Document:

exv4w15

Table of Contents

 

    Exhibit 4.15

 

    CONVERTED ORGANICS INC.

    2010 OMNIBUS STOCK COMPENSATION PLAN

 

    

    B-1

 

 

    CONVERTED
    ORGANICS INC.

    2010 OMNIBUS STOCK COMPENSATION PLAN

    

    TABLE OF CONTENTS

 

	 	 	 	 	 	 	 	 	 
	
 
	
 
	
 
	
 
	
    Page

	 

	 
	

    1.

	 
	
 
	
    Purpose
	
 
	 
	
    B-3
	 

	 
	

    2.

	 
	
 
	
    Definitions
	
 
	 
	
    B-3
	 

	 
	

    3.

	 
	
 
	
    Administration
	
 
	 
	
    B-5
	 

	 
	

    4.

	 
	
 
	
    Grants
	
 
	 
	
    B-5
	 

	 
	

    5.

	 
	
 
	
    Shares Subject to the Plan
	
 
	 
	
    B-5
	 

	 
	

    6.

	 
	
 
	
    Eligibility for Participation
	
 
	 
	
    B-6
	 

	 
	

    7.

	 
	
 
	
    Options
	
 
	 
	
    B-6
	 

	 
	

    8.

	 
	
 
	
    Stock Units
	
 
	 
	
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    9.

	 
	
 
	
    Stock Awards
	
 
	 
	
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    10.

	 
	
 
	
    Stock Appreciation Rights and Other Stock-Based
    Awards
	
 
	 
	
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    11.

	 
	
 
	
    Qualified Performance-Based Compensation
	
 
	 
	
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    12.

	 
	
 
	
    Deferrals
	
 
	 
	
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    13.

	 
	
 
	
    Withholding of Taxes
	
 
	 
	
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    14.

	 
	
 
	
    Transferability of Grants
	
 
	 
	
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    15.

	 
	
 
	
    Consequences of a Change of Control
	
 
	 
	
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    16.

	 
	
 
	
    Requirements for Issuance of Shares
	
 
	 
	
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    17.

	 
	
 
	
    Amendment and Termination of the Plan
	
 
	 
	
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    18.

	 
	
 
	
    Miscellaneous
	
 
	 
	
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    EXHIBITS

	
 
	 
	
 
	 

	

    A. FORM OF INCENTIVE OPTION GRANTS

	
 
	 
	
 
	 

	

    B. FORM OF NONQUALIFIED OPTION
    GRANTS

	
 
	 
	
 
	 

	

    C. FORM OF BOARD OF DIRECTORS GRANTS

	
 
	 
	
 
	 

    

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    CONVERTED
    ORGANICS INC.

    

 

    2010
    OMNIBUS STOCK COMPENSATION PLAN

 

		
	
    1.  
	
    Purpose
    and Objectives

 

    The Converted Organics Inc. 2010 Omnibus Stock Compensation Plan
    (the “Plan”) is designed to align the interests of
    (i) designated employees of Converted Organics Inc. (the
    “Company”) and its subsidiaries,
    (ii) non-employee members of the board of directors of the
    Company, and (iii) consultants and key advisors of the
    Company and its subsidiaries with the interests of the
    Company’s stockholders and to provide incentives for such
    persons to exert maximum efforts for the success of the Company.
    By extending the opportunity to receive grants of stock options,
    stock units, stock awards, stock appreciation rights and other
    stock-based awards, the Company believes that the Plan will
    encourage the participants to contribute materially to the
    growth of the Company, thereby benefiting the Company’s
    shareholders, and will align the economic interests of the
    participants with those of the shareholders. The Plan may
    furthermore be expected to benefit the Company and its
    stockholders by making it possible for the Company to attract
    and retain the best available talent. The Plan shall be
    effective as of DATE, 2010.

 

		
	
    2.  
	
    Definitions

 

    Whenever used in this Plan, the following terms will have the
    respective meanings set forth below:

 

    (a) “Board” means the Company’s Board
    of Directors.

 

    (b) “Cause” means, except to the extent
    otherwise specified by the Committee, a finding by the Committee
    of a Participant’s incompetence in the performance of
    duties, disloyalty, dishonesty, theft, embezzlement, or
    unauthorized disclosure of customer lists, product lines,
    processes or trade secrets of the Employer, individually or as
    an employee, partner, associate, officer or director of any
    organization.

 

    (c) “Change of Control” shall be deemed to
    have occurred if:

 

    (i) Any “person” (as such term is used in
    sections 13(d) and 14(d) of the Exchange Act) becomes a
    “beneficial owner” (as defined in
    Rule 13d-3
    under the Exchange Act), directly or indirectly, of securities
    of the Company representing more than 50% of the voting power of
    the then outstanding securities of the Company; provided that a
    Change of Control shall not be deemed to occur as a result of a
    transaction in which the Company becomes a subsidiary of another
    corporation and in which the shareholders of the Company,
    immediately prior to the transaction, will beneficially own,
    immediately after the transaction, shares entitling such
    shareholders to more than 50% of all votes to which all
    shareholders of the parent corporation would be entitled in the
    election of directors;

 

    (ii) The consummation of (i) a merger or consolidation
    of the Company with another corporation where the shareholders
    of the Company, immediately prior to the merger or
    consolidation, will not beneficially own, immediately after the
    merger or consolidation, shares entitling such shareholders to
    more than 50% of all votes to which all shareholders of the
    surviving corporation would be entitled in the election of
    directors, (ii) a sale or other disposition of all or
    substantially all of the assets of the Company, or (iii) a
    liquidation or dissolution of the Company; or

 

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

 

    (e) “Committee” means the Compensation
    Committee of the Board or another committee appointed by the
    Board to administer the Plan, or in the absence of such
    committee, the entire Board. Grants that are intended to be
    “qualified performance-based compensation” under
    section 162(m) of the Code shall be made by a committee
    that consists of two or more persons appointed by the Board, all
    of whom shall be “outside directors” as defined under
    section 162(m) of the Code and related Treasury regulations.

 

    (f) “Company” means Converted Organics
    Inc. and any successor corporation.

 

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

    

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    (h) “Consultant” means a consultant or
    advisor who performs services for the Employer and who renders
    bona fide services to the Employer, if the services are not in
    connection with the offer and sale of securities in a
    capital-raising transaction and the Consultant does not directly
    or indirectly promote or maintain a market for the
    Employer’s securities.

 

    (i) “Disability” means a
    Participant’s becoming disabled within the meaning of
    section 22(e)(3) of the Code, within the meaning of the
    Employer’s long-term disability plan applicable to the
    Participant, or as otherwise determined by the Committee.

 

    (j) “Effective Date” of the Plan means
    DATE, 2010.

 

    (k) “Employee” means an employee of the
    Employer (including an officer or director who is also an
    employee).

 

    (l) “Employer” means the Company and its
    subsidiaries.

 

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

 

    (n) “Exercise Price” means the per share
    price at which shares of Company Stock may be purchased under an
    Option, as designated by the Committee.

 

    (o) “Fair Market Value” of Company Stock
    means, unless the Committee determines otherwise with respect to
    a particular Grant, (i) if the principal trading market for
    the Company Stock is the NYSE Amex, the NASDAQ Global Market,
    the NASDAQ Capital Market or another national securities
    exchange, the “closing transaction” price at which
    shares of Company Stock are traded on such securities exchange
    on the relevant date or (if there were no trades on that date)
    the latest preceding date upon which a sale was reported,
    (ii) if the Company Stock is not principally traded on a
    national securities exchange, but is quoted on the NASD OTC
    Bulletin Board (“OTCBB”) or the Pink Sheets, the
    last reported “closing transaction” price of Company
    Stock on the relevant date, as reported by the OTCBB or Pink
    Sheets, or, if not so reported, as reported in a customary
    financial reporting service, as the Committee determines, or
    (iii) if the Company Stock is not publicly traded or, if
    publicly traded, is not subject to reported closing transaction
    prices as set forth above, the Fair Market Value per share shall
    be as determined by the Committee. Notwithstanding the
    foregoing, for federal, state and local income tax purposes, the
    Fair Market Value may be determined by the Committee in
    accordance with uniform and non-discriminatory standards adopted
    by it from time to time.

 

    (p) “Grant” means an Option, Stock Unit,
    Stock Award, SAR or Other Stock-Based Award granted under the
    Plan.

 

    (q) “Grant Agreement” means the written
    instrument that sets forth the terms and conditions of a Grant,
    including all amendments thereto.

 

    (r) “Incentive Stock Option” means an
    Option that is intended to meet the requirements of an incentive
    stock option under section 422 of the Code.

 

    (s) “Non-Employee Director” means a member
    of the Board who is not an employee of the Employer.

 

    (t) “Nonqualified Stock Option” means an
    Option that is not intended to be taxed as an incentive stock
    option under section 422 of the Code.

 

    (u) “Option” means an option to purchase
    shares of Company Stock, as described in Section 7.

 

    (v) “Other Stock-Based Award” means any
    Grant based on, measured by or payable in Company Stock (other
    than a Grant described in Sections 7, 8 or 9 of the Plan),
    as described in Section 10.

 

    (w) “Participant” means an Employee,
    Consultant or Non-Employee Director designated by the Committee
    to participate in the Plan.

 

    (x) “Plan” means this Converted Organics
    Inc. 2010 Omnibus Stock Compensation Plan, as in effect from
    time to time.

    

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    (y) “SAR” means a stock appreciation right
    as described in Section 10.

 

    (z) “Stock Award” means an award of
    Company Stock as described in Section 9.

 

    (aa) “Stock Unit” means an award of a
    phantom unit representing a share of Company Stock, as described
    in Section 8.

 

		
	
    3.  
	
    Administration

 

    (a) Committee.  The Plan shall be
    administered and interpreted by the Committee. Ministerial
    functions may be performed by an administrative committee
    comprised of Company employees appointed by the Committee.

