NOTE AND WARRANT PURCHASE AGREEMENT
Exhibit
10.1
THIS NOTE AND WARRANT PURCHASE
AGREEMENT (this “Agreement”), dated as of
_____, 2010 (the “Effective
Date”), is entered into by and between New Generation Biofuels Holdings,
Inc., a Florida corporation (the “Company”), and the persons
named on Schedule I attached hereto (each a “Purchaser” and collectively
the “Purchasers”) that
are signatories to this Agreement and any Additional Purchaser (as defined
below) that executes a Joinder Agreement in the form attached hereto as Exhibit
A.
The
parties, intending to be legally bound, hereby agree as follows:
1. Purchase
and Sale of Convertible Note; Issuance of Warrants; Security
Interest.
1.1 Authorization. On
or before the Initial Closing (as defined below), the Company shall have
authorized the offer, issuance and sale of (i) secured convertible promissory
notes in the form attached hereto as Exhibit B (the “Notes”) in an aggregate
original principal amount of up to $2,000,000 (the “Maximum Aggregate Principal Amount”),
convertible into the Company’s common stock, par value $0.001 per share (the
“Common Stock”), upon
the terms and conditions set forth in such Note; and (ii) warrants in the
form attached hereto as Exhibit C (the “Warrants”) to purchase up to
1,111,111 shares of Common Stock (the “Warrant Shares”)
1.2 Sale and Issuance of
Convertible Notes and Warrants. Subject to the terms and
conditions of this Agreement, the Purchasers listed on Schedule I agree,
severally and not jointly, to purchase from the Company, and the Company agrees
to sell and issue to the Purchasers, at the Closing (as defined below), the
Notes set forth opposite each Purchaser’s name on Schedule I attached
hereto at a purchase price equal to the principal amount of each such Note as
set forth in such Schedule I (the
“Note Purchase Price”).
The Company also agrees to issue to each Purchaser a Warrant to
purchase a number of shares of Common Stock equal to 50% of the Note Purchase
Price to be paid divided by $0.90, the consolidated closing bid price of the
Company’s Common Stock on the Nasdaq Capital Market immediately prior to
entering into this Agreement, at an exercise price of $0.90 per share. No
Warrant to purchase a fraction of a share of Common Stock will be issued, and
all fractions will be rounded down to the nearest whole number.
1.3 Security Interest.
The indebtedness represented by the Notes shall be secured and shall be entitled
to the benefit of two security agreements: (a) one security
agreement in the form attached hereto as Exhibit D (the “Pledge Agreement”), pursuant
to which 2020 Energy LLC shall grant the Purchasers a first priority security
interest in a number of shares of the Company’s Common Stock held by 2020 Energy
LLC equal to 120% of the Maximum Aggregate Principal Amount divided by the
consolidated closing bid price of the Company’s Common Stock on the Nasdaq
Capital Market immediately prior to entering into this Agreement and (b) another
security that is incorporated into the Notes pursuant to which the Company shall
grant the Purchasers a security interest in assets owned by the Company
contained in the Company’s leased plant facility located in Baltimore,
Maryland.
2. Closing;
Deliveries.
2.1 Closing. Subject to the
satisfaction of the closing conditions (as set forth below), the closing (the
“Initial Closing”) of the purchase and
sale of the Notes and the issuance of the Warrants shall take place at the
offices of Xxxxx & Xxxxxxx L.L.P., 000 Xxxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000 on such date as determined by the Company. The Company
shall notify the Purchasers of the date of the Initial Closing. At
one or more subsequent closings (each, a “Subsequent Closing,” and
together with the Initial Closing, the “Closing”), and subject to the
satisfaction of the Subsequent Closing conditions (as set forth below), the
Company may sell additional Notes and issue additional Warrants to additional
Purchasers (the “Additional
Purchasers”) provided that the Company does not issue Notes pursuant to
this Agreement with an aggregate principal amount equal to the Maximum Aggregate
Principal Amount.
2.2 Deliveries.
(a) Closing. At
the Initial Closing, (i) each Purchaser shall deliver to the Company a check or
wire transfer of funds in the amount of such Purchaser’s Note Purchase Price as
indicated on Schedule I and (ii) the Company shall issue and deliver to each
Purchaser (x) a Note in favor of such Purchaser payable in the principal amount
opposite each Purchaser’s name on Schedule I attached
hereto and (y) a Warrant providing such Purchaser with the right to purchase the
number of Warrant Shares opposite each Purchaser’s name on Schedule I attached
hereto.
