Document:

exv10w1

EXHIBIT 10.1

CONVERTED ORGANICS INC.

2006 STOCK OPTION PLAN

1. Purposes of the Plan. The purposes of this 2006 Stock Option Plan are:

	 	•	 	to attract and retain the best available personnel;
	 
	 	•	 	to provide additional incentive to Employees, Directors and Consultants; and
	 
	 	•	 	to promote the success of the Company’s business.

     Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options,
as determined by the Administrator at the time of grant.

2. Definitions. As used herein, the following definitions shall apply:

     (a) “Administrator” means the Board or any of its Committees as shall be administering
the Plan, in accordance with Section 4 of the Plan.

     (b) “Applicable Laws” means the requirements relating to the administration of stock
option plans under U. S. state corporate laws, U.S. federal and state securities laws, the Code,
any stock exchange or quotation system on which the Common Stock is listed or quoted and the
applicable laws of any foreign country or jurisdiction where Options are, or will be, granted under
the Plan.

     (c) “Board” means the Board of Directors of the Company.

     (d) “Code” means the Internal Revenue Code of 1986, as amended.

     (e) “Committee” means a committee of Directors appointed by the Board in accordance
with Section 4 of the Plan.

     (f) “Common Stock” means the common stock of the Company.

     (g) “Company” means Converted Organics Inc., a Delaware corporation.

     (h) “Consultant” means any person, including an advisor, engaged by the Company or a
Parent or Subsidiary to render services to such entity.

     (i) “Director” means a member of the Board.

     (j) “Disability” means total and permanent disability as defined in Section 22(e)(3)
of the Code.

     (k) “Employee” means any person, including Officers and Directors, employed by the
Company or any Parent or Subsidiary of the Company. A Service Provider shall not cease to be an
Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between
locations of the Company or between the Company, its Parent, any Subsidiary, or any successor. For
purposes of Incentive Stock Options, no such leave may exceed one hundred eighty (180) days, unless
reemployment upon expiration of such leave is guaranteed by statute or contract. If reemployment
upon expiration of a leave of absence approved by the Company is not so guaranteed, on the one
hundred eighty-first (181st) day of such leave any Incentive Stock Option held by the
Optionee shall cease to be treated as an Incentive Stock Option and shall be treated for tax

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purposes as a Nonstatutory Stock Option. Neither service as a Director nor payment of a
director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

     (l) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

     (m) “Fair Market Value” means, as of any date, the value of Common Stock determined as
follows:

     (i) If the Common Stock is listed on any established stock exchange or a national
market system, including without limitation the Nasdaq National Market or The Nasdaq Capital
Market, its Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for the last
market trading day prior to the time of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

     (ii) If the Common Stock is regularly quoted by a recognized securities dealer but
selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be
the mean between the high bid and low asked prices for the Common Stock on the last market
trading day prior to the day of determination, as reported in The Wall Street Journal or
such other source as the Administrator deems reliable; or

     (iii) In the absence of an established market for the Common Stock, the Fair Market
Value shall be determined in good faith by the Administrator.

     (n) “Incentive Stock Option” means an Option intended to qualify as an incentive stock
option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

     (o) “Nonstatutory Stock Option” means an Option not intended to qualify as an
Incentive Stock Option.

     (p) “Notice of Grant” means a written or electronic notice evidencing certain terms
and conditions of an individual Option grant. The Notice of Grant is part of the Option Agreement.

     (q) “Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

     (r) “Option” means a stock option granted pursuant to the Plan.

     (s) “Option Agreement” means an agreement between the Company and an Optionee
evidencing the terms and conditions of an individual Option grant. The Option Agreement is subject
to the terms and conditions of the Plan.

     (t) “Option Exchange Program” means a program whereby outstanding Options are
surrendered in exchange for Options with a lower exercise price.

     (u) “Optioned Stock” means the Common Stock subject to an Option.

     (v) “Optionee” means the holder of an outstanding Option granted under the Plan.

     (w) “Parent” means a “parent corporation,” whether now or hereafter existing, as
defined in Section 424(e) of the Code.

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     (x) “Plan” means this 2006 Stock Option Plan.

     (y) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3,
as in effect when discretion is being exercised with respect to the Plan.

     (z) “Section 16(b)” means Section 16(b) of the Exchange Act.

     (aa) “Service Provider” means an Employee, Director or Consultant.

     (bb) “Share” means a share of the Common Stock, as adjusted in accordance with
Section 12 of the Plan.

     (cc) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing,
as defined in Section 424(f) of the Code.

3. Stock Subject to the Plan. Subject to the provisions of Section 12 of the Plan, the
maximum aggregate number of Shares which may be optioned and sold under the Plan is six hundred
sixty-six thousand, six hundred sixty-seven (666,667) Shares. The Shares may be authorized, but
unissued, or reacquired Common Stock.

     If an Option expires or becomes unexercisable without having been exercised in full, or is
surrendered pursuant to an Option Exchange Program, the unpurchased Shares which were subject
thereto shall become available for future grant or sale under the Plan (unless the Plan has
terminated); provided, however, that Shares that have actually been issued under
the Plan shall not be returned to the Plan and shall not become available for future distribution
under the Plan.

4. Administration of the Plan.

     (a) Procedure.

     (i) Multiple Administrative Bodies. The Plan may be administered by different
Committees with respect to different groups of Service Providers.

     (ii) Section 162(m). To the extent that the Administrator determines it to be
desirable to qualify Options granted hereunder as “performance-based compensation” within
the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of
two or more “outside directors” within the meaning of Section 162(m) of the Code.

     (iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as
exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to
satisfy the requirements for exemption under Rule 16b-3.

     (iv) Other Administration. Other than as provided above, the Plan shall be
administered by (A) the Board or (B) a Committee, which committee shall be constituted to
satisfy Applicable Laws.

     (b) Powers of the Administrator. Subject to the provisions of the Plan, and in the
case of a Committee, subject to the specific duties delegated by the Board to such Committee, the
Administrator shall have the authority, in its discretion:

     (i) to determine the Fair Market Value;

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     (ii) to select the Service Providers to whom Options may be granted hereunder;

     (iii) to determine the number of shares of Common Stock to be covered by each Option
granted hereunder;

     (iv) to approve forms of agreement for use under the Plan;

     (v) to determine the terms and conditions, not inconsistent with the terms of the Plan,
of any Option granted hereunder. Such terms and conditions include, but are not limited to,
the exercise price, the time or times when Options may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock relating
thereto, based in each case on such factors as the Administrator, in its sole discretion,
shall determine;

     (vi) to reduce the exercise price of any Option to the then current Fair Market Value
if the Fair Market Value of the Common Stock covered by such Option shall have declined
since the date the Option was granted;

     (vii) to institute an Option Exchange Program;

     (viii) to construe and interpret the terms of the Plan and awards granted pursuant to
the Plan;

     (ix) to prescribe, amend and rescind rules and regulations relating to the Plan,
including rules and regulations relating to sub-plans established for the purpose of
qualifying for preferred tax treatment under foreign tax laws;

     (x) to modify or amend each Option (subject to Section 14(c) of the Plan), including
the discretionary authority to extend the post-termination exercisability period of Options
longer than is otherwise provided for in the Plan;

     (xi) to authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Option previously granted by the Administrator;

     (xii) to make all other determinations deemed necessary or advisable for administering
the Plan.

     (c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations
and interpretations shall be final and binding on all Optionees and any other holders of Options.

5. Eligibility. Nonstatutory Stock Options may be granted to Service Providers. Incentive
Stock Options may be granted only to Employees.

6. Limitations.

     (a) Each Option shall be designated in the Option Agreement as either an Incentive Stock
Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent
that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by the Optionee during any calendar year (under all plans of the
Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be
taken into account in the order in which they were granted. The

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Fair Market Value of the Shares shall be determined as of the time the Option with respect to
such Shares is granted.

     (b) Neither the Plan nor any Option shall confer upon an Optionee any right with respect to
continuing the Optionee’s relationship as a Service Provider with the Company, nor shall they
interfere in any way with the Optionee’s right or the Company’s right to terminate such
relationship at any time, with or without cause.

7. Term of Plan. Subject to Section 18 of the Plan, the Plan shall become effective upon
its adoption by the Board. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 14 of the Plan.

8. Term of Option. The term of each Option shall be stated in the Option Agreement;
provided, however, that the term shall be no more than ten (10) years from the date of grant
thereof. In the case of an Incentive Stock Option, the term shall be ten (10) years from the date
of grant or such shorter term as may be provided in the Option Agreement. Moreover, in the case of
an Incentive Stock Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock
Option shall be five (5) years from the date of grant or such shorter term as may be provided in
the Option Agreement.

