Irrevocable Standby Letter of Credit No. 600704242 by Pacific Mercantile Bank for Converted Organics Inc. and High Capital Funding LLC
Pacific Mercantile Bank issues an irrevocable standby letter of credit for $1,825,000 at the request of High Capital Funding LLC, in favor of Converted Organics Inc. Converted Organics can draw funds between February 16, 2008, and March 17, 2008, by presenting specific documents, including a certificate of drawdown signed by its CEO and CFO. The letter of credit expires on April 7, 2008. The bank commits to honor compliant drafts, and the agreement is governed by international standby practices.
PACIFIC MERCANTILE BANK
IRREVOCABLE STANDBY LETTER OF CREDIT
DATE: 5/15/2007
LETTER OF CREDIT NO. 600704242
AMOUNT U.S. $1,825,000.00
ISSUING AND ADVISING BANK
PACIFIC MERCANTILE BANK
949 South Coast Dr., Ste. 300
Costa Mesa, CA 92626
APPLICANT NAME AND ADDRESS:
HIGH CAPITAL FUNDING LLC
333 Sandy Springs Circle, Suite 230
Atlanta, GA 30328
IN FAVOR OF
CONVERTED ORGANICS INC.
7A Commercial Wharf West
Boston, MA 02110
EXPIRATION DATE:
April 7, 2008 6:00 PM PST
(Drafts to be drawn and presented to the Issuing Bank on or before this date. See additional provisions below regarding expiration and renewal conditions.)
Gentlemen:
We hereby establish our Irrevocable Letter of Credit in favor of Converted Organics Inc. (the Beneficiary), at the request of High Capital Funding, LLC. We authorize you to draw on Pacific Mercantile Bank located at 949 South Coast Dr., Ste. 300, Costa Mesa, CA 92626 up to an aggregate amount of $1,825,000.00 US Dollars (available by your drafts at sight).
Available by drafts drawn at sight, on Issuing Bank, when accompanied by the following documents:
1. Beneficiary’s signed statement as follows:
This Standby Letter of Credit (No. 600704242) may be drawn down one time in any amount up to $1,825,000 upon presentation to Pacific Mercantile Bank by Converted Organics Inc. (COIN) between February 16, 2008 and 6:00 PM PST March 17, 2008 of a Certificate of Drawdown signed by its Chief Executive Officer and Chief Financial Officer attesting to:
1.1 The amount of net proceeds1 if any, received by COIN from the issuance of equity subsequent to the closing of its IPO on February 16 2007.
1.2 The amount of net proceeds, if any, received by COIN from the Issuance of debt (which is subordinated to the $17,500,000 principal amount of NJ EDA Solid Waste Revenue Bonds sold to Oppenheimer Funds, Inc. on February 16, 2007).
The amount of the drawdown and the information in 1.1 and 1.2 above shall be in the form of “The Certificate of Drawdown” attached hereto.
2. All drafts drawn hereunder must be marked: Drawn under Pacific Mercantile Bank’s Letter of Credit number
600704242, and signed by an authorized officer of Beneficiary (or one purporting to be an authorized
officer).
3. The original Standby Letter of Credit.
ADDITIONAL.PROVISIONS:
1. Pacific Mercantile Bank shall pay the drawdown amount to the Beneficiary on the fifteenth business day following presentation of the documents specified in items 1, 2 and 3 in the above section to Pacific Mercantile Bank.
2. Any one Beneficiary or all Beneficiaries, acting Individually or jointly, may draw on this Letter of Credit in whole or in part, and any action taken by any Beneficiary hereunder shall bind all of them.
3. Notwithstanding any related matters governing maturity dates as stated above, this LETTER OF CREDIT shall expire IN FULL AND FINALLY on 4/7/2008 6:00 PM PST. Advising Bank will consider reissuance of this Letter of Credit upon request by Applicant.
We engage with you that all drafts drawn under and in compliance with the terms of this credit will be duly honored if presented at this office on or before the original expiration date or any automatically extended date, as hereinbefore set forth, we confirm credit and hereby undertake that all drafts drawn and presented will be duly honored by us. PACIFIC MERCANTILE BANK is authorized to debit the Applicant’s account for any unpaid fees and charges hereon.
This Letter of Credit is to be subject to and governed International Standby Practices 98 (1SP96), International Chamber of Commerce Publication No. 590.
PACIFIC MERCANTILE BANK
949 South Coast Drive
Costa Mesa, CA 92626
By
Richard G. Bushman
Vice-President, Credit Administration
By:
Bradford G. Hoover
Executive Vice President
Chief Credit Officer
EXHIBIT A
FORM OF CERTIFICATE OF DRAWDOWN
PACIFIC MERCANTILE BANK
STANDBY LETTER OF CREDIT No. 600704242
This Standby Letter of Credit No. 600704242 may be drawn down one time in any amount up to $ 1,825,000 upon presentation to Pacific Mercantile Bank by Converted Organics, Inc. (COIN) between February 16, 2008 and 6:00 PM PST March 17,2008 a Certificate of Drawdown signed by its Chief Executive Officer and Chief Financial Officer attesting to:
1. The amount of net proceeds, if any, received by COIN from the issuance of equity subsequent to the closing of its IPO on February 16, 2007 is $
2. The amount of net proceeds, if any, received by COIN from the issuance of debt (which is subordinated to the $17,500,000 principal amount of NJ EDA Solid Waste Revenue Bonds sold to Oppenheimer Funds, Inc. on February 16,2007) is $
Converted Organics Inc.
By:
Chief Executive Officer
By:
Chief Financial Officer
EXHIBIT A-1
CERTIFICATE OF DRAWDOWN
FORM OF SIGHT DRAFT
DRAWN UNDER PACIFIC MERCANTILE BANK
IRREVOCABLE STANDBY LETTER OF CREDIT
NO. 600704242
DATE
AT SIGHT
Pay to the order of Converted Organics Inc
U.S. DOLLARS
[Amount in words] U.S. Dollars
TO: Pacific Mercantile Bank
949 South Coast Drive, Ste 300,
Costa Mesa, California 92626
Converted Organics Inc.
By:
