest that may be charged in this transaction, subject to standard carve-outs for equitable remedies and insolvency laws, and (c) the valid authorization to issue the BRIDGE EQUITY UNITS and the DOCUMENT PREPARATION SECURITIES (under Delaware law) ("LEGAL OPINION"). The LEGAL OPINION shall be updated and reissued at each ADDITIONAL CLOSING. All parties executing this Financing Terms Agreement, including Exhibit D, shall be legally bound by the above terms and shall execute such further documents ("FURTHER DOCUMENTS"), including without limitation BRIDGE NOTE(S), a SECURITY AGREEMENT, AND AN ESCROW AGREEMENT substantially in the forms of Exhibit A, Exhibit B, and Exhibit C attached hereto, respectively. If there are any inconsistencies between this Financing Terms Agreement (Exclusive of Exhibits A, B & C) and any such FURTHER DOCUMENTS executed in connection with this transaction, the terms of this Financing Terms Agreement shall govern. This Financing Terms Agreement may be signed in two or more counterparts,

BINDING AGREEMENT:

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all of which taken together shall constitute an original. Facsimile signatures shall be deemed to be original signatures. CONVERTED ORGANICS INC.
By: -------------------------(signature) Edward J. Gildea, President -----------------------------------(name and title) Date: April 11, 2006

DAVID A. RAPAPORT, ESCROW AGENT Date: April 11, 2006 333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Tel: 404 257-9150 Fax: 404 257-9125 Email: drapaport@highcapus.com -6-

EXHIBIT A - FORM OF BRIDGE NOTE THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, PLEDGED, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (B) EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS ARE AVAILABLE.
Certificate No. ---------$ ---------------Principal Amount CONVERTED ORGANICS INC. SECURED PROMISSORY NOTE , 2006 ---------

FOR VALUE RECEIVED, CONVERTED ORGANICS INC., a Delaware corporation, ("Borrower") promises to pay to the order of ___________________________ ("Lender") the principal amount of ___________________________ Dollars ($______________), together with interest on the unpaid principal amount at the rate of 8 percent (8%) per annum based on a 360-day year, all upon the terms set forth below. This Secured Promissory Note (the "Note") is issued pursuant to that certain Financing Terms Agreement for Sale of Bridge Notes and Shares, dated as of April 11, 2006, by and between Lender and Borrower (the "Financing Agreement"). This Note is subject to the terms and conditions of the Financing Agreement. To the extent that any of the terms specifically set forth in the Financing Agreement is inconsistent with the provisions of this Note specifically relating to such matters, the Financing Agreement shall govern with respect to such inconsistencies. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Financing Agreement. 1. MATURITY. Accrued interest shall be paid in arrears on a quarterly basis, beginning three months after July 1, 2006 and every three months thereafter. Except as otherwise provided herein, the principal hereunder shall become due and payable in full on October 16, 2006, except that in the event of the closing of a Public Offering, the principal amount and accrued and unpaid interest will become immediately due and payable. After the Maturity Date, the Note shall bear interest at 18 percent per annum. 2. PREPAYMENT. Borrower may prepay any or all amounts due under this Bridge Note at any time without penalty. -7-

3. METHOD OF PAYMENT. Any payment of principal or interest hereunder shall be made by certified or bank cashier's check unless Holder has provided Borrower with appropriate wire instructions, in which event, the payment shall be made by wire transfer of "same day" funds. For the purpose of any interest calculation, payment shall be deemed made when the check is sent by overnight delivery or when the wire is sent. Any partial payment shall be applied first to accrued and unpaid interest and thereafter to a reduction of principal. 4. Security. REPAYMENT OF THE NOTE SHALL BE SECURED BY A LIEN ON ALL TANGIBLE AND INTANGIBLE ASSETS OF THE BORROWER AS DESCRIBED IN THAT CERTAIN SECURITY AGREEMENT EXECUTED CONTEMPORANEOUSLY HEREWITH. 5. ANTI DILUTION ADJUSTMENTS. The number and kind of securities or other property into which this Note may become convertible shall be subject to adjustment as follows: (a) If a split or a reverse split shall have occurred with respect to the Common Stock, the conversion rate shall be appropriately adjusted to cause the Holder to receive, upon conversion, a number of shares of Common Stock representing the same percentage of the equity of the Company to which the Holder would have been entitled on such conversion if the split had not occurred. (b) If a dividend or other distribution shall be made in favor of the Common Stock, appropriate adjustment shall be made so that, upon conversion of the Note, the Holder shall receive, in addition to the Common Stock otherwise obtainable on such conversion, the cash, securities or other property that it would have received had the Note been so converted immediately prior to the split, dividend or distribution. (c) If the Common Stock shall, as the result of a merger or otherwise, be converted into the right to receive other securities or property, appropriate adjustment shall be made so that, upon conversion of the Note, the Holder shall receive, in lieu of Common Stock, the securities and/or property that it would have received as a result of the merger or other such transaction had the Note been so converted immediately prior to the record date therefor. 6. DEFAULT. In the event of an occurrence of any event of default specified below, the principal of, and all accrued and unpaid interest on, the Note shall become immediately due and payable without notice, except as specified below: (a) Borrower fails to make any payment hereunder when due, which failure has not been cured within 10 days following such due date. (b) Any defined event of default occurs under any contract or instrument pursuant to which Borrower has incurred any liability for borrowed money in excess of $50,000, which event of default has not been waived within five business days following such occurrence, and which event of default is reasonably likely to materially affect the Company's business. -8-

(c) Borrower files a petition to take advantage of any insolvency act; makes an assignment for the benefit of its creditors; commences a proceeding for the appointment of a receiver, trustee, liquidator or conservator of itself of a whole or any substantial part of its property; files a petition or answer seeking reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the United States of America or any state. (d) A court of competent jurisdiction enters an order, judgment or decree appointing a custodian, receiver, trustee, liquidator or conservator of Borrower or of the whole or any substantial part of its properties, or approves a petition filed against Borrower seeking reorganization or arrangement or similar relief under the federal bankruptcy laws or any other applicable law or statute of the Untied States of America or any state; or if, under the provisions of any other law for the relief or aid of debtors, a court of competent jurisdiction assumes custody or control of Borrower or of the whole or any substantial part of its properties; or there is commenced against Borrower any proceeding for any of the foregoing relief and such proceeding or petition remains undismissed for a period of 30 days; or if Borrower by any act indicates its consent to or approval of any such proceeding or petition. (e) If (i) any judgment remaining unpaid, unstayed or undismissed for a period of 60 days is rendered against Borrower which by itself or together with all other such judgments rendered against Borrower remaining unpaid, unstayed or undismissed for a period of 60 days, is in excess of $50,000, or (ii) there is any attachment or execution against Borrower's properties remaining unstayed or undismissed for a period of 60 days which by itself or together with all other attachments and executions against Borrower's properties remaining unstayed or undismissed for a period of 60 days is for an amount in excess of $50,000. 7. SUCCESSORS AND ASSIGNS. The Note is transferable and assignable by Lender or any subsequent permitted assignee subject to the requirement that any such assignment or transfer be, in the opinion of Borrower's counsel, in compliance with applicable federal and state securities laws. The assignee shall be referred to herein as a "Holder." All covenants, agreements and undertakings in the Note by or on behalf of any of the parties shall bind and inure to the benefit of the respective successors and assigns of the parties whether so expressed or not. 8. NOTICES. Any and all notices, requests, consents and demands required or permitted to be given hereunder shall be in writing and shall be deemed given and received (i) upon personal delivery, (ii) upon the first business day following the receipt of confirmation of facsimile transmission to the telefax number as indicated below, or (iii) upon the third business day after deposit in the United States mail, by certified or registered mail, postage prepaid and addressed as follows: To Lender: [to the address and facsimile provided in Subscription Agreement between the Lender -9-

and the Borrower executed in connection with the purchase and sale of this Note] To Borrower: Converted Organics Inc. 7A Commercial Wharf West Boston, MA 02210 Tel: (617) 624-0111 Fax: (617) 624-0333

Email: egildea@ecapgolbal.com Either party may change by notice the address to which notices to that party are to be addressed. 9. WAIVER/AMENDMENT. Borrower hereby waives presentment for payment, demand, protest and notice of protest for nonpayment of the Note and consents to any extension or postponement of the time of payment or any other indulgence. The Note may only be amended or modified by written agreement signed by Borrower and Holder. 10. EXPENSES. In the event that Holder brings legal action against Borrower, or Borrower brings legal action against Holder, to enforce or otherwise determine the meaning or enforceability of the Note or any provision hereof, each party shall bear its own expenses, including attorney fees, directly attributable to such action. However, in any action for breach of the Note, including nonpayment, the prevailing party in any such dispute shall be entitled to recover all reasonable costs and attorney fees incurred in connection with such action. In addition, Borrower shall be entitled to recover from Lender all reasonable costs of collection, including without limitation, legal fees and expenses incurred in any bankruptcy and/or state insolvency proceeding. 11. CHOICE OF LAW. The Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Delaware. The parties agree that venue for any suit, action, proceeding or litigation arising out of or in relation to this Note will be in any federal or state court in Wilmington, Delaware having subject matter jurisdiction, and the parties hereby submit to the jurisdiction of that Court. WITH RESPECT TO ANY CLAIM OR ACTION ARISING UNDER THIS NOTE, EACH PARTY HEREBY (A) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE AND THE UNITED STATES DISTRICT COURT LOCATED IN THE CITY OF WILMINGTON, STATE OF DELAWARE, AND (B) IRREVOCABLY WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE BROUGHT IN ANY SUCH COURT, IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER IRREVOCABLY WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH CLAIM, SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH - 10 -

PARTY. NOTHING IN THIS NOTE WILL BE DEEMED TO PRECLUDE THE LENDER FROM BRINGING AN ACTION OR PROCEEDING IN RESPECT HEREOF IN ANY OTHER JURISDICTION. IN WITNESS WHEREOF, the Note has been executed and delivered on the date specified on the first page hereof by the duly authorized representative of Borrower. CONVERTED ORGANICS INC. By: Edward J. Gildea, President - 11 -

EXHIBIT "B" SECURITY AGREEMENT THIS SECURITY AGREEMENT, ("Agreement") is made as of this 2nd day of March, 2006, by and between CONVERTED ORGANICS INC., a Delaware Corporation, 7A Commercial Wharf West, Boston, MA 02210 (hereinafter "Borrower"), and Lender(s) as listed on Schedule "1" of this Agreement. WHEREAS, this Agreement is given to secure performance of the obligations ("Obligations") under the Secured Promissory Note(s) ("Secured Notes") , executed by Borrower, to Lenders as lenders and in the amounts listed on Schedule "1" attached hereto and incorporated herein by reference, together with interest thereon as provided for in the Secured Notes. Schedule I shall be amended and supplemented from time to time to reflect the issuance and delivery of additional Secured Notes. NOW, THEREFORE, in consideration of the loans made by the Lenders to Borrower, and further consideration of the covenants and promises contained in this Agreement, and for other good and valuable consideration, the parties agree as follows: 1. Defined Terms. As used in this Agreement, the following terms shall have the following meanings: (a) "Collateral" has the meaning set forth in paragraph 2 hereof. (b) "PTO" means the United States Patent and Trademark Office. (c) "UCC" means the Uniform Commercial Code as in effect in the State of Delaware. (d) Terms Defined in UCC. Where applicable in the context of this Agreement and except as otherwise defined herein, terms used in this Agreement shall have the meanings assigned to them in the UCC. (e) Construction. In this Agreement, the following rules of construction and interpretation shall be applicable: (i) no reference to "proceeds" in this Agreement authorizes any sale, transfer, or other disposition of any Collateral by Borrower; (ii) "includes" and "including" are not limiting; (iii) "or" is not exclusive; and (iv) "all" includes "any" and "any" includes "all." 2. Security Interest. (a) Grant of Security Interest. As security for the payment and performance of the Obligations, Borrower hereby assigns, transfers and conveys to Lenders, and grants to - 12 -

Lenders a security interest in and to all of Borrower's right, title and interest in, to and under the following property, in each case whether now or hereafter existing or arising or in which Borrower now has or hereafter owns, acquires or develops an interest and wherever located (collectively, the "Collateral"): (i) Accounts; (ii) Chattel Paper and Electronic Chattel Paper; (iii) Fixtures; (iv) Goods; (v) Inventory; (vi) Software; (vii) all patents, trademark, patent applications and trademark applications, domestic or foreign, all licenses relating to any of the foregoing and all income and royalties with respect to any licenses (including such patents, trademark, patent applications and trademark applications as described in Schedule "2"), all rights to sue for past, present or future infringement thereof, all rights arising therefrom and pertaining thereto and all reissues, divisions, continuations, renewals, extensions and continuations-in-part thereof. Borrower represents and warrants to Lenders that a true and correct list of all of the existing Collateral consisting of U.S. patents, trademark, patent applications and trademark applications or registrations owned by Borrower, in whole or in part, is set forth in Schedule "2"; (viii) all General Intangibles and all intangible intellectual or other similar property of Borrower of any kind or nature, associated with or arising out of any of the aforementioned properties and assets and not otherwise described above; and (ix) all Proceeds of any and all of the foregoing Collateral (including license royalties, rights to payment, accounts and proceeds of infringement suits) and, to the extent not otherwise included, all payments under insurance (whether or not Lenders is the loss payee thereof) or any indemnity, warranty or guaranty payable by reason of loss or damage to or otherwise with respect to the foregoing Collateral. (b) Continuing Security Interest. Borrower agrees that this Agreement shall create a continuing security interest in the Collateral which shall remain in effect until terminated in accordance herewith. - 13 -

3. Collateral Free of Other Security Interests. Borrower warrants that no financing statement covering any of the Collateral or its proceeds is on file in any public office at this date or will be on file with respect to the Collateral at the time the Collateral becomes subject to this Agreement (except any purchase money security interests). No other security interest of any kind affects the Collateral at this date, and no arrangement exists whereby the Collateral will in the future become subject to a security interest senior to the Agreement. Borrower will not sell, assign or otherwise alienate the ownership of the Collateral or its use or operation except any sale or replacement in the ordinary course of Borrower's business; and Borrower will not use the Collateral in violation of any ordinance or state or federal statute or any administrative rule or regulation of law. Borrower authorizes Lenders at their option and their sole discretion to discharge any taxes, charges, assessments, liens or other security interests or other encumbrances to which the Collateral may become subject. Lenders may pay amounts to preserve and maintain the Collateral, if Borrower fails to do so. Borrower agrees to reimburse Lenders within ten (10) days after demand for any payment made or any expense incurred by Lenders pursuant to the foregoing authorization, together with interest on the amount expended at the rate of eighteen percent (18%) per annum from the date of the payment. Any such amounts shall be secured by and under this Agreement. 4. Fees and Taxes. Borrower will timely pay any and all license fees, taxes, assessments and public charges, general and special, that may at any time be levied or assessed upon or against Collateral. 5. Maintenance of Collateral. Borrower will, at Borrower's expense, maintain and keep the Collateral at its present location in good order and repair, ordinary wear and tear excepted, and shall not remove, demolish or substantially alter the Collateral, except any sale or replacement in the ordinary course of Borrower's business, without the prior written consent of the Lenders. Borrower will not attempt to or actually dispose of, lend, transfer, lease or assign the Collateral, except any sale or replacement in the ordinary course of Borrower's business, without the prior written consent of Lenders. Borrower may remove the Collateral in its ordinary course of business, provided, that such Collateral shall be replaced with property of a similar nature of equal or greater value. The security interest created by this Agreement will immediately attach to the substitute property when it is acquired, and the substitute property will become part or the Collateral defined in this Agreement. Borrower will not permit the Collateral to be attached or seized by any legal process. Borrower will defend and indemnify Lenders from all expense and liability of every kind to any person or to the property of any person by reason of or in connection with the delivery, possession or use of the Collateral. 6. [Reserved]. - 14 -

7. Further Acts. On a continuing basis, Borrower shall make, execute, acknowledge and deliver, and file and record in the proper filing and recording places, all such instruments and documents, and take all such action as may be necessary or advisable or may be requested by Lenders to carry out the intent and purposes of this Agreement, or for assuring, confirming or protecting the grant or perfection of the security interest granted or purported to be granted hereby, to ensure Borrower's compliance with this Agreement or to enable Lenders to exercise and enforce its rights and remedies hereunder with respect to the Collateral, including any documents for filing with the PTO or any applicable state office. Lenders may record this Agreement, an abstract thereof, or any other document describing Lenders' interest in the Collateral with the PTO, at the expense of Borrower. In addition, Borrower authorizes Lenders to file financing statements describing the Collateral in any UCC filing office deemed appropriate by Lenders. If the Borrower shall at any time hold or acquire a commercial tort claim arising with respect to the Collateral, the Borrower shall immediately notify Lenders in a writing signed by the Borrower of the brief details thereof and grant to the Lenders in such writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance satisfactory to the Lenders. 8. Authorization to Supplement. If Borrower shall obtain rights to any new patentable inventions or become entitled to the benefit of any patent application or patent for any reissue, division, or continuation, of any patent or trademark, the provisions of this Agreement shall automatically apply thereto. Borrower shall give prompt notice in writing to Lenders with respect to any such new patent or trademark rights. Without limiting Borrower's obligations hereunder, Borrower authorizes Lenders unilaterally to modify this Agreement by amending Schedule "2" to include any such new patent or trademark rights. Notwithstanding the foregoing, no failure to so modify this Agreement or amend Schedule "2" shall in any way affect, invalidate or detract from Lenders' continuing security interest in all Collateral, whether or not listed on Schedule "2." 9. Default. The breach or failure of any term, agreement, covenant or term of this Agreement or the occurrence of an event or default upon any term contained in the Secured Note(s) shall constitute a default hereunder. 10. Remedies. Upon the occurrence of any default as defined above, Lenders will have the right at their option to enforce and to exercise any or all of their rights under this Agreement or otherwise. In addition to all other rights and remedies, Lenders shall have the remedies of a secured party under the UCC. In exercising these remedies, Lenders and Borrower agree as follows: (a) Lenders may, at their option, required Borrower to assemble the Collateral and make it available to Lenders at a place to be designated by Lenders which is reasonably convenient to both parties. In the event Borrower fails or refuses to assemble the Collateral, Lenders shall have the right, and Borrower hereby authorizes and empowers Lenders, to enter the premises upon which the Collateral is located in order to remove the same. - 15 -

(b) Lenders will give Borrower reasonable notice of the time and place of any public sale of the Collateral, or of the time after which any private sale or other intended disposition of the collateral is to be made, unless the Collateral is perishable, threatens to decline speedily in value, or is of a type customarily sold on a recognized market. The requirement of reasonable notice shall be met if a written notice is mail to Borrower, postage prepaid, to the address of Borrower last known to Lenders, at least ten (10) days prior to the date of the sale or disposition. (c) Borrower agrees to surrender possession of the Collateral to Lenders in event Lenders elects to foreclose this security interest. Borrower waives any notice of the exercise of any and all options reserved to Lenders by this Agreement. (d) Borrower will, upon Lenders' request, deliver to Lenders all original invoices, bills, charge or credit card receipts, books and records and other documents evidencing or describing any of the account receivable constituting a part of the Collateral. Borrower will also execute and deliver to Lenders an assignment of the right to receive payments under all such Accounts. The parties recognize, however, that in the event of default such Accounts shall be deemed assigned to Lenders, whether or not the assignments described above are actually delivered. (e) Lenders shall have the right and are hereby authorized to collect all amounts due under the Accounts; sue or take other actions to collect the same in their own name or as assignee of or in the name of Borrower; compromise or give acquittance for amounts due; and use such other measures as Lenders may in its sole discretion deem appropriate for collection of the Accounts. All such actions shall be taken at the sole expense of Borrower, who agrees to reimburse Lenders for all reasonable amounts expended (including a reasonable attorney's fee), together with interest thereon from the date of expenditure at the rate then applicable under the Secured Notes. (f) This Agreement constitutes a direction to and full authority to any Account debtor to pay directly to Lenders any such accounts. No proof of default shall be required. Any such debtor is herby irrevocably and unconditionally authorized to rely upon and comply with any notice from Lenders. The debtor shall not be liable to Borrower or any person claiming under Borrower for making any payment or rendering any performance to Lenders. The debtor shall have no obligation or right to inquire whether any default has occurred or is then existing. By its execution of this Agreement, Borrower irrevocably and unconditionally joins in, authorizes and consents to the above instructions. (g) The proceeds of any sale of the Collateral shall be applied to the following items in the following order: (a) the reasonable expenses of repossessing the Collateral and preparing for the holding the sale, including without limitation all reasonable attorney's fees incurred by Lenders; (b) interest an principal then due (by acceleration or otherwise) under the Secured Notes and any other debts specifically secured by the Agreement; (c) interest and principal then due (by acceleration or otherwise) under any - 16 -

other debts of Borrower to Lenders (to be applied in whatever order Lenders may in their sole discretion determine); (d) indebtedness of Borrower to other secured parties, provided written notice of demand therefore is received by Lenders before the sale (to bee applied in the order Lenders receives the requires); and (e) the balance, if any, to Borrower. 11. Set-off. Upon default by Borrower under this Agreement, Lenders (or the holder or owner of any debt secured by this Agreement) shall immediately have the right without further notice to Borrower to set off against the Secured Notes and any other debts secured by this Agreement all debts of Lenders (or such holder or owner) to Borrower, whether or not then due. 12. Notice. Any and all notices, requests, consents and demands required or permitted to be given hereunder shall be in writing and shall be deemed given and received (i) upon personal delivery, (ii) upon the first business day following the receipt of confirmation of facsimile transmission to the telefax number as indicated below, or (iii) upon the third business day after deposit in the United States mail, by certified or registered mail, postage prepaid and addressed to the appropriate party at the address provided for herein. Any party may change by notice the address to which notices to that party are to be addressed. 13. Miscellaneous. The following provisions are additional terms of this Agreement: (a) Lenders have no duty to maintain, repair or protect the Collateral. (b) No waiver by Lenders of any default shall operate as a waiver of any other default or of the same default on a future occasion. (c) All rights and remedies of Lenders are cumulative and may be exercised successively or concurrently, and shall inure to the benefit of Lenders' assigns. (d) All obligations of Borrower shall bind his trustees, custodians, general partners, successors and assigns. (e) The captions of the sections of this Agreement are inserted for convenience only and shall not be used in the interpretation or construction of any provisions hereof. (f) If any provisions of this Agreement is held invalid or unenforceable, the holding shall affect only the provision in question and all other provisions on this Agreement shall remain in full force and effect. (g) This Agreement supersedes all prior oral and/or written agreements concerning the subject matter hereof, including without limitation the Security Agreement by and among the parties hereto dated February 28, 2006. - 17 -

IN WITNESS WHEREOF, Borrower has executed this Agreement the day and year first above written. CONVERTED ORGANICS INC. a Delaware corporation By: Edward J. Gildea, President - 18 -

SCHEDULE "1" LENDERS NAME AND ADDRESS AMOUNT

SCHEDULE "2" PATENTS, TRADEMARKS AND APPLICATIONS None. - 20 -

EXHIBIT "C" ESCROW AGREEMENT David A. Rapaport, Esq. 333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Dear Mr. Rapaport: The undersigned hereby appoints you as my (our) agent, and you hereby accept such appointment, to act on my (our) behalf in connection with my (our) purchase of Secured Promissory Note(s) ("Note") and Bridge Equity Units from Converted Organics Inc. ("Organics" or "Company") pursuant to a Financing Terms Agreement For Sale of Bridge Notes and Shares dated April 11, 2006 ("Financing Terms Agreement"). You are hereby authorized and directed to hold for my (our) benefit the Bridge Notes and Primary Bridge Equity Units, Alternate Bridge Equity Units, if any, being issued, or to be issued in the future, to me (us) as partial consideration for my (our) purchase of the Note. You are also authorized to act on my behalf in the enforcement of my (our) rights under the Note, the Security Agreement dated March 2, the Primary Bridge Equity Units and the Alternate Bridge Equity Units. 1. The Agent's duties hereunder may be altered, amended, modified or revoked only by a writing signed by Investor and the Agent. 2. The Agent shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by the Agent to be genuine and to have been signed or presented by the property party or parties. The Agent shall not be personally liable for any act the Agent may do or omit to do hereunder as Agent while acting in good faith, except for fraud, willful misconduct, or gross negligence, and any act done or omitted by the Agent pursuant to the advice of the Agent's attorneys-at-law shall be evidence of such good faith. 3. The fees, if any, and disbursements of the Agent chargeable in respect of services provided in the capacity as Agent pursuant to this Escrow Agreement will be responsibility of Investor, except to the extent recoverable from the Company. 4. The Agent is hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law and is hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case the Agent obeys or complies with any such order, judgment or decree, the Agent shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction. 5. The Agent shall not be liable in any respect on account of the identity, authorities or rights of the parties executing or delivering or purporting to execute or deliver the Note, Security Agreement, or any documents or papers deposited or called for hereunder. 6. The Agent shall be entitled to employ such legal counsel and other experts as the Agent may deem necessary properly to advise the Agent in connection with the Agent's duties - 21 -

hereunder, may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor. The Agent is the Executive Vice President and General Counsel of High Capital Funding, LLC ("HCF") and has acted as legal counsel for HCF in connection with the Financing Terms Agreement and may continue to act as legal counsel for HCF and/or its affiliates from time to time, notwithstanding its duties as Agent hereunder. Investor waives any and all claims and allegations of conflict in relation to the Agent's continued representation of HCF and/or its affiliates as its attorney. 7. The Agent's responsibilities as Agent hereunder shall terminate if the Agent shall resign by three (3) business days prior written notice to Investor and Organics. In the event of any such resignation, Investor may, but shall not be required to, appoint a successor Agent. 8. If the Agent reasonably requires other or further instruments in connection with Escrow Agreement or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments. 9. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the property held by the Agent hereunder, the Agent is authorized and directed in the Agent's sole discretion (1) to retain in the Agent's possession without liability to anyone all or any part of such property until such disputes shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but the Agent shall be under no duty whatsoever to institute or defend any such proceedings or (2) to deliver the property held by the Agent hereunder to a state or federal court having competent subject matter jurisdiction in accordance with the applicable procedure therefore. 10. The Investor agrees to indemnify and hold harmless the Agent from any and all claims, liabilities, costs or expenses in any way arising from or relating to the duties or performance of the Agent hereunder other than any such claim, liability, cost or expense to the extent the same shall have been determined by final, unappealable judgment of a court of competent jurisdiction to have resulted from fraud, gross negligence or willful misconduct of the Agent. 11. In the event of any action or proceeding brought by any party against another under Escrow Agreement the prevailing party or parties shall be entitled to recover all expenses incurred through the date of final collection, including without limitation, all attorneys' fees. 12. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given upon personal delivery, overnight courier, facsimile, email or other form of electronic transmission, or three business days after deposit in the United States Postal Service, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties thereunto entitled at the addresses listed below their signature, or at such other addresses as a party may designate by ten days advance written notice to each of the other parties hereto. 13. This instrument shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and permitted assigns and shall be governed by the laws of the State of Georgia without giving effect to principles governing the conflicts of laws. Facsimile transmissions of the signatures to these instructions shall be legal and binding on all parties hereto. - 22 -

14. Organics shall be entitled to rely upon the authority of Agent under this Escrow Agreement unless and until Organics is notified in writing by Agent and/or Investor that such authority has been terminated and/or revoked in conformity with the terms herein. 15. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings provided in the Financing Terms Agreement. . (Signature page follows) - 23 -

AGENT Date: David A. Rapaport 333 Sandy Springs Circle Suite 230 Atlanta, GA 30328 Tel: (404) 257-9150 Fax: (404) 257-9125 Email: drapaport@highcapus.com INVESTOR Date: - 24 -

EXHIBIT D REPRESENTATIONS OF PURCHASER (1) ACCREDITED INVESTOR STATUS. The PURCHASER is an "accredited investor" within the meaning of Securities and Exchange Commission Rule 501 of Regulation D. (2) PURCHASE ENTIRELY FOR OWN ACCOUNT. The BRIDGE EQUITY UNITS to be received by the PURCHASER will be acquired for investment for the PURCHASER'S own account, not as a nominee or agent, and not with a view to the resale or distribution of any part thereof, and that the PURCHASER has no present intention of selling, granting any participation in, or otherwise distributing the same. The PURCHASER further represents that it does not have any contract, undertaking, agreement or arrangement with any person to sell, transfer or grant participations to such person or to any third person, with respect to the BRIDGE EQUITY UNITS. (3) DISCLOSURE OF INFORMATION. The PURCHASER represents that it has received the disclosure it believes relevant and necessary to its investment decision and has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of this transaction and the business, properties, prospects and financial condition of the Company and to obtain additional information (to the extent the Company possessed such information or could acquire it without unreasonable effort or expense) and/or conduct its own independent investigation necessary to verify the accuracy of any information furnished to the PURCHASER or to which the PURCHASER had access. (4) INVESTMENT EXPERIENCE. The PURCHASER (i) is experienced in evaluating and investing in private placement transactions in securities of companies similar to the Company and has such knowledge and experience in financial or business matters that it is capable of evaluating the merits and risks of the investment in the UNITS and (ii) acknowledges that it can bear the economic risk of its investment, including the loss of the entire investment. (5) RESTRICTED SECURITIES. The PURCHASER understands that the BRIDGE EQUITY UNITS are being sold pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended (the "Securities Act"). The PURCHASER also understands that the BRIDGE EQUITY UNITS and, with certain limited exceptions, any securities issuable on exercise or conversion thereof may not be resold by the PURCHASER without registration under the Securities Act or an exemption therefrom, and that in the absence of an effective registration statement covering the BRIDGE EQUITY UNITS or an available exemption from registration under the Securities Act, the BRIDGE EQUITY UNITS may be restricted from resale in a transaction to which United States securities laws apply for an indefinite period of time. (6) ILLIQUID INVESTMENT. The PURCHASER understands that no market for the BRIDGE EQUITY UNITS exists and no such market may ever exist. (7) RESIDENCE. The PURCHASER resides, or its office primarily responsible for the purchase of the BRIDGE EQUITY UNITS is located, at the address listed on the signature page. (8) BROKERS OR FINDERS. All negotiations on the part of the PURCHASER relative to the transactions contemplated hereby have been carried on by the PURCHASER without the intervention of any person or as the result of any act of the PURCHASER in such manner as to give rise to any valid - 25 -

claim for a brokerage commission, finder's fee, or other like payment, except for Investors Capital Corporation. (9) RELIANCE. The PURCHASER understands that this agreement is made with the PURCHASER in reliance upon the PURCHASER'S representations to the Company, as set forth above. - 26 -

NAME: AMOUNT: $ SUBSCRIPTION AGREEMENT CONVERTED ORGANICS INC. A DELAWARE COMPANY The undersigned hereby applies to become an investor in CONVERTED ORGANICS INC., a Delaware company (the "Company"), and subscribes to purchase the number of units consisting of Bridge Notes and Bridge Equity Units (the "Units") specified herein. 1. REPRESENTATIONS AND WARRANTIES. The undersigned represents and warrants to the Company as follows: (a) I have received, read and understand the Confidential Memorandum dated April 11, 2006 (the "Memorandum"), and in making this investment I am relying only on the information provided therein. I have not relied on any statements or representations inconsistent with those contained in the Memorandum. I understand that by signing this subscription agreement, I am agreeing to be bound by all of the terms and conditions of the Financing Terms Agreement For Sale of Bridge Notes And Shares dated April 11, 2006 (the "Financing Terms Agreement"), including the Security Agreement and Escrow Agreement attached to the Financing Terms Agreement as Exhibits B and C, respectively, which are included in the Memorandum, and my signature on this agreement is deemed to be a signature on the Financing Terms Agreement, Security Agreement, and Escrow Agreement. (b) I, or the fiduciary account for which I am purchasing, meet the suitability standards set forth in EXHIBIT D, "Representations of Purchaser," to the Financing Terms Agreement. (c) I am aware that this subscription may be rejected in whole or in part by the Company or its designees in its sole and absolute discretion; that my investment, if accepted, is subject to certain risks described in part in "RISK FACTORS" set forth in the Memorandum; and that, among other restrictions on sale or transfer of the Units, there will be no public market for the Units, and accordingly, it may not be possible for me to readily liquidate my investment in the Company. (d) I have been informed of all pertinent facts relating to the lack of liquidity or marketability of this investment. I am aware that any transfer of the Units or the Bridge Notes and/or Bridge Equity Units is subject to numerous restrictions described in the Memorandum. I have liquid assets sufficient to assure myself that such purchase will cause me no undue financial difficulties and that I can provide for my current needs and possible personal contingencies, or if I am the trustee of a retirement trust, that the limited liquidity of the Units will not cause difficulty in - 27 -

meeting the trust's obligations to make distributions to plan participants in a timely manner. (e) I am of the age of majority (as established in the state in which I am domiciled) if I am an individual, and in any event, I have full power, capacity, and authority to enter into a contractual relationship with the Company. If acting in a representative or fiduciary capacity for a corporation, fund or trust, or as a custodian or agent for any person or entity, I have full power or authority to enter into this subscription agreement in such capacity and on behalf of such corporation, fund, trust, person or entity. (f) I am buying the Units solely for my own account, or for the account of a member or members of my immediate family or in a fiduciary capacity for the account of another person or entity and not as an agent for another. I understand that the sale, transfer and assignment of the Units are subject to restrictions and may not be sold, transferred or assigned except in accordance with the terms of the Financing Terms Agreement, and I am aware that the certificates evidencing the Bridge Notes and the Bridge Equity Unit securities will bear a legend in substantially the following form: THIS [NAME OF SECURITY] HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, PLEDGED, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (B) EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS ARE AVAILABLE. As appropriate, other legends required by applicable state securities laws also will be affixed to certificates evidencing the Bridge Notes and/or Bridge Equity Unit securities. (g) I acknowledge and agree that counsel representing the Company and its affiliates do not represent me and shall not be deemed under the applicable codes of professional responsibility to have represented or to be representing me or any of the Company's members in any respect. (h) If I am buying the Units in a fiduciary capacity or as a custodian for the account of another person or entity, I have been directed by that person or entity to purchase the Unit(s), and such person or entity is aware of my purchase of Units on their behalf, and consents thereto and is aware of the merits and risks involved in the investment in the Company. - 28 -

(i) I (or the entity on whose behalf I am signing) do not have a direct or indirect ownership interest in Investors Capital Corp., Paulson Investment Company, Inc. or any other NASD member firm (through the ownership of securities in the NASD member firm, its parent, affiliates or otherwise). (j) I (or the entity on whose behalf I am signing) do not have an "immediate family relationship" with Investors Capital Corp., Paulson Investment Company, Inc. or any other NASD member firm. For purposes of this statement, I understand that the NASD defines "immediate family relationship" as parents, mother-in-law, fatherin-law, husband or wife, brother or sister, brother-in-law or sister-in-law, son-in-law or daughter-in-law, and children, or any other person who is supported, directly or indirectly, to a material extent by an employee of, or person associated, with an NASD member. (k) I (or the entity on whose behalf I am signing) have not provided any consulting or other services to the Company. (l) I (or the entity on whose behalf I am signing) am not an "underwriter or a related person." For purposes of this statement, I understand that the NASD defines an "underwriter or a related person" with respect to a proposed offering as being an underwriter, underwriter's counsel, financial consultant or advisor, finder, member of the selling or distribution group, any member participating in a public offering, and any and all other person associated with or related to any of the aforementioned persons. (m) I (or the entity on whose behalf I am signing) do not have any oral or written agreements with any NASD member or any associated persons of such member concerning the dispositions of my securities of the Company. For purposes of this statement, I understand that the NASD defines a "person associated with an NASD member" as being every sole proprietor, partner, officer, director or branch manager of any NASD member, or any natural person occupying a similar status or performing similar functions, or any natural person engaged in the investment banking or securities business who is directly or indirectly controlling or controlled by an NASD member (for example, any employee), whether or not any such person is registered or exempt from registration with the NASD pursuant to its Bylaws. By making these representations, the subscriber has not waived any right of action available under applicable federal or state securities laws. 2. ACCEPTANCE. This subscription agreement will be accepted or rejected by the Company within five (5) days of its receipt by the Company. Upon acceptance, this subscription will become irrevocable, and will obligate the undersigned to purchase the number of Units and in the dollar amount specified herein. The Company will return a countersigned copy of this subscription agreement to accepted subscribers, which copy of the agreement will be evidence of the purchase of the Units. - 29 -

3. PAYMENT OF SUBSCRIPTION PRICE. The full purchase price for the Units, equal to the number of purchased Units shall be payable by check or wire concurrently with delivery of this subscription agreement. Checks shall be made payable to "David A. Rapaport, Escrow Agent. Wires shall be sent as follows:
BANK: ABA # : FOR CREDIT TO: Wachovia Bank, N.A. 061-000-227 David A. Rapaport, Attorney Escrow Account

ACCT # : 101 008 605 4713 4. INDEMNIFICATION. THE UNDERSIGNED AGREES TO INDEMNIFY AND HOLD CONVERTED ORGANICS INC., A DELAWARE COMPANY, ITS DIRECTORS, OFFICERS, EMPLOYEES, ADVISOR AND OTHER AGENTS HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, LIABILITIES, AND DAMAGES, INCLUDING, WITHOUT LIMITATION, ALL ATTORNEYS' FEES WHICH ANY OF THEM MAY INCUR, IN ANY MANNER OR TO ANY PERSON, BY REASON OF THE FALSITY, INCOMPLETENESS OR MISREPRESENTATION OF ANY INFORMATION FURNISHED BY THE UNDERSIGNED HEREIN OR IN ANY DOCUMENT SUBMITTED HEREWITH. 5. SUBSCRIPTION-RELATED UNDERTAKINGS, REPRESENTATIONS AND WARRANTIES. (a) General. Each of the undersigned represents that: (i) I have read this agreement and the Memorandum included herein in its entirety and that all the information provided by me is accurate and complete; and (ii) I will notify the Company immediately of any material adverse change in any of the information set forth herein which occurs prior to the acceptance of my subscription. (b) Type Of Ownership: (check one) [ ] SINGLE PERSON [ ] MARRIED PERSON - JTWROS [ ] MARRIED PERSONS-- TENANTS-IN-COMMON [ ] CORPORATION OR LLC (C): (Authorized party must sign) [ ] TRUST (TR) (Trustee signature required) [ ] PARTNERSHIP (P) (Authorized Party must sign) - 30 -

[ ] CUSTODIAN (CU) (Custodian signature required) [ ] OTHER (Explain) (c) If Investor is One or More Individuals. Type or print your name(s) exactly as it should appear in the account records of the Company. Complete this section for individual investors and all trusts. All checks and correspondence will go to this address unless another address is listed in Sections 2 or 5 below. Individual Name Additional Name(s) if held in joint tenancy, community property or tenants-in-common Street Address
-------------------------------------------------------------------------------City State Zip Code

-------------------------------------------------------------------------------Daytime Phone Number Evening Phone Number

-------------------------------------------------------------------------------Mobile Phone Number

-------------------------------------------------------------------------------Email

-------------------------------------------------------------------------------Taxpayer ID# or Social Security #

(A social security number or taxpayer identification number is required for individual investors. For most individual taxpayers, it is your social security number. NOTE: If the Units are to be held in more than one name, only one number will be used and will be that of the first person listed.)

