Document:

exv10w2

Exhibit 10.2

TERMINATION AND SURRENDER AGREEMENT

     This Agreement (“Agreement”)is made as of this ___ day of October, 2010 (the “Effective
Date”), by and between Converted Organics Inc. (“COIN”), a Delaware corporation having offices at
7A Commercial Warf West, Boston, MA 02110, Converted Organics of Woodbridge, LLC, a New Jersey
limited liability company (“Woodbridge”) having offices at 7A Commercial Warf West, Boston, MA
02110 (COIN and Woodbridge being sometimes herein collectively referred to as the “COIN Parties”),
and Recycling Technology Development, LLC (“Lessor”), a New Jersey limited liability company having
offices at 75 Crows Mills Road, Keasbey, New Jersey 08832.

RECITALS

     A. Lessor and COIN entered into an Agreement of Lease dated as of June 2, 2006 (as amended
from time to time (the “Lease”). On or about February 1, 2007, COIN entered into an Assignment and
Assumption Agreement pursuant to which COIN assigned all of its rights, title and interest, duties,
obligations, responsibilities and liabilities to and under the Lease to Woodbridge (the “Assignment
and Assumption Agreement”). Simultaneous with such assignment, COIN guaranteed the obligations of
Woodbridge under the Lease (the “Guaranty”).

     B. Woodbridge has defaulted in the payment of the rent due under the Lease. The rent that
would have been paid by Woodbridge for the unexpired term of the Lease absent its termination as
provided herein would be approximately Nine Million One Hundred Six Thousand Five Hundred Eight and
90/100 ($9,106,508.90) Dollars (the “Future Rent”). Neither Woodbridge nor COIN has the financial
ability at this time to pay any material part of the amount due and owing to the Lessor.

     C. Subject to the terms and conditions of this agreement and the occurrence of the Settlement
Date (defined below), the Lessor and Woodbridge have agreed to terminate the Lease, and Woodbridge
has agreed to surrender possession of the Leased Premises. Further, the parties have agreed that
Woodbridge shall transfer certain personal property located at the Leased Premises and COIN shall
issue certain shares of stock in satisfaction of certain claims of the Lessor under the Lease
arising from (i) damages to a tipping floor, to the extent not actually reimbursed by insurance
carried by Woodbridge, (ii) unpaid sewer and trash removal charges through August 3, 2010, (iii)
unpaid rent due Lessor for periods prior to termination of the Lease; (iv) certain costs and
expenses incurred by Lessor in connection with existing litigation entitled Lefcourt Associates et
al. v. Converted Organics of Woodbridge (the “Lefcourt Litigation”) alleging damage from odors
emanating from the Leased Premises (“Litigation Expenses”), (v) damages that may result from the
condition of the premises at the time of surrender, and (vi) the required removal and disposal of
abandoned inventory and materials (collectively the “Immediate Damages”). It is agreed that the
Immediate Damages do not include Lessor’s claims under any insurance policy assigned to Lessor by
Woodbridge and any claims under any insurance agreement where Lessor is named as an additional
insured or loss payee. Lessor has agreed to enter into a certain Claims Purchase Agreement (the
“CPA”) with American Capital Management, LLC (“American Capital”) whereby Lessor will sell and
assign its rights to the Future Rent and all other remaining claims other than the Immediate
Damages, those claims under any insurance policy assigned to Lessor by Woodbridge and any claims
under any insurance agreement where Lessor is named as an additional insured or loss payee
(collectively the “Claims”) it may have against the COIN Parties in connection with the Lease, and
against any officers, directors, employees, contractors and affiliates or representatives of either
of the COIN Parties, to American Capital.

     D. As used herein, the “Settlement Date” shall mean the first business day following
satisfaction of all of the following conditions: (i) payment of the Purchase Price (as defined in
the CPA) by American Capital to Lessor, (ii) satisfaction of all of the terms and conditions of
this Agreement, and

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(iii) execution and delivery by American Capital of a general release in favor of the COIN
Parties releasing the assigned Claims.

