EX-4.3






[FORM OF WARRANT]




NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES
INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER
(IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE
144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.



CONVERTED ORGANICS INC.

Warrant To Purchase Common Stock




Warrant No.:


Date of Issuance:      , 2012 (“Issuance Date”)



Converted Organics Inc., a Delaware corporation (the “Company”), hereby certifies that, for
good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged,
[      ], the registered holder hereof or its permitted assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company, at the Exercise Price
(as defined below) then in effect, upon exercise of this Warrant to Purchase Common Stock
(including any Warrants to Purchase Common Stock issued in exchange, transfer or replacement
hereof, the “Warrant”), at any time or times on or after the Issuance Date, but not after 11:59
p.m., New York time, on the Expiration Date (as defined below), [      ]1 (subject
to adjustment as provided herein) fully paid and non-assessable shares of Common Stock (as defined
below) (the “Warrant Shares”). Except as otherwise defined herein, capitalized terms in this
Warrant shall have the meanings set forth in Section 16. This Warrant is one of the Warrants to
Purchase Common Stock (the “SPA Warrants”) issued pursuant to Section 1 of that certain Securities
Purchase Agreement, dated as of January 3, 2012, by and among the Company and the investors
referred to therein (the “Securities Purchase Agreement”).




	1.	 	EXERCISE OF WARRANT.





(a) Mechanics of Exercise. Subject to the terms and conditions hereof (including,
without limitation, the limitations set forth in Section 1(f)), this Warrant may be exercised by
the Holder on any day on or after the Issuance Date, in whole or in part, by delivery (whether via
facsimile or otherwise) of a written notice, in the form attached hereto as Exhibit A (the
“Exercise Notice”), of the Holder’s election to exercise this Warrant. Within one (1) Trading Day
following an exercise of this Warrant as aforesaid, the Holder shall deliver payment to the Company
of an amount equal to the Exercise Price in effect on the date of such exercise multiplied by the
number of Warrant Shares as to which this Warrant was so exercised (the “Aggregate Exercise Price”)
in cash or via wire transfer of immediately available funds if the Holder did not notify the
Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise (as
defined in Section 1(d)). The Holder shall not be required to deliver the original of this Warrant
in order to effect an exercise hereunder. Execution and delivery of an Exercise Notice with respect
to less than all of the Warrant Shares shall have the same effect as cancellation of the original
of this Warrant and issuance of a new Warrant evidencing the right to purchase the remaining number
of Warrant Shares. Execution and delivery of an Exercise Notice for all of the then-remaining
Warrant Shares shall have the same effect as cancellation of the original of this Warrant after
delivery of the Warrant Shares in accordance with the terms hereof. On or before the first
(1st) Trading Day following the date on which the Company has received an Exercise
Notice, the Company shall transmit by facsimile an acknowledgment of confirmation of receipt of
such Exercise Notice, in the form attached hereto as Exhibit B, to the Holder and the
Company’s transfer agent (the “Transfer Agent”). On or before the third (3rd) Trading
Day following the date on which the Company has received such Exercise Notice and received the
Aggregate Exercise Price if the Holder did not notify the Company in such Exercise Notice that such
exercise was made pursuant to a Cashless Exercise, the Company shall (X) provided that either a
registration statement for the resale by the Holder of the applicable Warrant Shares is effective
or the applicable Warrant Shares are otherwise eligible for resale pursuant to Rule 144 (as defined
in the Securities Purchase Agreement) and the Transfer Agent is participating in The Depository
Trust Company (“DTC”) Fast Automated Securities Transfer Program, upon the request of the Holder,
credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to
such exercise to the Holder’s or its designee’s balance account with DTC through its Deposit/
Withdrawal at Custodian system, or (Y) if the Transfer Agent is not participating in the DTC Fast
Automated Securities Transfer Program, issue and deliver to the Holder or, at the Holder’s
instruction pursuant to the Exercise Notice, the Holder’s agent or designee, in each case, sent by
reputable overnight courier to the address as specified in the applicable Exercise Notice, a
certificate, registered in the Company’s share register in the name of the Holder or its designee
(as indicated in the applicable Exercise Notice), for the number of shares of Common Stock to which
the Holder is entitled pursuant to such exercise, and to the extent the applicable Warrant Shares
have not been registered for resale by the Holder on an effective registration statement or are not
eligible for resale pursuant to Rule 144, the certificate shall include such restrictive legends as
required by Section 5 of the Securities Purchase Agreement. Upon delivery of an Exercise Notice,
the Holder shall be deemed for all corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been exercised, irrespective of the date such
Warrant Shares are credited to the Holder’s DTC account or the date of delivery of the certificates
evidencing such Warrant Shares (as the case may be). If this Warrant is submitted in connection
with any exercise pursuant to this Section 1(a) and the number of Warrant Shares represented by
this Warrant submitted for exercise is greater than the number of Warrant Shares being acquired
upon an exercise, then, at the request of the Holder, the Company shall as soon as practicable and
in no event later than three (3) Business Days after any exercise and at its own expense, issue and
deliver to the Holder (or its designee) a new Warrant (in accordance with Section 7(d))
representing the right to purchase the number of Warrant Shares purchasable immediately prior to
such exercise under this Warrant, less the number of Warrant Shares with respect to which this
Warrant is exercised. No fractional shares of Common Stock are to be issued upon the exercise of
this Warrant, but rather the number of shares of Common Stock to be issued shall be rounded up to
the nearest whole number. The Company shall pay any and all taxes and fees which may be payable
with respect to the issuance and delivery of Warrant Shares upon exercise of this Warrant.



(b) Exercise Price. For purposes of this Warrant, “Exercise Price” means
$[      ],2 subject to adjustment as provided herein.



