Document:

exv10w16

Exhibit 10.16

 

EXCHANGE AGREEMENT

dated as of October ____, 2010

by and among

BRAVO BRIO RESTAURANT GROUP, INC.,

BRAVO DEVELOPMENT HOLDINGS LLC

and

ALL OTHER SHAREHOLDERS OF BRAVO BRIO RESTAURANT GROUP, INC.

 

 

 

EXCHANGE AGREEMENT

          This is an Exchange Agreement (this “Agreement”) dated as of October __ 2010, by and
among Bravo Brio Restaurant Group, Inc., an Ohio corporation (the “Company”), Bravo
Development Holdings LLC, a Delaware limited liability company and majority shareholder of the
Company (“Holdings”), and all other shareholders of the Company (which shareholders are
listed on the signature pages hereto) (together with Holdings, the “Shareholders”).

RECITALS

          WHEREAS, the Company is contemplating an initial public offering (the “Offering”) of
its Common Shares, no par value per share (such shares, the “New Common Shares”), pursuant
to a registration statement on Form S-1 filed with the U.S. Securities and Exchange Commission (the
“Commission”) on July 1, 2010, as the same may be amended from time to time (the
“Registration Statement”);

          WHEREAS, as of the date hereof, the Shareholders constitute all the shareholders of the
Company and own of record the number of shares of the Company’s Common Stock, par value $.001 per
share (such shares, the “Existing Common Shares”), and shares of the Company’s Series A 14%
Cumulative Compounding Preferred Stock, par value $.001 per share (such shares, the “Existing
Preferred Shares”), as set forth opposite each of the Shareholders’ names on Exhibit A
hereto, which shares constitute as of the date hereof, and will constitute immediately prior to the
exchange transactions described below, all of the issued and outstanding Existing Common Shares and
Existing Preferred Shares;

          WHEREAS, in anticipation of the Offering, the parties hereto desire that, immediately prior to
the consummation of the Offering, (i) the Existing Common Shares will be exchanged for New Common
Shares in accordance with the terms hereof and (ii) immediately following the exchange of Existing
Common Shares for New Common Shares, the Existing Preferred Shares will be exchanged for New Common
Shares in accordance with the terms hereof;

          WHEREAS, immediately prior to the consummation of the exchange transactions described above,
the Company will adopt and file with the Secretary of State of the State of Ohio its Second Amended
and Restated Articles of Incorporation (the “New Articles of Incorporation”) reflecting the
Company’s new capital structure, including the authorization of the New Common Shares, and certain
other changes necessitated by the Offering;

          WHEREAS, it is contemplated that, immediately after the consummation of the exchange
transactions described above but immediately prior to the consummation of the Offering, Holdings
will effectuate (i) the dissolution of Holdings and (ii) the distribution of the New Common Shares
received by Holdings pursuant to the exchange transactions described above to its members in
proportion to their ownership of outstanding membership units of Holdings; and

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          WHEREAS, the above-referenced changes to the Company’s capital structure are intended to
constitute reorganizations pursuant to Section 368(a)(1) of the Internal Revenue Code of 1986, as
amended (the “Code”), and this Agreement is being entered into in connection with that
certain Agreement and Plan of Reorganization, dated as of the date hereof and attached as
Exhibit B hereto (the “Plan of Reorganization”), which shall be deemed to
constitute a “plan or reorganization” within the meaning of Code Section 368(a) and Treasury
Regulations Section 1.368-2(g).

          NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties,
covenants, agreements and conditions herein contained, and intending to be legally bound, the
parties hereto agree as follows:

AGREEMENT

ARTICLE I

THE EXCHANGES

     1.1 Exchange of Existing Common Shares for New Common Shares.

          (a) At the Closing (as defined below), each Shareholder shall transfer and deliver to the
Company, free and clear of all liens, the number of Existing Common Shares held by such Shareholder
set forth opposite such Shareholder’s name in the second column of Exhibit A hereto, and,
in exchange therefor, the Company shall issue to such Shareholder the number of New Common Shares
set forth opposite such Shareholder’s name in the fourth column
of Exhibit A (such
exchange, the “Common Shares Exchange”). The number of New Common Shares set forth
opposite each such Shareholder’s name in the fourth column of Exhibit A was derived by
multiplying (i) the number of Existing Common Shares to be transferred and delivered by each such
Shareholder by (ii) 6.8898763, rounded to a whole share. The Existing Common Shares so
exchanged shall be deemed to be cancelled without further action of the Company.

          (b) Prior to or at the Closing, each Shareholder shall surrender to the Company all stock
certificates evidencing Existing Common Shares owned by such Shareholder, free and clear of any
lien, claim or encumbrance, duly endorsed for transfer or accompanied by stock powers or
assignments duly executed with all necessary stock transfer stamps attached thereto. The
obligation of each party to close the Common Shares Exchange shall be conditioned on the
simultaneous closing by all the other parties to the Common Shares Exchange.

