WARRANT AGREEMENT

This WARRANT AGREEMENT (this “Agreement”) is entered into as of this 20th day of
October, 2009, among Converted Organics Inc., a Delaware corporation (the
“Company”), and Computershare Inc., a Delaware corporation, and its wholly-owned
subsidiary, Computershare Trust Company, N.A., a national banking association
doing business at 250 Royall Street, Canton, Massachusetts (in their capacity as
Warrant Agent as provided herein, together, the “Warrant Agent,” or
individually, “Computershare” and the “Trust Company,” respectively).

WHEREAS, the Trust Company is presently the transfer agent and Registrar for the
Company common stock (hereinafter referred to from time to time in such capacity
as the “Transfer Agent”); and

WHEREAS, the Company desires that the Trust Company act as Warrant Agent in
connection with the exercise of the Warrants (defined below) and that
Computershare act as Warrant Agent and dividend disbursing agent, and
Computershare and the Trust Company have indicated their willingness to do so.

WHEREAS, the Company, at or about the time that it is entering into this
Agreement, proposes to issue and sell to public investors up to 17,250,000 Units
(defined below). The Company also proposes to sell to Chardan Capital Markets,
LLC, as representative of the underwriters, an option for the purchase of
300,000 Units (defined below) for an aggregate purchase price of $100. Each
“Unit” consists of one share of common stock, $0.0001 par value per share, of
the Company (the “Common Stock”) and one Class H Warrant (each, a “Warrant,” and
together, 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, as set forth in this Agreement.

WHEREAS, 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, substantially
in the form attached as Exhibit 1 hereto, evidencing the Warrants to be issued
under this Agreement (the “Warrant Certificates”) and the exercise of the
Warrants.

WHEREAS, 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 mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

Section 1. Certain Definitions. For purposes of this Agreement, the following
terms have the meanings indicated:

(a) “Affiliate” has the meaning ascribed to it in Rule 12b-2 under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”).

(b) “Business Day” means any day other than a Saturday, Sunday or a day on which
the New York Stock Exchange is authorized or obligated by law or executive order
to close.

(c) “Close of Business” on any given date means 5:00 p.m., New York City time,
on such date; provided, however, that if such date is not a Business Day it
means 5:00 p.m., New York City time, on the next succeeding Business Day.

(d) “Exercise Price” means the Initial Exercise Price as adjusted from time to
time pursuant to Section 10 hereof.

(e) “Initial Exercise Price” means $1.30 per share of Common Stock.

(f) “Person” means an individual, corporation, association, partnership, limited
liability company, joint venture, trust, unincorporated organization, government
or political subdivision thereof or governmental agency or other entity.

(g) “Warrant Certificate” means a certificate in substantially the form attached
as Exhibit 1 hereto representing such number of Warrants as is indicated on the
face thereof.

Section 2. Appointment of Warrant Agent. The Company hereby appoints the Warrant
Agent to act as agent for the Company in accordance with the terms and
conditions hereof, and the Warrant Agent hereby accepts such appointment. The
Company may from time to time appoint such Co-Warrant Agents as it may, in its
sole discretion, deem necessary or desirable. The Warrant Agent shall be
indemnified and held harmless by the Company against the acts or omissions of
any such Co-Warrant Agent.

Section 3. Form of Warrant Certificates. The Warrant Certificates (together with
the form of election to purchase Common Stock and the form of assignment to be
printed on the reverse thereof) shall be substantially in the form of Exhibit 1
hereto and may have such marks of identification or designation and such
legends, summaries or endorsements printed 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 to conform to usage.

Section 4. Countersignature and Registration. The Warrant Certificates shall be
executed on behalf of the Company by its Chairman, its President or a Vice
President, either manually or by facsimile signature, and have affixed thereto
the Company’s seal or a facsimile thereof which shall be attested to by the
Secretary or an Assistant Secretary of the Company, either manually or by
facsimile signature. The Warrant Certificates shall be countersigned by the
Warrant Agent either manually or by facsimile signature, and shall not be valid
for any purpose unless so countersigned. In case any officer of the Company who
shall have signed any of the Warrant Certificates ceases to be such an officer
of the Company before countersignature by the Warrant Agent and issuance and
delivery by the Company, such Warrant Certificates, 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 an officer of the Company; and any Warrant Certificate may be signed
on behalf of the Company by any person who, at the actual date of the execution
of such Warrant Certificate, shall be a proper officer of the Company to sign
such Warrant Certificate, although at the date of the execution of this Warrant
Agreement any such person was not such an officer.The Warrant Agent will keep or
cause to be kept, at one of its offices in Canton, Massachusetts, or at the
office of one of its agents, books for registration and transfer of the Warrant
Certificates issued hereunder. Such books shall show the names and addresses of
the respective holders of the Warrant Certificates, the number of warrants
evidenced on the face of each of such Warrant Certificate and the date of each
of such Warrant Certificate.

The Warrant Agent will create a special account for the issuance of shares of
Common Stock to holders who have not yet surrendered their Warrant certificates.
When any such Warrant certificates are surrendered, the Warrant Agent will
convert them for stock certificates representing common stock of the Company.
The Company shall provide an opinion of counsel prior to the conversion date to
set up a reserve of shares of Common Stock. The opinion shall state that all
such shares are:

(1) registered under the Securities Act of 1933, as amended, and all appropriate
state securities law filings have been made with respect to the shares; and

(2) validly issued, fully paid and non-assessable.

Section 5. Transfer, Split Up, Combination and Exchange of Warrant Certificates;
Mutilated, Destroyed, Lost or Stolen Warrant Certificates. Subject to the
provisions of Section 13 hereof and subject to applicable law, rules or
regulations, restrictions on transferability that may appear on Warrant
Certificates in accordance with the terms hereof or any “stop transfer”
instructions the Company may give to the Warrant Agent at any time after the
Close of Business on the date hereof, at or prior to the Close of Business on
the Expiration Date (as such term is hereinafter defined), any Warrant
Certificate or Warrant Certificates may be transferred, split up, combined or
exchanged for another Warrant Certificate or Warrant Certificates, entitling the
registered holder to purchase a like number of shares of Common Stock as the
Warrant Certificate or Warrant Certificates surrendered then entitled such
holder to purchase. Any registered holder desiring to transfer, split up,
combine or exchange any Warrant Certificate shall make such request in writing
delivered to the Warrant Agent, and shall surrender the Warrant Certificate or
Warrant Certificates to be transferred, split up, combined or exchanged at the
principal office of the Warrant Agent. Thereupon the Warrant Agent shall
countersign and deliver to the person entitled thereto a Warrant Certificate or
Warrant Certificates, as the case may be, as so requested. Upon receipt by the
Company and the Warrant Agent of evidence reasonably satisfactory to them of the
loss, theft, destruction or mutilation of a Warrant Certificate, and, in case of
loss, theft or destruction, of indemnity or security in customary form and
amount which shall include a corporate bond of indemnity satisfactory to the
Warrant Agent, and reimbursement to the Company and the Warrant Agent of all
reasonable expenses incidental thereto, and upon surrender to the Warrant Agent
and cancellation of the Warrant Certificate if mutilated, the Company will make
and deliver a new Warrant Certificate of like tenor to the Warrant Agent for
delivery to the registered holder in lieu of the Warrant Certificate so lost,
stolen, destroyed or mutilated.

Section 6. Exercise of Warrants; Exercise Price; Expiration Date.

(a) The Warrants shall be exercisable commencing sixty (60) days after their
date of issuance. The Warrants shall cease to be exercisable and shall terminate
and become void, and all rights thereunder and under this Agreement shall cease,
at or prior to the Close of Business on October 14, 2014 (the “Expiration
Date”). Subject to the foregoing and to Section 6(b) below, the registered
holder of any Warrant Certificate may exercise the Warrants evidenced thereby in
whole or in part upon surrender of the Warrant Certificate, with the form of
election to purchase on the reverse thereof duly executed, to the Warrant Agent
at the principal office of the Warrant Agent in Canton, Massachusetts or to the
office of one of its agents as may be designated by the Warrant Agent from time
to time, together with payment of the Exercise Price, which may be made, at the
option of the holder in cash in United States dollars or by certified or
official bank check to the principal office of the Warrant Agent where the
Warrant Certificate is being surrendered. No payment or adjustment shall be made
on account of any distributions or dividends on the Common Stock issued upon
exercise of a Warrant.

(b) Upon receipt of a Warrant Certificate at or prior to the Close of Business
on the Expiration Date, with the form of election to purchase duly executed,
accompanied by payment of the Exercise Price for the shares to be purchased and
an amount equal to any applicable tax or governmental charge referred to in
Section 5 in cash, or by certified check or bank draft payable to the order of
the Company, the Warrant Agent shall thereupon promptly (i) requisition from any
transfer agent of the Common Stock certificates for the number of whole shares
of Common Stock to be purchased, and the Company hereby irrevocably authorizes
its transfer agent to comply with all such requests and (ii) after receipt of
such certificates, cause the same to be delivered to or upon the order of the
registered holder of such Warrant Certificate, registered in such name or names
as may be designated by such holder. Upon receipt by the Company of a Warrant
Certificate at the principal office of the Warrant Agent, with the form of
election to purchase duly executed, and payment of the applicable Exercise Price
as required hereby, the holder of such Warrant Certificate shall be deemed to be
the holder of record of the shares of Common Stock issuable upon such exercise,
notwithstanding that the stock transfer books of the Company shall then be
closed or that certificates representing such shares of Common Stock shall not
then be actually delivered to the holder of such Warrant Certificate.