(c) Company’s Failure to Timely Deliver Securities. If the Company shall fail, for any
reason or for no reason, to issue to the Holder within three (3) Trading Days after receipt of the
applicable Exercise Notice and received the Aggregate Exercise Price if the Holder did not notify
the Company in such Exercise Notice that such exercise was made pursuant to a Cashless Exercise, a
certificate for the number of shares of Common Stock to which the Holder is entitled and register
such shares of Common Stock on the Company’s share register or to credit the Holder’s balance
account with DTC for such number of shares of Common Stock to which the Holder is entitled upon the
Holder’s exercise of this Warrant (as the case may be) (a “Delivery Failure”), then, in addition to
all other remedies available to the Holder, the Company shall pay in cash to the Holder on each day
after such third (3rd) Trading Day that the issuance of such shares of Common Stock is
not timely effected an amount equal to 2% of the product of (A) the aggregate number of shares of
Common Stock not issued to the Holder on a timely basis and to which the Holder is entitled and (B)
the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the last
possible date on which the Company could have issued such shares of Common Stock to the Holder
without violating Section 1(a). In addition to the foregoing, if within three (3) Trading Days
after the Company’s receipt of the applicable Exercise Notice, the Company shall fail to issue and
deliver a certificate to the Holder and register such shares of Common Stock on the Company’s share
register or credit the Holder’s balance account with DTC for the number of shares of Common Stock
to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be), and if
on or after such third (3rd) Trading Day the Holder (or any other Person in respect, or
on behalf, of the Holder) purchases (in an open market transaction or otherwise) shares of Common
Stock to deliver in satisfaction of a sale by the Holder of all or any portion of the number of
shares of Common Stock, or a sale of a number of shares of Common Stock equal to all or any portion
of the number of shares of Common Stock, issuable upon such exercise that the Holder so anticipated
receiving from the Company, then, in addition to all other remedies available to the Holder, the
Company shall, within three (3) Business Days after the Holder’s request and in the Holder’s
discretion, either (i) pay cash to the Holder in an amount equal to the Holder’s total purchase
price (including brokerage commissions and other out-of-pocket expenses, if any) for the shares of
Common Stock so purchased (including, without limitation, by any other Person in respect, or on
behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation to so issue
and deliver such certificate or credit the Holder’s balance account with DTC for the number of
shares of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the
case may be) (and to issue such shares of Common Stock) shall terminate, or (ii) promptly honor its
obligation to so issue and deliver to the Holder a certificate or certificates representing such
shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares of
Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may
be) and pay cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price over
the product of (A) such number of shares of Common Stock multiplied by (B) the lowest Closing Sale
Price of the Common Stock on any Trading Day during the period commencing on the date of the
applicable Exercise Notice and ending on the date of such issuance and payment under this clause
(ii).



(d) Cashless Exercise. Notwithstanding anything contained herein to the contrary
(other than Section 1(f) below), if at the time of exercise hereof a registration statement is not
effective (or the prospectus contained therein is not available for use) for the resale by the
Holder of all of the Warrant Shares, then the Holder may, in its sole discretion, exercise this
Warrant in whole or in part and, in lieu of making the cash payment otherwise contemplated to be
made to the Company upon such exercise in payment of the Aggregate Exercise Price, elect instead to
receive upon such exercise the “Net Number” of shares of Common Stock determined according to the
following formula (a “Cashless Exercise”):



Net Number = (A x B) — (A x C)

B


For purposes of the foregoing formula:




A= the total number of shares with respect to which this Warrant is then being
exercised.




B= as applicable: (i) the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the date of the applicable Exercise Notice if such Exercise
Notice is (1) both executed and delivered pursuant to Section 1(a) hereof on a day
that is not a Trading Day or (2) both executed and delivered pursuant to Section
1(a) hereof on a Trading Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(64) of Regulation NMS promulgated under the federal
securities laws) on such Trading Day, (ii) the Bid Price of the Common Stock as of
the time of the Holder’s execution of the applicable Exercise Notice if such
Exercise Notice is executed during “regular trading hours” on a Trading Day and is
delivered within two (2) hours thereafter pursuant to Section 1(a) hereof or (iii)
the Closing Sale Price of the Common Stock on the date of the applicable Exercise
Notice if the date of such Exercise Notice is a Trading Day and such Exercise Notice
is both executed and delivered pursuant to Section 1(a) hereof after the close of
“regular trading hours” on such Trading Day.




	 	 	 	C= the Exercise Price then in effect for the applicable Warrant
Shares at the time of such exercise.





(e) Disputes. In the case of a dispute as to the determination of the Exercise Price
or the arithmetic calculation of the number of Warrant Shares to be issued pursuant to the terms
hereof, the Company shall promptly issue to the Holder the number of Warrant Shares that are not
disputed and resolve such dispute in accordance with Section 13.



(f) Limitations on Exercises. Notwithstanding anything to the contrary contained in
this Warrant, this Warrant shall not be exercisable by the Holder hereof to the extent (but only to
the extent) that the Holder or any of its affiliates would beneficially own in excess of  4.9% (the
“Maximum Percentage”) of the Common Stock. To the extent the above limitation applies, the
determination of whether this Warrant shall be exercisable (vis-à-vis other convertible,
exercisable or exchangeable securities owned by the Holder or any of its affiliates) and of which
such securities shall be exercisable (as among all such securities owned by the Holder) shall,
subject to such Maximum Percentage limitation, be determined on the basis of the first submission
to the Company for conversion, exercise or exchange (as the case may be). No prior inability to
exercise this Warrant pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of exercisability. For
the purposes of this paragraph, beneficial ownership and all determinations and calculations
(including, without limitation, with respect to calculations of percentage ownership) shall be
determined in accordance with Section 13(d) of the 1934 Act (as defined in the Securities Purchase
Agreement) and the rules and regulations promulgated thereunder. The provisions of this paragraph
shall be implemented in a manner otherwise than in strict conformity with the terms of this
paragraph to correct this paragraph (or any portion hereof) which may be defective or inconsistent
with the intended Maximum Percentage beneficial ownership limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such Maximum Percentage
limitation. The limitations contained in this paragraph shall apply to a successor Holder of this
Warrant. The holders of Common Stock shall be third party beneficiaries of this paragraph and the
Company may not amend or waive this paragraph without the consent of holders of a majority of its
Common Stock. For any reason at any time, upon the written or oral request of the Holder, the
Company shall within one (1) Business Day confirm orally and in writing to the Holder the number of
shares of Common Stock then outstanding, including by virtue of any prior conversion or exercise of
convertible or exercisable securities into Common Stock, including, without limitation, pursuant to
this Warrant or securities issued pursuant to the Securities Purchase Agreement.



(g) Insufficient Authorized Shares. From and after the date on which Shareholder
Approval (as defined in the Securities Purchase Agreement) is obtained, the Company shall at all
times keep reserved for issuance under this Warrant a number of shares of Common Stock as shall be
necessary to satisfy the Company’s obligation to issue shares of Common Stock hereunder (without
regard to any limitation otherwise contained herein with respect to the number of shares of Common
Stock that may be acquirable upon exercise of this Warrant). If, notwithstanding the foregoing, and
not in limitation thereof, from and after the date on which Shareholder Approval is obtained at any
time while any of the SPA Warrants remain outstanding the Company does not have a sufficient number
of authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for
issuance upon exercise of the SPA Warrants at least a number of shares of Common Stock equal to the
number of shares of Common Stock as shall from time to time be necessary to effect the exercise of
all of the SPA Warrants then outstanding (the “Required Reserve Amount”) (an “Authorized Share
Failure”), then the Company shall immediately either (x) effect any then authorized reverse stock
spilt of the Common Stock or (y) take all action necessary to increase the Company’s authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve
Amount for all the SPA Warrants then outstanding. Without limiting the generality of the foregoing
sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than sixty (60) days after the occurrence of such Authorized Share Failure,
the Company shall hold a meeting of its stockholders for the approval of an increase in the number
of authorized shares of Common Stock. In connection with such meeting, the Company shall provide
each stockholder with a proxy statement and shall use its best efforts to solicit its stockholders’
approval of such increase in authorized shares of Common Stock and to cause its board of directors
to recommend to the stockholders that they approve such proposal.



2. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES. The Exercise Price and number
of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to
time as set forth in this Section 2.



(a) Stock Dividends and Splits. Without limiting any provision of Section 2(b) or
Section 4, if the Company, at any time on or after the date of the Securities Purchase Agreement,
(i) pays a stock dividend on one or more classes of its then outstanding shares of Common Stock or
otherwise makes a distribution on any class of capital stock that is payable in shares of Common
Stock, (ii) subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or
more classes of its then outstanding shares of Common Stock into a larger number of shares or (iii)
combines (by combination, reverse stock split or otherwise) one or more classes of its then
outstanding shares of Common Stock into a smaller number of shares, then in each such case the
Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately before such event and of which the denominator shall
be the number of shares of Common Stock outstanding immediately after such event. Any adjustment
made pursuant to clause (i) of this paragraph shall become effective immediately after the record
date for the determination of stockholders entitled to receive such dividend or distribution, and
any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective
immediately after the effective date of such subdivision or combination. If any event requiring an
adjustment under this paragraph occurs during the period that an Exercise Price is calculated
hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect
such event.



(b) Adjustment Upon Issuance of Shares of Common Stock. If and whenever on or after
the date of the Securities Purchase Agreement, the Company issues or sells, or in accordance with
this Section 2 is deemed to have issued or sold, any shares of Common Stock (including the issuance
or sale of shares of Common Stock owned or held by or for the account of the Company, but excluding
any Excluded Securities (as defined in the Securities Purchase Agreement) issued or sold or deemed
to have been issued or sold) for a consideration per share (the “New Issuance Price”) less than a
price equal to the Exercise Price in effect immediately prior to such issue or sale or deemed
issuance or sale (such Exercise Price then in effect is referred to as the “Applicable Price”) (the
foregoing a “Dilutive Issuance”), then immediately after such Dilutive Issuance, the Exercise Price
then in effect shall be reduced to an amount equal to the New Issuance Price. For all purposes of
the foregoing (including, without limitation, determining the adjusted Exercise Price and
consideration per share under this Section 2(b)), the following shall be applicable:




(i) Issuance of Options. If the Company in any manner grants or sells any
Options and the lowest price per share for which one share of Common Stock is issuable upon
the exercise of any such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of any such Option is less than the Applicable Price, then
such share of Common Stock shall be deemed to be outstanding and to have been issued and
sold by the Company at the time of the granting or sale of such Option for such price per
share. For purposes of this Section 2(b)(i), the “lowest price per share for which one share
of Common Stock is issuable upon the exercise of any such Options or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such
Option” shall be equal to (1) the lower of (x) the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to any one share
of Common Stock upon the granting or sale of such Option, upon exercise of such Option and
upon conversion, exercise or exchange of any Convertible Security issuable upon exercise of
such Option and (y) the lowest exercise price set forth in such Option for which one share
of Common Stock is issuable upon the exercise of any such Options or upon conversion,
exercise or exchange of any Convertible Securities issuable upon exercise of any such Option
minus (2) the sum of all amounts paid or payable to the holder of such Option (or any other
Person) upon the granting or sale of such Option, upon exercise of such Option and upon
conversion, exercise or exchange of any Convertible Security issuable upon exercise of such
Option plus the value of any other consideration received or receivable by, or benefit
conferred on, the holder of such Option (or any other Person). Except as contemplated below,
no further adjustment of the Exercise Price shall be made upon the actual issuance of such
            shares of Common Stock or of such Convertible Securities upon the exercise of such Options
or upon the actual issuance of such shares of Common Stock upon conversion, exercise or
exchange of such Convertible Securities.




(ii) Issuance of Convertible Securities. If the Company in any manner issues or
sells any Convertible Securities and the lowest price per share for which one share of Common
Stock is issuable upon the conversion, exercise or exchange thereof is less than the
Applicable Price, then such share of Common Stock shall be deemed to be outstanding and to
have been issued and sold by the Company at the time of the issuance or sale of such
Convertible Securities for such price per share. For the purposes of this Section 2(b)(ii),
the “lowest price per share for which one share of Common Stock is issuable upon the
conversion, exercise or exchange thereof” shall be equal to (1) the lower of (x) the sum of
the lowest amounts of consideration (if any) received or receivable by the Company with
respect to one share of Common Stock upon the issuance or sale of the Convertible Security
and upon conversion, exercise or exchange of such Convertible Security and (y) the lowest
conversion price set forth in such Convertible Security for which one share of Common Stock
is issuable upon conversion, exercise or exchange thereof minus (2) the sum of all amounts
paid or payable to the holder of such Convertible Security (or any other Person) upon the
issuance or sale of such Convertible Security plus the value of any other consideration
received or receivable by, or benefit conferred on, the holder of such Convertible Security
(or any other Person). Except as contemplated below, no further adjustment of the Exercise
Price shall be made upon the actual issuance of such shares of Common Stock upon conversion,
exercise or exchange of such Convertible Securities, and if any such issue or sale of such
Convertible Securities is made upon exercise of any Options for which adjustment of this
Warrant has been or is to be made pursuant to other provisions of this Section 2(b), except
as contemplated below, no further adjustment of the Exercise Price shall be made by reason of
such issue or sale.




(iii) Change in Option Price or Rate of Conversion. If the purchase or exercise
price provided for in any Options, the additional consideration, if any, payable upon the
issue, conversion, exercise or exchange of any Convertible Securities, or the rate at which
any Convertible Securities are convertible into or exercisable or exchangeable for shares of
Common Stock increases or decreases at any time, the Exercise Price in effect at the time of
such increase or decrease shall be adjusted to the Exercise Price which would have been in
effect at such time had such Options or Convertible Securities provided for such increased or
decreased purchase price, additional consideration or increased or decreased conversion rate,
as the case may be, at the time initially granted, issued or sold. For purposes of this
Section 2(b)(iii), if the terms of any Option or Convertible Security that was outstanding as
of the date of issuance of this Warrant are increased or decreased in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and the shares
of Common Stock deemed issuable upon exercise, conversion or exchange thereof shall be deemed
to have been issued as of the date of such increase or decrease. No adjustment pursuant to
this Section 2(b) shall be made if such adjustment would result in an increase of the
Exercise Price then in effect.