     1.2 Exchange of Existing Preferred Shares for New Common Shares.

          (a) Prior to the consummation of the Offering and immediately subsequent to the Common Shares
Exchange, at the Closing, each Shareholder shall transfer and deliver to the Company, free and
clear of liens, the number of Existing Preferred Shares held by such Shareholder set forth opposite
such Shareholder’s name in the third column of Exhibit A hereto,

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and, in exchange therefor, the Company shall issue to such Shareholder the number of New
Common Shares set forth opposite such Shareholder’s name in the
fifth column of Exhibit A (such exchange, the “Preferred Shares Exchange”). The number of New Common Shares set
forth opposite each such Shareholder’s name in the fifth column of Exhibit A was derived by
multiplying (i) the number of Existing Preferred Shares to be transferred and delivered by each
such Shareholder by (ii) 117.90974568263, rounded to a whole share. The Existing Preferred
Shares so exchanged shall be deemed to be cancelled without further action of the Company.

          (b) Prior to or at the Closing, each Shareholder shall surrender all stock certificates
evidencing Existing Preferred Shares owned by such Shareholder, free and clear of any lien, claim
or encumbrance, duly endorsed for transfer or accompanied by stock powers or assignments duly
executed with all necessary stock transfer stamps attached thereto. The obligation of each party
to close the Preferred Shares Exchange shall be conditioned on the simultaneous closing by all the
other parties to the Preferred Shares Exchange.

     1.3 Restrictive Legends. It is understood and agreed that the certificates evidencing
the shares of New Common Shares to be delivered at the Closing, and each certificate issued upon
transfer thereof, shall bear the following legend, in addition to any other legends required by
Ohio law:

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE
OFFERED AND SOLD ONLY IF SO REGISTERED OR IN A MANNER EXEMPT FROM
REGISTRATION UNDER SUCH ACT.

     1.4 Transfer Taxes. The Company will assume and pay all transfer taxes (but not
income, franchise or other taxes measured by receipts or income) which are payable in connection
with the execution, delivery and performance of this Agreement or the authorization and issuance of
or exchange for New Common Shares hereunder or in connection with any modification of this
Agreement. Each Shareholder will cooperate with the Company to obtain a refund of any such taxes
from governmental authorities, if applicable.

ARTICLE II

THE CLOSING

     2.1 Closing.

          (a) Unless this Agreement shall have been earlier terminated in accordance with the terms of
this Agreement, the closing of the Preferred Shares Exchange shall take place on the date of but
immediately prior to the consummation of the Offering and the closing of the Common Shares Exchange
shall occur, without any action on the part of any party hereto, on the date of but immediately
prior to the closing of the Preferred Shares Exchange and simultaneously with the moment upon which
the New Articles of Incorporation filed with the Secretary of State

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of the State of Ohio shall become effective (together, the “Closing”). The Closing
shall take place at the offices of the Company, 777 Goodale Blvd., Suite 100, Columbus, Ohio 43212.
The date of the Closing is referred to herein as the “Closing Date.”

          (b) All obligations of the parties under this Agreement are subject to the condition precedent
that, concurrently with the closing of the Common Shares Exchange, the New Articles of
Incorporation shall have been filed with the Secretary of State of the State of Ohio and shall have
become effective.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

     3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants to the Shareholders, as of the date hereof and as of the Closing, as set forth below:

          (a) Existence, Qualification and Authority. The Company is a corporation duly
organized, validly existing and in good standing under the laws of Ohio. The Company has all
requisite power and authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance by the Company of this
Agreement have been duly authorized by all necessary action. This Agreement has been duly executed
and delivered by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except to the extent such
enforcement may be limited by applicable bankruptcy laws and other similar laws affecting
creditors’ rights generally.

          (b) New Common Shares. The New Common Shares to be issued to the Shareholders
pursuant to this Agreement will be, when issued, (i) duly authorized, validly issued, fully paid
and nonassessable, (ii) free and clear of all liens, encumbrances, equities and claims (other than
securities law restrictions and restrictions under that certain (x) New Investors Securities
Holders Agreement, dated as of June 29, 2006, by and among the Company, Holdings and the other
investors and parties named therein (the “New Investors Securities Holders Agreement”) and
(y) Securities Holders Agreement, dated as of June 29, 2006, by and among the Company, Holdings,
Alton F. Doody III, John C. Doody and the other investors and parties named therein (the
“Securities Holders Agreement”)) and (iii) issued without violation of any preemptive
rights.

     3.2 Representations and Warranties of the Shareholders. Each Shareholder, severally
and not jointly, hereby represents and warrants to the Company, as of the date hereof and as of the
Closing, as set forth below:

          (a) Existence, Qualification and Authority.

               (i) In respect of Holdings, Holdings is a limited liability company, duly organized, validly
existing and in good standing under the laws of Delaware. The

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execution, delivery and performance by Holdings of this Agreement have been duly authorized by
all necessary action. Holdings has the requisite power, authority and legal right to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.

               (ii) In respect of each Shareholder, other than Holdings, such Shareholder has the legal
capacity to execute and deliver this Agreement and to consummate the transactions contemplated
hereby.

               (iii) This Agreement has been duly executed and delivered by such Shareholder and constitutes
the legal, valid and binding obligation of such Shareholder, enforceable against such Shareholder
in accordance with its terms, except to the extent such enforcement may be limited by applicable
bankruptcy laws and other similar laws affecting creditors’ rights generally.

