Form of Bridge Loan Documents Dated March 2, 2006

Exhibit 10.1


CONVERTED ORGANICS INC.
7A COMMERCIAL WHARF WEST
BOSTON, MA 02210
TEL: 617 624-0111 FAX 617 624-0333
EMAIL: EGILDEA@ECAPGLOBAL.COM


MARCH 2, 2006


FINANCING TERMS AGREEMENT
FOR SALE OF BRIDGE NOTES AND SHARES


ISSUER: CONVERTED ORGANICS INC. ("CONVERTED ORGANICS"
or the "COMPANY").


AMOUNT: $1,200,000 in ninety-six (96) UNITS of
$12,500 in exchange for bridge notes ("BRIDGE
NOTE(S)") and securities of the COMPANY
("BRIDGE EQUITY UNITS").


PURCHASERS: "Accredited" investors, including High
Capital Funding, LLC ("HCF"), as defined in
Regulation D of the Securities Act of 1933.
See signature pages hereto for names,
addresses, and the number of UNITS being
purchased. PURCHASERS have read and agree to
the terms contained in Exhibit D hereto.


TERM OF NOTES: INTEREST AND PRE-PAYMENT: Interest will
accrue on the principal amount of the BRIDGE
NOTE(S) at the rate of eight (8%) percent per
annum, based on a 360-day year. The Company
will have the right to prepay without penalty
any amount owed under the BRIDGE NOTE(S) in
whole or in part at any time. Accrued
interest shall be paid quarterly, beginning
three months after the FIRST CLOSING and
every three months thereafter.


MATURITY DATE: The Company plans to raise
approximately $8-10 million in an initial
public offering (the "PUBLIC OFFERING"). The
principal amount and accrued and unpaid
interest on the BRIDGE NOTE(S) will be due
and payable at the earlier of: six months
from the FIRST CLOSING (as defined in
"Closing Date/Escrow" below); or the closing
of a PUBLIC OFFERING ("MATURITY DATE"). After
the MATURITY DATE, unpaid principal on the
BRIDGE NOTES shall bear interest at eighteen
(18%) per annum.


BRIDGE SECURITIES: Upon the closing of the PUBLIC OFFERING, the
COMPANY shall deliver to each PURCHASER,
BRIDGE EQUITY UNITS consisting of securities
identical in form to the securities offered
for sale in the PUBLIC OFFERING ("PRIMARY
BRIDGE EQUITY UNITS"), except that the
certificates for the PRIMARY BRIDGE EQUITY
UNITS may bear restrictive legends. Each
PURCHASER shall receive the number of


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PRIMARY BRIDGE EQUITY UNITS equal to the
principal of such PURCHASER'S BRIDGE NOTE(S)
divided by the public offering price of the
securities comprising the PRIMARY BRIDGE
EQUITY UNIT. The securities issued to
PURCHASERS shall have the same CUSIP numbers
as the corresponding securities in the PUBLIC
OFFERING.


If a PUBLIC OFFERING shall not have occurred
prior to six months from the FIRST CLOSING,
then on the first business day following the
end of such six month period the COMPANY
shall issue to the PURCHASER alternate BRIDGE
EQUITY UNITS ("ALTERNATE BRIDGE EQUITY
UNITS") consisting of that number of shares
of common stock of the COMPANY as shall equal
the principal amount of the BRIDGE NOTE(S)
divided by $3.00 plus an equal number of
non-callable warrants exercisable at $3.00
per share for a period of five years from
such issuance, and which shall have a
cashless exercise feature at any time after
one year from the FIRST CLOSING that the
underlying shares of common stock are not
covered by an effective registration
statement with a current prospectus
available. The number of ALTERNATE BRIDGE
EQUITY UNITS shall be adjusted, pro rata, on
account of any stock splits, reverse stock
splits, stock dividends paid on common stock,
etc. which occur after the date of issuance
of the BRIDGE NOTE(S) and prior to the
issuance of the ALTERNATE BRIDGE EQUITY
UNITS. PRIMARY BRIDGE EQUITY UNITS and
Alternate BRIDGE EQUITY UNITS are sometimes
referred to herein as "BRIDGE EQUITY UNITS."


The PURCHASERS shall have the right for a
period of one year and one month from the
issuance of the ALTERNATE BRIDGE EQUITY UNITS
to exchange them for PRIMARY BRIDGE EQUITY
UNITS of an equivalent worth issued in a
public offering of the COMPANY such that the
PURCHASERS will own the same securities as if
the public offering had closed on or prior to
the six month anniversary of the FIRST
CLOSING.