9. Option Exercise Price and Consideration.

     (a) Exercise Price. The per share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be determined by the Administrator, subject to the following:

     (i) In the case of an Incentive Stock Option

     (A)  granted to an Employee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power of
all classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be no less than 110% of the Fair Market Value per Share on the
date of grant.

     (B)  granted to any Employee other than an Employee described in paragraph (A)
immediately above, the per Share exercise price shall be no less than 100% of the
Fair Market Value per Share on the date of grant.

     (ii) In the case of a Nonstatutory Stock Option

     (A)  granted to a Service Provider who, at the time the Nonstatutory Stock
Option is granted, owns stock representing more than ten percent (10%) of the voting
power of all classes of stock of the Company or any Parent or Subsidiary, the per
Share exercise price shall be no less than one hundred ten percent (110%) of the Fair
Market Value per Share on the date of grant.

     (B)  intended to qualify as “performance-based compensation” within the meaning
of Section 162(m) of the Code, the per Share exercise price shall be no less than
100% of the Fair Market Value per Share on the date of grant.

     (C)  Granted to any other Service Provider, the per Share exercise price shall
be no less than eighty-five percent (85%) of the Fair Market Value per Share on the
date of grant.

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     (iii) Notwithstanding the foregoing, Options may be granted with a per Share exercise
price of less than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant pursuant to a merger or other corporate transaction.

     (b) Waiting Period and Exercise Dates. At the time an Option is granted, the
Administrator shall fix the period within which the Option may be exercised and shall determine any
conditions which must be satisfied before the Option may be exercised.

     (c) Form of Consideration. The Administrator shall determine the acceptable form of
consideration for exercising an Option, including the method of payment. In the case of an
Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at
the time of grant. Such consideration may consist entirely of:

     (i) cash;

     (ii) check;

     (iii) other Shares which (A) in the case of Shares acquired upon exercise of an option,
have been owned by the Optionee for more than six months on the date of surrender, and
(B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price
of the Shares as to which said Option shall be exercised;

     (iv) consideration received by the Company under a cashless exercise program, if
implemented by the Company in connection with the Plan;

     (v) a reduction in the amount of any Company liability to the Optionee, including any
liability attributable to the Optionee’s participation in any Company-sponsored deferred
compensation program or arrangement;

     (vi) any combination of the foregoing methods of payment; or

     (vii) such other consideration and method of payment for the issuance of Shares to the
extent permitted by Applicable Laws.

10. Exercise of Option.

     (a) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder
shall be exercisable according to the terms of the Plan and at such times and under such conditions
as determined by the Administrator and set forth in the Option Agreement. Unless otherwise stated
in the Option Agreement, Options shall become exercisable at a rate of twenty-five percent (25%)
per year over four (4) years from the date the Options are granted, with twenty-five percent (25%)
of the Shares under the Option vesting on each of the first, second, third and fourth anniversaries
of the date of grant. Unless the Administrator provides otherwise, vesting of Options granted
hereunder shall be suspended during any unpaid leave of absence. An Option may not be exercised for
a fraction of a Share.

     An Option shall be deemed exercised when the Company receives: (i) written or electronic
notice of exercise (in accordance with the Option Agreement) from the person entitled to exercise
the Option, and (ii) full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment authorized by the Administrator
and permitted by the Option Agreement and the Plan. Shares issued upon exercise of an Option shall
be issued in the name of the Optionee or, if requested by the Optionee, in the name of the Optionee
and his or her spouse. Until the Shares are issued

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(as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is
exercised. No adjustment will be made for a dividend or other right for which the record date is
prior to the date the Shares are issued, except as provided in Section 12 of the Plan.

     Exercising an Option in any manner shall decrease the number of Shares thereafter available,
both for purposes of the Plan and for sale under the Option, by the number of Shares as to which
the Option is exercised.

     (b) Termination of Relationship as a Service Provider. If an Optionee ceases to be a
Service Provider, other than upon the Optionee’s death or Disability, the Optionee may exercise his
or her Option within ninety (90) days of termination, or such longer period of time as specified in
the Option Agreement, to the extent that the Option is vested on the date of termination (but in no
event later than the expiration of the term of such Option as set forth in the Option Agreement).
If, on the date of termination, the Optionee is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option shall revert to the Plan. If, after
termination, the Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to
the Plan.