          (b) Existing Common Shares and Existing Preferred Shares. Such Shareholder owns of
record 100% of the Existing Common Shares and Existing Preferred Shares set forth opposite such
Shareholder’s name on Exhibit A hereto, free and clear of any lien, claim or encumbrance,
and, other than (x) the New Investors Securities Holders Agreement, (y) that certain Registration
Rights Agreement, dated as of June 29, 2006, by and among the Company, Holdings and the other
investors named therein and (z) the Securities Holders Agreement, as of the date hereof, there are
no, and immediately prior to the Closing there will be no, shareholder agreements, voting trusts,
proxies or other agreements or understandings with respect to the outstanding shares of capital
stock of the Company to which such Shareholder is a party.

          (c) Provisions Relating to Securities Laws. Such Shareholder acknowledges that the
shares of New Common Shares received pursuant to the Common Shares Exchange and/or the Preferred
Shares Exchange, as the case may be, have not been registered under the Securities Act of 1933, as
amended (the “Securities Act”), or under any applicable state securities laws, and are
being issued in reliance on exemptions from the registration requirements of the Securities Act and
any applicable state securities or blue sky laws. Each Shareholder agrees to refrain from
transferring or otherwise disposing of the New Common Shares (other than, in the case of Holdings,
to its members) or any interest therein in such manner as to cause the Company to violate the
registration requirements of the Securities Act or any applicable state securities or blue sky
laws.

ARTICLE IV

OTHER MATTERS

     4.1 Termination. Anything herein or elsewhere to the contrary notwithstanding, this
Agreement may be terminated (and the transactions contemplated herein may be abandoned) at any time
before the Closing (a) by mutual written consent of Holdings, on the one hand, and the Company, on
the other hand or (b) by Holdings, on the one hand, or the Company, on the other hand, upon notice
given to the other, if any governmental authority shall have issued an order, decree or ruling or
taken any other action permanently restraining, enjoining or otherwise

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prohibiting the transactions contemplated by this Agreement. In the event of any termination
of this Agreement as provided in this Section 4.1, (i) written notice thereof shall promptly be
given to the other parties hereto and this Agreement shall forthwith become wholly void and
terminate and of no further force and effect except for this Section 4.1 (Termination) and Sections
4.3 (Further Assurances; Lock-up), 4.5 (Assignment and Binding Effect), 4.6 (Amendment and Waiver),
4.7 (Notices), 4.8 (Applicable Law; Consent to Jurisdiction), 4.9 (No Benefit to Others), 4.10
(Headings), 4.11 (Severability), 4.12 (Counterparts) and 4.13 (Independent Nature of Obligations
and Rights), and (ii) there shall be no liability on the part of any of the parties hereto, except
that such termination shall not preclude any party from pursuing judicial remedies for damages
and/or other relief as a result of the breach by the other party of any representation, warranty,
covenant or agreement contained herein prior to such termination.

     4.2 Termination of Agreements. The Company and the Shareholders party to the New
Investors Securities Holders Agreement and/or the Securities Holders Agreement agree that,
effective as of the Closing, such agreements automatically shall be terminated in their entirety,
shall be null and void and shall no longer be in full force and effect and that all rights and
obligations thereunder shall cease upon the Closing.

     4.3 Further Assurances. Each of the parties shall from time to time after the Closing
Date, at the reasonable request of any other party, execute, acknowledge and deliver to such other
party such other instruments of conveyance and transfer or assumption and will take such other
actions and execute and deliver such other documents, certifications and further assurances as such
other party may reasonably require in order to effect the transactions contemplated hereby and will
use commercially reasonable efforts to cooperate with the other parties and execute and deliver to
the other parties such other instruments and documents and take such other actions as may be
reasonably requested from time to time by such other party as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.

     4.4 Contents of Agreement. This Agreement, including the Exhibits hereto, and, with
respect to the Company and Holdings only, the Plan of Reorganization, sets forth the entire
understanding of the parties hereto with respect to the transactions contemplated hereby and
supersedes any and all previous agreements and understandings, oral or written, between or among
the parties regarding the transactions contemplated hereby. The transactions contemplated hereby
constitute a reclassification within the meaning of Rule 16b-7 promulgated under the Securities
Exchange Act of 1934, as amended.

     4.5 Assignment and Binding Effect. This Agreement may not be assigned by any party
without the prior written consent of the other parties. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each party.

     4.6 Amendment and Waiver. Except for as expressly set forth herein, this Agreement
shall not be amended or modified, and no provision hereof shall be waived, except by written
instrument duly executed by each of the parties hereto. The grant of a waiver in one instance does
not constitute a continuing waiver in all similar instances. No failure to exercise, and no

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delay in exercising, by any party, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof.

     4.7 Notices. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and shall be deemed
given only if delivered personally, delivered by courier or sent by registered or certified mail or
by Federal Express or other overnight mail service, postage prepaid, or by facsimile, with written
confirmation to follow, as follows:

If to the Company, to:

Bravo Brio Restaurant Group, Inc.

777 Goodale Blvd.

Suite 100

Columbus, Ohio 43212

Attention: Chief Executive Officer

Facsimile No.: (614) 326-7943

With a required copy to (which shall not itself constitute notice):

Dechert LLP

Cira Centre

2929 Arch Street

Philadelphia, PA 19104

Attention: Carmen J. Romano, Esq. and James A. Lebovitz, Esq.

