EX-10.1D 5 b61186a6exv10w1d.txt EX-10.1D - LOAN EXTENSION & MODIFICATION LETTER DATED FEBRUARY 7, 2007 EXHIBIT 10.1D HIGH CAPITAL FUNDING, LLC 333 Sandy Springs Circle, Suite 230 Atlanta, Georgia 30328-3834 Tel (404) 257-9150 Fax (404) 257-9125 February 7, 2007 Converted Organics Inc 7A Commercial Wharf West Boston, MA 02110 Attention: Edward J. Gildea President and CEO Re: Loan Extension and Modification Letter Dear Ed: 1. You have advised us that Oppenheimer Funds ("Oppenheimer), as a condition to its purchase of COI's $17,500,000 New Jersey Economic Development Authority Solid Waste Facilities Revenue Bonds Series A (the "Bonds"), has requested that High Capital Funding, LLC ("HCF") enter into an agreement with Converted Organics Inc. ("COI") to (i) extend the Maturity Date of the notes listed on Schedule A attached (the "HCF Notes") in the aggregate principal amount of $650,000 (which includes $500,000 of Bridge Notes as defined below), and (ii) under certain conditions to purchase up to an aggregate of $1,015,000 of the principal amount and accrued interest of the notes listed on Schedule B attached hereto (the "Bridge Notes"). 2. As soon as reasonably possible following the closing of the Bond purchase, COI, HCF, and the holders of Bridge Notes ("Bridge Note Holders") shall begin negotiations on the terms upon which the HCF Notes and the Bridge Notes will be extended past April 19, 2007. 3. Based upon and subject to the terms and conditions set forth in this Loan Extension and Modification Letter (the "Extension Letter"), HCF agrees as follows: (i) No principal and/or interest of the HCF Notes or the Bridge Notes purchased by HCF pursuant to Item 3 (ii) below may be paid until the earlier of (a) as permitted under Items 7, 8 and 9 of the February 1, 2007 OppenheimerFunds Proposed Terms attached hereto as Exhibit 1 and as set forth in the final Bond documents, (b) the date upon which COI has raised additional debt subordinated to the Bonds, or equity proceeds (in addition to the IPO proceeds), which exceeds any amount of principal and/or interest to be repaid to HCF and/or the Bridge Notes Holders, (c) the date agreed upon pursuant to a Loan Extension and Modification Agreement to be negotiated among COI, HCF, and the Bridge Notes Holders (the "Approved Agreement"), (d) the date upon which HCF provides to COI a standby letter of credit for up to $1,665,000, issued by a bank with assets of at least one billion dollars, which may be drawn by COI during the 30 day period commencing on the first anniversary of the IPO and Bond closing in an amount that exceeds any amount of principal and interest to be repaid to HCF and/or the Bridge Note Holders, or (e) any other date approved in writing by Oppenheimer; and (ii) In the event that there is no Approved Agreement in place by April 19, 2007, or that all of the Bridge Note Holders have not agreed to execute an Approved Agreement by April 19, 2007, HCF shall offer to purchase, at face value plus accrued interest, the Bridge Notes of any Bridge Note Holders who have not agreed to execute an Approved Agreement by such date (the "HCF Purchase Commitment.") 4. The extension of the HCF Notes as set forth in Item 3 (i) and the HCF Purchase Commitment as set forth in Item 3 (ii) are conditioned upon (i) the closing of COI's IPO, (ii) the Bond closing, and (iii) the absence of a declaration of default by the Trustee under the Bonds. 5. HCF shall have the right to review and approve any public announcement or public filing made after the date hereof relating to any of the transactions contemplated hereby or relating to HCF or any of its affiliates, as the case may be, before any such announcement or filing is made (such approval not to be unreasonably withheld or delayed). 6. This Extension Letter shall be governed by and construed in accordance with the laws of the State of Delaware without reference to the conflicts or choice of laws principles thereof. HCF and COI each agree to submit to the jurisdiction of the state and Federal courts located in the state of Delaware. Each of us hereby irrevocably waives all right to trial by jury in any action, proceeding or counterclaim (whether based on contract, tort or otherwise) arising out of or relating to this Extension Letter. 7. This Extension Letter may be executed in any number of counterparts, each of which shall be an original, and all of which, when taken together, shall constitute one agreement. Delivery of an executed signature page of this Commitment Letter by facsimile transmission shall be effective as a delivery of a manually executed counterpart hereof. 8. This Extension Letter may not be amended or any provision hereof waived or modified except by an instrument in writing signed by HCF and COI. 9. This Extension Letter may not be assigned by COI without the prior written consent of HCF (and any purported assignment without such consent shall be null and void). Very truly yours, High Capital Funding, LLC By: /s/ Fred A. Brasch Name: Fred A. Brasch Title: Chief Financial Officer 2 Accepted and agreed: Converted Organics Inc. By: /s/ Edward J. Gildea Name: Edward J. Gildea Title: President 3 Schedule A High Capital Funding, LLC Notes
