Document:

EX-10.6

EXHIBIT 10.6

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

	 
	Right to Purchase 350,000 shares of Common Stock of Converted Organics Inc.

(subject to adjustment as provided herein)

CLASS D COMMON STOCK PURCHASE WARRANT

No. 2009-D-001 Issue Date: May 7, 2009

CONVERTED ORGANICS INC., a corporation organized under the laws of the State of Delaware (the
“Company”), hereby certifies that, for value received, IROQUOIS MASTER FUND LTD., 641 Lexington
Avenue, 26th Floor, New York, NY 10022, Fax: (212) 207-3452, or its assigns (the “Holder”), is
entitled, subject to the terms set forth below, to purchase from the Company six months from the
Issue Date until 5:00 p.m., E.S.T on the fifth anniversary of the Issue Date (the “Expiration
Date”), up to 350,000 fully paid and nonassessable shares of Common Stock at a per share purchase
price of $1.50. The aforedescribed purchase price per share, as adjusted from time to time as
herein provided, is referred to herein as the “Purchase Price.” The number and character of such
shares of Common Stock and the Purchase Price are subject to adjustment as provided herein. The
Company may reduce the Purchase Price for some or all of the Warrants, temporarily or permanently,
provided such reduction is made as to all outstanding Warrants for all Holders of such Warrants.
Capitalized terms used and not otherwise defined herein shall have the meanings set forth in that
certain Subscription Agreement (the “Subscription Agreement”), dated as of May 7, 2009, entered
into by the Company and the Holder.

As used herein the following terms, unless the context otherwise requires, have the following
respective meanings:

(a) The term “Company” shall mean Converted Organics Inc., a Delaware corporation, and any
corporation which shall succeed or assume the obligations of Converted Organics Inc. hereunder.

(b) The term “Common Stock” includes (i) the Company’s Common Stock, $0.0001 par value per
share, as authorized on the date of the Subscription Agreement, and (ii) any other securities into
which or for which any of the securities described in (i) may be converted or exchanged pursuant to
a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

(c) The term “Other Securities” refers to any stock (other than Common Stock) and other
securities of the Company or any other person (corporate or otherwise) which the holder of the
Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the
Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to
Section 4 herein or otherwise.

(d) The term “Warrant Shares” shall mean the Common Stock issuable upon exercise of this
Warrant.

1. Exercise of Warrant.

1.1. Number of Shares Issuable upon Exercise. From and after the Issue Date through
and including the Expiration Date, the Holder hereof shall be entitled to receive, upon exercise of
this Warrant in whole in accordance with the terms of subsection 1.2 or upon exercise of this
Warrant in part in accordance with subsection 1.3, shares of Common Stock of the Company, subject
to adjustment pursuant to Section 4.

1.2. Full Exercise. This Warrant may be exercised in full by the Holder hereof by
delivery of an original or facsimile copy of the form of subscription attached as Exhibit A hereto
(the “Subscription Form”) duly executed by such Holder and delivery within two days thereafter of
payment, in cash, wire transfer or by certified or official bank check payable to the order of the
Company, in the amount obtained by multiplying the number of shares of Common Stock for which this
Warrant is then exercisable by the Purchase Price then in effect. The original Warrant is not
required to be surrendered to the Company until it has been fully exercised.

1.3. Partial Exercise. This Warrant may be exercised in part (but not for a
fractional share) by delivery of a Subscription Form in the manner and at the place provided in
subsection 1.2 except that the amount payable by the Holder on such partial exercise shall be the
amount obtained by multiplying (a) the number of whole shares of Common Stock designated by the
Holder in the Subscription Form by (b) the Purchase Price then in effect. On any such partial
exercise provided the Holder has surrendered the original Warrant, the Company, at its expense,
will forthwith issue and deliver to or upon the order of the Holder hereof a new Warrant of like
tenor, in the name of the Holder hereof or as such Holder (upon payment by such Holder of any
applicable transfer taxes) may request, the whole number of shares of Common Stock for which such
Warrant may still be exercised.

1.4. Fair Market Value. Fair Market Value of a share of Common Stock as of a
particular date (the “Determination Date”) shall mean:

(a) If the Company’s Common Stock is traded on an exchange or is quoted on the NASDAQ Global
Market, NASDAQ Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange or the
American Stock Exchange, LLC, then the average of the closing sale prices of the Common Stock for
the five (5) Trading Days immediately prior to (but not including) the Determination Date;

(b) If the Company’s Common Stock is not traded on an exchange or on the NASDAQ Global Market,
NASDAQ Global Select Market, the NASDAQ Capital Market, the New York Stock Exchange or the American
Stock Exchange, Inc., but is traded on the OTC Bulletin Board or in the over-the-counter market or
Pink Sheets, then the average of the closing bid and ask prices reported for the five (5) Trading
Days immediately prior to (but not including) the Determination Date;

(c) Except as provided in clause (d) below and Section 3.1, if the Company’s Common Stock is
not publicly traded, then as the Holder and the Company agree, or in the absence of such an
agreement, by arbitration in accordance with the rules then standing of the American Arbitration
Association, before a single arbitrator to be chosen from a panel of persons qualified by education
and training to pass on the matter to be decided; or

(d) If the Determination Date is the date of a liquidation, dissolution or winding up, or any
event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter, then
all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the
event of such liquidation, dissolution or winding up, plus all other amounts to be payable per
share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of
this clause (d) that all of the shares of Common Stock then issuable upon exercise of all of the
Warrants are outstanding at the Determination Date.

