Document:

EX-10.1

SECURITIES PURCHASE AGREEMENT

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of December 17, 2010, is by and
among Converted Organics Inc., a Delaware corporation with headquarters located at 137A Lewis
Wharf, Boston, Massachusetts 02110 (the “Company”), and each of the investors listed on the
Schedule of Buyers attached hereto (individually, a “Buyer” and collectively, the “Buyers”).

RECITALS

A. The Company and each Buyer desire to enter into this transaction to purchase the Notes (as
defined below) and Warrants (as defined below) set forth herein pursuant to a currently effective
shelf registration statement on Form S-3, which has at least $70,000,000 of unallocated securities
of the Company, including convertible debt securities and warrants, registered thereunder
(Registration Number 333-167970) (the “Registration Statement”), which Registration Statement has
been declared effective in accordance with the Securities Act of 1933, as amended (the “1933 Act”),
by the United States Securities and Exchange Commission (the “SEC”).

B. The Company has authorized the issuance of convertible Notes (as defined below) in the
aggregate original principal amount of $4,990,000, which Notes shall be convertible into shares of
the Company’s common stock, $0.0001 par value per share (the “Common Stock”) (as converted,
collectively, the “Conversion Shares,” for purposes of clarification, such term includes, without
limitation, all shares of Common Stock issued pursuant to Section 8 of the Notes), in accordance
with the terms of the Notes.

C. Upon the terms and conditions stated in this Agreement, on the Initial Closing Date (as
defined below), each Buyer wishes to purchase, and the Company wishes to sell, (i) the aggregate
original principal amount of the Notes set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers (Initial Closing) (which aggregate amount for all Buyers shall be
$3,939,473.68), in the form attached hereto as Exhibit A-1 (the “Initial Notes”), (ii) a
Series A Warrant (as defined below) to initially acquire up to the aggregate number of shares of
Common Stock set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (Initial
Closing), (iii) a Series B Warrant (as defined below) to initially acquire up to the aggregate
number of shares of Common Stock set forth opposite such Buyer’s name in column (5) on the Schedule
of Buyers (Initial Closing) and (iv) a Series C Warrant (as defined below) to initially acquire up
to the aggregate number of shares of Common Stock set forth opposite such Buyer’s name in column
(6) on the Schedule of Buyers (Initial Closing). Warrants in the form attached hereto as
Exhibit B are referred to herein as the “Series A Warrants” and the shares of Common Stock
issuable upon exercise of the Series A Warrants are referred to herein as the “Series A Warrant
Shares”. Warrants in the form attached hereto as Exhibit C are referred to herein as the
“Series B Warrants” and the shares of Common Stock issuable upon exercise of the Series B Warrants
are referred to herein as the “Series B Warrant Shares”. Warrants in the form attached hereto as
Exhibit D are referred to herein as the “Series C Warrants” and the shares of Common Stock
issuable upon exercise of the Series C Warrants are referred to herein as the “Series C Warrant
Shares”.

D. Upon the terms and conditions stated in this Agreement, on the Additional Closing Date (as
defined below), each Buyer wishes to purchase, and the Company wishes to sell, (i) the aggregate
original principal amount of the Notes set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers (Additional Closing) (which aggregate amount for all Buyers shall be
$1,050,526.32), in the form attached hereto as Exhibit A-2 (the “Additional Notes” and
collectively with the Initial Notes, the “Notes”), (ii) a Series A Warrant to initially acquire up
to the aggregate number of shares of Common Stock set forth opposite such Buyer’s name in column
(4) on the Schedule of Buyers (Additional Closing), (iii) a Series B Warrant to initially acquire
up to the aggregate number of shares of Common Stock set forth opposite such Buyer’s name in column
(5) on the Schedule of Buyers (Additional Closing) and (iv) a Series C Warrant (as defined below)
to initially acquire up to the aggregate number of shares of Common Stock set forth opposite such
Buyer’s name in column (6) on the Schedule of Buyers (Additional Closing).

E. The Series A Warrants, the Series B Warrants and the Series C Warrants are collectively
referred to herein as the “Warrants.” The Series A Warrant Shares, the Series B Warrant Shares and
the Series C Warrant Shares are collectively referred to herein as the “Warrant Shares.” The
Notes, the Conversion Shares, the Warrants and the Warrant Shares are collectively referred to
herein as the “Securities.”

AGREEMENT

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and each Buyer hereby agree as follows:

	1.	 	PURCHASE AND SALE OF NOTES AND WARRANTS.

(a) Purchase of Notes and Warrants.

(i) Initial Notes and Warrants. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6(a) and 7(a) below, the Company shall issue and sell to each
Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the Initial
Closing Date, an Initial Note in the original principal amount as is set forth opposite such
Buyer’s name in column (3) on the Schedule of Buyers (Initial Closing), along with (i) Series A
Warrants to initially acquire up to the aggregate number of Series A Warrant Shares as is set forth
opposite such Buyer’s name in column (4) on the Schedule of Buyers (Initial Closing), (ii) Series B
Warrants to initially acquire up to the aggregate number of Series B Warrant Shares as is set forth
opposite such Buyer’s name in column (5) on the Schedule of Buyers (Initial Closing) and (iii)
Series C Warrants to initially acquire up to the aggregate number of Series C Warrant Shares as is
set forth opposite such Buyer’s name in column (6) on the Schedule of Buyers (Initial Closing) (the
“Initial Closing”).

(ii) Additional Notes and Warrants. Subject to the satisfaction (or waiver) of the
conditions set forth in Sections 6(b) and 7(b) below, the Company shall issue and sell to each
Buyer, and each Buyer severally, but not jointly, shall purchase from the Company on the Additional
Closing Date, an Additional Note in the original principal amount as is set forth opposite such
Buyer’s name in column (3) on the Schedule of Buyers (Additional Closing), along with (i) Series A
Warrants to initially acquire up to the aggregate number of Series A Warrant Shares as is set forth
opposite such Buyer’s name in column (4) on the Schedule of Buyers (Additional Closing), (ii)
Series B Warrants to initially acquire up to the aggregate number of Series B Warrant Shares as is
set forth opposite such Buyer’s name in column (5) on the Schedule of Buyers (Additional Closing)
and (iii) Series C Warrants to initially acquire up to the aggregate number of Series C Warrant
Shares as is set forth opposite such Buyer’s name in column (6) on the Schedule of Buyers
(Additional Closing) (the “Additional Closing”).

(iii) Closing. The Initial Closing and the Additional Closing are each referred to in
this Agreement as a “Closing”. Each Closing shall occur on the applicable Closing Date (as defined
below) at the offices of Greenberg Traurig, LLP, 77 W. Wacker Drive, Suite 3100, Chicago, Illinois
60601.

(iv) Purchase Price. The aggregate purchase price for the Initial Notes and Warrants
to be purchased by each Buyer at the Initial Closing (the “Initial Purchase Price”) shall be the
amount set forth opposite such Buyer’s name in column (7) on the Schedule of Buyers (Initial
Closing). The aggregate purchase price for the Additional Notes and Warrants to be purchased by
each Buyer at the Additional Closing (the “Additional Purchase Price”) shall be the amount set
forth opposite such Buyer’s name in column (7) on the Schedule of Buyers (Additional Closing).

(b) Initial Closing Date. The date and time of the Initial Closing (the “Initial
Closing Date”) shall be 9:00 a.m., New York time, on the first (1st) Business Day on
which the conditions to the Initial Closing set forth in Sections 6(a) and 7(a) below are satisfied
or waived (or such later time or date as is mutually agreed to by the Company and each Buyer). As
used herein “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks in New York, New York are authorized or required by law to remain closed.

(c) Additional Closing Date. The date and time of the Additional Closing (the
“Additional Closing Date” and together with the Initial Closing Date, each a “Closing Date” and
collectively, the “Closing Dates”) shall be 9:00 a.m., New York time, on the first (1st)
Business Day on which the conditions to the Additional Closing set forth in Sections 6(b) and 7(b)
below are satisfied or waived (or such later time or date as is mutually agreed to by the Company
and each Buyer).

(d) Payment of Purchase Price; Delivery of Notes and Warrants.

(i) On the Initial Closing Date, (A) each Buyer shall pay its respective Initial Purchase
Price (less, in the case of Iroquois (as defined below), the amounts withheld pursuant to Section
4(h)) to the Company for the Notes and Warrants to be issued and sold to such Buyer at the Initial
Closing, by wire transfer of immediately available funds in accordance with the Company’s written
wire instructions and (B) the Company shall deliver to each Buyer (i) a Note (in such original
principal amount as is set forth opposite such Buyer’s name in column (3) of the Schedule of Buyers
(Initial Closing)), (ii) Series A Warrants to initially acquire up to the aggregate number of
Series A Warrant Shares as is set forth opposite such Buyer’s name in column (4) on the Schedule of
Buyers (Initial Closing), (iii) Series B Warrants to initially acquire up to the aggregate number
of Series B Warrant Shares as is set forth opposite such Buyer’s name in column (5) on the Schedule
of Buyers (Initial Closing) and (iv) Series C Warrants to initially acquire up to the aggregate
number of Series C Warrant Shares as is set forth opposite such Buyer’s name in column (6) on the
Schedule of Buyers (Initial Closing), in each case, duly executed on behalf of the Company and
registered in the name of such Buyer or its designee.

(ii) On the Additional Closing Date, (A) each Buyer shall pay its respective Additional
Purchase Price to the Company for the Notes and Warrants to be issued and sold to such Buyer at the
Additional Closing, by wire transfer of immediately available funds in accordance with the
Company’s written wire instructions and (B) the Company shall deliver to each Buyer (i) a Note (in
such original principal amount as is set forth opposite such Buyer’s name in column (3) of the
Schedule of Buyers (Additional Closing)), (ii) Series A Warrants to initially acquire up to the
aggregate number of Series A Warrant Shares as is set forth opposite such Buyer’s name in column
(4) on the Schedule of Buyers (Additional Closing), (iii) Series B Warrants to initially acquire up
to the aggregate number of Series B Warrant Shares as is set forth opposite such Buyer’s name in
column (5) on the Schedule of Buyers (Additional Closing) and (iv) Series C Warrants to initially
acquire up to the aggregate number of Series C Warrant Shares as is set forth opposite such Buyer’s
name in column (6) on the Schedule of Buyers (Additional Closing), in each case, duly executed on
behalf of the Company and registered in the name of such Buyer or its designee.

	2.	 	BUYER’S REPRESENTATIONS AND WARRANTIES.

Each Buyer, severally and not jointly, represents and warrants to the Company with respect to
only itself that:

(a) Organization; Authority. Such Buyer is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with the requisite
power and authority to enter into and to consummate the transactions contemplated by the
Transaction Documents (as defined below) to which it is a party and otherwise to carry out its
obligations hereunder and thereunder.

(b) Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of such Buyer and constitutes the legal, valid and binding
obligations of such Buyer enforceable against such Buyer in accordance with its terms, except as
such enforceability may be limited by general principles of equity or applicable bankruptcy,
insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or
affecting generally, the enforcement of applicable creditors’ rights and remedies.

(c) No Conflicts. The execution, delivery and performance by such Buyer of this
Agreement and the consummation by such Buyer of the transactions contemplated hereby will not (i)
result in a violation of the organizational documents of such Buyer, (ii) conflict with, or
constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Buyer is a party or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree (including federal
and state securities laws) applicable to such Buyer, except, in the case of clauses (ii) and (iii)
above, for such conflicts, defaults, rights or violations which would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the ability of such Buyer to
perform its obligations hereunder.

(d) Certain Trading Activities. Such Buyer has not directly or indirectly, nor has
any Person acting on behalf of or pursuant to any understanding with such Buyer, engaged in any
transactions in the securities of the Company (including, without limitation, any Short Sales (as
defined below) involving the Company’s securities) during the period commencing as of the time that
such Buyer executed a term sheet regarding the specific investment in the Company contemplated by
this Agreement and ending immediately prior to the execution of this Agreement by such Buyer.
“Short Sales” means all “short sales” as defined in Rule 200 promulgated under Regulation SHO under
the Securities Exchange Act of 1934, as amended (the “1934 Act”) (but shall not be deemed to
include the location and/or reservation of borrowable shares of Common Stock).

	3.	 	REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

The Company represents and warrants to each of the Buyers that:

(a) Organization and Qualification. Each of the Company and each of its Subsidiaries
are entities duly organized and validly existing and in good standing under the laws of the
jurisdiction in which they are formed, and have the requisite power and authorization to own their
properties and to carry on their business as now being conducted and as presently proposed to be
conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity
to do business and is in good standing in every jurisdiction in which its ownership of property or
the nature of the business conducted by it makes such qualification necessary, except to the extent
that the failure to be so qualified or be in good standing would not have a Material Adverse
Effect. “Material Adverse Effect” means any material adverse effect on (i) the business,
properties, assets, liabilities, operations (including results thereof), condition (financial or
otherwise) or prospects of the Company and its Subsidiaries, taken as a whole, (ii) the
transactions contemplated hereby or in any of the other Transaction Documents or (iii) the
authority or ability of the Company to perform any of its obligations under any of the Transaction
Documents. Other than the Persons (as defined below) set forth on Schedule 3(a), the Company has no
Subsidiaries. “Subsidiaries” means any Person in which the Company, directly or indirectly, (I)
owns a majority of the outstanding capital stock or holds any equity or similar interest of such
Person or (II) controls or operates all or a substantial part of the business, operations or
administration of such Person, and each of the foregoing, is individually referred to herein as a
“Subsidiary”; provided that, except with respect to Section 3(m), Converted Organics of Woodbridge,
LLC shall not be considered to be a Subsidiary.

(b) Authorization; Enforcement; Validity. The Company has the requisite power and
authority to enter into and perform its obligations under this Agreement and the other Transaction
Documents and to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Notes and the reservation for issuance and issuance of the
Conversion Shares, the issuance of the Warrants and the reservation for issuance and issuance of
the Warrant Shares issuable upon exercise of the Warrants) have been duly authorized by the
Company’s board of directors and (other than the filing with the SEC of the prospectus supplement
required by the Registration Statement pursuant to Rule 424(b) under the 1933 Act (the “Prospectus
Supplement”) supplementing the base prospectus forming part of the Registration Statement (the
“Prospectus”), and the listing of additional shares application with the Principal Market and any
other filings as may be required by any state securities agencies) no further filing, consent or
authorization is required by the Company, its board of directors or its stockholders (other than
the Shareholder Approval) or other governing body. This Agreement has been, and the other
Transaction Documents will be prior to the applicable Closing, duly executed and delivered by the
Company, and each constitutes the legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with its respective terms, except as such enforceability may be
limited by general principles of equity or applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies and except as rights to indemnification and to
contribution may be limited by federal or state securities law. “Transaction Documents” means,
collectively, this Agreement, the Notes, the Warrants, the Irrevocable Transfer Agent Instructions
(as defined below) and each of the other agreements and instruments entered into or delivered by
any of the parties hereto in connection with the transactions contemplated hereby and thereby, as
may be amended from time to time.

(c) Issuance of Securities; Registration Statement. The issuance of the Notes and the
Warrants are duly authorized and, upon issuance in accordance with the terms of the Transaction
Documents, will be validly issued, fully paid and non-assessable and free from all preemptive or
similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof. As
of the Initial Closing, the Company shall have reserved from its duly authorized capital stock not
less than 100% of the sum of (i) the maximum number of Conversion Shares issuable upon conversion
of the Notes (assuming for purposes hereof that the Notes are convertible at the initial Conversion
Price (as defined in the Notes) and without taking into account any limitations on the conversion
of the Notes set forth therein) and (ii) the maximum number of Warrant Shares issuable upon
exercise of the Warrants (assuming for purposes hereof that the Warrants are convertible at the
initial Exercise Price (as defined in the Warrants)) (without taking into account any limitations
on the exercise of the Warrants set forth therein). The issuance of the Conversion Shares is duly
authorized, and upon conversion in accordance with the Notes, the Conversion Shares, when issued,
will be validly issued, fully paid and non-assessable and free from all preemptive or similar
rights, taxes, liens, charges and other encumbrances with respect to the issue thereof, with the
holders being entitled to all rights accorded to a holder of Common Stock. The issuance of the
Warrant Shares is duly authorized, and upon exercise in accordance with the Warrants, the Warrant
Shares, when issued, will be validly issued, fully paid and non-assessable and free from all
preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the
issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock.
The issuance by the Company of the Securities has been registered under the 1933 Act, the
Securities are being issued pursuant to the Registration Statement and all of the Securities are
freely transferable and freely tradable by each of the Buyers without restriction. The Registration
Statement is effective and available for the issuance of the Securities thereunder and the Company
has not received any notice that the SEC has issued or intends to issue a stop-order with respect
to the Registration Statement or that the SEC otherwise has suspended or withdrawn the
effectiveness of the Registration Statement, either temporarily or permanently, or intends or has
threatened in writing to do so. The “Plan of Distribution” section under the Registration Statement
permits the issuance and sale of the Securities hereunder and as contemplated by the other
Transaction Documents. Upon receipt of the Securities, each of the Buyers will have good and
marketable title to the Securities. The Registration Statement and any prospectus included therein,
including the Prospectus and the Prospectus Supplement, complied in all material respects with the
requirements of the 1933 Act and the 1934 Act and the rules and regulations of the SEC promulgated
thereunder and all other applicable laws and regulations. At the time the Registration Statement
and any amendments thereto became effective, at the date of this Agreement and at each deemed
effective date thereof pursuant to Rule 430B(f)(2) of the 1933 Act, the Registration Statement and
any amendments thereto complied and will comply in all material respects with the requirements of
the 1933 Act and did not and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the statements therein
not misleading. The Prospectus and any amendments or supplements thereto (including, without
limitation the Prospectus Supplement), at the time the Prospectus or any amendment or supplement
thereto was issued and at each Closing Date, complied, and will comply, in all material respects
with the requirements of the 1933 Act and did not, and will not, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. The Company meets all of
the requirements for the use of Form S-3 under the 1933 Act for the offering and sale of the
Securities contemplated by this Agreement and the other Transaction Documents, and the SEC has not
notified the Company of any objection to the use of the form of the Registration Statement pursuant
to Rule 401(g)(1) under the 1933 Act. The Registration Statement meets the requirements set forth
in Rule 415(a)(1)(x) under the 1933 Act. At the earliest time after the filing of the Registration
Statement that the Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the 1933 Act) relating to any of the Securities, the Company was
not and is not an “Ineligible Issuer” (as defined in Rule 405 under the 1933 Act). The Company (i)
has not distributed any offering material in connection with the offer or sale of any of the
Securities and (ii) until no Buyer holds any of the Securities, shall not distribute any offering
material in connection with the offer or sale of any of the Securities to, or by, any of the Buyers
(if required), in each case, other than the Registration Statement, the Prospectus or the
Prospectus Supplement. The Company has made all filings required to be made by the Company, if
any, with the Financial Industry Regulatory Authority in connection with the offering and sale of
the Securities.