AGREEMENT

     NOW, THEREFORE, in consideration of the foregoing and the covenants contained herein and for
other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereby agree as follows:

	 	1.	 	Termination and Surrender. On the Settlement Date, the Lease shall be
deemed terminated and Woodbridge shall be deemed to have surrendered possession of the
Leased Premises to the Lessor. At any time following the Settlement Date, immediately
upon the request of Lessor, Woodbridge shall assign and transfer to Lessor or its
designee, to the extent assignable, the Class C recycling permit and any other permit
held by Woodbridge.
	 
	 	2.	 	Issuance of Shares. On the Settlement Date, COIN shall issue a number
of COIN common shares to Lessor or its designee to be determined by dividing Five
Hundred Thousand Dollars ($500,000.00) by the Closing Stock Price (as defined below).
As used herein, “Closing Stock Price” means the consolidated closing bid price of the
COIN common stock on the day prior to the Settlement Date. Notwithstanding any other
provision hereof, no fractional shares of COIN common stock, and no certificates or
scrip for a fractional share, or other evidence of ownership thereof, will be issued to
the Lessor or any designee. COIN shall cause the transfer agent to confirm the number
of shares issued to Lessor in writing or by electronic mail immediately following such
transfer.
	 
	 	3.	 	Sale of Personal Property. On the Settlement Date, Woodbridge shall
execute and deliver a bill of sale in the form attached hereto as Exhibit A
selling, transferring and conveying all equipment, tools and fixtures owned by
Woodbridge and presently located at the Leased Premises (“Personal Property”), free and
clear of all liens, claims and other encumbrances, but otherwise on an “as is, where
is” basis with no representations or warranties of any kind expressed or implied. On
the Settlement Date, Woodbridge shall have obtained and filed or shall deliver to
Lessor UCC-3 forms executed by The Bank of New York, as Trustee, on behalf of itself
and the New Jersey Economic Development Authority releasing each of those creditor’s
liens covering the Personal Property. Woodbridge shall provide executed lien releases
and discharges from (i) SNC-Lavalin Project Services, Inc, (ii) Airside, Inc., (iii)
Hatzel & Buehler, Inc., (iv) Brennan Industrial Contractors, Inc, (v) Armistead
Mechanical, Inc., and (vi) The Construction Partnership, Inc., and their respective
successors and assigns, releasing and discharging any and all liens and claims against
the Personal Property and the Leased Premises. In addition, Woodbridge shall provide
an executed release of the lis pendens executed by Armistead Mechanical, Inc. on March
12, 2010 and recorded on March 16, 2010 in book 2100, page 663.
	 
	 	4.	 	Assignment of Rights Under Insurance Policies. To the extent that
Woodbridge is covered under any insurance policy for (i) damage to the tipping floor at
the Leased Premises, (ii) the Litigation Expenses, (iii) any other claim, cost or
expense in connection with the Lefcourt Litigation, and/or (iv) any other claim, cost
or expense in connection with the Lease or the Leased Premises, and to the extent
assignable under applicable law, Woodbridge assigns to Lessor any claim under such
policy or policies for payment on account of such damages and expenses effective as of
and conditioned upon the Settlement Date. Nothing herein is intended to in anyway
compromise, convey or affect any claim that Lessor may have for

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	 	 	 	defense or indemnification under any insurance agreement where Lessor is named as an
additional insured or loss payee.

	 	5.	 	Mutual Releases. On the Settlement Date, Lessor and the COIN Parties
shall execute and deliver a mutual release in the form attached hereto as Exhibit
B.
	 