Date of Birth
-------------------------------------------------------------------------------Citizenship: [ ] U.S. [ ] Other

-------------------------------------------------------------------------------Occupation Employer Name

-------------------------------------------------------------------------------Employer Address

-------------------------------------------------------------------------------City State Zip Code

Investment Objective (check one): - 31 -

[ ] Capital appreciation [ ] Other (please explain) Do you have a net worth, either individually or jointly with spouse, in excess of $1,000,000 [ ] YES [ ] NO Did you have an individual income in excess of $200,000 (or joint income with your spouse in excess of $300,000) during the last two years, and do you have a reasonable expectation of reaching the same or higher income level in the current year? [ ] YES [ ] NO Are you subject to any regulatory or other constraints that may preclude or limit your participation in any potential investment? [ ] YES [ ] NO If yes, please explain: (d) If Investor is an Entity:

Name of Investor Type of Legal Entity (e.g., corporation, trust, etc.): Address
-------------------------------------------------------------------------------City State Zip Code

-------------------------------------------------------------------------------Daytime Tel

-------------------------------------------------------------------------------Evening Tel

-------------------------------------------------------------------------------Mobile

-------------------------------------------------------------------------------Email

-------------------------------------------------------------------------------Taxpayer ID# Tax Year End

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6. DISTRIBUTIONS INFORMATION. ALTERNATIVE ADDRESS FOR DELIVERY OF DOCUMENTS, SECURITIES, AND FUNDS (I.E., OTHER THAN THE ADDRESS GIVEN IN SECTION 5(C) OR 5(D) ABOVE). David A. Rapaport, Esq. 333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Tel: 404 257-9150 Fax: 404 257-9125 Email: drapap@gmail.com - 33 -

7. INVESTMENT.
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Exhibit 10.2 CONVERTED ORGANICS INC. 2006 STOCK OPTION PLAN 1. Purposes of the Plan. The purposes of this 2006 Stock Option Plan are: - to attract and retain the best available personnel; - to provide additional incentive to Employees, Directors and Consultants; and - to promote the success of the Company's business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant. 2. Definitions. As used herein, the following definitions shall apply: (a) "Administrator" means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan. (b) "Applicable Laws" means the requirements relating to the administration of stock option plans under U. S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Options are, or will be, granted under the Plan. (c) "Board" means the Board of Directors of the Company. (d) "Code" means the Internal Revenue Code of 1986, as amended. (e) "Committee" means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan. (f) "Common Stock" means the common stock of the Company. (g) "Company" means Converted Organics Inc., a Delaware corporation. (h) "Consultant" means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity. (i) "Director" means a member of the Board. (j) "Disability" means total and permanent disability as defined in Section 22(e)(3) of the Code. (k) "Employee" means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For purposes of Incentive Stock Options, no such leave may exceed one hundred eighty (180) days, unless reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment upon expiration of a leave of absence approved by the Company is not so guaranteed, on the one hundred eighty-first (181st) day of such leave any Incentive Stock Option held by the Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax 1

purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a director's fee by the Company shall be sufficient to constitute "employment" by the Company. (l) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (m) "Fair Market Value" means, as of any date, the value of Common Stock determined as follows: (i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market or The Nasdaq Capital Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system for the last market trading day prior to the time of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; (ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or (iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator. (n) "Incentive Stock Option" means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder. (o) "Nonstatutory Stock Option" means an Option not intended to qualify as an Incentive Stock Option. (p) "Notice of Grant" means a written or electronic notice evidencing certain terms and conditions of an individual Option grant. The Notice of Grant is part of the Option Agreement. (q) "Officer" means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder. (r) "Option" means a stock option granted pursuant to the Plan. (s) "Option Agreement" means an agreement between the Company and an Optionee evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject to the terms and conditions of the Plan. (t) "Option Exchange Program" means a program whereby outstanding Options are surrendered in exchange for Options with a lower exercise price. (u) "Optioned Stock" means the Common Stock subject to an Option. (v) "Optionee" means the holder of an outstanding Option granted under the Plan. (w) "Parent" means a "parent corporation," whether now or hereafter existing, as defined in Section 424(e) of the Code. 2

(x) "Plan" means this 2006 Stock Option Plan. (y) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan. (z) "Section 16(b)" means Section 16(b) of the Exchange Act. (aa) "Service Provider" means an Employee, Director or Consultant. (bb) "Share" means a share of the Common Stock, as adjusted in accordance with Section 12 of the Plan. (cc) "Subsidiary" means a "subsidiary corporation", whether now or hereafter existing, as defined in Section 424 (f) of the Code. 3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the maximum aggregate number of Shares which may be optioned and sold under the Plan is six hundred sixty-six thousand, six hundred sixtyseven (666,667) Shares. The Shares may be authorized, but unissued, or reacquired Common Stock. If an Option expires or becomes unexercisable without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject thereto shall become available for future grant or sale under the Plan (unless the Plan has terminated); provided, however, that Shares that have actually been issued under the Plan shall not be returned to the Plan and shall not become available for future distribution under the Plan. 4. Administration of the Plan. (a) Procedure. (i) Multiple Administrative Bodies. The Plan may be administered by different Committees with respect to different groups of Service Providers. (ii) Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as "performance-based compensation" within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more "outside directors" within the meaning of Section 162(m) of the Code. (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3. (iv) Other Administration. Other than as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws. (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion: (i) to determine the Fair Market Value; 3

(ii) to select the Service Providers to whom Options may be granted hereunder; (iii) to determine the number of shares of Common Stock to be covered by each Option granted hereunder; (iv) to approve forms of agreement for use under the Plan; (v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Option granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Option or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine; (vi) to reduce the exercise price of any Option to the then current Fair Market Value if the Fair Market Value of the Common Stock covered by such Option shall have declined since the date the Option was granted; (vii) to institute an Option Exchange Program; (viii) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan; (ix) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws; (x) to modify or amend each Option (subject to Section 14(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options longer than is otherwise provided for in the Plan; (xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Option previously granted by the Administrator; (xii) to make all other determinations deemed necessary or advisable for administering the Plan. (c) Effect of Administrator's Decision. The Administrator's decisions, determinations and interpretations shall be final and binding on all Optionees and any other holders of Options. 5. Eligibility. Nonstatutory Stock Options may be granted to Service Providers. Incentive Stock Options may be granted only to Employees. 6. Limitations. (a) Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The 4

Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted. (b) Neither the Plan nor any Option shall confer upon an Optionee any right with respect to continuing the Optionee's relationship as a Service Provider with the Company, nor shall they interfere in any way with the Optionee's right or the Company's right to terminate such relationship at any time, with or without cause. 7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall become effective upon its adoption by the Board. It shall continue in effect for a term of ten (10) years unless terminated earlier under Section 14 of the Plan. 8. Term of Option. The term of each Option shall be stated in the Option Agreement; provided, however, that the term shall be no more than ten (10) years from the date of grant thereof. In the case of an Incentive Stock Option, the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Option Agreement. Moreover, in the case of an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Option Agreement. 9. Option Exercise Price and Consideration. (a) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator, subject to the following: (i) In the case of an Incentive Stock Option (A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant. (B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. (ii) In the case of a Nonstatutory Stock Option (A) granted to a Service Provider who, at the time the Nonstatutory Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant. (B) intended to qualify as "performance-based compensation" within the meaning of Section 162(m) of the Code, the per Share exercise price shall be no less than 100% of the Fair Market Value per Share on the date of grant. (C) Granted to any other Service Provider, the per Share exercise price shall be no less than eighty-five percent (85%) of the Fair Market Value per Share on the date of grant. 5

(iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant pursuant to a merger or other corporate transaction. (b) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised. (c) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of: (i) cash; (ii) check; (iii) other Shares which (A) in the case of Shares acquired upon exercise of an option, have been owned by the Optionee for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised; (iv) consideration received by the Company under a cashless exercise program, if implemented by the Company in connection with the Plan; (v) a reduction in the amount of any Company liability to the Optionee, including any liability attributable to the Optionee's participation in any Company-sponsored deferred compensation program or arrangement; (vi) any combination of the foregoing methods of payment; or (vii) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws. 10. Exercise of Option. (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Option Agreement. Unless otherwise stated in the Option Agreement, Options shall become exercisable at a rate of twenty-five percent (25%) per year over four (4) years from the date the Options are granted, with twenty-five percent (25%) of the Shares under the Option vesting on each of the first, second, third and fourth anniversaries of the date of grant. Unless the Administrator provides otherwise, vesting of Options granted hereunder shall be suspended during any unpaid leave of absence. An Option may not be exercised for a fraction of a Share. An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee and his or her spouse. Until the Shares are issued 6

(as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 12 of the Plan. Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised. (b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a Service Provider, other than upon the Optionee's death or Disability, the Optionee may exercise his or her Option within ninety (90) days of termination, or such longer period of time as specified in the Option Agreement, to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a result of the Optionee's Disability, the Optionee may exercise his or her Option within one (1) year of termination, or such longer period of time as may be specified in the Option Agreement, to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Option Agreement). If, on the date of termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may be exercised within one (1) year following Optionee's death, or such longer period of time as may be specified in the Option Agreement, to the extent that the Option is vested on the date of death (but in no event later than the expiration of the term of such Option as set forth in the Notice of Grant), by the Optionee's designated beneficiary, provided such beneficiary has been designated prior to Optionee's death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Optionee, then such Option may be exercised by the personal representative of the Optionee's estate or by the person(s) to whom the Option is transferred pursuant to the Optionee's will or in accordance with the laws of descent and distribution. If, at the time of death, the Optionee is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan. (e) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares an Option previously granted based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made. 11. Limited Transferability of Options. Unless determined otherwise by the Administrator, Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or the laws of descent and distribution, and may be exercised during the lifetime of the Optionee, only by the Optionee. If the Administrator in its sole discretion makes an Option transferable, such Option may only be transferred (i) by will, (ii) by the laws of descent and distribution, or (iii) as permitted by Rule 701 of the Securities Act of 1933, as amended. 7

12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale. (a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number of shares of Common Stock covered by each outstanding Option, and the number of shares of Common Stock which have been authorized for issuance under the Plan but as to which no Options have yet been granted or which have been returned to the Plan upon cancellation or expiration of an Option, as well as the price per share of Common Stock covered by each such outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of issued shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been "effected without receipt of consideration." Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option . (b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Option would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised, an Option will terminate immediately prior to the consummation of such proposed action. (c) Merger or Asset Sale. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Option may, at the discretion of the Administrator or the successor corporation, be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Option, any Option or portions of Options outstanding as of the date of such event that are not yet fully vested shall immediately become exercisable in full. In such event, the Administrator or the successor corporation, as the case may be, shall promptly notify the Optionee in writing or electronically of the qualifying merger or asset sale and of the exercisability of the Option; the Option and any portion thereof, whether vested or unvested, shall be exercisable by the Optionee for a period of fifteen (15) calendar days from the date of such notice, and the Option shall terminate upon the expiration of such period. For the purposes of this paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the option or right confers the right to purchase or receive, for each Share of Optioned Stock subject to the Option immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the Option, to be solely common stock of the successor corporation or its Parent equal in fair market value to the per share consideration received by holders of Common Stock in the merger or sale of assets. 8

13. Date of Grant. The date of grant of an Option shall be, for all purposes, the date on which the Administrator makes the determination granting such Option, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Optionee within a reasonable time after the date of such grant. 14. Amendment and Termination of the Plan. (a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan. (b) Stockholder Approval. The Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws. (c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise between the Optionee and the Administrator, which agreement must be in writing and signed by the Optionee and the Company. Termination of the Plan shall not affect the Administrator's ability to exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to the date of such termination. 15. Conditions Upon Issuance of Shares. (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance. (b) Investment Representations. As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required. 16. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained. 17. Reservation of Shares. The Company, during the term of this Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan. 18. Stockholder Approval. The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws. 19. Information to Optionees. The Company shall provide, or make available, to each Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than annually during the period such participant has one or more Options outstanding, and, in the case of an individual who acquires Shares pursuant to the Plan, during the period such individual owns such Shares, copies of annual financial statements. The Company shall not be required to provide such statements to key employees whose duties in connection with the Company assure their access to equivalent information. 9

CONVERTED ORGANICS INC. 2006 STOCK OPTION PLAN STOCK OPTION AGREEMENT Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement. I. NOTICE OF STOCK OPTION GRANT (NAME) The undersigned Optionee has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:
Date of Grant: Vesting Commencement Date: (same as Date of Grant, if left blank) Exercise Price per Share: Total Number of Shares Granted: Type of Option: _________________________________ _________________________________

_________________________________ _________________________________ ____ Incentive Stock Option ____ Nonstatutory Stock Option _________________________________

Expiration Date: (10 years from Date of Grant, if left blank) Vesting Schedule: [To be completed] Termination Period:

_________________________________

_________________________________

This Option shall be exercisable for ninety (90) days after Optionee ceases to be a Service Provider. Upon Optionee's death or disability, this Option may be exercised for such longer period as provided in the Plan. In no event may Optionee exercise this Option after the Term/Expiration Date as provided above. II. AGREEMENT 1. Grant of Option. The Plan Administrator of the Company hereby grants to the Optionee named in the Notice of Grant (the "Optionee"), an option (the "Option") to purchase the number of Shares set forth in the Notice of Grant, at the exercise price per Share set forth in the Notice of Grant (the "Exercise Price"), and subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 14(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail. 1

If designated in the Notice of Grant as an Incentive Stock Option ("ISO"), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option ("NSO"). 2. Exercise of Option. (a) Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable provisions of the Plan and this Option Agreement. (b) Method of Exercise. This Option shall be exercisable by delivery of an exercise notice in the form attached as EXHIBIT A (the "Exercise Notice") which shall state the election to exercise the Option, the number of Shares with respect to which the Option is being exercised, and such other representations and agreements as may be required by the Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price. No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise complies with Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to the Optionee on the date on which the Option is exercised with respect to such Shares. 3. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of the Optionee: (a) cash or check; (b) consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; (c) surrender of other Shares which, (i) in the case of Shares acquired from the Company, either directly or indirectly, have been owned by the Optionee for more than six (6) months on the date of surrender, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate Exercise Price of the Exercised Shares; or (d) any other form or manner endorsed in the Plan. 4. Restrictions on Exercise. This Option may not be exercised until such time as the Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Law. 5. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by Optionee. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of the Optionee. 2

6. Term of Option. This Option may be exercised only within the term set out in the Notice of Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option. 7. Tax Obligations. (a) Taxes. Optionee acknowledges and agrees that Optionee is solely responsible for the satisfaction of all federal, state, local and foreign income and other tax arising from or applicable to the Option exercise and the acquisition or sale of the Optioned Stock. Optionee agrees that Optionee shall indemnify the Company for any liability, including attorneys' fees and expenses, accrued by the Company as a result of the Optionee's failure to satisfy those taxes. (b) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (1) the date two (2) years after the Date of Grant, or (2) the date one year after the date of exercise, the Optionee shall immediately notify the Company in writing of such disposition. 8. Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof, and may not be modified adversely to the Optionee's interest except by means of a writing signed by the Company and Optionee. This agreement is governed by the internal substantive laws but not the choice of law rules of Delaware. 9. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO TERMINATE OPTIONEE'S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel and other advisors prior to executing this Option and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Optionee further agrees to notify the Company upon any change in the residence address indicated below. 3

OPTIONEE:

CONVERTED ORGANICS INC.

------------------------------------Signature ------------------------------------Print Name

---------------------------------------By ---------------------------------------Name ---------------------------------------Title

------------------------------------------------------------------------Residence Address

4

EXHIBIT A EXERCISE NOTICE AND AGREEMENT Converted Organics Inc. 7A Commercial Wharf West Boston, MA 02110 Attention: Stock Option Plan Administrator Re: Exercise of Stock Option Pursuant to 2006 Stock Option Plan
Name of Optionee: Optionee's Address: Optionee's Social Security Number: Date of Option Agreement: Exercise Date: The Shares Purchased are Incentive Stock Options: (circle one) Number of Shares Purchased Pursuant to this Notice:: Exercise Price per Share: Aggregate Exercise Price: Amount of Payment Enclosed: ________________________ ________________________ ________________________ ________________________ ________________________ Yes / No

________________________ $________________________ $________________________ $________________________

1. Exercise of Option. Pursuant to the 2006 Stock Option Plan (the "Plan") of Converted Organics Inc., a Delaware corporation (the "Company") and the Stock Option Agreement ("Option Agreement") entered into as of the date set forth above between the undersigned Optionee and the Company, Optionee hereby elects, effective as of the date of this notice, to exercise Optionee's option to purchase the number of shares of common stock (the "Shares") of the Company indicated above. 2. Payment. Enclosed is Optionee's payment in the amount indicated above, which is the full exercise price for the Shares. 3. Deemed Date of Exercise. The date of exercise shall be deemed to be the first date after which this Notice is filed with Company upon which Shares become eligible for issuance to Optionee under applicable state and federal laws and regulatory requirements. 4. Compliance with Laws. Optionee understands and acknowledges that the purchase and sale of the Shares may be subject to approval under the state and federal securities laws and other laws and, Exhibit A-1

notwithstanding any other provision of the Option Agreement to the contrary, the exercise of any rights to purchase Shares is expressly conditioned upon approval (if necessary) and compliance with all such laws. 5. Representations of Optionee. Optionee represents and warrants to the Company, as follows: (a) Optionee has received, read, and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions. (b) The Options exercised herewith are exercisable only according to the schedule in the Option Agreement. (c) Optionee is aware of the business affairs and financial condition of the Company and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. 6. Refusal to Transfer. The Company shall not be required (a) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement, the Option Agreement, or the Plan or (b) to treat as owner of such Shares or to accord the right to vote or receive dividends to any purchaser or other transferee to whom such Shares shall have been so transferred. 7. Tax Consultation. Optionee understands that Optionee may suffer adverse tax consequences as a result of Optionee's purchase or disposition of the Shares. Optionee represents that Optionee is not relying on the Company for any tax advice. 8. Entire Agreement. The Plan and the Option Agreement are incorporated herein by reference. This Agreement, the Plan, and the Option Agreement constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.
Submitted by: "OPTIONEE": Accepted by: "COMPANY" Converted Organics Inc., a Delaware corporation

------------------------------------Signature ------------------------------------Print Name

---------------------------------------By ---------------------------------------Name ----------------------------------------

Title Exhibit A-2

Exhibit 10.3 (ECAP LOGO) 7A Commercial Wharf West Boston, Massachusetts 02110 617.624.0111 Tel 617.624.0333 Fax ECAP, LLC SERVICE AGREEMENT WITH CONVERTED ORGANICS INC. SUMMARY OF TERMS
PARTIES: SCOPE: ECAP, LLC ("ECAP") AND Converted Organics Inc. ("COI") ECAP is providing office space and support services to COI. ECAP will be compensated for its services as described below.

SERVICES: ECAP will: 1. Provide office space and associated costs as well as: a. Access to the conference room b. Telephones and associated charges c. Access to the copier, printer and other common office equipment d. Office supplies (i.e., paper, pens, etc.) e. Access to the Internet, file server and Lotus Notes 2. Provide administrative support services, including the following: a. Accounting b. Banking c. Scheduling d. Lotus Notes e. Travel arrangements f. Document control g. Business material production COMPENSATION: As compensation for the above services, COI agrees to pay ECAP a total of $5,500.00 on a monthly basis beginning March 1, 2006 as follows: 1. $3,500.00 for Rent and associated costs 2. $2,000.00 for Support Services AGREED AND ACCEPTED:

ECAP, LLC:
/s/ William A. Gildea ------------------------------------William A. Gildea 3.1.06 Date

CONVERTED ORGANICS INC.:
/s/ Edward J. Gildea ------------------------------------Edward J. Gildea 3-1-06 Date

Exhibit 10.4 THIS AGREEMENT OF LEASE (the "Lease"), is made as of the 2nd day of June, 2006, by and RECYCLING TECHNOLOGY DEVELOPMENT, LLC, having a current address at 75 Crows Mill Road, Keasbey, New Jersey 08832, ("Landlord"); and CONVERTED ORGANICS, INC., a Delaware corporation, having a current address at 7A Commercial Wharf West, Boston, MA. 02110 ("Tenant"). WITNESETH: WHEREAS, the Landlord owns certain lands and premises in the Town of Keasbey, County of Middlesex and State of New Jersey, which said lands (the "LAND") and all improvements thereto are commonly known as 75 Crows Mill Road, Keasbey, New Jersey and are presently designated on a portion of lot 1, block 51 on the tax map of Keasbey, NJ, as shown on Exhibit A attached hereto. The Land and the building on the Land depicted on Exhibit A which contains a total of approximately 300,000 rentable square feet (the "BUILDING"), are collectively from time to time referred to as the "PROPERTY"); and WHEREAS, Tenant desires to lease approximately 60,000 square feet of rentable square feet of space in the Building (the "LEASED PREMISES"), to demolish some or all of the Leased Premises and to construct a new premises to be used in conjunction with its business as hereinafter described and Landlord is willing to lease the Leased Premises to Tenant for such purpose and purposes, subject to and in accordance with the terms covenants and conditions herein contained; WHERAS, the Leased Premises is hereby leased to Tenant, all in accordance with the terms and conditions hereinafter mentioned and the consideration herein expressed. NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS, that for the rents reserved and agreed to be paid the covenants to be performed by Tenant, Landlord does demise, lease and let unto the Tenant and the Tenant does rent and take from the Landlord the Leased Premises as described in Article 1, and the Landlord and Tenant do hereby mutually covenant and agree as follows: 1. LEASED PREMISES 1.1 The Leased Premises initially consists of that portion of the Building depicted on Exhibit A, containing approximately 60,000 rentable square feet. The term "Leased Premises" as used in this Lease shall mean and refer, from and immediately after the Effective Date, to the premises as initially leased to Tenant, to such premises as same shall be constituted during demolition and construction, and thereafter, to the new premises once completed, as contemplated hereunder, as shall be applicable. 1.2 The Leased Premises are leased subject to such state of facts as may be shown by an accurate survey of the Property including Exhibit A; real estate taxes and other impositions 1

constituting a lien on the Property of which the Leased Premises are a part; easements, restrictions and other matters affecting the Leased Premises or the Property; and present and future building and zoning laws, ordinances, resolutions, and regulations of any governmental or quasi-governmental agency department or authority now or at any time having jurisdiction over the Property and its use; and the terms of this Lease. 1.3 Tenant agrees that except as set forth in this Article 1 it shall have no other or further rights in any portion of the Property, except that Tenant shall have the non-exclusive right in common with Landlord and other tenants, authorized occupants, and invitees, to use the Common Areas (as such term is defined in Section 6.4) subject to such reasonable rules and regulations as Landlord may from time to time deem appropriate, including but not limited to rules and regulations governing truck access to and from the Leased Premises across the Common Areas; provided, however that Landlord may use all portions of the Property other than those exclusively demised to Tenant for any purpose as determined by Landlord in its sole and absolute discretion (except as such discretion is limited pursuant to Section 5.3 below). 2. TERM OF LEASE/RENEWAL TERM/EFFECTIVE DATE/RENT COMMENCEMENT DATE/ EXPIRATION DATE 2.1 This Lease shall become effective by its terms immediately upon execution and delivery hereof (such date hereinafter referred to as the "EFFECTIVE DATE"). Subject to the terms hereof (including, but not limited to the right of Tenant to terminate the Lease in accordance with the provisions of Section 4.3), the term of this Lease shall be for an initial term of ten (10) years commencing sixty (60) days after the Effective Date (i.e., on the first day following the end of the Due Diligence Period (as defined below)) (the "RENT COMMENCEMENT DATE") which date is hereby acknowledged to be August 1, 2006, and to end, unless sooner terminated pursuant to the provisions hereof, on the last day of the month in which the tenth (10th) anniversary of the Rent Commencement Date shall occur (the "EXPIRATION DATE") which date is hereby acknowledged to be July 31, 2016. 2.2 Provided that (i) this Lease has not been previously terminated; (ii) no Event of Default (as defined below) then exists at the time that Tenant shall exercise its right to renew this Lease or at the commencement of the Renewal Term; (iii) Tenant physically occupies and conducts business at the Leased Premises at the time that Tenant shall exercise its right to renew this Lease, and at the commencement of the renewal term; and (iv) Tenant gives written notice of its election to extend the term of this Lease no later than one hundred eighty (180) days prior to the expiration of the initial term, Tenant shall have one (1) option to renew this Lease for the Leased Premises for an additional term of ten (10) years (the "RENEWAL TERM"), which Renewal Term shall commence on the date immediately following the expiration date of the initial term. The Base Rent payable during the Renewal Term shall as shown on Exhibit B, and subject to all other terms, covenants, conditions, provisions and agreements of this Lease, including, but not limited to, the provisions for additional rent, shall be applicable during the Renewal Term, except that Tenant shall have no further rights of 2

renewal. 3. RENT 3.1 The Tenant covenants and agrees to pay during the term, and as otherwise herein provided, Base Rent commencing as of the Rent Commencement Date pursuant to the schedule shown on Exhibit B, which shall be payable in consecutive monthly installments as hereinafter set forth. Such payments shall be made promptly in advance on the first day of each and every month (except that the first installment of Base Rent shall be paid upon the date hereof), during the term of this Lease, without prior demand and without off-set, abatement or deduction, together with such additional rent and other charges required to be paid by Tenant as are hereinafter set forth. Simultaneously with the execution of this Lease, Tenant shall make the payments described in Section 44 of this Lease and sums delivered by Tenant pursuant thereto shall be applied in accordance therewith. 3.2 Any payments and charges other than Base Rent payable by Tenant in this Lease shall be deemed additional rent which shall be due and payable at the time specified under this Lease. In the event of non-payment of additional rent, Landlord shall in addition to all other rights and remedies have all the rights and remedies provided for herein or by law in the case of non-payment of rent. Tenant's obligation for payment of unbilled Base Rent and additional rent shall survive the expiration or termination of this Lease. The term rent where used in this Lease is defined to mean Base Rent, additional rent and any other charges payable by Tenant under this Lease. Rent for any period during the term which is less than a full calendar month shall be pro-rated based upon the actual number of days in that month. Rent shall be paid in legal tender of the United States of America. Payment of rent shall be made to Landlord at its address set forth in this Lease or to such other person or address as Landlord may designate by notice to Tenant. 3.3 Any payment by Tenant or acceptance by Landlord of a lesser amount then due from Tenant, shall be treated as a payment on account. Landlord's acceptance of a check for a lesser amount with an endorsement or statement thereon that such lesser amount constitutes payment in full shall be given no effect and Landlord may accept such check without prejudice to any other rights and remedies which Landlord may have against Tenant. 4. CONDITION OF PREMISES/DUE DILIGENCE PERIOD/DEMOLITION AND CONSTRUCTION PERIODS 4.1 Anything contained in this Lease to the contrary notwithstanding, it is expressly understood and agreed that the Tenant shall take the Leased Premises as of the Effective Date in its then "as is" condition, with all faults. Tenant shall, at its expense, obtain any required certificate of occupancy and perform all work incident to obtaining such certificate. Tenant expressly acknowledges that it has, or will have as of the end of the Due Diligence Period, inspected the Leased Premises and the Property, and has had, (or, by the end of the Due Diligence Period, will 3

have had), a reasonable opportunity to conduct any professional, third-party inspections of the Leased Premises, the Building and Property deemed necessary by Tenant), and that it, is, and/or will be fully acquainted with the condition of the Leased Premises, the Building and the Property, and has not relied on any representation of Landlord or any third party employed or engaged by Landlord in connection with its entry into this Lease. Landlord shall not be required to incur any expense in connection with the preparation of the Leased Premises, the Building or the Property for Tenant's occupancy. Landlord shall cooperate with Tenant in connection with securing such permits and approvals as Tenant may elect or be required to obtain; provided, that Landlord shall have no obligation to incur any expense in connection therewith. All demolition work and all improvements to the Leased Premises which are to be made by Tenant shall be approved by the Landlord, in writing, prior, as the case may be, to the demolition or installation of same, which approval shall not be unreasonably withheld or delayed. Any and all such work performed by Tenant, including, but not limited to the demolition of certain portions of the Leased Premises, construction or other alterations of or to the Building, and any and all work required to prepare the interior portions of the Building for the commencement of business operations therein (including, but not limited to, installation of furnishings, fixtures and equipment and all finishing work), shall sometimes collectively be referred to as "TENANT'S WORK", the entirety of cost of which shall be paid by Tenant. 4.2 DUE DILIGENCE PERIOD. Tenant shall have a period of up to sixty (60) days following the Effective Date (i.e., July 31, 2006) (the "First Due Diligence Period") to complete its due diligence at the Leased Premises and Tenant may extend that period for an additional sixty (60) days (i.e., to September 30, 2006) (the "Second Due Diligence Period") by delivering to Landlord on or before July 31, 2006, the additional sum of Thirty Thousand Dollars ($30,000) which amount shall be treated in accordance with Section 44 below (such initial and extended period being sometimes herein referred to as the "DUE DILIGENCE PERIOD"). Within five days of the end of the Due Diligence Period, Tenant may terminate this Lease for any reason or no reason at all pursuant to Section 4.3 below. If Tenant does not terminate this Lease in accordance with Section 4.3 below, then Tenant shall diligently and in good-faith pursue seek to obtain any and all necessary permits and approvals for Tenant's Work, and its use and operation of the Leased Premises for the purposes herein permitted ("TENANT'S PERMITS"), so that same shall be issued at the earliest practicable time. In addition, during the Due Diligence Period, Landlord shall permit Tenant access to the Leased Premises to complete any inspections required by Tenant ("INSPECTIONS"), upon and subject to the terms and conditions set forth in this Section 4.2, and subject to Tenant's payments described in Section 44 and Exhibit B. Throughout the term of the Lease, Tenant shall provide to Landlord copies of those Tenant's Permits which relate to the Tenant's use and occupancy of the Premises and its operations therein, all of which shall be maintained by Tenant in full force and effect. (a) From and after the Effective Date, but upon reasonable advance notice to Landlord, Tenant or its authorized agents may enter upon the Leased Premises to conduct the Inspections. Tenant shall perform the Inspections at its sole cost and expense, subject to the terms and conditions hereof. In no event shall 4

Tenant interfere with, or disturb the occupants of the Leased Premises, the Building or the Properly or any other adjacent or contiguous property owned by Landlord or any affiliated party. The Inspections shall be performed during normal business hours. Landlord shall have the right (whether itself or through a representative), at its election, to be present during all such Inspections. (b) Subject to sub-Section (d) below, Tenant shall indemnify and hold Landlord harmless from all losses, claims, damages, liabilities, judgments, costs and expenses (including reasonable attorneys fees) arising from Tenant's entry onto the Leased Premises, the Building or the Property and the performance of the Inspections and any related activities as contemplated above. (c) Subject to sub-Section (d) below, regardless of whether Landlord or Tenant exercise any right to terminate the Lease, Tenant shall restore the Leased Premises, the Building or the Property to substantially the same condition that the Leased Premises, the Building or the Property ,as the case may be, were in prior to Tenant's entry as soon as practicable and, in any event, no later than fifteen (15) days after Tenant's entry onto the Leased Premises. (d) Notwithstanding anything herein contained to the contrary, in the event that Tenant or its agents, employees or contractors shall cause the presence of hazardous material (as defined below) on the Leased Premises, the Building or the Property, Tenant shall be solely responsible for removing, replacing or otherwise handling or remediating any such hazardous material found on the Leased Premises, the Building or the Property. (e) Tenant shall provide prompt written notice to Landlord in the event that any hazardous material is discovered on the Leased Premises, the Building or the Property and shall provide to Landlord, without cost, any analysis confirming their existence and any reports or data applicable thereto. (f) Notwithstanding anything herein contained to the contrary, no physically intrusive testing of, on or under the Leased Premises, the Building or the Property shall be conducted without Landlord's prior written consent, which consent shall not be unreasonably withheld or delayed. A sampling plan shall be submitted for approval before any sampling is undertaken. If Landlord requires, sampling shall occur in the presence of a representative of Landlord. Any samples taken of the Land by Tenant shall be divided between the parties, provided, however, that samples taken within the current footprint of the Building shall not be required to be so divided. With respect to all sampling, Landlord shall be provided with all of the materials set forth in sub-paragraph (g) below. 5

(g) Tenant shall, upon Landlord's request, provide Landlord with the results of all of the Inspections, including, without limitations, copies of all reports, studies, surveys, plans and other documentation at Tenant's cost and shall also provide Landlord with the right to consult with Tenant's experts. Neither Tenant nor Tenant's consultants or experts shall report an environmental condition to any governmental authority, unless legally required to do so, without Landlord's prior written consent which may be granted or withheld in Landlord's sole discretion. Except where legally required to report any such condition (in which event the following shall be deemed not to apply), Tenant shall not be responsible for damages suffered by Landlord in the event that Landlord refuses to consent to Tenant's request to report to the appropriate governmental authorities, any environmental condition which is discovered as a result of the Inspections. (h) Prior to entering onto the Leased Premises, the Building or the Property, Tenant shall provide, and shall cause each of its contractors so entering any of same (the "CONTRACTORS"), to provide Landlord with a certificate of insurance evidencing a policy of comprehensive general liability insurance) naming Landlord as an additional insured by endorsement. The policies shall be written by insurance carrier(s), and shall be in a form of policy, selected by Tenant and/or Tenant's Contractors, and approved by Landlord in its reasonable discretion. Such comprehensive general liability insurance policy shall be in an amount not less than $2,000,000 per occurrence, whether involving bodily injury liability, or death resulting therefrom or property damage liability or a combination thereof, with a minimum aggregate limit of $3,000,000. The Contractors shall maintain general liability insurance in an amount not less than $3,000,000 during all periods covered by this agreement and shall provide Landlord with a certificate naming it as an additional insured. (i) Tenant acknowledges that any breach of the provisions regarding the Inspections would likely cause serious harm to the business of Landlord, and that in such event, Landlord shall be entitled to seek such legal and equitable remedies, including without limitation, an action for money damages and/or injunctive relief, as are available to Landlord pursuant to this Lease and otherwise. In connection with any litigation including appellate proceedings arising out of this Lease, the prevailing party shall be entitled to recover reasonable attorneys' fees and costs. (j) The rights granted Tenant with respect to the Due Diligence Period, may be terminated by Landlord at any time upon a default by Tenant under this Lease. All of Tenant's obligations and liabilities under this Section 4.2 shall survive any such termination of the Lease. 6

4.3 In the event that Tenant is permitted and elects to exercise its right to terminate the Lease (as set forth in Section 4.2 above), then Tenant shall give written notice to Landlord of such termination, which notice must be received by Landlord no later than five (5) business days following expiration of the Due Diligence Period, with TIME BEING OF THE ESSENCE TO THE EXERCISE BY TENANT OF SUCH RIGHT OF TERMINATION, in which event, should Landlord receive such timely notice of termination, subject, however, to the provisions of Section 44, Exhibit B and all of the terms, conditions and limitations herein, Landlord shall promptly return the FIRST PREPAID RENT AMOUNT (as defined below) pursuant to Section 44.2 of this Lease (if applicable). In no event shall Tenant commence any demolition, construction or other similar activity on the Leased Premises without first receiving Tenant's Permits. Nothing herein contained shall be deemed to extend the Due Diligence Period. In no event shall Tenant have the right to terminate this Lease except pursuant to this Section 4.3 except that the foregoing shall not preclude Tenant from terminating this Lease following an event of damage or destruction during the Term to the extent permitted in Section 14 or as otherwise expressly set forth in this Lease. 4.4 DEMOLITION PERIOD. [Intentionally omitted.] 4.5 CONSTRUCTION PERIOD. Upon expiration of the Due Diligence Period, but subject to the obtaining of Tenant's Permits and subject to the obtaining of Landlord's prior written approval of such work as shall be shown in Tenant's Plans, Tenant shall have a period of up to eighteen (18) calendar months following the end of the Due Diligence Period to commence and complete its demolition and construction at the Leased Premises in accordance with and pursuant to Tenant's Permits (such period being sometimes herein referred to as the "CONSTRUCTION PERIOD") (without extension for events of force majeure). Prior to the commencement of Tenant's Work Tenant shall provide to Landlord copies of Tenant's Permits. During the Construction Period, Tenant shall perform such alterations and work as shall have been approved by Landlord in accordance with Tenant's Plans, upon and subject to the terms and conditions set forth in this Section 4.4, and subject to Tenant's payments described in Section 44 and Exhibit B hereinbelow. If Tenant shall at any time abandon or otherwise fail to perform Tenant's Work in accordance with and pursuant to Tenant's Permits, such abandonment or failure shall constitute an Event of Default hereunder. Such work shall include, but not be limited to the obtaining of the required certificate of occupancy of the Leased Premises, as required in Section 5.1 of this Lease. Provided that Tenant shall not be in default of this Lease beyond any applicable notice and cure period hereunder, during the Construction Period only, Landlord agrees to designate, from time to time, upon request of Tenant, a temporary staging area (the "STAGING AREA"), in and around the Property, for use by Tenant and Tenant's Contractors. The use of the Staging Area shall be subject to all of the terms and conditions of this Lease, except that Tenant shall not be required to pay any fee for the use thereof. The tentative initial Staging Area is shown on Exhibit C. Notwithstanding the foregoing, Tenant shall accept the Staging Area so designated by Landlord in its "as-is where-is condition", with all faults, it being agreed that Landlord shall not be required to perform any work or expend any sums to 7

ready the Staging Area for Tenant's use. Tenant's use of the Staging Area shall be at Tenant's sole risk. The use of the Staging Area shall not interfere with the use and enjoyment of the Property or the Building by Landlord, or any tenants, occupants, guests or invitees thereof, nor interfere with any work being performed by or on behalf of Landlord in and around the Property or the Building. Landlord reserves the right to change the location of any previously designated Staging Area to a new location within reasonable proximity to the Leased Premises, upon five (5) days notice to Tenant, and all costs and expenses of moving and relocating shall be borne by Tenant. At the end of the Construction Period (or any earlier cessation of the use of the Staging Area by Tenant, Tenant shall promptly remove (and/or cause its Contractors to promptly remove), all vehicles, equipment, machinery, materials, debris and all other personal property on or prior to said date, so that the Staging Area is left in the same condition as existed as of the date upon which Tenant's use thereof commenced. 4.6 TENANT'S PLANS. A. Tenant's Plans/Tenant's Work. Following the expiration of the Due Diligence Period in the manner hereinabove described, and subject to the obtaining of Tenant's Permits (and Landlord's prior written approval thereof), Tenant shall commence Tenant's Work, which shall include, demolishing certain portions of the Leased Premises, and the construction of new alterations and improvements pursuant to plans and specifications which shall have been prepared by Tenant and submitted to Landlord for its prior written approval in accordance with the terms and conditions of this Lease. Such plans and specifications shall be prepared and provided at Tenant's sole cost and expense, shall be consistent with Tenant's Permits, and in compliance with all laws, ordinances, codes, permits, rules, regulations and requirements of all duly constituted governmental authorities having jurisdiction and applicable insurance companies (collectively, "LAWS") and shall include, as applicable, complete and detailed plans and specifications, including, but not limited to elevations, mechanical, electrical, plumbing and signage plans (collectively, "TENANT'S PLANS"). Tenant hereby agrees that Tenant's Plans shall not require the construction of any structure beyond the "footprint" of the structure currently situate on that portion of the Property on which the Leased Premises are to be rebuilt. Tenant's Plans shall be submitted to Landlord for its review and approval prior to the expiration of the Due Diligence Period (i.e., as the same may be extended as contemplated above but without extension for events of force Majeure). Landlord shall give its approval or disapproval (giving specific reasons in case of disapproval) of Tenant's Plans within ten (10) business days after their delivery to Landlord for an initial review, and within five (5) business days after their delivery to Landlord for resubmission. In the event that Landlord shall advise Tenant of any objections to Tenant's Plans, and Landlord and Tenant cannot reasonably resolve said objections to their mutual satisfaction within thirty (30) days following Tenant's receipt of Landlord's objections, then either party may submit such dispute to arbitration in accordance with Section 54. Notwithstanding anything herein contained to the contrary, the commencement or pending decision of any arbitration proceeding in conjunction with this Lease shall not delay or excuse any payment of Base Rent, additional rent or other charge which is otherwise due and payable under this Lease. In the event that 8