INVESTMENT DATE PRINCIPAL ---------- --------- 2-Mar-06 $500,000 30-Oct-06 $100,000 3-Jan-07 $ 50,000 -------- TOTAL: $650,000 ========
4 Schedule B Bridge Notes
INVESTMENT DATE PRINCIPAL ---------- --------- 1 Lea Adar 6-Jun-06 $ 20,000 2 Attar Family Ltd. 16-May-06 $ 17,000 Attar Family Ltd. 6-Jun-06 $ 25,000 3 Leslie Bardt 16-May-06 $ 5,000 4 Richard Bassin 16-May-06 $ 25,000 Richard Bassin 6-Jun-06 $ 15,000 5 Marc and Ellen Becker Tenants in Common 16-May-06 $ 15,000 6 Ronald J. Berk 6-Jun-06 $ 50,000 7 Harriet Stone Berkowitz 6-Jun-06 $ 5,000 8 Morrell Berkowitz 16-May-06 $ 5,000 9 James & Carole Bos JTWROS 16-May-06 $ 5,000 10 Fred A. Brasch 6-Jun-06 $ 15,000 11 Diana Budzanoski 6-Jun-06 $ 10,000 12 Bushrod Burns 16-May-06 $ 10,000 13 Howard Commander 6-Jun-06 $ 50,000 14 Scott Commander 6-Jun-06 $ 10,000 15 Barbara H & Peter R Ducoffe JTWROS 16-May-06 $ 25,000 16 Herbert W. Eber 16-May-06 $ 5,000 17 Kenneth & Jocelin Elan JTWROS 16-May-06 $ 15,000 18 Neila & Lawrence B. Fisher JTWROS 6-Jun-06 $ 15,000 19 J. David Forsyth 16-May-06 $ 17,000 20 Jack Franco 16-May-06 $ 10,000 21 Scott C. Garber 16-May-06 $ 10,000 22 Stephen W. Garber 16-May-06 $ 50,000 23 Sonia Gluckman 16-May-06 $ 25,000 24 Stephen M. Greenberg 16-May-06 $ 5,000 25 David R. Gross 16-May-06 $ 17,000 26 Christen M. Hart 6-Jun-06 $ 5,000 27 Ellis T. & Reva S. Hart JTWROS 6-Jun-06 $ 5,000 28 Mary L. Hart 6-Jun-06 $ 50,000 29 Hart Family Revocable Trust 16-May-06 $ 5,000 30 David & Joan Herskovits JTWROS 16-May-06 $ 17,000 David & Joan Herskovits JTWROS 6-Jun-06 $ 3,000 31 Insight Productions LLC 16-May-06 $ 5,000 32 Norman & Patty Johnson JTWROS 6-Jun-06 $ 5,000 33 Leslie & Barbara Kalmus JTWROS 16-May-06 $ 5,000 34 Gerald F. Kaplan 16-May-06 $ 25,000 Gerald F. Kaplan 6-Jun-06 $ 5,000 35 Jeffrey A. Kunkes, MD 6-Jun-06 $ 5,000 36 Gerald S. Leeseberg 16-May-06 $ 25,000 Gerald S. Leeseberg 6-Jun-06 $ 10,000 37 Michael G. Leff 6-Jun-06 $ 10,000 38 Jeffrey J. Leon 16-May-06 $ 10,000
5 39 James M. Libby, MD 6-Jun-06 $ 20,000 40 Stanley C. Lipton 16-May-06 $ 10,000 41 Edgar O. Mandeville 6-Jun-06 $ 5,000 42 Melissa Manheim 6-Jun-06 $ 5,000 43 Theresa Mari 6-Jun-06 $ 5,000 44 Alexander Michaels 16-May-06 $ 25,000 Alexander Michaels 6-Jun-06 $ 15,000 45 James J. Noonan 16-May-06 $ 17,000 46 One Walton Place LLC 16-May-06 $ 15,000 47 Thomas J. & Irene M. Principe JTWROS 6-Jun-06 $ 10,000 48 David A. Rapaport 16-May-06 $ 25,000 49 Phyllis Rodbell 16-May-06 $ 5,000 50 Neil S. & Susan Hart Sandler JTWROS 6-Jun-06 $ 5,000 51 Sidney & Carol Strickland JTWROS 16-May-06 $ 17,000 52 Tall Oaks Group, LLC 6-Jun-06 $ 50,000 53 The David and Laura Owen Trust 16-May-06 $ 5,000 54 The Hart Organization Corp. 6-Jun-06 $ 20,000 55 Frances N. Veillette 16-May-06 $ 10,000 56 Jo Lynn and John Waller JTWROS 16-May-06 $ 10,000 57 Weiner Family Investments, LLC 6-Jun-06 $ 50,000 58 F. Kenneth Zadeck & Lisa Weiss JTWROS 16-May-06 $ 25,000 ------------ TOTAL: $ 1,015,000 ============
6 Exhibit 1 to HCF Extension Letter Converted Organics Bond Offering Proposed Conditions -- OppenheimerFunds 2/01/07 1. 8.00% Coupon - All or nothing order for $17.5 million of bonds 2. Final maturity on July 1, 2027. Interest only through 2012; first annual sinking fund payment due July 1, 2013. 3. Optional redemption: 7/01/17 at 106%, 7/01/18 at 103%, & 7/01/19 at 100%. 4. Unpaid interest continues to accrue interest at the 8.00% coupon. 5. DSR equal to $1.75 million. 6. The minimum level of working capital available from bond proceeds on the Woodbridge balance sheet is $3.255 million as according to the latest FBW distribution. 7. The minimum level of required cash at Converted Organics Inc., post IPO and after all payables are brought current, is $3.50 million. [Note, assuming $2.15 million of "Development Capital" per the IPO documentation, then the cash needed through bridge loan extensions or other methods must equal $1.35 million.] Any working capital obtained via bridge loans or other agreements may not pay and must accrue interest and principal until EBITDA / MADS exceeds 1.2x over a 12 month rolling average. 8. Corporate guaranty of the bonds by Converted Organics Inc. until EBITDA / MADS > 1.2x over one fiscal year (confirmed by audit). 9. No distributions to Converted Organics Inc. until EBITDA / MADS > 1.5x over one fiscal year period (confirmed by audit). 10. Maintenance reserve fully funded prior to distributions to Converted Organics Inc is $1.2 million. 11. OppenheimerFunds receives a right of first refusal on any new tax-exempt financing by Woodbridge, Converted Organics Inc. or any of its affiliates. 7