	 	6.	 	Representations, Warranties and Covenants of Lessor. The Lessor hereby
represents, warrants and covenants to the COIN Parties as follows:

	 	a.	 	Lessor is the lessor under the Lease and sole owner of the
Claims, free and clear of all liens, claims, charges and encumbrances and other
restrictions of any nature. Other than as contemplated by this Agreement,
Lessor has not sold, transferred, assigned, encumbered or released its interest
in the Lease or any part of the Claims.
	 
	 	b.	 	Lessor has all necessary power and authority to execute,
deliver and perform all of its obligations under this Agreement. Lessor has
such knowledge and experience in business and financial matters that it is able
to protect its own interests and evaluate the risks and benefits of entering
into this Agreement. Lessor acknowledges and agrees that it has had an
opportunity to conduct its own due diligence and consult with its own legal
counsel, and tax, financial and other advisors, and that Lessor is not relying
on any advice or representations from the COIN Parties other than those
contained herein. Lessor acknowledges that neither Purchase nor any of its
affiliates, employees or agent of the COIN Parties is acting as a fiduciary or
in another similar capacity for, or an advisor to, Lessor in respect of this
Agreement or otherwise.
	 
	 	c.	 	The execution, delivery and performance of this Agreement by
Lessor has been duly authorized by all requisite action on the part of Lessor.
This Agreement has been duly executed and delivered by Lessor and constitutes
the legal, valid and binding obligation of Lessor, enforceable against Lessor
in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency or similar laws affecting Lessors’ rights generally or
the availability of equitable remedies.
	 
	 	d.	 	The execution and delivery of this Agreement by Lessor, and the
performance of all of its obligations hereunder (i) are not in violation or
breach of, and will not conflict with or constitute a default under, any note,
debt instrument, security agreement, security interest, lease, lien, deed of
trust, mortgage, indebtedness, indenture, guarantee, instrument or any other
material contract, license, obligation, purchase order, customer order,
agreement or commitment binding upon Lessor, and (ii) will not conflict with or
violate any applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court having jurisdiction over
Lessor.
	 
	 	e.	 	There is no action, suit, inquiry, notice of violation,
proceeding or investigation pending or, to the knowledge of Lessor, threatened,
against or affecting Lessor or any of its assets before or by any court,
arbitrator, governmental or administrative agency, or regulatory authority
(federal, state, county, local or foreign) that adversely affects or challenges
the legality, validity or enforceability of, or that could have or reasonably
be expected to result in a material adverse effect on this Agreement, the
Lease, or the Claim.

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	 	f.	 	Neither Lessor nor any of its affiliates is, or has been in the
past ninety (90) days, an “affiliate” (as defined in Rule 144 promulgated under
the Securities Act of 1933, as amended) of COIN. Lessor understands that the
COIN common shares are “restricted securities” and have not been registered
under the Securities Act of 1933, as amended (“Act”) or any applicable state
securities law and is acquiring the COIN common shares as principal for its own
account and not with a view to or for distributing or reselling such securities
or any part thereof in violation of the Act or any applicable state securities
law, has no present intention of distributing any of such COIN common shares in
violation of the Act or any applicable state securities law and has no direct
or indirect arrangement or understandings with any other persons to distribute
or regarding the distribution of such COIN common shares in violation of the
Act or any applicable state securities law. The Lessor is an “accredited
investor” as defined in Rule 501(a) under the Act. Lessor has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
COIN common shares, and has so evaluated the merits and risks of such
investment.

	 	7.	 	Representations and Warranties of The COIN Parties. The COIN Parties
hereby each represent and warrants to Lessor as follows:

	 	a.	 	The COIN Parties have all necessary power and authority to
execute, deliver and perform all of their respective obligations under this
Agreement.
	 
	 	b.	 	The execution, delivery and performance of this Agreement by
the COIN Parties has been duly authorized by all requisite action on the part
of the COIN Parties. This Agreement has been duly executed and delivered by
the COIN Parties and constitutes the legal, valid and binding obligation of the
COIN Parties, enforceable against the COIN Parties in accordance with its
terms, except as may be limited by applicable bankruptcy, insolvency or similar
laws affecting the COIN Parties generally or the availability of equitable
remedies.
	 
	 	c.	 	The execution and delivery of this Agreement by the COIN
Parties, and the performance of all of its obligations hereunder (i) are not in
violation or breach of, and will not conflict with or constitute a default
under, any note, debt instrument, security agreement, security interest, lease,
lien, deed of trust, mortgage, indebtedness, indenture, guarantee, instrument
or any other material contract, license, obligation, purchase order, customer
order, agreement or commitment binding upon COIN, and (ii) will not conflict
with or violate any applicable law, rule, regulation, judgment, order or decree
of any government, governmental instrumentality or court having jurisdiction
over the COIN Parties.
	 