Tenant fails to timely submit Tenant's Plans as contemplated herein, Landlord may, at its option, take either of the following actions: (i) extend the time for Tenant to submit Tenant's Plans or (ii) by written notice to Tenant, terminate this Lease (subject to the provisions of Section 44). Tenant acknowledges that Landlord's approval of Tenant's Plans shall not be deemed a warranty or representation that Tenant's Plans comply with applicable Laws, or other legal requirements or are sufficient for Tenant's needs or purposes. All improvements and installations to be made, performed or installed by Tenant, inclusive of Tenant's Work, shall be provided at Tenant's sole cost and expense and shall be performed in compliance with all of the terms and conditions of this Lease (including, but not limited to Section 21) and all applicable Laws. Tenant's Work shall be performed by reputable and licensed contractors reasonably approved by Landlord which shall work in a harmonious manner in accordance with good construction industry practice(s). Tenant shall not cause any conflict or work stoppage as a result of any work performed at the Property. Notwithstanding anything herein contained to the contrary, in no event may Tenant seek, submit, or request in any application made to any applicable municipal or other governing body having jurisdiction, any changes, modifications or other alterations of the Leased Premises, which entail or require either partial or full site plan review and approval, without Landlord's prior written consent, which consent may be withheld by Landlord in its sole and un-reviewable discretion; provided, however, that in the event that Landlord shall deny Tenant's request for consent to any such changes, modifications or other alterations of the Leased Premises, which entail or require either partial or full site plan, Tenant may request a Resolution Meeting (as defined below), with Landlord, in the same time and manner as provided in Section 4.6C below, in order to review the specific request and attempt a resolution thereof. B. Tenant's Permits. Following Landlord's approval of Tenant's Plans, Tenant shall, at its cost and expense, apply for Tenant's Permits and shall diligently proceed in good faith to obtain Tenant's Permits in order that Tenant may, subject to the provisions hereof, perform Tenant's Work to completion so that it is able to obtain and deliver to Landlord the certificate of occupancy which is required for the conduct of its business. Tenant shall keep Landlord reasonably apprised as to the status of the obtaining of Tenant's Permits and upon receipt thereof, Tenant shall promptly commence Tenant's Work, in accordance with Tenant's Plans, as approved by Landlord. Upon request by Landlord, Tenant shall provide a complete copy of Tenant's Permits to Landlord and upon receipt, shall provide a true copy of the certificate of occupancy. Tenant shall also furnish Landlord with a set of "as-built" plans and specifications, and a computer disc with CAD drawings and related information therein, once all work is complete. C. Non-interference/Delay. Tenant acknowledges that Tenant's Work, may, at times, proceed simultaneously with work which is being performed by Landlord or its affiliates throughout the Building and the Property. Tenant agrees to instruct its contractors and others performing construction work on its behalf, to cooperate with Landlord and its contractors and subcontractors, or those contractors or subcontractors of any affiliates of Landlord who are performing work on the Property, in order to minimize interference therewith. In the event that Landlord's agents, 9

contractors or employees, or Tenant's Work, or Tenant's agents, contractors or employees, are respectively impeding, interfering, or otherwise delaying the completion of work being performed by either Landlord or its affiliates, or Tenant, as the case may be, the aggrieved party shall provide the other with written notice (a "NOTICE OF DELAY"), which shall reasonably detail the circumstances of such delay and propose a "good faith solution", (as defined below), to resolve same. A "good faith solution" shall be defined as a solution which minimizes the costs and adverse effects on both parties. Within two (2) business days following receipt of a Notice of Delay, Landlord and Tenant will arrange for a conference call and/or meeting with each other's representatives, which representatives shall have decision making authority (the "RESOLUTION MEETING"). During the Resolution Meeting, all parties shall discuss the Notice of Delay and proposed good faith solution with the intent and purpose of resolving the matter in good faith as set forth above. Accurate minutes of the Resolution Meeting shall be kept and approved by both parties. In the event that a mutually satisfactory resolution is not reached following the Resolution Meeting, either Landlord or Tenant may submit the dispute to an ARBITRATION in accordance with the provisions of Article 54; provided, however, that given any timing constraints, such Arbitration shall be handled on an expedited basis. 5. USE 5.1 The Tenant covenants and agrees to use and occupy the Leased Premises (a) for the process of manufacturing organic fertilizer and natural soil amendment products after the receipt of organic food waste, (b) for such other directly related or substantially similar use but subject to the approval of Landlord which will not be unreasonably withheld or delayed, and (c) ancillary office uses in support of the foregoing. By way of illustration and not of limitation, if Landlord agrees with any other tenant that such other tenant may engage on an exclusive basis in a particular use, then Landlord's refusal to approve a use by Tenant that would violate such "exclusive" right of use by such other tenant shall be deemed reasonable. Any and all such permitted uses by Tenant are and shall be expressly subject to all applicable Laws, including, without limitation, any zoning ordinances, rules and regulations of any governmental boards of or bureaus having jurisdiction thereof and the terms and provisions of this Lease (the "PERMITTED USE") and no other use or uses shall be permitted without the obtaining of Landlord's prior written consent. Tenant shall comply with all requirements applicable to the operation of its business and obtain all approvals, permits (including the certificate of occupancy which it shall obtain at its sole cost and expense), and licenses required in connection therewith at Tenant's sole cost and expense. In the event a temporary certificate of occupancy is initially obtained by Tenant, Tenant covenants to obtain a final certificate of occupancy, at its sole cost and expense, within the time period set forth in the temporary certificate of occupancy; provided, that Tenant shall obtain a final certificate of occupancy within one hundred twenty (120) days of the substantial completion of Tenant's Work but in no event later than six hundred sixty (660) days from the end of the Due Diligence Period (without extension for events of force majeure). In addition, Tenant covenants that its use of and operations in the Leased Premises shall not disturb other tenants or occupants in the Building or on the Property. 10

5.2 Landlord grants permission to use the Leased Premises for those purposes set forth in Section 5.1 to the extent it is lawful to do so without any representation that the Leased Premises may be so used. Subject to applicable Laws, Tenant shall be permitted access to the Leased Premises 24 hours a day, 7 days per week. 5.3 Provided that Tenant is not in default under any of the terms, covenants or conditions of this Lease, and is continuing to use the Leased Premises for the Permitted Use, then, in such event, except as hereinafter provided in this paragraph, Landlord shall not hereinafter execute any new lease for the Property (excluding this Lease) to any tenant which shall use its premises to process food waste into fertilizer. For the purpose of the preceding sentence, the word "fertilizer" shall not include mulch or compost of any kind. Notwithstanding the foregoing, Landlord shall be expressly deemed not to be in violation of this paragraph by virtue of (i) any use or occupancy by Landlord or any parent, subsidiary or affiliate of Landlord of any portion of the Property; and/or (ii) any use or occupancy by any tenant or occupant that is currently leasing space in the Property under a lease existing as of the date hereof, as described on Exhibit D and which lease permits such use (an "Existing Lease" and collectively, the "Existing Leases"), or any subtenants, successors or assigns under any such Existing Lease. In the event that the granting of this provision violates any applicable Laws, or, if it is determined that the provisions of this paragraph are unenforceable, at the present time or any time in the future, the provisions of this paragraph shall be void ab initio and of no further force and effect and Tenant shall indemnify and hold Landlord fully harmless from and against any and all costs, claims, damages (including, without limitation, any punitive damages), expenses (including, without limitation, attorneys' and experts' fees), court costs and any amounts paid in settlement arising out of any claims arising out of the granting of this provision. 6. REPAIRS AND MAINTENANCE OF LEASED PREMISES/COMMON AREAS 6.1 Landlord shall have no obligation whatsoever to maintain, repair or replace all or any component system or aspect of the Leased Premises, Tenant's Work or any alteration or improvements made by Tenant to the Leased Premises during the term of this Lease. Tenant shall, at Tenant's sole cost and expense, keep and maintain in good operating order and state of repair (and replace where necessary) all of the Leased Premises including, but not limited to, the making of all necessary repairs and replacements to the structural components of the Leased Premises including, but not limited to, the roof, structural beams, columns and foundation, the bearing walls, floor, windows, doors, door operating equipment (including but not limited to rails, tracks, rollers, and motors), dock seals and bumpers, automatic and other levelers, any air-conditioning, heating, electrical and plumbing equipment, and all mechanical systems and working parts used in connection with the air-conditioning, heating, electrical, heating, sprinkler, plumbing fixtures and all other systems, including, but not limited to, ballasts, bulbs and fluorescent fixtures. To the extent that any fact, circumstance or condition existing in the Leased Premises and/or which was caused or created by Tenant and adversely affects any portion of the Building or the Common Areas which is not part of the Leased Premises, then 11

Tenant shall pay all costs and expenses associated with such maintenance, repair and replacements as solely but reasonably determined by Landlord. Tenant shall, at Tenant's expense, keep all downspouts and roof drains flowing freely and clear ice, snow or other obstructions. Tenant shall make or perform all maintenance, repairs and replacements applicable to the Leased Premises so that the Leased Premises are at all times kept in good order condition and state of repair, without expense to Landlord, utilizing contractors (including, but not limited to contractors and vendors reasonably approved by Landlord for the purposes of satisfying Tenant's obligations under Section 6.2). All labor and materials shall be first quality, suitable for their intended purposes and all work shall be performed in a good and workmanlike manner. With respect to the Leased Premises, Tenant shall keep the water and sewer pipes and connections free from ice and other obstructions, and shall generally maintain the Leased Premises and shall, at the expiration of the term, deliver up the Leased Premises in good order and condition, damage by insured casualty and ordinary wear and tear excepted. The Tenant covenants and agrees that it shall not cause or permit any waste (other than reasonable wear and tear), damage or disfigurement to the Leased Premises or the Building, structural injury to the Leased Premises or the Building or any overloading of the floors or electrical service within the Leased Premises or the Building. 6.2 At Tenant's sole cost and expense, Tenant shall (a) keep the Leased Premises free of debris; (b) clean the Leased Premises on a regular basis and remove all garbage on a regular basis to a dedicated garbage dumpster to be supplied by Tenant and emptied at required intervals and (c) keep the Leased Premises free of rodents and pest infestation and perform pest control services at required intervals. 6.3 Tenant shall at its expense maintain, repair and replace any lawns, shrubbery, drains, drainage systems, curbs, curbing, fencing, gates and paved areas within the Leased Premises, and promptly remove snow and ice from the Leased Premises. 6.4 Landlord shall operate, manage, equip, police, light, repair, maintain and replace (as necessary) the Building, all or any portion of the exterior and interior common areas and utility and other systems that serve more than one tenant (collectively referred to as the "Common Areas") of the Property, of which the Leased Premises is a part, for the benefit of all tenants in a clean, good and workmanlike manner as Landlord may in its sole but reasonable discretion determine. To the extent that Tenant is obligated to pay certain costs and expenses pursuant to Section 6.1 above, Tenant shall not be obligated to pay twice for the same such costs and expenses pursuant to this Section 6.4 (i.e., no duplication of charges). For the purposes of this Lease, the areas shown on Exhibit C shall be deemed to be included in the definition of the Common Areas as of the date of execution of this Lease, and shall include, but not be limited to, the access road and parking areas, which areas may be reduced or increased by Landlord from time to time during the term. In addition to the Base Rent reserved, Tenant shall, during the term of this Lease, commencing as of the Rent Commencement Date and thereafter, and throughout the term, promptly pay monthly, together with the Base Rent to be paid pursuant to Article 3 and Exhibit B, one-twelfth (l/12th) of twenty (20%) percent 12

of Landlord's costs and expenses incurred in the maintenance, repair and replacements of such Common Areas ("TENANT'S PROPORTIONATE SHARE"). An illustrative list of such costs and expenses is attached hereto as Exhibit E and made a part hereof. Without limiting the foregoing, Tenant shall be obligated to pay all costs of a capital nature, amortized over the useful life thereof, plus interest, including, but not limited to, capital improvements, capital repairs, capital equipment and capital tools, as determined in accordance with generally accepted accounting principles. Such payments by Tenant shall be reasonably estimated by Landlord during each year, with a final reconciliation to be done within a reasonable period of time at the end of each year and a proper adjustment shall be made as between Landlord and Tenant (either as a credit to Tenant, or payment to Landlord, as the case may be), within thirty (30) days of such reconciliation being provided to Tenant. Upon request by Tenant, Landlord will provide a reasonably detailed statement showing Landlord's calculation of Tenant's Proportionate Share together with substantiating documentation of such costs and expenses. 6.5 Landlord agrees that the following costs and expenses shall not be chargeable to or payable by Tenant pursuant to Section 6.4 above: (1) leasing commissions, attorneys' fees, costs, disbursements and other expenses incurred in connection with leasing, renovating or improving space for tenants or other occupants or prospective tenants of the Building; (2) costs, including permit, license and inspection fees, incurred in renovating or otherwise improving or decorating, painting or redecorating vacant space for tenants or other occupants; (3) Landlord's cost of any service sold to particular tenants or other occupants for which Landlord is entitled to be reimbursed in full by such tenants or other occupants as an additional charge or rental over and above the base; (4) any depreciation and amortization on the Building; (5) expenses in connection with services or other benefits of a type that are not provided to Tenant but which are provided to another tenant or occupant; (6) costs incurred due to violation by Landlord of any of the terms and conditions of this Lease or of any other lease relating to the Building; (7) overhead and profit increments paid to subsidiaries or affiliates of Landlord for management or other services on or to the Building or Property to the extent that the cost of the foregoing exceed the cost that would have been paid had such been provided by unaffiliated parties on a competitive basis; 13

(8) interest on debt or amortization payments on any mortgages or deeds of trust or any debt for borrowed money; (9) all items and services for which Tenant reimburses Landlord in full or pays third parties in full, or which Landlord provides selectively to one or more tenants or occupants of the Building other than Tenant without reimbursement; (10) advertising and promotional expenditures; or (11) repairs and other work occasioned by fire, windstorm or other casualty, to the extent, repairs and other work are payable from insurance or condemnation proceeds. 7. UTILITIES 7.1 During the term, Tenant shall, at its own cost and expense, pay all charges for separately metered or charged electricity gas, water, heat, power or other communication services and all other utilities used by Tenant or consumed in the Leased Premises directly to the applicable utility companies. All such payments shall be made when due and Tenant shall not permit utility services to be suspended on account of non-payment. 7.2 If any utility or service is provided to Tenant or the Leased Premises by Landlord, Landlord will pay the cost of such utility or service and will either charge the cost thereof to all persons, including Tenant, who use such service based upon actual submetered readings or based on hours of use and amount of consumption as reasonably determined by Landlord. If electric service to the Leased Premises shall be measured by sub-meter, Landlord shall provide and install same, at its expense. All such charges shall be additional rent and shall be paid by Tenant within fourteen (14) days of Landlord's demand. 7.3 Landlord shall not be liable or responsible to Tenant for any loss, damage or expense which Tenant may sustain or incur by reason of any failure, inadequacy or defect in the character, quantity or supply of utilities furnished to the Leased Premises. Landlord shall not be liable in damages or otherwise for any interruption in the supply of any of such utilities, whether caused by any disruption of primary sources of supply or otherwise, nor shall any such failure or interruption constitute constructive eviction or any ground for an abatement of rent reserved hereunder. 7.4 Without regard to whether or not Landlord is the provider of any utility service or such service is directly purchased by Tenant, Tenant shall pay all costs and expenses associated with the commencement of such services (i.e., hook-up fees, etc.). 8. TAXES 14

8.1 In addition to the Base Rent reserved, Tenant shall as of the Rent Commencement Date and thereafter during the term of this Lease, promptly pay monthly, together with the Base Rent to be paid pursuant to Article 3 and Exhibit B, Tenant's Proportionate Share of all taxes, assessments, water and sewer rents and charges, excises levies, and other governmental charges, general and special, of any kind whatsoever known or unknown which at any time prior to or during the term of this Lease may be assessed, levied, confirmed, imposed upon, or become payable out of or in respect of, or become a lien on (i) the Property or (ii) any rent, income or other payments received by Landlord under this Lease as estimated by Landlord, including such added assessment, or omitted assessment which may be levied against the Property, by the applicable governmental taxing authority, said obligation to be prorated as of the Rent Commencement Date and as of the Expiration Date hereunder, as applicable (collectively, "Taxes"). In addition to the obligation to pay Taxes as hereinabove set forth, the Tenant shall, during the term of this Lease, pay the cost and expense of any levy for building and other improvements and for the installation of local improvements affecting the Landlord and the Property as may be assessed by any governmental boards or bureaus having jurisdiction thereof. Any assessment or impositions for capital or public improvements which may be payable by law at the option of the taxpayer in installments, may be so paid by the Tenant in installments during the remaining term of this Lease together with any required interest. Landlord shall furnish Tenant, on a quarterly basis, with a copy of the then due real estate tax bill, together with a calculation of Tenant's Proportionate Share of Taxes. Tenant shall pay the amount shown by Landlord's statement within ten (10) days of Tenant's receipt thereof. Alternatively, if required by any mortgagee of Landlord, Landlord may, during the term reasonably estimate the amount of Taxes required to be paid by Tenant during each year, in which event, Tenant shall pay, on a monthly basis, (l/12th) of Tenant's Proportionate Share of Taxes, as reasonably estimated by Landlord. Landlord shall present Tenant with a copy of the final real estate tax bill within a reasonable period of time at the end of each tax year, and a proper adjustment shall be made as between Landlord and Tenant (either as a credit to Tenant, or payment to Landlord, as the case may be), within thirty (30) days of such real estate tax bill being provided to Tenant, and Landlord's statement showing Landlord's calculation of Tenant's Proportionate Share of Taxes. In the event of any change in the tax rate which shall require an adjustment in Tenant's annual tax obligation, such difference shall be adjusted by Landlord and Tenant during the month following Landlord's submission of each such tax bill. 8.2 If at any time during the term of this Lease the method or scope of taxation prevailing at the commencement of the Lease term shall be altered, modified or enlarged so as to cause the method of taxation to be changed, in whole or in part, so that in substitution for the Taxes now assessed there may be, in whole or in part, a capital levy or other imposition based on the value of the Property, or the rents received therefrom, or some other form of assessment based in whole or in part on some other valuation of the Property then, and in such event, such substituted tax or imposition shall be payable and discharged by the Tenant in the manner required pursuant to such law promulgated which shall authorize such change in the scope of taxation, and as required by the terms and conditions of the within Lease. 15

8.3 Nothing in this Lease contained shall require the Tenant to pay any franchise, estate, inheritance, succession, capital levy or transfer tax of the Landlord, or federal income tax, state income tax, or excess profits or revenue tax, unless such taxes are in substitution in whole or in part for real property taxes as a result of such change in the manner and scope of taxation as hereinbefore provided in this Article 8. 8.4 Notwithstanding the provisions of Section 8.1, Tenant shall be solely responsible for any assessments for Tenant improvements at the Leased Premises, whether installed by Tenant or Landlord that are assessed against the Land and Building at a valuation higher than the valuation for the existing building standard improvements, and shall be likewise responsible for any higher valuation assessed against other tenants at or occupants of the Land and Building. If the records of the Tax Assessor are available and sufficiently detailed to serve as a basis for determining whether said tenant improvements are assessed at a higher valuation than building standard, such records shall be binding on both Landlord and Tenant; otherwise the actual cost of construction shall be the basis for such determination. 8.5 If Landlord succeeds in reducing any assessed valuation for the Property or incurs expenses with third parties in efforts to minimize or reduce real estate taxes or other charges under this Article 8, Tenant shall pay the expenses so incurred by Landlord within ten (10) days following Landlord's demand. Provided that no default on Tenant's part shall have occurred, Landlord shall not unreasonably refuse a request by Tenant that Landlord undertake to appeal the tax assessment on the Property unless Landlord determines in its reasonable judgment that the appeal would not be successful or result in a higher valuation for the Property. In the event a tax appeal is conducted, the savings or additional payment due the municipality shall be adjusted as allocable for the applicable years of the appeal during the term after Landlord first receives reimbursement for legal and expert fees and all expenses associated with the appeal. No refund or credit shall be made or given to Tenant if Tenant is then in default. 8.6 Nothing set forth in Sections 8.1 - 8.5 shall be interpreted or construed to impose on Tenant an obligation to make duplicative payments of Taxes. Any determination by Landlord of Tenant's obligations as set forth in Sections 8.1 - 8.5 shall be reasonably substantiated by Landlord. 9. INSURANCE 9.1 During the term, Tenant will, at its sole cost and expense, obtain for the benefit of the Landlord wherein the Landlord shall be the named insured, all risk fire insurance with full extended coverage, (including flood insurance if required by Landlord or any mortgagee), insuring the Leased Premises (inclusive of any permanent improvements constructed by Tenant), in an amount and value equivalent to their full replacement cost, which policy of insurance shall include broad form boiler and machinery coverage (inclusive of heating and airconditioning systems, if any), together with 16

insurance coverage against sprinkler damage to the Building and its improvements. Said insurance, in any event, shall not be less than the amount of any mortgage(s) which may be placed on the Leased Premises by Landlord and shall be in such form and content as Landlord may reasonably required and as any mortgagee may require. Landlord shall have the right from time to time to determine the full replacement value as may be required to comply with full replacement insurance requirements. The insurance to be obtained by Tenant shall include rent insurance payable to and insuring the interest of the Landlord as to the value of the rental obligation hereunder to the extent of one (1) year's gross rental value (inclusive of real estate taxes, Landlord's operating expenses and applicable insurance premiums). Such insurance shall not be for the benefit of Tenant and shall not cover any personal property of Tenant (e.g., Tenant's fixtures, furnishings and equipment for which Tenant shall separately insure and in which Landlord shall have no insurable interest). 9.2 Tenant further covenants and agrees that it will, at its sole cost and expense, carry comprehensive general public liability insurance covering the Leased Premises and the use, operations and business conducted therein or thereon (in form and content approved by Landlord), by insurance carriers licensed in the State of New Jersey having a Best's Rating of not less than A-VIII and approved by Landlord (which approval shall not be unreasonably withheld or delayed) naming Landlord and other parties designated by Landlord as additional insured(s) with a per location aggregate with respect to the Leased Premises in the minimum amount of FIVE MILLION ($5,000,000.00) DOLLARS per occurrence combined single limit for injury to persons, death and property damage. Such required minimum level of coverage may, at Tenant's option, be satisfied by Tenant's providing primary coverage, as required, in a minimum amount of Two Million ($2,000,000.00) with excess coverage provided by means of an umbrella policy of insurance. Tenant shall provide notice to Landlord in the event that the aggregate limitation on liability is reduced by losses (including loss reserves of fifty (50%) percent or more during any one policy year. Tenant shall also carry (i) workers' compensation insurance as required by law, (ii) all risk insurance written under Insurance Services Offices (ISO) forms or its equivalent in respect of Tenant's stock in trade, fixtures and all other property of Tenant or alterations and improvement made by Tenant or placed in the Leased Premises in an amount not less than eighty (80%) percent of the full insurable value thereof and not less than the amount sufficient to avoid the effect of the co-insurance provisions of the applicable policy or policies; (iii) automobile liability insurance for owned, non-owned and hired automobiles with limits not less than Five Million ($5,000,000.00) Dollars for each accident naming Landlord as an additional insured; (iv) employers liability insurance with liability limits not less than One Million ($1,000,000.00) Dollars for each accident and for bodily injury by disease $1,000,000.00 each person and $1,000,000.00 policy limit, and (v) a First Party Environmental Insurance Policy or such other policy which shall be approved by Landlord in Landlord's sole discretion, which policy or policies shall insure the Building and the Property against contamination and pollution caused by the operation of Tenant's business which policy shall contain an initial minimum coverage amount of $3,000,000. The initial schedule of the insurance coverage to be purchased by Tenant is attached hereto as Exhibit F and made a part hereof. 17

9.3 For each of the polices required of Tenant hereunder this Article, Landlord shall have the right in its sole discretion to increase the amount of coverage and/or require additional coverage, in each case not to exceed the amount or type of coverage then being carried or being required by tenants to be carried by prudent landlords of similar use tenants in New Jersey with Landlord and its designee(s) being named insured parties with respect to all such policies. All such policies to be carried by Tenant shall contain a clause that the same shall not be cancelled except on thirty (30) days' written notice to all parties in interest. Tenant shall deliver to Landlord certificates for such fully paid for policies of insurance as Tenant is required to maintain on or prior to the Rent Commencement Date. Tenant shall procure and pay for renewal of such insurance before the expiration thereof and deliver certificates therefore at least thirty (30) days before the expiration of any existing policy. 9.4 Tenant shall not do or permit anything to be done in respect of the Leased Premises or conduct or operate Tenant's business in any manner objectionable to any insurance company or in violation of the requirements of the National Fire Codes published by the National Fire Protection Association (the "NFPA Code") whereby in the absence of compliance any insurance then in effect in respect to the Land and Building shall become void or suspended or whereby any premiums in respect of insurance maintained by Landlord shall be higher than those which would normally have been in effect for the occupancy contemplated under Article 5 hereof. In case of a breach of the provisions of this Section 9.4, in addition to all other rights and remedies of Landlord hereunder, Tenant shall (a) indemnify Landlord and hold Landlord harmless from and against any loss which would have been covered by insurance which shall have become void or suspended because of such breach by Tenant and (b) pay to Landlord any and all increases of premiums on any insurance, including, without limitation, rent insurance, resulting from any such breach. Landlord shall notify Tenant of any policy conditions which may cause the insurance coverage maintained by Landlord to be voided or the premiums increased. 9.5 The parties hereto mutually covenant and agree that each party, in connection with insurance policies required to be furnished in accordance with the terms and conditions of this Lease insuring such insurable interest as Landlord or Tenant may have in its own properties, whether personal or real, shall expressly waive any right of subrogation on the part of the insurer against the Landlord or Tenant, as the same may be applicable, which right to the extent not prohibited or violative of any such policy, is hereby expressly waived. Each party shall look first to any insurance in its favor before making any claim against the other party, and each party hereby releases the other party to the extent of the proceeds of insurance received with respect to any claim (including a claim for negligence) which it might otherwise have against the other party, for loss, damage or destruction with respect to its property occurring during the term of this Lease to the extent to which it is, or is required to be, insured. Nothing contained in this Section 9.5 shall be deemed to relieve either party of any duty, obligation or liability imposed elsewhere in this Lease. 9.6 Tenant, at its sole cost and expense, shall provide insurance against loss or 18

damage to all window glass in the Leased Premises, including glass in any entryways. 10. SIGNS Tenant shall be entitled to place a sign on the entrance to the Leased Premises, and a sign on the Building, identifying the name or trade identity of Tenant, which sign(s) shall be in compliance with all municipal and other governmental requirements and subject to Landlord's approval as to location, size and aesthetics. Tenant shall maintain the sign(s) in good order and condition during the term, shall pay for all utilities used in connection with such sign(s) and shall remove the sign(s) and repair any damage to the Leased Premises, the Building or other property on which such sign(s) is located arising from the sign installation and/or removal, at the expiration or termination of the Lease term. 11. FIXTURES 11.1 Tenant shall have the right and privilege of installing and, unless otherwise set forth in this Lease, removing its personal property, equipment and trade fixtures in the Leased Premises during the term of the Lease. However, upon the occurrence of an Event of Default, if such personal property, equipment and/or trade fixtures are not removed within thirty (30) days after such Event of Default, then the foregoing shall be deemed at the option of the Landlord to be abandoned and may be disposed of in any manner determined by Landlord or, in lieu thereof, the Landlord may remove and store such property and charge the reasonable cost and expense of removal and storage to the Tenant. The foregoing shall not be interpreted or construed to prevent the removal of Tenant's personal property, equipment and/or trade fixtures by any of Tenant's lenders prior to the expiration of such period of thirty (30) days. 11.2 It is expressly understood and agreed that the Tenant may install, connect and operate equipment as may be deemed necessary by the Tenant for the operation of its business in the Leased Premises subject to Tenant's compliance with applicable Laws. Subject to the terms and conditions of this Lease, the machinery, fixtures and equipment belonging to the Tenant shall at all times be considered and intended to be personal property of the Tenant, and not part of the realty and subject to removal by the Tenant, provided at the time of such desired removal that the Tenant is not in default pursuant to the terms and conditions of this Lease, and that the Tenant, at its own cost and expense, pays for any damage to the Leased Premises, the Building and the Property caused by such removal. 11.3 All fixtures, equipment, systems, facilities, improvements and appurtenances attached to or built into the Leased Premises on the Effective Date (should the Lease be terminated by either party prior to the expiration of the Due Diligence Period, as provided hereunder), shall be deemed to be property of Landlord and shall not be removed by Tenant. Notwithstanding the foregoing, should the term of the Lease proceed and the Leased Premises be constructed by Tenant as 19

contemplated hereunder, all fixtures, equipment, systems, facilities, improvements and appurtenances permanently attached to or built into the Leased Premises, as well as any additions, substitutions and replacements thereto during the term shall be and remain part of the Leased Premises, shall be deemed to be property of Landlord and shall not be removed by Tenant and shall be surrendered to Landlord upon the Expiration Date (or sooner termination of the term of this Lease), except to the extent that Landlord requests removal thereof, in conjunction with the provisions of Section 21. For purposes of clarification, those fixtures, equipment, systems, facilities, improvements and appurtenances attached to or built into the Leased Premises which are to become the property of Landlord upon the expiration or earlier termination of this Lease are generally described in Exhibit G attached hereto and made a part hereof. 12. GLASS The Tenant expressly covenants and agrees to replace any broken glass in the windows or other apertures of the Leased Premises which may become damaged or destroyed at its cost and expense. 13. ASSIGNMENT AND SUBLETTING 13.1 Tenant may not assign this Lease, sublet all or any portion of the Leased Premises, allow the same to be used or occupied by anyone other than Tenant and its present members and employees, or mortgage, pledge, encumber or otherwise transfer or hypothecate this Lease, by operation of law or otherwise, without, in each instance, obtaining Landlord's prior written consent which consent shall be in the sole and absolute discretion of Landlord. The foregoing consent requirement shall not apply to a conveyance of Tenant's leasehold interest as created hereby to or by a Mortgage Lender (as that term is defined in Section 55 below) which has taken such actions may be required, if any, to prevent the termination of this Lease by Landlord prior to such conveyance as set forth in Sections 55.1-55.5 below. 13.2 Without limiting any of the provisions herein or of Article 17, if pursuant to the Federal Bankruptcy Code (or any similar law hereafter enacted having the same general purpose), the Tenant is permitted to assign this Lease (notwithstanding the restrictions contained in this Lease) adequate assurance of future performance by an assignee expressly permitted under such code shall be deemed to mean the deposit of cash security in an amount equal to three (3) month's Base Rent (in addition to the Security Deposit posted pursuant to this Lease), which deposit shall be held by the Landlord for the balance of the Term, without interest, as security for the full performance of all of the Tenant's obligations under this Lease, and applied in the manner specified for security in Article 44. 13.3 Any assignment, sublet or other transfer or use of the Leased Premises by Tenant or any other party which violates the terms of this Article 13 shall constitute an Event of Default pursuant to Section 17.3(i). 20

13.4 Notwithstanding anything to the contrary set forth in this Article 13, Landlord shall be deemed to have consented on a one-time basis to an assignment of this Lease to a wholly owned subsidiary of Tenant; provided, that, prior thereto, Tenant (i) delivers to Landlord a form of assignment and assumption agreement in form reasonably acceptable to Landlord fully executed by the parties thereto; (ii) provides to Landlord proof of the corporate existence and good standing of such assignee; (iii) a corporate or comparable resolution of such assignee authorizing such assignee to execute, deliver perform and satisfy the terms such assignment and assumption agreement; and (iv) a Guaranty in the form attached hereto as Exhibit H executed by Tenant. Such assignment shall not in any way limit, restrict or otherwise affect or release Tenant from any of its obligations under this Lease. 14. DAMAGE AND DESTRUCTION 14.1 If the Leased Premises shall be partially or totally damaged or destroyed by fire or other casualty (and if this Lease shall not be terminated as in this Article 14 hereinafter provided), Tenant shall, at its sole cost and expense, promptly repair the damage and restore and rebuild the Leased Premises to its prior condition, including but not limited to Tenant's personal property and any permanent alterations or improvements performed by Tenant, with reasonable dispatch. Landlord shall make available to Tenant from time to time upon request therefore such proceeds of insurance as Landlord actually receives pursuant to the insurance policy which Tenant is required to purchase and maintain for the benefit of Landlord pursuant to Section 9.1 above, which proceeds shall be used exclusively for the restoration and repair of the Leased Premises (including but not limited to those items identified in Exhibit G attached hereto and made a part hereof) as reasonably substantiated by Tenant simultaneously with such request. If the Building of which the Leased Premises are a part shall be partially or totally damaged or fire or other casualty (and if this Lease shall not be terminated as in this Article 14 hereinafter provided), Landlord may, at its sole cost and expense, promptly repair the damage and restore and rebuild the Building to its prior condition; provided, that in no circumstance shall Landlord have any obligation to repair all or any portion of the Leased Premises. 14.2 If all or part of the Leased Premises shall be damaged or destroyed or rendered completely or partially untenantable on account of fire or other casualty then, subject to the last two (2) sentences of this Section 14.2, the rent shall be abated or reduced, as the case may be, in the proportion that the untenantable area bears to the total area of the Leased Premises, for the period from the date of the damage or destruction to (a) the date the damage to the Leased Premises shall be substantially repaired, or (b) if the Building and not the Leased Premises is so damaged or destroyed, the date of which the Leased Premises shall be made tenantable; provided, however, should Tenant reoccupy a portion of the Leased Premises during the period of repair or restoration, Tenant shall pay rent on the reoccupied portion on a pro-rata basis from the date of occupancy; provided, however, and notwithstanding the foregoing, in determining the amount of any such abatement or reduction in rent in the event of a fire or other casualty which damages less than the entire Leased Premises, due consideration shall be given to the extent of any damage, and to what extent Tenant can reasonably 21

(and, in any event, prior to the time specified in any notice of violation) comply with such (i) regulations or requests of the fire or liability insurance carriers providing insurance for the Leased Premises and/or the Land and Building and (ii) the requests of any mortgagee or proposed mortgagee of Landlord and will further comply with such other requirements that may be promulgated by the Board of Fire Underwriters, in connection with the use and occupancy by the Tenant of the Leased Premises and the conduct of its business therein; provided, that such requests shall not materially diminish Tenant's rights hereunder nor materially increase Tenant's obligations hereunder. (C) Tenant covenants and agrees that it will not commit any nuisance, nor permit the emission of any objectionable sound, noise, odors or conduct any other action or activity which would be violative of any applicable governmental rule or regulation or which constitutes a nuisance to any other tenant or occupant of the Building or the Property. Tenant further covenants and agrees that it will handle and dispose of all rubbish, garbage and waste in connection with the Tenant's operations in the Leased Premises in accordance with applicable Laws and reasonable regulations established by the Landlord from time to time in order to keep the Leased Premises in an orderly condition and in order to avoid unreasonable emission of dirt, fumes, odors or debris which may constitute a nuisance or induce pests or vermin. 15.2 (A) Tenant shall, at Tenant's own expense, comply with the Environmental Cleanup Responsibility Act, N.J.S.A. 13:lK-6 et. seq., as supplemented and amended by the Industrial Site Recovery Act, the regulations promulgated thereunder, and any amending and successor legislation and regulations ("ISRA") pertaining the Leased Premises and/or Tenant's use and occupancy thereof and operations therein. Tenant shall, at Tenant's own expense, make all submissions to, provide all information to, and comply with all requirements of, the Industrial Site Evaluation Element or its successor ("Element") of the New Jersey Department of Environmental Protection or its successor ("NJDEP"). Notwithstanding the foregoing, Tenant's obligations to comply with ISRA shall be limited to those facts, circumstances or conditions in, on or about the Leased Premises, the Building and/or the Property created by Tenant, its employees, agents, contractors, invitees or customers. (B) Tenant's obligations under this Section shall arise if there is any closing, terminating or transferring (or other triggering event) of operations of an industrial establishment at the Leased Premises or the Property pursuant to ISRA, whether triggered by Landlord or Tenant provided, however, that Tenant shall not be responsible to pay or incur the costs of environmental engineering and sampling if ISRA was not triggered by Tenant and, if such costs of environmental engineering and sampling in connection with compliance with ISRA were not due to any act or omission of Tenant, its employees, agents, contractors or invitees. (C) Provided this Lease is not previously canceled or terminated by either party or by operation of law, Tenant shall commence its submission to the Element in anticipation of the end of the Lease term, no later than one year prior to the expiration of the Lease term. 23

operate its business in the Leased Premises, notwithstanding that less than all of the Leased Premises shall have been damaged or destroyed. Notwithstanding the foregoing or anything contained in this Lease to the contrary, any abatement of rent shall be expressly subject to Landlord's actual receipt of rent insurance proceeds pursuant to the insurance policy required to be maintained by Tenant at its sole cost and expense in accordance with the provisions of Section 9.1. To the extent that such rent insurance proceeds are not actually received by Landlord, there shall be no abatement of rent under this Lease and Tenant shall continue to make all such rental payments as and when required by the terms and conditions of this Lease, notwithstanding such damage or destruction of the Leased Premises, or of the Building. 14.3 If more than fifty percent (50%) of the Leased Premises shall be totally damaged or destroyed by fire or other casualty, or, if damage or destruction shall occur during the two (2) year period preceding the Expiration Date, or, if Tenant reasonably determines that Tenant may not practicably operate its business in the Leased Premises as a result of such events, then, in any such case, Tenant may terminate this Lease by giving the other party written notice to such effect within ninety (90) days after the date of the fire or other casualty, provided, however, that in any such case, Tenant shall take such actions as Landlord may reasonably require pursuant to which Tenant waives any and all right, title or interest in or to the proceeds of insurance which Tenant is required to purchase and maintain for the benefit of Landlord as set forth in Section 9.1 above and promptly deliver to Landlord, on or prior to the date of such termination and as a condition thereto, the proceeds of insurance covering the Leased Premises under the policy maintained by Tenant in accordance with Section 9.1 if previously received by Tenant. 14.4 Except as otherwise herein provided, Tenant shall not be entitled to terminate this Lease and no damages, compensation or claim shall be payable by Landlord for inconvenience, loss of business or annoyance arising from any repair or restoration of any portion of the Leased Premises or of the Building pursuant to this Article 14. Tenant shall use reasonable efforts to make any such repairs or restoration promptly and in such manner as to not unreasonably interfere with the use and occupancy of the Building or of the Property by Landlord or by others so permitted to use the Building and the Property. 15. COMPLIANCE WITH LAWS, RULES AND REGULATIONS 15.1 (A) Tenant covenants and agrees that subject to the provisions of Article 4 with respect to its obligations during the Due Diligence Period, and thereafter during the entire term of the Lease, it will promptly (and, in any event, prior to the time specified in any notice of violation) at Tenant's cost and expense, comply with all Laws applicable to the Leased Premises or the operation of Tenant's business therein. The foregoing is expressly intended to apply to the installation, maintenance, use and operation of TENANT'S TANK (as defined below in Section 25.1). (B) Tenant covenants and agrees, at its own cost and expense, to promptly 22