     (c) Disability of Optionee. If an Optionee ceases to be a Service Provider as a
result of the Optionee’s Disability, the Optionee may exercise his or her Option within one (1)
year of termination, or such longer period of time as may be specified in the Option Agreement, to
the extent the Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement). If, on the date of
termination, the Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after termination, the Optionee does
not exercise his or her Option within the time specified herein, the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.

     (d) Death of Optionee. If an Optionee dies while a Service Provider, the Option may
be exercised within one (1) year following Optionee’s death, or such longer period of time as may
be specified in the Option Agreement, to the extent that the Option is vested on the date of death
(but in no event later than the expiration of the term of such Option as set forth in the Notice of
Grant), by the Optionee’s designated beneficiary, provided such beneficiary has been designated
prior to Optionee’s death in a form acceptable to the Administrator. If no such beneficiary has
been designated by the Optionee, then such Option may be exercised by the personal representative
of the Optionee’s estate or by the person(s) to whom the Option is transferred pursuant to the
Optionee’s will or in accordance with the laws of descent and distribution. If, at the time of
death, the Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall immediately revert to the Plan. If the Option is not so
exercised within the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

     (e) Buyout Provisions. The Administrator may at any time offer to buy out for a
payment in cash or Shares an Option previously granted based on such terms and conditions as the
Administrator shall establish and communicate to the Optionee at the time that such offer is made.

11. Limited Transferability of Options. Unless determined otherwise by the Administrator,
Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or the laws of descent and distribution, and may be exercised during the
lifetime of the Optionee, only by the Optionee. If the Administrator in its sole discretion makes
an Option transferable, such Option may only be transferred (i) by will, (ii) by the laws of
descent and distribution, or (iii) as permitted by Rule 701 of the Securities Act of 1933, as
amended.

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12. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

     (a) Changes in Capitalization. Subject to any required action by the stockholders of
the Company, the number of shares of Common Stock covered by each outstanding Option, and the
number of shares of Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or decrease in the
number of issued shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall
be made by the Board, whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or
securities convertible into shares of stock of any class, shall affect, and no adjustment by reason
thereof shall be made with respect to, the number or price of shares of Common Stock subject to an
Option .

     (b) Dissolution or Liquidation. In the event of the proposed dissolution or
liquidation of the Company, the Administrator shall notify each Optionee as soon as practicable
prior to the effective date of such proposed transaction. The Administrator in its discretion may
provide for an Optionee to have the right to exercise his or her Option until ten (10) days prior
to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which
the Option would not otherwise be exercisable. In addition, the Administrator may provide that any
Company repurchase option applicable to any Shares purchased upon exercise of an Option shall lapse
as to all such Shares, provided the proposed dissolution or liquidation takes place at the
time and in the manner contemplated. To the extent it has not been previously exercised, an Option
will terminate immediately prior to the consummation of such proposed action.

     (c) Merger or Asset Sale. In the event of a merger of the Company with or into
another corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option may, at the discretion of the Administrator or the successor corporation, be
assumed or an equivalent option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. In the event that the successor corporation refuses to
assume or substitute for the Option, any Option or portions of Options outstanding as of the date
of such event that are not yet fully vested shall immediately become exercisable in full. In such
event, the Administrator or the successor corporation, as the case may be, shall promptly notify
the Optionee in writing or electronically of the qualifying merger or asset sale and of the
exercisability of the Option; the Option and any portion thereof, whether vested or unvested, shall
be exercisable by the Optionee for a period of fifteen (15) calendar days from the date of such
notice, and the Option shall terminate upon the expiration of such period. For the purposes of this
paragraph, the Option shall be considered assumed if, following the merger or sale of assets, the
option or right confers the right to purchase or receive, for each Share of Optioned Stock subject
to the Option immediately prior to the merger or sale of assets, the consideration (whether stock,
cash, or other securities or property) received in the merger or sale of assets by holders of
Common Stock for each Share held on the effective date of the transaction (and if holders were
offered a choice of consideration, the type of consideration chosen by the holders of a majority of
the outstanding Shares); provided, however, that if such consideration received in
the merger or sale of assets is not solely common stock of the successor corporation or its Parent,
the Administrator may, with the consent of the successor corporation, provide for the consideration
to be received upon the exercise of the Option, for each Share of Optioned Stock subject to the
Option, to be solely common stock of the successor corporation or its Parent equal in fair market
value to the per share consideration received by holders of Common Stock in the merger or sale of
assets.

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13. Date of Grant. The date of grant of an Option shall be, for all purposes, the date on
which the Administrator makes the determination granting such Option, or such other later date as
is determined by the Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.