1.5. Company Acknowledgment. The Company will, at the time of the exercise of the
Warrant, upon the request of the Holder hereof, acknowledge in writing its continuing obligation to
afford to such Holder any rights to which such Holder shall continue to be entitled after such
exercise in accordance with the provisions of this Warrant. If the Holder shall fail to make any
such request, such failure shall not affect the continuing obligation of the Company to afford to
such Holder any such rights.

1.6. Delivery of Stock Certificates, etc. on Exercise. The Company agrees that,
provided the full purchase price listed in the Subscription Form is received as specified in
Section 1.2, the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to
be issued to the Holder hereof as the record owner of such shares as of the close of business on
the date on which delivery of a Subscription Form shall have occurred and payment made for such
shares as aforesaid. As soon as practicable after the exercise of this Warrant in full or in part,
and in any event within five (5) business days thereafter (“Warrant Share Delivery Date”), the
Company at its expense (including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the Holder hereof, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws,
a certificate or certificates for the number of duly and validly issued, fully paid and
non-assessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled
on such exercise, plus, in lieu of any fractional share to which such Holder would otherwise be
entitled, at the Company’s discretion either an extra share of Common Stock or cash equal to such
fraction multiplied by the then Fair Market Value of one full share of Common Stock, together with
any other stock or other securities and property (including cash, where applicable) to which such
Holder is entitled upon such exercise pursuant to Section 1 or otherwise. The Company understands
that a delay in the delivery of the Warrant Shares after the Warrant Share Delivery Date could
result in economic loss to the Holder. As compensation to the Holder for such loss, the Company
agrees to pay (as liquidated damages and not as a penalty) to the Holder for late issuance of
Warrant Shares upon exercise of this Warrant the proportionate amount of $100 per business day
after the Warrant Share Delivery Date for each $10,000 of Purchase Price of Warrant Shares for
which this Warrant is exercised which are not timely delivered. The Company shall pay any payments
incurred under this Section in immediately available funds upon demand. Furthermore, in addition
to any other remedies which may be available to the Holder, in the event that the Company fails for
any reason to effect delivery of the Warrant Shares by the Warrant Share Delivery Date, the Holder
may revoke all or part of the relevant Warrant exercise by delivery of a notice to such effect to
the Company, whereupon the Company and the Holder shall each be restored to their respective
positions immediately prior to the exercise of the relevant portion of this Warrant, except that
the liquidated damages described above shall be payable through the date notice of revocation or
rescission is given to the Company.

1.7. Buy-In. In addition to any other rights available to the Holder, if the Company
fails to deliver to a Holder the Warrant Shares as required pursuant to this Warrant, and the
Holder or a broker on the Holder’s behalf, purchases (in an open market transaction or otherwise)
shares of common stock to deliver in satisfaction of a sale by such Holder of the Warrant Shares
which the Holder was entitled to receive from the Company (a “Buy-In”), then the Company shall pay
in cash to the Holder (in addition to any remedies available to or elected by the Holder) the
amount by which (A) the Holder’s total purchase price (including brokerage commissions, if any) for
the shares of common stock so purchased exceeds (B) the aggregate Purchase Price of the Warrant
Shares required to have been delivered together with interest thereon at a rate of 15% per annum,
accruing until such amount and any accrued interest thereon is paid in full (which amount shall be
paid as liquidated damages and not as a penalty). For example, if a Holder purchases shares of
Common Stock having a total purchase price of $11,000 to cover a Buy-In with respect to $10,000 of
Purchase Price of Warrant Shares to have been received upon exercise of this Warrant, the Company
shall be required to pay the Holder $1,000, plus interest. The Holder shall provide the Company
written notice indicating the amounts payable to the Holder in respect of the Buy-In.

2. Cashless Exercise.

(a) Payment upon exercise may be made at the option of the Holder either in (i) cash, wire
transfer or by certified or official bank check payable to the order of the Company equal to the
applicable aggregate Purchase Price, (ii) by delivery of Common Stock issuable upon exercise of the
Warrants in accordance with Section (b) below or (iii) by a combination of any of the foregoing
methods, for the number of Common Stock specified in such form (as such exercise number shall be
adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the
holder per the terms of this Warrant) and the holder shall thereupon be entitled to receive the
number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or
Other Securities) determined as provided herein. Notwithstanding the foregoing, the Holder shall
not be permitted to utilize the “cashless” exercise provisions set forth in Section 2(b) below at
any time during which the resale of the Common Stock underlying the Warrants is registered for
public resale pursuant to the Act.