(D) For purposes of this Section 15.2, the term "Environmental Documents" shall include, but not be limited to, all environmental documentation concerning the Leased Premises or its environs, including, without limitation, all sampling plans, cleanup plans, sampling results, sampling result reports, data, diagrams, charts, maps, analyses, conclusions, quality assurance/quality control documentation, correspondence to or from the Element or any other municipal, county, state or federal governmental authority, submissions to the Element or any other municipal, county, state or federal governmental authority and directives, orders, approvals and disapprovals issued by the Element or any other municipal, county, state or federal governmental authority. During the term of this Lease and subsequently, promptly upon receipt by Tenant or Tenant's representatives, Tenant shall deliver to Landlord all Environmental Documents concerning or generated by or on behalf of Tenant, whether currently or hereafter existing. (E) Tenant shall notify Landlord in advance of all meetings scheduled between Tenant or Tenant's representatives and NJDEP or any other environmental authority, and Landlord and Landlord's representatives shall have the right, without the obligation, to attend and participate in all such meetings. (F) Should the Element or any other division of NJDEP or other governmental authority determine that a cleanup plan be prepared and that a cleanup be undertaken because, as a result of acts or omissions of Tenant, or its agents, employees, contractors, licensees or invitees, fill materials, or hazardous or toxic substances, pollutants or wastes exist, or have been spilled, discharged or placed in, on, under or about the Leased Premises and/or the Property or off-site during the term of the Lease, Tenant shall, at Tenant's own expense, promptly prepare and submit the required plans and financial assurances, which plans and financial assurances shall be satisfactory to NJDEP, and shall promptly carry out the approved plans and post the required financial assurances to the satisfaction of NJDEP. In no event shall Tenant's cleanup plan involve engineering or institutional controls, including, without limitation, capping or a deed restriction or other use restriction, and notwithstanding any amendment of, or successor legislation to ISRA, in no event shall Tenant's cleanup meet standards any less stringent than those currently imposed by NJDEP under ISRA. Promptly upon completion of all required investigatory and cleanup activities, Tenant shall restore the affected areas of the Leased Premises, the Building and/or the Property (and/or any off-site property affected thereby) from any damage or condition caused by the work, including, without limitation, closing, pursuant to law, any wells installed at the Leased Premises, the Building or the Property (and/or off-site). (G) At no expense to Landlord, Tenant shall promptly provide all information requested by Landlord or NJDEP for preparation of a non-applicability affidavit, de minimis quantity exemption application, limited conveyance application or other submission and shall promptly sign such affidavits and submissions when requested by Landlord or NJDEP. (H) Should Tenant's operations at the Premises be outside of those industrial operations covered by ISRA, Tenant shall, at Tenant's own expense, obtain a letter of non-applicability 24

or de minimis quantity exemption from the Element prior to the expiration or termination of the Lease term and shall promptly provide Tenant's submission and the Element's exemption letter to Landlord. Should Tenant obtain a letter of non-applicability, de minimis quantity exemption or other exemption from the Element, then Tenant shall, at Tenant's expense, at Landlord's option, hire a consultant satisfactory to Landlord to undertake sampling at the Premises sufficient to determine whether fill materials, or hazardous or toxic substances, pollutants or wastes have been spilled, discharged or placed in, on, under or about the Leased Premises, the Building, the Property and/or off-site during the Lease term. Should the sampling reveal any spill, discharge or placing of fill materials, or of hazardous or toxic substances, pollutants or wastes, in, on, under or about the Leased Premises, the Building, the Property and/or off-site property caused by Tenant, its employees, agents, contractors or invitees, then Tenant shall, at Tenant's expense, prior to the expiration or earlier termination of the Lease term, promptly clean up the affected portions of the Leased Premises, the Building, the Property and/or off-site property to the satisfaction of NJDEP. In no event shall Tenant's cleanup plan involve engineering or institutional controls, including, without limitation, capping or a deed restriction or other use restriction and in no event shall Tenant's cleanup meet standards any less stringent than those currently imposed by NJDEP. (I) If Tenant fails to obtain either: (i) a non-applicability letter; (ii) a de minimis quantity exemption; (iii) an unconditional negative declaration; or (iv) final approval of an implemented cleanup or no further action letter; (collectively referred to as "ISRA Clearance") from the Element; or fails to clean up the Leased Premises, the Building, the Property and/or off-site property pursuant to subparagraph (H) above, prior to the expiration or earlier termination of the Lease term, then upon the expiration or earlier termination of the Lease term Landlord shall have the option either to consider the Lease as having ended or to treat Tenant as a holdover tenant in possession of the Leased Premises. If Landlord considers the Lease as having ended, then Tenant shall nevertheless be obligated to promptly obtain ISRA Clearance or fulfill the obligations set forth in subparagraph (H) above, as the case may be. If Landlord treats Tenant as a holdover tenant in possession of the Leased Premises, then Tenant shall monthly pay to Landlord double the Base Rent and additional monthly rent which Tenant would otherwise have paid, until such time as Tenant obtains ISRA Clearance or fulfills its obligations under subparagraph (H) above, as the case may be, and during the holdover period all of the terms of this Lease shall remain in full force and effect except for any options relating to additional space, renewals, or purchase of the Leased Premises. (J) Tenant represents and warrants to Landlord that Tenant intends to use the Leased Premises for the use set forth in Article 5 which operations have the following North American Industrial Classification System ("NAICS") numbers as defined by the most recent edition of the NAICS Manual published by the Federal Executive Office of the President, Office of Management and Budget: 325311. Tenant's use of the Leased Premises shall be restricted to the classifications set forth above unless Tenant obtains Landlord's prior written consent to any change in use of the Leased Premises Prior to the Rent Commencement Date, Tenant shall supply to Landlord an affidavit of an officer of Tenant ("Officer's Affidavit") setting forth Tenant's NAICS numbers and a detailed 25

description of the operations and processes Tenant shall undertake at the Leased Premises, organized in the form of a narrative report, including a description and quantification of hazardous or toxic substances, pollutants and wastes to be generated, manufactured, refined, transported, treated, stored, handled or disposed of at the Leased Premises. Following commencement of the Lease term, Tenant shall notify Landlord by way of a supplemental Officer's Affidavit as to any changes in Tenant's operation, NAICS numbers or use or generation of hazardous or toxic substances, pollutants and wastes. Tenant shall also supplement and update the Officer's Affidavit upon each anniversary of the commencement of the Lease term. Tenant shall not commence or alter any operations at the Leased Premises prior to: (i) obtaining all required operating and discharge permits or approvals, including, but not limited to, air pollution control permits and water pollution discharge elimination system permits from NIDEP, from all governmental or public authorities having jurisdiction over Tenant's operations or the Leased Premises, and (ii) providing a copy of the permits or approvals to Landlord. (K) Tenant shall permit Landlord and Landlord's agents, servants and employees, including, but not limited to, legal counsel and environmental consultants and engineers, access to the Premises for the purposes of environmental inspection and sampling at a mutually agreeable date and time during regular business hours, or during other hours either by agreement of the parties or in the event of any environmental emergency. Tenant shall not restrict access to any part of the Leased Premises, and Tenant shall not impose any conditions to access. (L) Tenant shall indemnify, defend and hold harmless Landlord from and against all claims, liabilities, losses, damages, penalties and costs, foreseen or unforeseen, including, without limitation, counsel, engineering and other professional or expert fees, which Landlord may incur resulting directly or indirectly, wholly or partly from Tenant's action or non-action with regard to Tenant's obligations under this Article 15, and including, without limitation the installation, maintenance, use and operation of Tenant's Tank. (M) This Section 15.2 shall survive the expiration or earlier termination of this Lease. Tenant's failure to abide by the terms of this paragraph shall be restrainable by injunction. 15.3 In case the Tenant shall fail or neglect to comply with the aforesaid statutes, ordinances, rules, orders, regulations and requirements or any of them, then the Landlord or the Landlord's agents may after ten (10) days' notice (except for emergency actions, which may be made immediately) enter the Leased Premises and comply with any and all of the said statutes, ordinances, rules, orders, regulations or requirements, at the cost and expense of the Tenant (including, but not limited to, any professional fees) and in case of the Tenant's failure to pay therefor, the said cost and expense shall be added to the next month's rent and be due and payable as such, or the Landlord may deduct the same from the balance of any sum remaining in the Landlord's hands. This provision is in addition to the right of the Landlord to terminate this Lease or take other appropriate action by reason of any default on the part of the Tenant. 26

15.4 Notwithstanding anything to the contrary set forth in Sections 15.1 - 15.3 above, if any fact, circumstance or condition existed in the Leased Premises prior to the Effective Date which (i) is not at all attributable to the act or omission of Tenant; (ii) was not and could not have been discovered by Tenant prior to the expiration of the Due Diligence Period; (iii) was not known to or knowable by Tenant prior to the expiration of the Due Diligence Period; and (iv) was not revealed to Tenant or set forth in documents reviewed or reviewable by Tenant prior to the expiration of the Due Diligence Period, then Landlord shall bear the cost and expense of complying with ISRA as it relates to such fact, circumstance or condition and any remediation required thereby. 16. ACCESS AND INSPECTION BY LANDLORD 16.1 Tenant agrees that Landlord, its agents, and other representatives, shall have the right, upon reasonable prior notice to Tenant (which may be verbal), during normal business hours (except in the event of an emergency in which case access shall be unrestricted), to enter into and upon the Leased Premises, or any part thereof, for the purpose of examining the same, or to gain access to and utilize and make alterations, repairs, additions and improvements to mechanical, electrical or other systems serving or controlling other portions of the Building or the Property or for purposes of exhibiting the same to prospective tenants, lenders and purchasers or, if elected or required, making such repairs, alterations, additions and improvements therein as may be necessary for the safety and preservation thereof and/or to the Building its facilities and equipment. 16.2 For purposes of implementing and facilitating Landlord's rights under Section 16.1 (or other provisions of this Lease of similar import or nature) Tenant agrees to provide Landlord's designated representative with keys and alarm codes which shall be utilized only in case of an emergency. 17. DEFAULT 17.1 Any installment(s) of rent or other sum required to be paid by Tenant to Landlord which is not paid within ten (10) days following the date on which such sum is due, shall bear interest from the due date until the same shall be paid at the lesser of (a) a fixed rate equal to two (2) percentage points above the published prime rate of Citibank, N.A., New York, New York, for one (1) year commercial loans ("Citibank Prime") in effect on the date such amount was due and payable, or (b) the maximum rate of interest permitted by applicable law; and upon the second such occurrence during any twelve (12) month period any such occurrence Tenant shall be required to pay a late charge equal to three (3%) percent of the amount due to compensate Landlord for its administrative costs with respect thereto. Such late charge is agreed and deemed by Tenant to constitute Landlord's approximate actual damages caused by Tenant's untimely payment of rent. In the event that Citibank N.A. ceases to publish its prime rate, then Landlord may substitute the prime rate of another of the five (5) largest commercial banks headquartered in New York, New York, which rate shall then, for purposes of this Lease, continue as "Citibank Prime". Tenant hereby indemnifies the Landlord against any and all costs 27

and charges including reasonable counsel fees incurred in enforcing the payment thereof, in obtaining possession of the Leased Premises after default of the Tenant, upon the expiration of this Lease or the earlier termination of this Lease or in enforcing any covenant or agreement made by the Tenant hereunder. 17.2. All covenants to be performed by the Tenant hereunder shall be performed by Tenant at Tenant's sole cost and expense, without any abatement of rent, except as may herein be otherwise expressly provided. If the Tenant shall fail to perform any act or obligation imposed upon it under the terms of this Lease, and in the further event that such failure shall continue an Event of Default, then the Landlord may (but shall not be obligated to) perform such act or obligation without waiving or releasing any of Tenant's obligations relative thereto. Notwithstanding the foregoing, if such failure to perform creates or contributes to an emergency as reasonably determined by Landlord, then Landlord may act without notice to Tenant at Tenant's cost and expense. Any sum of money paid or costs incurred by the Landlord, including any reasonable counsel fees in performing any act or obligation of the Tenant, together with interest at the rate specified in Section 17.1 from the date payment was made or cost incurred by the Landlord, shall be payable by the Tenant to the Landlord on demand. 17.3 Any one or more of the following events shall constitute an "Event of Default:" (a) The sale of Tenant's interest in the Leased Premises under attachment, execution or similar legal process or, if Tenant is adjudicated a bankrupt or insolvent and such adjudication is not vacated within sixty (60) days; (b) The filing of a voluntary or involuntary petition proposing the adjudication of Tenant or any guarantor of Tenant's obligations hereunder as a bankrupt or insolvent, or the reorganization of Tenant or any such guarantor, or an arrangement by Tenant or any guarantor with creditors whether pursuant to the Federal Bankruptcy Act or any similar federal or state proceedings, unless such petition is filed by a party other than Tenant or any such guarantor and is withdrawn or dismissed within sixty (60) days after the date of filing; (c) The admission in writing by Tenant or any such guarantor of its inability to pay its debts when due; (d) The appointment of a receiver or trustee for the business or property of Tenant or any such guarantor, unless such appointment shall be vacated within sixty (60) days of its entry; (e) The making by Tenant or any such guarantor of an assignment for the benefit of its creditors, or if in any other manner Tenant's interest in this Lease shall pass to another by operation of law; (f) The failure of Tenant to pay any rent or other sum of money (including, but not limited to the Consent Payment), within ten (10) days after receipt of notice to Tenant and to each Mortgage Lender (identified by Tenant to Landlord in writing) that the same is due hereunder; (g) Default by Tenant in the performance or observance of any covenant or agreement of this Lease (other than a default involving the payment of money), which default is not cured within thirty (30) days after the giving of notice thereof by Landlord to Tenant and to each Mortgage Lender (identified by Tenant to Landlord in writing), unless such default is of such nature that it cannot be cured within such thirty (30) day period, in which case no Event of Default shall occur so long as Tenant shall commence the curing of the default within such thirty (30) day period and shall thereafter diligently prosecute the curing of same to conclusion at the earliest practicable date; provided, however, that if Tenant shall 28

default in the performance of any such covenant or agreement contained in this Lease for the payment of Base Rent two (2) or more times in any twelve (12) month period, then, notwithstanding that such defaults may have been cured by Tenant, any further default of the same or similar nature shall be deemed an Event of Default without the ability for cure; (h) The vacating or abandonment of the Leased Premises by Tenant at any time during the Term of this Lease without taking such actions as may be deemed appropriate by Landlord to physically secure the Leased Premises and maintain the physically integrity thereof; (i) The occurrence of any other event described as constituting a default or an Event of Default elsewhere in this Lease, or the occurrence of a default on Tenant's part under any other lease or agreement between Tenant and Landlord which has not, been cured within applicable notice and grace periods. Landlord hereby agrees to deliver to Tenant a monthly invoice of Base Rent and other sums then due under this Lease. 17.4 Upon the occurrence of an Event of Default, Landlord, with reasonable notice to Tenant and the Mortgage Lender in each instance (and except as otherwise provided elsewhere in this Lease) may do any one or more of the following: (a) Sell at public or private sale all or any part of the goods, chattels, fixtures and other personal property belonging to Tenant, which are or may be put into the Leased Premises during the Term, whether exempt or not from sale under execution or attachment and apply the proceeds of such sale, first, to the payment of all reasonable costs and expenses of conducting the sale or caring for or storing said property (including all reasonable attorneys' fees), second, toward the payment of any indebtedness, including (without limitation) indebtedness for rent, which may be or may become due from Tenant to Landlord, and third, to pay Tenant, on demand in writing, any surplus remaining after all indebtedness of Tenant to Landlord has been fully paid; (b) Perform, on behalf and at the expense of Tenant, any obligation of Tenant under this Lease which Tenant has failed to perform and of which Landlord shall have given Tenant notice, the cost of which performance by Landlord, together with interest thereon at the rate set forth in Section 17.1 from the date of such expenditure, shall be deemed additional rent and shall be payable by Tenant to Landlord upon demand. Notwithstanding the provisions of this clause (b) and regardless of whether an Event of Default shall have occurred, Landlord may exercise the remedy described in clause (b) without any notice to Tenant if Landlord, in its good faith judgment, believes it would be materially injured by failure to take rapid action or if the unperformed obligation of Tenant constitutes an emergency; (c) Elect to terminate this Lease and the tenancy created hereby (which termination shall not terminate Tenant's liability hereunder) by giving notice of such election to Tenant, and reenter the Leased Premises, by summary proceedings or other lawful means, and remove Tenant and all other persons and property from the Leased Premises, and store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant and without Landlord being deemed guilty of trespass or becoming liable for any loss or damage occasioned thereby; or (d) Exercise any other legal or equitable right or remedy which it may have. Any costs and expenses incurred by Landlord (including, without limitation, reasonable attorneys' fees) in enforcing any of its rights or remedies under this Lease shall be deemed to be additional rent and shall be repaid to Landlord by Tenant upon demand. 29

17.5 If this Lease is terminated by Landlord pursuant to Article 17, Tenant nevertheless shall remain liable for any rent and damages which may be due or sustained prior to such termination, all costs, fees and expenses including, but not limited to, reasonable attorneys' fees, costs and expenses incurred by Landlord in pursuit of its remedies hereunder, and in placing the Leased Premises in tenantable condition, making alterations and improvements and paying for brokerage services relating to renting the Leased Premises to others from time to time (all such rent, damages, costs, fees and expenses being referred to herein as Termination Damages) and additional damages (the Liquidated Damages), which, at the election of Landlord, shall be either: (a) An amount equal to the rent which, but for termination of this Lease, would have become due during the remainder of the Term, less the amount of rent, if any, which Landlord shall receive during such period from others to whom the Leased Premises may be rented (other than any additional rent received by Landlord as a result of any failure of such other person to perform any of its obligations to Landlord), in which case such Liquidated Damages shall be computed and payable in monthly installments, in advance, on the first day of each calendar month following termination of the Lease and continuing until the date on which the term would have expired but for such termination; any suit or action brought to collect any such Liquidated Damages for any month shall not in any manner prejudice the right of Landlord to collect any Liquidated Damages for any subsequent month by a similar proceeding; or (b) An amount equal to the present worth (as of the date of such termination) of rent which, but for termination of this Lease, would have become due during the remainder of the term, less the fair rental value of the Leased Premises, as determined by an independent real estate appraiser who is a member of the American Institute of Real Estate Appraisers (M.A.I.) named by Landlord, in which case such Liquidated Damages shall be payable to Landlord in one lump sum on demand and shall bear interest at the rate set forth in Section 17.1 until paid. For purposes of this clause (b), "present worth" shall be computed by discounting such amount to present worth at a discount rate equal to one percentage point above the discount rate then in effect at the Federal Reserve Bank nearest to the location of the Building. Termination Damages shall be due and payable immediately upon demand by Landlord following any termination of this Lease pursuant to ARTICLE 17. If this Lease is terminated pursuant to ARTICLE 17, Landlord shall employ reasonable efforts to relet the Leased Premises or any part thereof, alone or together with other premises, for such term(s) (which may be greater or less than the period which otherwise would have constituted the balance of the term) and on such commercially reasonable terms and conditions (which may include concessions or free rent and alterations of the Leased Premises) as Landlord, in its sole discretion, may determine, but Landlord shall not be liable for, nor shall Tenant's obligations hereunder be diminished by reason of Landlord's inability to relet the Leased Premises or to collect any rent due upon such reletting. Tenant agrees that in connection with the reletting of the Leased Premises, Landlord shall not be required to prefer the Leased Premises over any other space then available within the Building or the Property. Nothing contained in this Lease shall limit or prejudice the right of Landlord to prove for and obtain, in proceedings for the termination of this Lease by reason of bankruptcy, insolvency, or other 30

reason, an amount equal to the maximum allowed by any statute or rule of law in effect at the time when, and governing the proceedings in which, the damages are to proved, whether or not the amount be greater, equal to, or less than the amount of the loss or damages referred to above. Landlord's inability to relet the Leased Premises or any part or parts thereof or to collect rent due as a result of any re-letting shall not release or affect Tenant's liability for damages. 17.6 Nothing contained herein shall be deemed in any way to limit Landlord's rights and remedies under the Bankruptcy Code, II USC Section 101, et seq. as existing or as hereafter amended. Neither Tenant's interest in this Lease or in any estate created hereby shall pass to any receiver, trustee, assignee or otherwise except as may be specifically provided therein. In the event that a petition is filed by or against the Tenant under the Bankruptcy Code, the Tenant as debtor or as debtor in possession and any trustee who may be appointed, agree to adequately protect the Landlord as follows: (a) To pay monthly in advance on the first day of each month as reasonable compensation for use and occupancy of the Leased Premises an amount equal to all the rent due pursuant to this Lease; (b) To perform each and every obligation of the Tenant under this Lease until such time as this Lease is either rejected or assumed by order of a court of competent jurisdiction; (c) To determine within sixty days after the filing of such petition whether to assume or reject this Lease; (d) To give Landlord at least thirty days prior written notice unless a shorter notice period is agreed to in writing by the parties of any proceeding relating to any assumption of this Lease; (e) To give at least thirty (30) days prior written notice of any vacation or abandonment, any such vacation or abandonment to be deemed a vacation of this Lease; and (f) To do all other things of benefit to Landlord otherwise required under the Bankruptcy Code. Tenant shall be deemed to have rejected this Lease in the event of the failure to comply with any of the above. If the Tenant or a trustee elects to assume this Lease subsequent to the filing of a petition under the Bankruptcy Code, the Tenant as debtor or debtor in possession, or any trustee who may be appointed agree as follows: (a) To cure each and every existing breach by Tenant within not more than ninety days of the assumption of this Lease; (b) To compensate Landlord for any actual pecuniary loss resulting from any existing breach, including without limitation, Landlord's reasonable costs, expenses and attorney's fees incurred as a result of the breach as determined by a court of competent jurisdiction, within ninety days of assumption of this Lease; (c) In the event of an existing breach, to provide adequate assurance of Tenant's future performance, including without limitation (i) the deposit of an additional sum equal to three (3) months rent to be held without allowance for interest thereon to secure Tenant's obligation under the Lease; and (ii) the production to Landlord of written documentation establishing that Tenant has sufficient present and anticipated financial ability to perform each and every obligation of Tenant under this Lease; and (iii) assurances, in form acceptable to the Landlord, as may be required under any applicable provision of the Bankruptcy Code; (d) The assumption will not violate any provision of this Lease; (e) The assumption will be subject to all of the provisions of this Lease unless the prior written consent of the Landlord is obtained to the contrary; and (f) The prior written consent to the assumption of any mortgagee or ground lessor to which this Lease has been assigned as collateral security is obtained. 31

If Tenant assumes this Lease and proposes to assign same pursuant to the provisions of the Bankruptcy Code to any person or entity who shall have made a bona fide offer to accept an assignment of this Lease on terms acceptable to the Tenant, then Tenant shall forthwith give to the Landlord notice of such proposed assignment setting forth: (a) The name and address of such person; and (b) All terms and conditions of such offer; and (c) The adequate assurance to be provided Landlord to assure such person's future performance under the Lease, including, without limitation, the assurances referred to in any applicable provision of this Lease or the Bankruptcy Code, shall be given to the Landlord by Tenant no later than twenty days after receipt by Tenant, but in any event no later than ten days prior to the date that Tenant shall make application to a court of competent jurisdiction for authority and approval to enter into such assignment and assumption, and Landlord shall thereupon have the prior right and option, to be exercised by notice to Tenant given at any time prior to the effective date of such proposed assignment, to accept an assignment of this Lease upon the same terms and conditions and for the same consideration, if any, as the bona fide offer made by such person, plus any brokerage commissions which may be payable out of the consideration to be paid by such person for the assignment of this Lease. The adequate assurance to be provided Landlord to assure the assignee's future performance under this Lease shall include without limitation: (i) The deposit of a sum equal to one year's Base Rent to be held without any allowance for interest thereon as security for performance hereunder; (ii) A written demonstration that the assignee meets all reasonable financial and other criteria of Landlord as did Tenant and its business at the time of the execution of this Lease, including the production of the most recent audited financial statement of the assignee prepared by a certified public accountant; (iii) Evidence that assignee's use of the Leased Premises will be in compliance with the terms of that provision of this Lease dealing with use; (iv) Assurances in form acceptable to the Landlord as to all matters identified in any applicable provision of the Bankruptcy Code; and (v) Neither the Tenant nor any trustee who may be appointed in the event of the filing of a petition under the Bankruptcy Code shall conduct or permit the conduct of any fire sale, bankruptcy sale, going out of business sale or auction sale in or from the Leased Premises. 18. TRANSFERS BY LANDLORD 18.1 Landlord may at any time during the Term of this Lease sell, convey, assign or otherwise deal with the Building and the Property upon which it is situate subject to the rights of the Tenant under this Lease. In the event of such a sale, conveyance, assignment or other transfer, Landlord shall have the right to transfer the Security Deposit to the vendee or lessee and Landlord shall upon such transfer be released by Tenant from all liability for the return of such Security Deposit; and Tenant agrees to look solely to the new landlord for the return of said Security Deposit. Landlord shall notify Tenant in writing of any such transfer. 18.2 Any sale or conveyance of the Property shall release the Landlord from any liability for any claim, liability or loss after the effective date of such sale as to all of the terms, covenants and conditions of this Lease, and, thereafter, the Tenant shall look solely to the Landlord's 32

successor in title. No sale or conveyance by the Landlord shall affect this Lease and the Tenant shall attorn to the Landlord's successor in title. 18.3 Once Tenant has received written notice identifying the name and address of any lender (a "Lender") holding a mortgage or deed of trust (a "Mortgage") on the Property, Tenant agrees to notify such Lender by certified mail, return receipt requested, with postage prepaid, of any default on the part of Landlord under this Lease, and Tenant further agrees that, notwithstanding any provisions of this Lease, no cancellation or termination of this Lease and no abatement or reduction of the rent payable hereunder shall be effective unless the Lender has received notice of the same and have failed within thirty (30) days after the time when it shall have become entitled under the Mortgage to remedy the same, to commence to cure such default and thereafter diligently prosecute such cure to completion, provided that such period may be extended, if the Lender, needs to obtain possession of the Property to cure such default, to allow the Lender to obtain possession of the Property provided the Lender commences judicial or non-judicial proceedings to obtain possession within such thirty (30) day period and thereafter diligently prosecutes such efforts and cure to completion. It is understood that the Lender shall have the right, but not the obligation, to cure any default on the part of Landlord. 18.4 Tenant agrees that if a Lender shall succeed to the interest of Landlord under this Lease, neither the Lender nor its successors or assigns shall be; liable for any prior act or omission of Landlord; subject to any claims, offsets, credits or defenses which Tenant might have against any prior landlord (including Landlord); or bound by any assignment (except as otherwise expressly permitted hereunder), surrender, release, waiver, amendment or modification of the Lease made without such Lender's prior written consent; or obligated to make any payment to Tenant or liable for refund of all or any part of any Security Deposit or other prepaid charge to Tenant held by Landlord for any purpose unless the Lender shall have come into exclusive possession of such deposit or charge. In addition, if Lender shall succeed to the interest of Landlord under this Lease, the Lender shall have no obligation, nor incur any liability, beyond its then equity interest, if any, in the Property. 18.5 In the event that a Lender (or any person or entity to whom the Mortgage may subsequently be assigned) notifies Tenant of a default under the Mortgage and demands that Tenant pay its rent and all other sums due under this Lease to the Lender, Tenant shall honor such demand without inquiry and pay its rent and all other sums due under this Lease directly to the Lender or as otherwise required pursuant to such notice and shall not thereby incur any obligation or liability to Landlord. 18.6 Provided that Landlord's current Lender agrees to execute and deliver a Subordination, Non-Disturbance, and Attornment Agreement ("SNDA") in the form currently used by such Lender as contemplated in Section 18.9 below, then Tenant agrees and acknowledges that this Lease is subordinate to the lien of any Mortgage in effect as of the date hereof, but that, at the Lender's election, this Lease may be made prior to the lien of such existing Mortgage. As to any Mortgage which subsequently encumbers the Property, this Lease shall be prior to the lien of such Mortgage unless such Lender executes and delivers a SNDA in such form as such Lender shall then employ, in which event 33

Tenant shall execute and deliver such form of SNDA and this Lease shall be subordinate to such Mortgage. Subject to the execution and delivery of such SNDA's, if any, in the event any Lender succeeds to the interests of Landlord under this Lease, then, at the Lender's election (A) Tenant shall be bound to the Lender under all of the terms, covenants and conditions of this Lease for the remaining balance of the term hereof, with the same force and effect as if the Lender were the lessor hereunder, and Tenant does hereby agree to attorn to the Lender as its lessor without requiring the execution of any further instruments immediately upon the Lender succeeding to the interests of Landlord under this Lease; provided, however, that Tenant agrees to execute and deliver to the Lender any instrument reasonably requested by it to evidence such attornment; and (B) subject to the observance and performance by Tenant of all the terms, covenants and conditions of this Lease on the part of Tenant to be observed and performed, the Lender shall recognize the leasehold estate of Tenant under all of the terms and conditions of this Lease for the remaining balance of the term with the same force and effect as if Lender were the lessor under the Lease. 18.7 Each party agrees, at any time and from time to time, as required by the other or any Lender or Mortgage Lender, upon not less than ten (10) days' prior notice, to execute and deliver without cost or expense to the other or such Lender or Mortgage Lender an estoppel certificate certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating the modifications), certifying the dates to which all Base Rent and any additional rent have been paid, and stating whether or not, to the best knowledge of the signing party, the other party to this Lease is in default in the performance of any of its obligations under this Lease, and, if so, specifying each such default of which such signing party may have knowledge, it being intended that any such statement delivered pursuant thereto may be relied upon by Landlord, Tenant, Lender or Mortgage Lender as the case may be. 18.8 The subordination and attornment provisions contained in this Article shall be self-operating and, except as otherwise required by the terms of Article 18, no further instrument shall be required. Nevertheless, Tenant, within ten (10) days following the request of Landlord and without cost to Landlord or any successor in interest, shall execute and deliver any and all instruments, conforming to the terms of this Lease, further evidencing such subordination, non-disturbance and, where applicable hereunder, attornment. In the event that Tenant fails to timely execute and deliver such instrument, Tenant hereby irrevocably constitutes and appoints Landlord as attorney-in-fact for Tenant to execute, acknowledge and deliver any such instrument for and on behalf of Tenant. 18.9 Landlord agrees to use commercially reasonable efforts (but without material cost or expense) to obtain prior to the end of the First Due Diligence Period from Landlord's then-Lender the agreement of such Lender to execute and deliver a subordination, non-disturbance and attornment agreement in the form then being used by such Lender (an "SNDA"); provided, that (i) Tenant shall provide to Lender such information as such Lender may require in connection therewith; and (ii) such SNDA shall not materially increase Landlord's obligations and/or materially decrease Landlord's rights under any agreements, documents or instruments to which Landlord is then a party. 34

Tenant acknowledges and agrees that Tenant shall execute such form prior to its execution and delivery by Landlord and/or by such Lender. If a fully executed SNDA is not delivered to Tenant by the close of the First Due Diligence Period or the Second Due Diligence Period, as the case may be, then Tenant may terminate this Lease pursuant to Section 4.3, in which event the provisions of Article 44 shall apply and, except as set forth therein, the parties shall have no further rights or obligations under this Lease. 19. NOTICES Any notice or demand required or permitted to be given by either party to the other shall be in writing and shall be deemed to have been properly given only if mailed first class, postage prepaid by registered or certified mail, return receipt requested, or delivered by national overnight air courier service providing written evidence of delivery, addressed, if to Tenant at the address of the Tenant above stated or to such other address as the Tenant may have previously given to the Landlord in writing, and if to the Landlord, at the address of the Landlord above stated to the attention of Valerie Montecalvo or to such other address as the Landlord may have given by notice in writing to the Tenant. Any notice shall be deemed to have been given at the time of personal delivery or, if mailed, not more than five (5) days after the date of mailing. Any notice or demand given on Landlord's or Tenant's behalf by their respective management, managing agent or counsel, those persons being authorized to act on behalf of the parties in any manner provided herein, shall be deemed to have been given by the party on whose behalf such person acts, and shall be effective and binding upon the recipient. 20. NON-WAIVER The failure of the Landlord or the Tenant to insist upon strict performance of any of the covenants or conditions of this Lease, or to exercise any option of the Landlord or the Tenant herein conferred in any one or more instances, shall not be construed as a waiver by the Landlord or the Tenant, as the case may be, of any of its rights or remedies in this Lease, and shall not be construed as a waiver, relinquishment or failure of any such covenants, conditions, or options, which shall be and remain in full force and effect. 21. RIGHT OF TENANT TO MAKE ALTERATIONS AND IMPROVEMENTS 21.1 Tenant may make alterations, or improvements to the Leased Premises only with the prior written consent of the Landlord in each instance which consent shall not be unreasonably withheld, provided such alterations, additions or improvements do not require structural changes in the Leased Premises (except for Tenant's Work), do not involve any extension or expansion of the Building or the construction of any new building on the Land or do not in Landlord's judgment lessen the value or utility of the Leased Premises, the Building or the Property. Any consent which Landlord may give shall be conditioned upon Tenant furnishing to Landlord detailed plans and specifications with respect to any such changes, to be approved by Landlord in writing. As a condition of such consent, Landlord 35

reserves the right to require Tenant to remove, at Tenant's sole cost and expense, any such alterations or additions prior to the expiration of the Lease term and, for any alteration or improvement the cost of which exceeds One Hundred Thousand ($100,000) Dollars, to deliver to Landlord a performance bond and a labor and materials payment bond from a responsible corporate surety company licensed in New Jersey. If Landlord does not require such removal, any such alterations or additions shall be deemed to be part of the realty upon installation. If removed by Tenant at Landlord's option, Tenant shall be responsible to repair any damage to the Leased Premises, the Building or the Property occasioned by such removal. All such alterations, additions or improvements shall be in conformity with applicable governmental and insurance company requirements and regulations applicable to the Leased Premises. Tenant shall obtain all required permits and certificates applicable to permitted alterations provide copies of same to Landlord and shall cause all work to be performed in compliance therewith. Tenant shall defend, hold and save Landlord harmless and indemnify Landlord against any claim for damage or injury in connection with any of the foregoing work which Tenant may perform as hereinabove provided. 21.2 Nothing herein contained shall be construed as a consent on the part of the Landlord to subject the estate of the Landlord to liability under any Construction Lien Law, or similar law, of the State of New Jersey, it being expressly understood that the Landlord's estate shall not be subject to such liability. Tenant shall immediately satisfy and remove or bond any contract, claim, lien, notice of record in the event same is filed or recorded against Landlord or the Land, Building or the Leased Premises. 21.3 Tenant shall pay to Landlord all of Landlord's reasonable costs with regard to changes and alterations requiring Landlord's consent including costs or review by architects, contractors, attorneys, business or real estate consultants, or others of the proposed changes and alterations and plans, specifications and working drawings thereof. 21.4 In the case of any construction, change or alteration pursuant to this Article 21: (a) During the period of construction of any change or alteration or any demolition or new construction, Tenant shall maintain, at Tenant's expense, the following insurance: (i) The comprehensive general liability property damage insurance described in Article 9 shall provide coverage to the limits specified therein for the benefit of Landlord and Tenant as named insureds in connection with any change, alteration, addition, demolition or new construction permitted hereunder; (ii) Fire and any other applicable insurance provided for in Article 9 shall also insure any change, alteration, or addition, demolition or new construction, including all materials and equipment on or about the Property (including excavations, foundations, and footings) under an All Risk Completed Value Form or equivalent; and (iii) Worker's compensation insurance, including employer's liability insurance, in an amount not less than $1,000,000, covering all persons employed in connection with the work and with respect to whom death or bodily injury claims could be asserted against Landlord, 36