(c) In case the registered holder of any Warrant Certificate shall exercise
fewer than all Warrants evidenced thereby, a new Warrant Certificate evidencing
the number of Warrants equivalent to the number of Warrants remaining
unexercised shall be issued by the Warrant Agent to the registered holder of
such Warrant Certificate or to his duly authorized assigns, subject to the
provisions of Sections 5, 6(b) and Section 13 hereof.

(d) The Company acknowledges that the bank accounts maintained by Computershare
in connection with the services provided under this Agreement will be in
Computershare’s name and that Computershare may receive investment earnings in
connection with the investment at Computershare’s risk and for its benefit of
funds held in those accounts from time to time.  The Company will not receive
interest on any deposits or Exercise Price payment.

Section 7. Cancellation and Destruction of Warrant Certificates. All Warrant
Certificates surrendered for the purpose of exercise, transfer, split up,
combination or exchange shall, if surrendered to the Company or to any of its
agents, be delivered to the Warrant Agent for cancellation or in canceled form,
or, if surrendered to the Warrant Agent, shall be canceled by it, and no Warrant
Certificates shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Warrant Agreement. The Company shall deliver to
the Warrant Agent for cancellation and retirement, and the Warrant Agent shall
so cancel and retire, any other Warrant Certificate purchased or acquired by the
Company otherwise than upon the exercise thereof. The Warrant Agent shall
deliver all canceled Warrant Certificates to the Company, or shall, at the
written request of the Company, destroy such canceled Warrant Certificates, and
in such case shall deliver a certificate of destruction thereof to the Company,
subject to any applicable law, rule or regulation requiring the Warrant Agent to
retain such cancelled certificates.

Section 8. Certain Representations; Reservation and Availability of Shares of
Common Stock or Cash.

(a) The Company makes the following representations, warranties, and covenants
to the Warrant Agent:

(b) This Agreement has been duly authorized, executed and delivered by the
Company and, assuming due authorization, execution and delivery hereof by the
Warrant Agent, constitutes a valid and legally binding obligation of the Company
enforceable against the Company in accordance with its terms, and the Warrants
have been duly authorized, executed and issued by the Company and, assuming due
authentication thereof by the Warrant Agent pursuant hereto, constitute valid
and legally binding obligations of the Company enforceable against the Company
in accordance with their terms and entitled to the benefits hereof; in each case
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally or by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

(c) As of the date hereof, the authorized capital stock of the Company consists
of (i) 75,000,000 shares of Common Stock, of which 20,494,208 shares of Common
Stock are issued and outstanding, 17,550,000 shares of Common Stock are reserved
for issuance upon exercise of the Warrants and (ii) 10,000,000 shares of
preferred stock, $0.0001 par value per share, of which no shares are
outstanding.

(d) The Company covenants and agrees that it will cause to be reserved and kept
available out of its authorized and unissued shares of Common Stock free from
preemptive rights, the number of shares of Common Stock that will be sufficient
to permit the exercise in full of all outstanding Warrants.

(e) The Company covenants and agrees that it will take all such actions as may
be necessary to insure that all shares of Common Stock delivered upon exercise
of Warrants shall, at the time of delivery of the certificates for such shares
(subject to payment of the Exercise Price as contemplated by Section 6, be duly
authorized, validly issued, fully paid and non-assessable.

(f) The Company further covenants and agrees that it will pay when due and
payable any and all federal and state transfer taxes and charges which may be
payable in respect of the original issuance or delivery of the Warrant
Certificates or certificates evidencing Common Stock upon exercise of the
Warrants. The Company shall not, however, be required to pay any tax or
governmental charge which may be payable in respect of any transfer involved in
the transfer or delivery of Warrant Certificates or the issuance or delivery of
certificates for Common Stock in a name other than that of the registered holder
of the Warrant Certificate evidencing Warrants surrendered for exercise or to
issue or deliver any certificate for shares of Common Stock upon the exercise of
any Warrants until any such tax or governmental charge shall have been paid (any
such tax or governmental charge being payable by the holder of such Warrant
Certificate at the time of surrender) or until it has been established to the
Company’s reasonable satisfaction that no such tax or governmental charge is
due. The Warrant Agent will be advised by the Company when it has been
reasonably satisfied with regards to such charge.