	 	d.	 	The Personal Property shall be conveyed free and clear of all
liens, claims and other encumbrances.
	 
	 	e.	 	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”) is the holder of
$17,500,000 aggregate principal amount of Solid Waste Facilities Revenue Bonds
Series A (the “Bonds”), has agreed to direct the Bank of New York, as trustee
and assignee of the New Jersey Economic Development Authority to (i) waive its
right to cure or remedy any default or breach of covenant by Woodbridge under
the Lease, (ii) consent to the

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	 	 	 	termination of the Lease by Lessor and Woodbridge and the surrender of
possession of the leased premises by Woodbridge, (iii) release and discharge the
mortgage on the leasehold estate of Woodbridge, and (iv) release all liens on
the Personal Property of Woodbridge located in the leased premises.

	 	8.	 	Fees and Expenses. Each party shall pay its own fees and expenses of
its advisers, counsel, accountants and other experts, if any, and all other expenses
incurred by it in connection with this Agreement. Lessor understands that the COIN
Parties shall not be liable for any commissions, selling expenses, orders, purchases,
contracts, taxes, withholding, or obligations of any kind resulting from any of
Lessor’s transactions.
	 
	 	9.	 	Choice of Law. This Agreement shall be governed by and construed
according to the laws of the State of New Jersey, without giving effect to its choice
of law principles. The parties agree that all actions and proceedings arising out of
or relating directly or indirectly to this Agreement or any ancillary agreement or any
other related obligations shall be litigated solely and exclusively in the state courts
in Middlesex County, New Jersey or the federal courts located in Newark, New Jersey,
and that such courts are convenient forums. Each party hereby submits to the personal
jurisdiction of such courts for purposes of any such actions or proceedings.
	 
	 	10.	 	Notices. All notices and other communications shall be in writing and
shall be provided to the recipient party to the addresses set forth on the first page
of this Agreement. All notices and communications shall be deemed made and effective
as follows: (i) if transmitted for overnight delivery via a nationally recognized
delivery service, the first business day after being delivered by the transmitting
party to such overnight delivery service, or (ii) if mailed via certified U.S. mail,
upon delivery. Any party may designate a superseding notice contact name and/or
address by providing the other parties with written notice pursuant to the provisions
of this section.
	 
	 	11.	 	General. The headings herein are for convenience only, do not
constitute a part of this Agreement and shall not be deemed to limit or affect any of
the provisions hereof. 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. This Agreement is intended for the
benefit of Lessor and the COIN Parties and its affiliates and their respective
successors and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person. The representations, warranties and covenants
contained herein shall survive the execution and delivery of this Agreement and the
closing of the transactions contemplated herein for a period of one (1) year and shall
be true in all material respects as if made again on the Settlement Date. On or before
the Settlement Date, upon request of another party, each party shall certify that the
representations made herein are true and complete in all material respects as of the
Settlement Date. This Agreement may be executed in two or more counterparts, by
facsimile or electronic transmission, all of which when taken together shall be
considered one original. No party may assign this Agreement or any of its rights or
obligations hereunder without the prior written consent of the other parties and any
such attempted assignment shall be null and void. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, and their respective representatives,
successors and permitted assigns.
	 
	 	12.	 	Amendments and Waivers. No provision of this Agreement may be waived
or amended except in a written instrument signed, in the case of an amendment, by the
parties, or, in the case of a waiver, by the party against whom enforcement of such
waiver is sought. No

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	 	 	 	waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any
subsequent default or a waiver of any other provision, condition or requirement hereof,
nor shall any delay or omission of any party to exercise any right hereunder in any
manner impair the exercise of any such right.