(d) No Conflicts. The execution, delivery and performance of the Transaction Documents
by the Company and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance of the Notes, the Warrants, the Conversion
Shares and Warrant Shares and the reservation for issuance of the Conversion Shares and Warrant
Shares) will not (i) result in a violation of the Articles of Incorporation (as defined below)
(including, without limitation, any certificates of designation contained therein) or other
organizational documents of the Company or any of its Subsidiaries, any capital stock of the
Company, or Bylaws (as defined below), (ii) conflict with, or constitute a default (or an event
which with notice or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its Subsidiaries is a party or (iii) result in a
violation of any law, rule, regulation, order, judgment or decree (including, without limitation,
foreign, federal and state securities laws and regulations and the rules and regulations of the
Nasdaq Capital Market (the “Principal Market”)) applicable to the Company or any of its
Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound
or affected, except, in the case of clause (ii) or (iii) above, to the extent such violations that
could not reasonably be expected to have a Material Adverse Effect.

(e) Consents. The Company is not required to obtain any consent from, authorization
or order of, or make any filing or registration with (other than the filing with the SEC of the
Prospectus Supplement, the listing of additional shares application with the Principal Market and
any other filings as may be required by any state securities agencies), any court, governmental
agency or any regulatory or self-regulatory agency or any other Person in order for it to execute,
deliver or perform any of its obligations under, or contemplated by, the Transaction Documents, in
each case, in accordance with the terms hereof or thereof. All consents, authorizations, orders,
filings and registrations which the Company is required to obtain at or prior to the applicable
Closing have been obtained or effected on or prior to the applicable Closing Date, and neither the
Company nor any of its Subsidiaries are aware of any facts or circumstances which might prevent the
Company from obtaining or effecting any of the registration, application or filings contemplated by
the Transaction Documents. Except as disclosed in the SEC Documents, the Company is not in
violation of the requirements of the Principal Market and has no knowledge of any facts or
circumstances which could reasonably lead to delisting or suspension of the Common Stock in the
foreseeable future.

(f) Acknowledgment Regarding Buyer’s Purchase of Securities. The Company acknowledges
and agrees that each Buyer is acting solely in the capacity of an arm’s length purchaser with
respect to the Transaction Documents and the transactions contemplated hereby and thereby and that
no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) to its
knowledge, an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor
rule thereto) (collectively, “Rule 144”)) of the Company or any of its Subsidiaries or (iii) to its
knowledge, a “beneficial owner” of more than 10% of the shares of Common Stock (as defined for
purposes of Rule 13d-3 of the 1934 Act). The Company further acknowledges that no Buyer is acting
as a financial advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar
capacity) with respect to the Transaction Documents and the transactions contemplated hereby and
thereby, and any advice given by a Buyer or any of its representatives or agents in connection with
the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental
to such Buyer’s purchase of the Securities. The Company further represents to each Buyer that the
Company’s decision to enter into the Transaction Documents has been based solely on the independent
evaluation by the Company and its representatives.

(g) Placement Agent’s Fees. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for Persons
engaged by any Buyer or its investment advisor) relating to or arising out of the transactions
contemplated hereby. Other than Chardan Capital Markets, LLC (the “Placement Agent”), neither the
Company nor any of its Subsidiaries has engaged any placement agent or other agent in connection
with the offer or sale of the Securities.

(h) No Integrated Offering. None of the Company, its Subsidiaries or any of their
affiliates, nor any Person acting on their behalf has, directly or indirectly, made any offers or
sales of any security or solicited any offers to buy any security, under circumstances that would
cause this offering of the Securities to require approval of stockholders (other than the
Shareholder Approval) of the Company under any applicable stockholder approval provisions,
including, without limitation, under the rules and regulations of any exchange or automated
quotation system on which any of the securities of the Company are listed or designated for
quotation. None of the Company, its Subsidiaries, their affiliates nor any Person acting on their
behalf will take any action or steps that would cause the offering of any of the Securities to be
integrated with other offerings of securities of the Company.

(i) Dilutive Effect. The Company understands and acknowledges that the number of
Conversion Shares and Warrant Shares will increase in certain circumstances. The Company further
acknowledges that its obligation to issue the Conversion Shares upon conversion of the Notes and
the Warrant Shares upon exercise of the Warrants in accordance with this Agreement, the Notes and
the Warrants is absolute and unconditional, regardless of the dilutive effect that such issuance
may have on the ownership interests of other stockholders of the Company.

(j) Application of Takeover Protections; Rights Agreement. The Company and its board
of directors have taken all necessary action, if any, in order to render inapplicable any control
share acquisition, interested stockholder, business combination, poison pill (including, without
limitation, any distribution under a rights agreement) or other similar anti-takeover provision
under the Articles of Incorporation, Bylaws or other organizational documents or the laws of the
jurisdiction of its incorporation or otherwise which is or could become applicable to any Buyer as
a result of the transactions contemplated by this Agreement, including, without limitation, the
Company’s issuance of the Securities and any Buyer’s ownership of the Securities. The Company and
its board of directors have taken all necessary action, if any, in order to render inapplicable any
stockholder rights plan or similar arrangement relating to accumulations of beneficial ownership of
shares of Common Stock or a change in control of the Company or any of its Subsidiaries.

(k) SEC Documents; Financial Statements. During the two (2) years prior to the date
hereof, the Company has timely filed all reports, schedules, forms, proxy statements, statements
and other documents required to be filed by it with the SEC pursuant to the reporting requirements
of the 1934 Act (all of the foregoing filed prior to the date hereof and all exhibits and
appendices included therein and financial statements, notes and schedules thereto and documents
incorporated by reference therein being hereinafter referred to as the “SEC Documents”). The
Company has delivered to the Buyers or their respective representatives true, correct and complete
copies of each of the SEC Documents not available on the EDGAR system. As of their respective
dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act
and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents,
and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto as
in effect as of the time of filing. Such financial statements have been prepared in accordance with
generally accepted accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes thereto, or (ii) in the
case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed
or summary statements) and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments
which will not be material, either individually or in the aggregate). No other information provided
by or on behalf of the Company to any of the Buyers which is not included in the SEC Documents
contains any untrue statement of a material fact or omits to state any material fact necessary in
order to make the statements therein not misleading, in the light of the circumstance under which
they are or were made.

(l) Absence of Certain Changes. Since the date of the Company’s most recent audited
financial statements contained in a Form 10-K, except as disclosed in the SEC Documents filed
subsequent to such Form 10-K, there has been no material adverse change and no material adverse
development in the business, assets, liabilities, properties, operations (including results
thereof), condition (financial or otherwise) or prospects of the Company or any of its
Subsidiaries. Since the date of the Company’s most recent audited financial statements contained in
a Form 10-K, except as disclosed in the SEC Documents filed subsequent to such Form 10-K, neither
the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any
assets outside of the ordinary course of business or (iii) made any material capital expenditures,
individually or in the aggregate. Neither the Company nor any of its Subsidiaries has taken any
steps to seek protection pursuant to any law or statute relating to bankruptcy, insolvency,
reorganization, receivership, liquidation or winding up, nor does the Company or any Subsidiary
have any knowledge or reason to believe that any of their respective creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact which would reasonably lead
a creditor to do so. The Company and its Subsidiaries, on a consolidated basis, are not, and after
giving effect to the transactions contemplated hereby to occur at each Closing will not be,
Insolvent (as defined below). “Insolvent” means, (I) with respect to the Company and its
Subsidiaries, on a consolidated basis, (i) the present fair saleable value of the Company’s and its
Subsidiaries’ assets is less than the amount required to pay the Company’s and its Subsidiaries’
total Indebtedness (as defined below), (ii) the Company and its Subsidiaries are unable to pay
their debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured or (iii) the Company and its Subsidiaries intend to incur or believe
that they will incur debts that would be beyond their ability to pay as such debts mature; and (II)
with respect to the Company and each Subsidiary, individually, (i) the present fair saleable value
of the Company’s or such Subsidiary’s (as the case may be) assets is less than the amount required
to pay its respective total Indebtedness, (ii) the Company or such Subsidiary (as the case may be)
is unable to pay its respective debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured or (iii) the Company or such Subsidiary (as
the case may be) intends to incur or believes that it will incur debts that would be beyond its
respective ability to pay as such debts mature. Neither the Company nor any of its Subsidiaries has
engaged in any business or in any transaction, and is not about to engage in any business or in any
transaction, for which the Company’s or such Subsidiary’s remaining assets constitute unreasonably
small capital.

(m) No Undisclosed Events, Liabilities, Developments or Circumstances. No event,
liability, development or circumstance has occurred or exists, or is reasonably expected to occur
or exist with respect to the Company, any of its Subsidiaries or any of their respective
businesses, properties, liabilities, prospects, operations (including results thereof) or condition
(financial or otherwise) that (i) would be required to be disclosed by the Company under applicable
securities laws on a registration statement on Form S-1 filed with the SEC relating to an issuance
and sale by the Company of its Common Stock and which has not been publicly announced, (ii) could
have a material adverse effect on any Buyer’s investment hereunder or (iii) could have a Material
Adverse Effect.

(n) Conduct of Business; Regulatory Permits. Neither the Company nor any of its
Subsidiaries is in violation of any term of or in default under its Articles of Incorporation, any
certificate of designation, preferences or rights of any other outstanding series of preferred
stock of the Company or any of its Subsidiaries or Bylaws or their organizational charter,
certificate of formation or certificate of incorporation or bylaws, respectively. Neither the
Company nor any of its Subsidiaries is in violation of any judgment, decree or order or any
statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and
neither the Company nor any of its Subsidiaries will conduct its business in violation of any of
the foregoing, except in all cases for possible violations which could not, individually or in the
aggregate, have a Material Adverse Effect. Without limiting the generality of the foregoing, except
as disclosed in the SEC Documents, the Company is not in violation of any of the rules, regulations
or requirements of the Principal Market and has no knowledge of any facts or circumstances that
could reasonably lead to delisting or suspension of the Common Stock by the Principal Market in the
foreseeable future. Since January 1, 2008, (i) the Common Stock has been listed or designated for
quotation on the Principal Market, (ii) trading in the Common Stock has not been suspended by the
SEC or the Principal Market and (iii) except as disclosed in the SEC Documents, the Company has
received no communication, written or oral, from the SEC or the Principal Market regarding the
suspension or delisting of the Common Stock from the Principal Market. The Company and each of its
Subsidiaries possess all certificates, authorizations and permits issued by the appropriate
regulatory authorities necessary to conduct their respective businesses, except where the failure
to possess such certificates, authorizations or permits would not have, individually or in the
aggregate, a Material Adverse Effect, and neither the Company nor any such Subsidiary has received
any notice of proceedings relating to the revocation or modification of any such certificate,
authorization or permit.

(o) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries nor
any director, officer, agent, employee or other Person acting on behalf of the Company or any of
its Subsidiaries has, in the course of its actions for, or on behalf of, the Company or any of its
Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; (ii) made any direct or indirect unlawful
payment to any foreign or domestic government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.

(p) Sarbanes-Oxley Act. The Company and each Subsidiary is in compliance with all
applicable requirements of the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof,
and all applicable rules and regulations promulgated by the SEC thereunder that are effective as of
the date hereof.

(q) Transactions With Affiliates. Except as disclosed in the SEC Documents, none of
the officers, directors or employees of the Company or any of its Subsidiaries is presently a party
to any transaction with the Company or any of its Subsidiaries (other than for ordinary course
services as employees, officers or directors), including any contract, agreement or other
arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any such officer, director
or employee or, to the knowledge of the Company or any of its Subsidiaries, any corporation,
partnership, trust or other Person in which any such officer, director or employee has a
substantial interest or is an employee, officer, director, trustee or partner.

(r) Equity Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (i) 250,000,000 shares of Common Stock, of which, 84,096,669 are issued and
outstanding and 81,001,281 shares are reserved for issuance pursuant to securities (other than the
Notes and the Warrants) exercisable or exchangeable for, or convertible into, shares of Common
Stock and shares of Common Stock to be issued to TerraSphere members as disclosed in the SEC
Documents and (ii) 10,000,000 shares of preferred stock, of which 17,500 shares of 1% Series A
Convertible Preferred Stock are issued and outstanding. No shares of Common Stock are held in
treasury. All of such outstanding shares are duly authorized and have been, or upon issuance will
be, validly issued and are fully paid and non-assessable. 6,500,328 shares of the Company’s issued
and outstanding Common Stock on the date hereof are owned by Persons who are “affiliates” (as
defined in Rule 405 of the 1933 Act and calculated based on the assumption that only officers,
directors and holders of at least 10% of the Company’s issued and outstanding Common Stock are
“affiliates” without conceding that any such Persons are “affiliates” for purposes of federal
securities laws) of the Company or any of its Subsidiaries. To the Company’s knowledge, no Person
owns 10% or more of the Company’s issued and outstanding shares of Common Stock (calculated based
on the assumption that all Convertible Securities (as defined below), whether or not presently
exercisable or convertible, have been fully exercised or converted (as the case may be) taking
account of any limitations on exercise or conversion (including “blockers”) contained therein
without conceding that such identified Person is a 10% stockholder for purposes of federal
securities laws). (i) None of the Company’s or any Subsidiary’s capital stock is subject to
preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by
the Company or any Subsidiary; (ii) except as disclosed in the SEC Documents, there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable
for, any capital stock of the Company or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to issue additional capital stock of the Company or any of its Subsidiaries or options,
warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating
to, or securities or rights convertible into, or exercisable or exchangeable for, any capital stock
of the Company or any of its Subsidiaries; (iii) other than the Notes or except as disclosed in the
SEC Documents, there are no outstanding debt securities, notes, credit agreements, credit
facilities or other agreements, documents or instruments evidencing Indebtedness of the Company or
any of its Subsidiaries or by which the Company or any of its Subsidiaries is or may become bound;
(iv) there are no financing statements securing obligations in any amounts filed in connection with
the Company or any of its Subsidiaries; (v) except as disclosed in the SEC Documents and pursuant
to this Agreement, there are no agreements or arrangements under which the Company or any of its
Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act; (vi)
there are no outstanding securities or instruments of the Company or any of its Subsidiaries which
contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become
bound to redeem a security of the Company or any of its Subsidiaries; (vii) except as disclosed in
the SEC Documents, there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities; (viii) neither the Company nor
any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any
similar plan or agreement; and (ix) neither the Company nor any of its Subsidiaries have any
liabilities or obligations required to be disclosed in the SEC Documents which are not so disclosed
in the SEC Documents, other than those incurred in the ordinary course of the Company’s or its
Subsidiaries’ respective businesses and which, individually or in the aggregate, do not or could
not have a Material Adverse Effect. The Company has furnished to the Buyers true, correct and
complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the
date hereof (the “Articles of Incorporation”), and the Company’s bylaws, as amended and as in
effect on the date hereof (the “Bylaws”), and the terms of all securities convertible into, or
exercisable or exchangeable for, shares of Common Stock and the material rights of the holders
thereof in respect thereto.

(s) Indebtedness and Other Contracts. Neither the Company nor any of its Subsidiaries
(i) except as disclosed in the SEC Documents, has any outstanding Indebtedness (as defined below),
(ii) except as disclosed in the SEC Documents, is a party to any contract, agreement or instrument,
the violation of which, or default under which, by the other party(ies) to such contract, agreement
or instrument could reasonably be expected to result in a Material Adverse Effect, (iii) is in
violation of any term of, or in default under, any contract, agreement or instrument relating to
any Indebtedness, except where such violations and defaults would not result, individually or in
the aggregate, in a Material Adverse Effect, or (iv) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s
officers, has or is expected to have a Material Adverse Effect. For purposes of this Agreement: (x)
“Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money,
(B) all obligations issued, undertaken or assumed as the deferred purchase price of property or
services (including, without limitation, “capital leases” in accordance with generally accepted
accounting principles) (other than trade payables entered into in the ordinary course of business),
(C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and
other similar instruments, (D) all obligations evidenced by notes, bonds, debentures or similar
instruments, including obligations so evidenced incurred in connection with the acquisition of
property, assets or businesses (excluding shares of Common Stock to be issued to TerraSphere
Systems, LLC (“TerraSphere”) members as disclosed in the SEC Documents), (E) all indebtedness
created or arising under any conditional sale or other title retention agreement, or incurred as
financing, in either case with respect to any property or assets acquired with the proceeds of such
indebtedness (even though the rights and remedies of the seller or bank under such agreement in the
event of default are limited to repossession or sale of such property), (F) all monetary
obligations under any leasing or similar arrangement which, in connection with generally accepted
accounting principles, consistently applied for the periods covered thereby, is classified as a
capital lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for
which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any mortgage, lien, pledge, charge, security interest or other encumbrance upon or in any
property or assets (including accounts and contract rights) owned by any Person, even though the
Person which owns such assets or property has not assumed or become liable for the payment of such
indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of
others of the kinds referred to in clauses (A) through (G) above; (y) “Contingent Obligation”
means, as to any Person, any direct or indirect liability, contingent or otherwise, of that Person
with respect to any indebtedness, lease, dividend or other obligation of another Person if the
primary purpose or intent of the Person incurring such liability, or the primary effect thereof, is
to provide assurance to the obligee of such liability that such liability will be paid or
discharged, or that any agreements relating thereto will be complied with, or that the holders of
such liability will be protected (in whole or in part) against loss with respect thereto; and (z)
“Person” means an individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other entity and a government or any
department or agency thereof.

(t) Absence of Litigation(a) . Except as disclosed in the SEC Documents, there is no
action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,
public board, government agency, self-regulatory organization or body pending or, to the knowledge
of the Company, threatened against or affecting the Company or any of its Subsidiaries, the Common
Stock or any of the Company’s or its Subsidiaries’ officers or directors which is outside of the
ordinary course of business or individually or in the aggregate material to the Company or any of
its Subsidiaries. There has not been, and to the knowledge of the Company, there is not pending or
contemplated, any investigation by the SEC involving the Company, any of its Subsidiaries or any
current of former director or officer of the Company or any of its Subsidiaries that has not been
previously resolved with no consequences to the Company or any of its Subsidiaries. The SEC has not
issued any stop order or other order suspending the effectiveness of any registration statement
filed by the Company under the 1933 Act or the 1934 Act, including, without limitation, the
Registration Statement.