 

    (b) Committee Authority.  The Committee
    shall have the sole authority to (i) determine the
    Participants to whom Grants shall be made under the Plan,
    (ii) determine the type, size and terms and conditions of
    the Grants to be made to each such Participant,
    (iii) determine the time when the grants will be made and
    the duration of any applicable exercise or restriction period,
    including the criteria for exercisability and the acceleration
    of exercisability, (iv) amend the terms and conditions of
    any previously issued Grant, subject to the provisions of
    Section 17 below, and (v) deal with any other matters
    arising under the Plan.

 

    (c) Committee Determinations.  The
    Committee shall have full power and express discretionary
    authority to administer and interpret the Plan, to make factual
    determinations and to adopt or amend such rules, regulations,
    agreements and instruments for implementing the Plan and for the
    conduct of its business as it deems necessary or advisable, in
    its sole discretion. The Committee’s interpretations of the
    Plan and all determinations made by the Committee pursuant to
    the powers vested in it hereunder shall be conclusive and
    binding on all persons having any interest in the Plan or in any
    awards granted hereunder. All powers of the Committee shall be
    executed in its sole discretion, in the best interest of the
    Company, not as a fiduciary, and in keeping with the objectives
    of the Plan and need not be uniform as to similarly situated
    Participants.

 

		
	
    4.  
	
    Grants

 

    (a) Grants under the Plan may consist of Options as
    described in Section 7, Stock Units as described in
    Section 8, Stock Awards as described in Section 9, and
    SARs or Other Stock-Based Awards as described in
    Section 10. All Grants shall be subject to such terms and
    conditions as the Committee deems appropriate and as are
    specified in writing by the Committee to the Participant in the
    Grant Agreement.

 

    (b) All Grants shall be made conditional upon the
    Participant’s acknowledgement, in writing or by acceptance
    of the Grant, that all decisions and determinations of the
    Committee shall be final and binding on the Participant, his or
    her beneficiaries and any other person having or claiming an
    interest under such Grant. Grants under a particular Section of
    the Plan need not be uniform as among the Participants.

 

		
	
    5.  
	
    Shares Subject
    to the Plan

 

    (a) Shares Authorized.  The aggregate
    number of shares of Company Stock that may be issued under the
    Plan initially is 3,458,047 shares, however commencing on
    January 1, 2011 and on the first day of each year following
    thereafter, the number of shares authorized for issuance under
    the Plan shall be automatically recalculated to an amount equal
    to 20% of the Company’s common stock outstanding on the
    last day of the prior fiscal year less any options or securities
    issued under the Company’s Amended and Restated 2006 Stock
    Option Plan and this Plan, and also subject to adjustment as
    described in subsection (d) below.

 

    (b) Source of Shares; Share
    Counting.  Shares issued under the Plan may be
    authorized but unissued shares of Company Stock or reacquired
    shares of Company Stock, including shares purchased by the
    Company on the open market for purposes of the Plan. If and to
    the extent Options and SARs granted under the Plan terminate,
    expire, or are canceled, forfeited, exchanged or surrendered
    without having been exercised, and if and to the extent that any
    Stock Awards, Stock Units or Other Stock-Based Awards are
    forfeited or terminated, or otherwise are not paid in full, the
    shares reserved for such Grants shall again be available for
    purposes of the Plan.

    

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    (c) Grants.  All Grants under the Plan
    shall be expressed in shares of Company Stock. All cash payments
    shall equal the Fair Market Value of the shares of Company Stock
    to which the cash payments relate.

 

    (d) Adjustments.  If there is any change
    in the number or kind of shares of Company Stock outstanding
    (i) by reason of a stock dividend, spinoff,
    recapitalization, stock split, or combination or exchange of
    shares, (ii) by reason of a merger, reorganization or
    consolidation, (iii) by reason of a reclassification or
    change in par value, or (iv) by reason of any other
    extraordinary or unusual event affecting the outstanding Company
    Stock as a class without the Company’s receipt of
    consideration, or if the value of outstanding shares of Company
    Stock is substantially reduced as a result of a spinoff or the
    Company’s payment of an extraordinary dividend or
    distribution, the maximum number of shares of Company Stock
    available for issuance under the Plan, the maximum number of
    shares of Company Stock for which any individual may receive
    Grants in any year, the number of shares covered by outstanding
    Grants, the kind of shares issued and to be issued under the
    Plan, and the price per share or the applicable market value of
    such Grants may be appropriately adjusted by the Committee to
    reflect any increase or decrease in the number of, or change in
    the kind or value of, issued shares of Company Stock to
    preclude, to the extent practicable, the enlargement or dilution
    of rights and benefits under such Grants; provided, however,
    that any fractional shares resulting from such adjustment shall
    be eliminated. Any adjustments determined by the Committee shall
    be final, binding and conclusive. To the extent that any Grant
    is subject to section 409A of the Code, or becomes subject
    to section 409A of the Code as a result of any adjustment
    made hereunder, such adjustment shall be made in compliance with
    section 409A of the Code.

 

		
	
    6.  
	
    Eligibility
    for Participation

 

    (a) Eligible Persons.  All Employees,
    Consultants and Non-Employee Directors shall be eligible to
    participate in the Plan.

 

    (b) Selection of Participants.  The
    Committee shall select the Employees, Consultants and
    Non-Employee Directors to receive Grants and shall determine the
    number of shares of Company Stock subject to each Grant.

 

		
	
    7.  
	
    Options

 

    (a) General Requirements.  The Committee
    may grant Options to an Employee, Consultant or Non-Employee
    Director upon such terms and conditions as the Committee deems
    appropriate under this Section 7. The Committee shall
    determine the number of shares of Company Stock that will be
    subject to each Grant of Options to Employees, Consultants and
    Non-Employee Directors.

 

    (b) Type of Option, Price and Term

 

    (i) The Committee may grant Incentive Stock Options or
    Nonqualified Stock Options or any combination of the two, all in
    accordance with the terms and conditions set forth herein.
    Incentive Stock Options may be granted only to Employees of the
    Company or its parents or subsidiaries, as defined in section
    424 of the Code. Nonqualified Stock Options may be granted to
    Employees, Consultants or Non-Employee Directors.

 

    (ii) The Exercise Price of Company Stock subject to an
    Option shall be determined by the Committee; provided however,
    that the Exercise Price for an Incentive Stock Option will be
    equal to, or greater than, the Fair Market Value of a share of
    Company Stock on the date the incentive option is granted and
    further provided  that an Incentive Stock Option may not be
    granted to an Employee who, at the time of grant, owns stock
    possessing more than 10% of the total combined voting power of
    all classes of stock of the Company or any parent or subsidiary,
    as defined in section 424 of the Code, unless the Exercise
    Price per share is not less than 110% of the Fair Market Value
    of the Company Stock on the date of grant.

 

    (iii) The Committee shall determine the term of each
    Option, which shall not exceed ten years from the date of grant.
    However, an Incentive Stock Option that is granted to an
    Employee who, at the time of

    

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    grant, owns stock possessing more than 10% of the total combined
    voting power of all classes of stock of the Company or any
    parent or subsidiary, as defined in section 424 of the
    Code, may not have a term that exceeds five years from the date
    of grant.

 

    (c) Exercisability of Options.

 

    (i) Options shall become exercisable in accordance with
    such terms and conditions as may be determined by the Committee
    and specified in the Grant Agreement. The Committee may
    accelerate the exercisability of any or all outstanding Options
    at any time for any reason.

 

    (ii) The Committee may provide in a Grant Agreement that
    the Participant may elect to exercise part or all of an Option
    before it otherwise has become exercisable. Any shares so
    purchased shall be restricted shares and shall be subject to a
    repurchase right in favor of the Company during a specified
    restriction period, with the repurchase price equal to the
    lesser of (A) the Exercise Price or (B) the Fair
    Market Value of such shares at the time of repurchase, or such
    other restrictions as the Committee deems appropriate.
    Notwithstanding the foregoing, to the extent that an Option
    would otherwise be exempt from section 409A of the Code,
    the Committee may only include such a provision in a Grant
    Agreement for such an Option if the inclusion of such a
    provision will not cause that Option to become subject to
    section 409A of the Code.

 

    (iii) Options granted to persons who are non-exempt
    employees under the Fair Labor Standards Act of 1938, as
    amended, may not be exercisable for at least six months after
    the date of grant (except that such Options may become
    exercisable, as determined by the Committee, upon the
    Participant’s death, Disability or retirement, or upon a
    Change of Control or other circumstances permitted by applicable
    regulations).

 

    (d) Termination of Employment or
    Service.  Upon termination of employment or the
    services of a Participant, an Option may only be exercised as
    follows:

 

    (i) In the event that a Participant ceases to be employed
    by, or provide service to, the Employer for any reason other
    than Disability, death, or termination for Cause, any Option
    which is otherwise exercisable by the Participant shall
    terminate unless exercised within three months after the date on
    which the Participant ceases to be employed by, or provide
    service to, the Employer (or within such other period of time as
    may be specified by the Committee), but in any event no later
    than the date of expiration of the Option term. Except as
    otherwise provided by the Committee, any of the
    Participant’s Options that are not otherwise exercisable as
    of the date on which the Participant ceases to be employed by,
    or provide service to, the Employer shall terminate as of such
    date.

 

    (ii) In the event the Participant ceases to be employed by,
    or provide service to, the Employer on account of a termination
    for Cause by the Employer, any Option held by the Participant
    shall terminate as of the date the Participant ceases to be
    employed by, or provide service to, the Employer. In addition,
    notwithstanding any other provisions of this Section 7, if
    the Committee determines that the Participant has engaged in
    conduct that constitutes Cause at any time while the Participant
    is employed by, or providing service to, the Employer or after
    the Participant’s termination of employment or service, any
    Option held by the Participant shall immediately terminate and
    the Participant shall automatically forfeit all shares
    underlying any exercised portion of an Option for which the
    Company has not yet delivered the share certificates, upon
    refund by the Company of the Exercise Price paid by the
    Participant for such shares. Upon any exercise of an Option, the
    Company may withhold delivery of share certificates pending
    resolution of an inquiry that could lead to a finding resulting
    in a forfeiture.