	 	13.	 	Further Assurances. Each party hereto 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 (including,
without limitation, stock powers) as any other party may reasonable request in order to
carry out the intent and accomplish the purpose of this Agreement and the consummation
of the transaction contemplated hereby. Woodbridge shall also provide reasonable
cooperation (at no material expense to itself) to Lessor in connection with efforts by
Lessor (i) to seek to reduce sewer charges incurred with respect to the Leased
Premises, (ii) in connection with the prosecution of any insurance claims that may be
assigned under this agreement, or (iii) in connection with seeking reimbursement for
the Litigation Expenses. Within five (5) business days of the Effective Date
Woodbridge shall provide to Lessor copies of all sampling results, correspondence
and/or other information in its possession that will support the reduction in the sewer
charges.
	 
	 	14.	 	ISRA Compliance. Woodbridge will complete the General Information
Notice and a Remediation in Progress Waiver form and Lessor shall submit same to the
New Jersey Department of Environmental Protection and pay any applicable fees, for the
purpose of complying with the requirements of the New Jersey Industrial Site Recovery
Act (“ISRA”), in connection with the cessation of Woodbridge’s operations. Lessor will
cooperate with Woodbridge in connection with the completion of the ISRA documentation.
	 
	 	15.	 	Termination. If the Settlement Date does not occur on or before the
date that is thirty (30) days following the Effective Date (unless extended by written
agreement of the parties hereto) this Agreement shall become null and void ab initio.
Unless and until the Settlement Date shall have occurred, nothing herein shall be
deemed to be an admission of liability by any party.
	 
	 	16.	 	Entire Agreement. This Agreement, together with the exhibits hereto,
contains the entire agreement and understanding of the parties, and supersedes all
prior and contemporaneous agreements, term sheets, letters, discussions, communications
and understandings, both oral and written, solely with respect to the sale, transfer,
conveyance and assignment of the Claim by Lessor to The COIN Parties, which the parties
acknowledge have been merged into this Agreement. For clarification purposes, the
Recitals are part of this Agreement.

Signatures to follow on next page

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IN WITNESS WHEREOF, the parties hereto have respectively signed and sealed this Agreement as of the
Effective Date.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	RECYCLING TECHNOLOGY DEVELOPMENT, LLC	 	 	 	CONVERTED ORGANICS, INC.	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 
	 

	 	Name:
	 	 	 	 	 	 	 	Name:	 	 	 	 
	 

	 	Title:
	 	 	 	 	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 

	 	 	 	 	 	 	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	CONVERTED ORGANICS OF WOODBRIDGE, LLC	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 	 	 	 	 	 	 

	 	 

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EXHIBIT A

Bill of Sale

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EXHIBIT B

Form of General Release

9exv10w3

Exhibit 10.3

JEFFER MANGELS BUTLER & MITCHELL LLP

MICHAEL A. GOLD (Bar No. 90667)

ELIZABETH A. CULLEY (Bar No. 258250)

1900 Avenue of the Stars, Seventh Floor

Los Angeles, California 90067-4308

Telephone:  (310) 203-8080

Facsimile:     (310) 203-0567

Attorneys for Plaintiff

AMERICAN CAPITAL MANAGEMENT, LLC

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

	 	 	 	 

	American Capital Management, LLC

	 	 	CASE NO. BC447588
	 
	 	 	 
	Plaintiff,

	 	 	Assigned For All Purposes To:
	 

	 	 	Hon. Susan Bryant-Deason
	          v.
	 	 	 
	 

	 	 	ORDER APPROVING STIPULATION FOR SETTLEMENT OF
CLAIMS
	Converted Organics Inc. and Converted
Organics of Woodbridge, LLC and Does 1-10
Inclusive,

              Defendants.

	 	 	

Date:       October 18, 2010

Time:       8:30 am 

Dept:       52
	 
	 	 	 
	 

	 	 	Complaint Filed:     October 15, 2010
	 
	 	 	Trial Date:                None Set

     The Joint Ex Parte Application For Court Order Approving Stipulation for Settlement of Claims
(“Application”), jointly filed by Plaintiff American Capital Management, LLC (“Plaintiff”) and
Defendants Converted Organics, Inc. (“COIN”) and Converted Organics of Woodbridge, LLC
(“Subsidiary”), came on for hearing on October 18, 2010 at 8:30 a.m. in Department 52 of the
above-entitled court, the Honorable Susan Bryant-Deason, Judge presiding.