14. Amendment and Termination of the Plan.

     (a) Amendment and Termination. The Board may at any time amend, alter, suspend or
terminate the Plan.

     (b) Stockholder Approval. The Company shall obtain stockholder approval of any Plan
amendment to the extent necessary and desirable to comply with Applicable Laws.

     (c) Effect of Amendment or Termination. No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee, unless mutually agreed otherwise
between the Optionee and the Administrator, which agreement must be in writing and signed by the
Optionee and the Company. Termination of the Plan shall not affect the Administrator’s ability to
exercise the powers granted to it hereunder with respect to Options granted under the Plan prior to
the date of such termination.

15. Conditions Upon Issuance of Shares.

     (a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an
Option unless the exercise of such Option and the issuance and delivery of such Shares shall comply
with Applicable Laws and shall be further subject to the approval of counsel for the Company with
respect to such compliance.

     (b) Investment Representations. As a condition to the exercise of an Option, the
Company may require the person exercising such Option to represent and warrant at the time of any
such exercise that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a
representation is required.

16. Inability to Obtain Authority. The inability of the Company to obtain authority from
any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any
liability in respect of the failure to issue or sell such Shares as to which such requisite
authority shall not have been obtained.

17. Reservation of Shares. The Company, during the term of this Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements
of the Plan.

18. Stockholder Approval. The Plan shall be subject to approval by the stockholders of the
Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval
shall be obtained in the manner and to the degree required under Applicable Laws.

19. Information to Optionees. The Company shall provide, or make available, to each
Optionee and to each individual who acquires Shares pursuant to the Plan, not less frequently than
annually during the period such participant has one or more Options outstanding, and, in the case
of an individual who acquires Shares pursuant to the Plan, during the period such individual owns
such Shares, copies of annual financial statements. The Company shall not be required to provide
such statements to key employees whose duties in connection with the Company assure their access to
equivalent information.

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CONVERTED ORGANICS INC.

2006 STOCK OPTION PLAN

STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the Plan shall have the same defined
meanings in this Option Agreement.

I. NOTICE OF STOCK OPTION GRANT

     [Employee Name]

     The undersigned Optionee has been granted an Option to purchase Common Stock of the Company,
subject to the terms and conditions of the Plan and this Option Agreement, as follows:

	 	 	 	 	 	 	 
	 

	 	Date of Grant:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Vesting Commencement Date:	 	 	 	 
	 

	 	(same as Date of Grant, if left blank)	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Exercise Price per Share:	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Total Number of Shares Granted:	 	 	 	 
	 

	 	 	 	 

	 	 
	 

	 	Type of Option:
	 	___ Incentive Stock Option	 	 
	 
	 	 	 	___ Nonstatutory Stock Option	 	 
	 
	 	 	 	 	 	 
	 

	 	Expiration Date:	 	 	 	 
	 

	 	(10 years from Date of Grant, if left blank)	 	 	 	 

     Vesting Schedule:

     Vested upon grant.

     Termination Period:

     This Option shall be exercisable for ninety (90) days after Optionee ceases to be a Service
Provider. Upon Optionee’s death or disability, this Option may be exercised for such longer period
as provided in the Plan. In no event may Optionee exercise this Option after the Term/Expiration
Date as provided above.

II. AGREEMENT

     1. Grant of Option. The Plan Administrator of the Company hereby grants to the
Optionee named in the Notice of Grant (the “Optionee”), an option (the “Option”) to purchase the
number of Shares set forth in the Notice of Grant, at the exercise price per Share set forth in the
Notice of Grant (the “Exercise Price”), and subject to the terms and conditions of the Plan, which
is incorporated herein by reference. Subject to Section 14(c) of the Plan, in the event of a
conflict between the terms and conditions of the Plan and this Option Agreement, the terms and
conditions of the Plan shall prevail.

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     If designated in the Notice of Grant as an Incentive Stock Option (“ISO”), this Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code.
Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option
shall be treated as a Nonstatutory Stock Option (“NSO”).

     2. Exercise of Option.

     (a) Right to Exercise. This Option shall be exercisable during its term in
accordance with the Vesting Schedule set out in the Notice of Grant and with the applicable
provisions of the Plan and this Option Agreement.