(b) Subject to the provisions herein to the contrary, if the Fair Market Value of one share of
Common Stock is greater than the Purchase Price (at the date of calculation as set forth below), in
lieu of exercising this Warrant for cash, the holder may elect to receive shares equal to the value
(as determined below) of this Warrant (or the portion thereof being cancelled) by delivery of a
properly endorsed Subscription Form delivered to the Company by any means described in Section 13,
in which event the Company shall issue to the holder a number of shares of Common Stock computed
using the following formula:

X=Y (A-B)

A

Where X= the number of shares of Common Stock to be issued to the holder

	 	 	 	Y= the number of shares of Common Stock
purchasable under the Warrant or, if only a portion of the Warrant is
being exercised, the portion of the Warrant being exercised (at the
date of such calculation)

	 	 	 
	A=

B=
	 	Fair Market Value

Purchase Price (as adjusted to the date of such calculation)

For purposes of Rule 144 promulgated under the 1933 Act, it is intended, understood and
acknowledged that the Warrant Shares issued in a cashless exercise transaction in the manner
described above shall be deemed to have been acquired by the Holder, and the holding period for the
Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued
pursuant to the Subscription Agreement.

3. Adjustment for Reorganization, Consolidation, Merger, etc.

3.1. Fundamental Transaction.  If, at any time while this Warrant is outstanding, (A)
the Company effects any merger or  consolidation  of the Company with or into another entity, (B)
the Company effects any sale of all or substantially all of its assets in one or
a series of related transactions,  (C) any tender offer or exchange offer (whether by the Company
or another entity) is completed pursuant to which holders of Common
Stock are permitted to tender or exchange their shares for other securities, cash or property, (D)
the Company consummates a stock purchase agreement or other business combination (including,
without limitation, a reorganization, recapitalization, or spin-off) with one or more persons or
entities whereby such other persons or entities acquire more than the 50% of the outstanding shares
of Common Stock (not including any shares of Common Stock held by such other persons or entities
making or party to, or associated or affiliated with the other persons or entities making or party
to, such stock purchase agreement or other business combination), (E) any “person” or “group” (as
these terms are used for purposes of Sections 13(d) and 14(d) of the 1934 Act) is or shall become
the “beneficial owner” (as defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of
50% of the aggregate Common Stock of the Company, or (F) the Company effects any reclassification
of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash or property (in any such case, a
“Fundamental  Transaction”), then, upon any subsequent exercise of this Warrant, the Holder shall
have the right to receive, for each Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental Transaction, at the option of the Holder,
(a) upon exercise of this Warrant, the number of shares of Common Stock of the successor or
acquiring corporation or of the Company, if it is the surviving corporation, and any additional
consideration (the “Alternate Consideration”) receivable upon or as a result of such
reorganization, reclassification, merger, consolidation or disposition of assets by a Holder of the
number of shares of Common Stock for which this Warrant is exercisable immediately prior to such
event or (b) if the Company is acquired in (1) a “Rule 13e-3 transaction” as defined in Rule 13e-3
under the 1934 Act, cash equal to the Black-Scholes Value.  For purposes of any such exercise, the
determination of the Purchase Price shall be appropriately adjusted to apply to such Alternate
Consideration based on the amount of Alternate Consideration issuable in respect of one share of
Common Stock in such fundamental Transaction, and the Company shall apportion the Purchase Price
among the Alternate Consideration in a reasonable manner reflecting the relative value of any
different components of the Alternate Consideration.  If holders of Common Stock are given any
choice as to the securities, cash or property to be received in a Fundamental Transaction, then the
Holder shall be given the same choice as to the Alternate Consideration it receives upon any
exercise of this Warrant following such Fundamental Transaction.  To the extent necessary to
effectuate the foregoing provisions, any successor to the Company or surviving entity in such
Fundamental Transaction shall issue to the Holder a new warrant consistent with
the foregoing provisions and evidencing the Holder’s right to exercise such warrant into Alternate
Consideration.  The terms of any agreement pursuant to which a Fundamental Transaction is effected
shall include terms requiring any such successor or surviving entity to comply with
the provisions of this Section 3.1 and insuring that this Warrant (or any such replacement
security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental
Transaction. “Black-Scholes Value” shall be determined in accordance with the Black-Scholes Option
Pricing Model obtained from the “OV” function on Bloomberg L.P. using (i) a price per share of
Common Stock equal to the VWAP of the Common Stock for the Trading Day immediately preceding the
date of consummation of the applicable Fundamental Transaction, (ii) a risk-free interest rate
corresponding to the U.S. Treasury rate for a period equal to the remaining term of this Warrant as
of the date of such request and (iii) an expected volatility equal to the 100 day volatility
obtained from the HVT function on Bloomberg L.P. determined as of the Trading Day immediately
following the public announcement of the applicable Fundamental Transaction.