(u) Insurance. The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for, and neither the Company nor any such Subsidiary has any
reason to believe that it will be unable to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.

(v) Employee Relations. Neither the Company nor any of its Subsidiaries is a party to
any collective bargaining agreement or employs any member of a union. The Company believes that its
and its Subsidiaries’ relations with their respective employees are good. No executive officer (as
defined in Rule 501(f) promulgated under the 1933 Act) or other key employee of the Company or any
of its Subsidiaries has notified the Company or any such Subsidiary that such officer intends to
leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with the
Company or any such Subsidiary. No executive officer or other key employee of the Company or any of
its Subsidiaries is, or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement, non-competition
agreement, or any other contract or agreement or any restrictive covenant, and the continued
employment of each such executive officer or other key employee (as the case may be) does not
subject the Company or any of its Subsidiaries to any liability with respect to any of the
foregoing matters. The Company and its Subsidiaries are in compliance with all federal, state,
local and foreign laws and regulations respecting labor, employment and employment practices and
benefits, terms and conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect.

(w) Title. The Company and its Subsidiaries have good and marketable title in fee
simple to all real property, and have good and marketable title to all personal property, owned by
them which is material to the business of the Company and its Subsidiaries, in each case, free and
clear of all liens, encumbrances and defects except such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be made of such property by
the Company and any of its Subsidiaries. Any real property and facilities held under lease by the
Company or any of its Subsidiaries are held by them under valid, subsisting and enforceable leases
with such exceptions as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company or any of its Subsidiaries.

(x) Intellectual Property Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all trademarks, trade names, service marks, service mark
registrations, service names, patents, patent rights, copyrights, original works, inventions,
licenses, approvals, governmental authorizations, trade secrets and other intellectual property
rights and all applications and registrations therefor (“Intellectual Property Rights”) necessary
to conduct their respective businesses as now conducted and as presently proposed to be conducted.
None of the Company’s or its Subsidiaries’ Intellectual Property Rights have expired, terminated or
been abandoned, or are expected to expire, terminate or be abandoned, within three years from the
date of this Agreement. The Company has no knowledge of any infringement by the Company or any of
its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding
being made or brought, or to the knowledge of the Company or any of its Subsidiaries, being
threatened, against the Company or any of its Subsidiaries regarding their Intellectual Property
Rights. The Company is not aware of any facts or circumstances which might give rise to any of the
foregoing infringements or claims, actions or proceedings. The Company and each of its Subsidiaries
have taken reasonable security measures to protect the secrecy, confidentiality and value of all of
their Intellectual Property Rights.

(y) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with
all Environmental Laws (as defined below), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply
could be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect.
“Environmental Laws” means all federal, state, local or foreign laws relating to pollution or
protection of human health or the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata), including, without limitation, laws
relating to emissions, discharges, releases or threatened releases of chemicals, pollutants,
contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into
the environment, or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all
authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses,
notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or
approved thereunder.

(z) Subsidiary Rights. The Company or one of its Subsidiaries has the unrestricted
right to vote, and (subject to limitations imposed by applicable law) to receive dividends and
distributions on, all capital securities of its Subsidiaries as owned by the Company or such
Subsidiary.

(aa) Tax Status. The Company and each of its Subsidiaries (i) has timely made or filed
all foreign, federal and state income and all other tax returns, reports and declarations required
by any jurisdiction to which it is subject, (ii) has timely paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations, except those being contested in good faith and (iii) has set aside on its
books provision reasonably adequate for the payment of all taxes for periods subsequent to the
periods to which such returns, reports or declarations apply. There are no unpaid taxes in any
material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of
the Company and its Subsidiaries know of no basis for any such claim. The Company is not operated
in such a manner as to qualify as a passive foreign investment company, as defined in Section 1297
of the U.S. Internal Revenue Code of 1986, as amended.

(bb) Internal Accounting and Disclosure Controls. The Company and each of its
Subsidiaries maintains internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the 1934 Act) that is effective to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, including that (i)
transactions are executed in accordance with management’s general or specific authorizations, (ii)
transactions are recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset and liability accountability,
(iii) access to assets or incurrence of liabilities is permitted only in accordance with
management’s general or specific authorization and (iv) the recorded accountability for assets and
liabilities is compared with the existing assets and liabilities at reasonable intervals and
appropriate action is taken with respect to any difference. The Company maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15(e) under the 1934 Act) that are
effective in ensuring that information required to be disclosed by the Company in the reports that
it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the
time periods specified in the rules and forms of the SEC, including, without limitation, controls
and procedures designed to ensure that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and its principal
financial officer or officers, as appropriate, to allow timely decisions regarding required
disclosure. Neither the Company nor any of its Subsidiaries has received any notice or
correspondence from any accountant or other Person relating to any potential material weakness or
significant deficiency in any part of the internal controls over financial reporting of the Company
or any of its Subsidiaries.

(cc) Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company or any of its Subsidiaries and an unconsolidated or other off
balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is
not so disclosed or that otherwise could be reasonably likely to have a Material Adverse Effect.

(dd) Investment Company Status. The Company is not, and upon consummation of the sale
of the Securities will not be, an “investment company,” an affiliate of an “investment company,” a
company controlled by an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for, an “investment company” as such terms are defined in the Investment
Company Act of 1940, as amended.

(ee) Acknowledgement Regarding Buyers’ Trading Activity. It is understood and
acknowledged by the Company that (i) following the public disclosure of the transactions
contemplated by the Transaction Documents, in accordance with the terms thereof, none of the Buyers
have been asked by the Company or any of its Subsidiaries to agree, nor has any Buyer agreed with
the Company or any of its Subsidiaries, to desist from effecting any transactions in or with
respect to (including, without limitation, purchasing or selling, long and/or short) any securities
of the Company, or “derivative” securities based on securities issued by the Company or to hold any
of the Securities for any specified term; (ii) any Buyer, and counterparties in “derivative”
transactions to which any such Buyer is a party, directly or indirectly, presently may have a
“short” position in the Common Stock which was established prior to such Buyer’s knowledge of the
transactions contemplated by the Transaction Documents; and (iii) each Buyer shall not be deemed to
have any affiliation with or control over any arm’s length counterparty in any “derivative”
transaction. The Company further understands and acknowledges that following the public disclosure
of the transactions contemplated by the Transaction Documents pursuant to the Initial 8-K Filing
(as defined below) one or more Buyers may engage in hedging and/or trading activities at various
times during the period that the Securities are outstanding, including, without limitation, during
the periods that the value and/or number of the Warrant Shares deliverable with respect to the
Securities are being determined and such hedging and/or trading activities, if any, can reduce the
value of the existing stockholders’ equity interest in the Company both at and after the time the
hedging and/or trading activities are being conducted. The Company acknowledges that such
aforementioned hedging and/or trading activities do not constitute a breach of this Agreement or
any other Transaction Document or any of the documents executed in connection herewith or
therewith.

(ff) Manipulation of Price. Neither the Company nor any of its Subsidiaries has, and,
to the knowledge of the Company, no Person acting on their behalf has, directly or indirectly, (i)
taken any action designed to cause or to result in the stabilization or manipulation of the price
of any security of the Company or any of its Subsidiaries to facilitate the sale or resale of any
of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting purchases
of, any of the Securities (other than the Placement Agent), or (iii) paid or agreed to pay to any
Person any compensation for soliciting another to purchase any other securities of the Company or
any of its Subsidiaries.

(gg) U.S. Real Property Holding Corporation. Neither the Company nor any of its
Subsidiaries is, or has ever been, and so long as any of the Securities are held by any of the
Buyers, shall become, a U.S. real property holding corporation within the meaning of Section 897 of
the Internal Revenue Code of 1986, as amended, and the Company and each Subsidiary shall so certify
upon any Buyer’s request.

(hh) Registration Eligibility. The Company is eligible to register the issuance and
sale of the Securities to the Buyers using Form S-3 promulgated under the 1933 Act.

(ii) Transfer Taxes. On the applicable Closing Date, all stock transfer or other taxes
(other than income or similar taxes) which are required to be paid in connection with the issuance
and sale of the Securities to be sold to each Buyer hereunder will be, or will have been, fully
paid or provided for by the Company, and all laws imposing such taxes will be or will have been
complied with.

(jj) Bank Holding Company Act. Neither the Company nor any of its Subsidiaries is
subject to the Bank Holding Company Act of 1956, as amended (the “BHCA”) and to regulation by the
Board of Governors of the Federal Reserve System (the “Federal Reserve”). Neither the Company nor
any of its Subsidiaries or affiliates owns or controls, directly or indirectly, five percent (5%)
or more of the outstanding shares of any class of voting securities or twenty-five percent (25%) or
more of the total equity of a bank or any equity that is subject to the BHCA and to regulation by
the Federal Reserve. Neither the Company nor any of its Subsidiaries or affiliates exercises a
controlling influence over the management or policies of a bank or any entity that is subject to
the BHCA and to regulation by the Federal Reserve.

(kk) Shell Company Status. The Company is not, and has never been, an issuer
identified in, or subject to, Rule 144(i).

(ll) Public Utility Holding Act. None of the Company nor any of its Subsidiaries is a
“holding company,” or an “affiliate” of a “holding company,” as such terms are defined in the
Public Utility Holding Act of 2005.

(mm) Federal Power Act. None of the Company nor any of its Subsidiaries is subject to
regulation as a “public utility” under the Federal Power Act, as amended.

(nn) No Additional Agreements. The Company does not have any agreement or
understanding with any Buyer with respect to the transactions contemplated by the Transaction
Documents other than as specified in the Transaction Documents.

(oo) Real Property. Each of the Company and its Subsidiaries holds good title to all
real property, leases in real property, or other interests in real property owned or held by the
Company or any of its Subsidiaries (the “Real Property”) owned by the Company or any of its
Subsidiaries (as applicable). The Real Property is free and clear of all mortgages, defects,
claims, liens, pledges, charges, taxes, rights of first refusal, encumbrances, security interests
and other encumbrances (collectively “Encumbrances”) and is not subject to any rights of way,
building use restrictions, exceptions, variances, reservations, or limitations of any nature except
for (a) liens for current taxes not yet due and (b) zoning laws and other land use restrictions
that do not impair the present or anticipated use of the property subject thereto.

(pp) Fixtures and Equipment. Each of the Company and its Subsidiaries (as applicable)
has good title to, or a valid leasehold interest in, the tangible personal property, equipment,
improvements, fixtures, and other personal property and appurtenances that are used by the Company
or its Subsidiary in connection with the conduct of its business (the “Fixtures and Equipment”).
The Fixtures and Equipment are structurally sound, are in good operating condition and repair, are
adequate for the uses to which they are being put, are not in need of maintenance or repairs except
for ordinary, routine maintenance and repairs and are sufficient for the conduct of the Company’s
and/or its Subsidiaries’ businesses (as applicable) in the manner as conducted prior to the Initial
Closing. Each of the Company and its Subsidiaries owns all of its Fixtures and Equipment free and
clear of all Encumbrances except for (a) liens for current taxes not yet due and (b) zoning laws
and other land use restrictions that do not impair the present or anticipated use of the property
subject thereto.

(qq) Illegal or Unauthorized Payments; Political Contributions. Neither the Company
nor any of its Subsidiaries nor, to the best of the Company’s knowledge (after reasonable inquiry
of its officers and directors), any of the officers, directors, employees, agents or other
representatives of the Company or any of its Subsidiaries or any other business entity or
enterprise with which the Company or any Subsidiary is or has been affiliated or associated, has,
directly or indirectly, made or authorized any payment, contribution or gift of money, property, or
services, whether or not in contravention of applicable law, (a) as a kickback or bribe to any
Person or (b) to any political organization, or the holder of or any aspirant to any elective or
appointive public office except for personal political contributions not involving the direct or
indirect use of funds of the Company or any of its Subsidiaries.

(rr) Money Laundering. The Company and its Subsidiaries are in compliance with, and
have not previously violated, the USA Patriot Act of 2001 and all other applicable U.S. and
non-U.S. anti-money laundering laws and regulations, including, without limitation, the laws,
regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign
Assets Control, including, without limitation, (i) Executive Order 13224 of September 23, 2001
entitled, “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations contained in 31
CFR, Subtitle B, Chapter V.

(ss) Registration Rights. No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the Registration Statement
or the issuance of the Securities hereunder that could expose the Company to material liability or
any Buyer to any liability or that could impair the Company’s ability to consummate the issuance
and sale of the Securities in the manner, and at the times, contemplated hereby, which rights have
not been waived by the holder thereof as of the date hereof.

(tt) Ranking of the Notes. No Indebtedness of the Company, at each Closing, will be
senior to the Notes in right of payment, whether with respect to payment or redemptions, interest,
damages, upon liquidation or dissolution or otherwise.

(uu) Disclosure. The Company confirms that neither it nor any other Person acting on
its behalf has provided any of the Buyers or their agents or counsel with any information that
constitutes or could reasonably be expected to constitute material, non-public information
concerning the Company or any of its Subsidiaries, other than the existence of the transactions
contemplated by this Agreement and the other Transaction Documents. The Company understands and
confirms that each of the Buyers will rely on the foregoing representations in effecting
transactions in securities of the Company. All disclosure provided to the Buyers regarding the
Company and its Subsidiaries, their businesses and the transactions contemplated hereby, including
the schedules to this Agreement, furnished by or on behalf of the Company or any of its
Subsidiaries is true and correct and does not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. Each press release issued by
the Company or any of its Subsidiaries during the twelve (12) months preceding the date of this
Agreement did not at the time of release contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not misleading. No event or
circumstance has occurred or information exists with respect to the Company or any of its
Subsidiaries or its or their business, properties, liabilities, prospects, operations (including
results thereof) or conditions (financial or otherwise), which, under applicable law, rule or
regulation, requires public disclosure at or before the date hereof or announcement by the Company
but which has not been so publicly disclosed. The Company acknowledges and agrees that no Buyer
makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.

	4.	 	COVENANTS.

(a) Best Efforts. Each Buyer shall use its best efforts to timely satisfy each of the
conditions to be satisfied by it as provided in Section 6 of this Agreement. The Company shall use
its best efforts to timely satisfy each of the conditions to be satisfied by it as provided in
Section 7 of this Agreement.

(b) Maintenance of Registration Statement For so long as any of the Notes or Warrants
remain outstanding, the Company shall use its best efforts to maintain the effectiveness of the
Registration Statement for the issuance thereunder of the Conversion Shares and Warrant Shares, as
applicable, provided that if at any time while the Notes or Warrants are outstanding the Company
shall be ineligible to utilize Form S-3 (or any successor form) for the purpose of issuance of the
Conversion Shares and Warrant Shares, as applicable, the Company shall promptly amend the
Registration Statement on such other form as may be necessary to maintain the effectiveness of the
Registration Statement for this purpose. If at any time following the date hereof the Registration
Statement is not effective or is not otherwise available for the issuance of the Securities or any
prospectus contained therein is not available for use, the Company shall immediately notify the
holders of the Securities in writing that the Registration Statement is not then effective or a
prospectus contained therein is not available for use and thereafter shall promptly notify such
holders when the Registration Statement is effective again and available for the issuance of the
Securities or such prospectus is again available for use.

(c) Prospectus Supplement and Blue Sky. Immediately prior to execution of this
Agreement, the Company shall have delivered, and as soon as practicable after execution of this
Agreement the Company shall file, the Prospectus Supplement with respect to the Securities as
required under, and in conformity with, the 1933 Act, including Rule 424(b) thereunder. If required
under applicable law, immediately prior to the consummation of the Additional Closing, the Company
shall deliver and file a prospectus supplement with respect to the Securities to be issued at the
Additional Closing as required under, and in conformity with, the 1933 Act, including Rule 424(b)
thereunder. If required, the Company, on or before each Closing Date, shall take such action as the
Company shall reasonably determine is necessary in order to obtain an exemption for, or to, qualify
the Securities for sale to the Buyers at each Closing pursuant to this Agreement under applicable
securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from
such qualification), and shall provide evidence of any such action so taken to the Buyers on or
prior to each Closing Date. Without limiting any other obligation of the Company under this
Agreement, the Company shall timely make all filings and reports relating to the offer and sale of
the Securities required under all applicable securities laws (including, without limitation, all
applicable federal securities laws and all applicable “Blue Sky” laws), and the Company shall
comply with all applicable federal, state and local laws, statutes, rules, regulations and the like
relating to the offering and sale of the Securities to the Buyers.

(d) Reporting Status. Until the date on which no Notes or Warrants are outstanding
(the “Reporting Period”), the Company shall timely file all reports required to be filed with the
SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer required
to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder
would no longer require or otherwise permit such termination.

(e) Use of Proceeds. The Company shall use the net proceeds from the sale of the
Securities hereunder solely for general working capital. Without limiting the foregoing, none of
such proceeds shall be used, directly or indirectly, (i) for the satisfaction of any debt of the
Company or any of its Subsidiaries (other than payment of trade payables incurred after the date
hereof in the ordinary course of business of the Company and its Subsidiaries and consistent with
prior practices) or (ii) for the redemption of any securities of the Company.

(f) Financial Information. The Company agrees to send the following to each Buyer
during the Reporting Period (i) unless the following are filed with the SEC through EDGAR and are
available to the public through the EDGAR system, within one (1) Business Day after the filing
thereof with the SEC, a copy of its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q,
any interim reports or any consolidated balance sheets, income statements, stockholders’ equity
statements and/or cash flow statements for any period other than annual, any Current Reports on
Form 8-K and any registration statements (other than on Form S-8) or amendments filed pursuant to
the 1933 Act, (ii) unless publicly disseminated, on the same day as the release thereof, facsimile
copies of all press releases issued by the Company or any of its Subsidiaries and (iii) copies of
any notices and other information made available or given to the stockholders of the Company
generally, contemporaneously with the making available or giving thereof to the stockholders.