Facsimile No.: (215) 994-2222

If to Holdings:

c/o Bruckmann, Rosser, Sherrill & Co., Inc.

126 East 56th Street, 29th Floor

New York, NY 10022

Attention: Harold O. Rosser, II

Facsimile No.: (212) 521-3799

With a required copy to (which shall not itself constitute notice):

Bruckmann, Rosser, Sherrill & Co., Inc.

126 East 56th Street, 29th Floor

New York, NY 10022

Attention: Harold O. Rosser, II

Facsimile No.: (212) 521-3799

Castle Harlan, Inc.

150 East 58th Street

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New York, NY 10155

Attention: David B. Pittaway

Facsimile No.: (212) 593-5955

Dechert LLP

Cira Centre

2929 Arch Street

Philadelphia, PA 19104

Attention: Carmen J. Romano, Esq. and James A. Lebovitz, Esq.

Facsimile No.: (215) 994-2222

          If to any other Shareholder, to such Shareholder’s address as set forth in the records of the
Company,

or to such other address or facsimile numbers as the addressee may have specified in a notice duly
given to the sender as provided herein. Such notice, request, demand, waiver, consent, approval or
other communication will be deemed to have been given as of the date so delivered or, if such date
is not a business day, on the next business day.

     4.8 Applicable Law; Consent to Jurisdiction. This Agreement shall be governed by and
construed in accordance with the laws of the State of Ohio, without giving effect to such State’s
laws and principles regarding the conflict of laws. Each of the parties hereto (a) consents to
submit itself to the personal jurisdiction of any federal court located in the State of Ohio or any
Ohio state court in connection with any dispute that arises out of this Agreement or any of the
transactions contemplated by this Agreement, (b) agrees that it will not attempt to deny or defeat
such personal jurisdiction by motion or other request for leave from any such court, (c) agrees
that it will not bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any court other than a federal court sitting in the State of Ohio
or an Ohio state court unless venue would not be proper under rules applicable in such courts and
(d) waives any right to which it may be entitled, on account of place of residence or domicile.

     4.9 No Benefit to Others. The representations, warranties, covenants and agreements
contained in this Agreement are for the sole benefit of the parties hereto and their respective
heirs, executors, administrators, legal representatives, successors and permitted assigns, and they
shall not be construed as conferring any rights on any other persons.

     4.10 Headings. The headings in this Agreement are solely for convenience of reference
and shall not limit or otherwise affect the meaning of this Agreement.

     4.11 Severability. Any provision of this Agreement which is invalid or unenforceable
in any jurisdiction shall be ineffective to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining provisions hereof, and such
invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provisions in any other jurisdiction.

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     4.12 Counterparts. This Agreement may be executed in any number of counterparts and
any party hereto may execute any such counterpart, each of which when executed and delivered shall
be deemed to be an original and all of which counterparts taken together shall constitute but one
and the same instrument. This Agreement shall only become binding when one or more counterparts
taken together shall have been executed and delivered by all of the parties.

     4.13 Independent Nature of Obligations and Rights. The obligations of each Shareholder
under this Agreement are several and not joint with the obligations of each other party, and no
Shareholder shall be responsible in any way for the performance of the obligations of any other
party under this Agreement.

     4.14 Remedies. Each party to this Agreement acknowledges and agrees that in the event
of any breach of this Agreement by such party, any of the other parties hereto would be irreparably
harmed and could not be made whole by monetary damages. Each party accordingly agrees (i) to waive
the defense in any action for specific performance that a remedy at law would be adequate and (ii)
any of the other parties hereto, in addition to any other remedy to which it may be entitled at law
or in equity, shall be entitled to compel specific performance of this Agreement.

[Signature Pages Follow]

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          IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of the date first
written above.

	 	 	 	 	 
	 	BRAVO BRIO RESTAURANT GROUP, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	SHAREHOLDERS

BRAVO DEVELOPMENT HOLDINGS LLC

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 

	 

	 	 
	 

	 	Alton F. Doody, III
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Saed Mohseni
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	James J. O’Connor

[Signature Page to Exchange Agreement]

 

 

	 	 	 

	 

	 	 
	 

	 	Bret Adams
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Kathleen L. Chugh
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Mike Creedon
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Ronald F. Dee
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	John C. Doody
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Alice Elliot
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Gary Ertl
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Vernessa W. Gates
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Matt Harding
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Joe Isbell

[Signature Page to Exchange Agreement]

 

 

	 	 	 

	 

	 	 
	 

	 	Lance Juhas
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Timothy M. Kenrick
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Michael L. Moser
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Brian T. O’Malley
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	John Odachowski
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Jeff Ramm
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Diane Reed
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Lou Rios
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Nicole Roope
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Justin Stratford

[Signature Page to Exchange Agreement]

 

 

	 	 	 

	 

	 	 
	 

	 	Laura Tappen
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Debbie Ticknor
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Tom Vahle
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Mike Woodburn
	 
	 	 
	 
	 	 
	 

	 	 
	 

	 	Philip S. Yandolino

[Signature Page to Exchange Agreement]exv10w1

Exhibit 10.1

EXCHANGE AGREEMENT

     This EXCHANGE AGREEMENT (the “Agreement”), dated as of October 18, 2010, is being entered into
by and between CONVERTED ORGANICS INC., a Delaware corporation (the “Company”), and OPPENHEIMER
ROCHESTER NATIONAL MUNICIPALS and OPPENHEIMER NEW JERSEY MUNICIPAL FUND, each a series of
OPPENHEIMER MULTI-STATE MUNICIPAL TRUST, a Massachusetts business trust (together, the “Holder”).