3.2. Continuation of Terms. Upon any reorganization, consolidation, merger or
transfer (and any dissolution following any transfer) referred to in this Section 3, this Warrant
shall continue in full force and effect and the terms hereof shall be applicable to the Other
Securities and property receivable on the exercise of this Warrant after the consummation of such
reorganization, consolidation or merger or the effective date of dissolution following any such
transfer, as the case may be, and shall be binding upon the issuer of any Other Securities,
including, in the case of any such transfer, the person acquiring all or substantially all of the
properties or assets of the Company, whether or not such person shall have expressly assumed the
terms of this Warrant as provided in Section 4. In the event this Warrant does not continue in
full force and effect after the consummation of the transaction described in this Section 3, then
only in such event will the Company’s securities and property (including cash, where applicable)
receivable by the Holder of the Warrants be delivered to the Trustee as contemplated by
Section 3.2.

3.3 Share Issuance. Until the Expiration Date, if the Company shall issue any Common
Stock or derivative security except for the Excepted Issuances (as defined in the Subscription
Agreement), prior to the complete exercise of this Warrant for a consideration less than the
Purchase Price that would be in effect at the time of such issuance or at the time of exercise of
such derivative security or if the Purchase Price is reduced temporarily, for consideration less
than the Purchase Price that would be in effect after such temporary reduction, then, and
thereafter successively upon each such issuance or exercise, the Purchase Price shall be reduced to
such other lower price for then outstanding Warrants. For purposes of this adjustment, the
issuance of any security or debt instrument of the Company carrying the right to convert such
security or debt instrument into Common Stock or of any warrant, right or option to purchase Common
Stock shall result in an adjustment to the Purchase Price upon the issuance of the above-described
security, debt instrument, warrant, right, or option if the exercise or conversion price of such
security is at a price lower than the Purchase Price in effect upon such issuance and again at any
time if such exercise or conversion price is lowered. Common Stock issued or issuable by the
Company for no consideration will be deemed issuable or to have been issued for $0.001 per share of
Common Stock.

4. Extraordinary Events Regarding Common Stock. In the event that the Company shall
(a) issue additional shares of the Common Stock as a dividend or other distribution on outstanding
Common Stock, (b) subdivide its outstanding shares of Common Stock, or (c) combine its outstanding
shares of the Common Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such event, be adjusted by
multiplying the then Purchase Price by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the denominator of which
shall be the number of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The Purchase Price, as
so adjusted, shall be readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 4. The number of shares of Common Stock that the Holder of
this Warrant shall thereafter, on the exercise hereof, be entitled to receive shall be adjusted to
a number determined by multiplying the number of shares of Common Stock that would otherwise (but
for the provisions of this Section 4) be issuable on such exercise by a fraction of which (a) the
numerator is the Purchase Price that would otherwise (but for the provisions of this Section 4) be
in effect, and (b) the denominator is the Purchase Price in effect on the date of such exercise.

5. Certificate as to Adjustments. In each case of any adjustment or readjustment in
the shares of Common Stock (or Other Securities) issuable on the exercise of the Warrants or the
Purchase Price, the Company at its expense will promptly cause its Chief Financial Officer or other
appropriate designee to compute such adjustment or readjustment in accordance with the terms of the
Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based, including a statement of
(a) the consideration received or receivable by the Company for any additional shares of Common
Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of
shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the
Purchase Price and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or
readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such
certificate to the Holder of the Warrant and any Warrant Agent of the Company (appointed pursuant
to Section 11 hereof) not later than five business days after the effective date of such
adjustment. Holder will be entitled to the benefit of the adjustment regardless of the giving of
such notice. The timely giving of such notice to Holder is a material obligation of the Company,
provided the failure to provide such notice shall not be deemed to result in an Event of Default
pursuant to the Note unless the Holder is materially adversely effected by such untimely delivery.

6. Reservation of Stock, etc. Issuable on Exercise of Warrant; Financial Statements.
The Company will at all times reserve and keep available, solely for issuance and delivery on the
exercise of the Warrants, all shares of Common Stock (or Other Securities) from time to time
issuable on the exercise of the Warrant. This Warrant entitles the Holder hereof, upon written
request, to receive copies of all financial and other information distributed or required to be
distributed to the holders of the Company’s Common Stock.

7. Assignment; Exchange of Warrant. Subject to compliance with applicable securities
laws, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder
hereof (a “Transferor”). On the surrender for exchange of this Warrant, with the Transferor’s
endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form”) and
together with an opinion of counsel reasonably satisfactory to the Company that the transfer of
this Warrant will be in compliance with applicable securities laws, the Company will issue and
deliver to or on the order of the Transferor thereof a new Warrant or Warrants of like tenor, in
the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form
(each a “Transferee”), calling in the aggregate on the face or faces thereof for the number of
shares of Common Stock called for on the face or faces of the Warrant so surrendered by the
Transferor.

8. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such
loss, theft or destruction of this Warrant, on delivery of an indemnity agreement or security
reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation,
on surrender and cancellation of this Warrant, the Company at its expense, twice only, will execute
and deliver, in lieu thereof, a new Warrant of like tenor.

9. [Reserved].

10. Maximum Exercise. The Holder shall not be entitled to exercise this Warrant on an
exercise date, in connection with that number of shares of Common Stock which would be in excess of
the sum of (i) the number of shares of Common Stock beneficially owned by the Holder and its
affiliates on an exercise date, and (ii) the number of shares of Common Stock issuable upon the
exercise of this Warrant with respect to which the determination of this limitation is being made
on an exercise date, which would result in beneficial ownership by the Holder and its affiliates of
more than 4.99% of the outstanding shares of Common Stock on such date. For the purposes of the
immediately preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the 1934 Act and Rule 13d-3 thereunder. Subject to the foregoing, except as
provided below, the Holder shall not be limited to aggregate exercises which would result in the
issuance of more than 4.99%. The restriction described in this paragraph may be waived, in whole
or in part, upon sixty-one (61) days prior notice from the Holder to the Company to increase such
percentage to up to 9.99%, but not in excess of 9.99%. The Holder may decide whether to exercise
this Warrant to achieve an actual 4.99% or up to 9.99% ownership position as described above, but
not in excess of 9.99%. Notwithstanding anything to the contrary herein, Holder agrees that the
aggregate number of shares of Common Stock issuable upon any and all exercises of this Warrant may
not exceed 19.9% (the “Numeric Limitation”) of the total issued and outstanding shares of the
Company outstanding common stock on the Issue Date.

11. Warrant Agent. The Company may, by written notice to the Holder of the Warrant,
appoint an agent (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other Securities)
on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to
Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such
office by such Warrant Agent.

12. Transfer on the Company’s Books. Until this Warrant is transferred on the books
of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary.

13. Notices. All notices, demands, requests, consents, approvals, and other
communications required or permitted hereunder shall be in writing and, unless otherwise specified
herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below
or to such other address as such party shall have specified most recently by written notice. Any
notice or other communication required or permitted to be given hereunder shall be deemed effective
(a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the
transmitting facsimile machine, at the address or number designated below (if delivered on a
business day during normal business hours where such notice is to be received), or the first
business day following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second business day following the
date of mailing by express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for such communications
shall be: if to the Company, to: Converted Organics, Inc., 7A Commercial Wharf West, Boston, MA
02110, Attn: Edward J. Gildea, CEO and President, facsimile: (617) 624-0333, with a copy by
facsimile only to: Cozen O’Connor, 1900 Market Street, Philadelphia, PA 19103, Attn: Cavas Pavri,
Esq., facsimile: (215) 665-2013, and (ii) if to the Holder, to the address and facsimile number
listed on the first paragraph of this Warrant, with a copy by facsimile only to: Grushko & Mittman,
P.C., 551 Fifth Avenue, Suite 1601, New York, New York 10176, facsimile: (212) 697-3575.

14. Law Governing This Warrant. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles of conflicts of
laws. Any action brought by either party against the other concerning the transactions
contemplated by this Warrant shall be brought only in the state courts of New York or in the
federal courts located in the state and county of New York. The parties to this Warrant hereby
irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and
shall not assert any defense based on lack of jurisdiction or venue or based upon forum non
conveniens. The Company and Holder waive trial by jury. The prevailing party shall be
entitled to recover from the other party its reasonable attorney’s fees and costs. In the event
that any provision of this Warrant or any other agreement delivered in connection herewith is
invalid or unenforceable under any applicable statute or rule of law, then such provision shall be
deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of any other provision
of any agreement. Each party hereby irrevocably waives personal service of process and consents
to process being served in any suit, action or proceeding in connection with this Agreement or any
other Transaction Document by mailing a copy thereof via registered or certified mail or overnight
delivery (with evidence of delivery) to such party at the address in effect for 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 other manner permitted by law.

IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.

	 
	CONVERTED ORGANICS INC.

By:

	 

	Name: David R. Allen, CFO

1

Exhibit A

FORM OF SUBSCRIPTION

(to be signed only on exercise of Warrant)

TO: CONVERTED ORGANICS INC.

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.   ), hereby
irrevocably elects to purchase (check applicable box):

              shares of the Common Stock covered by such Warrant; or

     the maximum number of shares of Common Stock covered by such Warrant pursuant to the cashless
exercise procedure set forth in Section 2.