(g) Listing. The Company shall promptly secure the listing or designation for
quotation (as the case may be) of all of the Conversion Shares and Warrant Shares upon each
national securities exchange and automated quotation system, if any, upon which the Common Stock is
then listed or designated for quotation (as the case may be) (subject to official notice of
issuance) (but in no event later than the first Installment Notice Due Date) and shall maintain
such listing or designation for quotation (as the case may be) of all the shares of Common Stock
from time to time issuable under the terms of the Transaction Documents on such national securities
exchange or automated quotation system. The Company shall maintain the Common Stock’s listing or
designation for quotation (as the case may be) on the Principal Market, The New York Stock
Exchange, the NYSE Amex, the Nasdaq Global Select Market or the Nasdaq Global Market (each, an
“Eligible Market”). Neither the Company nor any of its Subsidiaries shall take any action which
could be reasonably expected to result in the delisting or suspension of the Common Stock on an
Eligible Market. The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section 4(g).

(h) Fees. The Company shall reimburse Iroquois Master Fund Ltd. (“Iroquois”) or its
designee(s) for all costs and expenses incurred by it or its affiliates in connection with the
transactions contemplated by the Transaction Documents (including, without limitation, all legal
fees and disbursements in connection therewith, structuring, documentation and implementation of
the transactions contemplated by the Transaction Documents and due diligence and regulatory filings
in connection therewith) in a non-accountable amount equal to $70,000, which amount shall be
withheld by Iroquois from its Initial Purchase Price at the Initial Closing or paid by the Company
on demand by Iroquois if Iroquois terminates its obligations under this Agreement in accordance
with Section 8 (as the case may be). The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or broker’s commissions (other than for Persons
engaged by any Buyer) relating to or arising out of the transactions contemplated hereby
(including, without limitation, any fees payable to the Placement Agent, who is the Company’s sole
placement agent in connection with the transactions contemplated by this Agreement). The Company
shall pay, and hold each Buyer harmless against, any liability, loss or expense (including, without
limitation, reasonable attorneys’ fees and out-of-pocket expenses) arising in connection with any
claim relating to any such payment. Except as otherwise set forth in the Transaction Documents,
each party to this Agreement shall bear its own expenses in connection with the sale of the
Securities to the Buyers.

(i) Pledge of Securities. Notwithstanding anything to the contrary contained in this
Agreement, the Company acknowledges and agrees that the Securities may be pledged by a Buyer in
connection with a bona fide margin agreement or other loan or financing arrangement that is secured
by the Securities. The pledge of Securities shall not be deemed to be a transfer, sale or
assignment of the Securities hereunder, and no Buyer effecting a pledge of Securities shall be
required to provide the Company with any notice thereof or otherwise make any delivery to the
Company pursuant to this Agreement or any other Transaction Document. The Company hereby agrees to
execute and deliver such documentation as a pledgee of the Securities may reasonably request in
connection with a pledge of the Securities to such pledgee by a Buyer.

(j) Disclosure of Transactions and Other Material Information. The Company shall, on
or before 5:30 p.m. (but in no event prior to 5:15 p.m.), New York time, on the date of this
Agreement, file a Current Report on Form 8-K describing all the material terms of the transactions
contemplated by the Transaction Documents in the form required by the 1934 Act and attaching all
the material Transaction Documents (including, without limitation, this Agreement (and all
schedules to this Agreement), the form of the Notes and the form of Warrants) (including all
attachments, the “Initial 8-K Filing”). The Company shall, on or before 9:30 a.m. (but in no event
prior to 9:15 a.m.), New York time, on the Additional Closing Date, (x) issue a press release
reasonably acceptable to the Buyers disclosing all the material terms of the transactions
consummated at the Additional Closing and (y) file a Current Report on Form 8-K describing all the
material terms of the transactions consummated at the Additional Closing in the form required by
the 1934 Act (the “Additional 8-K Filing” and collectively with the Initial 8-K Filing, the “8-K
Filings”). From and after the filing of the Initial 8-K Filing, the Company shall have disclosed
all material, non-public information (if any) delivered to any of the Buyers by the Company or any
of its Subsidiaries, or any of their respective officers, directors, employees or agents in
connection with the transactions contemplated by the Transaction Documents. The Company shall not,
and the Company shall cause each of its Subsidiaries and each of its and their respective officers,
directors, employees and agents, not to, provide any Buyer with any material, non-public
information regarding the Company or any of its Subsidiaries from and after the filing of the
Initial 8-K Filing without the express prior written consent of such Buyer. In the event of a
breach of any of the foregoing covenants or any of the covenants contained in Section 4(o) by the
Company, any of its Subsidiaries, or any of its or their respective officers, directors, employees
and agents (as determined in the reasonable good faith judgment of such Buyer), in addition to any
other remedy provided herein or in the Transaction Documents, such Buyer shall have the right to
make a public disclosure, in the form of a press release, public advertisement or otherwise, of
such material, non-public information without the prior approval by the Company, any of its
Subsidiaries, or any of its or their respective officers, directors, employees or agents. No Buyer
shall have any liability to the Company, any of its Subsidiaries, or any of its or their respective
officers, directors, employees, stockholders or agents, for any such disclosure. Subject to the
foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or
any other public statements with respect to the transactions contemplated hereby; provided,
however, the Company shall be entitled, without the prior approval of any Buyer, to make any press
release or other public disclosure with respect to such transactions (i) in substantial conformity
with the 8-K Filings and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company
in connection with any such press release or other public disclosure prior to its release). Without
the prior written consent of the applicable Buyer, the Company shall not (and shall cause each of
its Subsidiaries and affiliates to not) disclose the name of such Buyer in any filing (other than
the 8-K Filings), announcement, release or otherwise. Notwithstanding anything contained in this
Agreement to the contrary and without implication that the contrary would otherwise be true, the
Company expressly acknowledges and agrees that no Buyer has had, and no Buyer shall have (unless
expressly agreed to by a particular Buyer after the date hereof in a written definitive and binding
agreement executed by the Company and such particular Buyer (it being understood and agreed that no
Buyer may bind any other Buyer with respect thereto)), any duty of confidentiality with respect to,
or a duty not to trade on the basis of, any information regarding the Company or any of its
Subsidiaries.

(k) Additional Issuance of Securities. The Company agrees that for the period
commencing on the date hereof and ending on the date immediately following the ninety (90) day
anniversary of the Initial Closing Date (provided that such period shall be extended by the number
of days during such period and any extension thereof contemplated by this proviso on which the
Registration Statement is not effective or any prospectus contained therein is not available for
use) (the “Restricted Period”), neither the Company nor any of its Subsidiaries shall directly or
indirectly issue, offer, sell, grant any option or right to purchase, or otherwise dispose of (or
announce any issuance, offer, sale, grant of any option or right to purchase or other disposition
of) any equity security or any equity-linked or related security (including, without limitation,
any “equity security” (as that term is defined under Rule 405 promulgated under the 1933 Act), any
Convertible Securities, any debt, any preferred stock or any purchase rights) (any such issuance,
offer, sale, grant, disposition or announcement (whether occurring during the Restricted Period or
at any time thereafter) is referred to as a “Subsequent Placement”). Notwithstanding the foregoing,
this Section 4(k) shall not apply in respect of the issuance of (A) shares of Common Stock or
standard options to purchase Common Stock to directors, officers, consultants (it being expressly
understood and agreed that lawyers, law firms, accountants, accounting firms and other similar
professional advisors and professional advisory firms are not consultants) or employees of the
Company or any of its Subsidiaries in their capacity as such pursuant to an Approved Share Plan (as
defined below), provided that (1) all such issuances (taking into account the shares of Common
Stock issuable upon exercise of such options) after the date hereof pursuant to this clause (A) do
not, in the aggregate, exceed more than 6,500,000 shares of Common Stock (adjusted for stock
splits, stock combinations and other similar transactions) and (2) the exercise price of any such
options is not lowered, none of such options are amended to increase the number of shares issuable
thereunder and none of the terms or conditions of any such options are otherwise materially changed
in any manner that adversely affects any of the Buyers; (B) shares of Common Stock issued upon the
conversion or exercise of Convertible Securities (other than standard options to purchase Common
Stock issued pursuant to an Approved Share Plan that are covered by clause (A) above) issued prior
to the date hereof, provided that the conversion price of any such Convertible Securities (other
than standard options to purchase Common Stock issued pursuant to an Approved Share Plan that are
covered by clause (A) above) is not lowered, none of such Convertible Securities (other than
standard options to purchase Common Stock issued pursuant to an Approved Share Plan that are
covered by clause (A) above) are amended to increase the number of shares issuable thereunder and
none of the terms or conditions of any such Convertible Securities (other than standard options to
purchase Common Stock issued pursuant to an Approved Share Plan that are covered by clause (A)
above) are otherwise materially changed in any manner that adversely affects any of the Buyers; (C)
up to 15,992,064 shares of Common Stock to be issued to TerraSphere members as disclosed in the SEC
Documents; (D) shares of unregistered Common Stock to be issued to the Placement Agent in
connection with services rendered to the Company; (E) shares of Common Stock issued in connection
with strategic alliances, strategic mergers and acquisitions and strategic partnerships, provided
that (1) the primary purpose of such issuance is not to raise capital as determined in good faith
by the Buyers, (2) the purchaser or acquirer of such shares of Common Stock in such issuance solely
consists of either (I) the actual participants in such strategic alliance or strategic partnership,
(II) the actual owners of such assets or securities acquired in such merger or acquisition or (III)
the stockholders, partners or members of the foregoing Persons in the immediately preceding clauses
(I) and (II), (3) the number or amount (as the case may be) of such shares of Common Stock issued
to such Person by the Company shall not be disproportionate to such Person’s actual participation
in such strategic alliance or strategic partnership or ownership of such assets or securities to be
acquired by the Company (as applicable) and (4) all such issuances of Common Stock after the date
hereof pursuant to this clause (E) do not, in the aggregate, exceed more than 16,000,000 shares of
Common Stock (adjusted for stock splits, stock combinations and other similar transactions); (F)
the Additional Notes; (G) the Warrants to be issued at the Additional Closing; (H) the Conversion
Shares (whether issued pursuant to Sections 3 or 8 of the Notes); and (I) the Warrant Shares (each
of the foregoing in clauses (A) through (I) collectively the “Excluded Securities”). “Approved
Share Plan” means any employee benefit plan which has been approved by the board of directors of
the Company prior to or subsequent to the date hereof pursuant to which shares of Common Stock and
standard options to purchase Common Stock may be issued to any employee, officer, consultants or
director for services provided to the Company or any of its Subsidiaries in their capacity as such.
“Convertible Securities” means any capital stock or other security of the Company or any of its
Subsidiaries 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 capital stock or other security of the Company (including, without limitation, Common Stock) or
any of its Subsidiaries.

(l) Reservation of Shares. So long as any of the Notes or Warrants remain outstanding,
the Company shall take all action necessary to at all times have authorized, and reserved for the
purpose of issuance, no less than 100% of (i) the maximum number of shares of Common Stock issuable
upon conversion of all the Notes (assuming for purposes hereof, that the Notes are convertible at
the Conversion Price (as defined in the Notes) and without regard to any limitations on the
conversion of the Notes set forth therein) and (ii) the maximum number of shares of Common Stock
issuable upon exercise of all the Warrants (without regard to any limitations on the exercise of
the Warrants set forth therein).

(m) Conduct of Business. The business of the Company and its Subsidiaries shall not
be conducted in violation of any law, ordinance or regulation of any governmental entity, except
where such violations would not result, either individually or in the aggregate, in a Material
Adverse Effect.

(n) Variable Rate Transaction. Until none of the Notes or Warrants are outstanding,
the Company and each Subsidiary shall be prohibited from effecting or entering into an agreement to
effect any Subsequent Placement involving a Variable Rate Transaction. “Variable Rate Transaction”
means a transaction in which the Company or any Subsidiary (i) issues or sells any Convertible
Securities either (A) at a conversion, exercise or exchange rate or other price that is based upon
and/or varies with the trading prices of, or quotations for, the shares of Common Stock at any time
after the initial issuance of such Convertible Securities, or (B) with a conversion, exercise or
exchange price that is subject to being reset at some future date after the initial issuance of
such Convertible Securities or upon the occurrence of specified or contingent events directly or
indirectly related to the business of the Company or the market for the Common Stock, other than
pursuant to a customary “weighted average” or “full-ratchet” anti-dilution provisions similar to
those set forth in the Warrants, or (ii) enters into any agreement (including, without limitation,
an “equity line of credit” or an “at-the-market offering”) whereby the Company or any Subsidiary
may sell securities at a future determined price (other than standard and customary “preemptive” or
“participation” rights). Each Buyer shall be entitled to obtain injunctive relief against the
Company and its Subsidiaries to preclude any such issuance, which remedy shall be in addition to
any right to collect damages.

(o) Participation Right. From the date hereof through the one (1) year anniversary of
the Initial Closing Date, neither the Company nor any of its Subsidiaries shall, directly or
indirectly, effect any Subsequent Placement unless the Company shall have first complied with this
Section 4(o). The Company acknowledges and agrees that the right set forth in this Section 4(o) is
a right granted by the Company, separately, to each Buyer.

(i) At least five (5) Trading Days prior to any proposed or intended Subsequent
Placement, the Company shall deliver to each Buyer a written notice of its proposal or
intention to effect a Subsequent Placement (each such notice, a “Pre-Notice”), which
Pre-Notice shall not contain any information (including, without limitation, material,
non-public information) other than: (i) a statement that the Company proposes or intends to
effect a Subsequent Placement, (ii) a statement that the statement in clause (i) above does
not constitute material, non-public information and (iii) a statement informing such Buyer
that it is entitled to receive an Offer Notice (as defined below) with respect to such
Subsequent Placement upon its written request. Upon the written request of a Buyer within
three (3) Trading Days after the Company’s delivery to such Buyer of such Pre-Notice, and
only upon a written request by such Buyer, the Company shall promptly, but no later than one
(1) Trading Day after such request, deliver to such Buyer an irrevocable written notice (the
“Offer Notice”) of any proposed or intended issuance or sale or exchange (the “Offer”) of
the securities being offered (the “Offered Securities”) in a Subsequent Placement, which
Offer Notice shall (w) identify and describe the Offered Securities, (x) describe the price
and other terms upon which they are to be issued, sold or exchanged, and the number or
amount of the Offered Securities to be issued, sold or exchanged, (y) identify the Persons
(if known) to which or with which the Offered Securities are to be offered, issued, sold or
exchanged and (z) offer to issue and sell to or exchange with such Buyer in accordance with
the terms of the Offer all of the Offered Securities, provided that the number of Offered
Securities which such Buyer shall have the right to subscribe for under this Section 4(o)
shall be (a) based on such Buyer’s pro rata portion of the aggregate original principal
amount of the Notes purchased hereunder by all Buyers (the “Basic Amount”), and (b) with
respect to each Buyer that elects to purchase its Basic Amount, any additional portion of
the Offered Securities attributable to the Basic Amounts of other Buyers as such Buyer shall
indicate it will purchase or acquire should the other Buyers subscribe for less than their
Basic Amounts (the “Undersubscription Amount”).

(ii) To accept an Offer, in whole or in part, such Buyer must deliver a written notice
to the Company prior to the end of the fifth (5th) Business Day after such
Buyer’s receipt of the Offer Notice (the “Offer Period”), setting forth the portion of such
Buyer’s Basic Amount that such Buyer elects to purchase and, if such Buyer shall elect to
purchase all of its Basic Amount, the Undersubscription Amount, if any, that such Buyer
elects to purchase (in either case, the “Notice of Acceptance”). If the Basic Amounts
subscribed for by all Buyers are less than the total of all of the Basic Amounts, then such
Buyer who has set forth an Undersubscription Amount in its Notice of Acceptance shall be
entitled to purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, if the Undersubscription Amounts subscribed
for exceed the difference between the total of all the Basic Amounts and the Basic Amounts
subscribed for (the “Available Undersubscription Amount”), such Buyer who has subscribed for
any Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Basic Amount of such Buyer bears to the total
Basic Amounts of all Buyers that have subscribed for Undersubscription Amounts, subject to
rounding by the Company to the extent it deems reasonably necessary. Notwithstanding the
foregoing, if the Company desires to modify or amend the terms and conditions of the Offer
prior to the expiration of the Offer Period, the Company may deliver to each Buyer a new
Offer Notice and the Offer Period shall expire on the fifth (5th) Business Day
after such Buyer’s receipt of such new Offer Notice.

(iii) The Company shall have five (5) days from the expiration of the Offer Period
above (i) to offer, issue, sell or exchange all or any part of such Offered Securities as to
which a Notice of Acceptance has not been given by a Buyer (the “Refused Securities”)
pursuant to a definitive agreement(s) (the “Subsequent Placement Agreement”), but only to
the offerees described in the Offer Notice (if so described therein) and only upon terms and
conditions (including, without limitation, unit prices and interest rates) that are not more
favorable to the acquiring Person or Persons or less favorable to the Company than those set
forth in the Offer Notice and (ii) to publicly announce (a) the execution of such Subsequent
Placement Agreement, and (b) either (x) the consummation of the transactions contemplated by
such Subsequent Placement Agreement or (y) the termination of such Subsequent Placement
Agreement, which shall be filed with the SEC on a Current Report on Form 8-K with such
Subsequent Placement Agreement and any documents contemplated therein filed as exhibits
thereto.

(iv) In the event the Company shall propose to sell less than all the Refused
Securities (any such sale to be in the manner and on the terms specified in Section
4(o)(iii) above), then such Buyer may, at its sole option and in its sole discretion, reduce
the number or amount of the Offered Securities specified in its Notice of Acceptance to an
amount that shall be not less than the number or amount of the Offered Securities that such
Buyer elected to purchase pursuant to Section 4(o)(ii) above multiplied by a fraction, (i)
the numerator of which shall be the number or amount of Offered Securities the Company
actually proposes to issue, sell or exchange (including Offered Securities to be issued or
sold to Buyers pursuant to this Section 4(o) prior to such reduction) and (ii) the
denominator of which shall be the original amount of the Offered Securities. In the event
that any Buyer so elects to reduce the number or amount of Offered Securities specified in
its Notice of Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have again been
offered to the Buyers in accordance with Section 4(o)(i) above.

(v) Upon the closing of the issuance, sale or exchange of all or less than all of the
Refused Securities, such Buyer shall acquire from the Company, and the Company shall issue
to such Buyer, the number or amount of Offered Securities specified in its Notice of
Acceptance. The purchase by such Buyer of any Offered Securities is subject in all cases to
the preparation, execution and delivery by the Company and such Buyer of a separate purchase
agreement relating to such Offered Securities reasonably satisfactory in form and substance
to such Buyer and its counsel.