Tenant or the Property, with statutory limits as then required under the New Jersey. These insurance requirements are equally applicable to all work involved in the restoration, repairs, replacements, or alterations to be effected in accordance with Article 14. (b) During the progress of the construction, change or alteration, Landlord and its architects or engineers may at reasonable times inspect the work and examine all plans, drawings, and specifications relating to the same, and on request Landlord shall be furnished with copies of all such plans, drawings and specifications. The reasonable charges of any attorney architect, engineer, or construction or real estate specialist employed by Landlord to pass upon any plans, drawings and specifications, to supervise or approve any construction, or to render any other service contemplated by this Lease with regard to construction, alterations, or improvements requiring Landlord's consent, shall be paid by Tenant as additional rent due within twenty (20) days of demand. (c) No construction, change or alteration shall, without the prior written consent of Landlord, when completed, tie in or connect the Property with any other building or any adjoining property. (d) No construction, change or alteration shall be undertaken until Tenant shall have procured and paid for all required permits and authorizations of all municipal departments and governmental subdivisions having jurisdiction. Landlord shall join in the application for such permits or authorizations whenever necessary, but without any liability or expense to Landlord, (e) Any construction, change or alteration shall be constructed and made promptly, in good workmanlike manner, and in compliance with all applicable permits and authorizations, building and zoning Laws. 21.5 No consent or approval given or deemed given by Landlord pursuant to Article 21 or otherwise shall constitute a representation or warranty that such alteration, improvement or other matter (or any plans or specifications therefore) are in compliance with applicable Laws or are sufficient for Tenant's needs or purposes. 22. NON-LIABILITY OF LANDLORD 22.1 It is expressly understood and agreed by and between the parties to this Lease that, except for Landlord's gross negligence or willful misconduct: (a) Tenant shall assume all risk of damage to its products, inventory, property, equipment and fixtures occurring in or about the Leased Premises, the Building and the Property whatever the cause of such damage or casualty; and (b) the Landlord shall not be liable for any damage or injury to property or person caused by or resulting from steam, electricity, gas, water, rain, ice or snow, or any leak or flow from or into any part of the Leased Premises or the Building, or from any damage or injury resulting or arising from any other cause or happening whatsoever. 22.2 Landlord and/or any of its beneficiaries, members, shareholders, officers, 37

directors, agents, managers, partners or other affiliates of Landlord, shall be under no personal liability with respect to any of the provisions of this Lease, and if Landlord is in breach or default with respect to its obligations or otherwise, Tenant shall look solely to the interest of Landlord in the Property for the satisfaction of Tenant's remedies and will not seek recourse against Landlord or any of the foregoing persons or entities or their personal assets for such satisfaction. It is expressly understood and agreed that Landlord's liability under the terms, covenants, conditions and obligations of this Lease shall in no event exceed the loss of its interest in the Property. In no event shall Landlord be liable for inconvenience, disturbance, loss of business, loss of use of the Leased Premises or any consequential loss or damage which Tenant may suffer. 23. WARRANTY OF TITLE Landlord represents that it has title to the Leased Premises which are the subject of this Lease, and that it has the full right, capacity and authority to enter into the within Lease Agreement. 24. RESERVATION OF EASEMENT Landlord and its designees reserve the right, easement and privilege, exercisable at any time and from time to time, to enter on the Land, Building or Leased Premises in order to make improvements, repairs, alterations and installations, to access mechanical and other systems, facilities and equipment which service the Building or the Property (including, without limitation for the purposes set forth in Article 16) and to separate or separately demise (without reduction or abatement of rent) any areas of the Leased Premises in which there is located systems or facilities which serve other portions of the Building or the Property and to gain access to and have full utilization of other portions of the Property. Landlord shall, at its own cost and expense, repair any damage to the Leased Premises caused by Landlord. Landlord covenants that the foregoing work or other action or Landlord shall not unreasonably interfere with the normal operation of Tenant's business in the Leased Premises. 25. AIR, GROUND AND WATER POLLUTION/TENANT'S TANK 25.1 Tenant shall not cause or permit any hazardous material to be brought upon, kept or used in or about the Leased Premises by Tenant, its agents, employees, contractors or invitees. The foregoing shall not preclude Tenant from (a) the use of de minimus quantities of cleaning solutions, pest control and lubricating substances in the normal course of Tenant's business or (b) the installation by Tenant and use of an above-ground natural gas fuel tank and an aboveground No. 2 fuel oil tank (neither of which shall exceed a 10,000 gallon capacity), for use as an alternative source of energy (collectively, "Tenant's Tank"), provided that Tenant's Tank, as well as any of the above-referenced substances shall be used, stored, maintained and disposed of in accordance with all applicable Laws. Tenant's Tank shall be placed in such location as shall be approved in writing by Landlord. Prior to any such installation, Tenant shall furnish detailed plans and specifications for Tenant's Tank, and all wires, lines, pipes conduits and other apparatus in connection with Tenant's Tank 38

to Landlord for its prior approval. Landlord may condition its consent by requiring that Tenant's Tank be adequately screened (at Tenant's sole expense) in such locations as shall be reasonably required by Landlord. Upon approval of Tenant's plans and specifications, Tenant shall have the right to install Tenant's Tank, at Tenant's expense, subject to Landlord's reasonable supervision. The costs and expenses of which Tenant shall be so obligated, shall include the processing and obtaining of any special permits that may be required by any applicable governmental authorities in connection with such installation (including any necessary tank registration). Tenant shall comply with all applicable Laws in connection with the installation, maintenance, use and operation of Tenant's Tank and all lines, wiring, pipes, conduits, other apparatus in connection therewith, and Tenant shall keep the Leased Premises and Property free and clear from liens arising from or related to the installation, maintenance, use and operation thereof. Any wires, lines, conduits or other physical connections between Tenant's Tank and the Building or the Leased Premises shall be concealed within permanent walls, floors, columns and ceilings of the Building and in the shafts of the Building provided for such installation and approved by Landlord, which will not damage the appearance of the Building or reduce the usable or rentable space of the Building. Any installation, maintenance or repairs of Tenant's Tank shall be performed by Tenant, or at Tenant's direction, at Tenant's sole cost and expense, and upon completion of such installation, maintenance or repair (initially and from time to time) Tenant shall restore such portions of the Leased Premises to a condition reasonably comparable to that existing prior to such installation or maintenance. Tenant shall be responsible for procuring all approvals, licenses or permits may be required for the installation, maintenance, use and operation of Tenant's Tank and the related support systems or operation of any equipment served thereby. Landlord makes no warranty whatsoever as to permitted size of the Tenant's Tank or the permissibility of such system or system (s) under applicable Laws. Upon termination or expiration of this Lease, Landlord shall have the right to direct that Tenant's Tank remain at the Leased Premises, or that Tenant remove Tenant's Tank and any other tank, lines, wires, conduit, pipes or other apparatus installed in connection therewith, at Tenant's expense, and to further require that Tenant repair and restore the Property to a condition comparable to that existing prior to such installation. In addition, Landlord expressly reserves the right to relocate Tenant's Tank at Landlord's expense, provided such relocation shall have no adverse impact on the operations of Tenant's Tank or interfere with the operation or availability of the same to Tenant. Tenant shall be solely responsible for all charges, if any, resulting from the operation of Tenant's Tank. 25.2 In installing, maintaining or operating Tenant's Tank, or otherwise, Tenant shall not discharge, leak or emit, or permit to be discharged, leaked or emitted, any material into the atmosphere, ground, sewer system, or any body of water, if that material (as is reasonably determined by the Landlord or any governmental authority) does or may pollute or contaminate the same, or may adversely affect (1) the health, welfare or safely of persons, whether located on the Leased Premises, the Building, or elsewhere, or (2) the condition, use or enjoyment of the Leased Premises, the Building, the Property or any other real or personal property. If Tenant breaches either of these covenants, in addition to being a default under this Lease, Tenant shall be liable to Landlord for all damages resulting therefrom, and Tenant shall indemnify, defend and hold Landlord harmless from any and all claims, judgments, penalties, fines, costs, liabilities or losses, including, without limitation, diminution in value 39

of the Leased Premises, the Building or the Property, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Leased Premises, the Building or the Property, damages arising from any adverse impact on marketing of space in the Building or the Property, any personal injury (including wrongful death) or property damage (real or personal), and sums paid in settlement of claims, attorney's fees, consultant fees and expert fees which arise during or after the Lease term as a result of such breach or as a result of any contamination caused or permitted by Tenant. This indemnification includes, without limitation, costs incurred in connection with any investigation of site conditions or any clean-up, remedial, removal or restoration work required by any federal, state or local governmental agency or political subdivision or by the holder of any mortgage encumbering the Leased Premises, the Building or the Property. Tenant shall promptly take all actions at its sole expense as are necessary to return the Leased Premises, the Building and/or the Property to the condition existing prior to the introduction of any hazardous material to the Leased Premises, the Building or the Property by Tenant, its agents, invitees, contractors or employees; provided that Landlord's approval of such action shall first be obtained. The provisions of this Paragraph shall be in addition to any other obligations and liabilities Tenant may have at law or equity and shall survive the transactions contemplated herein and shall survive the termination of this Lease. 25.3 As used herein, the term "hazardous material" shall mean the following: (1) "Hazardous Substances", as defined by the Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"), 43 U.S.C. Sec. 9601 et seq.; (2) "Hazardous Wastes", as defined by the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C. Sec. 6901 et seq.; (3) any other wastes, pollutants, contaminants or hazardous, dangerous or toxic chemicals, materials or substances within the meaning of any other applicable federal, state or local law, regulations, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or materials, all as amended or hereafter amended; (4) more than 7 gallons of crude oil or distillate thereof which is liquid at standard conditions of temperature and press (60 degrees Fahrenheit and 14.7 pounds per square inch absolute); (5) any radioactive material, including any source, special nuclear or by-product material as defined at 42 U.S.C. Sec. 2011 et seq., as amended or hereafter amended; and (6) the asbestiform varieties of chrysolite, crocidolite, amosite, anthophyllite, termolite or actinolite, or asbestos in any other form, in any condition. 26. FORCE MAJEURE 26.1 This Article shall apply in the event that if at any time during the term of this Lease there shall occur one or more strikes, lockouts or labor disputes; or there shall be an inability on the part of either party to obtain labor or materials; or there shall occur any act of God, or action by governmental authority or whether there be war, insurrection, civil disobedience, fire or other casualty, or any event not specifically mentioned which impairs the ability of either party to perform according to the terms of this Lease. In the event any of the foregoing shall occur which results in the inability of either the Landlord or the Tenant to timely perform any obligation which it is required to perform under 40

this Lease, then such non-performance shall be excused and shall not be a breach of this Lease by the party failing to so perform, but only to the extent occasioned by such event. Any non-performance by either party hereto which occurs for any reason above stated shall extend performance under this Lease for that period of time which the party who was obligated to perform was disenabled from so performing and this Lease shall be extended, accordingly, for such period of time. 26.2 The above to the contrary notwithstanding, the provisions of this Article 26 shall not be applicable to determining the Effective Date or Rent Commencement Date under this Lease nor shall this Article 26 in any way be deemed to impair or suspend the obligation of the Tenant to pay Base Rent, additional rent, or any other payments, costs or charges which may be an obligation of the Tenant hereunder. 27. STATEMENTS BY LANDLORD AND TENANT 27.1 Within ten (10) days following written request which Landlord or Tenant may make from time to time, the other party shall execute and deliver to the party initiating the request or to any prospective landlord or mortgagee, a sworn statement certifying: (a) the date of commencement of this Lease; (b) the fact that the Lease is unmodified and in full force and effect, or, if there has been a modification to this Lease, that same remains in full force and effect, as modified, stating the date and nature of such modification; (c) the date to which the rent and other sums payable under this Lease have been paid; (d) that there are no current defaults under the Lease by either Landlord or Tenant except, as specified in the statement; (e) such other matters as may be reasonably requested. 27.2 Landlord and Tenant intend that any statement delivered pursuant to this Article 27 may be relied upon by any mortgagee, purchaser, or successor in interest to Landlord or any permitted assignee or sublessee of Tenant. Tenant hereby irrevocably appoints Landlord as attorney in fact for Tenant with the full power and authority to execute and deliver in the name of Tenant such estoppel certificate if the Tenant fails to timely deliver same. 28. CONDEMNATION 28.1 If the whole of the Leased Premises shall be taken by any competent authority under the power of eminent domain or in the event of conveyance of the whole of the Leased Premises in lieu thereof, this Lease shall terminate as of the day possession shall be taken by such authority. If 25% or less of the floor space of the Leased Premises shall be so taken or conveyed, this Lease shall terminate only in respect of the part so taken or conveyed as of the day possession shall be taken by such authority. If more than 25% of the floor space of the Leased Premises shall be so taken or conveyed, this Lease shall terminate only in respect of the part so taken or conveyed as of the day possession shall be taken by such authority, but either party shall have the right to terminate this Lease upon notice given to the other party within 30 days after such taking of possession. If more than 25% of the floor space of the Building shall be so taken or conveyed, Landlord, may, by notice to Tenant, 41

terminate this Lease as of the day possession shall be taken. If so much of the parking facilities shall be so taken or conveyed that the number of parking spaces necessary, in Landlord's judgment, for the continued operation of the Building shall not be available, Landlord shall, by notice to Tenant, terminate this Lease as of the day possession shall be taken. If the part so taken deprives the Leased Premises of access to any immediately adjacent public street from which access was made available on the Rent Commencement Date (unless Tenant has a reasonable alternative access to and from the Leased Premises to an other immediately adjacent public street), for a period of in excess of 180 days, Landlord or Tenant may, by notice to the other, terminate this Lease as of the date of such taking. If this Lease shall continue in effect as to any portion of the Leased Premises not so taken or conveyed, the rent shall be computed as of the day possession shall be taken on the basis of the remaining floor space of the Leased Premises. Except as specifically provided herein, in the event of any such taking or conveyance there shall be no reduction in rent. If this Lease shall continue in effect, Landlord shall, at its expense, but shall be obligated only to the extent of the new award or other compensation (after deducting all expenses in connection with obtaining same) available to Landlord for the permanent improvements taken or conveyed (including those items identified in Exhibit G attached hereto but excluding any award or other compensation for land or for the unexpired portion of the term of any superior lease), make all necessary alterations so as to constitute the remaining Building a complete architectural and tenantable unit, and Tenant shall make all alterations or replacements to the Tenant's property and decorations in the Leased Premises. All awards and compensation for any taking or conveyance, whether for the whole or a part of the Land or Building, the Leased Premises or otherwise, shall be property of Landlord, and Tenant hereby assigns to Landlord all of Tenant's right, title and interest in and to any and all such awards and compensation, including, without limitation, any award or compensation for the value of the unexpired portion of the term. Tenant shall be entitle to claim, prove and receive in the condemnation proceeding such award or compensation as may be allowed for the Tenant's (i) personal property; (ii) loss of business, good will; (iii) and depreciation or injury to and cost of removal of the Tenant's personal property and (iv) the unamortized costs on Tenant's books and records of Tenant's permanent improvements to the Leased Premises, which shall be amortized over a period not to exceed to ten (10) years from the Rent Commencement Date, but, as to items (i) - (iii) only if such award or compensation shall be made by the condemning authority in addition to, and shall not result in a reduction of, the award or compensation made by it to Landlord. 28.2 Notwithstanding anything herein contained to the contrary in the event there is a taking of all or any portion of the Leased Premises such that, in Tenant's reasonable business judgment, Tenant shall not be able to operate its business at the Leased Premises, then, Tenant shall have the right to terminate this Lease, which termination shall be effective on the date of such taking. 29. QUIET ENJOYMENT The Landlord covenants that so long as Tenant, pays all of the rent and performs all of Tenant's other obligations hereunder Tenant shall and may peaceably and quietly have, hold and enjoy the Leased Premises for the term, subject, nevertheless to the terms of this Lease and to any superior 42

lease and/or superior mortgage. 30. SURRENDER OF PREMISES On the Expiration Date, or upon any earlier termination of this Lease or upon re-entry by Landlord, Tenant shall quit and surrender the Leased Premises to Landlord broom-clean and in good order, condition and repair (reasonable wear and tear, and damage by fire or other casualty as Landlord is required to repair or restore under this Lease excepted) and shall deliver and surrender the Leased Premises to the Landlord peaceably, together with all alterations, additions and improvements in, to or. on the Leased Premises made by Landlord or Tenant as permitted under the Lease and those items set forth in Section 11.3. The Landlord reserves the right, however, to require the Tenant, at its cost and expense, to remove any alterations or improvements installed by or for the Tenant, including, but not limited to Tenant's Tank and all wires, lines, pipes conduits and other apparatus installed and used in connection therewith, so as to restore the Leased Premises to the condition existing on inception of the Lease term, or at such later time following the completion of construction of Tenant's Work, which covenant by Tenant shall survive the surrender and the delivery of the Leased Premises as provided hereunder (i.e., exclusive of those items described in the last sentence of Section 11.3 above). Prior to the expiration of the Lease Term, Tenant shall, unless otherwise provided in this Lease, remove all of its property, fixtures, equipment and trade fixtures from the Leased Premises. All property not removed by Tenant shall be deemed abandoned by Tenant, and Landlord reserves the right to charge the reasonable cost of such removal to the Tenant, which obligation shall survive the Lease termination and surrender hereinabove provided. If the Leased Premises be not surrendered to the end of the Lease term, Tenant shall indemnify, defend and hold harmless Landlord against loss or damage resulting from delay by Tenant in surrendering the Leased Premises, including, without limitation, any claims made by any succeeding tenant founded on the delay. If Tenant remains in possession of the Leased Premises after the expiration of the term, Tenant shall be deemed to be occupying the Leased Premises as a Tenant from month to month at the sufferance of Landlord subject to all of the provisions of this Lease except that the monthly Base Rent shall be twice the Base Rent in effect during the last month of the term. Notwithstanding the foregoing to the contrary, provided that Tenant shall not be in default beyond any applicable notice and cure period hereunder, in the event that Tenant shall notify Landlord in writing at least one hundred eighty (180) days prior to the Expiration Date, TIME BEING OF THE ESSENCE (the "EXTENSION NOTICE"), Tenant shall be permitted to remain in the Leased Premises for an additional period of sixty (60) days following the Expiration Date (the "SIXTY DAY EXTENSION"), without being deemed to be a hold-over tenant, provided, however, that during the Sixty Day Extension, all of the terms and conditions of the Lease shall remain in full force and effect and applicable to Tenant's use and occupancy of the Leased Premises during such period and Tenant shall have delivered to Landlord, pre-paid rent for the Sixty Day Extension, in the total amount of two (2) times the amount of Base Rent and all additional rent in effect during the final month immediately preceding the Sixty Day Extension. Nothing herein contained shall permit, or be deemed to permit Tenant the right to remain in the Leased Premises beyond the Sixty Day Extension. In the event that Tenant shall fail to timely deliver the Extension Notice (or should Tenant be in default), Tenant shall 43

not have the right to remain the Leased Premises following the then scheduled Expiration Date and the Lease shall end and expire in accordance with its terms. 31. INDEMNITY 31.1 Anything in this Lease to the contrary notwithstanding, and without limiting the Tenant's obligation to provide insurance pursuant to Article 9 hereof, or indemnification where otherwise provided herein, Tenant covenants and agrees that it will indemnify, defend and save harmless the Landlord against and from all liabilities, obligations, damages, penalties, claims, costs, charges and expenses, including, without limitation, reasonable attorneys' fees, which may be imposed upon or incurred by Landlord by reason of any of the following occurring during the term of this Lease: (i) any matter, cause or thing arising out of use, occupancy, control or management of the Leased Premises and any part thereof unless solely caused by Landlord or any of its agents, employees or contractors; (ii) any acts and/or negligence on the part of the Tenant or any of its agents, contractors, employees, licensees or invitees; (iii) any accident, injury, damage to any person or property occurring in or about the Leased Premises or the Property to the extent caused by Tenant or any person employed, controlled or engaged by Tenant; (iv) any failure on the part of Tenant to perform or comply with any of the covenants, agreements, terms or conditions contained in this Lease on its part to be performed or complied with. 31.2 Landlord shall promptly notify Tenant of any such claim asserted against it and shall promptly send to Tenant copies of all papers or legal process served upon it in connection with any action or proceeding brought against Landlord by reason of any such claim. 32. LEASE CONSTRUCTION This Lease shall be governed by and construed in accordance with the Laws of the State of New Jersey. The captions of Articles are included for reference purposes only and shall have no effect on the construction or interpretation of this Lease. All obligations related to the payment of rent or other charges shall be deemed to be separate, independent covenants. This Lease, although prepared by Landlord, has been fully negotiated by the parties. Accordingly, no rule of construction or interpretation which might otherwise be applied against Landlord as the draftsman of this Lease shall be applicable in any controversy or dispute relating to this Lease, its meaning or the rights or obligations of the parties hereunder. 33. BINDING EFFECT The terms, covenants and conditions of the within Lease shall be binding upon and inure to the benefit of each of the parties hereto, their respective executors, administrators, heirs, successors and permitted assigns, as the case may be. 44

34. DEFINITIONS The neuter gender, when used herein and in the acknowledgement hereafter set forth, shall include all persons and corporations, and words used in the singular shall include words in the plural where the text of this Lease so requires. 35. DEFINITION OF THE TERM "LANDLORD" When the term "Landlord" is used in this Lease, it shall be construed to mean and include only the owner of the Leased Premises. Upon the transfer by the Landlord of the fee title to the Property, the Landlord shall advise the Tenant in writing by certified mail, return receipt requested of the name of the Landlord's transferee. In such event, Landlord shall be automatically freed and relieved from and after the date of such transfer of title of all liability with respect to the performance of any of the covenants and liability with respect to the performance of any of the covenants and obligations on the part of the Landlord herein agreed to be performed, and it shall be deemed and construed without further agreement between the parties or their successors in interest, or between the parties and the purchaser, at any such sale, that the purchaser has assumed and agreed to carry out any and all covenants and obligations of Landlord hereunder from and after the date of such transfer. 36. FURTHER ASSURANCES/FINANCIAL INFORMATION/ 36.1 If, in connection with Landlord obtaining financing utilizing the Property security therefore, the mortgage lender shall request reasonable modifications in this Lease as a condition to such financing, Tenant will not unreasonably withhold, delay or refuse its consent thereto, provided that such modifications do not in any material and adverse respect increase the obligations of Tenant hereunder or materially, adversely affect the leasehold interest hereby created or Tenant's use and enjoyment of the Leased Premises. Notwithstanding anything to the contrary contained herein, in recognition of the scope and nature of the construction and alteration of the Leased Premises which is required to be performed by Tenant, in the event that Landlord, Landlord's affiliate, any lender of Landlord or its affiliate, requires that Tenant evidence that sufficient funds will be available to pay for construction of the Leased Premises prior to the start of any construction, Tenant agrees to provide to any such party, financial assurances that such funds are available. Among other things, in the event any such financial assurances involve the posting of a bond, letter of credit or other similar obligation to secure the performance and payment of Tenant's obligations hereunder (as set forth in Section 56 below), Tenant shall, at its sole cost and expense, provide any necessary security or collateral required thereby. In addition, Landlord and Tenant acknowledge and agree that Landlord may establish certain criteria and rules and regulations regarding the construction and alteration of the Leased Premises, provided that any such criteria and rules and regulations are applied to all similarly situated tenants. 36.2 Tenant agrees to provide Landlord within one hundred eighty (180) days following the end of each calendar year during the term with annual audited financial statements, if 45

available, or otherwise with Tenant's Annual Report or other financial statements certified by Tenant's chief financial officer containing Tenant's balance sheet and profit and loss statement for the most recently ended annual period reflecting changes from the preceding period, prepared in accordance with generally accepted accounting principles, consistently applied. The annual statements shall include an explanatory statement of the chief financial officer of the Tenant with respect to any changes from the prior financial statement or changes from the date of such financial statements to the date on which such statements are provided to the Landlord. Tenant agrees to promptly notify Landlord, in writing, upon the occurrence of a material adverse change in its financial condition or in the financial condition of any guarantor of Tenant's obligations such notice to provide reasonable documentation and explanation of the change. Landlord agrees to treat any financial information provided to it by Tenant pursuant to this provision as confidential and shall not (except to the extent required by applicable law or legal process) disclose such information to any persons other than to its agents, attorneys, employees, prospective partners, purchasers or mortgage lenders. 37. LANDLORD'S REMEDIES 37.1 The rights and remedies given to the Landlord in this Lease are distinct, separate and cumulative remedies, and no one of them, whether or not exercised by the Landlord, shall be deemed to be in exclusion of any of the others or any other remedies available to Landlord at law or in equity. 37.2 In addition to any other legal remedies for violation or breach by or on the part of the Tenant or by any undertenant or by anyone holding or claiming under the tenant or any one of them, of the restrictions, agreements or covenants of this Lease on the part of the Tenant to be performed or fulfilled, such violation or breach shall be restrainable by injunction at the suit of the Landlord. 37.3 No receipt of money by the Landlord from any receiver, trustee, custodian, debtor in possession, similar officer of any permitted subtenant or assignee, shall reinstate, continue or extend the Term of this Lease or affect any notice theretofore given to the Tenant, or to any such receiver, trustee, custodian, debtor in possession, similar officer or any permitted subtenant or assignee, or operate as a waiver or estoppel of the right of the Landlord to recover possession of the Leased Premises for any of the causes therein enumerated by any lawful remedy; and the failure of the Landlord to enforce any covenant or condition by reason of its breach by the Tenant shall not be deemed to void or affect the right of the Landlord to enforce the same covenant or condition on the occasion of any subsequent default or breach. 38. COVENANT AGAINST LIENS Subject to the terms and provisions of Section 55 below, Tenant agrees that it shall not encumber, or suffer or permit to be encumbered, the Land, Building or Leased Premises by any lien, 46

charge or encumbrance, and Tenant shall have no authority to mortgage or hypothecate its interest in this Lease or the Leased Premises in any way whatsoever. The violation of this Article shall be considered an Event of Default. 39. BROKERAGE Landlord and Tenant each represent and warrant that they have had no dealings with any broker or agent in connection with this Lease. Tenant agrees to defend, hold harmless and indemnify Landlord from and against any cost, expense or liability and for any compensation, commissions or charges sought by any person claiming through Tenant with regard to this Lease or the negotiation hereof. Landlord agrees to defend, hold harmless and indemnify Tenant from and against any cost, expense or liability and for any compensation, commissions or charges sought by any person claiming through Landlord with regard to this Lease or the negotiation hereof. 40. LANDLORD'S CONSENT Whenever an express provision is made in this Lease that Landlord shall not unreasonably withhold or delay its consent, the Tenant's sole and exclusive remedy for breach of such agreement by the Landlord shall be limited to an action for injunction, declaratory judgment or specific performance. Whenever any such express provision is made in this Lease requiring that Landlord not unreasonably withhold or delay its consent, provided that Landlord has received or is in possession of all information required to make an informed response, Landlord shall use commercially reasonable efforts to respond to any such request for consent which is made by Tenant within five (5) business days of receipt of such request. Notwithstanding the foregoing, Landlord's failure, refusal or inability to respond within such time period shall not be deemed as consent, or as actual consent to the request made by Tenant. In no event shall Landlord be liable in damages to Tenant for unreasonably withholding or delaying any consent. 41. ENTIRE AGREEMENT This Lease and the exhibits hereto annexed constitute the entire agreement between the parties and supersedes any previous negotiations. There have been no representations or warranties made by the Landlord or understandings between the parties other than those set forth in this Lease and its exhibits. This Lease may not be modified, amended, or supplemented except by a written instrument duly executed by Landlord and Tenant. 42. PARKING AND TRUCK ACCESS Tenant and its employees and visitors shall have the right, subject to the terms and conditions of this Lease, to use up to twelve(12) (non-reserved), parking spaces in and around the Common Areas. Landlord acknowledges and agrees that Tenant will require truck access to and from 47

the Leased Premises across the Common Areas and Landlord's rules and regulations governing access to and from the Common Areas shall be reasonably designed, implemented and adjusted from time to time as Landlord reasonably deems appropriate to facilitate such access to and from the Leased Premises for such trucks. Without limiting the foregoing, Landlord and Tenant acknowledge and agree that trucks making deliveries to the Leased Premises may be weighed by Landlord at Tenant's request and Landlord may establish charge a fee for such service which fee shall be subject to revision from time to time and comparable to such fees as Landlord may then be charging to other tenants or occupants of the Property or others. 43. SURVIVAL OF OBLIGATIONS It is expressly understood and agreed that in the event there are any obligations of Tenant with respect to payment or performance as required under the terms and conditions of this Lease that shall have not been performed prior to the expiration or termination of the Lease in accordance with its terms, such obligations, including, but not limited to, the obligations to make rent adjustments and/or to conduct environmental investigations and/or environmental remediation, shall survive the expiration or termination of the Lease term and surrender of the Leased Premises by the Tenant to Landlord. 44. SECURITY/PREPAID RENT 44.1 In consideration of Landlord's execution and delivery of this Lease, Tenant shall pay to Landlord One Hundred Thousand Dollars ($100,000) which amount shall be absolutely non-refundable to Tenant. Tenant shall also pay to Landlord the sum of Sixty Five Thousand Dollars ($65,000) which amount shall also be absolutely non-refundable to Tenant; provided, however, that if this Lease is not terminated by Tenant pursuant to Section 4.3 above, then such amount shall be treated by Landlord as a security deposit (the "SECURITY DEPOSIT"), subject to and in accordance with the terms and conditions of this Lease. In the event that Tenant shall default in any of the terms, covenants and conditions of this Lease, whether arising from and after the Effective Date, or at anytime thereafter, Landlord may apply or retain all or any portion of the Security Deposit to cure the default or to reimburse Landlord for any cost which Landlord may incur by reason of such default. In the event of any such application or retention, Tenant shall on demand pay to Landlord the sums so applied or retained which shall be added to the Security Deposit so that the same shall be restored to its original amount. No interest shall be payable to Tenant on account of the Security Deposit or any Prepaid Rent, and Landlord may commingle such sums with other of its funds. 44.2 In addition to the amounts set forth in Section 44.1 above, Tenant shall also pay to Landlord the sum of Thirty-Five Thousand Dollars ($35,000) in payment of the Base Rent due hereunder for the month of August 2006 (the "FIRST PREPAID RENT AMOUNT") with the excess thereof (i.e., $2,500) being applicable to the Base Rent due for September 2006; provided, that if this Lease is terminated within five (5) days of the First Due Diligence Period pursuant to Section 4.3 above, then 48

Landlord shall return the First Prepaid Rent Amount to Tenant promptly after such termination. 44.3 In addition to the amounts set forth in Section 44.1 above, if Tenant shall elect to extend the Due Diligence Period (i.e., from sixty (60) to one hundred twenty (120) days) as permitted pursuant to Section 4.1 above, Tenant shall also pay to Landlord prior to the end of the First Due Diligence Period the sum of Thirty Thousand Dollars ($30,000) in payment of the Base Rent due hereunder for the month of September 2006 (the "SECOND PREPAID RENT AMOUNT"); provided, that if this Lease is terminated pursuant to Section 4.3 above within five days of the close of the Second Due Diligence Period, then Landlord shall have no obligation to return the First Prepaid Rent Amount or the Second Prepaid Rent Amount to Tenant after such termination. 44.4 Following the end of the Term of this Lease, providing Tenant shall have performed all of its obligations and satisfied all liabilities hereunder and not be in default hereunder, and provided further that the Security Deposit has not otherwise been applied, any remaining unused portion of the Security Deposit shall be returned to Tenant. In the event of a sale of the Property by Landlord or a lease thereof or other disposition of this Lease by Landlord, Landlord may assign and turn over the Security Deposit to Landlord's grantee, lessee or assignee, and Tenant hereby releases and relieves Landlord from any and all liability for the return of said Security Deposit and shall look solely to Landlord's grantee, lessee or assignee therefor. Landlord shall provide written notice to Tenant of any such transfer of the Security Deposit promptly thereafter. 45. NET RENT It is the purpose and intent of the Landlord and Tenant that the Base Rent payable by Tenant hereunder shall be absolutely net to Landlord, so that this Lease shall yield, net, to Landlord, the rent specified in Article 3 and Exhibit B hereof in each month during the term of the Lease, and that all costs, expenses and obligations of every kind and nature whatsoever relating to the Leased Premises which may arise or become due during or out of the term of this Lease, shall be paid by Tenant; except for such obligations and charges as have otherwise expressly been solely assumed by Tenant or Landlord in accordance with the express terms and conditions of this Lease. 46. HOLDOVER TENANCY Subject to the terms and provisions of Section 30 above, if Tenant holds possession of the Leased Premises beyond the Expiration Date or earlier termination of the term (including, but not limited to a termination occurring upon expiration of the Due Diligence Period), Tenant shall become a tenant from month-to-month at two hundred (200%) percent the Base Rent and additional rent payable hereunder and upon all other terms and conditions of this Lease, and shall continue to be such month-to-month tenant until such tenancy shall be terminated and such termination shall be effective not later than ten (10) days following Landlord's notice of termination. Subject to the terms and provisions of Section 30 above, nothing contained in this Lease shall be construed as a consent by Landlord to the occupancy or possession by Tenant of the Leased Premises beyond the Expiration Date or earlier 49

termination of the term and Landlord, upon said Expiration Date or earlier termination of the term, shall be entitled to the benefit of all legal remedies that now may be in force or may be hereafter enacted relating to the expedited repossession of the Leased Premises. 47. NO OFFER TO LEASE The submission of this Lease to Tenant for its review shall not be deemed an offer to lease by Landlord or create any right in the Property or the Leased Premises in Tenant or any person other than Landlord unless and until this Lease has been executed and delivered by Landlord to Tenant. 48. RECORDATION Tenant shall not record this Lease without the prior written consent of Landlord which may be freely withheld. Tenant may at Tenant's cost and expense prepare and record a memorandum of lease in form reasonably acceptable to Landlord; provided, that, a condition of Landlord's execution thereof (i) Tenant shall deliver to Landlord's counsel to hold in escrow a Discharge of Memorandum of Lease which may be completed by Landlord and recorded by Landlord upon the occurrence of an Event of Default; and (ii) Tenant shall execute an Escrow Agreement in form acceptable to Landlord's counsel governing the delivery of such Discharge of Memorandum of Lease and such other matters as may be set forth therein. In the event that Tenant shall record this Lease without the prior written consent of Landlord, such recordation shall be deemed to be an uncurable Event of Default under this Lease. 49. WAIVER OF TRIAL BY JURY Both Landlord and Tenant hereby waive trial by jury in any action, proceeding or claim which may be maintained by one against the other relative to any matter under this Lease. Such waiver shall survive the expiration or termination of this Lease. Tenant agrees that in the event that summary proceedings are commenced by Landlord for nonpayment of rent or possession of the Leased Premises, Tenant will not and waives all right to interpose any counterclaim of whatsoever nature in such proceeding, unless such counterclaim is compulsory in accordance with applicable law. Tenant further waives any right to remove said summary proceeding to any other court or to consolidate said summary proceeding with any other action. 50. ATTORNEY'S FEES [Intentionally omitted.] 51. AUTHORITY The parties to this Lease represent and warrant that this Lease and the execution hereof 50

by their respective signatories has been duly authorized and approved the parties. The undersigned officer(s) and/or representative(s) of the parties executing this Lease represent and warrant that they are duly authorized to execute this Lease on behalf of the parties and that the execution and performance of this Lease by the parties does not violate the terms of any other agreement to which either is a party or by which either is bound. 52. SEVERABILITY All of the provisions of this Lease are to be construed as covenants and agreements as though the words importing such covenants and agreements were used in each separate Article hereof. If any portion of any term or provision of this Lease, or the application thereof to any persons or circumstances, shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term or provision of this Lease shall be valid and be enforced to the fullest extent permitted by law. 53. VENUE Landlord and Tenant agree that the venue of any judicial proceeding concerning this Lease, (including, without limitation, its interpretation, construction, performance or breach), shall be in the Superior Court of the State of New Jersey, Middlesex County and the parties hereto consent to jurisdiction in such court. Tenant waives any right to assert that it is not subject to the jurisdiction of the above-named court, that such court is an inconvenient forum or that venue in such court is improper. 54. ARBITRATION. 54.1 If, pursuant to any express provision of this Lease, either Landlord is entitled, Tenant is entitled, or either of Landlord or Tenant are entitled, to submit a particular dispute to arbitration in accordance with the provisions of this Section, then each party so entitled to submit the dispute in question to arbitration to be held in Middlesex County before one arbitrator in accordance with the procedural rules then in effect of the American Arbitration Association or any successor thereto. The arbitration shall be commenced by delivering a notice thereof to the other party (each, an "ARBITRATION NOTICE"), and if such provision of this Lease shall set forth a specific period within which such party may submit the dispute to arbitration, then such Arbitration Notice must be served prior to the expiration of such time period (time being of the essence). For purposes of this Article, the party delivering an Arbitration Notice shall be referred to as the "INITIATING PARTY", and the party receiving an Arbitration Notice shall be referred to as the "RESPONDING PARTY". Each Arbitration Notice shall (i) specifically set forth the Article and Section of this Lease in which are located the provisions hereof expressly entitling the Initiating Party to submit the dispute in question to arbitration (such provisions being herein called the "AUTHORIZING PROVISIONS"), and (ii) set forth, with reasonable specificity, the 51

dispute being submitted to arbitration pursuant to such Authorizing Provisions and the issue to be determined by arbitration (which issue shall be consistent with the Authorizing Provisions) (such issue being herein called the "ARBITRATION ISSUE"). 54.2 Promptly after the appointment of the arbitrator, the arbitrator shall proceed to decide the Arbitration Issue. The arbitrator shall be instructed to render his/her decision, in writing, within ten (10) business days after appointment. 54.3 Landlord and Tenant shall each have the right to appear and be represented by counsel before any arbitrator(s) and to submit such data and memoranda in support of their respective positions with respect to the Arbitration Issue as may be reasonably necessary or appropriate in the circumstances. The arbitrator shall set a schedule for the hearing and submission of data and memoranda so as to comply with the ten (10) business day deadline for rendering the decision. 54.4 Landlord and Tenant shall share equally in the cost and expense of the arbitration, and each shall separately pay its own attorneys' fees and expenses, unless the arbitrator finds that one of the parties did not act in good faith in connection with the dispute or the conduct of the arbitration proceeding, in which case he may award all or part of said costs, expenses and fees to the other party. 54.5 With respect to any conclusive and binding decision of the arbitrator rendered pursuant to the provisions of this Section, judgment may be entered thereupon in any court of competent jurisdiction. In rendering any decision, the arbitrator shall have no power to modify any of the provisions of this Lease, and the jurisdiction of arbitrator is limited accordingly, it being specifically understood that the arbitrator, in any arbitration under this Section, shall only have authority to decide the Arbitration Issue in question, and in no event shall the arbitrator have any authority to award damages. The arbitrator shall be instructed to keep the arbitration and all matters pertaining thereto strictly confidential, both during and for a period of ten years after the arbitration is concluded, except as required by applicable law. 54.6 Each "ARBITRATOR" appointed hereunder (whether by Landlord, Tenant or any other person(s), organization or court) shall not then be employed by Landlord, Tenant or any affiliate of Landlord or Tenant, and, in all other respects, shall be impartial. In addition, each arbitrator (x) shall meet the specific qualifications set forth in the applicable Authorizing Provisions, or (y) if no such qualifications are so set forth in the Authorizing Provisions, shall have at least ten (10) years experience in the area being arbitrated. 54.7 Landlord and Tenant shall not be deemed to have agreed to have any dispute/issue arising out of this Lease determined by arbitration unless arbitration in such manner shall be expressly provided hereunder. If the issues included in this arbitration clause include any matter which may affect the computation or determination of Tenant's rental obligations, Tenant shall continue paying the 52

amount as determined or computed by Landlord while the arbitration is pending, subject to retroactive adjustment after the arbitration is concluded. While such arbitration is pending, Tenant's obligations to pay the amount as determined or computed by Landlord shall be enforceable by Landlord in accordance with the Lease, without first resorting to arbitration. 54.8 If either Landlord or Tenant, or both, are named as defendant in an action or proceeding brought by a third party, then any provision of this Lease requiring the submission of disputes to arbitration shall not preclude the determination of the issues between Landlord and Tenant raised in such action or proceeding. 55. LEASEHOLD MORTGAGE PERMITTED. 55.1. Tenant may at any time mortgage, encumber, pledge or assign as security its right, title and interest in and to the leasehold estate created hereby ("LEASEHOLD MORTGAGE"). Tenant may, at any time, give to Landlord a notice (hereinafter referred to as a "MORTGAGE NOTICE") containing the name and address of a MORTGAGE LENDER (as defined below), to which the leasehold estate created hereby has been or will be mortgaged, encumbered, pledged or assigned as security. Upon written request from Tenant or any Mortgage Lender identified in a Mortgage Notice, Landlord will acknowledge, in writing, the receipt of any Mortgage Notice which it has received. For the purposes of this Lease, unless the context otherwise requires, the term Leasehold Mortgage shall mean only one, primary mortgage, deed of trust, or other lien instrument encumbering Tenant's leasehold interest herein existing at any one time (including any renewal, modification, replacement or extension thereof) for a term which shall never exceed the term hereof, in any event; and the term Mortgage Lender shall mean the INSTITUTIONAL LENDER (as defined below), which is the holder of the Leasehold Mortgage for which Landlord has received written notice pursuant to Section 55.2 below. For purposes of this Lease, Institutional Lender shall mean a savings and loan association, commercial bank, trust company, credit union, insurance company, pension fund, federal, state or local governmental authority or agency, or other lender regularly engaged in financing or administering such loans. 55.2. Provided that Tenant has previously given Landlord a Mortgage Notice, whenever Landlord shall give any default notice to Tenant pursuant to this Lease, Landlord shall also give to any Mortgage Lender at the address of such Mortgage Lender, a duplicate copy of such notice. The address of the Mortgage Lender shall be the address specified in the Mortgage Notice, unless changed by subsequent written notice given by the Mortgage Lender to Landlord. If at any time a Mortgage Lender shall give to Landlord a written notice that it has released its lien on the leasehold estate created hereby, such lender shall cease to be a Mortgage Lender for purposes hereof and no further notices need be given to it. 55.3. If Tenant shall not cure or remedy any default or breach of covenant by Tenant under this Lease within the period provided for such cure or remedy, which failure to cure or remedy shall entitle Landlord to terminate this Lease, Landlord shall thereupon give notice to that effect to the 53

Mortgage Lender. The following provisions of this subsection shall apply if, within twenty (20) business days following such termination notice, the Mortgage Lender shall: (a) notify Landlord in writing of the Mortgage Lender's desire to nullify such termination notice; (b) pay or cause to be paid all Rent and other monetary charges and amounts then required to have been paid by Tenant, together with all such Rent and other monetary charges and amounts under this Lease which become payable by Tenant during such applicable termination notice period; and (c) comply, or in good faith and with reasonable diligence and continuity, commence to comply, with all nonmonetary requirements of this Lease then in default and reasonably susceptible of being complied with by such Mortgage Lender so that all existing defaults of Tenant shall be cured; provided, however, if such Mortgage Lender advises Landlord in writing prior to the expiration of such twenty (20) business day period that it cannot cure such non-monetary defaults, then such Mortgage Lender shall agree to pay and shall pay to Landlord within ten (10) days of Landlord's written demand therefore the costs and expense incurred by Landlord to cure such default on Tenant's behalf. Provided that Mortgage Lender shall have complied with the foregoing and shall continue to abide by all of the terms and conditions of the Lease from and after the expiration of the twenty (20) business day period described above, Mortgage Lender may, at any time permitted under its loan documents, foreclose or otherwise realize upon its lien on the leasehold estate created hereby and following such foreclosure or other action, Landlord will recognize the person, firm or corporation acquiring the leasehold estate created hereby as the Tenant hereunder with all of the rights and estate of Tenant, provided such person, firm or corporation agrees to execute instruments reasonably satisfactory to Landlord evidencing the assumption of any and all obligations of Tenant and its agreement to perform all of the terms, covenants and conditions of this Lease to be observed and performed by Tenant and to be bound by all of the terms, covenants and conditions hereof. Provided, however that neither such foreclosure or other action by Mortgage Lender, nor any such person's, firm's or corporation's assumption, shall operate to relieve Tenant of its liabilities under this Lease, and Tenant shall remain liable for the full and faithful performance of all of the terms, covenants and conditions of this Lease to be observed and performed by Tenant. 55.4. Landlord further agrees that any Mortgage Lender, in order to protect its interest in the leasehold estate created hereby, may, unless there has been a prior termination of this Lease or non-renewal of the term, timely exercise any then remaining Renewal Term granted to Tenant in Section 2.2 and to otherwise perform as Tenant hereunder and if such right of renewal is not also exercised by Tenant, then during such Renewal Term as exercised by Mortgage Lender, Landlord will recognize the Mortgage Lender as the lessee hereunder with all of the rights and obligations of 54