Section 9. Common Stock Record Date. Each person in whose name any certificate
for shares of Common Stock is issued upon the exercise of Warrants shall for all
purposes be deemed to have become the holder of record for the Common Stock
represented thereby on, and such certificate shall be dated, the date upon which
the Warrant Certificate evidencing such Warrants was duly surrendered and
payment of the Exercise Price (and any applicable transfer taxes) was made;
provided, however, that if the date of such surrender and payment is a date upon
which the Common Stock transfer books of the Company are closed, such person
shall be deemed to have become the record holder of such shares on, and such
certificate shall be dated, the next succeeding day on which the Common Stock
transfer books of the Company are open.

Section 10. Adjustment of Exercise Price, Number of Shares of Common Stock or
Number of the Company Warrants.

(a) The Exercise Price, the number of shares covered by each Warrant and the
number of Warrants outstanding are subject to adjustment from time to time as
provided in this Section 10. In the event the Company shall at any time after
the date of this Agreement (i) declare a dividend on shares of Common Stock
payable in shares of any class of capital stock of the Company, (ii) subdivide
the outstanding shares of Common Stock into a greater number of shares of Common
Stock, (iii) combine the outstanding shares of Common Stock into a smaller
number of shares, or (iv) issue any shares of capital stock in a
reclassification of shares of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation), the Exercise Price in effect at the time
of the record date for such dividend or distribution or of the effective date of
such subdivision, combination or reclassification, and the number and kind of
shares of capital stock issuable on such date, shall be proportionately adjusted
so that the holder of any Warrant exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Warrant had been exercised immediately prior to such date and at a time when the
Common Stock transfer books of the Company were open, such holder would have
owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification.

(b) Notwithstanding the foregoing paragraph (a), no adjustment in the Exercise
Price pursuant to such paragraph shall be required unless such adjustment would
require an increase or decrease of at least 1% in such price; provided, however,
that any adjustments which by reason of this Section 10(b) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 10 shall be made to the nearest
cent or the nearest hundredth of a share, as the case may be.

(c) In the event that at any time, as a result of an adjustment made pursuant to
Section 10(a), the holder of any Warrant exercised 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
shares contained in Section 10(a), and the provisions of Sections 6, 8, 9 and 12
with respect to the shares of Common Stock shall apply on like terms to any such
other shares.

(d) All Warrants originally issued by the Company subsequent to any adjustment
made to the Exercise Price hereunder shall evidence the right to purchase, at
the adjusted Exercise Price, the number of shares of Common Stock purchasable
from time to time hereunder upon exercise of the Warrants, all subject to
further adjustment as provided herein.

(e) The Company may elect on or after the date of any adjustment of the Exercise
Price to adjust the number of Warrants, in substitution for any adjustment in
the number of shares of Common Stock purchasable upon the exercise of a Warrant.
Each of the Warrants outstanding after such adjustment of the number of Warrants
shall be exercisable for one share of Common Stock. Each Warrant held of record
prior to such adjustment of the number of Warrants shall become that number of
Warrants (calculated to the nearest hundredth) obtained by dividing the Exercise
Price in effect prior to adjustment of the Exercise Price by the Exercise Price
in effect after adjustment of the Exercise Price. The Company shall instruct the
Warrant Agent to notify each of the record holders of Warrants of its election
to adjust the number of Warrants, indicating the record date for the adjustment,
and, if known at the time, the amount of adjustment to be made. Such record date
may be the date on which the Exercise Price is adjusted or any day thereafter,
but shall be at least 10 days later than the date of the public announcement.
Upon each adjustment of the number of Warrants pursuant to this Section 10(e),
the Company shall instruct the Warrant Agent to distribute, as promptly as
practicable, to holders of record of Warrant Certificates on such record date
Warrant Certificates evidencing, subject to Section 13, the additional Warrants
to which such holders shall be entitled as a result of such adjustment, or, at
the option of the Company, instruct the Warrant Agent to distribute to such
holders of record in substitution and replacement for the Warrant Certificates
held by such holders prior to the date of adjustment, and upon surrender
thereof, if required by the Company, new Warrant Certificates evidencing all the
Warrants to which such holders shall be entitled after such adjustment. Warrant
Certificates so to be distributed shall be issued, executed and countersigned in
the manner provided for herein (and may bear, at the option of the Company, the
adjusted Exercise Price) and shall be registered in the names of the holders of
record of Warrant Certificates on the record date specified in the public
announcement.