     The Court, having reviewed the Application, having been presented with a Stipulation for

 

 

Settlement of Claims (the “Stipulation”), a copy of which is attached as Exhibit K to the
Application, and after a hearing upon the fairness, adequacy and reasonableness of the terms and
conditions of the issuance of shares of the common stock of COIN (the “Common Stock”) to Plaintiff
in exchange for the extinguishment of the claims set forth in the Stipulation,

     IT IS THEREFORE ORDERED AS FOLLOWS:

     1. The Stipulation is approved in its entirety;

     2. In full and final settlement of Plaintiff’s claims against COIN and
Subsidiary in the total amount of $11,254,749.90 (the “Claims”), which Claims Plaintiff
purchased from third-party creditors of COIN, Airside, Inc. (“Airside”), Armistead Mechanical, Inc.
(“Armistead”), Hatzel & Buehler, Inc. (“Hatzel”), Recycling Technology Development, LLC (“Recycling
Technology”), and SNC-Lavalin Project Services, Inc. (“SNC”) (collectively “Creditors”), pursuant
to Claims Purchase Agreements between Plaintiff and Creditors, dated October 6, 2010 and October
14, 2010 (the “Claims Purchase Agreements”), and which Claims comprise the principal, interest,
fees, and other costs, plus additional interest that will accrue through the date of the Order,
COIN will, in accordance with Paragraph 3 below, issue and deliver, in total, to Plaintiff that
amount of validly issued, fully paid and non-assessable shares of Common Stock which equals (i) the
aggregate amount of the Claims plus the amount of Plaintiff’s legal fees (which includes a fixed
fee), expenses and costs incurred through the date of the Order, divided by (ii) the consolidated
closing bid price of the Common Stock on the trading day immediately prior to the date of the entry
of the Order approving the Stipulation of Settlement (the “Settlement Shares”).

     3. No later than 9:30 a.m. (New York time) on the business day immediately following the date
of this Order, COIN shall (i) issue irrevocable instructions to its transfer agent and any
subsequent transfer agent, in the form attached to the Stipulation as Exhibit M (the “Irrevocable
Transfer Agent Instructions”), to issue and credit Settlement Shares to Plaintiff’s balance
accounts at DTC in such amounts as specified from time to time by Plaintiff in each

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Issuance
Instructions, in the form attached to the Stipulation as Exhibit L (the “Issuance Instructions”),
and (ii) cause its counsel to issue a legal opinion to COIN’s transfer agent that the Settlement
Shares may be issued without any restrictive or other legend. COIN shall only issue Settlement
Shares to Plaintiff upon receipt of Issuance Instructions from Plaintiff. COIN shall immediately
upon each receipt of Issuance Instructions, whether via facsimile or otherwise, from Plaintiff
issue the number of Settlement Shares specified in such Issuance Instructions (which specified
number is subject to the Maximum Percentage limitation set forth below) to Plaintiff and
credit such specified number of Settlement Shares to Plaintiff’s balance account with The
Depository Trust Company through its Deposit/Withdrawal at Custodian system, without any
restriction on transfer or resale and without any restrictive or other legend.

     4. Notwithstanding anything to the contrary contained in this Stipulation, the Plaintiff may
not deliver Issuance Instructions at any particular time to the extent (but only to the extent)
that the Plaintiff or any of its affiliates would as of such time beneficially own in excess of
4.99% (the “Maximum Percentage”) of the Common Stock. No prior inability to deliver
Issuance Instructions pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination. The Maximum Percentage
limitation contained in this paragraph and any other similar beneficial ownership limitation
contained in any other instrument held by Plaintiff or any of its affiliates that is convertible or
exercisable into Common Stock shall be coordinated so that the aggregate beneficial ownership of
Plaintiff (together with its affiliates) does not exceed the Maximum Percentage limitation. In
connection therewith, issuances hereunder shall take precedence over issuances of any shares of
Common Stock issuable to Plaintiff or any of its affiliates under any other instrument held by
Plaintiff or any of its affiliates containing similar beneficial ownership limitations that is
convertible or exercisable into Common Stock. For the purposes of this paragraph, beneficial
ownership and all determinations and calculations (including, without limitation, with respect to
calculations of percentage ownership) shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the