PURCHASE PRICE: The aggregate purchase price for each BRIDGE
NOTE and BRIDGE EQUITY UNIT shall be the
original principal amount of the BRIDGE
NOTE(S) included in such UNIT. The purchase
price allocable to the BRIDGE NOTE(S)
included in such UNIT shall be not less than
75% of such aggregate purchase price and the
purchase price allocable to the BRIDGE EQUITY
UNITS included in such UNIT shall be not more
than 25% of such aggregate purchase price.
The tax value of the BRIDGE EQUITY UNITS
shall be equal to the portion of the purchase
price allocated to the BRIDGE EQUITY UNITS.


SECURITY: Repayment of the BRIDGE NOTE(S) shall be
secured by a lien on all tangible and
intangible assets of the COMPANY to be
evidenced by a SECURITY AGREEMENT in form and
substance satisfactory to HCF, the lead
investor.


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DOCUMENT PREPARATION SECURITIES: In lieu of reimbursing HCF, for the cost of
preparing the legal documents for this
transaction, CONVERTED ORGANICS shall issue
to HCF, BRIDGE EQUITY UNITS with a tax value
of $25,000 ("DOCUMENT PREPARATION
SECURITIES"). The DOCUMENT PREPARATION
SECURITIES shall be in all respects identical
to the BRIDGE EQUITY UNITS with identical
attendant rights. If a PUBLIC OFFERING shall
not have occurred prior to six months from
the FIRST CLOSING, then the BRIDGE EQUITY
UNITS comprising the DOCUMENT PREPARATION
SECURITIES shall automatically convert to
33,333 ALTERNATE BRIDGE EQUITY UNITS.


PLACEMENT AGENT FEE: CONVERTED ORGANICS and PURCHASERS agree that
CONVERTED ORGANICS shall be solely
responsible for the payment of placement
agent fees to Investors Capital Corporation
("Placement Agent").


EXPENSES: PURCHASERS and CONVERTED ORGANICS shall each
be responsible for their own expenses in
connection with this transaction.


TRANSFER AND ASSIGNMENT: PURCHASERS shall have the right, subject to
applicable securities laws, to transfer
and/or assign the BRIDGE NOTES and/or the
BRIDGE EQUITY UNITS, and HCF shall have the
right to transfer and/or assign the DOCUMENT
PREPARATION SECURITIES. Any PURCHASER,
transferee or assignee of a BRIDGE NOTE,
BRIDGE EQUITY UNITS, or DOCUMENT PREPARATION
SECURITIES is a "HOLDER" or collectively
"HOLDERS."


CLOSING DATE/ESCROW: The first closing of this transaction ("
FIRST CLOSING") will be on the second
business day following the receipt by David
A. Rapaport (Executive V.P. and General
Counsel of HCF), as ESCROW AGENT, of (a) not
less than an aggregate of $500,000 ("FIRST
CLOSING PROCEEDS") from HCF and other
PURCHASERS, (b) executed BRIDGE NOTES for an
aggregate of the FIRST CLOSING PROCEEDS, (c)
a fully executed SECURITY AGREEMENT with
evidence of the filing of UCC-1's, and (d) a
LEGAL OPINION (as defined in
"Jurisdiction/Choice of Law" below). At the
FIRST CLOSING the ESCROW AGENT shall transfer
the FIRST CLOSING PROCEEDS - minus Placement
Agent fees - to CONVERTED ORGANICS and shall
deliver the BRIDGE NOTE(S) to PURCHASERS.
ADDITIONAL CLOSINGS shall be held at the
mutual agreement of the parties, including
HCF, provided that no ADDITIONAL CLOSINGS
shall be held after 30 days following the
FIRST CLOSING without the written consent of
HCF.


FINANCIAL INFORMATION: The Company has delivered to HCF the
unaudited financial statements of Mining
Organics Management LLC for the years ended
December 31, 2004 and December 31, 2003, or
the federal tax returns of Mining Organics
Management LLC for the years 2004 and 2003.
The Company shall deliver unaudited financial
statements of Mining Organics Management LLC
for the year ended December 31, 2005 or the
federal tax return of Mining


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Organics Management LLC for the year 2005 by
March 31, 2006. The Company also has
delivered to HCF the form of Asset Purchase
Agreements between the Company and Mining
Organics Management LLC, and between the
Company and Mining Organics HRRY LLC,
identifying the assets to be transferred from
the LLC's to the Company.