Tenant; provided, however, and notwithstanding anything herein contained to the contrary, such exercise of the Renewal Term, continuation of the Lease term and occupancy of the Leased Premises by Mortgage Lender shall be subject to all of the terms, conditions and restrictions contained herein (including, but not limited to the Permitted Use) and any purchaser at any sale of Tenant's leasehold estate or the assignee or transferee of Tenant's leasehold estate under any instrument of assignment or transfer in lieu of foreclosure of the Leasehold Mortgage, shall be deemed to have agreed to perform all of the terms, covenants and conditions on the part of Tenant to be performed hereunder from and after the date of such purchase and/or assignment or assumption. 55.5 Subject to the terms and provisions of any then applicable SNDA, any Leasehold Mortgage, at all times during the term, is and shall be subject and subordinate to all of the terms and conditions of this Lease and Landlord's fee title interest in the Land and the Building (which shall never be subject to the lien of the Leasehold Mortgage, in any event), and any fee mortgages now or hereinafter placed thereon; provided, however, Landlord agrees that it shall subordinate any statutory or equitable lien it may have in Tenant's personal properly by virtue of this Lease to the interest of the Leasehold Mortgagee in Tenant's personal property. 56. CONTIGUOUS PARCEL. [Intentionally omitted.] 57. COUNTERPARTS. This Lease may be executed in any number of counterparts. Each such counterpart shall be deemed to be an original Lease and all such counterparts as may be executed shall constitute one and the same Lease. 58. BONDS. Prior to the commencement of any of Tenant's Work, Tenant shall provide (or cause to be provided) to Landlord performance, payment and completion bonds from such sureties and in such amounts and in such forms, all as Landlord shall deem appropriate in its sole and absolute discretion, to secure Landlord that all of Tenant's Work in accordance with Tenant's Plan and the provisions of this Lease shall be completed and that all costs associated therewith shall be paid. Tenant acknowledges that Tenant's covenant to provide such bonds to Landlord is a material inducement to Landlord to execute and deliver this Lease and but for such covenant and the performance thereof Landlord would not have executed and delivered this Lease. It is specifically agreed that Landlord need not assign or otherwise transfer its rights as the beneficiary of such bonds to any Mortgage Lender or Institutional Lender (as those terms are defined above) and may exercise its rights as a beneficiary thereof in accordance with the terms of such bonds without obligation to any such Mortgage Lender or Institutional Lender. 55

This Lease may be executed in any number of counterparts. Each such counterpart shall be deemed to be an original Lease and all such counterparts as may be executed shall constitute one and the same Lease. 58. BONDS. Prior to the commencement of any of Tenant's Work, Tenant shall provide (or cause to be provided) to Landlord performance, payment and completion bonds from such sureties and in such amounts and in such forms, all as Landlord shall deem appropriate in its sole and absolute discretion, to secure Landlord that all of Tenant's Work in accordance with Tenant's Plan and the provisions of this Lease shall be completed and that all costs associated therewith shall be paid. Tenant acknowledges that Tenant's covenant to provide such bonds to Landlord is a material inducement to Landlord to execute and deliver this Lease and but for such covenant and the performance thereof Landlord would not have executed and delivered this Lease. It is specifically agreed that Landlord need not assign or otherwise transfer its rights as the beneficiary of such bonds to any Mortgage Lender or Institutional Lender (as those terms are defined above) and may exercise its rights as a beneficiary thereof in accordance with the terms of such bonds without obligation to any such Mortgage Lender or Institutional Lender. 59. VERMIN, PESTS AND RODENTS. Prior to the commencement of Tenant's Work, Tenant shall prepare and present to Landlord for Landlord's approval, which approval shall not be unreasonably withheld, delayed or conditioned, a program for the prevention of (i) infestation by vermin, rodents and other pests on or about the Leased Premises; and (ii) the emanation of any odors from the Leased Premises and/or Tenant's operations in, on about the Leased Premises. During the Term of this Lease, Tenant shall execute such program at Tenant's sole and expense and shall use its best efforts to prevent (i) the presence and/or infestation by vermin, rodents and other pests and (ii) the emanation of odors from the Leased Premises and/or Tenant's operations in, on about the Leased Premises. If such program shall be ineffective, Tenant shall take such other actions as Landlord may require to eradicate such presence, infestation or odors achieve and thereafter to prevent the reoccurrence thereof. [THIS PAGE WAS INTENTIONALLY ENDED HERE.] 56

IN WITNESS WHEREOF, the parties have hereunto set their hands and seals or caused these presents to be signed by its proper corporate officers and caused its proper corporate seal to be hereunto affixed, the day and year first above written.
ATTEST (WITNESS): RECYCLING TECHNOLOGY DEVELOPMENT, LLC, LANDLORD

/s/ Joseph A Alfano ------------------------------------Joseph A Alfano (Name) Chief Financial Officer (Title)

By: /s/ Valerie Montecalus -----------------------------------(Name) Valerie Montecalus (Title) Managing member

ATTEST (WITNESS):

CONVERTED ORGANICS, INC. TENANT

/s/ William A Gildea ------------------------------------William a Gildea (Name) Secretary (Title)

/s/ Edward J. Gildea ---------------------------------------Edward J. Gildea (Name) President (Title)

57

EXHIBIT A PROPERTY SITE PLAN/PLAN OF THE BUILDING AND LEASED PREMISES 58

(APARTMENT LAYOUT)

EXHIBIT B BASE RENT SCHEDULE RENT TO BE PAID FROM AND AFTER THE RENT COMMENCEMENT DATE The lease term is for TEN (10) years with an option to renew for an additional TEN (10) years. During the first FIVE (5) years the base rent is: $32,500.00 per month $390,000/yr. The rent is increased, as per the following schedule, in year 6 thru year 20.
Lease Year ---------Year Six (6) Year Seven (7) Year Eight (8) Year Nine (9) Year Ten (10) Year Eleven (11) Year Twelve (12) Year Thirteen (13) Year Fourteen (14) Year Fifteen (15) Year Sixteen (16) Year Seventeen (17) Year Eighteen (18) Year Nineteen (19) Year Twenty (20) Monthly ---------$34,125.00 $34,807.50 $35,503.65 $36,213.72 $36,938.00 $38,784.90 $39,560.60 $40,351.81 $41,158.84 $41,982.02 $44,081.12 $44,962.74 $45,862.00 $46,779.24 $47,714.82 Annual ----------$409,500.00 $417,690.00 $426,043.80 $434,564.68 $443,255.97 $465,418.77 $474,727.14 $484,221.69 $493,906.12 $503,784.24 $528,973.45 $539,552.92 $550,343.98 $561,350.86 $572,577.88

$32,500.00 $34,125.00 $34,807.50 $35,503.65 $36,213.72 $36,938.00 $38,784.90 $39,560.60 $40,351.81 $41,158.84 $41,982.02 $44,081.12 $44,962.74 $45,862.00 $46,779.24

Plus Plus Plus Plus Plus Plus Plus Plus Plus Plus Plus Plus Plus Plus Plus

5% 2% 2% 2% 2% 5% 2% 2% 2% 2% 5% 2% 2% 2% 2%

$1,625.00 $ 682.50 $ 696.15 $ 710.07 $ 724.27 $1,846.90 $ 775.70 $ 791.21 $ 807.04 $ 823.18 $2,099.10 $ 881.62 $ 899.25 $ 917.24 $ 935.58

59

EXHIBIT C DIAGRAM SHOWING THE COMMON AREAS, ACCESS ROADS AND THE INITIAL STAGING AREA SEE EXHIBIT A The location and dimensions of the Staging Area shall be subject to change from time to time by Landlord. 60

EXHIBIT D EXISTING LEASES 1. Montecalvo Disposal Services, Inc. 2. Montecalvo Construction Corp. 3. Bayshore Recycling Corp. 4. ESMI of New Jersey, LLC 5. Allocco Recycling Corp. 6. Bio Genesis Enterprises 61

EXHIBIT E ILLUSTRATIVE LIST OF COMMON AREAS COSTS AND EXPENSES 1. Snow Removal from common areas 2. Lighting of common areas 3. Security of common areas 4. Maintenance and Repair of common areas 5. Insurance cost and Taxes related to common areas 6. All utilities related to common areas 7. All costs related to Municipal, County or State requirements related to the common areas. 62

EXHIBIT F SCHEDULE OF REQUIRED INSURANCE 1. All Risk Fire Insurance 2. Flood Insurance 3. Rent Insurance/Business Interruption Coverage 4. Comprehensive General Public Liability Insurance 5. Workers Compensation Insurance 6. Automobile Liability Insurance 7. Employers Liability Insurance 8. First Party Environmental Insurance 63

EXHIBIT G LIST OF ITEMS TO REMAIN IN THE LEASED PREMISES UPON EXPRIRATION OR EARLIER TERMINATION OF THE LEASE 1. Electrical service equipment (conduits, panels, distribution, outlets, junction boxes, cable, etc.) 2. Light fixtures. 3. HVAC equipment and distribution system. 4. Water service equipment and distribution system. 5. Alarm and fire suppression (sprinkler or other) equipment and systems. 6. Plumbing equipment and distribution system. 7. All interior walls and partitions. 64

EXHIBIT H FORM OF GUARANTY THIS GUARANTY, made by CONVERTED ORGANICS, INC. (the "Guarantor") a Delaware corporation, having a current address at 7A Commercial Wharf West, Boston, MA. 02110 ("Guarantor") in favor of RECYCLING TECHNOLOGY DEVELOPMENT, LLC, having a current address at 75 Crows Mill Road, Keasbey, New Jersey 08832 ("Landlord"). WITNESSETH: WHEREAS, in order to induce Landlord to consent to the assignment and assumption of that certain Agreement of Lease, dated June 2, 2006, between Landlord and Converted Organics, Inc. (the "Lease") to ________________________ ("Tenant"), a wholly owned subsidiary of Guarantor, Guarantor agrees to guarantee the obligations of Tenant under the Lease. NOW, THEREFORE, in consideration of the premises and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Guarantor hereby guarantees, covenants and agrees as follows: 1. Guarantor unconditionally and absolutely guarantees to Landlord, and its successors and assigns, the due, punctual and complete payment and performance by Tenant, of all of the obligations, undertakings, covenants and agreements of Tenant under the Lease and under any modification, amendment, variation or termination of thereof. 2. Guarantor represents and warrants to Landlord, and its successors and assigns, that: (a) Guarantor has an ownership interest in Tenant. (b) This Guaranty has been duly and validly authorized, executed and delivered by Guarantor and constitutes the legal, valid and binding agreement of Guarantor, enforceable against Guarantor in accordance with its terms. (c) The compliance by Guarantor with all the provisions hereof will not conflict with or result in a breach of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement, understanding or instrument to which Guarantor is a party or by which Guarantor is bound or to which any of the property or assets of Guarantor is subject, nor will such action result in any violation of the provisions of any order of any court or governmental agency or body having jurisdiction over Guarantor or any of Guarantor's properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the performance by Guarantor of Guarantor's obligations under this Guaranty. 65

3. Guarantor waives to the fullest extent permitted by law: (a) any defense based upon any (i) legal disability or lack of authority of Tenant, (ii) legal or equitable discharge or limitation of the liability of Tenant, whether consensual or arising by operation of law, (iii) bankruptcy, insolvency, reorganization or other similar proceeding affecting Guarantor or Tenant, or (iv) invalidity, irregularity or unenforceability of any or all of the provisions of this Guaranty or the Lease; (b) presentment, demand, protest or notice of any other kind; (c) notice of acceptance of this Guaranty; (d) other defenses available to a guarantor under applicable law; or (e) any requirement of diligence on the party of Landlord or any right Guarantor may have to require Landlord to proceed first against Tenant. 4. Guarantor hereby agrees that this is a guaranty of payment and not of collection and that Landlord shall have the right to require the performance by Guarantor of each and every one of its obligations hereunder, and to sue for damages and other relief at law and in equity (including specific performance) for breach of any such obligations without first seeking or taking any action against Tenant, and that the institution of any such suit or proceeding shall not be deemed to be taking part in the control of Tenant's business by Landlord or subject Landlord to liability to Guarantor, its successors or assigns hereunder or to any other person or entity for any of Landlord's obligations. 5. The liability of Guarantor shall be unaffected by: (i) any modification, amendment, termination or variation in or addition to the Lease; (ii) any extensions of time for performance or any waiver of performance or any delay of Landlord in enforcing any right, remedy, power or privilege which Landlord may have against Tenant or any other person; (iii) the release of Tenant, in whole or in part, from performance or observance of any of the agreements, covenants, terms or conditions contained in the Lease, whether made with or without notice to Guarantor; (iv) any other guarantee now or hereafter executed by Guarantor or anyone else in connection with the transactions contemplated by the Lease; (v) any rights, powers or privileges Landlord may now or hereafter have against any person or entity; (vi) any event of bankruptcy, insolvency, reorganization or similar proceedings affecting Tenant or the dissolution or liquidation of Tenant; or (vii) the sale, assignment, transfer or other disposition of all or a portion of Guarantor's 66

interest in Tenant. 6. Guarantor covenants that in the event this Guaranty is placed in the hands of an attorney for enforcement, Guarantor will reimburse Landlord for all reasonable expense incurred directly in the enforcement of the rights of Landlord hereunder, including reasonable attorneys' fees and expenses if, and only if, Landlord is the prevailing party. 7. This Guaranty is a continuous and continuing guarantee and shall be construed and enforced in accordance with the laws of the State of New Jersey. Any provisions hereof which may prove unenforceable under any law shall not affect the validity of any other provisions hereof. 8. Guarantor has reviewed the terms and conditions of the Lease and has considered and understands all of the respective obligations, undertakings, covenants and agreements of Tenant thereunder. 9. No modification, waiver, amendment, discharge or change in this Guaranty shall be valid unless in writing and approved by Landlord. 10. Nothing herein shall be deemed a waiver by the Guarantor of any right it may have to subrogation or contribution against third parties. 11. This Guaranty shall inure to the benefit of Landlord, its successors and assigns exclusively and shall not inure to the benefit of, or be enforceable by, any other third party. 12. Nothing set forth in this Guaranty shall be interpreted or construed to limit the obligations and/or liabilities of Guarantor under the Lease or otherwise release the Guarantor therefrom in its capacity as the originally named "Tenant" thereunder. IN WITNESS WHEREOF, Guarantor has duly executed and delivered this Guaranty to Landlord as of the _________________ day of ______________________________.
WITNESS: GUARANTOR: CONVERTED ORGANICS, INC.

-------------------------------------

---------------------------------------Print Name: ---------------------------Tax ID Number: -------------------------

67

STATE OF ____________________________ ) ) ss: COUNTY OF ___________________________ ) The foregoing instrument was acknowledged before me this _______ day of _________________, by ____________________________, as _______________ of Converted Organics, Inc., a Delaware corporation, on behalf of, and as duly authorized by, said corporation. He is personally known to me or has produced ______________________________________ as identification. Notary Public, State of Print Name: My Commission Expires: 68

STATE OF ____________________________ ) ) ss: COUNTY OF ___________________________ ) The foregoing instrument was acknowledged before me this ______________ day of ____________________, by ___________________, as _____________________ of Converted Organics, Inc., a Delaware corporation, on behalf of, and as duly authorized by, said corporation. He is personally known to me or has produced ________________________________ as identification. Notary Public, State of Print Name: My Commission Expires: 69

Exhibit 10.5 CONVERTED ORGANICS INC. EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") dated March 2, 2006 and effective as of the Effective Date (as hereinafter defined), is made and entered into by and between CONVERTED ORGANICS INC., a Delaware corporation (the "Company"), and EDWARD J. GILDEA, (the "Executive"). WITNESSETH WHEREAS, the Company is engaged in the business of converting waste into high value products; and WHEREAS, the Executive has certain knowledge and expertise relating to the operation of businesses, in general, as well as the business of the Company; and WHEREAS, the Company desires to employ the Executive to perform certain services for and on behalf of the Company as hereafter set forth; and WHEREAS, the Executive desires to accept such employment upon the terms and conditions set forth in this Agreement. NOW THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein, plus other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. Capitalized terms used in this Agreement shall have the meanings set forth below unless otherwise required by the content of this Agreement: "Agreement" shall have the meaning set forth in the introductory paragraph of this agreement. "Cause" shall mean (a) Executive's conviction of, or plea of guilty or nolo contendere to, a felony involving the business of the Company, (b) Executive's commission of a deliberately dishonest and fraudulent act which results in an adverse effect on the business of the Company, (c) Executive's willful, repeated or habitual neglect or refusal to perform Executive's duties or obligations under this Agreement, or (d) Executive's material breach of this Agreement which breach is not cured within a reasonable period of time following written notice by the Company. "Change of Control" shall mean: (i) The acquisition by any Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Page 1 of 10

"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of (A) 20% of the total shares or more than 35% of the outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, or (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (ii) Individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the outstanding shares of the Company common stock prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the outstanding shares of the Company common stock, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 25% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Page 2 of 10

board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. "Confidential Information" means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary. This information includes, without limitation: (i) trade secret information about the Company and its products and services; (ii) confidential information concerning the business, including customer lists and suppliers of the Company (as conducted at any time during the Employment Period); and (iii) confidential information concerning any of the past, current, or possible future locations, products and services of the Company, including (without limitation) information about research, development, engineering, purchasing, manufacturing, accounting, marketing, selling or leasing. Any information that is known to the public or that becomes known to the public other than through a breach of this Agreement by Executive or that which is received from a third party without breach of any obligation to the Company, is not Confidential Information. "Disability" shall mean any physical or mental impairment which causes the Executive to be unable to perform the essential functions of Executive's duties under this Agreement with reasonable accommodation for a period of one hundred twenty (120) consecutive days, or one hundred eighty (180) days during any twelve (12) month period or at such time as Executive is judged permanently disabled by medical experts. "Effective Date" shall mean the date on which the Company successfully completes the consummation of a transaction approved by its board of directors through which the Company secures initial minimum capital in an amount equal to or greater than $5,000,000 (five million dollars). "Employment Period" shall have the meaning set forth in Section 2.2 of this Agreement. "Fiscal Year" shall mean the Company's fiscal year, as it exists on the Effective Date or as changed from time to time. "Good Reason" shall mean any termination of employment by Executive as a result of: (i) the Company's material breach of this Agreement which breach is not cured within 30 (thirty) days following written notice by Executive; (ii) any material change in the duties and responsibilities assigned to Executive under this Agreement; and (iii) a requirement by the Company that Executive be based in an office that is more than 100 miles from Executive's principal place of employment as of the Effective Date. Page 3 of 10

"Inventions" shall mean any ideas, discoveries, modifications, improvements, designs, logos (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented, copyrighted or registered as a trademark or service mark) that the Executive makes, authors, or conceives (either alone or with others) during the Employment Period and which (i) concern directly the business of the Company; (ii) result directly from any work the Executive performs for the Company; or (iii) makes use of the equipment, supplies, facilities, or trade secret information, of the Company. "Person" shall mean any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, or any other business entity or governmental body. "Severance" following or in connection with a Change in Control, shall mean the payment of 36 months of base salary and benefits; plus any bonus which would have been payable in the year the Executive's employment is terminated; and full acceleration of vesting of shares of common stock held by Executive and all Options granted by the company to Executive. In the absence of a Change in Control, "Severance" shall mean the payment of 12 months of base salary and benefits; plus full acceleration of vesting of shares of common stock held by Executive and all Options granted by the Company to Executive. "Without Good Reason" shall mean any termination of employment by Executive for any reason other than for Good Reason, including, without limitation, voluntary resignation by Executive. "Without Cause" shall mean termination by the Company for the sole convenience of the Company, exclusive of termination by reason of death, Disability of Executive, termination for Cause, or termination by Executive either for Good Reason or Without Good Reason. 2. Employment Terms and Duties. 2.1 Employment. The Company hereby employs the Executive, and the Executive hereby accepts such employment on the terms and conditions set forth in this Agreement. 2.2 Term. Unless earlier terminated as provided in this Agreement, the term of employment under this Agreement (the "Employment Period") shall be for a period beginning on the Effective Date and ending on December 31, of the year that is at least three (3) years subsequent to the Effective Date. 2.3 Title. The Executive shall have the title, President and Chief Executive Officer ("President and CEO"). Page 4 of 10

2.4 Duties. The Executive shall have such duties and responsibilities as may be assigned to Executive from time to time by the Chief Executive Officer of the Company. Following the Effective Date, Executive shall devote Executive's full time and attention to the business and affairs of the Company throughout the remainder of the Employment Period. Executive shall (i) perform the duties and responsibilities assigned to Executive to the best of Executive's ability, and (ii) promote the best interests of the Company in carrying out the duties and responsibilities assigned to Executive. In performance of Executive's duties under this Agreement, Executive shall report directly to the Chief Executive Officer of the Company and shall be subject to the direction and control thereof. 2.5 Outside Board of Directors. Executive will be permitted to serve on the board of directors of up to two commercial or charitable organizations, for which Executive may receive compensation, provided that such activity does not conflict with Executive's obligations to the Company, nor substantially diminish the amount of time Executive spends in the performance of his duties and responsibilities with the Company. 3. Compensation and Benefits. 3.1 Salary. In consideration for the performance of Executive's duties under this Agreement, the Company shall, commencing on the Effective Date and continuing through the end of the Employment Period, pay Executive an annual salary ("Salary") during each year of the Employment Period of $220,000.00. Annual salary adjustments may be made at the discretion of the Chief Executive Officer and the compensation committee of the Board of Directors. The Salary payable to Executive under this Agreement shall be paid in such periodic installments as may be provided under the Company's customary payroll policy. The Salary shall be subject to annual review by the Board of Directors. 3.2 Bonus. Executive will be eligible to receive a bonus under any company bonus plan approved by the Board of Directors. 3.3 2006 Stock Options. Executive will receive an option to purchase 100,000 shares of the Company's common stock pursuant to the terms of the 2006 Stock Option Plan adopted by the Board of Directors. Executive shall be eligible for participation in all future equity based compensation programs that may be established by the Company which apply generally to Executive of the Company. 3.4 Benefits. During the Employment Period, Executive shall be entitled to participate in any employee benefit plans, including, without limitation, any life, disability, medical and/or dental plans, pension plans, 401(k) and any other customary plans adopted by the Company, to the extent that Executive is eligible to participate in such plans under the terms of such plans. Page 5 of 10

3.5 Expenses. The Company will pay on behalf of the Executive (or reimburse the Executive for) all reasonable and customary expenses incurred by Executive in the performance of Executive's duties under this Agreement, as well as all reasonable expenses incurred by Executive in the completion of this Agreement and subsequent agreements between Executive and Company. Reasonable and necessary relocation and moving expenses will be paid by the Company should the Executive be required to relocate. 3.6 Personal Leave Days (Vacations, Holidays and Sick Days). The Executive shall be entitled to thirty (30) days of paid leave to be used for vacation and sick days in addition to Company paid holidays. Vacation may be taken at such time as Executive chooses, provided such vacation taken does not unreasonably interfere with the duties and responsibilities of Executive. Personal Leave days during any calendar year that are not used by the Executive during such calendar year may not be "carried over" for use by Executive in any subsequent calendar year. 4. Termination. 4.1 Events of Termination. Executive's employment shall terminate upon the earliest to occur of any of the following events (hereinafter referred to as a "Termination Event"): (a) death of the Executive; (b) notice given by either party of termination as a result of the Disability of Executive; (c) notice given by the Company of termination of Executive (whether such termination is for Cause or Without Cause); (d) notice given by Executive of termination (whether such termination is for Good Reason or Without Good Reason). 4.2 Effect of Termination. Upon the occurrence of a Termination Event the party's sole rights and remedies shall be as set forth in this Agreement. Notwithstanding a Termination Event, all provisions of this Agreement which by their terms survive, including the covenants set forth in paragraphs 5, 6 and 7 of this Agreement, shall survive in accordance with such terms. 4.3 Termination Pay. Effective upon a Termination Event, the Company shall, in lieu of all other amounts and in settlement and complete release of all claims Executive may have against the Company, pay the Executive (or, in the event of Executive's death, the Executive's estate) only such amounts as are provided for in this paragraph. Page 6 of 10

(a) Termination Pay Upon Death or Disability. If Executive's employment is terminated because of the Executive's death, the Executive's estate will be entitled to receive an amount equal to Severance. (b) Termination Pay Upon Termination for Cause. If Executive's employment is terminated by the Company for Cause, the Executive will be entitled to receive Executive's Salary, Bonus, and Option(s) held by Executive through the date such termination is effective. (c) Termination Pay Upon Termination Without Cause. If Executive's employment is terminated by the Company Without Cause, the Executive will be entitled to receive Severance. (d) Termination Pay Upon Termination for Good Reason. If the Executive terminates Executive's employment for Good Reason, the Executive will be entitled to receive Severance. (e) Termination Pay Upon Termination Without Good Reason. Upon any termination by Executive Without Good Reason, the Executive will be entitled to receive only Executive's Salary, Bonus, and Option(s) held by Executive through the date such termination is effective. (g) Benefits Upon Termination. The Executive's accrual of, or participation in, any employee benefit plans will continue in accordance with the provisions of such plans. The Executive will receive any payment or other compensation for any vacation unused on the date of termination of Executive's employment within 30 (thirty) days of the termination date. Any Salary or additional compensation payable to Executive pursuant to this paragraph shall be paid in a single, lump sum payment on the date of termination. 5. Non Disclosure and Non Interference. Executive agrees (i) not to use any Confidential Information for any purpose other than the business of the Company, and (ii) not to disclose any part of the Confidential Information to any Person who is not authorized by the Company to receive such Confidential Information and who is required to maintain the confidentiality of such information. Executive agrees that, upon termination of the Employment Period, Executive shall promptly deliver to the Company (or leave in the possession of the Company) all documents, records and any other items that disclose, describe or embody Confidential Information, and any other property of the Company (whether or not containing Confidential Information) which is within the Executive's possession, custody or control. In the event Executive is required to disclose any Confidential Information by reason of law or by order of any court or tribunal of competent jurisdiction, Executive shall immediately give notice of such requirement or order to the Company and shall use Executive's reasonable best efforts to provide the Company with an adequate opportunity to seek appropriate relief to protect the confidentiality of the Page 7 of 10

Confidential Information. Executive further agrees not to (i) solicit, employ, or otherwise engage as an employee, independent contractor, or otherwise, any person who is an employee of the Company at any time, or in any manner induce or attempt to induce any employee of the Company to terminate his or her employment with the Company; or (ii) disparage the Company or its customers or suppliers, or any of their officers, directors, shareholders, employees, or agents. 6. Inventions. Executive agrees that all Inventions made by the Executive during the Employment Period will be the Company's sole and exclusive property and shall for all purposes be deemed "works for hire". Executive will, with respect to any Invention: (i) keep current, accurate, and complete records, which will belong to the Company and be kept and stored on the Company's premises; (ii) promptly and fully disclose the existence and describe the nature of any Invention to the Company; (iii) assign (and the Executive does hereby assign) to the Company all of Executive's rights to any Invention, any applications Executive makes for patents or copyrights in any country, and any patents or copyrights granted to Executive in any country; and (iv) acknowledge and deliver promptly to the Company any written instruments, and perform any other acts necessary in the Company's opinion to preserve property rights in any Invention against forfeiture, abandonment or loss and to obtain and maintain letters, patents and/or copyrights on any Invention and to vest the entire right and title to any Invention in the Company. Inventions include but are not limited to improvements to the Company's products, process and technology. 7. Non-Competition. Executive agrees that, during the Employment Period and for a period of one (1) year thereafter, Executive shall not, directly or indirectly, (i) own, manage, operate, lend Executive's name or credit to, or be connected with, either as an owner, director, employee, agent, independent contractor, partner, sole proprietor, lender or otherwise, any business which competes with the Company in connection with the commercial conversion of waste into high value products that is substantially similar to that developed by the Company or any product developed or marketed by the Company at any time during the Employment Period, or (ii) induce any employee of the Company to terminate such employee's employment with the Company or hire any employee of the Company to work with Executive or any company or business affiliated with Executive. Notwithstanding the limitations on the ownership of competing businesses set forth above, Executive may hold, purchase, or acquire up to (but not more than) one percent 1% of any class of equity securities of any competing business if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Act of 1934. If any part of the foregoing covenant not to compete is held to be unreasonable, arbitrary, or against public policy, such covenant shall be considered to be divisible with respect to scope, time, and geographic area, and such lesser scope, time, or geographic area, or all of them, as may be necessary to be determined to be reasonable, not arbitrary and not against public policy, will be effective, binding, and enforceable against the parties hereto. Page 8 of 10

8. Miscellaneous. 8.1 Entire Agreement. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties, whether oral or written, with respect to the subject matter hereof. 8.2 Amendments, Modification and Waiver. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the party against whom enforcement of such modification, amendment or waiver is sought. This Agreement will be expressly made a part of any agreement entered into by the Company to sell equity in the Company. 8.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective personal representatives, heirs, successors, and permitted assigns. 8.4 Assignment. No party to this Agreement may assign its rights or delegate its obligations under this Agreement to any other Person or other entity without the express prior written consent of the other party to this Agreement. 8.5 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity of enforceability of any other provision hereof and if any particular provision is determined to be invalid or unenforceable, the remainder of this Agreement shall be interpreted and construed as if such provision were omitted. 8.6 Notices. All notices, requests, consents, demands, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to be duly given and received on the date of delivery if delivered personally (or sent by fax), or on the second day after deposit in the United States mail if mailed by prepaid first class registered or certified mail, and properly addressed as follows:
If to the Company: Converted Organics Inc 7A Commercial Wharf West Boston, MA 02110 Facsimile No.: (617) 624-0333 Edward J. Gildea 23 Bullard Street Dedham, MA 02026

If to Executive:

Any party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above. Page 9 of 10

8.7 Headings. Descriptive headings used in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any provision of this Agreement. 8.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Massachusetts, without regard to any otherwise applicable principles of conflicts of laws. 8.9 Counterparts and Facsimile. For the convenience of the parties hereto, this Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile signature, and each signature printed by a facsimile machine, when attached to this Agreement, shall be deemed an original counterpart. 8.10 Further Assurances. Each party shall perform such further acts and execute and deliver such further documents as may be reasonably necessary to carry into or give effect to the intention of the parties hereto and to carry out and accomplish the purposes of this Agreement. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date above first written above.
EXECUTIVE: Edward J. Gildea Print Name COMPANY: Converted Organics Inc.

/s/ Edward J. Gildea ------------------------------------Signature President & CEO Title 6-16-06 Date

/s/ John P. Weigold ---------------------------------------By V.P. Development/Operations Its 6/16/06 Date

Page 10 of 10

Exhibit 10.6 CONVERTED ORGANICS INC. EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") dated March 2, 2006 and effective as of the Effective Date (as hereinafter defined), is made and entered into by and between CONVERTED ORGANICS INC., a Delaware corporation (the "Company"), and THOMAS R. BUCHANAN, (the "Executive"). WITNESSETH WHEREAS, the Company is engaged in the business of converting waste into high value products; and WHEREAS, the Executive has certain knowledge and expertise relating to the operation of businesses, in general, as well as the business of the Company; and WHEREAS, the Company desires to employ the Executive to perform certain services for and on behalf of the Company as hereafter set forth; and WHEREAS, the Executive desires to accept such employment upon the terms and conditions set forth in this Agreement. NOW THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein, plus other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. Capitalized terms used in this Agreement shall have the meanings set forth below unless otherwise required by the content of this Agreement: "Agreement" shall have the meaning set forth in the introductory paragraph of this agreement. "Cause" shall mean (a) Executive's conviction of, or plea of guilty or nolo contendere to, a felony involving the business of the Company, (b) Executive's commission of a deliberately dishonest and fraudulent act which results in an adverse effect on the business of the Company, (c) Executive's willful, repeated or habitual neglect or refusal to perform Executive's duties or obligations under this Agreement, or (d) Executive's material breach of this Agreement which breach is not cured within a reasonable period of time following written notice by the Company. "Change of Control" shall mean: (i) The acquisition by any Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Page 1 of 10

"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of (A) 20% of the total shares or more than 35% of the outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, or (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (ii) Individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the outstanding shares of the Company common stock prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the outstanding shares of the Company common stock, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 25% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Page 2 of 10

board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. "Confidential Information" means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary. This information includes, without limitation: (i) trade secret information about the Company and its products and services; (ii) confidential information concerning the business, including customer lists and suppliers of the Company (as conducted at any time during the Employment Period); and (iii) confidential information concerning any of the past, current, or possible future locations, products and services of the Company, including (without limitation) information about research, development, engineering, purchasing, manufacturing, accounting, marketing, selling or leasing. Any information that is known to the public or that becomes known to the public other than through a breach of this Agreement by Executive or that which is received from a third party without breach of any obligation to the Company, is not Confidential Information. "Disability" shall mean any physical or mental impairment which causes the Executive to be unable to perform the essential functions of Executive's duties under this Agreement with reasonable accommodation for a period of one hundred twenty (120) consecutive days, or one hundred eighty (180) days during any twelve (12) month period or at such time as Executive is judged permanently disabled by medical experts. "Effective Date" shall mean the date on which the Company successfully completes the consummation of a transaction approved by its board of directors through which the Company secures initial minimum capital in an amount equal to or greater than $5,000,000 (five million dollars). "Employment Period" shall have the meaning set forth in Section 2.2 of this Agreement. "Fiscal Year" shall mean the Company's fiscal year, as it exists on the Effective Date or as changed from time to time. "Good Reason" shall mean any termination of employment by Executive as a result of: (i) the Company's material breach of this Agreement which breach is not cured within 30 (thirty) days following written notice by Executive; (ii) any material change in the duties and responsibilities assigned to Executive under this Agreement; and (iii) a requirement by the Company that Executive be based in an office that is more than 100 miles from Executive's principal place of employment as of the Effective Date. Page 3 of 10

"Inventions" shall mean any ideas, discoveries, modifications, improvements, designs, logos (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented, copyrighted or registered as a trademark or service mark) that the Executive makes, authors, or conceives (either alone or with others) during the Employment Period and which (i) concern directly the business of the Company; (ii) result directly from any work the Executive performs for the Company; or (iii) makes use of the equipment, supplies, facilities, or trade secret information, of the Company. "Person" shall mean any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, or any other business entity or governmental body. "Severance" following or in connection with a Change in Control, shall mean the payment of 36 months of base salary and benefits; plus any bonus which would have been payable in the year the Executive's employment is terminated; and full acceleration of vesting of shares of common stock held by Executive and all Options granted by the company to Executive. In the absence of a Change in Control, "Severance" shall mean the payment of 12 months of base salary and benefits; plus full acceleration of vesting of shares of common stock held by Executive and all Options granted by the Company to Executive. "Without Good Reason" shall mean any termination of employment by Executive for any reason other than for Good Reason, including, without limitation, voluntary resignation by Executive. "Without Cause" shall mean termination by the Company for the sole convenience of the Company, exclusive of termination by reason of death, Disability of Executive, termination for Cause, or termination by Executive either for Good Reason or Without Good Reason. 2. Employment Terms and Duties. 2.1 Employment. The Company hereby employs the Executive, and the Executive hereby accepts such employment on the terms and conditions set forth in this Agreement. 2.2 Term. Unless earlier terminated as provided in this Agreement, the term of employment under this Agreement (the "Employment Period") shall be for a period beginning on the Effective Date and ending on December 31, of the year that is at least three (3) years subsequent to the Effective Date. 2.3 Title. The Executive shall have the title, Vice President and Chief Financial Officer ("VP and CFO"). Page 4 of 10

2.4 Duties. The Executive shall have such duties and responsibilities as may be assigned to Executive from time to time by the Chief Executive Officer of the Company. Following the Effective Date, Executive shall devote Executive's full time and attention to the business and affairs of the Company throughout the remainder of the Employment Period. Executive shall (i) perform the duties and responsibilities assigned to Executive to the best of Executive's ability, and (ii) promote the best interests of the Company in carrying out the duties and responsibilities assigned to Executive. In performance of Executive's duties under this Agreement, Executive shall report directly to the Chief Executive Officer of the Company and shall be subject to the direction and control thereof. 2.5 Outside Board of Directors. Executive will be permitted to serve on the board of directors of up to two commercial or charitable organizations, for which Executive may receive compensation, provided that such activity does not conflict with Executive's obligations to the Company, nor substantially diminish the amount of time Executive spends in the performance of his duties and responsibilities with the Company. 3. Compensation and Benefits. 3.1 Salary. In consideration for the performance of Executive's duties under this Agreement, the Company shall, commencing on the Effective Date and continuing through the end of the Employment Period, pay Executive an annual salary ("Salary") during each year of the Employment Period of $180,000.00. Annual salary adjustments may be made at the discretion of the Chief Executive Officer and the compensation committee of the Board of Directors. The Salary payable to Executive under this Agreement shall be paid in such periodic installments as may be provided under the Company's customary payroll policy. The Salary shall be subject to annual review by the Board of Directors. 3.2 Bonus. Executive will be eligible to receive a bonus under any company bonus plan approved by the Board of Directors. 3.3 2006 Stock Options. Executive will receive an option to purchase 100,000 shares of the Company's common stock pursuant to the terms of the 2006 Stock Option Plan adopted by the Board of Directors. Executive shall be eligible for participation in all future equity based compensation programs that may be established by the Company which apply generally to Executive of the Company. 3.4 Benefits. During the Employment Period, Executive shall be entitled to participate in any employee benefit plans, including, without limitation, any life, disability, medical and/or dental plans, pension plans, 401(k) and any other customary plans adopted by the Company, to the extent that Executive is eligible to participate in such plans under the terms of such plans. Page 5 of 10

3.5 Expenses. The Company will pay on behalf of the Executive (or reimburse the Executive for) all reasonable and customary expenses incurred by Executive in the performance of Executive's duties under this Agreement, as well as all reasonable expenses incurred by Executive in the completion of this Agreement and subsequent agreements between Executive and Company. Reasonable and necessary relocation and moving expenses will be paid by the Company should the Executive be required to relocate. 3.6 Personal Leave Days (Vacations, Holidays and Sick Days). The Executive shall be entitled to thirty (30) days of paid leave to be used for vacation and sick days in addition to Company paid holidays. Vacation may be taken at such time as Executive chooses, provided such vacation taken does not unreasonably interfere with the duties and responsibilities of Executive. Personal Leave days during any calendar year that are not used by the Executive during such calendar year may not be "carried over" for use by Executive in any subsequent calendar year. 4. Termination. 4.1 Events of Termination. Executive's employment shall terminate upon the earliest to occur of any of the following events (hereinafter referred to as a "Termination Event"): (a) death of the Executive; (b) notice given by either party of termination as a result of the Disability of Executive; (c) notice given by the Company of termination of Executive (whether such termination is for Cause or Without Cause); (d) notice given by Executive of termination (whether such termination is for Good Reason or Without Good Reason). 4.2 Effect of Termination. Upon the occurrence of a Termination Event the party's sole rights and remedies shall be as set forth in this Agreement. Notwithstanding a Termination Event, all provisions of this Agreement which by their terms survive, including the covenants set forth in paragraphs 5, 6 and 7 of this Agreement, shall survive in accordance with such terms. 4.3 Termination Pay. Effective upon a Termination Event, the Company shall, in lieu of all other amounts and in settlement and complete release of all claims Executive may have against the Company, pay the Executive (or, in the event of Executive's death, the Executive's estate) only such amounts as are provided for in this paragraph. Page 6 of 10