     (b) Method of Exercise. This Option shall be exercisable by delivery of an
exercise notice in the form attached as Exhibit A (the “Exercise Notice”) which shall state
the election to exercise the Option, the number of Shares with respect to which the Option
is being exercised, and such other representations and agreements as may be required by the
Company. The Exercise Notice shall be accompanied by payment of the aggregate Exercise Price
as to all Exercised Shares. This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price.

     No Shares shall be issued pursuant to the exercise of an Option unless such issuance
and such exercise complies with Applicable Laws. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such Shares.

     3. Method of Payment. Payment of the aggregate Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee:

     (a) cash or check;

     (b) consideration received by the Company under a formal cashless exercise program
adopted by the Company in connection with the Plan;

     (c) surrender of other Shares which, (i) in the case of Shares acquired from the
Company, either directly or indirectly, have been owned by the Optionee for more than six
(6) months on the date of surrender, and (ii) have a Fair Market Value on the date of
surrender equal to the aggregate Exercise Price of the Exercised Shares; or

     (d) any other form or manner endorsed in the Plan.

     4. Restrictions on Exercise. This Option may not be exercised until such time as the
Plan has been approved by the shareholders of the Company, or if the issuance of such Shares upon
such exercise or the method of payment of consideration for such shares would constitute a
violation of any Applicable Law.

     5. Non-Transferability of Option. This Option may not be transferred in any manner
otherwise than by will or by the laws of descent or distribution and may be exercised during the
lifetime of Optionee only by Optionee. The terms of the Plan and this Option Agreement shall be
binding upon the executors, administrators, heirs, successors and assigns of the Optionee.

2

 

     6. Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant, and may be exercised during such term only in accordance with the Plan and the
terms of this Option.

     7. Tax Obligations.

     (a) Taxes. Optionee acknowledges and agrees that Optionee is solely
responsible for the satisfaction of all federal, state, local and foreign income and other
tax arising from or applicable to the Option exercise and the acquisition or sale of the
Optioned Stock. Optionee agrees that Optionee shall indemnify the Company for any
liability, including attorneys’ fees and expenses, accrued by the Company as a result of the
Optionee’s failure to satisfy those taxes.

     (b) Notice of Disqualifying Disposition of ISO Shares. If the Option granted
to Optionee herein is an ISO, and if Optionee sells or otherwise disposes of any of the
Shares acquired pursuant to the ISO on or before the later of (1) the date two (2) years
after the Date of Grant, or (2) the date one year after the date of exercise, the Optionee
shall immediately notify the Company in writing of such disposition.

     8. Entire Agreement; Governing Law. The Plan is incorporated herein by reference.
The Plan and this Option Agreement constitute the entire agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings and agreements of
the Company and Optionee with respect to the subject matter hereof, and may not be modified
adversely to the Optionee’s interest except by means of a writing signed by the Company and
Optionee. This agreement is governed by the internal substantive laws but not the choice of law
rules of Delaware.

     9. No Guarantee of Continued Service. OPTIONEE ACKNOWLEDGES AND AGREES THAT THE
VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE
PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION
OR ACQUIRING SHARES HEREUNDER). OPTIONEE FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN
EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD,
FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE
COMPANY’S RIGHT TO TERMINATE OPTIONEE’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

     Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar
with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof. Optionee has reviewed the Plan and this Option in their entirety, has had
an opportunity to obtain the advice of counsel and other advisors prior to executing this Option
and fully understands all provisions of the Option. Optionee hereby agrees to accept as binding,
conclusive and final all decisions or interpretations of the Administrator upon any questions
arising under the Plan or this Option. Optionee further agrees to notify the Company upon any
change in the residence address indicated below.

3

 

	 	 	 	 	 
	OPTIONEE:

	 	CONVERTED ORGANICS INC.	 	 
	 
	 	 	 	 
	 

	 	 

Edward J. Gildea

President & CEO
	 	 

4

 

EXHIBIT A

EXERCISE NOTICE AND AGREEMENT

Converted Organics Inc.