RECITALS

     A. Pursuant to a certain Loan Agreement dated as of February 1, 2007 (the “Loan Agreement”),
by and between the New Jersey Economic Development Authority (the “Authority”) and a wholly-owned
subsidiary of the Company, Converted Organics of Woodbridge, LLC (the “Borrower”), the Authority
issued and sold its $17,500,000 aggregate principal amount Solid Waste Facilities Revenue Bonds
(Converted Organics of Woodbridge, LLC — 2006 Project) Series A (the “Bonds”), for the purpose of
making a loan to the Borrower in the amount of $17,500,000 (the “Loan”).

     B. The Loan is evidenced by a certain Promissory Note dated as of February 16, 2007 (the
“Note”), which Note is secured by a certain Mortgage and Security Agreement (the “Mortgage”) and
Assignment of Leases and Other Agreements (the “Assignment”), each dated as of February 16, 2007.

     C. As an inducement to the Authority to make the Loan and to Holder to purchase the Bonds, the
Company entered into and executed a certain Guaranty Agreement dated as of February 16, 2007,
pursuant to which it guaranteed the full, prompt and unconditional payment when due of any
liability of Borrower owing to the Authority and the Holder with respect to the Loan.

     D. The Holder purchased the Bonds from Authority’s placement agent pursuant to a Bond
Placement Agreement dated February 14, 2007.

     E. The Holder is the owner of warrants to purchase 2,284,409 shares the Company’s common stock
(the “Class B Warrants”).

     F. Holder acknowledges that since the date of the Loan Agreement, the Company has periodically
deposited funds into certain accounts with BNY Mellon, and as of August 31, 2010, $613,245.11
remained in such accounts (such amount, plus any additional interest accrued since August 31, 2010
thereon, the “Indenture Funds”).

     G. To induce the Holder to exchange the Bonds, the Class B Warrants and certain additional
consideration described herein, for equity in the Company, the Company has authorized a new class
of Series A Preferred Stock (the “Securities”), such Securities to have such rights and preferences
relative to the common stock of the Company as set forth in the Certificate of Designation set
forth in Exhibit A hereto.

     H. Pursuant to the terms of this Agreement and in consideration of the 17,500 shares

 

 

of the Securities, the Holder will (i) transfer to the Company its interest in the Bonds, (ii)
waive the interest accrued and unpaid from February 1, 2010 until the date hereof on the Bonds (the
“Bond Interest”), (iii) transfer to the Company any and all rights with respect to the Indenture
Funds and irrevocably waive any continuing rights relating to such Indenture Funds and (iv)
relinquish and terminate the Class B Warrants (collectively, the “Consideration”).

     I. Notwithstanding the foregoing, the Company acknowledges that it shall remit to Holder, upon
receipt of the Indenture Funds, an amount equal to Holder’s legal fees incurred in connection with
this Agreement (“Holder’s Fees”).

     J. The issuance of the Securities is being made in reliance upon the exemption from
registration provided by Section 4(2) of the Securities Act of 1933 (the “1933 Act”).

AGREEMENT

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

1. EXCHANGE; INTEREST RELEASE.

     (a) Exchange Terms. On the date hereof (the “Closing Date”), the Holder shall, and the
Company shall, pursuant to Section 4(2) of the 1933 Act, exchange the Consideration for the
Securities. The closing (the “Closing”) of the exchange shall occur at the offices of the Company
located at 137A Lewis Wharf, Boston, Massachusetts, 02110.

     (b) 
Delivery. On the Closing Date,
(i) the Holder shall deliver to the Company (a) DTC Transfer Instructions relating to the Bonds,
instructing that the Bonds be transferred to the Company and (b) the Class B Warrant certificate
(collectively, the “Holder Deliveries”) and (ii) the Company shall deliver to the Holder the
Securities, registered in the name of the Holder.

     (c) 
Interest Release. By executing this
Agreement, Holder hereby irrevocably waives and relinquishes its right to the Bond Interest.
Holder further acknowledges that as of the date hereof no interest, penalties, fees or expenses are
due or payable to Holder related to the Bonds from the Company or Borrower.

     (d) Indenture Funds Release. By executing this Agreement, Holder hereby transfers to
the Company any and all rights with respect to the Indenture Funds and irrevocably waives any
rights relating to such Indenture Funds.

     (e) Company Obligation. Upon receipt of the Indenture Funds, the Company shall deliver
to the Holder, by wire transfer of immediately available funds, an amount equal to Holder’s Fees.

2. HOLDER’S REPRESENTATIONS AND WARRANTIES.

     The Holder represents and warrants to the Company:

 

 

     (a) Organization; Authority. The Holder is an entity duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization with the requisite
power and authority to enter into and to consummate the transactions contemplated by this
Agreement.

     (b) No Public Sale or Distribution. The Securities are being acquired by the Holder
for its own account and not with a view towards, or for resale in connection with, the public sale
or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act. The
Holder does not presently have any agreement or understanding, directly or indirectly, with any
individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity or a government or any department or agency thereof
(“Person”) to distribute any of the Securities in violation of any applicable securities laws.