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“Exchange Act”), and the rules and
regulations promulgated thereunder. The provisions of this paragraph shall be implemented in a
manner otherwise than in strict conformity with the terms of this paragraph to correct this
paragraph (or any portion hereof) which may be defective or inconsistent with the intended Maximum
Percentage beneficial ownership limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such Maximum Percentage limitation. The
holders of Common Stock shall be third party beneficiaries of this paragraph and neither Plaintiff
nor COIN may waive this paragraph without the consent of holders of a majority of the Common Stock.
For any reason at any time, upon the written or oral request of the Plaintiff, COIN shall within
one (1) business day confirm orally and in writing to the Plaintiff the number of shares of Common
Stock then outstanding.

     5. For so long as Plaintiff holds any Settlement Shares, neither Plaintiff nor any of its
affiliates will, or will seek to, influence control of COIN. The provisions of this paragraph 5
may not be modified or waived without further order of the Court.

     6. COIN shall, on or before 8:30 a.m., New York time, on the first (1st) business day after
the issuance of this Order (i) issue a press release (the “Press Release”) disclosing all the
material terms of the transactions contemplated hereby and (ii) file a Current Report on Form 8 K
describing all the material terms of the transactions contemplated hereby in the form required by
the Exchange Act and attaching all the material documents related hereto (including all
attachments, the “8 K Filing”). From and after the issuance of the Press Release, COIN shall have
disclosed all material, non-public information relating to the matters contemplated hereby and
Plaintiff shall have no material, non-public information relating to COIN or any of its
subsidiaries. In the event of a breach of any of the foregoing covenants by COIN, in addition to
any other remedy available to Plaintiff, the Plaintiff shall have the right to make a public
disclosure, in the form of a press release, public advertisement or otherwise, of such the matters
contemplated hereby without the prior approval by COIN, any of its subsidiaries, or any of its or
their respective officers, directors, employees or agents. The Plaintiff shall not have any
liability to COIN, any of its subsidiaries, or any of its or their respective officers, directors,
employees,

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stockholders or agents, for any such disclosure.

     7. This Order ends, finally and forever (i) any claims to payment or compensation of any kind
or nature which Plaintiff had, now has, or may assert in the future against
Defendants arising out of the Claims, and (ii) any claims, including without limitation for
offset or counterclaim, which COIN or Subsidiary had, now has, or may assert in the future against
Plaintiff arising out of the Claims. In this regard, and subject to compliance with this Order,
effective upon the execution of this Order, each party herby releases and forever discharges the
other party, including each of the other party’s employees, officers, directors, affiliates and
attorneys, from any and all claims, demands, obligations (fiduciary or otherwise), and causes of
action, whether known or unknown, suspected or unsuspected, arising out of, connected with, or
incidental to the Claims. Each party further waives, with respect to the matters released herein,
any and all rights and benefits conferred upon it by the provisions of California Civil Code
Section 1542 and any similar law of any state or territory of the United States.

     8. This action is hereby dismissed with prejudice, provided that the court shall retain
jurisdiction with regard to the Claims to enforce the terms of the Stipulation and this Order.

     9. The Stipulation and this Order may be enforced by any party to the Stipulation by a motion
under California Code of Civil Procedure section 664.6, or by any procedure permitted by law in the
Superior Court of Los Angeles County. Pursuant to the Stipulation, each party thereto further
waives a statement of decision, and the right to appeal from this Order after entry. COIN further
waives any defense based on the rule against splitting causes of action. Except as expressly
provided in Paragraph 2 above, each party shall bear its own attorneys’ fees, expenses and costs
with regard to the Stipulation and this Order.

     IT IS SO ORDERED.

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	DATED: 	By:  	 	 
	 	 	JUDGE OF THE SUPERIOR COURT 	 
	 	 	 	 
	 

6

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