The undersigned herewith makes payment of the full purchase price for such shares at the price per
share provided for in such Warrant, which is $     . Such payment takes the form of (check
applicable box or boxes):

       $      in lawful money of the United States; and/or

     the cancellation of such portion of the attached Warrant as is exercisable for a total of
     shares of Common Stock (using a Fair Market Value of $    per share for purposes of
this calculation); and/or

       the cancellation of such number of shares of Common Stock as is necessary, in accordance with
the formula set forth in Section 2, to exercise this Warrant with respect to the maximum number of
shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in
Section 2.

The undersigned requests that the certificates for such shares be issued in the name of, and
delivered to        whose address is
     

      .

The undersigned represents and warrants that all offers and sales by the undersigned of the
securities issuable upon exercise of the within Warrant shall be made pursuant to registration of
the Common Stock under the Securities Act of 1933, as amended (the “Securities Act”), or pursuant
to an exemption from registration under the Securities Act.

	 	 	 
	Dated:      
	 	(Signature must conform to name of holder as

specified on the face of the Warrant)

(Address)

Exhibit B

FORM OF TRANSFEROR ENDORSEMENT

(To be signed only on transfer of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s)
named below under the heading “Transferees” the right represented by the within Warrant to purchase
the percentage and number of shares of Common Stock of CONVERTED ORGANICS INC. to which the within
Warrant relates specified under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to
transfer its respective right on the books of CONVERTED ORGANICS INC. with full power of
substitution in the premises.

	 	 	 	 	 
	Transferees

	 	Percentage Transferred
	 	Number Transferred
	 

	 	 
	 	 

	 	 	 
	Dated:       ,       

Signed in the presence of:

(Name)

ACCEPTED AND AGREED:

[TRANSFEREE]

(Name)

	 	(Signature must conform to name of holder

as specified on the face of the warrant)

(address)

(address)

2EX-10.7

EXHIBIT 10.7

SUBSIDIARY GUARANTY

1. Identification.

This Guaranty (the “Guaranty”), dated as of May 7, 2009, is entered into by Converted Organics
of California LLC, a California limited liability company, Converted Organics of Woodbridge LLC, a
New Jersey limited liability company (each a “Guarantor” and collectively, “Guarantors”), for the
benefit of Iroquois Master Fund Ltd. (“Lender”).

2. Recitals.

2.1 Guarantors are direct or indirect subsidiaries of Converted Organics Inc., a Delaware
corporation (“Parent”). The Lender has made and/or is making a loan to Parent (the “Loan”).
Guarantor has or will obtain substantial benefit from the proceeds of the Loan.

2.2 The Loan is and will be evidenced by a certain secured promissory Note issued by Parent
on or about the date of this Guaranty (“Note”) in the principal amount of $1,320,000 pursuant to a
subscription agreement dated at or about the date hereof (“Subscription Agreement”). The Note was
or will be executed by Parent as “Borrower” or “Debtor” for the benefit of Lender as the “Holder”
or “Lender” thereof.

2.3 In consideration of the Loan and for other good and valuable consideration, and as
security for the performance by Parent of its obligations under the Note and as security for the
repayment of the Loan and all other sums due from Parent to Lender arising under the Note,
Transaction Documents (as defined in the Subscription Agreement) and any other agreement to which
the Lender and Parent are parties (collectively, the “Obligations”), Guarantor, for good and
valuable consideration, receipt of which is acknowledged, has agreed to enter into this Guaranty.

2.4 Capitalized terms used but not defined herein shall have the meanings ascribed to them in
the Subscription Agreement and the Security Agreement dated of even date herewith between the
Parent and the Lender (the “Security Agreement”).

3. Guaranty.

3.1 Guaranty. Guarantor hereby unconditionally and irrevocably guarantees, jointly
and severally with any other Guarantor, the punctual payment, performance and observance when due,
whether at stated maturity, by acceleration or otherwise, of all of the Secured Obligations now or
hereafter existing, whether for principal, interest (including, without limitation, all interest
that accrues after the commencement of any insolvency, bankruptcy or reorganization of Parent,
whether or not constituting an allowed claim in such proceeding), fees, commissions, expense
reimbursements, liquidated damages, indemnifications or otherwise (such obligations, to the extent
not paid by Parent being the parts of and components of the “Secured Obligations”),, and agrees to
pay any and all reasonable costs, fees and expenses (including reasonable counsel fees and
expenses) incurred by Lender in enforcing any rights under the guaranty set forth herein. Without
limiting the generality of the foregoing, Guarantor’s liability shall extend to all amounts that
constitute part of the Secured Obligations and would be owed by Parent to Lender, but for the fact
that they are unenforceable or not allowable due to the existence of an insolvency, bankruptcy or
reorganization involving Parent.