REGISTRATION RIGHTS: The Company will (1) file a resale
registration statement within 180 days of the
PUBLIC OFFERING closing: (2) cause it to be
effective within 240 days of the PUBLIC
OFFERING closing if the registration
statement is not reviewed by the Securities
and Exchange Commission ("SEC") and 270 days
of the PUBLIC OFFERING closing if the
registration statement is reviewed by the SEC
covering the resale of the BRIDGE EQUITY
UNITS and the DOCUMENT PREPARATION SECURITIES
(including the resale of any shares of common
stock issuable upon the exercise or
conversion of any BRIDGE EQUITY UNITS); and
(3) cause it to remain effective with a
current prospectus available for a period of
the longer of two years, or until the
expiration or exercise in full of any
warrants contained in the BRIDGE EQUITY
UNITS.


If the Company fails to satisfy requirements
(1) or (2) above it will be subject to a 2%
cash late registration fee (i.e. 2% of the
outstanding BRIDGE NOTE(S) principal) per
month or part thereof that such failure
continues ("LATE FEE"); provided such LATE
FEE shall not be accrued for any month after
one year from the FIRST CLOSING that the
Company is current in its reporting
obligations under the Exchange Act and has
been subject to such reporting requirements
for at least 90 days, unless any Holder is
the beneficial owner of more than 1% of
CONVERTED ORGANICS's issued and outstanding
common stock, in which case the LATE FEE
shall continue to accrue for no more than two
years from the FIRST CLOSING.


If the COMPANY fails to satisfy requirement
(3) above, the LATE FEE shall continue until
the longer of the period set forth in the
preceding paragraph, or the expiration or
exercise in full of any warrants included in
the BRIDGE EQUITY UNITS.


JURISDICTION/CHOICE OF LAW: All transaction documents shall be governed
by and construed under the laws of the state
of Delaware as applied to agreements entered
into and to be performed entirely within the
state of Delaware, without giving effect to
principles of conflicts of law. The parties
irrevocably consent to the jurisdiction and
venue of the state and federal courts located
in Wilmington, DE in connection with any
action relating to this transaction. At or
prior to the FIRST CLOSING and each
ADDITIONAL CLOSING, PURCHASERS shall receive
a legal opinion from Company counsel in form
and substance satisfactory to HCF it as to
(a) the due formation and existence of the
COMPANY (under Delaware law), (b) the
validity and enforceability of this Financing
Terms


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Agreement (under Delaware law), the BRIDGE
NOTE(S) (under Delaware law), and the
SECURITY AGREEMENT (under Delaware law),
including specifically that neither this
Financing Terms Agreement nor the BRIDGE
NOTE(S) violate any laws of the state of
Delaware relating directly or indirectly to
the maximum rate of interest that may be
charged in this transaction, subject to
standard carve-outs for equitable remedies
and insolvency laws, and (c) the valid
authorization to issue the BRIDGE EQUITY
UNITS and the DOCUMENT PREPARATION SECURITIES
(under Delaware law) ("LEGAL OPINION"). The
LEGAL OPINION shall be updated and reissued
at each ADDITIONAL CLOSING.


BINDING AGREEMENT: All parties executing this Financing Terms
Agreement, including Exhibit D, shall be
legally bound by the above terms and shall
execute such further documents ("FURTHER
DOCUMENTS"), including without limitation
BRIDGE NOTE(S), a SECURITY AGREEMENT, AND AN
ESCROW AGREEMENT substantially in the forms
of Exhibit A, Exhibit B, and Exhibit C
attached hereto, respectively. If there are
any inconsistencies between this Financing
Terms Agreement (Exclusive of Exhibits A, B &
C) and any such FURTHER DOCUMENTS executed in
connection with this transaction, the terms
of this Financing Terms Agreement shall
govern. This Financing Terms Agreement may be
signed in two or more counterparts, all of
which taken together shall constitute an
original. Facsimile signatures shall be
deemed to be original signatures.