     (c) Accredited Investor Status. The Holder is an “accredited investor” as that term is
defined in Rule 501(a) of Regulation D.

     (d) Reliance on Exemptions. The Holder understands that the Securities are being
offered and issued to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company is relying in part upon the
truth and accuracy of, and the Holder’s compliance with, the representations, warranties,
agreements, acknowledgments and understandings of the Holder set forth herein in order to determine
the availability of such exemptions and the eligibility of the Holder to acquire the Securities.

     (e) Information. The Holder and its advisors have been furnished with all materials
relating to the business, finances and operations of the Company and materials relating to the
offer and issuance of the Securities which have been requested by the Holder, including, without
limitation, the information related to the restructuring of the Company’s debt obligations and
landlord and contractor obligations. The Holder and its advisors have been afforded the
opportunity to ask questions of the Company. The Holder understands that its acquisition of the
Securities involves a high degree of risk. The Holder has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

     (f) No Governmental Review. The Holder understands that no United States federal or
state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the acquisition
of the Securities nor have such authorities passed upon or endorsed the merits of the offering of
the Securities.

     (g) Transfer or Resale. The Holder understands that: (i) the Securities and the
Company’s common stock, par value $0.0001 per share, issuable upon conversion of all of the
Securities (the “Conversion Shares”), have not been and are not being registered under the 1933 Act
or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless
(A) subsequently registered thereunder, (B) the Holder shall have delivered to the Company an
opinion of counsel to the Holder (if requested by the Company), in a form reasonably acceptable to
the Company, to the effect that such Securities and Conversion Shares

 

 

to be sold, assigned or
transferred may be sold, assigned or transferred pursuant to an exemption from such registration,
or (C) the Holder provides the Company with reasonable assurance (which shall not include an
opinion of counsel) that such Securities and Conversion Shares can be sold, assigned or transferred
pursuant to Rule 144 or Rule 144A promulgated under the 1933 Act (or a successor rule thereto)
(collectively, “Rule 144”); (ii) any sale of the Securities and Conversion Shares made in reliance
on Rule 144 may be made only in accordance with the terms of Rule 144 and
further, if Rule 144 is not applicable, any resale of the Securities and Conversion Shares
under circumstances in which the seller (or the Person through whom the sale is made) may be deemed
to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some
other exemption under the 1933 Act or the rules and regulations of the Securities and Exchange
Commission (“SEC”) promulgated thereunder; and (iii) except as set forth herein, neither the
Company nor any other Person is under any obligation to register the Securities and Conversion
Shares under the 1933 Act or any state securities laws or to comply with the terms and conditions
of any exemption thereunder.

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

     (j) No Conflicts. The execution, delivery and performance by the Holder of this
Agreement and the consummation by the Holder of the transactions contemplated hereby will not (i)
result in a violation of the organizational documents of the Holder or (ii) result in a violation
of any law, rule, regulation, order, judgment or decree (including federal and state securities
laws) applicable to the Holder, except in the case of clause (ii) above, for such conflicts,
defaults, rights or violations which would not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on the ability of the Holder to perform its obligations
hereunder.

     (k) General Solicitation. The Holder is not acquiring the Securities as a result of
any advertisement, article, notice or other communication regarding the Securities published in any
newspaper, magazine or similar media or broadcast over television or radio or presented at any
seminar.

3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

     The Company represents and warrants to the Holder that:

     (a) Organization and Qualification. The Company is an entity duly incorporated or
otherwise organized, validly existing and in good standing under the laws of the jurisdiction of
its incorporation, with the requisite power and authority to own and use its properties and assets
and to carry on its business as currently conducted. The Company is not in material violation nor
default of any of the provisions of its certificate of incorporation, bylaws or other
organizational or charter documents. The Company is duly qualified to conduct business and is in
good standing as a foreign corporation or other entity in each jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification necessary, except where

 

 

the
failure to be so qualified or in good standing, as the case may be, could not have or reasonably be
expected to result in: (i) a material adverse effect on the legality, validity or enforceability of
this Agreement, (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company, taken as a whole, or (iii) a
material adverse effect on the Company’s ability to perform in any material respect on a timely
basis its obligations under this Agreement (any of (i), (ii) or (iii), a “Material Adverse
Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or
curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

     (b) Authorization; Enforcement. The Company has the requisite corporate power and
authority to enter into and to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of
this Agreement by the Company and the consummation by it of the transactions contemplated hereby
has been duly authorized by all necessary action on the part of the Company and no further action
is required by the Company, the Board of Directors or the Company’s stockholders in connection
therewith other than in connection with the Required Approvals. This Agreement has been (or upon
delivery will have been) duly executed by the Company and, when delivered in accordance with the
terms hereof and thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except: (i) as limited by general
equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited
by laws relating to the availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions may be limited by
applicable law.

     (c) No Conflicts. The execution, delivery and performance by the Company of this
Agreement, the issuance and sale of the Securities and the consummation by it of the transactions
contemplated hereby to which it is a party do not and will not: (i) conflict with or violate any
provision of the Company’s certificate of incorporation, bylaws or other organizational or charter
documents, or (ii) subject to the Required Approvals, conflict with or result in a violation of any
law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or
governmental authority to which the Company is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company is bound or affected; except in
the case of clause (ii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.