(f) Irrespective of any adjustment or change in the Exercise Price or the number
of shares of Common Stock issuable upon the exercise of the Warrants, the
Warrant Certificates theretofore and thereafter issued may continue to express
the Exercise Price per share and the number of shares which were expressed upon
the initial Warrant Certificates issued hereunder.

(g) The Company agrees that it will not, by amendment of its Certificate of
Incorporation or through reorganization, consolidation, merger, dissolution or
sale of assets, or by any other voluntary act, avoid or seek to avoid the
observance or performance of any of the covenants, stipulations or conditions to
be observed or performed hereunder by the Company.

(h) In any case in which this Section 10 shall require that an adjustment in the
Exercise Price be made effective as of a record date for a specified event, if
any holder of a Warrant exercises such Warrant after such record date, the
Company may elect to defer, until the occurrence of such event, the issuance of
the shares of Common Stock and other capital stock of the Company in excess of
the shares of Common Stock and other capital stock of the Company, if any,
issuable upon such exercise on the basis of the Exercise Price in effect prior
to such adjustment; provided, however, that the Company shall deliver to such
holder a due bill or other appropriate instrument evidencing such holder’s right
to receive such additional shares and/or other capital securities upon the
occurrence of the event requiring such adjustment.

Section 11. Certification of Adjusted Exercise Price or Number of Shares of
Common Stock. Whenever the Exercise Price or the number of shares of Common
Stock issuable upon the exercise of each Warrant is adjusted as provided in
Section 10 or 12, the Company shall (a) promptly prepare a certificate setting
forth the Exercise Price and number of shares of Common Stock issuable upon
exercise of each Warrant as so adjusted, and a brief statement of the facts
accounting for such adjustment, (b) promptly file with the Warrant Agent and
with each transfer agent for the Common Stock a copy of such certificate and
(c) instruct the Warrant Agent to mail a brief summary thereof to each holder of
a Warrant Certificate.

Section 12. Reclassification, Consolidation, Purchase, Combination, Sale or
Conveyance.

(a) In case any of the following shall occur while any Warrants are outstanding:
(i) any reclassification or change of the outstanding shares of Common Stock
(other than a change in par value, or from par value to no par value, or as
covered by Section 10(a)), or (ii) any consolidation, merger or combination of
the Company with or into another corporation as a result of which holders of
Common Stock shall be entitled to receive stock, other securities or cash with
respect to or in exchange for such Common Stock, or (iii) any sale or conveyance
of the property or assets of the Company as, or substantially as, an entirety to
any other entity as a result of which holders of Common Stock shall be entitled
to receive stock, other securities or cash with respect to or in exchange for
such Common Stock, then the Company, or such successor corporation or
transferee, as the case may be, shall make appropriate provision by amendment of
this Agreement or by the successor corporation or transferee executing with the
Warrant Agent an agreement so that the holders of the Warrants then outstanding
shall have the right at any time thereafter, upon exercise of such Warrants (in
lieu of the number of shares of Common Stock theretofore deliverable) to receive
the kind and amount of securities and cash receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
as would be received by a holder of the number of shares of Common Stock
issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance.If the
holders of the Common Stock may elect from choices the kind or amount of
securities and cash receivable upon such reclassification, change,
consolidation, merger, combination, sale or conveyance, then for the purpose of
this Section 12 the kind and amount of securities and cash receivable upon such
reclassification, change, consolidation, merger, combination, sale or conveyance
shall be deemed to be the choice specified by the holder of the Warrant, which
specification shall be made by the holder of the Warrant by the later of (A) 20
calendar days after the holder of the Warrant is provided with a final version
of all information required by law or regulation to be furnished to holders of
Common Stock concerning such choice, or if no such information is required, 20
calendar days after the Company notified the holder of the Warrant of all
material facts concerning such specification and (B) the last time at which
holders of Common Stock are permitted to make their specification known to the
Company. If the holder of the Warrant fails to make any specification, the
holder’s choice shall be deemed to be whatever choice is made by a plurality of
holders of Common Stock not affiliated with the Company or any other party to
the reclassification, change, consolidation, merger, combination, sale or
conveyance. Such adjusted Warrants shall provide for adjustments which, for
events subsequent to the effective date of such new Warrants, shall be as nearly
equivalent as may be practicable to the adjustments provided for in Section 10
and this Section 12. The above provisions of this Section 12 shall similarly
apply to successive reclassifications, changes, consolidations, mergers,
combinations, sales and conveyances of the kind described above.