3.2 Guaranty Absolute. Guarantor guarantees that the Secured Obligations will be paid
strictly in accordance with the terms of the Note, regardless of any law, regulation or order now
or hereafter in effect in any jurisdiction affecting any of such terms or the rights of Lender with
respect thereto. The obligations of Guarantor under this Guaranty are independent of the Secured
Obligations, and a separate action or actions may be brought and prosecuted against Guarantor to
enforce such obligations, irrespective of whether any action is brought against Parent or any other
Guarantor or whether Parent or any other Guarantor is joined in any such action or actions. The
liability of Guarantor under this Guaranty constitutes a primary obligation, and not a contract of
surety, and to the extent permitted by law, shall be irrevocable, absolute and unconditional
irrespective of, and Guarantor hereby irrevocably waives any defenses it may now or hereafter have
in any way relating to, any or all of the following:

(a) any lack of validity of the Note or any agreement or instrument relating thereto;

(b) any change in the time, manner or place of payment of, or in any other term of, all or any
of the Secured Obligations, or any other amendment or waiver of or any consent to departure from
the Note, including, without limitation, any increase in the Secured Obligations resulting from the
extension of additional credit to Parent or otherwise;

(c) any taking, exchange, release, subordination or non-perfection of any Collateral, or any
taking, release or amendment or waiver of or consent to departure from any other guaranty, for all
or any of the Secured Obligations;

(d) any change, restructuring or termination of the corporate, limited liability company or
partnership structure or existence of Parent; or

(e) any other circumstance (including, without limitation, any statute of limitations) or any
existence of or reliance on any representation by Lender that might otherwise constitute a defense
available to, or a discharge of, Parent or any other guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Secured Obligations is rescinded or must otherwise be returned by
Lender, the Lender or any other entity upon the insolvency, bankruptcy or reorganization of the
Parent or otherwise (and whether as a result of any demand, settlement, litigation or otherwise),
all as though such payment had not been made.

3.3 Waiver. Guarantor hereby waives promptness, diligence, notice of acceptance and
any other notice with respect to any of the Secured Obligations and this Guaranty and any
requirement that Lender exhaust any right or take any action against any Borrower or any other
person or entity or any Collateral. Guarantor acknowledges that it will receive direct and
indirect benefits from the financing arrangements contemplated herein and that the waiver set forth
in this Section 3.3 is knowingly made in contemplation of such benefits. Guarantor hereby waives
any right to revoke this Guaranty, and acknowledges that this Guaranty is continuing in nature and
applies to the Secured Obligations, whether existing now or in the future.

3.4 Continuing Guaranty; Assignments. This Guaranty is a continuing guaranty
and shall (a) remain in full force and effect until the cash payment in full of the Secured
Obligations and all other amounts payable under this Guaranty, (b) be binding upon Guarantor, its
successors and assigns and (c) inure to the benefit of and be enforceable by the Lender and its
successors, pledgees, transferees and assigns. Without limiting the generality of the foregoing
clause (c), Lender may pledge, assign or otherwise transfer all or any portion of its rights and
obligations under this Guaranty (including, without limitation, all or any portion of its Note
owing to it) to any other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted Lender herein or otherwise.

3.5 Subrogation. Guarantor will not exercise any rights that it may now or
hereafter acquire against Lender or other Guarantor (if any) that arise from the existence,
payment, performance or enforcement of such Guarantor’s obligations under this Guaranty, including,
without limitation, any right of subrogation, reimbursement, exoneration, contribution or
indemnification, whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or receive from Lender or
other Guarantor (if any), directly or indirectly, in cash or other property or by set-off or in any
other manner, payment or security solely on account of such claim, remedy or right, unless and
until all of the Secured Obligations and all other amounts payable under this Guaranty shall have
been indefeasibly paid in full.

3.6 Maximum Obligations. Notwithstanding any provision herein contained to the
contrary, Guarantor’s liability with respect to the Secured Obligations shall be limited to an
amount not to exceed, as of any date of determination, the amount that could be claimed by Lender
from Guarantor without rendering such claim voidable or avoidable under Section 548 of the
Bankruptcy Code or under any applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent
Conveyance Act or similar statute or common law.

4. Miscellaneous.

4.1 Expenses. Guarantor shall pay to the Lender, on demand, the amount of any and all
reasonable expenses, including, without limitation, attorneys’ fees, which the Lender may incur in
connection with exercise or enforcement of any the rights, remedies or powers of the Lender
hereunder or with respect to any or all of the Secured Obligations.

4.2 Waivers, Amendment and Remedies. No course of dealing by the Lender and no
failure by the Lender to exercise, or delay by the Lender in exercising, any right, remedy or power
hereunder shall operate as a waiver thereof, and no single or partial exercise thereof shall
preclude any other or further exercise thereof or the exercise of any other right, remedy or power
of the Lender. No amendment, modification or waiver of any provision of this Guaranty and no
consent to any departure by Guarantor therefrom, shall, in any event, be effective unless contained
in a writing signed by the party against whom such amendment, modification or waiver is sought, and
then such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given. The rights, remedies and powers of the Lender, not only hereunder, but
also under any instruments and agreements evidencing or securing the Secured Obligations and under
applicable law are cumulative, and may be exercised by the Lender from time to time in such order
as the Lender may elect.