(a) Termination Pay Upon Death or Disability. If Executive's employment is terminated because of the Executive's death, the Executive's estate will be entitled to receive an amount equal to Severance. (b) Termination Pay Upon Termination for Cause. If Executive's employment is terminated by the Company for Cause, the Executive will be entitled to receive Executive's Salary, Bonus, and Option(s) held by Executive through the date such termination is effective. (c) Termination Pay Upon Termination Without Cause. If Executive's employment is terminated by the Company Without Cause, the Executive will be entitled to receive Severance. (d) Termination Pay Upon Termination for Good Reason. If the Executive terminates Executive's employment for Good Reason, the Executive will be entitled to receive Severance. (e) Termination Pay Upon Termination Without Good Reason. Upon any termination by Executive Without Good Reason, the Executive will be entitled to receive only Executive's Salary, Bonus, and Option(s) held by Executive through the date such termination is effective. (g) Benefits Upon Termination. The Executive's accrual of, or participation in, any employee benefit plans will continue in accordance with the provisions of such plans. The Executive will receive any payment or other compensation for any vacation unused on the date of termination of Executive's employment within 30 (thirty) days of the termination date. Any Salary or additional compensation payable to Executive pursuant to this paragraph shall be paid in a single, lump sum payment on the date of termination. 5. Non Disclosure and Non Interference. Executive agrees (i) not to use any Confidential Information for any purpose other than the business of the Company, and (ii) not to disclose any part of the Confidential Information to any Person who is not authorized by the Company to receive such Confidential Information and who is required to maintain the confidentiality of such information. Executive agrees that, upon termination of the Employment Period, Executive shall promptly deliver to the Company (or leave in the possession of the Company) all documents, records and any other items that disclose, describe or embody Confidential Information, and any other property of the Company (whether or not containing Confidential Information) which is within the Executive's possession, custody or control. In the event Executive is required to disclose any Confidential Information by reason of law or by order of any court or tribunal of competent jurisdiction, Executive shall immediately give notice of such requirement or order to the Company and shall use Executive's reasonable best efforts to provide the Company with an adequate opportunity to seek appropriate relief to protect the confidentiality of the Page 7 of 10

Confidential Information. Executive further agrees not to (i) solicit, employ, or otherwise engage as an employee, independent contractor, or otherwise, any person who is an employee of the Company at any time, or in any manner induce or attempt to induce any employee of the Company to terminate his or her employment with the Company; or (ii) disparage the Company or its customers or suppliers, or any of their officers, directors, shareholders, employees, or agents. 6. Inventions. Executive agrees that all Inventions made by the Executive during the Employment Period will be the Company's sole and exclusive property and shall for all purposes be deemed "works for hire". Executive will, with respect to any Invention: (i) keep current, accurate, and complete records, which will belong to the Company and be kept and stored on the Company's premises; (ii) promptly and fully disclose the existence and describe the nature of any Invention to the Company; (iii) assign (and the Executive does hereby assign) to the Company all of Executive's rights to any Invention, any applications Executive makes for patents or copyrights in any country, and any patents or copyrights granted to Executive in any country; and (iv) acknowledge and deliver promptly to the Company any written instruments, and perform any other acts necessary in the Company's opinion to preserve property rights in any Invention against forfeiture, abandonment or loss and to obtain and maintain letters, patents and/or copyrights on any Invention and to vest the entire right and title to any Invention in the Company. Inventions include but are not limited to improvements to the Company's products, process and technology. 7. Non-Competition. Executive agrees that, during the Employment Period and for a period of one (1) year thereafter, Executive shall not, directly or indirectly, (i) own, manage, operate, lend Executive's name or credit to, or be connected with, either as an owner, director, employee, agent, independent contractor, partner, sole proprietor, lender or otherwise, any business which competes with the Company in connection with the commercial conversion of waste into high value products that is substantially similar to that developed by the Company or any product developed or marketed by the Company at any time during the Employment Period, or (ii) induce any employee of the Company to terminate such employee's employment with the Company or hire any employee of the Company to work with Executive or any company or business affiliated with Executive. Notwithstanding the limitations on the ownership of competing businesses set forth above, Executive may hold, purchase, or acquire up to (but not more than) one percent 1% of any class of equity securities of any competing business if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Act of 1934. If any part of the foregoing covenant not to compete is held to be unreasonable, arbitrary, or against public policy, such covenant shall be considered to be divisible with respect to scope, time, and geographic area, and such lesser scope, time, or geographic area, or all of them, as may be necessary to be determined to be reasonable, not arbitrary and not against public policy, will be effective, binding, and enforceable against the parties hereto. Page 8 of 10

8. Miscellaneous. 8.1 Entire Agreement. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties, whether oral or written, with respect to the subject matter hereof. 8.2 Amendments, Modification and Waiver. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the party against whom enforcement of such modification, amendment or waiver is sought. This Agreement will be expressly made a part of any agreement entered into by the Company to sell equity in the Company. 8.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective personal representatives, heirs, successors, and permitted assigns. 8.4 Assignment. No party to this Agreement may assign its rights or delegate its obligations under this Agreement to any other Person or other entity without the express prior written consent of the other party to this Agreement. 8.5 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity of enforceability of any other provision hereof and if any particular provision is determined to be invalid or unenforceable, the remainder of this Agreement shall be interpreted and construed as if such provision were omitted. 8.6 Notices. All notices, requests, consents, demands, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to be duly given and received on the date of delivery if delivered personally (or sent by fax), or on the second day after deposit in the United States mail if mailed by prepaid first class registered or certified mail, and properly addressed as follows:
If to the Company: Converted Organics Inc 7A Commercial Wharf West Boston, MA 02110 Facsimile No.: (617) 624-0333 Thomas R. Buchanan 207 Carol Avenue Pelham, NY 10538

If to Executive:

Any party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above. Page 9 of 10

8.7 Headings. Descriptive headings used in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any provision of this Agreement. 8.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Massachusetts, without regard to any otherwise applicable principles of conflicts of laws. 8.9 Counterparts and Facsimile. For the convenience of the parties hereto, this Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile signature, and each signature printed by a facsimile machine, when attached to this Agreement, shall be deemed an original counterpart. 8.10 Further Assurances. Each party shall perform such further acts and execute and deliver such further documents as may be reasonably necessary to carry into or give effect to the intention of the parties hereto and to carry out and accomplish the purposes of this Agreement. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date above first written above.
EXECUTIVE: Tom R. Buchanan Print Name COMPANY: Converted Organics Inc.

/s/ Thomas R. Buchanan ------------------------------------Signature VP CFO Title June 14, 2006 Date

/s/ Edward J. Gildea ---------------------------------------By Edward J. Gildea ---------------------------------------Its President and CEO 6-14-06 Date

Page 10 of 10

Exhibit 10.7 CONVERTED ORGANICS INC. EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") dated March 2, 2006 and effective as of the Effective Date (as hereinafter defined), is made and entered into by and between CONVERTED ORGANICS INC., a Delaware corporation (the "Company"), and JOHN A. WALSDORF, (the "Executive"). WITNESSETH WHEREAS, the Company is engaged in the business of converting waste into high value products; and WHEREAS, the Executive has certain knowledge and expertise relating to the operation of businesses, in general, as well as the business of the Company; and WHEREAS, the Company desires to employ the Executive to perform certain services for and on behalf of the Company as hereafter set forth; and WHEREAS, the Executive desires to accept such employment upon the terms and conditions set forth in this Agreement. NOW THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein, plus other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. Capitalized terms used in this Agreement shall have the meanings set forth below unless otherwise required by the content of this Agreement: "Agreement" shall have the meaning set forth in the introductory paragraph of this agreement. "Cause" shall mean (a) Executive's conviction of, or plea of guilty or nolo contendere to, a felony involving the business of the Company, (b) Executive's commission of a deliberately dishonest and fraudulent act which results in an adverse effect on the business of the Company, (c) Executive's willful, repeated or habitual neglect or refusal to perform Executive's duties or obligations under this Agreement, or (d) Executive's material breach of this Agreement which breach is not cured within a reasonable period of time following written notice by the Company. "Change of Control" shall mean: (i) The acquisition by any Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Page 1 of 10

"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of (A) 20% of the total shares or more than 35% of the outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, or (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (ii) Individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the outstanding shares of the Company common stock prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the outstanding shares of the Company common stock, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 25% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Page 2 of 10

board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. "Confidential Information" means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary. This information includes, without limitation: (i) trade secret information about the Company and its products and services; (ii) confidential information concerning the business, including customer lists and suppliers of the Company (as conducted at any time during the Employment Period); and (iii) confidential information concerning any of the past, current, or possible future locations, products and services of the Company, including (without limitation) information about research, development, engineering, purchasing, manufacturing, accounting, marketing, selling or leasing. Any information that is known to the public or that becomes known to the public other than through a breach of this Agreement by Executive or that which is received from a third party without breach of any obligation to the Company, is not Confidential Information. "Disability" shall mean any physical or mental impairment which causes the Executive to be unable to perform the essential functions of Executive's duties under this Agreement with reasonable accommodation for a period of one hundred twenty (120) consecutive days, or one hundred eighty (180) days during any twelve (12) month period or at such time as Executive is judged permanently disabled by medical experts. "Effective Date" shall mean the date on which the Company successfully completes the consummation of a transaction approved by its board of directors through which the Company secures initial minimum capital in an amount equal to or greater than $5,000,000 (five million dollars). "Employment Period" shall have the meaning set forth in Section 2.2 of this Agreement. "Fiscal Year" shall mean the Company's fiscal year, as it exists on the Effective Date or as changed from time to time. "Good Reason" shall mean any termination of employment by Executive as a result of: (i) the Company's material breach of this Agreement which breach is not cured within 30 (thirty) days following written notice by Executive; (ii) any material change in the duties and responsibilities assigned to Executive under this Agreement; and (iii) a requirement by the Company that Executive be based in an office that is more than 100 miles from Executive's principal place of employment as of the Effective Date. Page 3 of 10

"Inventions" shall mean any ideas, discoveries, modifications, improvements, designs, logos (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented, copyrighted or registered as a trademark or service mark) that the Executive makes, authors, or conceives (either alone or with others) during the Employment Period and which (i) concern directly the business of the Company; (ii) result directly from any work the Executive performs for the Company; or (iii) makes use of the equipment, supplies, facilities, or trade secret information, of the Company. "Person" shall mean any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, or any other business entity or governmental body. "Severance" following or in connection with a Change in Control, shall mean the payment of 36 months of base salary and benefits; plus any bonus which would have been payable in the year the Executive's employment is terminated; and full acceleration of vesting of shares of common stock held by Executive and all Options granted by the company to Executive. In the absence of a Change in Control, "Severance" shall mean the payment of 12 months of base salary and benefits; plus full acceleration of vesting of shares of common stock held by Executive and all Options granted by the Company to Executive. "Without Good Reason" shall mean any termination of employment by Executive for any reason other than for Good Reason, including, without limitation, voluntary resignation by Executive. "Without Cause" shall mean termination by the Company for the sole convenience of the Company, exclusive of termination by reason of death, Disability of Executive, termination for Cause, or termination by Executive either for Good Reason or Without Good Reason. 2. Employment Terms and Duties. 2.1 Employment. The Company hereby employs the Executive, and the Executive hereby accepts such employment on the terms and conditions set forth in this Agreement. 2.2 Term. Unless earlier terminated as provided in this Agreement, the term of employment under this Agreement (the "Employment Period") shall be for a period beginning on the Effective Date and ending on December 31, of the year that is at least three (3) years subsequent to the Effective Date. 2.3 Title. The Executive shall have the title, Vice President and Chief Operating Officer ("VP and COO"). Page 4 of 10

2.4 Duties. The Executive shall have such duties and responsibilities as may be assigned to Executive from time to time by the Chief Executive Officer of the Company. Following the Effective Date, Executive shall devote Executive's full time and attention to the business and affairs of the Company throughout the remainder of the Employment Period. Executive shall (i) perform the duties and responsibilities assigned to Executive to the best of Executive's ability, and (ii) promote the best interests of the Company in carrying out the duties and responsibilities assigned to Executive. In performance of Executive's duties under this Agreement, Executive shall report directly to the Chief Executive Officer of the Company and shall be subject to the direction and control thereof. 2.5 Outside Board of Directors. Executive will be permitted to serve on the board of directors of up to two commercial or charitable organizations, for which Executive may receive compensation, provided that such activity does not conflict with Executive's obligations to the Company, nor substantially diminish the amount of time Executive spends in the performance of his duties and responsibilities with the Company. 3. Compensation and Benefits. 3.1 Salary. In consideration for the performance of Executive's duties under this Agreement, the Company shall, commencing on the Effective Date and continuing through the end of the Employment Period, pay Executive an annual salary ("Salary") during each year of the Employment Period of $180,000.00. Annual salary adjustments may be made at the discretion of the Chief Executive Officer and the compensation committee of the Board of Directors. The Salary payable to Executive under this Agreement shall be paid in such periodic installments as may be provided under the Company's customary payroll policy. The Salary shall be subject to annual review by the Board of Directors. 3.2 Bonus. Executive will be eligible to receive a bonus under any company bonus plan approved by the Board of Directors. 3.3 2006 Stock Options. Executive will receive an option to purchase 100,000 shares of the Company's common stock pursuant to the terms of the 2006 Stock Option Plan adopted by the Board of Directors. Executive shall be eligible for participation in all future equity based compensation programs that may be established by the Company which apply generally to Executive of the Company. 3.4 Benefits. During the Employment Period, Executive shall be entitled to participate in any employee benefit plans, including, without limitation, any life, disability, medical and/or dental plans, pension plans, 401(k) and any other customary plans adopted by the Company, to the extent that Executive is eligible to participate in such plans under the terms of such plans. Page 5 of 10

3.5 Expenses. The Company will pay on behalf of the Executive (or reimburse the Executive for) all reasonable and customary expenses incurred by Executive in the performance of Executive's duties under this Agreement, as well as all reasonable expenses incurred by Executive in the completion of this Agreement and subsequent agreements between Executive and Company. Reasonable and necessary relocation and moving expenses will be paid by the Company should the Executive be required to relocate. 3.6 Personal Leave Days (Vacations, Holidays and Sick Days). The Executive shall be entitled to thirty (30) days of paid leave to be used for vacation and sick days in addition to Company paid holidays. Vacation may be taken at such time as Executive chooses, provided such vacation taken does not unreasonably interfere with the duties and responsibilities of Executive. Personal Leave days during any calendar year that are not used by the Executive during such calendar year may not be "carried over" for use by Executive in any subsequent calendar year. 4. Termination. 4.1 Events of Termination. Executive's employment shall terminate upon the earliest to occur of any of the following events (hereinafter referred to as a "Termination Event"): (a) death of the Executive; (b) notice given by either party of termination as a result of the Disability of Executive; (c) notice given by the Company of termination of Executive (whether such termination is for Cause or Without Cause); (d) notice given by Executive of termination (whether such termination is for Good Reason or Without Good Reason). 4.2 Effect of Termination. Upon the occurrence of a Termination Event the party's sole rights and remedies shall be as set forth in this Agreement. Notwithstanding a Termination Event, all provisions of this Agreement which by their terms survive, including the covenants set forth in paragraphs 5, 6 and 7 of this Agreement, shall survive in accordance with such terms. 4.3 Termination Pay. Effective upon a Termination Event, the Company shall, in lieu of all other amounts and in settlement and complete release of all claims Executive may have against the Company, pay the Executive (or, in the event of Executive's death, the Executive's estate) only such amounts as are provided for in this paragraph. Page 6 of 10

(a) Termination Pay Upon Death or Disability. If Executive's employment is terminated because of the Executive's death, the Executive's estate will be entitled to receive an amount equal to Severance. (b) Termination Pay Upon Termination for Cause. If Executive's employment is terminated by the Company for Cause, the Executive will be entitled to receive Executive's Salary, Bonus, and Option(s) held by Executive through the date such termination is effective. (c) Termination Pay Upon Termination Without Cause. If Executive's employment is terminated by the Company Without Cause, the Executive will be entitled to receive Severance. (d) Termination Pay Upon Termination for Good Reason. If the Executive terminates Executive's employment for Good Reason, the Executive will be entitled to receive Severance. (e) Termination Pay Upon Termination Without Good Reason. Upon any termination by Executive Without Good Reason, the Executive will be entitled to receive only Executive's Salary, Bonus, and Option(s) held by Executive through the date such termination is effective. (g) Benefits Upon Termination. The Executive's accrual of, or participation in, any employee benefit plans will continue in accordance with the provisions of such plans. The Executive will receive any payment or other compensation for any vacation unused on the date of termination of Executive's employment within 30 (thirty) days of the termination date. Any Salary or additional compensation payable to Executive pursuant to this paragraph shall be paid in a single, lump sum payment on the date of termination. 5. Non Disclosure and Non Interference. Executive agrees (i) not to use any Confidential Information for any purpose other than the business of the Company, and (ii) not to disclose any part of the Confidential Information to any Person who is not authorized by the Company to receive such Confidential Information and who is required to maintain the confidentiality of such information. Executive agrees that, upon termination of the Employment Period, Executive shall promptly deliver to the Company (or leave in the possession of the Company) all documents, records and any other items that disclose, describe or embody Confidential Information, and any other property of the Company (whether or not containing Confidential Information) which is within the Executive's possession, custody or control. In the event Executive is required to disclose any Confidential Information by reason of law or by order of any court or tribunal of competent jurisdiction, Executive shall immediately give notice of such requirement or order to the Company and shall use Executive's reasonable best efforts to provide the Company with an adequate opportunity to seek appropriate relief to protect the confidentiality of the Page 7 of 10

Confidential Information. Executive further agrees not to (i) solicit, employ, or otherwise engage as an employee, independent contractor, or otherwise, any person who is an employee of the Company at any time, or in any manner induce or attempt to induce any employee of the Company to terminate his or her employment with the Company; or (ii) disparage the Company or its customers or suppliers, or any of their officers, directors, shareholders, employees, or agents. 6. Inventions. Executive agrees that all Inventions made by the Executive during the Employment Period will be the Company's sole and exclusive property and shall for all purposes be deemed "works for hire". Executive will, with respect to any Invention: (i) keep current, accurate, and complete records, which will belong to the Company and be kept and stored on the Company's premises; (ii) promptly and fully disclose the existence and describe the nature of any Invention to the Company; (iii) assign (and the Executive does hereby assign) to the Company all of Executive's rights to any Invention, any applications Executive makes for patents or copyrights in any country, and any patents or copyrights granted to Executive in any country; and (iv) acknowledge and deliver promptly to the Company any written instruments, and perform any other acts necessary in the Company's opinion to preserve property rights in any Invention against forfeiture, abandonment or loss and to obtain and maintain letters, patents and/or copyrights on any Invention and to vest the entire right and title to any Invention in the Company. Inventions include but are not limited to improvements to the Company's products, process and technology. 7. Non-Competition. Executive agrees that, during the Employment Period and for a period of one (1) year thereafter, Executive shall not, directly or indirectly, (i) own, manage, operate, lend Executive's name or credit to, or be connected with, either as an owner, director, employee, agent, independent contractor, partner, sole proprietor, lender or otherwise, any business which competes with the Company in connection with the commercial conversion of waste into high value products that is substantially similar to that developed by the Company or any product developed or marketed by the Company at any time during the Employment Period, or (ii) induce any employee of the Company to terminate such employee's employment with the Company or hire any employee of the Company to work with Executive or any company or business affiliated with Executive. Notwithstanding the limitations on the ownership of competing businesses set forth above, Executive may hold, purchase, or acquire up to (but not more than) one percent 1% of any class of equity securities of any competing business if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Act of 1934. If any part of the foregoing covenant not to compete is held to be unreasonable, arbitrary, or against public policy, such covenant shall be considered to be divisible with respect to scope, time, and geographic area, and such lesser scope, time, or geographic area, or all of them, as may be necessary to be determined to be reasonable, not arbitrary and not against public policy, will be effective, binding, and enforceable against the parties hereto. Page 8 of 10

8. Miscellaneous. 8.1 Entire Agreement. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties, whether oral or written, with respect to the subject matter hereof. 8.2 Amendments, Modification and Waiver. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the party against whom enforcement of such modification, amendment or waiver is sought. This Agreement will be expressly made a part of any agreement entered into by the Company to sell equity in the Company. 8.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective personal representatives, heirs, successors, and permitted assigns. 8.4 Assignment. No party to this Agreement may assign its rights or delegate its obligations under this Agreement to any other Person or other entity without the express prior written consent of the other party to this Agreement. 8.5 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity of enforceability of any other provision hereof and if any particular provision is determined to be invalid or unenforceable, the remainder of this Agreement shall be interpreted and construed as if such provision were omitted. 8.6 Notices. All notices, requests, consents, demands, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to be duly given and received on the date of delivery if delivered personally (or sent by fax), or on the second day after deposit in the United States mail if mailed by prepaid first class registered or certified mail, and properly addressed as follows:
If to the Company: Converted Organics Inc 7A Commercial Wharf West Boston, MA 02110 Facsimile No.: (617) 624-0333 John A. Walsdorf 99 Madison Avenue Fanwood, NJ 07023

If to Executive:

Any party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above. Page 9 of 10

8.7 Headings. Descriptive headings used in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any provision of this Agreement. 8.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Massachusetts, without regard to any otherwise applicable principles of conflicts of laws. 8.9 Counterparts and Facsimile. For the convenience of the parties hereto, this Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile signature, and each signature printed by a facsimile machine, when attached to this Agreement, shall be deemed an original counterpart. 8.10 Further Assurances. Each party shall perform such further acts and execute and deliver such further documents as may be reasonably necessary to carry into or give effect to the intention of the parties hereto and to carry out and accomplish the purposes of this Agreement. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date above first written above.
EXECUTIVE: COMPANY:

John A. Walsdorf ------------------------------------Print Name

Converted Organics Inc.

/s/ John A. Walsdorf ------------------------------------Signature

/s/ Edward J. Gildea ---------------------------------------By Edward J. Gildea

Chief Operating Officer ------------------------------------Title 06/14/06 Date

---------------------------------------Its President and CEO 6-14-06 Date

Page 10 of 10

Exhibit 10.8 CONVERTED ORGANICS INC. EMPLOYMENT AGREEMENT EMPLOYMENT AGREEMENT This Employment Agreement (this "Agreement") dated March 2, 2006 and effective as of the Effective Date (as hereinafter defined), is made and entered into by and between CONVERTED ORGANICS INC., a Delaware corporation (the "Company"), and JOHN P. WEIGOLD, (the "Executive"). WITNESSETH WHEREAS, the Company is engaged in the business of converting waste into high value products; and WHEREAS, the Executive has certain knowledge and expertise relating to the operation of businesses, in general, as well as the business of the Company; and WHEREAS, the Company desires to employ the Executive to perform certain services for and on behalf of the Company as hereafter set forth; and WHEREAS, the Executive desires to accept such employment upon the terms and conditions set forth in this Agreement. NOW THEREFORE, for and in consideration of the mutual covenants and agreements set forth herein, plus other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. Capitalized terms used in this Agreement shall have the meanings set forth below unless otherwise required by the content of this Agreement: "Agreement" shall have the meaning set forth in the introductory paragraph of this agreement. "Cause" shall mean (a) Executive's conviction of, or plea of guilty or nolo contendere to, a felony involving the business of the Company, (b) Executive's commission of a deliberately dishonest and fraudulent act which results in an adverse effect on the business of the Company, (c) Executive's willful, repeated or habitual neglect or refusal to perform Executive's duties or obligations under this Agreement, or (d) Executive's material breach of this Agreement which breach is not cured within a reasonable period of time following written notice by the Company. "Change of Control" shall mean: (i) The acquisition by any Person or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the Page 1 of 10

"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of (A) 20% of the total shares or more than 35% of the outstanding shares of common stock of the Company (the "Outstanding Company Common Stock") provided, however, that, for purposes of this Section, the following acquisitions shall not constitute a Change of Control: (1) any acquisition directly from the Company, (2) any acquisition by the Company, or (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Affiliates, or (ii) Individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's stockholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger, consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the outstanding shares of the Company common stock prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the then-outstanding shares of common stock and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation that, as a result of such transaction, owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the outstanding shares of the Company common stock, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 25% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the Page 2 of 10

board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or (iv) Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. "Confidential Information" means information that is not generally known and that is proprietary to the Company or that the Company is obligated to treat as proprietary. This information includes, without limitation: (i) trade secret information about the Company and its products and services; (ii) confidential information concerning the business, including customer lists and suppliers of the Company (as conducted at any time during the Employment Period); and (iii) confidential information concerning any of the past, current, or possible future locations, products and services of the Company, including (without limitation) information about research, development, engineering, purchasing, manufacturing, accounting, marketing, selling or leasing. Any information that is known to the public or that becomes known to the public other than through a breach of this Agreement by Executive or that which is received from a third party without breach of any obligation to the Company, is not Confidential Information. "Disability" shall mean any physical or mental impairment which causes the Executive to be unable to perform the essential functions of Executive's duties under this Agreement with reasonable accommodation for a period of one hundred twenty (120) consecutive days, or one hundred eighty (180) days during any twelve (12) month period or at such time as Executive is judged permanently disabled by medical experts. "Effective Date" shall mean the date on which the Company successfully completes the consummation of a transaction approved by its board of directors through which the Company secures initial minimum capital in an amount equal to or greater than $5,000,000 (five million dollars). "Employment Period" shall have the meaning set forth in Section 2.2 of this Agreement. "Fiscal Year" shall mean the Company's fiscal year, as it exists on the Effective Date or as changed from time to time. "Good Reason" shall mean any termination of employment by Executive as a result of: (i) the Company's material breach of this Agreement which breach is not cured within 30 (thirty) days following written notice by Executive; (ii) any material change in the duties and responsibilities assigned to Executive under this Agreement; and (iii) a requirement by the Company that Executive be based in an office that is more than 100 miles from Executive's principal place of employment as of the Effective Date. Page 3 of 10

"Inventions" shall mean any ideas, discoveries, modifications, improvements, designs, logos (whether or not they are in writing or reduced to practice) or works of authorship (whether or not they can be patented, copyrighted or registered as a trademark or service mark) that the Executive makes, authors, or conceives (either alone or with others) during the Employment Period and which (i) concern directly the business of the Company; (ii) result directly from any work the Executive performs for the Company; or (iii) makes use of the equipment, supplies, facilities, or trade secret information, of the Company. "Person" shall mean any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, or any other business entity or governmental body. "Severance" following or in connection with a Change in Control, shall mean the payment of 36 months of base salary and benefits; plus any bonus which would have been payable in the year the Executive's employment is terminated; and full acceleration of vesting of shares of common stock held by Executive and all Options granted by the company to Executive. In the absence of a Change in Control, "Severance" shall mean the payment of 12 months of base salary and benefits; plus full acceleration of vesting of shares of common stock held by Executive and all Options granted by the Company to Executive. "Without Good Reason" shall mean any termination of employment by Executive for any reason other than for Good Reason, including, without limitation, voluntary resignation by Executive. "Without Cause" shall mean termination by the Company for the sole convenience of the Company, exclusive of termination by reason of death, Disability of Executive, termination for Cause, or termination by Executive either for Good Reason or Without Good Reason. 2. Employment Terms and Duties. 2.1 Employment. The Company hereby employs the Executive, and the Executive hereby accepts such employment on the terms and conditions set forth in this Agreement. 2.2 Term. Unless earlier terminated as provided in this Agreement, the term of employment under this Agreement (the "Employment Period") shall be for a period beginning on the Effective Date and ending on December 31, of the year that is at least three (3) years subsequent to the Effective Date. 2.3 Title. The Executive shall have the title, Vice President of Development/Operations ("VP"). Page 4 of 10

2.4 Duties. The Executive shall have such duties and responsibilities as may be assigned to Executive from time to time by the Chief Executive Officer of the Company. Following the Effective Date, Executive shall devote Executive's full time and attention to the business and affairs of the Company throughout the remainder of the Employment Period. Executive shall (i) perform the duties and responsibilities assigned to Executive to the best of Executive's ability, and (ii) promote the best interests of the Company in carrying out the duties and responsibilities assigned to Executive. In performance of Executive's duties under this Agreement, Executive shall report directly to the Chief Executive Officer of the Company and shall be subject to the direction and control thereof. 2.5 Outside Board of Directors. Executive will be permitted to serve on the board of directors of up to two commercial or charitable organizations, for which Executive may receive compensation, provided that such activity does not conflict with Executive's obligations to the Company, nor substantially diminish the amount of time Executive spends in the performance of his duties and responsibilities with the Company. 3. Compensation and Benefits. 3.1 Salary. In consideration for the performance of Executive's duties under this Agreement, the Company shall, commencing on the Effective Date and continuing through the end of the Employment Period, pay Executive an annual salary ("Salary") during each year of the Employment Period of $180,000.00. Annual salary adjustments may be made at the discretion of the Chief Executive Officer and the compensation committee of the Board of Directors. The Salary payable to Executive under this Agreement shall be paid in such periodic installments as may be provided under the Company's customary payroll policy. The Salary shall be subject to annual review by the Board of Directors. 3.2 Bonus. Executive will be eligible to receive a bonus under any company bonus plan approved by the Board of Directors. 3.3 2006 Stock Options. Executive will receive an option to purchase 95,000 shares of the Company's common stock pursuant to the terms of the 2006 Stock Option Plan adopted by the Board of Directors. Executive shall be eligible for participation in all future equity based compensation programs that may be established by the Company which apply generally to Executive of the Company. 3.4 Benefits. During the Employment Period, Executive shall be entitled to participate in any employee benefit plans, including, without limitation, any life, disability, medical and/or dental plans, pension plans, 401(k) and any other customary plans adopted by the Company, to the extent that Executive is eligible to participate in such plans under the terms of such plans. Page 5 of 10

3.5 Expenses. The Company will pay on behalf of the Executive (or reimburse the Executive for) all reasonable and customary expenses incurred by Executive in the performance of Executive's duties under this Agreement, as well as all reasonable expenses incurred by Executive in the completion of this Agreement and subsequent agreements between Executive and Company. Reasonable and necessary relocation and moving expenses will be paid by the Company should the Executive be required to relocate. 3.6 Personal Leave Days (Vacations, Holidays and Sick Days). The Executive shall be entitled to thirty (30) days of paid leave to be used for vacation and sick days in addition to Company paid holidays. Vacation may be taken at such time as Executive chooses, provided such vacation taken does not unreasonably interfere with the duties and responsibilities of Executive. Personal Leave days during any calendar year that are not used by the Executive during such calendar year may not be "carried over" for use by Executive in any subsequent calendar year. 4. Termination. 4.1 Events of Termination. Executive's employment shall terminate upon the earliest to occur of any of the following events (hereinafter referred to as a "Termination Event"): (a) death of the Executive; (b) notice given by either party of termination as a result of the Disability of Executive; (c) notice given by the Company of termination of Executive (whether such termination is for Cause or Without Cause); (d) notice given by Executive of termination (whether such termination is for Good Reason or Without Good Reason). 4.2 Effect of Termination. Upon the occurrence of a Termination Event the party's sole rights and remedies shall be as set forth in this Agreement. Notwithstanding a Termination Event, all provisions of this Agreement which by their terms survive, including the covenants set forth in paragraphs 5, 6 and 7 of this Agreement, shall survive in accordance with such terms. 4.3 Termination Pay. Effective upon a Termination Event, the Company shall, in lieu of all other amounts and in settlement and complete release of all claims Executive may have against the Company, pay the Executive (or, in the event of Executive's death, the Executive's estate) only such amounts as are provided for in this paragraph. Page 6 of 10

(a) Termination Pay Upon Death or Disability. If Executive's employment is terminated because of the Executive's death, the Executive's estate will be entitled to receive an amount equal to Severance. (b) Termination Pay Upon Termination for Cause. If Executive's employment is terminated by the Company for Cause, the Executive will be entitled to receive Executive's Salary, Bonus, and Option(s) held by Executive through the date such termination is effective. (c) Termination Pay Upon Termination Without Cause. If Executive's employment is terminated by the Company Without Cause, the Executive will be entitled to receive Severance. (d) Termination Pay Upon Termination for Good Reason. If the Executive terminates Executive's employment for Good Reason, the Executive will be entitled to receive Severance. (e) Termination Pay Upon Termination Without Good Reason. Upon any termination by Executive Without Good Reason, the Executive will be entitled to receive only Executive's Salary, Bonus, and Option(s) held by Executive through the date such termination is effective. (g) Benefits Upon Termination. The Executive's accrual of, or participation in, any employee benefit plans will continue in accordance with the provisions of such plans. The Executive will receive any payment or other compensation for any vacation unused on the date of termination of Executive's employment within 30 (thirty) days of the termination date. Any Salary or additional compensation payable to Executive pursuant to this paragraph shall be paid in a single, lump sum payment on the date of termination. 5. Non Disclosure and Non Interference. Executive agrees (i) not to use any Confidential Information for any purpose other than the business of the Company, and (ii) not to disclose any part of the Confidential Information to any Person who is not authorized by the Company to receive such Confidential Information and who is required to maintain the confidentiality of such information. Executive agrees that, upon termination of the Employment Period, Executive shall promptly deliver to the Company (or leave in the possession of the Company) all documents, records and any other items that disclose, describe or embody Confidential Information, and any other property of the Company (whether or not containing Confidential Information) which is within the Executive's possession, custody or control. In the event Executive is required to disclose any Confidential Information by reason of law or by order of any court or tribunal of competent jurisdiction, Executive shall immediately give notice of such requirement or order to the Company and shall use Executive's reasonable best efforts to provide the Company with an adequate opportunity to seek appropriate relief to protect the confidentiality of the Page 7 of 10

Confidential Information. Executive further agrees not to (i) solicit, employ, or otherwise engage as an employee, independent contractor, or otherwise, any person who is an employee of the Company at any time, or in any manner induce or attempt to induce any employee of the Company to terminate his or her employment with the Company; or (ii) disparage the Company or its customers or suppliers, or any of their officers, directors, shareholders, employees, or agents. 6. Inventions. Executive agrees that all Inventions made by the Executive during the Employment Period will be the Company's sole and exclusive property and shall for all purposes be deemed "works for hire". Executive will, with respect to any Invention: (i) keep current, accurate, and complete records, which will belong to the Company and be kept and stored on the Company's premises; (ii) promptly and fully disclose the existence and describe the nature of any Invention to the Company; (iii) assign (and the Executive does hereby assign) to the Company all of Executive's rights to any Invention, any applications Executive makes for patents or copyrights in any country, and any patents or copyrights granted to Executive in any country; and (iv) acknowledge and deliver promptly to the Company any written instruments, and perform any other acts necessary in the Company's opinion to preserve property rights in any Invention against forfeiture, abandonment or loss and to obtain and maintain letters, patents and/or copyrights on any Invention and to vest the entire right and title to any Invention in the Company. Inventions include but are not limited to improvements to the Company's products, process and technology. 7. Non-Competition. Executive agrees that, during the Employment Period and for a period of one (1) year thereafter, Executive shall not, directly or indirectly, (i) own, manage, operate, lend Executive's name or credit to, or be connected with, either as an owner, director, employee, agent, independent contractor, partner, sole proprietor, lender or otherwise, any business which competes with the Company in connection with the commercial conversion of waste into high value products that is substantially similar to that developed by the Company or any product developed or marketed by the Company at any time during the Employment Period, or (ii) induce any employee of the Company to terminate such employee's employment with the Company or hire any employee of the Company to work with Executive or any company or business affiliated with Executive. Notwithstanding the limitations on the ownership of competing businesses set forth above, Executive may hold, purchase, or acquire up to (but not more than) one percent 1% of any class of equity securities of any competing business if such securities are listed on any national or regional securities exchange or have been registered under Section 12(g) of the Securities Act of 1934. If any part of the foregoing covenant not to compete is held to be unreasonable, arbitrary, or against public policy, such covenant shall be considered to be divisible with respect to scope, time, and geographic area, and such lesser scope, time, or geographic area, or all of them, as may be necessary to be determined to be reasonable, not arbitrary and not against public policy, will be effective, binding, and enforceable against the parties hereto. Page 8 of 10

8. Miscellaneous. 8.1 Entire Agreement. This Agreement constitutes the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements, representations, and understandings of the parties, whether oral or written, with respect to the subject matter hereof. 8.2 Amendments, Modification and Waiver. No amendment, modification, or waiver of any provision of this Agreement shall be effective unless it is in writing and signed by the party against whom enforcement of such modification, amendment or waiver is sought. This Agreement will be expressly made a part of any agreement entered into by the Company to sell equity in the Company. 8.3 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the parties hereto, their respective personal representatives, heirs, successors, and permitted assigns. 8.4 Assignment. No party to this Agreement may assign its rights or delegate its obligations under this Agreement to any other Person or other entity without the express prior written consent of the other party to this Agreement. 8.5 Severability. The invalidity or unenforceability of any provision of this Agreement shall not affect the validity of enforceability of any other provision hereof and if any particular provision is determined to be invalid or unenforceable, the remainder of this Agreement shall be interpreted and construed as if such provision were omitted. 8.6 Notices. All notices, requests, consents, demands, and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to be duly given and received on the date of delivery if delivered personally (or sent by fax), or on the second day after deposit in the United States mail if mailed by prepaid first class registered or certified mail, and properly addressed as follows: If to the Company: Converted Organics Inc
7A Commercial Wharf West Boston, MA 02110 Facsimile No.: (617) 624-0333 If to Executive: John P. Weigold 122 Bowdoin Street, Apt. #86 Boston, MA 02108

Any party may change its address for purposes of this paragraph by giving the other party written notice of the new address in the manner set forth above. Page 9 of 10

8.7 Headings. Descriptive headings used in this Agreement are for convenience of reference only and shall not control or affect the meaning or construction of any provision of this Agreement. 8.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Massachusetts, without regard to any otherwise applicable principles of conflicts of laws. 8.9 Counterparts and Facsimile. For the convenience of the parties hereto, this Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same instrument. This Agreement may be executed by facsimile signature, and each signature printed by a facsimile machine, when attached to this Agreement, shall be deemed an original counterpart. 8.10 Further Assurances. Each party shall perform such further acts and execute and deliver such further documents as may be reasonably necessary to carry into or give effect to the intention of the parties hereto and to carry out and accomplish the purposes of this Agreement. IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date above first written above.
EXECUTIVE: John P. Weigold Print Name COMPANY: Converted Organics Inc.