     (d) Filings, Consents and Approvals. The Company is not required to obtain any
consent, waiver, authorization or order of, give any notice to, or make any filing or registration
with, any court or other federal, state, local or other governmental authority or other Person in
connection with the execution, delivery and performance by the Company of this Agreement, other
than such filings as are required to be made under applicable securities laws and the notice and
application to the NASDAQ Stock Market for the listing of the shares of Company common stock
underlying the Securities (the “Required Approvals”), and the Company will use its reasonable best
efforts to keep its shares listed on the NASDAQ Stock Market.

     (e) Issuance of the Securities. The Securities are duly authorized and, when issued
and paid for, will be duly and validly issued, fully paid and nonassessable, free and clear of all
liens imposed by the Company other than restrictions on transfer provided for in this Agreement.

 

 

The Company has duly authorized the issuance and delivery of the Conversion Shares, and upon
conversion of the Securities, the Conversion Shares will be fully paid and nonassessable and free
of and clear of all liens imposed by the Company other than restrictions on transfer provided for
in this Agreement.

     (f) SEC Reports; Financial Statements. The Company has filed all reports, forms,
statements and other documents required to be filed by the Company under the 1933 Act and the
Securities Exchange Act of 1934 (the “1934 Act”), including pursuant to Section 13(a) or 15(d)
thereof, for the two years preceding the date hereof (the foregoing materials, including the
exhibits thereto and documents incorporated by reference therein, being collectively referred to
herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such extension. As of
their respective dates, the SEC Reports complied in all material respects with the requirements of
the 1933 Act and the 1934 Act, as applicable, and none of the SEC Reports, when filed, contained
any untrue statement of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The financial statements of the Company included in
the SEC Reports complied in all material respects with applicable accounting requirements and the
rules and regulations of the Commission with respect thereto as in effect at the time of filing.
Such financial statements have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as
may be otherwise specified in such financial statements or the notes thereto and except that
unaudited financial statements may not contain all footnotes required by GAAP, and fairly present
in all material respects the financial position of the Company as of and for the dates thereof and
the results of operations and cash flows for the periods then ended, subject, in the case of
unaudited statements, to normal, immaterial, year-end audit adjustments.

     (g) Litigation. Except as set forth in the SEC Reports, there is no action, suit,
inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of its properties before or by any
court, arbitrator, governmental or administrative agency or regulatory authority (federal, state,
county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the
legality, validity or enforceability of this Agreement or the Securities or (ii) could, if there
were an unfavorable decision, have or reasonably be expected to result in a Material Adverse
Effect.

     (h) Regulatory Permits. The Company possess all certificates, authorizations and
permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary
to conduct their respective businesses as described in the SEC Reports, except where the failure to
possess such permits could not reasonably be expected to result in a Material Adverse Effect
(“Material Permits”), and the Company has not received any notice of proceedings relating to the
revocation or modification of any Material Permit.

     (i) Sarbanes-Oxley; Internal Accounting Controls. The Company is in material
compliance with all provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of
the Closing Date. The Company maintains a system of internal accounting controls sufficient to
provide reasonable assurance that: (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as necessary to

 

 

permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with management’s general or specific
authorization, and (iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in 1934
Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and
procedures to ensure that information required to be disclosed by the Company in the reports it
files or submits under the 1934 Act is recorded, processed, summarized and reported, within the
time periods specified in the Commission’s rules and forms. The Company’s certifying officers have
evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of
the period covered by the Company’s most recently filed periodic report under the 1934 Act (such
date, the “Evaluation Date”). The Company presented in its most recently filed periodic report
under the 1934 Act the conclusions of the certifying officers about the effectiveness of the
disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the Company’s internal control over financial
reporting (as such term is defined in the 1934 Act) that has materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial reporting.

     (j) Investment Company. The Company is not an “investment company” within the meaning
of the Investment Company Act of 1940, as amended. The Company shall conduct its business in a
manner so that it will not become an “investment company” subject to registration under the
Investment Company Act of 1940, as amended.

     (k) Disclaimer of Shareholder and Trustee Liability. The Company understands and
agrees that the obligations of the Funds under this Agreement are not binding on any trustee or
shareholder of the Funds personally but bind only the property of the Funds. The Company represents
that it has notice of the provisions of the Declaration of Trust of the Holder disclaiming
shareholder or trustee liability for acts or obligations of the Funds.

4. COVENANTS.

     (a) The Company shall, on or before 9:30 a.m., Eastern time, on the fourth (4th)
Business Day following the date of this Agreement, file a Current Report on Form 8-K describing all
the material terms of the transactions contemplated by this Agreement in the form required by the
1934 Act and attaching all the material ancillary agreements, provided, however, that any press
release or Form 8-K filing made by the Company pursuant to this section shall be subject to
Holder’s prior review and approval.