 

    (iii) In the event the Participant ceases to be employed
    by, or provide service to, the Employer on account of the
    Participant’s Disability, any Option which is otherwise
    exercisable by the Participant shall terminate unless exercised
    within one year after the date on which the Participant ceases
    to be employed by, or provide service to, the Employer (or
    within such other period of time as may be specified by the
    Committee), but in any event no later than the date of
    expiration of the Option term. Except as otherwise

    

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    provided by the Committee, any of the Participant’s Options
    which are not otherwise exercisable as of the date on which the
    Participant ceases to be employed by, or provide service to, the
    Employer shall terminate as of such date.

 

    (iv) If the Participant dies while employed by, or
    providing service to, the Employer or while an Option remains
    outstanding under Section 7(d)(i) or 7(d)(iii) above (or
    within such other period of time as may be specified by the
    Committee), any Option that is otherwise exercisable by the
    Participant shall terminate unless exercised within one year
    after the date on which the Participant ceases to be employed
    by, or provide service to, the Employer (or within such other
    period of time as may be specified by the Committee), but in any
    event no later than the date of expiration of the Option term.
    Except as otherwise provided by the Committee, any of the
    Participant’s Options that are not otherwise exercisable as
    of the date on which the Participant ceases to be employed by,
    or provide service to, the Employer shall terminate as of such
    date.

 

    (e) Exercise of Options.  A Participant
    may exercise an Option that has become exercisable, in whole or
    in part, by delivering a notice of exercise to the Company. The
    Participant shall pay the Exercise Price for the Option
    (i) in cash, (ii) if permitted by the Committee, by
    delivering shares of Company Stock owned by the Participant and
    having a Fair Market Value on the date of exercise equal to the
    Exercise Price or by attestation to ownership of shares of
    Company Stock having an aggregate Fair Market Value on the date
    of exercise equal to the Exercise Price, (iii) by payment
    through a broker in accordance with procedures permitted by
    Regulation T of the Federal Reserve Board, or (iv) by
    such other method as the Committee may approve. Shares of
    Company Stock used to exercise an Option shall have been held by
    the Participant for the requisite period of time to avoid
    adverse accounting consequences to the Company with respect to
    the Option. Payment for the shares pursuant to the Option, and
    any required withholding taxes, must be received by the time
    specified by the Committee depending on the type of payment
    being made, but in all cases prior to the issuance of the
    Company Stock.

 

    (f) Limits on Incentive Stock
    Options.  Each Incentive Stock Option shall
    provide that, if the aggregate Fair Market Value of the stock on
    the date of the grant with respect to which Incentive Stock
    Options are exercisable for the first time by a Participant
    during any calendar year, under the Plan or any other stock
    option plan of the Company or a parent or subsidiary, as defined
    in section 424 of the Code, exceeds $100,000, then the
    Option, as to the excess, shall be treated as a Nonqualified
    Stock Option. An Incentive Stock Option shall not be granted to
    any person who is not an Employee of the Company or a parent or
    subsidiary, as defined in section 424 of the Code.

 

		
	
    8.  
	
    Stock
    Units

 

    (a) General Requirements.  The Committee
    may grant Stock Units to an Employee, Consultant or Non-Employee
    Director, upon such terms and conditions as the Committee deems
    appropriate under this Section 8. Each Stock Unit shall
    represent the right of the Participant to receive a share of
    Company Stock or an amount based on the value of a share of
    Company Stock. All Stock Units shall be credited to bookkeeping
    accounts on the Company’s records for purposes of the Plan.

 

    (b) Terms of Stock Units.  The Committee
    may grant Stock Units that are payable on terms and conditions
    determined by the Committee, which may include payment based on
    achievement of performance goals. Stock Units may be paid at the
    end of a specified vesting or performance period, or payment may
    be deferred to a date authorized by the Committee. The Committee
    shall determine the number of Stock Units to be granted and the
    requirements applicable to such Stock Units.

 

    (c) Payment With Respect to Stock
    Units.  Payment with respect to Stock Units shall
    be made in cash, in Company Stock, or in a combination of the
    two, as determined by the Committee. The Grant Agreement shall
    specify the maximum number of shares that can be issued under
    the Stock Units.

 

    (d) Requirement of Employment or
    Service.  The Committee shall determine in the
    Grant Agreement under what circumstances a Participant may
    retain Stock Units after termination of the Participant’s
    employment or service, and the circumstances under which Stock
    Units may be forfeited.

    

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    9.  
	
    Stock
    Awards

 

    (a) General Requirements.  The Committee
    may issue shares of Company Stock to an Employee, Consultant or
    Non-Employee Director under a Stock Award, upon such terms and
    conditions as the Committee deems appropriate under this
    Section 9. Shares of Company Stock issued pursuant to Stock
    Awards may be issued for cash consideration or for no cash
    consideration, and subject to restrictions or no restrictions,
    as determined by the Committee. The Committee may establish
    conditions under which restrictions on Stock Awards shall lapse
    over a period of time or according to such other criteria as the
    Committee deems appropriate, including restrictions based upon
    the achievement of specific performance goals. The Committee
    shall determine the number of shares of Company Stock to be
    issued pursuant to a Stock Award.

 

    (b) Requirement of Employment or
    Service.  The Committee shall determine in the
    Grant Agreement under what circumstances a Participant may
    retain Stock Awards after termination of the Participant’s
    employment or service, and the circumstances under which Stock
    Awards may be forfeited.

 

    (c) Restrictions on Transfer.  While Stock
    Awards are subject to restrictions, a Participant may not sell,
    assign, transfer, pledge or otherwise dispose of the shares of a
    Stock Award except upon death as described in
    Section 14(a). Each certificate for a share of a Stock
    Award shall contain a legend giving appropriate notice of the
    restrictions in the Grant. The Participant shall be entitled to
    have the legend removed when all restrictions on such shares
    have lapsed. The Company may retain possession of any
    certificates for Stock Awards until all restrictions on such
    shares have lapsed.

 

    (d) Right to Vote and to Receive
    Dividends.  The Committee shall determine to what
    extent, and under what conditions, the Participant shall have
    the right to vote shares of Stock Awards and to receive any
    dividends or other distributions paid on such shares during the
    restriction period.

 

		
	
    10.  
	
    Stock
    Appreciation Rights and Other Stock-Based Awards

 

    (a) The Committee may grant SARs to an Employee,
    Non-Employee Director or Consultant separately or in tandem with
    an Option. The following provisions are applicable to SARs:

 

    (i) Base Amount.  The Committee shall
    establish the base amount of the SAR at the time the SAR is
    granted. The base amount of each SAR shall be equal to the per
    share Exercise Price of the related Option or, if there is no
    related Option, an amount that is at least equal to the Fair
    Market Value of a share of Company Stock as of the date of Grant
    of the SAR.

 

    (ii) Tandem SARs.  The Committee may grant
    tandem SARs either at the time the Option is granted or at any
    time thereafter while the Option remains outstanding; provided,
    however, that, in the case of an Incentive Stock Option, SARs
    may be granted only at the date of the grant of the Incentive
    Stock Option. In the case of tandem SARs, the number of SARs
    granted to a Participant that shall be exercisable during a
    specified period shall not exceed the number of shares of
    Company Stock that the Participant may purchase upon the
    exercise of the related Option during such period. Upon the
    exercise of an Option, the SARs relating to the Company Stock
    covered by such Option shall terminate. Upon the exercise of
    SARs, the related Option shall terminate to the extent of an
    equal number of shares of Company Stock.

 

    (iii) Exercisability.  An SAR shall be
    exercisable during the period specified by the Committee in the
    Grant Agreement and shall be subject to such vesting and other
    restrictions as may be specified in the Grant Agreement. The
    Committee may grant SARs that are subject to achievement of
    performance goals or other conditions. The Committee may
    accelerate the exercisability of any or all outstanding SARs at
    any time for any reason. SARs may only be exercised while the
    Participant is employed by, or providing service to, the
    Employer or during the applicable period after termination of
    employment or service as described in Section 7(d). A
    tandem SAR shall be exercisable only during the period when the
    Option to which it is related is also exercisable.

 

    (iv) Grants to Non-Exempt Employees.  SARs
    granted to persons who are non-exempt employees under the Fair
    Labor Standards Act of 1938, as amended, may not be exercisable
    for at least six months after the date of grant (except that
    such SARs may become exercisable, as determined by the
    Committee,

    

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    upon the Participant’s death, Disability or retirement, or
    upon a Change of Control or other circumstances permitted by
    applicable regulations).

 

    (v) Value of SARs.  When a Participant
    exercises SARs, the Participant shall receive in settlement of
    such SARs an amount equal to the value of the stock appreciation
    for the number of SARs exercised. The stock appreciation for an
    SAR is the amount by which the Fair Market Value of the
    underlying Company Stock on the date of exercise of the SAR
    exceeds the base amount of the SAR as described in subsection
    (i).

 

    (vi) Form of Payment.  The Committee shall
    determine whether the stock appreciation for an SAR shall be
    paid in the form of shares of Company Stock, cash or a
    combination of the two. For purposes of calculating the number
    of shares of Company Stock to be received, shares of Company
    Stock shall be valued at their Fair Market Value on the date of
    exercise of the SAR. If shares of Company Stock are to be
    received upon exercise of an SAR, cash shall be delivered in
    lieu of any fractional share.