(vi) Any Offered Securities not acquired by a Buyer or other Persons in accordance with
this Section 4(o) may not be issued, sold or exchanged until they are again offered to such
Buyer under the procedures specified in this Agreement.

(vii) The Company and each Buyer agree that if any Buyer elects to participate in the
Offer, neither the Subsequent Placement Agreement with respect to such Offer nor any other
transaction documents related thereto (collectively, the “Subsequent Placement Documents”)
shall include any term or provision whereby such Buyer shall be required to agree to any
restrictions on trading as to any securities of the Company (other than restrictions
required by applicable securities laws on the resale of the specific “restricted securities”
(as that term is defined under Rule 144) being issued in the Subsequent Placement) or be
required to consent to any amendment to or termination of, or grant any waiver, release or
the like under or in connection with, any agreement previously entered into with the Company
or any instrument received from the Company.

(viii) Notwithstanding anything to the contrary in this Section 4(o) and unless
otherwise agreed to by such Buyer, the Company shall either confirm in writing to such Buyer
that the transaction with respect to the Subsequent Placement has been abandoned or shall
publicly disclose its intention to issue the Offered Securities, in either case in such a
manner such that such Buyer will not be in possession of any material, non-public
information, by the fifth (5th) Business Day following delivery of the Offer
Notice. If by such fifth (5th) Business Day, no public disclosure regarding a
transaction with respect to the Offered Securities has been made, and no notice regarding
the abandonment of such transaction has been received by such Buyer, such transaction shall
be deemed to have been abandoned and such Buyer shall not be in possession of any material,
non-public information with respect to the Company or any of its Subsidiaries. Should the
Company decide to again pursue such transaction with respect to the Offered Securities, the
Company shall provide such Buyer with another Offer Notice in accordance with, and subject
to, the terms of this Section 4(o) and such Buyer will again have the right of participation
set forth in this Section 4(o). The Company shall not be permitted to deliver more than one
Offer Notice to such Buyer in any forty-five (45) day period, except as expressly
contemplated by the last sentence of Section 4(o)(ii).

(ix) The restrictions contained in this Section 4(o) shall not apply in connection with
the issuance of any Excluded Securities. The Company shall not circumvent the provisions of
this Section 4(o) by providing terms or conditions to one Buyer that are not provided to
all.

(p) Passive Foreign Investment Company. The Company shall conduct its business in such
a manner as will ensure that the Company will not be deemed to constitute a passive foreign
investment company within the meaning of Section 1297 of the U.S. Internal Revenue Code of 1986, as
amended.

(q) Restriction on Redemption and Cash Dividends. So long as any Notes are
outstanding, the Company shall not, directly or indirectly, redeem, or declare or pay any cash
dividend or distribution on, any securities of the Company without the prior express written
consent of the Buyers.

(r) Corporate Existence. So long as any Buyer owns any Notes or Warrants, the Company
shall not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is
in compliance with the applicable provisions governing Fundamental Transactions set forth in the
Notes and the Warrants.

(s) Shareholder Approval. The Company shall provide each shareholder entitled to vote
at a special or annual meeting of shareholders of the Company (the “Shareholder Meeting”), which
meeting shall be held no later than February 28, 2011 (the “Shareholder Meeting Deadline”)), a
proxy statement, substantially in a form which has been previously reviewed by each of the Buyers
and each of their counsel at the expense of the Company, soliciting each such shareholder’s
affirmative vote at the Shareholder Meeting for approval of resolutions (the “Resolutions”) (i) to
the extent required by the Principal Market, permitting the sale of Securities at the Additional
Closing, (ii) permitting adjustments to the Exercise Price (as defined in the Series A Warrants and
the Series C Warrants) below the Floor Price (as defined in the Series A Warrants and the Series C
Warrants) and the issuance of any resulting additional shares of Common Stock issued thereunder,
(iii) making the Exchange Cap (as defined in the Notes and the Series B Warrants) inapplicable with
respect to issuances of Common Stock in excess thereof and (iii) eliminating the “temporary
purchase price floor” set forth in the Class G warrants issued by the Company in September 2009,
all in accordance with applicable law and the rules and regulations of Principal Market (such
affirmative approval being referred to herein as the “Shareholder Approval”), and the Company shall
use its best efforts to solicit its shareholders’ approval of the Resolutions (which efforts shall
include, without limitation, the requirement to hire a reputable proxy solicitor) and to cause the
board of directors of the Company to recommend to the shareholders that they approve the
Resolutions. The Company shall be obligated to seek to obtain the Shareholder Approval by the
Shareholder Meeting Deadline. If, despite the Company’s best efforts the Shareholder Approval is
not obtained on or prior to the Shareholder Meeting Deadline, the Company shall cause an additional
Shareholder Meeting to be held every three (3) months thereafter until such Shareholder Approval is
obtained. Until Shareholder Approval is obtained, the Company shall not, directly or indirectly,
issue or sell, or, in accordance with Section 2 of the Warrants, be deemed to have issued or sold,
any shares of Common Stock (other than Excluded Securities and shares of Common Stock issuable
under Convertible Securities held by any Buyer) for consideration per share (determined in
accordance with Section 2 of the Warrants) less than the Floor Price at any time while any of the
Notes or Warrants are outstanding without the prior written consent of each Buyer, which consent
may be granted or withheld in each Buyer’s sole discretion.

(t) Waiver of Certain Anti-Dilution Rights. Each Buyer who holds Class C warrants
issued by the Company, Class D warrants issued by the Company, Class G warrants issued by the
Company and Class I warrants issued by the Company hereby agrees with the Company that no
adjustment to any of the exercise prices thereunder shall occur solely as a result of the issuance
of any of the Securities.

	5.	 	REGISTER; TRANSFER AGENT INSTRUCTIONS; NO LEGENDS.

(a) Register. The Company shall maintain at its principal executive offices (or such
other office or agency of the Company as it may designate by notice to each holder of Securities),
a register for the Notes and the Warrants in which the Company shall record the name and address of
the Person in whose name the Notes and the Warrants have been issued (including the name and
address of each transferee), the principal amount of the Notes held by such Person, the number of
Conversion Shares issuable upon conversion of the Notes held by such Person and the number of
Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep
the register open and available at all times during business hours for inspection of any Buyer or
its legal representatives.

(b) Transfer Agent Instructions. The Company shall issue irrevocable instructions to
its transfer agent (the “Transfer Agent”) in the form previously provided to the Company (the
“Irrevocable Transfer Agent Instructions”) to issue certificates or credit shares to the applicable
balance accounts at The Depository Trust Company (“DTC”), registered in the name of each Buyer or
its respective nominee(s), for the Conversion Shares and the Warrant Shares in such amounts as
specified from time to time by each Buyer to the Company upon conversion of the Notes or the
exercise of the Warrants (as the case may be). The Company represents and warrants that no
instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5(b)
will be given by the Company to the Transfer Agent with respect to the Securities, and that the
Securities shall otherwise be freely transferable on the books and records of the Company. If a
Buyer effects a sale, assignment or transfer of the Securities, the Company shall permit the
transfer and shall promptly instruct the Transfer Agent to issue one or more certificates or credit
shares to the applicable balance accounts at DTC in such name and in such denominations as
specified by such Buyer to effect such sale, transfer or assignment. The Company acknowledges that
a breach by it of its obligations hereunder will cause irreparable harm to each Buyer. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations under this Section
5(b) will be inadequate and agrees, in the event of a breach or threatened breach by the Company of
the provisions of this Section 5(b), that each Buyer shall be entitled, in addition to all other
available remedies, to an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and without any bond or other
security being required.

(c) Legends. Certificates and any other instruments evidencing the Securities shall
not bear any restrictive or other legend.

	6.	 	CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

(a) Initial Closing Date. The obligation of the Company hereunder to issue and sell
the Initial Notes and Warrants to each Buyer at the Initial Closing is subject to the satisfaction,
at or before the Initial Closing Date, of each of the following conditions, provided that these
conditions are for the Company’s sole benefit and may be waived by the Company at any time in its
sole discretion by providing each Buyer with prior written notice thereof:

(i) Such Buyer and each other Buyer shall have delivered to the Company the Initial Purchase
Price (less, in the case of Iroquois, the amounts withheld pursuant to Section 4(h)) for the
Initial Notes and Warrants being purchased by such Buyer at the Initial Closing by wire transfer of
immediately available funds pursuant to the wire instructions provided by the Company.

(ii) The representations and warranties of such Buyer shall be true and correct in all
material respects as of the date when made and as of the Initial Closing Date as though originally
made at that time (except for representations and warranties that speak as of a specific date,
which shall be true and correct as of such date), and such Buyer shall have performed, satisfied
and complied in all material respects with the covenants, agreements and conditions required by
this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the Initial
Closing Date.

(b) Additional Closing Date. The obligation of the Company hereunder to issue and
sell the Additional Notes and Warrants to each Buyer at the Additional Closing is subject to the
satisfaction, at or before the Additional Closing Date, of each of the following conditions,
provided that these conditions are for the Company’s sole benefit and may be waived by the Company
at any time in its sole discretion by providing each Buyer with prior written notice thereof:

(i) Such Buyer and each other Buyer shall have delivered to the Company the Additional
Purchase Price for the Additional Notes and Warrants being purchased by such Buyer at the
Additional Closing by wire transfer of immediately available funds pursuant to the wire
instructions provided by the Company.

(ii) The representations and warranties of such Buyer shall be true and correct in all
material respects as of the date when made and as of the Additional Closing Date as though
originally made at that time (except for representations and warranties that speak as of a specific
date, which shall be true and correct as of such date), and such Buyer shall have performed,
satisfied and complied in all material respects with the covenants, agreements and conditions
required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to
the Additional Closing Date.

	7.	 	CONDITIONS TO EACH BUYER’S OBLIGATION TO PURCHASE.

(a) Initial Closing Date. The obligation of each Buyer hereunder to purchase its
Initial Note and Warrants at the Initial Closing is subject to the satisfaction, at or before the
Initial Closing Date, of each of the following conditions, provided that these conditions are for
each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole discretion by
providing the Company with prior written notice thereof:

(i) The Company shall have duly executed and delivered to such Buyer: (A) the Initial Note (in
such original principal amount as is set forth across from such Buyer’s name in column (3) of the
Schedule of Buyers (Initial Closing)), (B) Series A Warrants (for such aggregate number of Warrant
Shares as is set forth across from such Buyer’s name in column (4) of the Schedule of Buyers
(Initial Closing)), (C) Series B Warrants (for such aggregate number of Warrant Shares as is set
forth across from such Buyer’s name in column (5) of the Schedule of Buyers (Initial Closing)) and
(D) Series C Warrants (for such aggregate number of Warrant Shares as is set forth across from such
Buyer’s name in column (6) of the Schedule of Buyers (Initial Closing)), in each case, which are
being purchased by such Buyer at the Initial Closing pursuant to this Agreement.

(ii) Such Buyer shall have received the opinion of Cozen O’Connor, the Company’s
counsel, dated as of the Initial Closing Date, in the form previously provided to the Company.

(iii) The Company shall have delivered to such Buyer a certificate evidencing the formation
and good standing of the Company, TerraSphere, Inc. and Converted Organics of California, LLC in
each such entity’s jurisdiction of formation issued by the Secretary of State (or comparable
office) of such jurisdiction of formation as of a date within ten (10) days of the Initial Closing
Date.

(iv) The Company shall have delivered to such Buyer a certificate evidencing the Company’s
qualification as a foreign corporation and good standing issued by the Secretary of State (or
comparable office) of each jurisdiction in which the Company conducts business and is required to
so qualify, as of a date within ten (10) days of the Initial Closing Date.

(v) The Company shall have delivered to such Buyer a certified copy of the Articles of
Incorporation as certified by the Secretary of State of the State of Delaware within ten (10) days
of the Initial Closing Date.

(vi) The Company shall have delivered to such Buyer a certificate, in the form previously
provided to the Company, executed by the Secretary of the Company and dated as of the Initial
Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Buyer, (ii) the Articles of
Incorporation and (iii) the Bylaws, each as in effect at the Initial Closing.

(vii) Each and every representation and warranty of the Company shall be true and correct as
of the date when made and as of the Initial Closing Date as though originally made at that time
(except for representations and warranties that speak as of a specific date, which shall be true
and correct as of such date) and the Company shall have performed, satisfied and complied in all
respects with the covenants, agreements and conditions required to be performed, satisfied or
complied with by the Company at or prior to the Initial Closing Date. Such Buyer shall have
received a certificate, executed by the Chief Executive Officer of the Company, dated as of the
Initial Closing Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form acceptable to such Buyer.

(viii) The Company shall have delivered to such Buyer a letter from the Transfer Agent
certifying the number of shares of Common Stock outstanding on the Initial Closing Date immediately
prior to the Initial Closing.

(ix) The Common Stock (I) shall be designated for quotation or listed on the Principal Market
and (II) shall not have been suspended, as of the Initial Closing Date, by the SEC or the Principal
Market from trading on the Principal Market nor shall suspension by the SEC or the Principal Market
have been threatened, except as disclosed in the SEC Documents, as of the Initial Closing Date,
either (A) in writing by the SEC or the Principal Market or (B) by falling below the minimum
maintenance requirements of the Principal Market.

(x) The Company shall have obtained all governmental, regulatory or third party consents and
approvals, if any, necessary for the sale of the Securities, including without limitation, those
required by the Principal Market, provided that the Company agrees that the listing of additional
share application in connection with the Conversion Shares and Warrant Shares be filed as soon as
practicable.

(xi) No statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions contemplated by the
Transaction Documents.

(xii) Since the date of execution of this Agreement, no event or series of events shall have
occurred that reasonably would have or result in a Material Adverse Effect.

(xiii) The Company shall have delivered to such Buyer such other documents, instruments or
certificates relating to the transactions contemplated by this Agreement as such Buyer or its
counsel may reasonably request.

(b) Additional Closing Date. The obligation of each Buyer hereunder to purchase its
Additional Note and Warrants at the Additional Closing is subject to the satisfaction, at or before
the Additional Closing Date, of each of the following conditions, provided that these conditions
are for each Buyer’s sole benefit and may be waived by such Buyer at any time in its sole
discretion by providing the Company with prior written notice thereof:

(i) The Company shall have obtained Shareholder Approval.

(ii) There is then no Equity Conditions Failure (as defined in the Notes).

(iii) The Company shall have duly executed and delivered to such Buyer: (A) the Additional
Note (in such original principal amount as is set forth across from such Buyer’s name in column (3)
of the Schedule of Buyers (Additional Closing)), (B) Series A Warrants (for such aggregate number
of Warrant Shares as is set forth across from such Buyer’s name in column (4) of the Schedule of
Buyers (Additional Closing)), (C) Series B Warrants (for such aggregate number of Warrant Shares as
is set forth across from such Buyer’s name in column (5) of the Schedule of Buyers (Additional
Closing)) and (D) Series C Warrants (for such aggregate number of Warrant Shares as is set forth
across from such Buyer’s name in column (6) of the Schedule of Buyers (Additional Closing)), in
each case, which are being purchased by such Buyer at the Additional Closing pursuant to this
Agreement.

(iv) Such Buyer shall have received the opinion of Cozen O’Connor, the Company’s
counsel, dated as of the Additional Closing Date, in the form previously provided to the Company.

(v) The Company shall have delivered to such Buyer a certificate evidencing the formation and
good standing of the Company, TerraSphere, Inc. and Converted Organics of California, LLC in each
such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of
such jurisdiction of formation as of a date within ten (10) days of the Additional Closing Date.

(vi) The Company shall have delivered to such Buyer a certificate evidencing the Company’s
qualification as a foreign corporation and good standing issued by the Secretary of State (or
comparable office) of each jurisdiction in which the Company conducts business and is required to
so qualify, as of a date within ten (10) days of the Additional Closing Date.

(vii) The Company shall have delivered to such Buyer a certified copy of the Articles of
Incorporation as certified by the Secretary of State of the State of Delaware within ten (10) days
of the Additional Closing Date.

(viii) The Company shall have delivered to such Buyer a certificate, in the form previously
provided to the Company, executed by the Secretary of the Company and dated as of the Additional
Closing Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s
board of directors in a form reasonably acceptable to such Buyer, (ii) the Articles of
Incorporation and (iii) the Bylaws, each as in effect at the Additional Closing.

(ix) Each and every representation and warranty of the Company shall be true and correct as of
the date when made and as of the Additional Closing Date as though originally made at that time
(except for representations and warranties that speak as of a specific date, which shall be true
and correct as of such date) and the Company shall have performed, satisfied and complied in all
respects with the covenants, agreements and conditions required to be performed, satisfied or
complied with by the Company at or prior to the Additional Closing Date. Such Buyer shall have
received a certificate, executed by the Chief Executive Officer of the Company, dated as of the
Additional Closing Date, to the foregoing effect and as to such other matters as may be reasonably
requested by such Buyer in the form acceptable to such Buyer.

(x) The Company shall have delivered to such Buyer a letter from the Transfer Agent certifying
the number of shares of Common Stock outstanding on the Additional Closing Date immediately prior
to the Additional Closing.

(xi) The Common Stock (I) shall be designated for quotation or listed on the Principal Market
and (II) shall not have been suspended, as of the Additional Closing Date, by the SEC or the
Principal Market from trading on the Principal Market nor shall suspension by the SEC or the
Principal Market have been threatened, except as disclosed in the SEC Documents, as of the
Additional Closing Date, either (A) in writing by the SEC or the Principal Market or (B) by falling
below the minimum maintenance requirements of the Principal Market.

(xii) The Company shall have obtained all governmental, regulatory or third party consents and
approvals, if any, necessary for the sale of the Securities, including without limitation, those
required by the Principal Market.

(xiii) No statute, rule, regulation, executive order, decree, ruling or injunction shall have
been enacted, entered, promulgated or endorsed by any court or governmental authority of competent
jurisdiction that prohibits the consummation of any of the transactions contemplated by the
Transaction Documents.

(xiv) Since the date of execution of this Agreement, no event or series of events shall have
occurred that reasonably would have or result in a Material Adverse Effect.

(xv) The Company shall have obtained approval of the Principal Market to list or designate for
quotation (as the case may be) the Conversion Shares and the Warrant Shares.