(b) The Company shall instruct the Warrant Agent to mail by first class mail,
postage prepaid, to each registered holder of a Warrant, written notice of the
execution of any such amendment, supplement or agreement. Any supplemented or
amended agreement entered into by the successor corporation or transferee shall
provide for adjustments, which shall be as nearly equivalent as may be
practicable to the adjustments provided for in Section 10 and this Section 12.
The Warrant Agent shall be under no responsibility to determine the correctness
of any provisions contained in such agreement relating either to the kind or
amount of securities or other property receivable upon exercise of warrants or
with respect to the method employed and provided therein for any adjustments and
shall be entitled to rely upon the provisions contained in any such agreement.
The provisions of this Section 12 shall similarly apply to successive
reclassifications, changes, consolidations, mergers, sales and conveyances of
the kind described above.

Section 13. Fractional Shares of Common Stock.

(a) The Company shall not issue fractions of Warrants or distribute Warrant
Certificates which evidence fractional Warrants. Whenever any fractional Warrant
would otherwise be required to be issued or distributed, the actual issuance or
distribution shall reflect a rounding of such fraction to the nearest whole
Warrant (up or down), with fractions of half of a Warrant or less being rounded
down and fractions in excess of a half of a Warrant being rounded up.

(b) The Company shall not issue fractions of shares of Common Stock upon
exercise of Warrants or distribute stock certificates which evidence fractional
shares of Common Stock. Whenever any fraction of a share of Common Stock would
otherwise be required to be issued or distributed, the actual issuance or
distribution made shall reflect a rounding of such fraction to the nearest whole
share (up or down), with fractions of half of a share or less being rounded down
and fractions in excess of half of a share being rounded up.

Section 14. Warrant Certificate Holder Not Deemed a Shareholder. No holder, as
such, of any Warrant Certificate shall be entitled to vote, receive dividends or
distributions on, or be deemed for any purpose 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, nor shall anything contained
herein or in any Warrant Certificate be construed to confer upon the holder of
any Warrant Certificate, as such, any of the rights of a shareholder of the
Company or any right to vote for the election of directors or upon any matter
submitted to shareholders at any meeting thereof, or to give or withhold consent
to any corporate action, or to receive notice of meetings or other actions
affecting shareholders, or to receive dividends or distributions or subscription
rights, or otherwise, until the Warrant or Warrants evidenced by such Warrant
Certificate shall have been exercised in accordance with the provisions hereof.

Section 15. Concerning the Warrant Agent.

(a) The Company agrees to pay to the Warrant Agent reasonable compensation for
all services rendered by it hereunder and, from time to time, on demand of the
Warrant Agent, its reasonable expenses and counsel fees and other disbursements
incurred in the administration.

(b) The Company covenants and agrees to indemnify and to hold the Warrant Agent
harmless against any costs, expenses (including reasonable fees of its legal
counsel), losses or damages, which may be paid, incurred or suffered by or to
which it may become subject, arising from or out of, directly or indirectly, any
claims or liability resulting from its actions as Warrant Agent pursuant hereto;
provided, that such covenant and agreement does not extend to, and the Warrant
Agent shall not be indemnified with respect to, such costs, expenses, losses and
damages incurred or suffered by the Warrant Agent as a result of, or arising out
of, its gross negligence, bad faith, or willful misconduct.

(c) Promptly after the receipt by the Warrant Agent of notice of any demand or
claim or the commencement of any action, suit, proceeding or investigation, the
Warrant Agent shall, if a claim in respect thereof is to be made against the
Company, notify the Company thereof in writing. The Company shall be entitled to
participate at its own expense in the defense of any such claim or proceeding,
and, if it so elects at any time after receipt of such notice, it may assume the
defense of any suit brought to enforce any such claim or of any other legal
action or proceeding.

(d) The Warrant Agent shall be responsible for and shall indemnify and hold the
Company harmless from and against any and all losses, damages, costs, charges,
counsel fees, payments, expenses and liability arising out of or attributable to
the Warrant Agent’s refusal or failure to comply with the terms of this
Agreement, or which arise out of Warrant Agent’s gross negligence, bad faith or
willful misconduct or which arise out of the breach of any representation or
warranty of the Warrant Agent hereunder, for which the Warrant Agent is not
entitled to indemnification under this Agreement; provided, however, that
Warrant Agent’s aggregate liability during any term of this Agreement with
respect to, arising from, or arising in connection with this Agreement, or from
all services provided or omitted to be provided under this Agreement, whether in
contract, or in tort, or otherwise, is limited to, and shall not exceed, the
amounts paid under this Agreement by the Company to Warrant Agent as fees and
charges, but not including reimbursable expenses.