 

    (b) Other Stock-Based Awards.  The
    Committee may grant other awards not specified in
    Sections 7, 8 or 9 above that are based on or measured by
    Company Stock to Employees, Consultants and Non-Employee
    Directors, on such terms and conditions as the Committee deems
    appropriate. Other Stock-Based Awards may be granted subject to
    achievement of performance goals or other conditions and may be
    payable in Company Stock or cash, or in a combination of the
    two, as determined by the Committee in the Grant Agreement.

 

    11. Qualified
    Performance-Based Compensation

 

    (a) Designation as Qualified Performance-Based
    Compensation.  The Committee may determine that
    Stock Units, Stock Awards, SARs or Other Stock-Based Awards
    granted to an Employee shall be considered “qualified
    performance-based compensation” under section 162(m)
    of the Code, in which case the provisions of this
    Section 11 shall apply to such Grants. The Committee may
    also grant Options under which the exercisability of the Options
    is subject to achievement of performance goals as described in
    this Section 11 or otherwise.

 

    (b) Performance Goals.  When Grants are
    made under this Section 11, the Committee shall establish
    in writing (i) the objective performance goals that must be
    met, (ii) the period during which performance will be
    measured, (iii) the maximum amounts that may be paid if the
    performance goals are met, and (iv) any other conditions
    that the Committee deems appropriate and consistent with the
    requirements of section 162(m) of the Code for
    “qualified performance-based compensation.” The
    performance goals shall satisfy the requirements for
    “qualified performance-based compensation,” including
    the requirement that the achievement of the goals be
    substantially uncertain at the time they are established and
    that the performance goals be established in such a way that a
    third party with knowledge of the relevant facts could determine
    whether and to what extent the performance goals have been met.
    The Committee shall not have discretion to increase the amount
    of compensation that is payable, but may reduce the amount of
    compensation that is payable, pursuant to Grants identified by
    the Committee as “qualified performance-based
    compensation.”

 

    (c) Criteria Used for Objective Performance
    Goals.  The Committee shall use objectively
    determinable performance goals based on one or more of the
    following criteria: stock price, earnings per share,
    price-earnings multiples, gross profit, net earnings, operating
    earnings, revenue, revenue growth, number of days sales
    outstanding in accounts receivable, number of days of cost of
    sales in inventory, productivity, margin, EBITDA (earnings
    before interest, taxes, depreciation and amortization), net
    capital employed, return on assets, shareholder return, return
    on equity, return on capital employed, growth in assets, unit
    volume, sales, cash flow, market share, relative performance to
    a comparison group designated by the Committee, debt reduction,
    market capitalization or strategic business criteria consisting
    of one or more objectives based on meeting specified R&D
    programs, new product releases, revenue goals, market
    penetration goals, customer growth, geographic business
    expansion goals, cost targets, quality improvements, cycle time
    reductions, manufacturing improvements
    and/or
    efficiencies, human resource programs, customer programs, goals
    relating to acquisitions or divestitures or goals relating to
    FDA or other regulatory approvals. The performance goals may
    relate to one or more business units or the performance of the
    Company as a whole, or any combination of the foregoing.
    Performance goals need not be uniform as among Participants.
    Performance goals may be set

    

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    on a pre tax or after tax basis, may be defined by absolute or
    relative measures, and may be valued on a growth or fixed basis.

 

    (d) Timing of Establishment of Goals.  The
    Committee shall establish the performance goals in writing
    either before the beginning of the performance period or during
    a period ending no later than the earlier of
    (i) 90 days after the beginning of the performance
    period or (ii) the date on which 25% of the performance
    period has been completed, or such other date as may be required
    or permitted under applicable regulations under
    section 162(m) of the Code.

 

    (e) Certification of Results.  The
    Committee shall certify the performance results for the
    performance period specified in the Grant Agreement after the
    performance period ends. The Committee shall determine the
    amount, if any, to be paid pursuant to each Grant based on the
    achievement of the performance goals and the satisfaction of all
    other terms of the Grant Agreement.

 

    (f) Death, Disability or Other
    Circumstances.  The Committee may provide in the
    Grant Agreement that Grants under this Section 11 shall be
    payable, in whole or in part, in the event of the
    Participant’s death or Disability, a Change of Control or
    under other circumstances consistent with the Treasury
    regulations and rulings under section 162(m) of the Code.

 

		
	
    12.  
	
    Deferrals

 

    The Committee may permit or require a Participant to defer
    receipt of the payment of cash or the delivery of shares that
    would otherwise be due to the Participant in connection with any
    Grant. The Committee shall establish rules and procedures for
    any such deferrals, consistent with applicable requirements of
    section 409A of the Code.

 

		
	
    13.  
	
    Withholding
    of Taxes

 

    (a) Required Withholding.  All Grants
    under the Plan shall be subject to applicable federal (including
    FICA), state and local tax withholding requirements. The Company
    may require that the Participant or other person receiving or
    exercising Grants pay to the Company the amount of any federal,
    state or local taxes that the Company is required to withhold
    with respect to such Grants, or the Company may deduct from
    other wages paid by the Company the amount of any withholding
    taxes due with respect to such Grants.

 

    (b) Election to Withhold Shares.  If the
    Committee so permits, a Participant may elect to satisfy the
    Company’s tax withholding obligation with respect to Grants
    paid in Company Stock by having shares withheld, at the time
    such Grants become taxable, up to an amount that does not exceed
    the minimum applicable withholding tax rate for federal
    (including FICA), state and local tax liabilities. The election
    must be in a form and manner prescribed by the Committee.

 

		
	
    14.  
	
    Transferability
    of Grants

 

    (a) Restrictions on Transfer.  Except as
    described in subsection (b) below, only the Participant may
    exercise rights under a Grant during the Participant’s
    lifetime, and a Participant may not transfer those rights except
    by will or by the laws of descent and distribution. When a
    Participant dies, the personal representative or other person
    entitled to succeed to the rights of the Participant may
    exercise such rights. Any such successor must furnish proof
    satisfactory to the Company of his or her right to receive the
    Grant under the Participant’s will or under the applicable
    laws of descent and distribution.

 

    (b) Transfer of Nonqualified Stock Options to or for
    Family Members.  Notwithstanding the foregoing,
    the Committee may provide, in a Grant Agreement, that a
    Participant may transfer Nonqualified Stock Options to family
    members, or one or more trusts or other entities for the benefit
    of or owned by family members, consistent with the applicable
    securities laws, according to such terms as the Committee may
    determine; provided that the Participant receives no
    consideration for the transfer of an Option and the transferred
    Option shall continue to be subject to the same terms and
    conditions as were applicable to the Option immediately before
    the transfer.

    

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    15.  
	
    Consequences
    of a Change of Control

 

    In the event of a Change of Control, the Committee may take any
    one or more of the following actions with respect to any or all
    outstanding Grants, without the consent of any Participant:
    (i) the Committee may determine that outstanding Options
    and SARs shall be fully exercisable, and restrictions on
    outstanding Stock Awards and Stock Units shall lapse, as of the
    date of the Change of Control or at such other time or subject
    to specific conditions as the Committee determines,
    (ii) the Committee may require that Participants surrender
    their outstanding Options and SARs in exchange for one or more
    payments by the Company, in cash or Company Stock as determined
    by the Committee, in an amount equal to the amount by which the
    then Fair Market Value of the shares of Company Stock subject to
    the Participant’s unexercised Options and SARs exceeds the
    Exercise Price, if any, and on such terms as the Committee
    determines, (iii) after giving Participants an opportunity
    to exercise their outstanding Options and SARs, the Committee
    may terminate any or all unexercised Options and SARs at such
    time as the Committee deems appropriate, (iv) with respect
    to Participants holding Stock Units or Other Stock-Based Awards,
    the Committee may determine that such Participants shall receive
    one or more payments in settlement of such Stock Units or Other
    Stock-Based Awards, in such amount and form and on such terms as
    may be determined by the Committee, or (v) the Committee
    may determine that Grants that remain outstanding after the
    Change of Control shall be converted to similar grants of the
    surviving corporation (or a parent or subsidiary of the
    surviving corporation). Such acceleration, surrender,
    termination, settlement or assumption shall take place as of the
    date of the Change of Control or such other date as the
    Committee may specify. Notwithstanding the foregoing, to the
    extent required to comply with section 409A of the Code, a
    Grant Agreement will include a definition of “Change of
    Control” that complies with and falls within the definition
    of “change in control event” set forth in
    section 409A of the Code and any Internal Revenue Service
    regulations or other guidance issued thereunder.

 

		
	
    16.  
	
    Requirements
    for Issuance of Shares

 

    No Company Stock shall be issued in connection with any Grant
    hereunder unless and until all legal requirements applicable to
    the issuance of such Company Stock have been complied with to
    the satisfaction of the Committee. The Committee shall have the
    right to condition any Grant made to any Participant hereunder
    on such Participant’s undertaking in writing to comply with
    such restrictions on his or her subsequent disposition of such
    shares of Company Stock as the Committee shall deem necessary or
    advisable, and certificates representing such shares may be
    legended to reflect any such restrictions. Certificates
    representing shares of Company Stock issued under the Plan will
    be subject to such stop-transfer orders and other restrictions
    as may be required by applicable laws, regulations and
    interpretations, including any requirement that a legend be
    placed thereon. No Participant shall have any right as a
    shareholder with respect to Company Stock covered by a Grant
    until shares have been issued to the Participant.

 

		
	
    17.  
	
    Amendment
    and Termination of the Plan

 

    (a) Amendment.  The Board may amend or
    terminate the Plan at any time; provided, however, that the
    Board shall not amend the Plan without approval of the
    shareholders of the Company if such approval is required in
    order to comply with the Code or applicable laws, or to comply
    with applicable stock exchange requirements. No amendment or
    termination of this Plan shall, without the consent of the
    Participant, materially impair any rights or obligations under
    any Grant previously made to the Participant under the Plan,
    unless such right has been reserved in the Plan or the Grant
    Agreement, or except as provided in Section 18(b) below.
    Notwithstanding anything in the Plan to the contrary, the Board
    may amend the Plan in such manner as it deems appropriate in the
    event of a change in applicable law or regulations.