(iv) Calculation of Consideration Received. If any Option or Convertible
Security is issued in connection with the issuance or sale or deemed issuance or sale of any
other securities of the Company, together comprising one integrated transaction, (x) such
Option or Convertible Security (as applicable) will be deemed to have been issued for
consideration equal to the Black Scholes Consideration Value thereof and (y) the other
securities issued or sold or deemed to have been issued or sold in such integrated
transaction shall be deemed to have been issued for consideration equal to the difference of
(I) the aggregate consideration received by the Company minus (II) the Black Scholes
Consideration Value of each such Option or Convertible Security (as applicable). If any
            shares of Common Stock, Options or Convertible Securities are issued or sold or deemed to
have been issued or sold for cash, the consideration received therefor will be deemed to be
the net amount of consideration received by the Company therefor. If any shares of Common
Stock, Options or Convertible Securities are issued or sold for a consideration other than
cash, the amount of such consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of publicly traded securities, in
which case the amount of consideration received by the Company for such securities will be
the arithmetic average of the VWAPs of such security for each of the five (5) Trading Days
immediately preceding the date of receipt. If any shares of Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving entity in connection
with any merger in which the Company is the surviving entity, the amount of consideration
therefor will be deemed to be the fair value of such portion of the net assets and business
of the non-surviving entity as is attributable to such shares of Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any consideration other than
cash or publicly traded securities will be determined jointly by the Company and the Holder.
If such parties are unable to reach agreement within ten (10) days after the occurrence of an
event requiring valuation (the “Valuation Event”), the fair value of such consideration will
be determined within five (5) Trading Days after the tenth (10th) day following
such Valuation Event by an independent, reputable appraiser jointly selected by the Company
and the Holder. The determination of such appraiser shall be final and binding upon all
parties absent manifest error and the fees and expenses of such appraiser shall be borne by
the Company.




(v) Record Date. If the Company takes a record of the holders of shares of
Common Stock for the purpose of entitling them (A) to receive a dividend or other
distribution payable in shares of Common Stock, Options or in Convertible Securities or
(B) to subscribe for or purchase shares of Common Stock, Options or Convertible Securities,
then such record date will be deemed to be the date of the issue or sale of the shares of
Common Stock deemed to have been issued or sold upon the declaration of such dividend or the
making of such other distribution or the date of the granting of such right of subscription
or purchase (as the case may be).



(c) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price
pursuant to paragraph (a) of this Section 2, the number of Warrant Shares that may be purchased
upon exercise of this Warrant shall be increased or decreased proportionately, so that after such
adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares
shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment
(without regard to any limitations on exercise contained herein). No adjustments to the number of
Warrant Shares shall be made due to any adjustments to the Exercise Price pursuant to paragraph (b)
of this Section 2.



(d) Other Events. In the event that the Company (or any Subsidiary (as defined in the
Securities Purchase Agreement)) shall take any action to which the provisions hereof are not
strictly applicable, or, if applicable, would not operate to protect the Holder from dilution or if
any event occurs of the type contemplated by the provisions of this Section 2 but not expressly
provided for by such provisions (including, without limitation, the granting of stock appreciation
rights, phantom stock rights or other rights with equity features), then the Company’s board of
directors shall in good faith determine and implement an appropriate adjustment in the Exercise
Price and the number of Warrant Shares (if applicable) so as to protect the rights of the Holder,
provided that no such adjustment pursuant to this Section 2(d) will increase the Exercise Price or
decrease the number of Warrant Shares as otherwise determined pursuant to this Section 2, provided
further that if the Holder does not accept such adjustments as appropriately protecting its
interests hereunder against such dilution, then the Company’s board of directors and the Holder
shall agree, in good faith, upon an independent investment bank of nationally recognized standing
to make such appropriate adjustments, whose determination shall be final and binding and whose fees
and expenses shall be borne by the Company.



(e) Calculations. All calculations under this Section 2 shall be made by rounding to
the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares
of Common Stock outstanding at any given time shall not include shares owned or held by or for the
account of the Company, and the disposition of any such shares shall be considered an issue or sale
of Common Stock.



3. RIGHTS UPON DISTRIBUTION OF ASSETS. In addition to any adjustments pursuant to Section 2
above, if the Company shall declare or make any dividend or other distribution of its assets (or
rights to acquire its assets) to holders of shares of Common Stock, by way of return of capital or
otherwise (including, without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a “Distribution”), at any time after the
issuance of this Warrant, then, in each such case, the Holder shall be entitled to participate in
such Distribution to the same extent that the Holder would have participated therein if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant
(without regard to any limitations on exercise hereof, including without limitation, the Maximum
Percentage) immediately before the date on which a record is taken for such Distribution, or, if no
such record is taken, the date as of which the record holders of shares of Common Stock are to be
determined for the participation in such Distribution (provided, however, to the extent that the
Holder’s right to participate in any such Distributions would result in the Holder exceeding the
Maximum Percentage, then the Holder shall not be entitled to participate in such Distribution to
such extent (or the beneficial ownership of any such shares of Common Stock as a result of such
Distribution to such extent) and such Distribution to such extent shall be held in abeyance for the
benefit of the Holder until such time, if ever, as its right thereto would not result in the Holder
exceeding the Maximum Percentage).




	4.	 	PURCHASE RIGHTS; FUNDAMENTAL TRANSACTIONS.





(a) Purchase Rights. In addition to any adjustments pursuant to Section 2 above, if
at any time the Company grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record holders of any class
of shares of Common Stock (the “Purchase Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which the Holder
could have acquired if the Holder had held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant (without regard to any limitations on exercise hereof, including
without limitation, the Maximum Percentage) immediately before the date on which a record is taken
for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken, the date
as of which the record holders of shares of Common Stock are to be determined for the grant, issue
or sale of such Purchase Rights (provided, however, to the extent that the Holder’s right to
participate in any such Purchase Right would result in the Holder exceeding the Maximum Percentage,
then the Holder shall not be entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such shares of Common Stock as a result of such Purchase Right to such
extent) and such Purchase Right to such extent shall be held in abeyance for the Holder until such
time, if ever, as its right thereto would not result in the Holder exceeding the Maximum
Percentage).