(e) Promptly after the receipt by the Company of notice of any demand or claim
or the commencement of any action, suit, proceeding or investigation, the
Company shall, if a claim in respect thereof is to be made against the Warrant
Agent, notify the Warrant Agent thereof in writing. The Warrant Agent shall be
entitled to participate at its own expense in the defense of any such claim or
proceeding, and, if it so elects at any time after receipt of such notice, it
may assume the defense of any suit brought to enforce any such claim or of any
other legal action or proceeding. For the purposes of this Section 15, the term
“expense or loss” means any amount paid or payable to satisfy any claim, demand,
action, suit or proceeding settled with the express written consent of the
Company, and all reasonable costs and expenses, including, but not limited to,
reasonable counsel fees and disbursements, paid or incurred in investigating or
defending against any such claim, demand, action, suit, proceeding or
investigation.

(f) Neither party to this Agreement shall be liable to the other party for any
consequential, indirect, special or incidental damages under any provision of
this Agreement or for any consequential, indirect, penal, special or incidental
damages arising out of any act or failure to act hereunder even if that party
has been advised of or has foreseen the possibility of such damages.

Section 16. Purchase or Consolidation or Change of Name of Warrant Agent.

(a) Any corporation into which the Warrant Agent or any successor 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 or any successor
Warrant Agent shall be party, or any corporation succeeding to the corporate
trust business of the Warrant Agent or any successor Warrant Agent, shall be the
successor to the Warrant Agent under this Agreement 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 18. In case at the time such
successor 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 Warrant Agent may adopt the countersignature of the
predecessor 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 Warrant Agent may 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.

(b) 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.

Section 17. 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 Certificate, by their
acceptance thereof, shall be bound:

(a) The Warrant Agent may consult with legal counsel (who may be legal 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 or
omitted by it in good faith and in accordance with such opinion.

(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 the Chairman, President or any Vice President of the
Company and by the Treasurer or any Assistant Treasurer or the Secretary of the
Company and delivered to the Warrant Agent; and such certificate shall be full
authentication 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, pursuant to Section 16 above.

(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 thereof) 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 of any covenant or
condition contained in this Agreement or in any Warrant Certificate; nor shall
it be responsible for the adjustment of the Exercise Price or the making of any
change in the number of shares of Common Stock required under the provisions of
Sections 10 or 12 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 Warrants evidenced
by 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 duly authorized,
validly issued, fully paid and non-assessable.

(f) The Company agrees that it will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged and delivered all such further and
other acts, instruments and assurances as may reasonably be required by the
Warrant Agent for the carrying out or performing by the Warrant Agent of the
provisions of this Agreement.

(g) The Warrant Agent is hereby authorized to accept instructions with respect
to the performance of its duties hereunder from the Chairman or the President or
any Vice President or the Secretary of the Company, and to apply to such
officers for advice or instructions in connection with its duties, and it shall
not be liable and shall be indemnified and held harmless for any action taken or
suffered to be taken by it in good faith in accordance with instructions of any
such officer, provided the Warrant Agent carries out such instructions without
gross negligence, bad faith or willful misconduct.

(h) The Warrant Agent and any shareholder, 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 the Company 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.

(i) 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 attorney or agents, and the Warrant Agent shall not be answerable or
accountable for any act, default, neglect or misconduct of any such attorney or
agents or for any loss to the Company resulting from any such act, default,
neglect or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof.

Section 18. Change of Warrant Agent. The Warrant Agent may resign and be
discharged from its duties under this Agreement upon 30 days’ notice in writing
mailed to the Company and to each transfer agent of the Common Stock by
registered or certified mail, and to the holders of the Warrant Certificates by
first-class mail. The Company may remove the Warrant Agent or any successor
Warrant Agent upon 30 days’ notice in writing, mailed to the Warrant Agent or
successor Warrant Agent, as the case may be, and to each transfer agent of the
Common Stock by registered or certified mail, and to the holders of the Warrant
Certificates by first-class 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. If the Company shall fail to make such
appointment within a period of 30 days after such removal or after it has been
notified in writing of such resignation or incapacity by the resigning or
incapacitated Warrant Agent or by the holder of a Warrant Certificate (who
shall, with such notice, submit his Warrant Certificate for inspection by the
Company), then the registered holder of any Warrant Certificate may apply to any
court of competent jurisdiction for the appointment of a new Warrant Agent. Any
successor Warrant Agent, whether appointed by the Company or by such a court,
shall be a corporation organized and doing business under the laws of the United
States or of a state thereof, in good standing, which is authorized under such
laws to exercise corporate trust powers and is subject to supervision or
examination by federal or state authority and which has at the time of its
appointment as Warrant Agent a combined capital and surplus of at least
$50,000,000. After appointment, 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
predecessor Warrant Agent shall deliver and transfer to the successor Warrant
Agent any property at the time held by it hereunder, and execute and deliver any
further assurance, conveyance, act or deed necessary for the purpose. Not later
than the effective date of any such appointment, the Company shall file notice
thereof in writing with the predecessor Warrant Agent and each transfer agent of
the Common Stock, and mail a notice thereof in writing to the registered holders
of the Warrant Certificates. However, failure to give any notice provided for in
this Section 18, 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.