(xvi) The Company shall have delivered to such Buyer such other documents, instruments or
certificates relating to the transactions contemplated by this Agreement as such Buyer or its
counsel may reasonably request.

	8.	 	TERMINATION.

In the event that (i) the Initial Closing shall not have occurred with respect to a Buyer
within five (5) days after the date hereof or (ii) the Additional Closing shall not have occurred
with respect to a Buyer by the six (6) month anniversary of the date hereof, then (x) if the
Initial Closing has not occurred, such Buyer shall have the right to terminate its obligations
under this Agreement with respect to itself at any time on or after the close of business on such
date without liability of such Buyer to any other party or (y) if the Initial Closing has occurred,
such Buyer shall have the right to terminate its obligations under this Agreement relating to the
Additional Closing and the Securities to be purchased at the Additional Closing with respect to
itself at any time on or after the close of business on such date without liability of such Buyer
to any other party (as applicable); provided, however, (i) the right to terminate this Agreement
under this Section 8 shall not be available to such Buyer if the failure of the transactions
contemplated by this Agreement to have been consummated by any such date is the result of such
Buyer’s breach of this Agreement and (ii) the abandonment of the sale and purchase of the
applicable Notes or the Warrants which have not yet been purchased shall be applicable only to such
Buyer providing such written notice, provided further that no such termination shall affect any
obligation of the Company under this Agreement to reimburse such Buyer for the expenses described
in Section 4(h) above. Nothing contained in this Section 8 shall be deemed to release any party
from any liability for any breach by such party of the terms and provisions of this Agreement or
the other Transaction Documents or to impair the right of any party to compel specific performance
by any other party of its obligations under this Agreement or the other Transaction Documents.

	9.	 	MISCELLANEOUS.

(a) Governing Law; Jurisdiction; Jury Trial. All questions concerning the construction,
validity, enforcement and interpretation of this Agreement and the other Transaction Documents
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. Each party 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 under any of the other Transaction Documents or in connection herewith or
therewith or with any transaction contemplated hereby or thereby or discussed herein or therein,
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. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. 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 shall be deemed or operate to preclude any Buyer from
bringing suit or taking other legal action against the Company in any other jurisdiction to collect
on the Company’s obligations to such Buyer or to enforce a judgment or other court ruling in favor
of such Buyer. EACH PARTY 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 AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party. In the
event that any signature is delivered by facsimile transmission or by an e-mail which contains a
portable document format (.pdf) file of an executed signature page, such signature page shall
create a valid and binding obligation of the party executing (or on whose behalf such signature is
executed) with the same force and effect as if such signature page were an original thereof.

(c) Headings; Gender. The headings of this Agreement are for convenience of reference
and shall not form part of, or affect the interpretation of, this Agreement. Unless the context
clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine,
feminine, neuter, singular and plural forms thereof. The terms “including,” “includes,” “include”
and words of like import shall be construed broadly as if followed by the words “without
limitation.” The terms “herein,” “hereunder,” “hereof” and words of like import refer to this
entire Agreement instead of just the provision in which they are found.

(d) Severability. If any provision of this Agreement 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 Agreement so long
as this Agreement 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). Notwithstanding anything to the contrary contained in this Agreement
or any other Transaction Document (and without implication that the following is required or
applicable), it is the intention of the parties that in no event shall amounts and value paid by
the Company, or payable to or received by any of the Buyers, under the Transaction Documents
(including without limitation, any amounts that would be characterized as “interest” under
applicable law) exceed amounts permitted under any applicable law. Accordingly, if any obligation
to pay, payment made to any Buyer, or collection by any Buyer pursuant the Transaction Documents is
finally judicially determined to be contrary to any such applicable law, such obligation to pay,
payment or collection shall be deemed to have been made by mutual mistake of such Buyer, the
Company and such amount shall be deemed to have been adjusted with retroactive effect to the
maximum amount or rate of interest, as the case may be, as would not be so prohibited by the
applicable law. Such adjustment shall be effected, to the extent necessary, by reducing or
refunding, at the option of such Buyer, the amount of interest or any other amounts which would
constitute unlawful amounts required to be paid or actually paid to such Buyer under the
Transaction Documents. For greater certainty, to the extent that any interest, charges, fees,
expenses or other amounts required to be paid to or received by such Buyer under any of the
Transaction Documents or related thereto are held to be within the meaning of “interest” or another
applicable term to otherwise be violative of applicable law, such amounts shall be pro-rated over
the period of time to which they relate.

(e) Entire Agreement; Amendments. This Agreement, the other Transaction Documents and
the schedules and exhibits attached hereto and thereto and the instruments referenced herein and
therein supersede all other prior oral or written agreements between the Buyers, the Company, their
affiliates and Persons acting on their behalf solely with respect to the matters contained herein
and therein, and this Agreement, the other Transaction Documents, the schedules and exhibits
attached hereto and thereto and the instruments referenced herein and therein contain the entire
understanding of the parties solely with respect to the matters covered herein and therein;
provided, however, nothing contained in this Agreement or any other Transaction Document shall (or
shall be deemed to) (i) have any effect on any agreements any Buyer has entered into with the
Company or any of its Subsidiaries prior to the date hereof with respect to any prior investment
made by such Buyer in the Company or (ii) waive, alter, modify or amend in any respect any
obligations of the Company or any of its Subsidiaries, or any rights of or benefits to any Buyer or
any other Person, in any agreement entered into prior to the date hereof between or among the
Company and/or any of its Subsidiaries and any Buyer and all such agreements shall continue in full
force and effect. Except as specifically set forth herein or therein, neither the Company nor any
Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. For
clarification purposes, the Recitals are part of this Agreement. No provision of this Agreement may
be amended other than by an instrument in writing signed by the Company and each of the Buyers. No
waiver shall be effective unless it is in writing and signed by an authorized representative of the
waiving party. No consideration shall be offered or paid to any Person to amend or consent to a
waiver or modification of any provision of any of the Transaction Documents unless the same
consideration also is offered to all of the parties to the Transaction Documents, all holders of
the Notes or all holders of the Warrants (as the case may be). The Company has not, directly or
indirectly, made any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in the Transaction
Documents. Without limiting the foregoing, the Company confirms that, except as set forth in this
Agreement, no Buyer has made any commitment or promise or has any other obligation to provide any
financing to the Company, any Subsidiary or otherwise. As a material inducement for each Buyer to
enter into this Agreement, the Company expressly acknowledges and agrees that (i) no due diligence
or other investigation or inquiry conducted by a Buyer, any of its advisors or any of its
representatives shall affect such Buyer’s right to rely on, or shall modify or qualify in any
manner or be an exception to any of, the Company’s representations and warranties contained in this
Agreement or any other Transaction Document, (ii) nothing contained in the Registration Statement,
the Prospectus or the Prospectus Supplement shall affect such Buyer’s right to rely on, or shall
modify or qualify in any manner or be an exception to any of, the Company’s representations and
warranties contained in this Agreement or any other Transaction Document and (iii) unless a
provision of this Agreement or any other Transaction Document is expressly preceded by the phrase
“except as disclosed in the SEC Documents,” nothing contained in any of the SEC Documents shall
affect such Buyer’s right to rely on, or shall modify or qualify in any manner or be an exception
to any of, the Company’s representations and warranties contained in this Agreement or any other
Transaction Document.

(f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one (1) Business Day after deposit with an overnight
courier service with next day delivery specified, in each case, properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications shall be:

If to the Company:

Converted Organics Inc.

137A Lewis Wharf

Boston MA 02110

Telephone: 617.624.0111

Facsimile: 617.624.0333

Attention: Edward J. Gildea, President

With a copy (for informational purposes only) to:

Cozen O’Connor

1900 Market Street

Philadelphia, PA 19103

Telephone: 215-665-5542

Facsimile: 215-701-2478

Attention: Ralph De Martino, Esq.

Cavas S. Pavri, Esq.

If to the Transfer Agent:

Computershare Inc.

250 Royall St

Canton, Massachusetts 02021

Telephone: (781) 575-4182

Facsimile:  (781) 575.2549

Attention:  Kim Crimi

If to a Buyer, to its address and facsimile number set forth on the Schedule of Buyers, with copies
to such Buyer’s representatives as set forth on the Schedule of Buyers,

with a copy (for informational purposes only) to:

Greenberg Traurig, LLP

77 W. Wacker Drive, Suite 3100

Chicago, Illinois 60601

Telephone: (312) 456-8400

Facsimile: (312) 456-8435

Attention: Peter H. Lieberman, Esq.

Todd A. Mazur, Esq.

or to such other address and/or facsimile number and/or to the attention of such other Person as
the recipient party has specified by written notice given to each other party five (5) days prior
to the effectiveness of such change, provided that Greenberg Traurig, LLP shall only be provided
copies of notices sent to Iroquois. Written confirmation of receipt (A) given by the recipient of
such notice, consent, waiver or other communication, (B) mechanically or electronically generated
by the sender’s facsimile machine containing the time, date, recipient facsimile number and an
image of the first page of such transmission or (C) provided by an overnight courier service shall
be rebuttable evidence of personal service, receipt by facsimile or receipt from an overnight
courier service in accordance with clause (i), (ii) or (iii) above, respectively.

(g) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns, including, as contemplated
below, any assignee of any of the Securities. The Company shall not assign this Agreement or any
rights or obligations hereunder without the prior written consent of each of the Buyers, including,
without limitation, by way of a Fundamental Transaction (as defined in the Warrants) (unless the
Company is in compliance with the applicable provisions governing Fundamental Transactions set
forth in the Warrants) or a Fundamental Transaction (as defined in the Notes) (unless the Company
is in compliance with the applicable provisions governing Fundamental Transactions set forth in the
Notes). A Buyer may assign some or all of its rights hereunder in connection with any transfer of
any of its Securities without the consent of the Company, in which event such assignee shall be
deemed to be a Buyer hereunder with respect to such assigned rights.

(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other Person, other than the Indemnitees
referred to in Section 9(k).

(i) Survival. The representations, warranties, agreements and covenants shall survive
each Closing. Each Buyer shall be responsible only for its own representations, warranties,
agreements and covenants hereunder.

(j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

(k) Indemnification.

(i) In consideration of each Buyer’s execution and delivery of the Transaction Documents and
acquiring the Securities thereunder and in addition to all of the Company’s other obligations under
the Transaction Documents, the Company shall defend, protect, indemnify and hold harmless each
Buyer and each holder of any Securities and all of their stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or
other representatives (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the “Indemnitees”) from and against any
and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and
damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a
party to the action for which indemnification hereunder is sought), and including reasonable
attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a
result of, or arising out of, or relating to (a) any misrepresentation or breach of any
representation or warranty made by the Company in any of the Transaction Documents, (b) any breach
of any covenant, agreement or obligation of the Company contained in any of the Transaction
Documents or (c) any cause of action, suit or claim brought or made against such Indemnitee by a
third party (including for these purposes a derivative action brought on behalf of the Company) and
arising out of or resulting from (i) the execution, delivery, performance or enforcement of any of
the Transaction Documents, (ii) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities, (iii) any disclosure
properly made by such Buyer pursuant to Section 4(j), or (iv) the status of such Buyer or holder of
the Securities as an investor in the Company pursuant to the transactions contemplated by the
Transaction Documents. To the extent that the foregoing undertaking by the Company may be
unenforceable for any reason, the Company shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.

(ii) Promptly after receipt by an Indemnitee under this Section 9(k) of notice of the
commencement of any action or proceeding (including any governmental action or proceeding)
involving an Indemnified Liability, such Indemnitee shall, if a claim in respect thereof is to be
made against the Company under this Section 9(k), deliver to the Company a written notice of the
commencement thereof, and the Company shall have the right to participate in, and, to the extent
the Company so desires, to assume control of the defense thereof with counsel mutually satisfactory
to the Company and the Indemnitee; provided, however, that an Indemnitee shall have the right to
retain its own counsel with the fees and expenses of such counsel to be paid by the Company if: (i)
the Company has agreed in writing to pay such fees and expenses; (ii) the Company shall have failed
promptly to assume the defense of such Indemnified Liability and to employ counsel reasonably
satisfactory to such Indemnitee in any such Indemnified Liability; or (iii) the named parties to
any such Indemnified Liability (including any impleaded parties) include both such Indemnitee and
the Company, and such Indemnitee shall have been advised by counsel that a conflict of interest is
likely to exist if the same counsel were to represent such Indemnitee and the Company (in which
case, if such Indemnitee notifies the Company in writing that it elects to employ separate counsel
at the expense of the Company, then the Company shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the Company), provided further, that in the
case of clause (iii) above the Company shall not be responsible for the reasonable fees and
expenses of more than one (1) separate legal counsel for such Indemnitee. The Indemnitee shall
reasonably cooperate with the Company in connection with any negotiation or defense of any such
action or Indemnified Liability by the Company and shall furnish to the Company all information
reasonably available to the Indemnitee which relates to such action or Indemnified Liability. The
Company shall keep the Indemnitee reasonably apprised at all times as to the status of the defense
or any settlement negotiations with respect thereto. The Company shall not be liable for any
settlement of any action, claim or proceeding effected without its prior written consent, provided,
however, that the Company shall not unreasonably withhold, delay or condition its consent. The
Company shall not, without the prior written consent of the Indemnitee, consent to entry of any
judgment or enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such Indemnitee of a release
from all liability in respect to such Indemnified Liability or litigation, and such settlement
shall not include any admission as to fault on the part of the Indemnitee. Following
indemnification as provided for hereunder, the Company shall be subrogated to all rights of the
Indemnitee with respect to all third parties, firms or corporations relating to the matter for
which indemnification has been made. The failure to deliver written notice to the Company within a
reasonable time of the commencement of any such action shall not relieve the Company of any
liability to the Indemnitee under this Section 9(k), except to the extent that the Company is
materially and adversely prejudiced in its ability to defend such action.

(iii) The indemnification required by this Section 9(k) shall be made by periodic payments of
the amount thereof during the course of the investigation or defense, as and when bills are
received or Indemnified Liabilities are incurred.

(iv) The indemnity agreement contained herein shall be in addition to (A) any cause of action
or similar right of the Indemnitee against the Company or others, and (B) any liabilities the
Company may be subject to pursuant to the law.

(l) Construction. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict construction
will be applied against any party. No specific representation or warranty shall limit the
generality or applicability of a more general representation or warranty. Each and every reference
to share prices, shares of Common Stock and any other numbers in this Agreement that relate to the
Common Stock shall be automatically adjusted for stock splits, stock dividends, stock combinations
and other similar transactions that occur with respect to the Common Stock after the date of this
Agreement.

(m) Remedies. Each Buyer and each holder of any Securities shall have all rights and
remedies set forth in the Transaction Documents and all rights and remedies which such holders have
been granted at any time under any other agreement or contract and all of the rights which such
holders have under any law. Any Person having any rights under any provision of this Agreement
shall be entitled to enforce such rights specifically (without posting a bond or other security),
to recover damages by reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. Furthermore, the Company recognizes that in the event that it fails to
perform, observe, or discharge any or all of its obligations under the Transaction Documents, any
remedy at law may prove to be inadequate relief to the Buyers. The Company therefore agrees that
the Buyers shall be entitled to seek specific performance and/or temporary, preliminary and
permanent injunctive or other equitable relief from any court of competent jurisdiction in any such
case without the necessity of proving actual damages and without posting a bond or other security.

(n) Withdrawal Right. Notwithstanding anything to the contrary contained in (and
without limiting any similar provisions of) the Transaction Documents, whenever any Buyer exercises
a right, election, demand or option under a Transaction Document and the Company does not timely
perform its related obligations within the periods therein provided, then such Buyer may rescind or
withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant
notice, demand or election in whole or in part without prejudice to its future actions and rights.

(o) Payment Set Aside; Currency1.1 . To the extent that the Company makes a payment or
payments to any Buyer hereunder or pursuant to any of the other Transaction Documents or any of the
Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required
to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other
Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal
law, common law or equitable cause of action), then to the extent of any such restoration the
obligation or part thereof originally intended to be satisfied shall be revived and continued in
full force and effect as if such payment had not been made or such enforcement or setoff had not
occurred. Until the Warrants are no longer outstanding, the Company shall not effect any stock
combination, reverse stock split or other similar transaction (or make any public announcement or
disclosure with respect to any of the foregoing) without the prior written consent of each of the
Buyers. Unless otherwise expressly indicated, all dollar amounts referred to in this Agreement and
the other Transaction Documents are in United States Dollars (“U.S. Dollars”), and all amounts
owing under this Agreement and all other Transaction Documents shall be paid in U.S. Dollars. All
amounts denominated in other currencies (if any) shall be converted into the U.S. Dollar equivalent
amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in
relation to any amount of currency to be converted into U.S. Dollars pursuant to this Agreement,
the U.S. Dollar exchange rate as published in the Wall Street Journal on the relevant date of
calculation.

(p) Independent Nature of Buyers’ Obligations and Rights. The obligations of each
Buyer under the Transaction Documents are several and not joint with the obligations of any other
Buyer, and no Buyer shall be responsible in any way for the performance of the obligations of any
other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction
Document, and no action taken by any Buyer pursuant hereto or thereto, shall be deemed to
constitute the Buyers as, and the Company acknowledges that the Buyers do not so constitute, a
partnership, an association, a joint venture or any other kind of group or entity, or create a
presumption that the Buyers are in any way acting in concert or as a group or entity with respect
to such obligations or the transactions contemplated by the Transaction Documents or any matters,
and the Company acknowledges that the Buyers are not acting in concert or as a group, and the
Company shall not assert any such claim, with respect to such obligations or the transactions
contemplated by the Transaction Documents. The decision of each Buyer to purchase Securities
pursuant to the Transaction Documents has been made by such Buyer independently of any other Buyer.
Each Buyer acknowledges that no other Buyer has acted as agent for such Buyer in connection with
such Buyer making its investment hereunder and that no other Buyer will be acting as agent of such
Buyer in connection with monitoring such Buyer’s investment in the Securities or enforcing its
rights under the Transaction Documents. The Company and each Buyer confirms that each Buyer has
independently participated with the Company in the negotiation of the transaction contemplated
hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to
independently protect and enforce its rights, including, without limitation, the rights arising out
of this Agreement or out of any other Transaction Documents, and it shall not be necessary for any
other Buyer to be joined as an additional party in any proceeding for such purpose. The use of a
single agreement to effectuate the purchase and sale of the Securities contemplated hereby was
solely in the control of the Company, not the action or decision of any Buyer, and was done solely
for the convenience of the Company and not because it was required or requested to do so by any
Buyer. It is expressly understood and agreed that each provision contained in this Agreement and
in each other Transaction Document is between the Company and a Buyer, solely, and not between the
Company and the Buyers collectively and not between and among the Buyers.