(b) Fundamental Transactions. The Company shall not enter into or be party to a
Fundamental Transaction unless (i)  the Successor Entity assumes in writing all of the obligations
of the Company under this Warrant and the other Transaction Documents (as defined in the Securities
Purchase Agreement) in accordance with the provisions of this Section 4(b) pursuant to written
agreements in form and substance satisfactory to the Holder and approved by the Holder prior to
such Fundamental Transaction, including agreements to deliver to the Holder in exchange for this
Warrant a security of the Successor Entity evidenced by a written instrument substantially similar
in form and substance to this Warrant, including, without limitation, which is exercisable for a
corresponding number of shares of capital stock equivalent to the shares of Common Stock acquirable
and receivable upon exercise of this Warrant (without regard to any limitations on the exercise of
this Warrant) prior to such Fundamental Transaction, and with an exercise price which applies the
exercise price hereunder to such shares of capital stock (but taking into account the relative
value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such
shares of capital stock, such adjustments to the number of shares of capital stock and such
exercise price being for the purpose of protecting the economic value of this Warrant immediately
prior to the consummation of such Fundamental Transaction) and (ii) the Successor Entity is a
publicly traded corporation whose common stock is quoted on or listed for trading on an Eligible
Market. Upon the consummation of each Fundamental Transaction, the Successor Entity shall succeed
to, and be substituted for (so that from and after the date of the applicable Fundamental
Transaction, the provisions of this Warrant and the other Transaction Documents referring to the
“Company” shall refer instead to the Successor Entity), and may exercise every right and power of
the Company and shall assume all of the obligations of the Company under this Warrant and the other
Transaction Documents with the same effect as if such Successor Entity had been named as the
Company herein. Upon consummation of each Fundamental Transaction, the Successor Entity shall
deliver to the Holder confirmation that there shall be issued upon exercise of this Warrant at any
time after the consummation of the applicable Fundamental Transaction, in lieu of the shares of
Common Stock (or other securities, cash, assets or other property (except such items still issuable
under Sections 3 and 4(a) above, which shall continue to be receivable thereafter)) issuable upon
the exercise of this Warrant prior to the applicable Fundamental Transaction, such shares of
publicly traded common stock (or its equivalent) of the Successor Entity which the Holder would
have been entitled to receive upon the happening of the applicable Fundamental Transaction had this
Warrant been exercised immediately prior to the applicable Fundamental Transaction (without regard
to any limitations on the exercise of this Warrant), as adjusted in accordance with the provisions
of this Warrant. In addition to and not in substitution for any other rights hereunder, prior to
the consummation of each Fundamental Transaction pursuant to which holders of shares of Common
Stock are entitled to receive securities or other assets with respect to or in exchange for shares
of Common Stock (a “Corporate Event”), the Company shall make appropriate provision to insure that
the Holder will thereafter have the right to receive upon an exercise of this Warrant at any time
after the consummation of the applicable Fundamental Transaction but prior to the Expiration Date,
in lieu of the shares of the Common Stock (or other securities, cash, assets or other property
(except such items still issuable under Sections 3 and 4(a) above, which shall continue to be
receivable thereafter)) issuable upon the exercise of the Warrant prior to such Fundamental
Transaction, such shares of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights) which the Holder would have been
entitled to receive upon the happening of the applicable Fundamental Transaction had this Warrant
been exercised immediately prior to the applicable Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant). Provision made pursuant to the preceding sentence
shall be in a form and substance reasonably satisfactory to the Holder.



(c) Black Scholes Value. Notwithstanding the foregoing and the provisions of Section
4(b) above, at the request of the Holder delivered at any time commencing on the earliest to occur
of (x) the public disclosure of any Fundamental Transaction, (y) the consummation of any
Fundamental Transaction and (z) the Holder first becoming aware of any Fundamental Transaction
through the date that is ninety (90) days after the public disclosure of the consummation of such
Fundamental Transaction by the Company pursuant to a Current Report on Form 8-K filed with the SEC,
the Company or the Successor Entity (as the case may be) shall purchase this Warrant from the
Holder on the date of such request by paying to the Holder cash in an amount equal to the Black
Scholes Value.



(d) Application. The provisions of this Section 4 shall apply similarly and equally to
successive Fundamental Transactions and Corporate Events and shall be applied as if this Warrant
(and any such subsequent warrants) were fully exercisable and without regard to any limitations on
the exercise of this Warrant (provided that the Holder shall continue to be entitled to the benefit
of the Maximum Percentage, applied however with respect to shares of capital stock registered under
the 1934 Act and thereafter receivable upon exercise of this Warrant (or any such other warrant)).



5. NONCIRCUMVENTION. The Company hereby covenants and agrees that the Company will not, by
amendment of its Articles of Incorporation (as defined in the Securities Purchase Agreement),
Bylaws (as defined in the Securities Purchase Agreement) or through any reorganization, transfer of
assets, consolidation, merger, scheme of arrangement, dissolution, issue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or performance of any of the
terms of this Warrant, and will at all times in good faith carry out all the provisions of this
Warrant and take all action as may be required to protect the rights of the Holder. Without
limiting the generality of the foregoing, the Company (i) shall not increase the par value of any
shares of Common Stock receivable upon the exercise of this Warrant above the Exercise Price then
in effect, (ii) shall take all such actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and non-assessable shares of Common Stock upon the
exercise of this Warrant, and (iii) shall, so long as any of the SPA Warrants are outstanding, take
all action necessary to reserve and keep available out of its authorized and unissued shares of
Common Stock, solely for the purpose of effecting the exercise of the SPA Warrants, the maximum
number of shares of Common Stock as shall from time to time be necessary to effect the exercise of
the SPA Warrants then outstanding (without regard to any limitations on exercise).



6. WARRANT HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in its capacity as a holder of this Warrant, shall not be entitled to
vote or receive dividends or be deemed the holder of share capital of the Company for any purpose,
nor shall anything contained in this Warrant be construed to confer upon the Holder, solely in its
capacity as the Holder of this Warrant, any of the rights of a stockholder of the Company or any
right to vote, give or withhold consent to any corporate action (whether any reorganization, issue
of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive
notice of meetings, receive dividends or subscription rights, or otherwise, prior to the issuance
to the Holder of the Warrant Shares which it is then entitled to receive upon the due exercise of
this Warrant. In addition, nothing contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise of this Warrant or otherwise)
or as a stockholder of the Company, whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the Company shall provide the Holder with
copies of the same notices and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the stockholders.



7. REISSUANCE OF WARRANTS.



(a) Transfer of Warrant. If this Warrant is to be transferred, the Holder shall
surrender this Warrant to the Company, whereupon the Company will forthwith issue and deliver upon
the order of the Holder a new Warrant (in accordance with Section 7(d)), registered as the Holder
may request, representing the right to purchase the number of Warrant Shares being transferred by
the Holder and, if less than the total number of Warrant Shares then underlying this Warrant is
being transferred, a new Warrant (in accordance with Section 7(d)) to the Holder representing the
right to purchase the number of Warrant Shares not being transferred.



(b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company of evidence
reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this
Warrant (as to which a written certification and the indemnification contemplated below shall
suffice as such evidence), and, in the case of loss, theft or destruction, of any indemnification
undertaking by the Holder to the Company in customary and reasonable form and, in the case of
mutilation, upon surrender and cancellation of this Warrant, the Company shall execute and deliver
to the Holder a new Warrant (in accordance with Section 7(d)) representing the right to purchase
the Warrant Shares then underlying this Warrant.