4.3 Notices. All notices or other communications given or made hereunder shall be
given in the same manner as set forth in Section 12(b) of the Subscription Agreement to the party
to receive the same at its address set forth below or to such other address as either party shall
hereafter give to the other by notice duly made under this Section:

	 	 	 
	To Guarantor, to:
	 	c/o Converted Organics, Inc.

7A Commercial Wharf West

Boston, MA 02110

Attn: Edward J. Gildea, CEO and President

Fax: (617) 624-0333

	With a copy by facsimile only to:
	 	Cozen O’Connor

1900 Market Street

Philadelphia, PA 19103

Attn: Cavas Pavri, Esq.

Fax: (215) 665-2013

	To Lender:
	 	Iroquois Master Fund Ltd.

641 Lexington Avenue, 26th Floor

New York, NY 10022

Fax: (212) 207-3452

Attn: Mitchell Kulick, Esq.

	If to Guarantor or Lender,

with a copy by telecopier only to:
	 	

Grushko & Mittman, P.C.

551 Fifth Avenue, Suite 1601

New York, New York 10176

Fax: (212) 697-3575

Attn: Barbara R. Mittman, Esq.

Any party may change its address by written notice in accordance with this paragraph.

4.4 Term; Binding Effect. This Guaranty shall (a) remain in full force and effect
until payment and satisfaction in full of all of the Obligations; (b) be binding upon Guarantor and
its successors and permitted assigns; and (c) inure to the benefit of the Lender and its respective
successors and assigns. Upon the payment in full of the Obligations, (i) this Guaranty shall
terminate and (ii) the Lender will, upon Guarantor’s request and at Guarantor’s expense, execute
and deliver to Guarantor such documents as Guarantor shall reasonably request to evidence such
termination, all without any representation, warranty or recourse whatsoever.

4.5 Captions. The captions of Paragraphs, Articles and Sections in this Guaranty have
been included for convenience of reference only, and shall not define or limit the provisions
hereof and have no legal or other significance whatsoever.

4.6 Governing Law; Venue; Severability. This Guaranty shall be governed by and
construed in accordance with the laws of the State of New York without regard to principles of
conflicts or choice of law. Any legal action or proceeding against Guarantor with respect to this
Guaranty must be brought only in the courts of the State of New York or of the United States for
the Southern District of New York, and, by execution and delivery of this Guaranty, Guarantor
hereby irrevocably accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. Guarantor hereby irrevocably waives any
objection which they may now or hereafter have to the laying of venue of any of the aforesaid
actions or proceedings arising out of or in connection with this Guaranty brought in the aforesaid
courts and hereby further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in an inconvenient
forum. If any provision of this Guaranty, or the application thereof to any person or
circumstance, is held invalid, such invalidity shall not affect any other provisions which can be
given effect without the invalid provision or application, and to this end the provisions hereof
shall be severable and the remaining, valid provisions shall remain of full force and effect. This
Guaranty shall be deemed an unconditional obligation of Guarantor for the payment of money and,
without limitation to any other remedies of Lender, may be enforced against Guarantor by summary
proceeding pursuant to New York Civil Procedure Law and Rules Section 3213 or any similar rule or
statute in the jurisdiction where enforcement is sought. For purposes of such rule or statute, any
other document or agreement to which Lender and Guarantor are parties or which Guarantor delivered
to Lender, which may be convenient or necessary to determine Lender’s rights hereunder or
Guarantor’s obligations to Lender are deemed a part of this Guaranty, whether or not such other
document or agreement was delivered together herewith or was executed apart from this Guaranty.
Each party hereby irrevocably waives personal service of process and consents to process being
served in any suit, action or proceeding in connection with this Agreement or any other Transaction
Document by mailing a copy thereof via registered or certified mail or overnight delivery (with
evidence of delivery) to such party at the address in effect for 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 other manner permitted by law. Guarantor irrevocably appoints Parent its true and lawful
agent for service of process upon whom all processes of law and notices may be served and given in
the manner described above; and such service and notice shall be deemed valid personal service and
notice upon each such Guarantor with the same force and validity as if served upon such Guarantor.

4.7 Satisfaction of Obligations. For all purposes of this Guaranty, the payment in
full of the Secured Obligations shall be conclusively deemed to have occurred when the
Secured Obligations have been indefeasibly paid.

4.8 Execution. This Agreement may be executed by facsimile signature and delivered
by electronic transmission.

[THE BALANCE OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK]

1

IN WITNESS WHEREOF, the undersigned have executed and delivered this Guaranty, as of the date
first written above.

“GUARANTOR”

CONVERTED ORGANICS OF CALIFORNIA LLC

a California limited liability company

     

By:

Its:

“GUARANTOR”

CONVERTED ORGANICS OF WOODBRIDGE LLC

a New Jersey limited liability company

     

By:

Its:

This Guaranty may be signed by facsimile signature and

delivered by confirmed facsimile transmission.

2

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