 

    (b) Shareholder Approval for “Qualified
    Performance-Based Compensation.”  If Grants
    are made under Section 11 above, the Plan must be
    reapproved by the Company’s shareholders no later than the
    first shareholders meeting that occurs in the fifth year
    following the year in which the shareholders previously approved
    the provisions of Section 11, if additional Grants are to
    be made under Section 11 and if required by
    section 162(m) of the Code or the regulations thereunder.

    

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Table of Contents

    (c) Termination of Plan.  The Plan shall
    terminate on the day immediately preceding the tenth anniversary
    of its Effective Date, unless the Plan is terminated earlier by
    the Board or is extended by the Board with the approval of the
    shareholders. The termination of the Plan shall not impair the
    power and authority of the Committee with respect to an
    outstanding Grant.

 

		
	
    18.  
	
    Miscellaneous

 

    (a) Grants in Connection with Corporate Transactions and
    Otherwise.  Nothing contained in this Plan shall
    be construed to (i) limit the right of the Committee to
    make Grants under this Plan in connection with the acquisition,
    by purchase, lease, merger, consolidation or otherwise, of the
    business or assets of any corporation, firm or association,
    including Grants to employees thereof who become Employees, or
    for other proper corporate purposes, or (ii) limit the
    right of the Company to grant stock options or make other
    stock-based awards outside of this Plan. Without limiting the
    foregoing, the Committee may make a Grant to an employee of
    another corporation who becomes an Employee by reason of a
    corporate merger, consolidation, acquisition of stock or
    property, reorganization or liquidation involving the Company in
    substitution for a grant made by such corporation. The terms and
    conditions of the Grants may vary from the terms and conditions
    required by the Plan and from those of the substituted stock
    incentives, as determined by the Committee

 

    (b) Compliance with Law.  The Plan, the
    exercise of Options and the obligations of the Company to issue
    or transfer shares of Company Stock under Grants shall be
    subject to all applicable laws and to approvals by any
    governmental or regulatory agency as may be required. With
    respect to persons subject to section 16 of the Exchange
    Act, it is the intent of the Company that the Plan and all
    transactions under the Plan comply with all applicable
    provisions of
    Rule 16b-3
    or its successors under the Exchange Act. In addition, it is the
    intent of the Company that Incentive Stock Options comply with
    the applicable provisions of section 422 of the Code, that
    Grants of “qualified performance-based compensation”
    comply with the applicable provisions of section 162(m) of
    the Code and that, to the extent applicable, Grants comply with
    the requirements of section 409A of the Code. To the extent
    that any legal requirement of section 16 of the Exchange
    Act or section 422, 162(m) or 409A of the Code as set forth
    in the Plan ceases to be required under section 16 of the
    Exchange Act or section 422, 162(m) or 409A of the Code,
    that Plan provision shall cease to apply. The Committee may
    revoke any Grant if it is contrary to law or modify a Grant to
    bring it into compliance with any valid and mandatory government
    regulation. The Committee may also adopt rules regarding the
    withholding of taxes on payments to Participants. The Committee
    may, in its sole discretion, agree to limit its authority under
    this Section.

 

    (c) Enforceability.  The Plan shall be
    binding upon and enforceable against the Company and its
    successors and assigns.

 

    (d) Funding of the Plan; Limitation on
    Rights.  This Plan shall be unfunded. The Company
    shall not be required to establish any special or separate fund
    or to make any other segregation of assets to assure the payment
    of any Grants under this Plan. Nothing contained in the Plan and
    no action taken pursuant hereto shall create or be construed to
    create a fiduciary relationship between the Company and any
    Participant or any other person. No Participant or any other
    person shall under any circumstances acquire any property
    interest in any specific assets of the Company. To the extent
    that any person acquires a right to receive payment from the
    Company hereunder, such right shall be no greater than the right
    of any unsecured general creditor of the Company.

 

    (e) Rights of Participants.  Nothing in
    this Plan shall entitle any Employee, Non-Employee Director or
    other person to any claim or right to receive a Grant under this
    Plan. Neither this Plan nor any action taken hereunder shall be
    construed as giving any individual any rights to be retained by
    or in the employment or service of the Employer.

    

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    (f) No Fractional Shares.  No fractional
    shares of Company Stock shall be issued or delivered pursuant to
    the Plan or any Grant. The Committee shall determine whether
    cash, other awards or other property shall be issued or paid in
    lieu of such fractional shares or whether such fractional shares
    or any rights thereto shall be forfeited or otherwise eliminated.

 

    (g) Employees Subject to Taxation Outside the United
    States.  With respect to Participants who are
    subject to taxation in countries other than the United States,
    the Committee may make Grants on such terms and conditions as
    the Committee deems appropriate to comply with the laws of the
    applicable countries, and the Committee may create such
    procedures, addenda and subplans and make such modifications as
    may be necessary or advisable to comply with such laws.

 

    (h) Governing Law.  The validity,
    construction, interpretation and effect of the Plan and Grant
    Agreements issued under the Plan shall be governed and construed
    by and determined in accordance with the laws of the State of
    Delaware, without giving effect to the conflict of laws
    provisions thereof.

    

    B-14

Table of Contents

 

    FORM OF
    INCENTIVE OPTION GRANTS

 

    CONVERTED
    ORGANICS INC.

    2010 OMNIBUS STOCK COMPENSATION
    PLAN

    

    INCENTIVE
    STOCK OPTION GRANT

 

    This STOCK OPTION GRANT, dated as
    of          ,
    (the “Date of Grant”), is delivered by Converted
    Organics Inc. (the “Company”)
    to          
    (the “Grantee”).

 

    RECITALS

 

    The Converted Organics Inc. 2010 Omnibus Stock Compensation Plan
    (the “Plan”) provides for the grant of options to
    purchase shares of common stock of the Company. The Compensation
    Committee of the Committee of Directors of the Company, or if no
    such entity exists, the entire Board of Directors (the
    “Committee”) has decided to make a stock option grant
    as an inducement for the Grantee to promote the best interests
    of the Company and its shareholders.

 

    NOW, THEREFORE, the parties to this Agreement, intending to be
    legally bound hereby, agree as follows:

 

    1.  Grant of Option.

 

    (a) Subject to the terms and conditions set forth in this
    Agreement and in the Plan, the Company hereby grants to the
    Grantee an incentive stock option (the “Option”) to
    purchase           shares
    of common stock of the Company (“Shares”) at an
    exercise price of $      per Share. The
    Option shall become exercisable according to Paragraph 2
    below.

 

    (b) The Option is designated as an incentive stock option,
    as described in Paragraph 5 below. However, if and to the
    extent the Option exceeds the limits for an incentive stock
    option, as described in Paragraph 5, the Option shall be a
    nonqualified stock option.

 

    2.  Exercisability of
    Option.  The Option shall become exercisable
    on the following dates, if the Grantee is employed by, or
    providing service to, the Employer (as defined in the Plan) on
    the applicable date:

 

	 	 	 
	

    Date

	
 
	
    Shares for Which the Option is Exercisable

	 

 

    The exercisability of the Option is cumulative, but shall not
    exceed 100% of the Shares subject to the Option. If the
    foregoing schedule would produce fractional Shares, the number
    of Shares for which the Option becomes exercisable shall be
    rounded down to the nearest whole Share.

 

    3.  Term of Option.

 

    (a) The Option shall have a term
    of          
    years from the Date of Grant and shall terminate at the
    expiration of that period, unless it is terminated at an earlier
    date pursuant to the provisions of this Agreement or the Plan.

    

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    (b) The Option shall automatically terminate upon the
    happening of the first of the following events:

 

    (i) The expiration of the three-month period after the
    Grantee ceases to be employed by, or provide service to, the
    Employer, if the termination is for any reason other than
    Disability (as defined in the Plan), death or Cause (as defined
    in the Plan).

 

    (ii) The expiration of the one-year period after the
    Grantee ceases to be employed by, or provide service to, the
    Employer on account of the Grantee’s Disability.

 

    (iii) The expiration of the one-year period after the
    Grantee ceases to be employed by, or provide service to, the
    Employer, if the Grantee dies while employed by, or providing
    service to, the Employer or while the Option remains outstanding
    as described in subparagraph (i) or (ii) above.

 

    (iv) The date on which the Grantee ceases to be employed
    by, or provide service to, the Employer for Cause. In addition,
    notwithstanding the prior provisions of this Paragraph 3,
    if the Grantee engages in conduct that constitutes Cause after
    the Grantee’s employment or service terminates, the Option
    shall immediately terminate.

 

    Notwithstanding the foregoing, in no event may the Option be
    exercised after the date that is immediately before
    the          
    anniversary of the Date of Grant. Any portion of the Option that
    is not exercisable at the time the Grantee ceases to be employed
    by, or provide service to, the Employer shall immediately
    terminate.

 

    4.  Exercise Procedures.

 

    (a) Subject to the provisions of Paragraphs 2 and 3
    above, the Grantee may exercise part or all of the exercisable
    Option by giving the Company written notice of intent to
    exercise in the manner provided in this Agreement, specifying
    the number of Shares as to which the Option is to be exercised
    and the method of payment. Payment of the exercise price shall
    be made in accordance with procedures established by the
    Committee from time to time based on type of payment being made
    but, in any event, prior to issuance of the Shares. The Grantee
    shall pay the exercise price (i) in cash, (ii) with
    the approval of the Committee, by delivering Shares of the
    Company, which shall be valued at their fair market value on the
    date of delivery, or by attestation (on a form prescribed by the
    Committee) to ownership of Shares having a fair market value on
    the date of exercise equal to the exercise price, (iii) by
    payment through a broker in accordance with procedures permitted
    by Regulation T of the Federal Reserve Board or
    (iv) by such other method as the Committee may approve. The
    Committee may impose from time to time such limitations as it
    deems appropriate on the use of Shares of the Company to
    exercise the Option.