This Financing Terms Agreement supersedes all
prior oral and/or written agreements
concerning the subject matter hereof,
including without limitation the Financing
Terms Agreement by and among the parties
hereto dated January 18, 2006, the Promissory
Note dated February 28, 2006 in the principal
amount of $500,000, and the Promissory Note
dated March 1, 2006 in the principal amount
of $300,000, both notes being void ab initio,


CONVERTED ORGANICS INC.


By: Date: March ____, 2006
---------------------------------
(signature)


Edward J. Gildea, President
(name and title)


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DAVID A. RAPAPORT, ESCROW AGENT


Date: March _____, 2006 - -------------------------------------


333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Tel: 404 257-9150 Fax: 404 257-9125 Email: drapaport@highcapus.com


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SIGNATURES OF PURCHASERS


High Capital Funding, LLC Number of Units:
-----------------------


By: Principal Amount of Bridge Notes: $_____
---------------------------------
Fred A. Brasch, CFO


Date: , 2006
-------------------------


333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328 Attn: Fred A. Brasch, CFO


Tel: 404 257-9150 Fax: 404 257-9125 Email: fredbrasch@mindspring.com Tax ID#/SS#: 13-3921591


With copy to:


David A. Rapaport, Escrow Agent 333 Sandy Springs Circle, Suite 230 Atlanta, GA 30328


Tel: 404 257-9150 Fax: 404 257-9125 Email: drapaport@highcapus.com


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EXHIBIT A


FORM OF BRIDGE NOTE


THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), NOR UNDER ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, PLEDGED, OFFERED FOR SALE, ASSIGNED OR TRANSFERRED UNLESS (A) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER THE SECURITIES ACT, AND ANY APPLICABLE STATE SECURITIES LAW REQUIREMENTS HAVE BEEN MET OR (B) EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT AND THE REGISTRATION OR QUALIFICATION REQUIREMENTS OF APPLICABLE STATE SECURITIES LAWS ARE AVAILABLE.


Certificate No. __________ $_______________
Principal Amount


CONVERTED ORGANICS INC.
SECURED PROMISSORY NOTE


_________, 2006


FOR VALUE RECEIVED, CONVERTED ORGANICS INC., a Delaware corporation, ("Borrower") promises to pay to the order of ___________________________ ("Lender") the principal amount of ___________________________ Dollars ($______________), together with interest on the unpaid principal amount at the rate of 8 percent (8%) per annum based on a 360-day year, all upon the terms set forth below. This Secured Promissory Note (the "Note") is issued pursuant to that certain Financing Terms Agreement for Sale of Bridge Notes and Shares, dated as of January 18, 2006, by and between Lender and Borrower (the "Financing Agreement"). This Note is subject to the terms and conditions of the Financing Agreement. To the extent that any of the terms specifically set forth in the Financing Agreement is inconsistent with the provisions of this Note specifically relating to such matters, the Financing Agreement shall govern with respect to such inconsistencies. Capitalized terms used herein and not otherwise defined have the meanings ascribed to them in the Financing Agreement.


1. MATURITY. Accrued interest shall be paid in arrears on a quarterly basis, beginning three months after the First Closing and every three months thereafter. Except as otherwise provided herein, the principal hereunder shall become due and payable in full on the date six months from the First Closing, except that in the event of the closing of a Public Offering, the principal amount and accrued and unpaid interest will become immediately due and payable. After the Maturity Date, the Note shall bear interest at 18 percent per annum.


2. PREPAYMENT. Borrower may prepay any or all amounts due under this Bridge Note at any time without penalty.


A-1


3. METHOD OF PAYMENT. Any payment of principal or interest hereunder shall be made by certified or bank cashier's check unless Holder has provided Borrower with appropriate wire instructions, in which event, the payment shall be made by wire transfer of "same day" funds. For the purpose of any interest calculation, payment shall be deemed made when the check is sent by overnight delivery or when the wire is sent. Any partial payment shall be applied first to accrued and unpaid interest and thereafter to a reduction of principal.


4. Security. REPAYMENT OF THE NOTE SHALL BE SECURED BY A LIEN ON ALL TANGIBLE AND INTANGIBLE ASSETS OF THE BORROWER AS DESCRIBED IN THAT CERTAIN SECURITY AGREEMENT EXECUTED CONTEMPORANEOUSLY HEREWITH.


5. ANTI DILUTION ADJUSTMENTS. The number and kind of securities or other property into which this Note may become convertible shall be subject to adjustment as follows:


(a) If a split or a reverse split shall have occurred with respect to the
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