	 	(q)	 	Judgment Currency.

(i) If for the purpose of obtaining or enforcing judgment against the Company in any court in
any jurisdiction it becomes necessary to convert into any other currency (such other currency being
hereinafter in this Section 9(q) referred to as the “Judgment Currency”) an amount due in U.S.
Dollars under this Agreement or any other Transaction Document, the conversion shall be made at the
Exchange Rate prevailing on the Trading Day immediately preceding: (1) the date actual payment of
the amount due, in the case of any proceeding in the courts of Illinois or in the courts of any
other jurisdiction that will give effect to such conversion being made on such date or (2) the date
on which the foreign court determines, in the case of any proceeding in the courts of any other
jurisdiction (the date as of which such conversion is made pursuant to this Section 9(q)(i) being
hereinafter referred to as the “Judgment Conversion Date”).

(ii) If in the case of any proceeding in the court of any jurisdiction referred to in Section
9(q)(i) above, there is a change in the Exchange Rate prevailing between the Judgment Conversion
Date and the date of actual payment of the amount due, the applicable party shall pay such adjusted
amount as may be necessary to ensure that the amount paid in the Judgment Currency, when converted
at the Exchange Rate prevailing on the date of payment, will produce the amount of U.S. Dollars
which could have been purchased with the amount of Judgment Currency stipulated in the judgment or
judicial order at the Exchange Rate prevailing on the Judgment Conversion Date.

(iii) Any amount due from the Company under this provision shall be due as a separate debt and
shall not be affected by judgment being obtained for any other amounts due under or in respect of
this Agreement or any other Transaction Document.

[signature pages follow]IN WITNESS WHEREOF, Buyer and the Company have caused their
respective signature page to this Agreement to be duly executed as of the date first written above.

	 
	COMPANY:

	CONVERTED ORGANICS INC.
By:

	 

	Name: __________________
Title: __________________

1

IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature page to this
Agreement to be duly executed as of the date first written above.

	 
	BUYER:

	IROQUOIS MASTER FUND LTD.

     

By: Joshua Silverman, Authorized Signatory

2

IN WITNESS WHEREOF, Buyer and the Company have caused their respective signature page to this
Agreement to be duly executed as of the date first written above.

	 
	BUYER:

	IROQUOIS CAPITAL OPPORTUNITY FUND LP

     

By: Joshua Silverman, Authorized Signatory

SCHEDULE OF BUYERS

Schedule of Buyers (Initial Closing)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)	 	(7)
	 	 	 	 	 
	 	 	 	 	 	Number of	 	Number of	 	Number of	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	Initial
	 	 	 	 	 
	 	Principal Amount of	 	Series A Warrant	 	Series B Warrant	 	Series C Warrant	 	 	—	 
	Buyer	 	Address and Facsimile Number
	 	Initial Notes	 	Shares	 	Shares	 	Shares	 	Purchase Price
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Iroquois Master Fund Ltd.	 	641 Lexington Avenue, 26th Floor
New York, New York 10022
Facsimile: (212) 207-3452
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Iroquois Opportunity Fund LP	 	641 Lexington Avenue, 26th Floor
New York, New York 10022
Facsimile: (212) 207-3452
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Totals:	 	 
	 	$	3,939,473.68	 	 	 	1,969,737	 	 	 	3,939,474	 	 	 	1,969,737	 	 	$	3,750,000	 

3

SCHEDULE OF BUYERS (CONTINUED)

Schedule of Buyers (Additional Closing)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	(1)	 	(2)	 	(3)	 	(4)	 	(5)	 	(6)	 	(7)
	 	 	 	 	 
	 	 	 	 	 	Number of	 	Number of	 	Number of	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	—	 	 	 	—	 	 	 	—	 	 	Additional
	 	 	 	 	 
	 	Principal Amount of	 	Series A Warrant	 	Series B Warrant	 	Series C Warrant	 	 	—	 
	Buyer	 	Address and Facsimile Number
	 	Additional Notes	 	Shares	 	Shares	 	Shares	 	Purchase Price
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Iroquois Master Fund Ltd.	 	641 Lexington Avenue, 26th Floor
New York, New York 10022
Facsimile: (212) 207-3452
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Iroquois Opportunity Fund LP	 	641 Lexington Avenue, 26th Floor
New York, New York 10022
Facsimile: (212) 207-3452
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Totals:	 	 
	 	$	1,050,526.32	 	 	 	525,263	 	 	 	1,050,526	 	 	 	525,263	 	 	$	1,000,000	 

4EX-10.2

PLACEMENT AGENCY AGREEMENT

December 16, 2010

Chardan Capital Markets, LLC

17 State Street, Suite 1600

New York, New York 10004

Ladies and Gentlemen:

Introduction. Subject to the terms and conditions herein (this “Agreement”),
Converted Organics Inc., a Delaware corporation (the “Company”), hereby agrees to sell up
to an aggregate of $4,990,000 principal amount of registered securities (the “Securities”)
of the Company, including, but not limited to, units (“Units”) comprised of debt securities
(“Debt Securities”) that are convertible into shares of the Company’s common stock, $0.001
par value per share (the “Common Stock”) (the shares of Common Stock underlying the Debt
Securities, the “Conversion Shares”), and common stock purchase warrants to purchase up to
an aggregate of 9,999,980 shares of Common Stock (the “Warrants”) directly to various
investors (each, an “Investor” and, collectively, the “Investors”) through Chardan
Capital Markets, LLC, as placement agent (the “Placement Agent”). The aggregate purchase
price to the Investors for all Units is $4,750,000 and the exercise price to the Investors for each
share of common stock issuable upon exercise of the Warrants is $1.00.

	 	 	 
	The Company hereby confirms its agreement with the Placement Agent as follows:

	Section 1.

	 	Agreement to Act as Placement Agent.

(a) On the basis of the representations, warranties and agreements of the Company
herein contained, and subject to all the terms and conditions of this Agreement, the
Placement Agent shall be the exclusive Placement Agent in connection with the offering and
sale by the Company of the Securities pursuant to the Company’s registration statement on
Form S-3 (File No. 333-167970) (the “Registration Statement”), with the terms of
such offering (the “Offering”) to be subject to market conditions and negotiations
between the Company, the Placement Agent and the prospective Investors. The Placement Agent
will act on a reasonable best efforts basis and the Company agrees and acknowledges that
there is no guarantee of the successful placement of the Securities, or any portion thereof,
in the prospective Offering. Under no circumstances will the Placement Agent or any of its
“Affiliates” (as defined below) be obligated to underwrite or purchase any of the Units for
its own account or otherwise provide any financing. The Placement Agent shall act solely as
the Company’s agent and not as principal. The Placement Agent shall have no authority to
bind the Company with respect to any prospective offer to purchase Units and the Company
shall have the sole right to accept offers to purchase Units and may reject any such offer,
in whole or in part. Subject to the terms and conditions hereof, payment of the purchase
price for, and delivery of, the Securities shall be made at one or more closings (each a
“Closing” and the date on which each Closing occurs, a “Closing Date”). As
compensation for services rendered, on each Closing Date, the Company shall pay to the
Placement Agent the fees and expenses set forth below:

(i) A cash fee equal to 8% of the gross proceeds received by the Company from
the sale of the Securities at the closing of the Offering (the “Closing”).

(b) The term of the Placement Agent’s exclusive engagement will be until the completion
of the Offering (the “Exclusive Term”); provided, however, that a
party hereto may terminate the engagement with respect to itself at any time upon 10 days
written notice to the other parties. Notwithstanding anything to the contrary contained
herein, the provisions concerning confidentiality, indemnification and contribution
contained herein and the Company’s obligations contained in the indemnification provisions
will survive any expiration or termination of this Agreement, and the Company’s obligation
to pay fees actually earned and payable will survive any expiration or termination of this
Agreement. Nothing in this Agreement shall be construed to limit the ability of the
Placement Agent or its Affiliates to pursue, investigate, analyze, invest in, or engage in
investment banking, financial advisory or any other business relationship with Persons (as
defined below) other than the Company. As used herein (i) “Persons” means an individual or
corporation, partnership, trust, incorporated or unincorporated association, joint venture,
limited liability company, joint stock company, government (or an agency or subdivision
thereof) or other entity of any kind and (ii) “Affiliate” means any Person that, directly or
indirectly through one or more intermediaries, controls or is controlled by or is under
common control with a Person as such terms are used in and construed under Rule 405 under
the Securities Act of 1933, as amended (the “Securities Act”).

Section 2. Representations, Warranties and Covenants of the Company. The Company hereby makes to
the Placement Agent each of the representations and warrantiess as of the date hereof, and as of
each Closing Date, as are made to the Investors in the Transaction Documents (and treating this
Agreement as “Transaction Document” for such purposes, and also represents and warrants as
follows:

(a) Certificates. Any certificate signed by an officer of the Company and
delivered to the Placement Agent or to counsel for the Placement Agent shall be deemed to be
a representation and warranty by the Company to the Placement Agent as to the matters set
forth therein.

(b) Reliance. The Company acknowledges that the Placement Agent will rely upon
the accuracy and truthfulness of the foregoing and incorporated representations and
warranties and hereby consents to such reliance.

(nn) FINRA Affiliations. There are no affiliations with any FINRA member firm
among the Company’s officers, directors or, to the knowledge of the Company, any five
percent (5%) or greater stockholder of the Company.

Section 3. Delivery and Payment. Each Closing shall occur at the offices of the Weinstein Smith
LLP, 420 Lexington Avenue, Suite 2620, New York, New York 10170 (or at such other place as shall be
agreed upon by the Placement Agent and the Company) (“Placement Agent Counsel”). Subject
to the terms and conditions hereof, at each Closing payment of the purchase price for the Units
sold on such Closing Date shall be made by Federal Funds wire transfer, against delivery of such
Securities, and such Securities shall be registered in such name or names and shall be in such
denominations, as the Placement Agent may request at least one business day before the time of
purchase (as defined below).

Deliveries of the documents with respect to the purchase of the Securities, if any, shall be
made at the offices of Placement Agent Counsel. All actions taken at a Closing shall be deemed to
have occurred simultaneously.

Section 4. Covenants and Agreements of the Company. The Company further covenants and agrees with
the Placement Agent as follows:

(a) Registration Statement Matters. The Company will advise the Placement
Agent promptly after it receives notice thereof of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to any
Prospectus Supplement or any amended Prospectus Supplement has been filed and will furnish
the Placement Agent with copies thereof. The Company will file promptly all reports and any
definitive proxy or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 14 or 15(d) of the Exchange Act subsequent to the date
of any Prospectus Supplement and for so long as the delivery of a prospectus is required in
connection with the Offering. The Company will advise the Placement Agent, promptly after
it receives notice thereof (i) of any request by the Commission to amend the Registration
Statement or to amend or supplement any Prospectus Supplement or for additional information,
and (ii) of the issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto or any order directed at
any Incorporated Document, if any, or any amendment or supplement thereto or any order
preventing or suspending the use of the Base Prospectus or any Prospectus Supplement or any
amendment or supplement thereto or any post-effective amendment to the Registration
Statement, of the suspension of the qualification of the Securities for offering or sale in
any jurisdiction, of the institution or threatened institution of any proceeding for any
such purpose, or of any request by the Commission for the amending or supplementing of the
Registration Statement or a Prospectus Supplement or for additional information. The Company
shall use its best efforts to prevent the issuance of any such stop order or prevention or
suspension of such use.  If the Commission shall enter any such stop order or order or
notice of prevention or suspension at any time, the Company will use its best efforts to
obtain the lifting of such order at the earliest possible moment, or will file a new
registration statement and use its best efforts to have such new registration statement
declared effective as soon as practicable.  Additionally, the Company agrees that it shall
comply with the provisions of Rules 424(b), 430A, 430B and 430C, as applicable, under the
Securities Act, including with respect to the timely filing of documents thereunder, and
will use its reasonable efforts to confirm that any filings made by the Company under such
Rule 424(b) are received in a timely manner by the Commission.

(b) Blue Sky Compliance. The Company will cooperate with the Placement Agent
and the Investors in endeavoring to qualify the Securities for sale under the securities
laws of such jurisdictions (United States and foreign) as the Placement Agent and the
Investors may reasonably request and will make such applications, file such documents, and
furnish such information as may be reasonably required for that purpose, provided the
Company shall not be required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction where it is not now so qualified or
required to file such a consent, and provided further that the Company shall not be required
to produce any new disclosure document other than a Prospectus Supplement. The Company
will, from time to time, prepare and file such statements, reports and other documents as
are or may be required to continue such qualifications in effect for so long a period as the
Placement Agent may reasonably request for distribution of the Securities. The Company will
advise the Placement Agent promptly of the suspension of the qualification or registration
of (or any such exemption relating to) the Securities for offering, sale or trading in any
jurisdiction or any initiation or threat of any proceeding for any such purpose, and in the
event of the issuance of any order suspending such qualification, registration or exemption,
the Company shall use its best efforts to obtain the withdrawal thereof at the earliest
possible moment.

(c) Amendments and Supplements to a Prospectus Supplement and Other Matters.
The Company will comply with the Securities Act and the Exchange Act, and the rules and
regulations of the Commission thereunder, so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement, the Incorporated Documents and any
Prospectus Supplement. If during the period in which a prospectus is required by law to be
delivered in connection with the distribution of Securities contemplated by the Incorporated
Documents or any Prospectus Supplement (the “Prospectus Delivery Period”), any event
shall occur as a result of which, in the judgment of the Company or in the opinion of the
Placement Agent or counsel for the Placement Agent, it becomes necessary to amend or
supplement the Incorporated Documents or any Prospectus Supplement in order to make the
statements therein, in the light of the circumstances under which they were made, as the
case may be, not misleading, or if it is necessary at any time to amend or supplement the
Incorporated Documents or any Prospectus Supplement or to file under the Exchange Act any
Incorporated Document to comply with any law, the Company will promptly prepare and file
with the Commission, and furnish at its own expense to the Placement Agent and to dealers,
an appropriate amendment to the Registration Statement or supplement to the Registration
Statement, the Incorporated Documents or any Prospectus Supplement that is necessary in
order to make the statements in the Incorporated Documents and any Prospectus Supplement as
so amended or supplemented, in the light of the circumstances under which they were made, as
the case may be, not misleading, or so that the Registration Statement, the Incorporated
Documents or any Prospectus Supplement, as so amended or supplemented, will comply with law.
Before amending the Registration Statement or supplementing the Incorporated Documents or
any Prospectus Supplement in connection with the Offering, the Company will furnish the
Placement Agent with a copy of such proposed amendment or supplement and will not file any
such amendment or supplement to which the Placement Agent reasonably objects.

(d) Copies of any Amendments and Supplements to a Prospectus Supplement. The
Company will furnish the Placement Agent, without charge, during the period beginning on the
date hereof and ending on the later of the last Closing Date of the Offering, as many copies
of the Incorporated Documents and any Prospectus Supplement and any amendments and
supplements thereto (including any Incorporated Documents, if any) as the Placement Agent
may reasonably request.

(e) Free Writing Prospectus. The Company covenants that it will not, unless it
obtains the prior written consent of the Placement Agent, make any offer relating to the
Securities that would constitute an Company Free Writing Prospectus or that would otherwise
constitute a “free writing prospectus” (as defined in Rule 405 of the Securities
Act) required to be filed by the Company with the Commission or retained by the Company
under Rule 433 of the Securities Act. In the event that the Placement Agent expressly
consents in writing to any such free writing prospectus (a “Permitted Free Writing
Prospectus”), the Company covenants that it shall (i) treat each Permitted Free Writing
Prospectus as an Company Free Writing Prospectus, and (ii) comply with the requirements of
Rule 164 and 433 of the Securities Act applicable to such Permitted Free Writing Prospectus,
including in respect of timely filing with the Commission, legending and record keeping.

(f) Transfer Agent. The Company will maintain, at its expense, a registrar and
transfer agent for the Common Stock.

(g) Earnings Statement. As soon as practicable and in accordance with
applicable requirements under the Securities Act, but in any event not later than 18 months
after the last Closing Date, the Company will make generally available to its security
holders and to the Placement Agent an earnings statement, covering a period of at least 12
consecutive months beginning after the last Closing Date, that satisfies the provisions of
Section 11(a) and Rule 158 under the Securities Act.

(h) Periodic Reporting Obligations. During the Prospectus Delivery Period, the
Company will duly file, on a timely basis, with the Commission and the Trading Market all
reports and documents required to be filed under the Exchange Act within the time periods
and in the manner required by the Exchange Act.

(i) Additional Documents. The Company will enter into any subscription,
purchase or other customary agreements as the Placement Agent or the Investors deem
necessary or appropriate to consummate the Offering, all of which will be in form and
substance reasonably acceptable to the Placement Agent and the Investors. The Company
agrees that the Placement Agent may rely upon, and each is a third party beneficiary of, the
representations and warranties, and applicable covenants, set forth in any such purchase,
subscription or other agreement with Investors in the Offering.

(j) No Manipulation of Price.  The Company will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the price of any
securities of the Company.

(k) Acknowledgment. The Company acknowledges that any advice given by the
Placement Agent to the Company is solely for the benefit and use of the Board of Directors
of the Company and may not be used, reproduced, disseminated, quoted or referred to, without
the Placement Agent’s prior written consent.

Section 5. Conditions of the Obligations of the Placement Agent. The obligations of the Placement
Agent hereunder shall be subject to the accuracy of the representations and warranties on the part
of the Company set forth in Section 2 hereof, in each case as of the date hereof and as of each
Closing Date as though then made, to the timely performance by each of the Company of its covenants
and other obligations hereunder on and as of such dates, and to each of the following additional
conditions:

(a) Compliance with Registration Requirements; No Stop Order; No Objection from the
FINRA. Each Prospectus Supplement (in accordance with Rule 424(b)) and “free
writing prospectus” (as defined in Rule 405 of the Securities Act), if any, shall have
been duly filed with the Commission, as appropriate; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened by the Commission; no
order preventing or suspending the use of any Prospectus Supplement shall have been issued
and no proceeding for that purpose shall have been initiated or threatened by the
Commission; no order having the effect of ceasing or suspending the distribution of the
Securities or any other securities of the Company shall have been issued by any securities
commission, securities regulatory authority or stock exchange and no proceedings for that
purpose shall have been instituted or shall be pending or, to the knowledge of the Company,
contemplated by any securities commission, securities regulatory authority or stock
exchange; all requests for additional information on the part of the Commission shall have
been complied with; and the FINRA shall have raised no objection to the fairness and
reasonableness of the placement terms and arrangements.