7A Commercial Wharf West

Boston, MA 02110

Attention: Stock Option Plan Administrator

     Re: Exercise of Stock Option Pursuant to 2006 Stock Option Plan

	 	 	 
	Name of Optionee:

	 	                                                            
	 
	 	 
	Optionee’s Address:

	 	                                                            
	 
	 	 
	Optionee’s Social Security Number:

	 	                                                            
	 
	 	 
	Date of Option Agreement:

	 	                                                            
	 
	 	 
	Exercise Date:

	 	                                                            
	 
	 	 
	The Shares Purchased are Incentive Stock Options:
	 	 
	(circle one)

	 	Yes / No
	 
	 	 
	Number of Shares Purchased Pursuant to this Notice::

	 	                                                            
	 
	 	 
	Exercise Price per Share:

	 	$                                                            
	 
	 	 
	Aggregate Exercise Price:

	 	$                                                            
	 
	 	 
	Amount of Payment Enclosed:

	 	$                                                            

     1. Exercise of Option. Pursuant to the 2006 Stock Option Plan (the “Plan”) of
Converted Organics Inc., a Delaware corporation (the “Company”) and the Stock Option Agreement
(“Option Agreement”) entered into as of the date set forth above between the undersigned Optionee
and the Company, Optionee hereby elects, effective as of the date of this notice, to exercise
Optionee’s option to purchase the number of shares of common stock (the “Shares”) of the Company
indicated above.

     2. Payment. Enclosed is Optionee’s payment in the amount indicated above, which is
the full exercise price for the Shares.

     3. Deemed Date of Exercise. The date of exercise shall be deemed to be the first
date after which this Notice is filed with Company upon which Shares become eligible for issuance
to Optionee under applicable state and federal laws and regulatory requirements.

     4. Compliance with Laws. Optionee understands and acknowledges that the purchase and
sale of the Shares may be subject to approval under the state and federal securities laws and other
laws and,

Exhibit A - 1

 

notwithstanding any other provision of the Option Agreement to the contrary, the exercise
of any rights to purchase Shares is expressly conditioned upon approval (if necessary) and
compliance with all such laws.

5. Representations of Optionee. Optionee represents and warrants to the Company, as
follows:

(a) Optionee has received, read, and understood the Plan and the Option Agreement and
agrees to abide by and be bound by their terms and conditions.

(b) The Options exercised herewith are exercisable only according to the schedule in the
Option Agreement.

(c) Optionee is aware of the business affairs and financial condition of the Company and
has acquired sufficient information about the Company to reach an informed and knowledgeable
decision to acquire the Shares.

     6. Refusal to Transfer. The Company shall not be required (a) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Agreement, the Option Agreement, or the Plan or (b) to treat as owner of such Shares or to
accord the right to vote or receive dividends to any purchaser or other transferee to whom such
Shares shall have been so transferred.

     7. Tax Consultation. Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents
that Optionee is not relying on the Company for any tax advice.

     8. Entire Agreement. The Plan and the Option Agreement are incorporated herein by
reference. This Agreement, the Plan, and the Option Agreement constitute the entire agreement of
the parties and supersede in their entirety all prior undertakings and agreements of the Company
and Optionee with respect to the subject matter hereof.

	 	 	 	 	 	 	 
	Submitted by:	 	Accepted by:	 	 
	“OPTIONEE”:	 	“COMPANY”	 	 
	 
	 	 	 	 	 	 
	 	 	Converted Organics Inc.,	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	Signature

	 	By	 	 	 	 
	 

	 	 
	 	 

	 	 
	Print Name

	 	Name	 	 	 	 
	 

	 	 
	 	 

	 	 
	 

	 	Title	 	 

	 	 

Exhibit A - 2exv4w21

EXHIBIT 4.21

CERTIFICATE OF AMENDMENT

TO

CERTIFICATE OF TRUST

OF

ONB CAPITAL TRUST III

     THIS Certificate of Amendment of ONB Capital Trust III (the “Trust”), is being duly executed
and filed on behalf of the Trust by the undersigned trustee to amend the Certificate of Trust of
the statutory trust formed under the Delaware Statutory Trust Act (12 Del. C. § 3801
et seq.) (the “Act”).

     1. Name. The name of the statutory trust amended hereby is ONB Capital Trust III.

     2. Amendment of Trust. The Certificate of Trust of the Trust is hereby amended by
changing the name and address of the trustee of the Trust in the State of Delaware to:

BNYM (Delaware)

White Clay Center

Route 273

Newark, DE 19711

     3. Effective Date. This Certificate of Amendment shall be effective upon filing with
the Delaware Secretary of State.

     IN WITNESS WHEREOF, the undersigned trustee of the Trust has executed this Certificate of
Amendment in accordance with Section 3811(a)(2) of the Act.