Section 19. Issuance of New Warrant Certificates. Notwithstanding any of the
provisions of this Agreement or of the Warrants to the contrary, the Company
may, at its option, issue new Warrant Certificates evidencing Warrants in such
form as may be approved by its Board of Directors to reflect any adjustment or
change in the Exercise Price per share and the number or kind or class of shares
of stock or other securities or property purchasable under the several Warrant
Certificates made in accordance with the provisions of this Agreement.

Section 20. Notices. Notices or demands authorized by this Agreement to be given
or made (i) by the Warrant Agent or by the holder of any Warrant Certificate to
or on the Company, (ii) subject to the provisions of Section 18, by the Company
or by the holder of any Warrant Certificate to or on the Warrant Agent or
(iii) by the Company or the Warrant Agent to the holder of any Warrant
Certificate, shall be deemed given (x) on the date delivered, if delivered
personally or if delivered by facsimile transmission with confirmation of
facsimile delivery and receipt by the intended recipient, and a copy of the
notice sent by mail, (y) on the first Business Day following the deposit thereof
with Federal Express or another recognized overnight courier, if sent by Federal
Express or another recognized overnight courier, and (z) on the fourth Business
Day following the mailing thereof with postage prepaid, if mailed by registered
or certified mail (return receipt requested), in each case to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):(a) If to the Company, to:

Converted Organics Inc.

7A Commercial Wharf West

Boston MA 02110

Attention: President

Fax: (617) 624-0333

(b) If to the Warrant Agent, to:

Computershare Trust Company, N.A.
250 Royall Street
Canton, Massachusetts 02021
Attention: Client Administration
Fax: (781) 575-2549

(c) If to the holder of any Warrant Certificate, to the address of such holder
as shown on the registry books of the Company. Any notice required to be
delivered by the Company to the registered holder of any Warrant may be given by
the Warrant Agent on behalf of the Company.

Section 21. Supplements and Amendments.(a)

(a) The Company and the Warrant Agent may from time to time supplement or amend
this Agreement without the approval of any holders of Warrant Certificates in
order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
or to make any other provisions with regard to matters or questions arising
hereunder which the Company and the Warrant Agent may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Warrant Certificates.

(b) In addition to the foregoing, with the consent of holders of the Warrants
entitled, upon exercise thereof, to receive not less than a majority of the
shares of Common Stock issuable thereunder, the Company and the Warrant Agent
may modify this Agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Warrant
Agreement or modifying in any manner the rights of the holders of the Warrant
Certificates; provided, however, that no modification of the terms (including
but not limited to the adjustments described in Section 10) upon which the
Warrants are exercisable or reducing the percentage required for consent to
modification of this Agreement may be made without the consent of the holder of
each outstanding Warrant Certificate affected thereby.

Section 22. Successors. All 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.

Section 23. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give any Person other than the Company or the Warrant Agent 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 and the
Warrant Agent.

Section 24. Governing Law. This Agreement and each Warrant Certificate issued
hereunder shall be governed by, and construed in accordance with, the laws of
the Commonwealth of Massachusetts without giving effect to the conflicts of law
principles thereof.

Section 25. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and all such counterparts shall together constitute but one and
the same instrument.Section 26. Captions. The captions of the sections of this
Agreement have been inserted for convenience only and shall not control or
affect the meaning or construction of any of the provisions hereof.

Section 27. Information. The Company agrees to promptly provide the registered
holders of the Warrants the information it is required to provide to the holders
of the Common Stock.

Section 28. Force Majeure. Notwithstanding anything to the contrary contained
herein, Warrant Agent shall not be liable for any delays or failures in
performance resulting from acts beyond its reasonable control including, without
limitation, acts of God, terrorist acts, shortage of supply, breakdowns or
malfunctions, interruptions or malfunction of computer facilities, or loss of
data due to power failures or mechanical difficulties with information storage
or retrieval systems, labor difficulties, war, or civil unrest.

[Signature Page Follows]

1

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

CONVERTED ORGANICS INC.

      By:

Name:
Title:

COMPUTERSHARE INC., AND COMPUTERSHARE TRUST COMPANY, N.A., for both entities,

      By:

Name:
Title:

Warrant Agreement

Dated as of October 20, 2009

among

Converted Organics Inc.,

Computershare Inc.,

and

Computershare Trust Company, N.A.,

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