(c) Exchangeable for Multiple Warrants. This Warrant is exchangeable, upon the
surrender hereof by the Holder at the principal office of the Company, for a new Warrant or
Warrants (in accordance with Section 7(d)) representing in the aggregate the right to purchase the
number of Warrant Shares then underlying this Warrant, and each such new Warrant will represent the
right to purchase such portion of such Warrant Shares as is designated by the Holder at the time of
such surrender; provided, however, no warrants for fractional shares of Common Stock shall be
given.



(d) Issuance of New Warrants. Whenever the Company is required to issue a new Warrant
pursuant to the terms of this Warrant, such new Warrant (i) shall be of like tenor with this
Warrant, (ii) shall represent, as indicated on the face of such new Warrant, the right to purchase
the Warrant Shares then underlying this Warrant (or in the case of a new Warrant being issued
pursuant to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder which, when
added to the number of shares of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of Warrant Shares then underlying this
Warrant), (iii) shall have an issuance date, as indicated on the face of such new Warrant which is
the same as the Issuance Date, and (iv) shall have the same rights and conditions as this Warrant.



8. NOTICES. Whenever notice is required to be given under this Warrant, unless otherwise
provided herein, such notice shall be given in accordance with Section 9(f) of the Securities
Purchase Agreement. The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant, including in reasonable detail a description of such action and the
reason therefor. Without limiting the generality of the foregoing, the Company will give written
notice to the Holder (i) immediately upon each adjustment of the Exercise Price and the number of
Warrant Shares, setting forth in reasonable detail, and certifying, the calculation of such
adjustment(s) and (ii) at least fifteen (15) days prior to the date on which the Company closes its
books or takes a record (A) with respect to any dividend or distribution upon the shares of Common
Stock, (B) with respect to any grants, issuances or sales of any Options, Convertible Securities or
rights to purchase stock, warrants, securities or other property to all holders of shares of Common
Stock or (C) for determining rights to vote with respect to any Fundamental Transaction,
dissolution or liquidation, provided in each case that such information shall be made known to the
public prior to or in conjunction with such notice being provided to the Holder and (iii) at least
ten (10) Trading Days prior to the consummation of any Fundamental Transaction. To the extent that
any notice provided hereunder constitutes, or contains, material, non-public information regarding
the Company or any of its Subsidiaries, the Company shall simultaneously file such notice with the
SEC (as defined in the Securities Purchase Agreement) pursuant to a Current Report on Form 8-K. It
is expressly understood and agreed that the time of execution specified by the Holder in each
Exercise Notice shall be definitive and may not be disputed or challenged by the Company, absent
manifest error.



9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the provisions of this
Warrant (other than Section 1(f)) may be amended and the Company may take any action herein
prohibited, or omit to perform any act herein required to be performed by it, only if the Company
has obtained the written consent of the Holder. The Holder shall be entitled, at its option, to the
benefit of any amendment of (i) any other similar warrant issued under the Securities Purchase
Agreement or (ii) any other similar warrant. No waiver shall be effective unless it is in writing
and signed by an authorized representative of the waiving party.



10. SEVERABILITY. If any provision of this Warrant is prohibited by law or otherwise
determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that
would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of
such provision shall not affect the validity of the remaining provisions of this Warrant so long as
this Warrant as so modified continues to express, without material change, the original intentions
of the parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair the respective
expectations or reciprocal obligations of the parties or the practical realization of the benefits
that would otherwise be conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid
provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or
unenforceable provision(s).



11. GOVERNING LAW. This Warrant shall be governed by and construed and enforced in
accordance with, and all questions concerning the construction, validity, interpretation and
performance of this Warrant shall be governed by, the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule (whether of the
State of New York or any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company hereby irrevocably submits to the
exclusive jurisdiction of the state and federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not
to assert in any suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient
forum or that the venue of such suit, action or proceeding is improper. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner permitted by law.
Nothing contained herein (i) shall be deemed or operate to preclude the Holder from bringing suit
or taking other legal action against the Company in any other jurisdiction to collect on the
Company’s obligations to the Holder or to enforce a judgment or other court ruling in favor of the
Holder or (ii) shall limit, or shall be deemed or construed to limit, any provision of Section 13.
THE COMPANY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO, AND AGREES NOT TO REQUEST, A JURY
TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH OR ARISING OUT OF THIS
WARRANT OR ANY TRANSACTION CONTEMPLATED HEREBY.



12. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly drafted by the
Company and the Holder and shall not be construed against any Person as the drafter hereof. The
headings of this Warrant are for convenience of reference and shall not form part of, or affect the
interpretation of, this Warrant. Terms used in this Warrant but defined in the other Transaction
Documents shall have the meanings ascribed to such terms on the Closing Date (as defined in the
Securities Purchase Agreement) in such other Transaction Documents unless otherwise consented to in
writing by the Holder.



13. DISPUTE RESOLUTION. In the case of a dispute as to the determination of the Exercise
Price, the Closing Sale Price, the Bid Price or fair market value or the arithmetic calculation of
the Warrant Shares (as the case may be), the Company or the Holder (as the case may be) shall
submit the disputed determinations or arithmetic calculations (as the case may be) via facsimile
(i) within two (2) Business Days after receipt of the applicable notice giving rise to such dispute
to the Company or the Holder (as the case may be) or (ii) if no notice gave rise to such dispute,
at any time after the Holder learned of the circumstances giving rise to such dispute (including,
without limitation, as to whether any issuance or sale or deemed issuance or sale was an issuance
or sale or deemed issuance or sale of Excluded Securities). If the Holder and the Company are
unable to agree upon such determination or calculation (as the case may be) of the Exercise Price,
the Closing Sale Price, the Bid Price or fair market value or the number of Warrant Shares (as the
case may be) within three (3) Business Days of such disputed determination or arithmetic
calculation being submitted to the Company or the Holder (as the case may be), then the Company
shall, within two (2) Business Days submit via facsimile (a) the disputed determination of the
Exercise Price, the Closing Sale Price, the Bid Price or fair market value (as the case may be) to
an independent, reputable investment bank selected by the Holder or (b) the disputed arithmetic
calculation of the Warrant Shares to the Company’s independent, outside accountant. The Company
shall cause at its expense the investment bank or the accountant (as the case may be) to perform
the determinations or calculations (as the case may be) and notify the Company and the Holder of
the results no later than ten (10) Business Days from the time it receives such disputed
determinations or calculations (as the case may be). Such investment bank’s or accountant’s
determination or calculation (as the case may be) shall be binding upon all parties absent
demonstrable error.