     (b) After the six-month anniversary of the date hereof, upon written request of the Holder,
the Company shall prepare and file with the SEC a registration statement (the “Registration
Statement”) covering the resale of all or such maximum portion of the Conversion Shares as
permitted by any publicly-available written or oral guidance of the SEC staff, or any comments,
requirements or requests of the SEC staff, including, without limitation, the Manual of Publicly
Available Telephone Interpretations D.29 (the “SEC Guidance”) that are: (i) not then registered on
an effective registration statement for an offering to be made on a continuous basis pursuant to
Rule 415 of the 1933 Act or (ii) not eligible for resale without volume or manner-of-sale
restrictions and without current public information pursuant to Rule

 

 

144. The Company shall use
its reasonable best efforts to cause a Registration Statement filed hereunder to be declared
effective under the 1933 Act as promptly as possible after the filing thereof, and shall use its
reasonable best efforts to keep such Registration Statement continuously effective under the 1933
Act until all Conversion Shares covered by such Registration Statement (i) have been sold,
thereunder or pursuant to Rule 144, or (ii) (A) may be sold without volume or
manner-of-sale restrictions pursuant to Rule 144 and (B) (I) may be sold without the
requirement for the Company to be in compliance with the current public information requirement
under Rule 144 or (II) the Company is in compliance with the current public information requirement
under Rule 144. Notwithstanding any other provision of this Agreement, if any SEC Guidance sets
forth a limitation on the number of Conversion Shares permitted to be registered on a Registration
Statement (and notwithstanding that the Company used diligent efforts to advocate with the
Commission for the registration of all or a greater portion of Conversion Shares), the number of
Conversion Shares to be registered on such Registration Statement will reduced as required by the
SEC Guidance. The Company agrees to pay all costs of the Company associated with the preparation
and filing of the Registration Statement. The Holder shall be responsible for any broker or
similar commissions.

5. REGISTER; LEGEND.

     (a) Register. The Company shall maintain at its principal executive offices (or such other
office or agency of the Company as it may designate by notice to Holder), a register for the
Securities in which the Company shall record the name and address of Holder as the Person in whose
name the Securities has been issued. The Company shall keep the register open and available at all
times during business hours for inspection of the Holder or its legal representatives.

     (b) Legends. The Holder understands that the certificates or other instruments
representing the Securities and, if required by law, the Conversion Shares shall bear any legend as
required by the “blue sky” laws of any state and a restrictive legend in substantially the
following form (and a stop-transfer order may be placed against transfer of such stock
certificates):

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”), AS AMENDED AND HAVE BEEN ACQUIRED FOR INVESTMENT
AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO
SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.

6. MISCELLANEOUS.

     (a) Governing Law. The parties hereby agree that they have chosen that all questions
concerning the construction, validity, enforcement and interpretation of this Agreement shall be
governed by the internal laws of the State of Delaware, without giving effect to any choice of law
or conflict of law provision or rule (whether of the State of Delaware or any other

 

 

jurisdictions)
that would cause the application of the laws of any jurisdictions other than the State of Delaware.

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

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

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

     (e) Entire Agreement; Amendments. This Agreement and exhibits attached hereto and thereto
and the instruments referenced herein and therein supersede all other prior oral or written
agreements between the Holder, the Company, their affiliates and Persons acting on their behalf
solely with respect to the matters contained herein and therein and this Agreement and exhibits
attached hereto and thereto and the instruments referenced herein and therein contain the entire
understanding of the parties solely with respect to the matters covered herein and therein and,
except as specifically set forth herein or therein, neither the Company nor the Holder makes

 

 

any
representation, warranty, covenant or undertaking with respect to such matters. No provision of
this Agreement may be amended or waived other than by an instrument in writing signed by the
Company and the Holder, provided that any party may give a waiver in writing as to itself.

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

If to the Company:

Converted Organics Inc.

137A Lewis Wharf

Boston, Massachusetts 02110

Attention: Edward J. Gildea, President

Facsimile: (617) 624-0333

With a copy (for informational purposes only) to:

Cozen O’Connor

The Army and Navy Building

1627 I Street, NW

Suite 1100

Washington, D.C. 20006

Attention: Ralph V. De Martino, Esq.

Facsimile: (866) 741-8182

If to the Holder:

Richard Stein

Director of Credit Research

OppenheimerFunds Inc.

350 Linden Oaks

Rochester, New York 14625

(585) 383-1300

rstein@oppenheimerfunds.com

With a copy (for informational purposes only) to:

Randy Legg

Vice President and Associate Counsel

OppenheimerFunds, Inc.

6803 South Tucson Way

Centennial, CO 80112-3924

 

 

(ph) 303-768-1026

(fax) 303-645-9606

rlegg@oppenheimerfunds.com

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

     (g) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective successors and assigns, including any purchasers of any of the
Securities.

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

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

     (j) No Strict Construction. The language used in this Agreement will be deemed to be the
language chosen by the parties to express their mutual intent, and no rules of strict construction
will be applied against any party.

[Signature Page Follow]

 

 

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

	 	 	 	 	 
	 	COMPANY:

CONVERTED ORGANICS INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HOLDER:

OPPENHEIMER ROCHESTER
NATIONAL MUNICIPALS

 	 
	 	By:  	 	 
	 	 	Richard Stein, Vice President 	 
	 	 	 	 
	 
	 	OPPENHEIMER NEW JERSEY
MUNICIPAL FUND

 	 
	 	By:  	 	 
	 	 	Richard Stein, Vice President 	 
	 	 	 	 

 

 

	 	 	 	 	 

Exhibit A

Certificate of Designation

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