(b) Corporate Proceedings. All corporate proceedings and other legal matters
in connection with this Agreement, the Registration Statement and each Prospectus
Supplement, and the registration, sale and delivery of the Securities, shall have been
completed or resolved in a manner reasonably satisfactory to the Placement Agent’s counsel,
and such counsel shall have been furnished with such papers and information as it may
reasonably have requested to enable such counsel to pass upon the matters referred to in
this Section 5.

(c) No Material Adverse Change. Subsequent to the execution and delivery of
this Agreement and prior to each Closing Date, in the Placement Agent’s sole judgment after
consultation with the Company, there shall not have occurred any Material Adverse Change or
Material Adverse Effect.

(d) Opinion of Counsel for the Company. The Placement Agent shall have
received on each Closing Date the favorable opinion of legal counsel to the Company, dated
as of such Closing Date, addressed to the Placement Agent in form and substance satisfactory
to the Placement Agent.

(e) Officers’ Certificate. The Placement Agent shall have received on each
Closing Date a certificate of the Company, dated as of such Closing Date, signed by the
Chief Executive Officer and Chief Financial Officer of the Company, to the effect that, and
the Placement Agent shall be satisfied that, the signers of such certificate have reviewed
the Registration Statement, the Incorporated Documents, any Prospectus Supplement, and this
Agreement and to the further effect that:

(i) The representations and warranties of the Company in this Agreement are
true and correct, as if made on and as of such Closing Date, and the Company has
complied with all the agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to such Closing Date;

(ii) No stop order suspending the effectiveness of the Registration Statement
or the use of the Base Prospectus or any Prospectus Supplement has been issued and
no proceedings for that purpose have been instituted or are pending or, to the
Company’s knowledge, threatened under the Securities Act; no order having the effect
of ceasing or suspending the distribution of the Securities or any other securities
of the Company has been issued by any securities commission, securities regulatory
authority or stock exchange in the United States and no proceedings for that purpose
have been instituted or are pending or, to the knowledge of the Company,
contemplated by any securities commission, securities regulatory authority or stock
exchange in the United States;

(iii) When the Registration Statement became effective, at the time of sale,
and at all times subsequent thereto up to the delivery of such certificate, the
Registration Statement and the Incorporated Documents, if any, when such documents
became effective or were filed with the Commission, contained all material
information required to be included therein by the Securities Act and the Exchange
Act and the applicable rules and regulations of the Commission thereunder, as the
case may be, and in all material respects conformed to the requirements of the
Securities Act and the Exchange Act and the applicable rules and regulations of the
Commission thereunder, as the case may be, and the Registration Statement and the
Incorporated Documents, if any, did not and do not include any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading (provided, however, that the preceding
representations and warranties contained in this paragraph (iii) shall not apply to
any statements or omissions made in reliance upon and in conformity with information
furnished in writing to the Company by the Placement Agent expressly for use
therein) and, since the effective date of the Registration Statement, there has
occurred no event required by the Securities Act and the rules and regulations of
the Commission thereunder to be set forth in the Incorporated Documents which has
not been so set forth; and

(iv) Subsequent to the respective dates as of which information is given in the
Registration Statement, the Incorporated Documents and any Prospectus Supplement,
there has not been: (a) any Material Adverse Change; (b) any transaction that is
material to the Company and the Subsidiaries taken as a whole, except transactions
entered into in the ordinary course of business; (c) any obligation, direct or
contingent, that is material to the Company and the Subsidiaries taken as a whole,
incurred by the Company or any Subsidiary, except obligations incurred in the
ordinary course of business; (d) any material change in the capital stock (except
changes thereto resulting from the exercise of outstanding stock options or
warrants) or outstanding indebtedness of the Company or any Subsidiary; (e) any
dividend or distribution of any kind declared, paid or made on the capital stock of
the Company; or (f) any loss or damage (whether or not insured) to the property of
the Company or any Subsidiary which has been sustained or will have been sustained
which has a Material Adverse Effect.

(f) Stock Exchange Listing. The Common Stock shall be registered under the
Exchange Act and shall be listed on the Trading Market, and the Company shall not have taken
any action designed to terminate, or likely to have the effect of terminating, the
registration of the Common Stock under the Exchange Act or delisting or suspending from
trading the Common Stock from the Trading Market, nor shall the Company have received any
information suggesting that the Commission or the Trading Market is contemplating
terminating such registration or listing.

(g) Additional Documents. On or before each Closing Date, the Placement Agent
and counsel for the Placement Agent shall have received such information and documents as
they may reasonably require for the purposes of enabling them to pass upon the issuance and
sale of the Securities as contemplated herein, or in order to evidence the accuracy of any
of the representations and warranties, or the satisfaction of any of the conditions or
agreements, herein contained.

If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Placement Agent by notice to the Company at any
time on or prior to a Closing Date, which termination shall be without liability on the part of any
party to any other party, except that Section 6 (Payment of Expenses), Section 7 (Indemnification
and Contribution) and Section 8 (Representations and Indemnities to Survive Delivery) shall at all
times be effective and shall survive such termination.

Section 6. Payment of Expenses. The Company agrees to pay all costs, fees and expenses incurred by
the Company in connection with the performance of its obligations hereunder and in connection with
the transactions contemplated hereby, including, without limitation: (i) all expenses incident to
the issuance, delivery and qualification of the Securities (including all printing and engraving
costs); (ii) all fees and expenses of the registrar and transfer agent of the Common Stock; (iii)
all necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the
Securities; (iv) all fees and expenses of the Company’s counsel, independent public or certified
public accountants and other advisors; (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of experts), the Base
Prospectus and each Prospectus Supplement, and all amendments and supplements thereto, and this
Agreement; (vi) all filing fees, reasonable attorneys’ fees and expenses incurred by the Company or
the Placement Agent in connection with qualifying or registering (or obtaining exemptions from the
qualification or registration of) all or any part of the Securities for offer and sale under the
state securities or blue sky laws or the securities laws of any other country, and, if requested by
the Placement Agent, preparing and printing a “Blue Sky Survey,” an “International Blue
Sky Survey” or other memorandum, and any supplements thereto, advising the Placement Agent of
such qualifications, registrations and exemptions; (vii) if applicable, the filing fees incident to
the review and approval by the FINRA of the Placement Agent’s participation in the offering and
distribution of the Securities; (viii) the fees and expenses associated with including the
Securities on the Trading Market; (ix) all costs and expenses incident to the travel and
accommodation of the Company’s and the Placement Agent’s employees on the “roadshow,” if
any; and (x) all other fees, costs and expenses referred to in Part II of the Registration
Statement.

Section 7. Indemnification and Contribution.

(a) The Company agrees to indemnify and hold harmless the Placement Agent, its
affiliates and each person controlling the Placement Agent (within the meaning of Section 15
of the Securities Act), and the directors, officers, agents and employees of the Placement
Agent, its affiliates and each such controlling person (the Placement Agent, and each such
entity or person. an “Indemnified Person”) from and against any losses, claims,
damages, judgments, assessments, costs and other liabilities (collectively, the
“Liabilities”), and shall reimburse each Indemnified Person for all fees and
expenses (including the reasonable fees and expenses of one counsel for all Indemnified
Persons, except as otherwise expressly provided herein) (collectively, the
“Expenses”) as they are incurred by an Indemnified Person in investigating,
preparing, pursuing or defending any Actions, whether or not any Indemnified Person is a
party thereto, (i) caused by, or arising out of or in connection with, any untrue statement
or alleged untrue statement of a material fact contained in any Incorporated Document or by
any omission or alleged omission to state therein a material fact necessary to make the
statements therein, in light of the circumstances under which they were made, not misleading
(other than untrue statements or alleged untrue statements in, or omissions or alleged
omissions from, information relating to an Indemnified Person furnished in writing by or on
behalf of such Indemnified Person expressly for use in the Incorporated Documents) or (ii)
otherwise arising out of or in connection with advice or services rendered or to be rendered
by any Indemnified Person pursuant to this Agreement, the transactions contemplated thereby
or any Indemnified Person’s actions or inactions in connection with any such advice,
services or transactions; provided, however, that, in the case of clause (ii) only,
the Company shall not be responsible for any Liabilities or Expenses of any Indemnified
Person that have resulted primarily from such Indemnified Person’s (x) gross negligence, bad
faith or willful misconduct in connection with any of the advice, actions, inactions or
services referred to above or (y) use of any offering materials or information concerning
the Company in connection with the offer or sale of the Securities in the Offering which
were not authorized for such use by the Company and which use constitutes negligence, bad
faith or willful misconduct. The Company also agrees to reimburse each Indemnified Person
for all Expenses as they are incurred in connection with enforcing such Indemnified Person’s
rights under this Agreement.

(b) Upon receipt by an Indemnified Person of actual notice of an Action against such
Indemnified Person with respect to which indemnity may be sought under this Agreement, such
Indemnified Person shall promptly notify the Company in writing; provided that failure by
any Indemnified Person so to notify the Company shall not relieve the Company from any
liability which the Company may have on account of this indemnity or otherwise to such
Indemnified Person, except to the extent the Company shall have been prejudiced by such
failure. The Company shall, if requested by the Placement Agent, assume the defense of any
such Action including the employment of counsel reasonably satisfactory to the Placement
Agent, which counsel may also be counsel to the Company. Any Indemnified Person shall have
the right to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of such
Indemnified Person unless: (i) the Company has failed promptly to assume the defense and
employ counsel or (ii) the named parties to any such Action (including any impeded parties)
include such Indemnified Person and the Company, and such Indemnified Person shall have been
advised in the reasonable opinion of counsel that there is an actual conflict of interest
that prevents the counsel selected by the Company from representing both the Company (or
another client of such counsel) and any Indemnified Person; provided that the Company shall
not in such event be responsible hereunder for the fees and expenses of more than one firm
of separate counsel for all Indemnified Persons in connection with any Action or related
Actions, in addition to any local counsel. The Company shall not be liable for any
settlement of any Action effected without its written consent (which shall not be
unreasonably withheld). In addition, the Company shall not, without the prior written
consent of the Placement Agent (which shall not be unreasonably withheld), settle,
compromise or consent to the entry of any judgment in or otherwise seek to terminate any
pending or threatened Action in respect of which indemnification or contribution may be
sought hereunder (whether or not such Indemnified Person is a party thereto) unless such
settlement, compromise, consent or termination includes an unconditional release of each
Indemnified Person from all Liabilities arising out of such Action for which indemnification
or contribution may be sought hereunder. The indemnification required hereby shall be made
by periodic payments of the amount thereof during the course of the investigation or
defense, as such expense, loss, damage or liability is incurred and is due and payable.

(c) In the event that the foregoing indemnity is unavailable to an Indemnified Person
other than in accordance with this Agreement, the Company shall contribute to the
Liabilities and Expenses paid or payable by such Indemnified Person in such proportion as is
appropriate to reflect (i) the relative benefits to the Company, on the one hand, and to the
Placement Agent and any other Indemnified Person, on the other hand, of the matters
contemplated by this Agreement or (ii) if the allocation provided by the immediately
preceding clause is not permitted by applicable law, not only such relative benefits but
also the relative fault of the Company, on the one hand, and the Placement Agent and any
other Indemnified Person, on the other hand, in connection with the matters as to which such
Liabilities or Expenses relate, as well as any other relevant equitable considerations;
provided that in no event shall the Company contribute less than the amount necessary to
ensure that all Indemnified Persons, in the aggregate, are not liable for any Liabilities
and Expenses in excess of the amount of fees actually received by the Placement Agent
pursuant to this Agreement. For purposes of this paragraph, the relative benefits to the
Company, on the one hand, and to the Placement Agent on the other hand, of the matters
contemplated by this Agreement shall be deemed to be in the same proportion as (a) the total
value paid or contemplated to be paid to or received or contemplated to be received by the
Company in the transaction or transactions that are within the scope of this Agreement,
whether or not any such transaction is consummated, bears to (b) the fees paid to the
Placement Agent under this Agreement. Notwithstanding the above, no person guilty of
fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act, as
amended, shall be entitled to contribution from a party who was not guilty of fraudulent
misrepresentation.

(d) The Company also agrees that no Indemnified Person shall have any liability
(whether direct or indirect, in contract or tort or otherwise) to the Company for or in
connection with advice or services rendered or to be rendered by any Indemnified Person
pursuant to this Agreement, the transactions contemplated thereby or any Indemnified
Person’s actions or inactions in connection with any such advice, services or transactions
except for Liabilities (and related Expenses) of the Company that have resulted primarily
from such Indemnified Person’s gross negligence, bad faith or willful misconduct in
connection with any such advice, actions, inactions or services.

(e) The reimbursement, indemnity and contribution obligations of the Company set forth
herein shall apply to any modification of this Agreement and shall remain in full force and
effect regardless of any termination of, or the completion of any Indemnified Person’s
services under or in connection with, this Agreement.

Section 8. Representations and Indemnities to Survive Delivery. The respective indemnities,
agreements, representations, warranties and other statements of the Company or any person
controlling the Company, of its officers, and of the Placement Agent set forth in or made pursuant
to this Agreement will remain in full force and effect, regardless of any investigation made by or
on behalf of the Placement Agent, the Company, or any of its or their partners, officers or
directors or any controlling person, as the case may be, and will survive delivery of and payment
for the Securities sold hereunder and any termination of this Agreement. A successor to a
Placement Agent, or to the Company, its directors or officers or any person controlling the
Company, shall be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in this Agreement.

Section 9. Notices. All communications hereunder shall be in writing and shall be mailed, hand
delivered or telecopied and confirmed to the parties hereto as follows:

If to the Placement Agent to the address set forth above, attn: Kerry Propper, Chief Executive
Officer, Facsimile: (646) 465-9039

With a copy to:

Weinstein Smith LLP

420 Lexington Avenue

New York, New York 10170

Facsimile: (201) 401-4741

Attention: Robert Charron

If to the Company:

137A Lewis Wharf

Boston, Massachusetts 02110

Facsimile:      

Attention:       

With a copy to:

     

     

     

Facsimile:      

Attention:       

Any party hereto may change the address for receipt of communications by giving written notice
to the others.

Section 10. Successors. This Agreement will inure to the benefit of and be binding upon the
parties hereto, and to the benefit of the employees, officers and directors and controlling persons
referred to in Section 7 hereof, and to their respective successors, and personal representative,
and no other person will have any right or obligation hereunder.

Section 11. Partial Unenforceability. The invalidity or unenforceability of any section, paragraph
or provision of this Agreement shall not affect the validity or enforceability of any other
section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement
is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such
minor changes (and only such minor changes) as are necessary to make it valid and enforceable.

Section 12. Governing Law Provisions. This Agreement shall be deemed to have been made and
delivered in New York City and both this engagement letter and the transactions contemplated hereby
shall be governed as to validity, interpretation, construction, effect and in all other respects by
the internal laws of the State of New York, without regard to the conflict of laws principles
thereof. Each of the Placement Agent and the Company: (i) agrees that any legal suit, action or
proceeding arising out of or relating to this engagement letter and/or the transactions
contemplated hereby shall be instituted exclusively in New York Supreme Court, County of New York,
or in the United States District Court for the Southern District of New York, (ii) waives any
objection which it may have or hereafter to the venue of any such suit, action or proceeding, and
(iii) irrevocably consents to the jurisdiction of the New York Supreme Court, County of New York,
and the United States District Court for the Southern District of New York in any such suit, action
or proceeding. Each of the Placement Agent and the Company further agrees to accept and
acknowledge service of any and all process which may be served in any such suit, action or
proceeding in the New York Supreme Court, County of New York, or in the United States District
Court for the Southern District of New York and agrees that service of process upon the Company
mailed by certified mail to the Company’s address shall be deemed in every respect effective
service of process upon the Company, in any such suit, action or proceeding, and service of process
upon the Placement Agent mailed by certified mail to the Placement Agent’s address shall be deemed
in every respect effective service process upon the Placement Agent, in any such suit, action or
proceeding. Notwithstanding any provision of this engagement letter to the contrary, the Company
agrees that neither the Placement Agent nor its affiliates, and the respective officers, directors,
employees, agents and representatives of the Placement Agent, its affiliates and each other person,
if any, controlling the Placement Agent or any of its affiliates, shall have any liability (whether
direct or indirect, in contract or tort or otherwise) to the Company for or in connection with the
engagement and transaction described herein except for any such liability for losses, claims,
damages or liabilities incurred by us that are finally judicially determined to have resulted from
the bad faith or gross negligence of such individuals or entities. If either party shall commence
an action or proceeding to enforce any provision of this Agreement, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its reasonable attorney’s fees
and other costs and expenses incurred with the investigation, preparation and prosecution of such
action or proceeding.

Section 13. General Provisions.

(a) This Agreement constitutes the entire agreement of the parties to this Agreement
and supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. This Agreement
may be executed in two or more counterparts, each one of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties hereto, and
no condition herein (express or implied) may be waived unless waived in writing by each
party whom the condition is meant to benefit. Section headings herein are for the
convenience of the parties only and shall not affect the construction or interpretation of
this Agreement.

(b) The Company acknowledges that in connection with the offering of the Securities:
(i) the Placement Agent has acted at arms length, are not agents of, and owe no fiduciary
duties to the Company or any other person, (ii) the Placement Agent owes the Company only
those duties and obligations set forth in this Agreement and (iii) the Placement Agent may
have interests that differ from those of the Company. The Company waives to the full extent
permitted by applicable law any claims it may have against the Placement Agent arising from
an alleged breach of fiduciary duty in connection with the offering of the Securities

[The remainder of this page has been intentionally left blank.]

1

If the foregoing is in accordance with your understanding of our agreement, please sign below
whereupon this instrument, along with all counterparts hereof, shall become a binding agreement in
accordance with its terms.

Very truly yours,

CONVERTED ORGANICS INC.,

a Delaware corporation

By:

Name:

Title:

The foregoing Placement Agency Agreement is hereby confirmed and accepted as of the date first
above written.

CHARDAN CAPITAL MARKETS, LLC

By:

Name: Steven Urbach

Title: President

2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00182-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00182-of-00352.parquet"}]]