14. REMEDIES, CHARACTERIZATION, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Warrant shall be cumulative and in addition to all other remedies
available under this Warrant and the other Transaction Documents, at law or in equity (including a
decree of specific performance and/or other injunctive relief), and nothing herein shall limit the
right of the Holder to pursue actual damages for any failure by the Company to comply with the
terms of this Warrant. The Company covenants to the Holder that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts set forth or provided
for herein with respect to payments, exercises and the like (and the computation thereof) shall be
the amounts to be received by the Holder and shall not, except as expressly provided herein, be
subject to any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the
Holder and that the remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the holder of this Warrant shall
be entitled, in addition to all other available remedies, to an injunction restraining any breach,
without the necessity of showing economic loss and without any bond or other security being
required. The Company shall provide all information and documentation to the Holder that is
requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and
conditions of this Warrant (including, without limitation, compliance with Section 2 hereof). The
issuance of shares and certificates for shares as contemplated hereby upon the exercise of this
Warrant shall be made without charge to the Holder or such shares for any issuance tax or other
costs in respect thereof, provided that the Company shall not be required to pay any tax which may
be payable in respect of any transfer involved in the issuance and delivery of any certificate in a
name other than the Holder or its agent on its behalf.



15. TRANSFER. This Warrant may be offered for sale, sold, transferred or assigned without
the consent of the Company, except as may otherwise be required by Section 2(g) of the Securities
Purchase Agreement.



16. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms shall have the
following meanings:



(a) “Bid Price” means, for any security as of the particular time of determination, the bid
price for such security on the Principal Market as reported by Bloomberg as of such time of
determination, or, if the Principal Market is not the principal securities exchange or trading
market for such security, the bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg as of such time of
determination, or if the foregoing does not apply, the bid price of such security in the
over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg
as of such time of determination, or, if no bid price is reported for such security by Bloomberg as
of such time of determination, the average of the bid prices of any market makers for such security
as reported in the “pink sheets” by OTC Markets Group Inc.(formerly Pink Sheets LLC) as of such
time of determination. If the Bid Price cannot be calculated for a security as of the particular
time of determination on any of the foregoing bases, the Bid Price of such security as of such time
of determination shall be the fair market value as mutually determined by the Company and the
Holder. If the Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved in accordance with the procedures in Section 13. All
such determinations shall be appropriately adjusted for any stock dividend, stock split, stock
combination or other similar transaction during such period.



(b) “Black Scholes Consideration Value” means the value of the applicable Option or
Convertible Security (as the case may be) as of the date of issuance thereof calculated using the
Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an
underlying price per share equal to the Closing Sale Price of the Common Stock on the Trading Day
immediately preceding the public announcement of the execution of definitive documents with respect
to the issuance of such Option or Convertible Security (as the case may be), (ii) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period equal to the remaining term of
such Option or Convertible Security (as the case may be) as of the date of issuance of such Option
or Convertible Security (as the case may be) and (iii) an expected volatility equal to the greater
of 100% and the 100 day volatility obtained from the HVT function on Bloomberg (determined
utilizing a 365 day annualization factor) as of the Trading Day immediately following the date of
issuance of such Option or Convertible Security (as the case may be).



(c) “Black Scholes Value” means the value of the unexercised portion of this Warrant remaining
on the date of the Holder’s request pursuant to Section 4(c), which value is calculated using the
Black Scholes Option Pricing Model obtained from the “OV” function on Bloomberg utilizing (i) an
underlying price per share equal to the greater of (1) the highest Closing Sale Price of the Common
Stock during the period beginning on the Trading Day immediately preceding the earliest to occur of
(x) the public disclosure of the applicable Fundamental Transaction, (y) the consummation of the
applicable Fundamental Transaction and (z) the date on which the Holder first became aware of the
applicable Fundamental Transaction and ending on the Trading Day of the Holder’s request pursuant
to Section 4(c) and (2) the sum of the price per share being offered in cash in the applicable
Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the
applicable Fundamental Transaction (if any), (ii) a strike price equal to the Exercise Price in
effect on the date of the Holder’s request pursuant to Section 4(c), (iii) a risk-free interest
rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining
term of this Warrant as of the date of the Holder’s request pursuant to Section 4(c) and (2) the
remaining term of this Warrant as of the date of consummation of the applicable Fundamental
Transaction or as of the date of the Holder’s request pursuant to Section 4(c) if such request is
prior to the date of the consummation of the applicable Fundamental Transaction and (iv) an
expected volatility equal to the greater of 100% and the 100 day volatility obtained from the HVT
function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day
immediately following the earliest to occur of (x) the public disclosure of the applicable
Fundamental Transaction, (y) the consummation of the applicable Fundamental Transaction and (z) the
date on which the Holder first became aware of the applicable Fundamental Transaction.



(d) “Bloomberg” means Bloomberg, L.P.



(e) “Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in The City of New York are authorized or required by law to remain closed.



(f) “Closing Sale Price” means, for any security as of any date, the last closing trade price
for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market
begins to operate on an extended hours basis and does not designate the closing trade price, then
the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by
Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market
for such security, the last trade price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg, or if the
foregoing does not apply, the last trade price of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade
price is reported for such security by Bloomberg, the average of the ask prices of any market
makers for such security as reported in the “pink sheets” by OTC Markets Group Inc.(formerly Pink
Sheets LLC). If the Closing Sale Price cannot be calculated for a security on a particular date on
any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be
resolved in accordance with the procedures in Section 13. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.



(g) “Common Stock” means (i) the Company’s shares of common stock, $0.0001 par value per
share, and (ii) any capital stock into which such common stock shall have been changed or any share
capital resulting from a reclassification of such common stock.



(h) “Convertible Securities” means any stock or other security (other than Options) that is at
any time and under any circumstances, directly or indirectly, convertible into, exercisable or
exchangeable for, or which otherwise entitles the holder thereof to acquire, any shares of Common
Stock.



(i) “Eligible Market” means The New York Stock Exchange, the NYSE Amex, The Nasdaq Global
Select Market, The Nasdaq Global Market, The Nasdaq Capital Market or the Principal Market.



(j) “Expiration Date” means the date that is the fifth (5th) anniversary of the
Issuance Date or, if such date falls on a day other than a Business Day or on which trading does
not take place on the Principal Market (a “Holiday”), the next date that is not a Holiday.