 

    (b) The obligation of the Company to deliver Shares upon
    exercise of the Option shall be subject to all applicable laws,
    rules, and regulations and such approvals by governmental
    agencies as may be deemed appropriate by the Committee,
    including such actions as Company counsel shall deem necessary
    or appropriate to comply with relevant securities laws and
    regulations. The Company may require that the Grantee (or other
    person exercising the Option after the Grantee’s death)
    represent that the Grantee is purchasing Shares for the
    Grantee’s own account and not with a view to or for sale in
    connection with any distribution of the Shares, or such other
    representation as the Committee deems appropriate.

 

    (c) All obligations of the Company under this Agreement
    shall be subject to the rights of the Company as set forth in
    the Plan to withhold amounts required to be withheld for any
    taxes, if applicable. Subject to Committee approval, the Grantee
    may elect to satisfy any tax withholding obligation of the
    Employer with respect to the Option by having Shares withheld up
    to an amount that does not exceed the minimum applicable
    withholding tax rate for federal (including FICA), state and
    local tax liabilities.

 

    5.  Designation as Incentive Stock
    Option.

 

    (a) This Option is designated an incentive stock option
    under Section 422 of the Internal Revenue Code of 1986, as
    amended (the “Code”). If the aggregate fair market
    value of the stock on the date of the grant with respect to
    which incentive stock options are exercisable for the first time
    by the Grantee during any calendar year, under the Plan or any
    other stock option plan of the Company or a parent or
    subsidiary, exceeds $100,000, then the Option, as to the excess,
    shall be treated as a nonqualified stock option that does not
    meet

    

    B-16

Table of Contents

    the requirements of Section 422. If and to the extent that
    the Option fails to qualify as an incentive stock option under
    the Code, the Option shall remain outstanding according to its
    terms as a nonqualified stock option.

 

    (b) The Grantee understands that favorable incentive stock
    option tax treatment is available only if the Option is
    exercised while the Grantee is an employee of the Company or a
    parent or subsidiary of the Company or within a period of time
    specified in the Code after the Grantee ceases to be an
    employee. The Grantee understands that the Grantee is
    responsible for the income tax consequences of the Option, and,
    among other tax consequences, the Grantee understands that he or
    she may be subject to the alternative minimum tax under the Code
    in the year in which the Option is exercised. The Grantee will
    consult with his or her tax adviser regarding the tax
    consequences of the Option.

 

    (c) The Grantee agrees that the Grantee shall immediately
    notify the Company in writing if the Grantee sells or otherwise
    disposes of any Shares acquired upon the exercise of the Option
    and such sale or other disposition occurs on or before the later
    of (i) two years after the Date of Grant or (ii) one
    year after the exercise of the Option. The Grantee also agrees
    to provide the Company with any information requested by the
    Company with respect to such sale or other disposition.

 

    6.  Change of Control.  The
    provisions of the Plan applicable to a Change of Control shall
    apply to the Option, and, in the event of a Change of Control,
    the Committee may take such actions as it deems appropriate
    pursuant to the Plan.

 

    7.  Restrictions on
    Exercise.  Only the Grantee may exercise the
    Option during the Grantee’s lifetime. After the
    Grantee’s death, the Option shall be exercisable (subject
    to the limitations specified in the Plan) solely by the legal
    representatives of the Grantee, or by the person who acquires
    the right to exercise the Option by will or by the laws of
    descent and distribution, to the extent that the Option is
    exercisable pursuant to this Agreement.

 

    8.  Grant Subject to Plan
    Provisions.  This grant is made pursuant to
    the Plan, the terms of which are incorporated herein by
    reference, and in all respects shall be interpreted in
    accordance with the Plan. The grant and exercise of the Option
    are subject to interpretations, regulations and determinations
    concerning the Plan established from time to time by the
    Committee in accordance with the provisions of the Plan,
    including, but not limited to, provisions pertaining to
    (i) rights and obligations with respect to withholding
    taxes, (ii) the registration, qualification or listing of
    the Shares, (iii) changes in capitalization of the Company
    and (iv) other requirements of applicable law. The
    Committee shall have the authority to interpret and construe the
    Option pursuant to the terms of the Plan, and its decisions
    shall be conclusive as to any questions arising hereunder.

 

    9.  No Employment or Other
    Rights.  The grant of the Option shall not
    confer upon the Grantee any right to be retained by or in the
    employ or service of the Employer and shall not interfere in any
    way with the right of the Employer to terminate the
    Grantee’s employment or service at any time. The right of
    the Employer to terminate at will the Grantee’s employment
    or service at any time for any reason is specifically reserved.

 

    10.  No Shareholder
    Rights.  Neither the Grantee, nor any person
    entitled to exercise the Grantee’s rights in the event of
    the Grantee’s death, shall have any of the rights and
    privileges of a shareholder with respect to the Shares subject
    to the Option, until certificates for Shares have been issued
    upon the exercise of the Option.

 

    11.  Assignment and
    Transfers.  The rights and interests of the
    Grantee under this Agreement may not be sold, assigned,
    encumbered or otherwise transferred except, in the event of the
    death of the Grantee, by will or by the laws of descent and
    distribution. In the event of any attempt by the Grantee to
    alienate, assign, pledge, hypothecate, or otherwise dispose of
    the Option or any right hereunder, except as provided for in
    this Agreement, or in the event of the levy or any attachment,
    execution or similar process upon the rights or interests hereby
    conferred, the Company may terminate the Option by notice to the
    Grantee, and the Option and all rights hereunder shall thereupon
    become null and void. The rights and protections of the Company

    

    B-17

Table of Contents

    hereunder shall extend to any successors or assigns of the
    Company and to the Company’s parents, subsidiaries, and
    affiliates. This Agreement may be assigned by the Company
    without the Grantee’s consent.

 

    12.  Applicable Law.  The
    validity, construction, interpretation and effect of this
    instrument shall be governed by and construed in accordance with
    the laws of the State of Delaware, without giving effect to the
    conflicts of laws provisions thereof.

 

    13.  Notice.  Any notice to
    the Company provided for in this instrument shall be addressed
    to the Company at 137A Lewis Wharf, Boston, MA 02110 and any
    notice to the Grantee shall be addressed to such Grantee at the
    current address shown on the payroll of the Employer, or to such
    other address as the Grantee may designate to the Employer in
    writing. Any notice shall be delivered by hand, sent by telecopy
    or enclosed in a properly sealed envelope addressed as stated
    above, registered and deposited, postage prepaid, in a post
    office regularly maintained by the United States Postal Service.

 

    [REMAINDER
    OF PAGE INTENTIONALLY LEFT BLANK]
    

    

    B-18

Table of Contents

    IN WITNESS WHEREOF, the Company has caused its duly authorized
    officers to execute and attest this Agreement, and the Grantee
    has executed this Agreement, effective as of the Date of Grant.

 

    CONVERTED ORGANICS INC.

 

			
	 	    By: 
	
        

 

    I hereby accept the Option described in this Agreement, and I
    agree to be bound by the terms of the Plan and this Agreement. I
    hereby further agree that all the decisions and determinations
    of the Committee shall be final and binding.

 

    Grantee: ­
    ­

 

    Date: ­
    ­

    

    B-19

Table of Contents

 

    FORM OF
    NONQUALIFIED OPTION GRANTS

 

    CONVERTED
    ORGANICS INC.

    2010 OMNIBUS STOCK COMPENSATION
    PLAN

    

    NONQUALIFIED
    STOCK OPTION GRANT

 

    This STOCK OPTION GRANT, dated as
    of          
    (the “Date of Grant”), is delivered by Converted
    Organics Inc. (the “Company”)
    to          
    (the “Grantee”).

 

    RECITALS

 

    The Converted Organics Inc. 2010 Omnibus Stock Compensation Plan
    (the “Plan”) provides for the grant of options to
    purchase shares of common stock of the Company. The Compensation
    Committee of the Committee of Directors of the Company, or if no
    such entity exists, the entire Board of Directors (the
    “Committee”) has decided to make a stock option grant
    as an inducement for the Grantee to promote the best interests
    of the Company and its shareholders.

 

    NOW, THEREFORE, the parties to this Agreement, intending to be
    legally bound hereby, agree as follows:

 

    1.  Grant of Option.  Subject
    to the terms and conditions set forth in this Agreement and in
    the Plan, the Company hereby grants to the Grantee a
    nonqualified stock option (the “Option”) to
    purchase           shares
    of common stock of the Company (“Shares”) at an
    exercise price of $      per Share. The
    Option shall become exercisable according to Paragraph 2
    below.

 

    2.  Exercisability of
    Option.  The Option shall become exercisable
    on the following dates, if the Grantee is employed by, or
    providing service to, the Employer (as defined in the Plan) on
    the applicable date:

 

	 	 	 
	

    Date

	
 
	

    Shares for Which the Option is Exercisable

	 

 

    The exercisability of the Option is cumulative, but shall not
    exceed 100% of the Shares subject to the Option. If the
    foregoing schedule would produce fractional Shares, the number
    of Shares for which the Option becomes exercisable shall be
    rounded down to the nearest whole Share.

 

    3.  Term of Option.

 

    (a) The Option shall have a term
    of          
    years from the Date of Grant and shall terminate at the
    expiration of that period, unless it is terminated at an earlier
    date pursuant to the provisions of this Agreement or the Plan.

 

    (b) The Option shall automatically terminate upon the
    happening of the first of the following events:

 

    (i) The expiration of the three-month period after the
    Grantee ceases to be employed by, or provide service to, the
    Employer, if the termination is for any reason other than
    Disability (as defined in the Plan), death or Cause (as defined
    in the Plan).