	 	 	 	 	 
	 	 	BNYM (DELAWARE), Successor Trustee
	 	 	to Chase Bank USA, National Association,
	 	 	as Delaware Trustee
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kristine K. Gullo
	 

	 	 	 	 
	 

	 	Name:
	 	Kristine K. Gullo
	 

	 	Title:
	 	Vice President

 

 

CERTIFICATE OF AMENDMENT

TO

CERTIFICATE OF TRUST

OF

ONB CAPITAL TRUST IV

     THIS Certificate of Amendment of ONB Capital Trust IV (the “Trust”), is being duly executed
and filed on behalf of the Trust by the undersigned trustee to amend the Certificate of Trust of
the statutory trust formed under the Delaware Statutory Trust Act (12 Del. C. § 3801
et seq.) (the “Act”).

     4. Name. The name of the statutory trust amended hereby is ONB Capital Trust IV.

     5. Amendment of Trust. The Certificate of Trust of the Trust is hereby amended by
changing the name and address of the trustee of the Trust in the State of Delaware to:

BNYM (Delaware)

White Clay Center

Route 273

Newark, DE 19711

     6. Effective Date. This Certificate of Amendment shall be effective upon filing with
the Delaware Secretary of State.

     IN WITNESS WHEREOF, the undersigned trustee of the Trust has executed this Certificate of
Amendment in accordance with Section 3811(a)(2) of the Act.

	 	 	 	 	 
	 	 	BNYM (DELAWARE), Successor Trustee
	 	 	to Chase Bank USA, National Association,
	 	 	as Delaware Trustee
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kristine K. Gullo
	 

	 	 	 	 
	 

	 	Name:
	 	Kristine K. Gullo
	 

	 	Title:
	 	Vice President

 

 

CERTIFICATE OF AMENDMENT

TO

CERTIFICATE OF TRUST

OF

ONB CAPITAL TRUST V

     THIS Certificate of Amendment of ONB Capital Trust V (the “Trust”), is being duly executed and
filed on behalf of the Trust by the undersigned trustee to amend the Certificate of Trust of the
statutory trust formed under the Delaware Statutory Trust Act (12 Del. C. § 3801 et
seq.) (the “Act”).

     7. Name. The name of the statutory trust amended hereby is ONB Capital Trust V.

     8. Amendment of Trust. The Certificate of Trust of the Trust is hereby amended by
changing the name and address of the trustee of the Trust in the State of Delaware to:

BNYM (Delaware)

White Clay Center

Route 273

Newark, DE 19711

     9. Effective Date. This Certificate of Amendment shall be effective upon filing with
the Delaware Secretary of State.

     IN WITNESS WHEREOF, the undersigned trustee of the Trust has executed this Certificate of
Amendment in accordance with Section 3811(a)(2) of the Act.

	 	 	 	 	 
	 	 	BNYM (DELAWARE), Successor Trustee
	 	 	to Chase Bank USA, National Association,
	 	 	as Delaware Trustee
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kristine K. Gullo
	 

	 	 	 	 
	 

	 	Name:
	 	Kristine K. Gullo
	 

	 	Title:
	 	Vice President

 

 

CERTIFICATE OF AMENDMENT

TO

CERTIFICATE OF TRUST

OF

ONB CAPITAL TRUST VI

     THIS Certificate of Amendment of ONB Capital Trust VI (the “Trust”), is being duly executed
and filed on behalf of the Trust by the undersigned trustee to amend the Certificate of Trust of
the statutory trust formed under the Delaware Statutory Trust Act (12 Del. C. § 3801
et seq.) (the “Act”).

     10. Name. The name of the statutory trust amended hereby is ONB Capital Trust VI.

     11. Amendment of Trust. The Certificate of Trust of the Trust is hereby amended by
changing the name and address of the trustee of the Trust in the State of Delaware to:

BNYM (Delaware)

White Clay Center

Route 273

Newark, DE 19711

     12. Effective Date. This Certificate of Amendment shall be effective upon filing with
the Delaware Secretary of State.

     IN WITNESS WHEREOF, the undersigned trustee of the Trust has executed this Certificate of
Amendment in accordance with Section 3811(a)(2) of the Act.

	 	 	 	 	 
	 	 	BNYM (DELAWARE), Successor Trustee
	 	 	to Chase Bank USA, National Association,
	 	 	as Delaware Trustee
	 
	 	 	 	 
	 

	 	By:
	 	/s/ Kristine K. Gullo
	 

	 	 	 	 
	 

	 	Name:
	 	Kristine K. Gullo
	 

	 	Title:
	 	Vice President

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