/s/ John P. Weigold ------------------------------------Signature V.P. of Development/Operations Title 6/15/06 Date

/s/ Edward J. Gildea ---------------------------------------By Edward J. Gildea ---------------------------------------Its President and CEO 6-14-06 Date

Page 10 of 10

Exhibit 10.9 (WESTON SOLUTIONS(R) LOGO) WESTON SOLUTIONS OF NEW YORK, INC 85 Wellington Court Yorktown Heights, NY 10598 732-417-5800 - Fax 732-417-5801 www.westonsolutions.com May 29, 2003 Mr. William A. Gildea, Jr. ECAP, LLC 137 Newbury Street Seventh Floor Boston, MA 02116 RE: Mining Organics Management Harlem River Yard Facility Design Dear Mr. Gildea: WESTON Solutions of New York, Inc. (WESTON(R)) is pleased to provide the attached Scope of Work (SOW) for the design of the Harlem River Yard organic waste to fertilizer manufacturing facility. The attachment outlines our scope, assumptions, and exclusions. As previously discussed, WESTON has estimated our design effort will be a lump sum amount of Five Hundred Thousand Dollars ($500,000) for these services. We are prepared to proceed upon your authorization and receipt of appropriate information from the technology provider, International BioRecovery (IBR). Acceptance of this proposal and the attached Terms and Conditions can be made by signing in the space provided below. We appreciate the opportunity to submit this proposal and look forward to the opportunity to provide the design services for this project. If you have any questions, please feel free to contact us at your convenience. Very Truly Yours, WESTON SOLUTIONS, INC.
/s/ Donald (Buzz) Grogan ---------------------------------------Donald (Buzz) Grogan, P.E., DEE Vice President/General Manager

cc: Greg C. Miller, WESTON Enclosures

(WESTON SOLUTIONS(R) LOGO) Mr. William A. Gildea, Jr. ECAP, LLC 2 May 29, 2003 AUTHORIZATION TO PROCEED This proposal is hereby approved and the General Terms and Conditions as outlined above agreed upon.
/s/ John (Illegible) ------------------------------------Authorized Representative Mining Organic Management May 30, 2003 Date

1. SCOPE OF WORK Weston Solutions, Inc. (WESTON(SM)) will receive a generic design for an organic waste processing facility from IBR. It is expected that the generic design will include all of the basic elements required to construct a facility to convert the organic waste into a pelletized solid fertilizer and a concentrated liquid fertilizer. In general, it is assumed that the IBR design package will include the following: - Process flow diagrams and mass balance. - Process and instrumentation diagrams. - Equipment list. - Hydraulic profiles. - Dimensions and specifications for all unit processes. - Specifications for pelletizer, evaporator, reactors, dryer, Fournier press, aerators, pumps, blowers, etc. - Operations and maintenance manual for the facility suitable for permitting requirements. - Generic engineering drawings. It is assumed that all drawings will be provided in AutoCADD version 14 (or compatible) electronic format, and all text will be provided in Microsoft Word (or compatible) electronic format. A more detailed list of our assumptions with regard to the contents of the generic design package is included in Attachment A. WESTON's Scope of Work for design (WO# 13083.001.001) will include modifying the IBR furnished documentation as follows: - Modifying the IBR Basis of Design Document. - Evaluating alternate technologies that can be used to concentrate the liquid fertilizer (based on previous IBR evaluations and research). - Revising the process flow diagrams to be specific to the Harlem River Site. 1 3 JUNE 2003

- Revising the process and instrumentation diagrams to be specific to the Harlem River Site. - Revising hydraulic profiles to be specific to the Harlem River Site. - Preparing layouts for equipment, tanks, and piping at the Harlem River Site. - Modifying the IBR design for pre-engineered metal panel buildings to house the process equipment. - Modifying the IBR design for mezzanines and catwalks. - Modifying the IBR design for a biofilter for air emissions treatment. - Modifying the IBR design for the HVAC system for the buildings. - Modifying the IBR design for sizing and specifying the boiler(s) for process and heating. - Modifying the IBR design for the building electrical, lighting, and plumbing. - Modifying the IBR design for mechanical work, including all pumps, aerators, reactors, processing equipment, etc. - Modifying the IBR design for electrical work, including electrical distribution, motor control, power supply to all equipment. - Modifying the IBR design for process instrumentation and control work. - Modifying the IBR design for process safety documentation. Tasks that are not presently included in WESTON's Scope of Work, but will need to be performed to implement and support the Design Phase include the following: - Surveying the site and producing an existing conditions site plan. - Conducting geotechnical investigations and a geotechnical evaluation for designing foundations for the buildings and tanks. - All permitting, including state, local, and federal environmental permitting; and local building, zoning, community permitting or obtaining variances (if necessary). - Environmental Impact Study. 2 3 JUNE 2003

- Visual screening of facility. - Fuel cell evaluation. The following Scopes of Work will be considered Construction Phase tasks and are not included in the Design Phase. Scope of Work for Procurement (WO# 13083.001.002) will include: - Preparing an RFQ and evaluating Statements of Qualifications and Experience for a minimum of 3 general contractors. - Selecting a general contractor based on qualifications. - Preparing an RFP (with design package) for construction of building and installation of equipment, piping, electrical, controls, - Conducting price negotiations with general contractor. - Preparing RFPs and soliciting of prices for the major equipment. - Procuring miscellaneous equipment and supplies for construction of the facility. Scope of Work for Construction Administration (WO# 13083.001.003) will include: - Preparing a Health & Safety Plan for the project. - Providing a minimum of one full-time construction inspector at the construction site to oversee construction activities. - Providing a second construction inspector at the construction site when required to ensure proper QA of work. - Mobilization to the site, including provision of a construction trailer with phone, fax, and utilities for the duration of construction. - Reviewing shop drawing submittals. - Conducting Health & Safety Inspections to facilitate worker safety and compliance with OSHA requirements. - Approval of contractor pay estimates. - Preparing punch lists and ensuring contractor's work is completed satisfactorily. 3 3 JUNE 2003

WESTON GENERAL TERMS AND CONDITIONS 1. PARTIES. References herein to WESTON mean the entity, division, affiliate or subsidiary corporation of WESTON SOLUTIONS, INC. (WESTON(R)) identified in the Proposal to which these General Terms and Conditions are attached or have been incorporated by reference therein. 2. DEFINITIONS. Agreement - The Agreement consists of the Contract Documents as described in Article 3 below. Access Agreements - All necessary approvals, permits, licenses, easements and consents that relate to or are necessary for performance of WESTON's services. Change Order - CLIENT'S written request for services differing from the services described in the Scope of Work. Modification - A written amendment to the Agreement modifying the Scope of Work, the compensation and/or the terms and conditions of the Agreement signed by CLIENT and WESTON. Days - A day as used herein means a business day unless otherwise described. Project Records - Information in documentary, electronic medium or other form relating to performance of WESTON's obligations under this Agreement. Proposal - The letter or document, signed by WESTON, to which these General Terms and Conditions are attached or made a part of and which sets forth WESTON's technical and/or cost proposal for the Work. Scope of Work or Work - The services and products WESTON has agreed in its Proposal to provide to CLIENT pursuant to this Agreement. Underground Facilities - Equipment and material beneath the ground surface including but not limited to buried or concealed pipes, tanks, cables, instruments, utilities, and other man-made objects which may affect or be affected by WESTON's services. 3. CONTRACT DOCUMENTS/ORDER OF PRECEDENCE. The Contract Documents include Modifications, Proposal, WESTON General Terms and Conditions, Scope of Work, Special Terms and Conditions, Specifications and Drawings. In the event of any ambiguity, inconsistency, or conflict between or among the respective Contract Documents, the Contract Documents shall govern in the following descending order of precedence: (a) Modifications. (b) Proposal. (c) Special Terms and Conditions. (d) General Terms and Conditions. (e) Scope of Work. (f) Specifications and Drawings. In the event of any ambiguity and/or inconsistency between or among Contract Documents having the same caption, a later dated document will take precedence over an earlier dated document. 4. CHANGES. CLIENT, by Change Order furnished to WESTON, may request changes within the general scope of the Agreement in the Work to be performed. In order to be an effective request for such a change, any oral request for change in the Work must be confirmed in writing by a Change Order. If any such changes cause

an increase in WESTON's costs and/or increase the time required for, or the nature of performance of the Agreement, WESTON shall so notify CLIENT within a reasonable time following receipt of the Change Order and an equitable adjustment in compensation shall be made through a Modification. WESTON shall have no obligation with respect to such changes, nor will WESTON be considered to be in default for failure or refusal to proceed with such changes until agreement on such cost or time impact has been incorporated into a signed Modification. In the event the Parties fail to agree upon an equitable adjustment to price or schedule resulting from changes sought by CLIENT in the Scope of Work, WESTON may at its sole option cease the Work without liability, or terminate or suspend this Agreement should WESTON determine that it would not be in its best interest to agree to such changes. 5. EXCLUDED SERVICES. CLIENT acknowledges that the services and/or products to be provided by WESTON under this Agreement include only those services and/or products that are expressly listed in the Scope of Work. WESTON shall have no responsibility to provide any services and/or products that are not expressly listed in the Scope of Work. CLIENT has made its own determination that any services and/or products that are not listed in the Scope of Work are either unnecessary or will be obtained by CLIENT from sources other than WESTON. 6. FORCE MAJEURE. WESTON will not be responsible for delays, such as, but not limited to, those attributable to acts of God, acts of the CLIENT or third Parties, weather, intervention of public authorities, work stoppages, changes in applicable laws or regulations after the date of commencement of performance hereunder or any other acts or omissions or events which are beyond the reasonable control of WESTON. Costs and schedule commitments shall be subject to renegotiation for unreasonable delays caused by CLIENT'S or third Party's failure to provide specified facilities or information. The time for performance shall be equitably adjusted in the event WESTON is delayed in the performance of this Agreement by such causes and an equitable adjustment in compensation shall be made in accordance with the provisions of Article 4 hereof. 7. INVOICES. (A) Invoices will be submitted on WESTON's standard invoice format periodically (customarily on a monthly basis), and terms are net cash in U.S. dollars, due and payable upon CLIENT'S receipt of each invoice. (B) When the contract payment is based on a cost reimbursement, time and material, labor hour, or fixed rate schedule, the following provisions shall apply: (i) Where applicable, rental charges will be applied to the Project to cover the cost of pilot-scale facilities, equipment, apparatus, instrumentation or other technical machinery. When such charges are applicable, CLIENT will be advised at the start of an assignment, task or phase. Analyses performed in WESTON's laboratories will be billed in accordance with the laboratory's standard billing practices unless specified otherwise in the Agreement. (ii) Reimbursable expenses shall include but are not limited to: travel and subsistence expenses of personnel (which may be charged on a per diem basis) when away from their home office on business directly or indirectly connected with the Project; identifiable communication, shipping, printing, and reproduction costs; subcontractors; identifiable drafting and stenographic supplies; computer time and software; and expendable materials and supplies purchased specifically for the Work. A ten percent (10%) handling and administrative charge will be added to each reimbursable expense item (as more fully described in WESTON's Hourly Charge Rates, if applicable). When WESTON, after commencement of the Work, determines that specialized equipment is needed to perform the services, it will notify CLIENT of such requirement and purchase the equipment for CLIENT as a reimbursable expense. (iii) Invoices will be submitted on WESTON's standard invoice format which will state labor hours worked and total expenses, but will not include original documentation (such as time sheets and expense receipts). If additional detail or actual invoice documentation is requested by CLIENT, the labor and expenses associated with retrieval, gathering, sorting, highlighting, mailing and copying supporting documentation will be paid by CLIENT and will be billed to CLIENT on subsequent invoice(s). (C) When the method of contract payment is based on a fixed price/lump sum Agreement, invoices will be submitted based on the billing schedule proposed by WESTON and agreed to by the Parties.

8. PAYMENTS. Time is of the essence in the payment of invoices. Timely payment of invoices is a material part of the consideration of the Agreement and failure to pay invoices shall therefore constitute a material breach. Invoices not paid within thirty (30) calendar days of receipt by CLIENT arc considered overdue and shall be subject to an interest charge at a rate equal to the greater of one and one-half percent (1-1/2%) per month on the overdue balance or the maximum charge permitted by applicable law. CLIENT agrees that in the event litigation is instituted by WESTON for payment of its invoices, WESTON shall be entitled to receive, in addition to all unpaid invoice amounts, interest at the above rate, filing and service costs and reasonable attorney's fees and expenses. In addition, CLIENT agrees that WESTON may, after giving ten (10) days written notice to CLIENT, suspend services without liability until CLIENT has paid in full all amounts due WESTON on account of ser vices rendered and expenses incurred, including interest on overdue invoices. Invoices shall not be subject to any discount. Invoice amounts in dispute hereunder shall not affect CLIENT'S obligation to pay remaining invoice charges and CLIENT shall not offset or deduct from amounts payable hereunder any amounts for the purpose of satisfying any other claims CLIENT may have against WESTON under this or any other Agreement. 9. PAYMENT OF INVOICES. CLIENT shall remit all invoices for more than twenty-five thousand dollars ($25,000.00) through electronic wire transfer of funds to WESTON's bank account, identified below: Account Number 94292-23574 ABA Number: 011900571 Swift BIC: FNBBUS33 (For International Accounts) Page 1 of 4

WESTON GENERAL TERMS AND CONDITIONS (CONTINUED) CLIENT may remit payment of invoices for less than twenty-five thousand dollars ($25,000.00) to WESTON'S lockbox account identified below: Weston Solutions, Inc. P.O. Box 538253 Atlanta, GA 30353-8253 10.(A) TERMINATION FOR DEFAULT. Either Party ("Terminating Party") may terminate this Agreement, in writing, if the other Party ("Breaching Party") fails to fulfill its obligations under the Agreement ("breaches") through no fault of the Terminating Party. In such event the Terminating Party may, after giving the Breaching Party an opportunity to cure (as described in the next sentence of this Article 10(A)), declare the Breaching Party in default by issuing a Declaration of Default and terminate the Agreement for cause. Before issuing such Declaration of Default, the Terminating Party shall advise the Breaching Party that a Declaration of Default is imminent by sending the Breaching Party a written notice ("Notice of Imminent Default") by registered or certified mail, return receipt requested, including a description of the conditions constituting breach of the Agreement and providing the Breaching Party a period of time of not less than five (5) days and not more than twenty (20) days within which to correct such conditions to the satisfaction of the Terminating Party. In the event that the Breaching Party docs not correct such conditions contained in the Notice of Imminent Default to the satisfaction of the Terminating Party within the designated period of time, the Terminating Party may issue a Declaration of Default and terminate the Agreement effective on the date specified in the Declaration of Default (the "Effective Date"). Disputes arising under this Article, including final payment to WESTON, if unresolved amicably, shall proceed in accordance with Article 25 hereof. In the event this Agreement is terminated for default, the Parties shall comply with the Orderly Transfer of responsibility provisions contained in Article 10(C) below. (B) TERMINATION/SUSPENSION FOR CONVENIENCE OF CLIENT. The Work may be terminated or suspended by CLIENT in accordance with this Article 10(B) when CLIENT determines that such termination or suspension is in CLIENT'S best interests. Any such termination or suspension shall be instituted by delivery to WESTON of a written Notice of Termination/Suspension for Convenience specifying the Agreement is being terminated or suspended for the convenience of CLIENT and directing WESTON to cease the performance of services under the Agreement upon the date of WESTON'S receipt of such notification (the "Effective Date"). After receipt of the Notice of Termination/Suspension for the Convenience of CLIENT, WESTON shall upon the Effective Date cease performing services under the Agreement and as soon as practicable thereafter, WESTON shall: (1) Terminate or suspend all orders and subcontracts to the extent that they relate to the performance of the Work terminated or suspended by the Notice of Termination/Suspension for Convenience. (2) Assign to CLIENT all of WESTON'S rights, title and interest under the orders and subcontracts so terminated or suspended. (3) Transfer to CLIENT (and CLIENT will accept responsibility for) the obligation to satisfy all outstanding liabilities and all unresolved claims arising out of termination/suspension of orders and subcontracts associated with such termination or suspension; CLIENT shall release WESTON from all such outstanding liabilities and unresolved claims, and CLIENT shall indemnify, hold harmless and defend WESTON from all losses, costs, damages and expenses, including attorneys' fees and expenses, arising out of or in connection with such outstanding liabilities and unresolved claims. (4) Transfer the responsibility for site management from WESTON to CLIENT in accordance with Article 10(C) below. (5) Submit to CLIENT and CLIENT shall pay WESTON'S termination or suspension invoice including, but not necessarily limited to, the total of: (a) The cost and fees associated with such Work.

(b) The cost of settling and paying claims arising out of the termination or suspension of Work under subcontracts or purchase orders. (c) Reasonable demobilization costs. (d) A reasonable allowance for profit. (e) All costs incurred under Article 10(C) below. (C) ORDERLY TRANSFER OF RESPONSIBILITY. To the extent the Work involves WESTON-directed activity on site and the Work is terminated or suspended, whether for Convenience of CLIENT or for Default, the Parties hereto understand and agree that certain steps (hereinafter referred to as "Orderly Transfer") must be taken to properly implement the termination or suspension. CLIENT agrees that all costs of the Orderly Transfer will be borne by CLIENT. Upon notification of termination or suspension, WESTON will prepare a memorandum of Orderly Transfer, which will advise CLIENT of the steps necessary to shut down the job site or otherwise effect a transition. Upon completion of the Orderly Transfer, WESTON will provide written notification to CLIENT. Upon notification by WESTON, CLIENT agrees to accept all responsibility for the Work and site, including but not limited to, continued maintenance and protection of the Work and site in accordance with all federal, state, and local laws and regulations. In the event of termination or suspension of Work under this Agreement, whether for convenience, for default or as otherwise specifically permitted under this Agreement, CLIENT accepts full responsibility for continuing operations on the site and to the fullest extent permitted by law, CLIENT shall indemnify, hold harmless and defend WESTON and its agents and employees from and against any and all claims, liabilities, costs, losses, damages and expenses, including attorneys' fees and expenses, arising out of or resulting from site maintenance, protection and operation of the site following the Orderly Transfer in accordance with this Article 10(C). 11. HEALTH AND SAFETY. WESTON has established and maintains a Health and Safety program for its employees. A copy of this Health and Safety plan is available for review upon request from CLIENT. WESTON specifically disclaims any authority or responsibility for general job site safety and health and safety of persons who are not WESTON'S employees. Unless otherwise specifically included in the Scope of Work, WESTON is not responsible for the work site safety or the safety of any persons on the project site other than WESTON'S employees. 12. STANDARD OF CARE. When WESTON serves as the professional representative of CLIENT or provides any professional services to CLIENT under this Agreement, WESTON will endeavor to do so in accordance with generally accepted professional standards and practices as applied to similar projects performed under similar conditions prevailing in the community where services are rendered at the time such advice, consultation and/or services are provided by WESTON. The Parties intend that the duty owed by WESTON is solely for the benefit of the CLIENT and that there is no other Party contemplated to benefit from the Work performed hereunder. 13. INDEPENDENT CONTRACTOR. Unless provided otherwise elsewhere in this Agreement, WESTON shall provide its services under this Agreement as an independent contractor and its employees shall not be considered to be employees of CLIENT in any respect or for any purpose whatsoever. 14. NO WARRANTY/GUARANTEE. Estimates of cost, approvals, recommendations, opinions and decisions by WESTON are made on the basis of WESTON'S experience, qualifications and professional judgment and are not nor should they be considered or construed as warranties or guarantees. WESTON MAKES NO WARRANTY OR GUARANTEE, EXPRESSED OR IMPLIED, REGARDING THE WORK TO BE PROVIDED UNDER THIS AGREEMENT. 15. HAZARDOUS MATERIALS. CLIENT bears full responsibility and liability for the creation, existence or presence of any toxic, hazardous, radioactive, infectious or other dangerous substances existing at the site at the time WESTON commences performance of services at the site. CLIENT recognizes that when it is known,

assumed or suspected that hazardous materials exist on or beneath the surface of the site of the Project or within any structure thereon, certain sampling materials or residues, such as drill cuttings and drilling fluids or asbestos removed for sampling, should be handled as if hazardous or contaminated and CLIENT shall so notify WESTON and all appropriate federal, state and local public agencies in writing as required that such materials or residues may present a potential danger to the public health, safety and/or the environment. Accordingly, when sampling is included in the Scope of Work and when determined by WESTON in its sole discretion to be necessary based on WESTON'S assessment of the degree of contamination, hazard and risk, WESTON will promptly inform CLIENT that containerization and labeling of wastes or residues will be performed. WESTON will appropriately containerize and label such materials and will leave such containers on the site for proper and lawful removal, transport and disposal by CLIENT. CLIENT waives any claim against WESTON and agrees to indemnify, defend and hold WESTON harmless from any claim, cost, loss, damage, expense or liability, including attorneys' fees and expenses, which may Page 2 of 4

WESTON GENERAL TERMS AND CONDITIONS (CONTINUED) arise as a result of or in connection with the drill cuttings, drilling fluids or other assumedly hazardous materials being left on the site of the Project after containerization by WESTON except where due solely to WESTON'S negligent acts or omissions. The Parties do not intend for WESTON to take title to, control or have final authority with respect to the disposition of any hazardous substance or waste. Accordingly, WESTON will not be considered to be a generator, arranger, storer, transporter, operator or disposer of hazardous substances or wastes as a result of activities performed in connection with this Agreement. CLIENT shall select and arrange for lawful disposal of any hazardous substance, including but not limited to, samples obtained in connection with work under this Agreement WESTON may execute any manifests or forms in connection with such activity in the name of and on behalf of CLIENT. If and to the extent that WESTON is notified of claims in connection with or arising out of the handling, transportation, treatment, storage or disposal of hazardous substances or wastes in connection with the performance of this Agreement, CLIENT shall defend, indemnify and hold WESTON harmless from and against any and all such claims and any liabilities, costs, losses, damages and expenses, including attorneys' fees and expenses, for or associated with such claims. 16. INSURANCE. WESTON agrees to maintain, at its own expense, Worker's Compensation, Commercial General Liability, Automobile Liability, and Professional Liability insurances as follows:
TYPES OF INSURANCE -----------------Worker's Compensation Employer's Liability Commercial General Liability LIMITS OF LIABILITY -----------------------Statutory Worker's Compensation $1,000,000 Employer's Liability $1,000,000 each occurrence $2,000,000 aggregate $1,000,000 each accident or loss All vehicles including hired and non-owned $1,000,000 per single claim/aggregate

Automobile Liability

Professional Liability (including Pollution Errors and Omissions) Contractor Pollution Liability Insurance

$ 1,000,000 per single claim/aggregate

WESTON will, upon request, furnish appropriate insurance certificates to CLIENT. WESTON agrees to indemnify CLIENT for the hazards covered by WESTON's insurance subject to the limitation of liability contained in Article 18. WESTON agrees to purchase such additional insurance as may be requested by CLIENT (if such insurance is available), provided the costs (including WESTON's administrative costs) for such additional insurance are reimbursed by CLIENT. 17. INDEMNITY. Subject to the Limitation of Liability contained in Article 18 of this Agreement, WESTON shall defend, indemnify and hold CLIENT harmless from liability for claims, liabilities, losses, costs, damages and expenses, including attorneys' fees and expenses, for bodily injuries or death, property loss or damage, caused solely by the negligent acts or omissions or willful misconduct of WESTON, provided that WESTON shall not be responsible for and CLIENT shall defend, indemnify and hold WESTON harmless from any such claims, liabilities, losses, costs, damages and expenses, including attorneys' fees and expenses, arising from the negligence, acts or omissions of CLIENT, or CLIENT'S agents, representatives or employees. CLIENT shall defend, indemnify and hold WESTON harmless from all liability, claims, losses, costs, damages and expenses, including attorneys' fees and expenses, for personal injuries, including death, property loss or

damage, injuries to others (including employees of CLIENT, WESTON, and their subcontractors), and air, water or ground pollution or environmental impairment arising out of or in any manner connected with or related to the performance of the Agreement, unless such injury, loss or damage is caused solely by the negligent acts or omissions or willful misconduct of WESTON. CLIENT shall indemnify, defend, and hold WESTON, its subsidiaries and affiliates, its employees and agents harmless against all claims, liabilities, losses, costs, damages and expenses, including attorneys' fees and expenses (other than liability caused solely by WESTON's negligent acts or willful misconduct) arising from or in connection with the violation or alleged violation of CLIENT'S or any third Party's trade secrets, proprietary information, trademark, copyright or patent rights in connection with the performance of the Work hereunder. CLIENT'S obligation to indemnify, defend and hold harmless WESTON or any employee or agent under this or any other provision of this Agreement will survive the expiration or termination of this Agreement. WESTON shall promptly notify CLIENT of any third Party claim known to WESTON and CLIENT may, at its option, participate in the defense of any such third Party action and WESTON shall cooperate with such defense. Claims against WESTON under this Indemnity provision are considered disputes and shall be subject to Article 25 hereunder. 18. LIMITATION OF LIABILITY. Notwithstanding any other provision of these General Terms and Conditions, and unless a higher limit of liability is expressly provided elsewhere in this Agreement in a provision making specific reference to this Article 18, WESTON's total liability to CLIENT for any loss or damage from claims under, arising out of or in connection with this Agreement from any cause, matter or event, including but not limited to WESTON's strict liability, breach of contract, tort or professional negligence, errors or omissions and/or any other basis, shall not exceed the lesser of (a) the total amount paid by CLIENT to WESTON under this Agreement or (b) the proceeds, if any, available from WESTON's liability insurance as specified in Article 16 hereof. CLIENT hereby releases WESTON from any liability exceeding such limited amount. In no event shall either Party be liable to the other for special, indirect, punitive, incidental or consequential damages whether or not such damages were foreseeable at the time of the commencement of the Work. 19. WESTON EMPLOYEES. During the term of this Agreement and for a period of six (6) months after completion or termination of this Agreement, CLIENT shall not offer to employ or actually employ any WESTON employee assigned to the Work. CLIENT agrees that WESTON may utilize employees of any of WESTON's subsidiary companies and affiliates in the performance of this Agreement 20. SITE CONDITIONS/SITE ACCESS. CLIENT will provide WESTON access to the site. Before the start of work, CLIENT shall provide WESTON or advise WESTON of the location of any and all existing environmental information, including but not limited to, studies, reports, laboratory analyses and underground facilities known to CLIENT or in CLIENT'S possession or control or which it has reason to believe exist which may be pertinent to the Work. WESTON shall not be liable for damage, or bodily injury or death arising from damage, to subterranean structures (e.g., pipes, tanks, cables, etc.) when such structures are not called to WESTON's attention and/or accurately shown on plans furnished to WESTON by CLIENT in connection with the Work performed under this Agreement CLIENT represents that it has obtained or will obtain permission on behalf of WESTON to enter all property required for inspection and performance of WESTON's services hereunder, including any access agreements, from all necessary Parties before start of the Work on such property. 21. CONFIDENTIALITY. WESTON shall maintain as confidential and not disclose to others without CLIENT'S prior written consent, any information or documents obtained from CLIENT expressly designated by the CLIENT in writing to be "CONFIDENTIAL." The provisions of this Article shall not apply to information in any form which (a) is published or comes into the public domain, (b) is already known to or by the receiving Party, (c) is furnished by or obtained from a third Party which is under no obligation to keep the information confidential, or (d) is required to be disclosed by law or pursuant to a court order or subpoena of a court, administrative agency or other authority with proper jurisdiction. Notwithstanding anything to the contrary set forth herein, it is understood by CLIENT that WESTON is or may be subject to certain legal and ethical considerations and obligations depending upon the nature and Scope of Work rendered hereunder which may require WESTON to disclose facts observed by WESTON to third Parties. In such event, WESTON shall advise CLIENT, but shall, subject to any legal or professional obligation as determined by WESTON's counsel to immediately disclose such facts, refrain from making any such disclosure until WESTON and CLIENT have conferred with respect to such facts. If for any reason the Parties

are unable to confer or if WESTON believes on the advice of counsel that it must disclose such facts, WESTON shall notify CLIENT of its intention to disclose such information prior to actual disclosure to third Parties. Any such disclosure shall not be deemed a violation or breach of this Agreement and CLIENT agrees that WESTON shall be and is hereby released from any liability, claim or cause of action whatsoever with respect to such disclosure. CLIENT agrees that WESTON may use and publish CLIENT'S name and a general description of WESTON's services with respect to the Work in describing WESTON's experience and qualifications to other clients Page 3 of 4

WESTON GENERAL TERMS AND CONDITIONS (CONTINUED) and potential clients. WESTON's technical and pricing information contained in the Proposal or Agreement is considered confidential, proprietary information constituting a trade secret and is not to be disclosed or otherwise made available to third Parties without the prior written consent of WESTON. 22. USE OF PROJECT RECORDS. All Project Records, including but not limited to, drawings and specifications, prepared or furnished by WESTON (including WESTON's independent professional associates, consultants and subcontractors) pursuant to this Agreement are instruments of service regarding the Work. CLIENT may make and retain copies for information and reference in connection with the Work; however, Project Records are not intended or represented to be suitable for any use other than the use specified in the Contract Documents. Any reuse of Project Records without prior written verification or adaptation by WESTON for the specific purpose intended in this Agreement will be at CLIENT'S sole risk and exposure and without liability or legal exposure to WESTON, or to WESTON's independent professional associates, consultants or subcontractors. CLIENT shall indemnify, defend and hold harmless WESTON and WESTON's independent professional associates, consultants and subcontractors from and against any and all claims, liabilities, losses, costs, damages and expenses whatsoever, including attorneys' fees and expenses, arising out of or resulting from reuse of any such Project Records without WESTON's express, prior written approval of reuse. Any verification or adaptation agreed to by WESTON will entitle WESTON to compensation at rates to be agreed upon by CLIENT and WESTON at that time. 23. RECORDS RETENTION. It is WESTON's practice and policy to retain Project Records including reports, drawings and correspondence developed during performance of the Agreement for a period of three (3) years after project completion. Such records may be maintained on electronic or other media, as WESTON may deem appropriate. In the event CLIENT desires Project Records to be maintained for an additional period of time or in specific media, upon CLIENT'S written request to WESTON, such records shall either (a) be delivered to CLIENT or (b) be retained by WESTON for additional period(s) of time for a reasonable additional charge. 24. SERVICES. It is understood and agreed that the Work performed and related products furnished to CLIENT under this Agreement are not subject to any provision of any Uniform Commercial Code. 25. DISPUTES. Unless the law provides a shorter limitations period (in which event that shorter limitations period shall apply), all disputes between the Parties arising out of or in connection with this Agreement must be brought within three (3) years of the commencement of the Work hereunder. All disputes between the Parties arising out of or in connection with this Agreement shall be resolved by submission to Mediation and Arbitration in Philadelphia, PA, or such other place as otherwise agreed in writing by the Parties as described below: (A) MEDIATION The Parties shall attempt in good faith to mediate each dispute and use their best efforts to reach agreement on the matters in dispute. Either Party may make written request for non-binding mediation, which shall specify in reasonable detail the facts of the dispute, and within ten (10) days from the date of delivery of the demand, the matter shall be submitted to Mediation in accordance with the American Arbitration Association Construction Industry Mediation Rules. The Mediator shall hear the matter and, if requested by the Parties, provide an informal opinion and advice, none of which shall be binding upon the Parties, but is expected by the Parties to help resolve the dispute. Said informal opinion and advice shall be submitted to the Parties within twenty (20) days following written request for same. The Mediator's fee shall be shared equally by the Parties. If the dispute has not been resolved within 120 days of submission of the request for Mediation, the matter shall then be submitted to Arbitration in accordance with Article 25(B) below: (B) ARBITRATION All claims, counterclaims, disputes and other matters in dispute between the Parties hereto arising out of or relating to this Agreement or the breach thereof not otherwise resolved in accordance with Article 25(A) hereof shall be decided by Arbitration in Philadelphia, PA, or such other places as otherwise agreed in accordance with the Construction Industry Arbitration Rules of the American Arbitration Association then obtaining, subject to the

limitations and restrictions stated in Article 25(B)(1) and Article 25(B)(2) below. This Agreement to so arbitrate and any other agreement or consent to arbitrate will be specifically enforceable under the prevailing arbitration law by any court having jurisdiction. (1) Notice of demand for arbitration must be filed in writing with the other Party or Parties to this Agreement and with the American Arbitration Association. The demand must be made within a reasonable time after the claim, dispute or other matter in question has arisen. In no event may the demand for Arbitration be made after the time when institution of legal or equitable proceedings, based on such claim, dispute or other matter in question, would be barred by this Agreement or by the applicable statute of limitations or statute of repose. (2) No arbitration arising out of or relating to this Agreement may include, by consolidation, joinder or in any other manner, any person or entity who is not a Party to this Agreement. (3) Only by written consent signed by all the Parties to this Agreement and containing a specific reference thereto, may the limitations and restrictions contained in Article 25(B)(1) and Article 25(B)(2) be waived in whole or in part as to any claim, counterclaim, dispute or other matter. (4) The award rendered by the arbitrators will be final, not subject to appeal, and judgment may be entered upon it in any court having jurisdiction thereof. (5) In the event of any disputes between the Parties to this Agreement the Arbitrator shall award the prevailing party, in addition to all other appropriate relief, its reasonable costs and attorney's fees. 26. NO THIRD PARTY BENEFICIARY. WESTON's services are performed for the sole and exclusive benefit of CLIENT. This Agreement does not create, and is not intended to create, any right or benefit for anyone other than CLIENT and WESTON. 27. SALES AND USE TAX. Pending a final ruling by appropriate tax authorities with respect to the imposition of a State Sales and Use Tax applicable to WESTON's professional services, CLIENT acknowledges that the obligation to pay sales and use tax, if ruled applicable to WESTON's services, is CLIENT'S obligation as purchaser. CLIENT agrees to pay such sales and use tax and hereby releases, indemnifies and holds WESTON harmless from any and all claims related to sales and use tax as it applies to WESTON's professional services provided under this Agreement. 28. SEVERABILITY/SAVINGS. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any of the provisions hereof shall not affect the validity and enforceability of the other provisions hereof. If any provision of this Agreement is unenforceable, for any reason whatsoever, such provision shall be appropriately limited and given effect to the extent that it may be enforceable. 29. ASSIGNMENT. Neither Party shall assign, or otherwise transfer this Agreement or any rights or obligations hereunder to a subsidiary, successor, affiliate or any third Party, except as expressly provided herein, without the prior written consent of the other Party. Any attempted assignment will be null and void and without force and effect. Nothing hereunder shall prevent WESTON from employing such professional associates, subcontractors and consultants as WESTON deems appropriate to assist WESTON in the performance of services. 30. LITIGATION SERVICES. CLIENT and WESTON agree that the Work performed hereunder may involve some form of legal process or proceedings during or after performance of the project. Such legal process or proceedings may include production of records, forms of discovery such as depositions and interrogatories, filings and court testimony. CLIENT agrees that if WESTON is required to participate in or otherwise respond to such legal process or proceedings in which WESTON is not a Party, CLIENT shall compensate WESTON for its efforts in so doing, including but not limited to, expenses, labor, document reproduction costs, travel expenses, legal fees, etc., reasonably incurred in connection with its efforts in responding to such legal process or proceedings. 31. GOVERNING LAW. The interpretation and enforcement of this Agreement is to be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania. 32. ENTIRE AGREEMENT. This Agreement represents the entire and integrated Agreement between the

Parties and supersedes all other prior negotiations, representations or agreements, either written or oral. Any terms and conditions set forth in CLIENT'S purchase order, requisition, or other notice of authorization to proceed are inapplicable to the Work, except when specifically provided for in full on the face of such purchase order, requisition, or notice or authorization and specifically accepted in writing by WESTON. WESTON's acknowledgment of receipt of any purchase order, requisition, notice or authorization or WESTON's performance of Work subsequent to receipt thereof does not constitute acceptance of any terms or conditions other than those set forth in this Agreement. (WESTON SOLUTIONS, (TM) LOGO) WS09-O5-002/A-O7/01 (C) 1991, 1995, 1999, 2001, 2002 Weston Solutions, Inc. 02P -0926 Page 4 of 4

Scope of Work for Facility Startup (WO# 13083.001.004) will include: - Startup, troubleshooting, and optimization of process operations. - A trip to IBR for process training. - Customizing IBR's generic O&M manual to make it specific to the processing operations and equipment at the Harlem River Site. - Preparing as-built drawings. 4 3 JUNE 2003

INVOICE AMOUNT -------------PROJECT # 13083.001 12/10/2003 3/5/2004 6/1/2004 8/30/2004 10/18/2004 12/2/2004 1/7/2005 2/10/2005 3/1/2005 PROJECT # 13083.002 4/26/2005 PROJECT # 13083.003 5/26/2005 TOTAL INVOICED pd MOHRRY 2003 pd COI 4/28/06 TOTAL PAID BALANCE DUE DEC2003-002632 MAR2004-02298 JUN2004-02006 SEP2004-02180 OCT2004-03659 DEC2004-02821 JAN2005-02212 2005-02983 MAR2005-02823 70,000.00 132,300.00 20,000.00 53,680.00 124,896.00 103,578.00 50,040.00 2,753.48 1,709.00

TOTAL INVOICED -------------70,000.00 202,300.00 222,300.00 275,980.00 400,876.00 504,454.00 554,494.00 557,247.48 558,956.48

APR2005-02822

13,500.00

13,500.00

MAY2005-04483

22,885.81

22,885.81 ----------595,342.29 (75,376.00) (40,000.00) ----------(115,376.00) 479,966.29 ===========

WESTON SOLUTIONS, INC. ONE WALL STREET MANCHESTER, NH 03101 AUTHORIZATION FOR CONTRACT MODIFICATION NO.: 01 Project Description: Harlem River Yard Facility Design Weston Solutions Project No.: 13083.001.001 This document describes the extra effort that has been and continues to be required to complete the design of the Harlem River Yard Food Waste Processing Facility (now known as the Woodbridge Facility), above and beyond which was included in Weston Solutions, Inc.'s (WESTON(R)) original Scope of Work. WESTON's original Scope of Work was based on a set of assumptions regarding the information that we would receive from IBR. (See attached list of missing IBR documentation). In addition to these clearly defined omissions, several design issues have come to light while performing the initial design tasks. 1. The IBR facility in Vancouver currently does not have a process for effectively concentrating the liquid product. Therefore, IBR has provided no information on how this could effectively be accomplished. As WESTON has investigated the use of an evaporator to concentrate the filtrate, we have uncovered some serious issues relating to corrosivity of the filtrate (particularly at high temperatures) and the production of a high BOD wastewater (BOD = approximately 3,000 milligrams per liter) that would need to be treated prior to discharge to the sewer. 2. The only information that IBR has been able to give us regarding membrane filtration is that US Filter was unable to use membrane filtration for this application because the filtrate rapidly blinded the membrane. As a result, WESTON has had to perform a considerable amount of research to design a process that will successfully concentrate the filtrate, including pilot testing of membrane filtration, corrosion testing of metals, and design of a method of handling the wastewater generated by the process. 3. While performing research on the corrosion hazards in the evaporator, WESTON discovered that other equipment such as the digesters may be subject to stress corrosion cracking because of the chloride concentrations and the high temperatures experienced in these tanks. More research has been required to determine if 316L stainless steel is appropriate for these tanks. 4. It has become apparent that shearators are not suitable for aeration of all tanks because they cannot operate effectively unless the tank is full. Tanks that are typically undergoing filling and emptying cycles (i.e., filter press feed tank) must be modified somehow to accommodate the shearators. 1 October 6, 2004

5. There is inadequate information available for sizing of the dryer. An accurate heat transfer coefficient is required to size the dryer. IBR cannot provide this information. 6. To determine if membrane filtration is a viable technology for concentrating the liquid product, WESTON is conducting pilot testing. This is an additional cost. WESTON's current estimate for the additional engineering costs is $150,000. This includes $60,000 to perform the basic engineering tasks to fill in the information not supplied by IBR and $90,000 for the research and conceptual engineering for the liquid product concentration system and associated wastewater treatment.
TOTAL Contract Modification No. 1: Original Contract Sum (including any previous changes): NEW CONTRACT SUM: $150,000 $500,000 $650,000

Approved for Mining Organics Management: Mr. Willam Gildea President

Approved for Weston Solutions, Inc. Donald (Buzz) Grogan, P.E., DEE Vice President, General Manager

/s/ Willam Gildea -----------------------------Signature

10/6/04 Date

/s/ Donald (Buzz) Grogan --------------------------Signature

10/6/04 Date

2 October 5, 2004

EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We hereby consent to the use in this Registration Statement on Form SB-2 of our report dated June 2, 2006, except for Note 10, as to which the date is June 15, 2006, relating to the financial statements of Converted Organics Inc., which appears in such Registration Statement, and to the use of our name and the statements with respect to us, as appearing under the heading "Experts" in such Registration Statement.
/s/ CARLIN, CHARRON & ROSEN, LLP

CARLIN, CHARRON & ROSEN, LLP Glastonbury, Connecticut June 20, 2006