(k) “Fundamental Transaction” means that (i) (1) the Company or any of its Subsidiaries shall,
directly or indirectly, in one or more related transactions, consolidate or merge with or into
(whether or not the Company or any of its Subsidiaries is the surviving corporation) any other
Person, or (2) the Company or any of its Significant Subsidiaries (as defined in the Notes) shall,
directly or indirectly, in one or more related transactions, sell, lease, license, assign,
transfer, convey or otherwise dispose of all or substantially all of its respective properties or
assets to any other Person, or (3) the Company or any of its Subsidiaries shall, directly or
indirectly, in one or more related transactions, allow any other Person to make a purchase, tender
or exchange offer that is accepted by the holders of more than 50% of the outstanding shares of
Voting Stock of the Company (not including any shares of Voting Stock of the Company held by the
Person or Persons making or party to, or associated or affiliated with the Persons making or party
to, such purchase, tender or exchange offer), or (4) the Company or any of its Subsidiaries shall,
directly or indirectly, in one or more related transactions, consummate a stock or share purchase
agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with any other Person whereby such other
Person acquires more than 50% of the outstanding shares of Voting Stock of the Company (not
including any shares of Voting Stock of the Company held by the other Person or other Persons
making or party to, or associated or affiliated with the other Persons making or party to, such
stock or share purchase agreement or other business combination), or (5) the Company or any of its
Subsidiaries shall, directly or indirectly, in one or more related transactions, reorganize,
recapitalize or reclassify the Common Stock (which shall not include a reverse stock split), or
(ii) any “person” or “group” (as these terms are used for purposes of Sections 13(d) and 14(d) of
the 1934 Act and the rules and regulations promulgated thereunder) is or shall become the
“beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of 50% of
the aggregate ordinary voting power represented by issued and outstanding Voting Stock of the
Company.



(l) “Options” means any rights, warrants or options to subscribe for or purchase shares of
Common Stock or Convertible Securities.



(m) “Parent Entity” of a Person means an entity that, directly or indirectly, controls the
applicable Person and whose common stock or equivalent equity security is quoted or listed on an
Eligible Market, or, if there is more than one such Person or Parent Entity, the Person or Parent
Entity with the largest public market capitalization as of the date of consummation of the
Fundamental Transaction.



(n) “Person” means an individual, a limited liability company, a partnership, a joint venture,
a corporation, a trust, an unincorporated organization, any other entity or a government or any
department or agency thereof.



(o) “Principal Market” means the OTC Bulletin Board.



(p) “Successor Entity” means the Person (or, if so elected by the Holder, the Parent Entity)
formed by, resulting from or surviving any Fundamental Transaction or the Person (or, if so elected
by the Holder, the Parent Entity) with which such Fundamental Transaction shall have been entered
into.



(q) “Trading Day” means, as applicable, (x) with respect to all price determinations relating
to the Common Stock, any day on which the Common Stock is traded on the Principal Market, or, if
the Principal Market is not the principal trading market for the Common Stock, then on the
principal securities exchange or securities market on which the Common Stock is then traded,
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to
trade on such exchange or market for less than 4.5 hours or any day that the Common Stock is
suspended from trading during the final hour of trading on such exchange or market (or if such
exchange or market does not designate in advance the closing time of trading on such exchange or
market, then during the hour ending at 4:00:00 p.m., New York time) unless such day is otherwise
designated as a Trading Day in writing by the Holder or (y) with respect to all determinations
other than price determinations relating to the Common Stock, any day on which The New York Stock
Exchange (or any successor thereto) is open for trading of securities.



(r) “Voting Stock” of a Person means capital stock of such Person of the class or classes
pursuant to which the holders thereof have the general voting power to elect, or the general power
to appoint, at least a majority of the board of directors, managers or trustees of such Person
(irrespective of whether or not at the time capital stock of any other class or classes shall have
or might have voting power by reason of the happening of any contingency).



(s) “VWAP” means, for any security as of any date, the dollar volume-weighted average price
for such security on the Principal Market (or, if the Principal Market is not the principal trading
market for such security, then on the principal securities exchange or securities market on which
such security is then traded) during the period beginning at 9:30:01 a.m., New York time, and
ending at 4:00:00 p.m., New York time, as reported by Bloomberg through its “Volume at Price”
function or, if the foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for such security during
the period beginning at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average price is reported for such security
by Bloomberg for such hours, the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported in the “pink sheets” by OTC
Markets Group Inc.(formerly Pink Sheets LLC). If VWAP cannot be calculated for such security on
such date on any of the foregoing bases, the VWAP of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such dispute shall be
resolved in accordance with the procedures in Section 13. All such determinations shall be
appropriately adjusted for any stock dividend, stock split, stock combination or other similar
transaction during such period.



[signature page follows]IN WITNESS WHEREOF, the Company has caused this Warrant to
Purchase Common Stock to be duly executed as of the Issuance Date set out above.




CONVERTED ORGANICS INC.



By:      

Name:

Title:




EXHIBIT A




EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS

WARRANT TO PURCHASE COMMON STOCK

CONVERTED ORGANICS INC.




The undersigned holder hereby exercises the right to purchase        of the shares
of Common Stock (“Warrant Shares”) of Converted Organics Inc., a Delaware corporation (the
“Company”), evidenced by Warrant To Purchase Common Stock No.    (the “Warrant”). Capitalized
terms used herein and not otherwise defined shall have the respective meanings set forth in the
Warrant.



1. Form of Exercise Price. The Holder intends that payment of the Exercise Price
shall be made as:




	 	 	 	       a “Cash Exercise” with respect to        Warrant
Shares; and/or






	 	 	 	       a “Cashless Exercise” with respect to        Warrant
Shares.





In the event that the Holder has elected a Cashless Exercise with respect to some or all of
the Warrant Shares to be issued pursuant hereto, the Holder hereby represents and warrants that (i)
this Exercise Notice was executed by the Holder at        [a.m.][p.m.] on the date set forth
below and (ii) if applicable, the Bid Price as of such time of execution of this Exercise Notice
was $     .



2. Payment of Exercise Price. In the event that the Holder has elected a Cash Exercise
with respect to some or all of the Warrant Shares to be issued pursuant hereto, the Holder shall
pay the Aggregate Exercise Price in the sum of $      to the Company in accordance
with the terms of the Warrant.



3. Delivery of Warrant Shares. The Company shall deliver to Holder, or its designee
or agent as specified below,        Warrant Shares in accordance with the terms of the Warrant.
Delivery shall be made to Holder, or for its benefit, to the following address:




      




      




      




      



Date:              ,       



Name of Registered Holder



By:

Name:

Title:





	1	 	Insert number of shares of Common Stock equal
to 50% of the number of shares of Common Stock issuable upon conversion in full
of the applicable Note (based on initial Fixed Conversion Price of the
applicable Note) issued at the applicable Closing






	2	 	Insert price equal to the initial Fixed
Conversion Price of the applicable Note issued at the applicable Closing




1









EXHIBIT B




ACKNOWLEDGMENT




The Company hereby acknowledges this Exercise Notice and hereby directs        to
issue the above indicated number of shares of Common Stock in accordance with the Transfer Agent
Instructions dated     , 20      , from the Company and acknowledged and agreed to by
     .




CONVERTED ORGANICS INC.



By:      

Name:

Title:





2