 

    (ii) The expiration of the one-year period after the
    Grantee ceases to be employed by, or provide service to, the
    Employer on account of the Grantee’s Disability.

 

    (iii) The expiration of the one-year period after the
    Grantee ceases to be employed by, or provide service to, the
    Employer, if the Grantee dies while employed by, or providing
    service to, the Employer or while the Option remains outstanding
    as described in subparagraph (i) or (ii) above.

    

    B-20

Table of Contents

    (iv) The date on which the Grantee ceases to be employed
    by, or provide service to, the Employer for Cause. In addition,
    notwithstanding the prior provisions of this Paragraph 3,
    if the Grantee engages in conduct that constitutes Cause after
    the Grantee’s employment or service terminates, the Option
    shall immediately terminate.

 

    Notwithstanding the foregoing, in no event may the Option be
    exercised after the date that is immediately before
    the          
    anniversary of the Date of Grant. Any portion of the Option that
    is not exercisable at the time the Grantee ceases to be employed
    by, or provide service to, the Employer shall immediately
    terminate.

 

    4.  Exercise Procedures.

 

    (a) Subject to the provisions of Paragraphs 2 and 3
    above, the Grantee may exercise part or all of the exercisable
    Option by giving the Company written notice of intent to
    exercise in the manner provided in this Agreement, specifying
    the number of Shares as to which the Option is to be exercised
    and the method of payment. Payment of the exercise price shall
    be made in accordance with procedures established by the
    Committee from time to time based on type of payment being made
    but, in any event, prior to issuance of the Shares. The Grantee
    shall pay the exercise price (i) in cash, (ii) with
    the approval of the Committee, by delivering Shares of the
    Company, which shall be valued at their fair market value on the
    date of delivery, or by attestation (on a form prescribed by the
    Committee) to ownership of Shares having a fair market value on
    the date of exercise equal to the exercise price, (iii) by
    payment through a broker in accordance with procedures permitted
    by Regulation T of the Federal Reserve Board or
    (iv) by such other method as the Committee may approve. The
    Committee may impose from time to time such limitations as it
    deems appropriate on the use of Shares of the Company to
    exercise the Option.

 

    (b) The obligation of the Company to deliver Shares upon
    exercise of the Option shall be subject to all applicable laws,
    rules, and regulations and such approvals by governmental
    agencies as may be deemed appropriate by the Committee,
    including such actions as Company counsel shall deem necessary
    or appropriate to comply with relevant securities laws and
    regulations. The Company may require that the Grantee (or other
    person exercising the Option after the Grantee’s death)
    represent that the Grantee is purchasing Shares for the
    Grantee’s own account and not with a view to or for sale in
    connection with any distribution of the Shares, or such other
    representation as the Committee deems appropriate.

 

    (c) All obligations of the Company under this Agreement
    shall be subject to the rights of the Company as set forth in
    the Plan to withhold amounts required to be withheld for any
    taxes, if applicable. Subject to Committee approval, the Grantee
    may elect to satisfy any tax withholding obligation of the
    Employer with respect to the Option by having Shares withheld up
    to an amount that does not exceed the minimum applicable
    withholding tax rate for federal (including FICA), state and
    local tax liabilities.

 

    5.  Change of Control.  The
    provisions of the Plan applicable to a Change of Control shall
    apply to the Option, and, in the event of a Change of Control,
    the Committee may take such actions as it deems appropriate
    pursuant to the Plan.

 

    6.  Restrictions on
    Exercise.  Except as the Committee may
    otherwise permit pursuant to the Plan, only the Grantee may
    exercise the Option during the Grantee’s lifetime and,
    after the Grantee’s death, the Option shall be exercisable
    (subject to the limitations specified in the Plan) solely by the
    legal representatives of the Grantee, or by the person who
    acquires the right to exercise the Option by will or by the laws
    of descent and distribution, to the extent that the Option is
    exercisable pursuant to this Agreement.

 

    7.  Grant Subject to Plan
    Provisions.  This grant is made pursuant to
    the Plan, the terms of which are incorporated herein by
    reference, and in all respects shall be interpreted in
    accordance with the Plan. The grant and exercise of the Option
    are subject to interpretations, regulations and determinations
    concerning the Plan established from time to time by the
    Committee in accordance with the provisions of the Plan,
    including, but not limited to, provisions pertaining to
    (i) rights and obligations with respect to withholding
    taxes, (ii) the registration, qualification or listing of
    the Shares, (iii) changes in capitalization of the Company
    and (iv) other requirements of applicable law. The
    Committee shall have the authority to interpret and construe the
    Option pursuant to the terms of the Plan, and its decisions
    shall be conclusive as to any questions arising hereunder.

    

    B-21

Table of Contents

    8.  No Employment or Other
    Rights.  The grant of the Option shall not
    confer upon the Grantee any right to be retained by or in the
    employ or service of the Employer and shall not interfere in any
    way with the right of the Employer to terminate the
    Grantee’s employment or service at any time. The right of
    the Employer to terminate at will the Grantee’s employment
    or service at any time for any reason is specifically reserved.

 

    9.  No Shareholder
    Rights.  Neither the Grantee, nor any person
    entitled to exercise the Grantee’s rights in the event of
    the Grantee’s death, shall have any of the rights and
    privileges of a shareholder with respect to the Shares subject
    to the Option, until certificates for Shares have been issued
    upon the exercise of the Option.

 

    10.  Assignment and
    Transfers.  Except as the Committee may
    otherwise permit pursuant to the Plan, the rights and interests
    of the Grantee under this Agreement may not be sold, assigned,
    encumbered or otherwise transferred except, in the event of the
    death of the Grantee, by will or by the laws of descent and
    distribution. In the event of any attempt by the Grantee to
    alienate, assign, pledge, hypothecate, or otherwise dispose of
    the Option or any right hereunder, except as provided for in
    this Agreement, or in the event of the levy or any attachment,
    execution or similar process upon the rights or interests hereby
    conferred, the Company may terminate the Option by notice to the
    Grantee, and the Option and all rights hereunder shall thereupon
    become null and void. The rights and protections of the Company
    hereunder shall extend to any successors or assigns of the
    Company and to the Company’s parents, subsidiaries, and
    affiliates. This Agreement may be assigned by the Company
    without the Grantee’s consent.

 

    11.  Applicable Law.  The
    validity, construction, interpretation and effect of this
    instrument shall be governed by and construed in accordance with
    the laws of the State of Delaware, without giving effect to the
    conflicts of laws provisions thereof.

 

    12.  Notice.  Any notice to
    the Company provided for in this instrument shall be addressed
    to the Company at 137A Lewis Wharf, Boston, MA 02110, and any
    notice to the Grantee shall be addressed to such Grantee at the
    current address shown on the payroll of the Employer, or to such
    other address as the Grantee may designate to the Employer in
    writing. Any notice shall be delivered by hand, sent by telecopy
    or enclosed in a properly sealed envelope addressed as stated
    above, registered and deposited, postage prepaid, in a post
    office regularly maintained by the United States Postal Service.

 

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    OF PAGE INTENTIONALLY LEFT BLANK]
    

    

    B-22

Table of Contents

    IN WITNESS WHEREOF, the Company has caused its duly authorized
    officers to execute and attest this Agreement, and the Grantee
    has executed this Agreement, effective as of the Date of Grant.

 

    CONVERTED ORGANICS INC.

 

			
	 	    By: 
	
        

 

    I hereby accept the Option described in this Agreement, and I
    agree to be bound by the terms of the Plan and this Agreement. I
    hereby further agree that all the decisions and determinations
    of the Committee shall be final and binding.

 

    Grantee: ­
    ­

 

    Date: ­
    ­

    

    B-23

Table of Contents

 

    FORM OF
    BOARD OF DIRECTORS GRANTS

 

    CONVERTED
    ORGANICS INC.

    2010 OMNIBUS STOCK COMPENSATION
    PLAN

    

    NONQUALIFIED
    STOCK OPTION GRANT

 

    This STOCK OPTION GRANT, dated as
    of          
    (the “Date of Grant”), is delivered by Converted
    Organics Inc. (the “Company”)
    to          
    (the “Grantee”).

 

    RECITALS

 

    The Converted Organics Inc. 2010 Omnibus Stock Compensation Plan
    (the “Plan”) provides for the grant of options to
    purchase shares of common stock of the Company. The Compensation
    Committee of the Committee of Directors of the Company, or if no
    such entity exists, the entire Board of Directors (the
    “Committee”) has decided to make a stock option grant
    as an inducement for the Grantee to promote the best interests
    of the Company and its shareholders.

 

    NOW, THEREFORE, the parties to this Agreement, intending to be
    legally bound hereby, agree as follows:

 

    1.  Grant of Option.  Subject
    to the terms and conditions set forth in this Agreement and in
    the Plan, the Company hereby grants to the Grantee a
    nonqualified stock option (the “Option”) to
    purchase           shares
    of common stock of the Company (“Shares”) at an
    exercise price of $      per Share. The
    Option shall become exercisable according to Paragraph 2
    below.

 

    2.  Exercisability of
    Option.  The Option shall become exercisable
    on the following dates, if the Grantee is providing service to
    the Company as a member of its Board of Directors on the
    applicable date:

 

	 	 	 
	

    Date

	
 
	

    Shares for Which the Option is Exercisable

	 

 

    The exercisability of the Option is cumulative, but shall not
    exceed 100% of the Shares subject to the Option. If the
    foregoing schedule would produce fractional Shares, the number
    of Shares for which the Option becomes exercisable shall be
    rounded down to the nearest whole Share. Any portion of the
    Option that is not exercisable at the time the Grantee ceases to
    be a member of the Board of Directors shall immediately
    terminate.

 

    3.  Term of Option.  The
    Option shall have a term
    of          
    years from the Date of Grant and shall terminate at the
    expiration of that period, unless it is terminated at an earlier
    date pursuant to the provisions of this Agreement or the Plan.
    Notwithstanding anything to the contrary in the Plan, the Option
    shall not terminate due to the termination of service, death, or
    Disability of the Grantee.

 

    4.  Exercise Procedures.

 

    (a) Subject to the provisions of Paragraphs 2 and 3
    above, the Grantee may exercise part or all of the exercisable
    Option by giving the Company written notice of intent to
    exercise in the manner provided in this Agreement, specifying
    the number of Shares as to which the Option is to be exercised
    and the method of payment. Payment of the exercise price shall
    be made in accordance with procedures established by the
    Committee from time to time based on type of payment being made
    but, in any event, prior to issuance of the Shares. The Grantee
    shall pay the exercise price (i) in cash, (ii) with
    the approval of the Committee, by delivering Shares of the
    Company, which shall be valued at their fair market value on the
    date of delivery, or by attestation (on a form prescribed by the
    Committee) to ownership of Shares having a fair market value on
    the date of exercise equal to the exercise price, (iii) by
    payment through a broker in accordance with

    

    B-24

Table of Contents

    procedures permitted by Regulation T of the Federal Reserve
    Board or (iv) by such other method as the Committee may
    approve. The Committee may impose from time to time such
    limitations as it deems appropriate on the use of Shares of the
    Company to exercise the Option.

 

    (b) The obligation of the Company to deliver Shares upon
    exercise of the Option shall be subject to all applicable laws,
    rules, and regulations and such approvals by governmental
    agencies as may be deemed appropriate by the Committee,
    including such actions as Company counsel shall deem necessary
    or appropriate to comply with relevant securities laws and
    regulations. The Company may require that the Grantee (or other
    person exercising the Option after the Grantee’s death)
    represent that the Grantee is purchasing Shares for the
    Grantee’s own account and not with a view to or for sale in
    connection with any distribution of the Shares, or such other
    representation as the Committee deems appropriate.

 

    (c) All obligations of the Company under this Agreement
    shall be subject to the rights of the Company as set forth in
    the Plan to withhold amounts required to be withheld for any
    taxes, if applicable. Subject to Committee approval, the Grantee
    may elect to satisfy any tax withholding obligation of the
    Company with respect to the Option by having Shares withheld up
    to an amount that does not exceed the minimum applicable
    withholding tax rate for federal (including FICA), state and
    local tax liabilities.

 

    5.  Change of Control.  The
    provisions of the Plan applicable to a Change of Control shall
    apply to the Option, and, in the event of a Change of Control,
    the Committee may take such actions as it deems appropriate
    pursuant to the Plan.

 

    6.  Restrictions on
    Exercise.  Except as the Committee may
    otherwise permit pursuant to the Plan, only the Grantee may
    exercise the Option during the Grantee’s lifetime and,
    after the Grantee’s death, the Option shall be exercisable
    (subject to the limitations specified in the Plan) solely by the
    legal representatives of the Grantee, or by the person who
    acquires the right to exercise the Option by will or by the laws
    of descent and distribution, to the extent that the Option is
    exercisable pursuant to this Agreement.

 

    7.  Grant Subject to Plan
    Provisions.  This grant is made pursuant to
    the Plan, the terms of which are incorporated herein by
    reference, and in all respects shall be interpreted in
    accordance with the Plan. The grant and exercise of the Option
    are subject to interpretations, regulations and determinations
    concerning the Plan established from time to time by the
    Committee in accordance with the provisions of the Plan,
    including, but not limited to, provisions pertaining to
    (i) rights and obligations with respect to withholding
    taxes, (ii) the registration, qualification or listing of
    the Shares, (iii) changes in capitalization of the Company
    and (iv) other requirements of applicable law. The
    Committee shall have the authority to interpret and construe the
    Option pursuant to the terms of the Plan, and its decisions
    shall be conclusive as to any questions arising hereunder.

 

    8.  No Service or Other
    Rights.  The grant of the Option shall not
    confer upon the Grantee any right to be retained by or in the
    service of the Company.

 

    9.  No Shareholder
    Rights.  Neither the Grantee, nor any person
    entitled to exercise the Grantee’s rights in the event of
    the Grantee’s death, shall have any of the rights and
    privileges of a shareholder with respect to the Shares subject
    to the Option, until certificates for Shares have been issued
    upon the exercise of the Option.

 

    10.  Assignment and
    Transfers.  Except as the Committee may
    otherwise permit pursuant to the Plan, the rights and interests
    of the Grantee under this Agreement may not be sold, assigned,
    encumbered or otherwise transferred except, in the event of the
    death of the Grantee, by will or by the laws of descent and
    distribution. In the event of any attempt by the Grantee to
    alienate, assign, pledge, hypothecate, or otherwise dispose of
    the Option or any right hereunder, except as provided for in
    this Agreement, or in the event of the levy or any attachment,
    execution or similar process upon the rights or interests hereby
    conferred, the Company may terminate the Option by notice to the
    Grantee, and the Option and all rights hereunder shall thereupon
    become null and void. The rights and protections of the Company
    hereunder shall extend to any

    

    B-25

Table of Contents

    successors or assigns of the Company and to the Company’s
    parents, subsidiaries, and affiliates. This Agreement may be
    assigned by the Company without the Grantee’s consent.

 

    11.  Applicable Law.  The
    validity, construction, interpretation and effect of this
    instrument shall be governed by and construed in accordance with
    the laws of the State of Delaware, without giving effect to the
    conflicts of laws provisions thereof.

 

    12.  Notice.  Any notice to
    the Company provided for in this instrument shall be addressed
    to the Company at 137A Lewis Wharf, Boston, MA 02110, and any
    notice to the Grantee shall be addressed to such Grantee at the
    current address shown on the books and records of the Company,
    or to such other address as the Grantee may designate to the
    Company in writing. Any notice shall be delivered by hand, sent
    by telecopy or enclosed in a properly sealed envelope addressed
    as stated above, registered and deposited, postage prepaid, in a
    post office regularly maintained by the United States Postal
    Service.

 

    [REMAINDER
    OF PAGE INTENTIONALLY LEFT BLANK]
    

    

    B-26

Table of Contents

    IN WITNESS WHEREOF, the Company has caused its duly authorized
    officers to execute and attest this Agreement, and the Grantee
    has executed this Agreement, effective as of the Date of Grant.

 

    CONVERTED ORGANICS INC.

 

			
	 	    By: 
	
        

 

    I hereby accept the Option described in this Agreement, and I
    agree to be bound by the terms of the Plan and this Agreement. I
    hereby further agree that all the decisions and determinations
    of the Committee shall be final and binding.

 

    Grantee: ­
    ­

 

    Date: ­
    ­

    

    B-27Exhibit 10.1

Exhibit 10.1

Approved May 27, 2010

NON-EMPLOYEE DIRECTOR COMPENSATION

	•	 	Annual Retainers: $50,000, plus

	 	•	 	Audit Committee:

	 	•	 	Chair: $35,000
	 
	 	•	 	Member: $25,000

	 	•	 	Other Committee:

	 	•	 	Chair: $20,000
	 
	 	•	 	Member: $12,500

Note: These retainers will be payable on a quarterly basis, generally
in advance, with the first payment of the term being made for the quarter
beginning July 1 following the date of the annual meeting of stockholders and
following the re-election of the director to the board and the designation of
committee responsibilities. Amounts will be pro-rated for partial year
service.

	•	 	Meeting Attendance: There will be no per meeting fees.
	 
	•	 	Restricted Stock Awards:

	 	•	 	Initial Election: Number of shares equal to $140,000 (increasing by
5% per year in 2011) divided by the average trading price for the 10 trading days
preceding the date of initial election.
	 
	 	•	 	Annual Award: Number of shares equal to $100,000 (increasing by 5%
per year beginning in 2011) divided by the average trading price for the 10
trading days preceding the date of the annual meeting.

Note: These awards will be made under the Amended and Restated 2006 Equity
Incentive Plan on the date of the annual meeting of stockholders and will vest one
year following the date of grant. If the director resigns or is removed prior to
the vesting, or if director fails to attend 75% or more of the Board and applicable
committee meetings during that 12-month period, shares would be forfeited unless
resignation or failure is caused by director’s disability.

 

 

 

SHARAD MANSUKANI

VICE CHAIRMAN-STRATEGIC PLANNING OF BOARD OF DIRECTORS

Responsibilities:

Develop and analyze Company’s strategic plan and opportunities. Periodically report
to the full Board of Directors. Without limiting the scope of the foregoing, the
Vice Chair activities will include:

	 	(i)	 	overseeing and evaluating the company’s significant provider,
primarily physician, relationships and providing guidance on the development
of new physician relationships;
	 
	 	(ii)	 	identifying and analyzing potential merger and acquisition
transactions;
	 
	 	(iii)	 	overseeing strategic plan development and implementation;
	 
	 	(iv)	 	overseeing other significant business development
opportunities, including new lines of business, either de novo or stand-alone
or through joint ventures, management arrangements, and provider partnerships;
and
	 
	 	(v)	 	assisting federal governmental relations, including
educational and informational activities with regard to health care reform.

Compensation:

Fees, in addition to other Board and committee fees, will
consist of:

	 	•	 	Annual Cash Retainer: $225,000
	 
	 	•	 	Annual Non-qualified Stock Option Award: beginning with the annual
meeting of stockholders in 2011, $50,000 (notional amount) divided by
average trading price for the 10 days preceding the date of the annual
meeting; vesting ratably over a four-year period
	 
	 	•	 	Annual Restricted Stock Grant: beginning with the annual meeting of stockholders in 2011, $50,000
divided by average trading price for the 10 days preceding the date of the annual meeting; vesting
ratably over a four-year period

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