(b) Subsequent
Closings. At the Subsequent Closing, (i) each Additional
Purchaser shall deliver to the Company (x) an executed Joinder Agreement in the
form attached hereto as Exhibit A and (y) a
check or wire transfer of funds in the amount of such Additional Purchaser’s
Note Purchase Price as indicated on the Joinder Agreement for such Additional
Purchaser and (ii) the Company shall issue and deliver to each Additional
Purchaser (x) a Note in favor of such Additional Purchaser payable in the
principal amount set forth on the Joinder Agreement, and (y) a Warrant
evidencing such Additional Purchaser’s right to acquire the number of shares of
Warrant Shares as set forth on the Joinder Agreement.
3. Representations, Warranties
and Covenants of the Company. The
Company represents and warrants to the Purchasers as
follows:
3.1 Organization and
Authorization. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida, and is duly qualified under all applicable laws to carry on
its business in the places and in the manner as now conducted. The
Company has all requisite corporate power and authority to execute, deliver and
perform this Agreement, including, without limitation, to sell and issue the
Notes and Warrants hereunder, and to issue the Common Stock issuable upon
conversion of the Note or exercise of the Warrant, and to own operate and lease
its assets and to carry on its business as currently conducted.
3.2 Capitalization. Immediately
prior to the Closing, the Company’s authorized capital stock is substantially as
disclosed in the Company’s reports filed with the Securities and Exchange
Commission.
3.3 Binding
Obligation. This Agreement and all other instruments and
agreements contemplated herein constitute the legal, valid and binding
obligation of the Company, enforceable in accordance with its terms (except as
limited by applicable bankruptcy, moratorium, insolvency or other similar laws
affecting generally the rights of creditors or by principles of equity), and the
execution, delivery and performance of this Agreement and such other agreements
by the Company does not and, to the knowledge of the Company, will not: (i)
conflict with, or violate any provision of, statute, law, rule, regulation,
order, judgment, injunction, decree or award of any arbitrator or governmental
authority having applicability to the Company or its business, assets, or
properties, or any provision of its certificate of incorporation, bylaws or
similar governing instruments or (ii) conflict with, violate, or result in
any breach of, or constitute a default under, any agreement or instrument to
which the Company is now a party or by which the Company or any of its
properties or assets may be bound or affected.
3.4 Issuance of Notes, Warrants
and Stock. All corporate action on the part of the Company,
its directors and its shareholders necessary for the authorization, execution,
delivery and performance of this Agreement by the Company and the performance of
the Company’s obligations hereunder, including the issuance and delivery of the
Notes and Warrants and the reservation of the Common Stock issuable upon
exercise of the Warrant has been taken or will be taken prior to the Closing.
Upon payment of the full purchase price therefor at the Closing, each Note and
Warrant, and the Common Stock issuable upon conversion or exercise thereof, when
issued in compliance with the provisions of this Agreement and the Notes or the
Warrants, as applicable, will be validly issued, fully paid and non-assessable
and free of any liens or encumbrances other than those imposed by federal and
state securities laws.
3.5 Litigation. There
are no claims, actions, suits or proceedings pending or, to the best knowledge
of the Company, threatened against the Company or relating to this Agreement or
the transactions contemplated hereby, at law or in equity or before or by any
federal, state, local or foreign court or other governmental department,
commission, board, agency, instrumentality or authority, nor any arbitration
proceeding.
3.6. Compliance with
Laws. To the knowledge of the Company, the Company is in
compliance with and has complied with all laws, ordinances and regulations of
any governmental entity except for violations, if any, which in the aggregate
would not have a material adverse effect on the business of the
Company.
3.7. Consents. No
material authorization, consent or approval of, or filing or registration with,
any governmental or regulatory body or authority, or any other third party, is
necessary for the Company’s execution, delivery and performance of this
Agreement, except filings required pursuant to applicable federal and state
securities laws and blue sky laws.
4. Representations and
Warranties of the Purchasers.
4.1 Authorization. Each
Purchaser has full power and authority to enter into this Agreement, the
execution and delivery of which has been duly authorized, if applicable, and
this Agreement constitutes a valid and legally binding obligation of such
Purchaser.
4.2 Securities
Exemption. Each Purchaser acknowledges his, her or its
understanding that the offering and sale of the Securities (as hereinafter
defined) is intended to be exempt from registration under the Securities Act by
virtue of Section 4(2) of the Securities Act and the provisions of Regulation D
promulgated thereunder (“Regulation
D”). In furtherance thereof, each Purchaser represents and
warrants to the Company as follows:
(a) The
Purchaser realizes that the basis for the exemption from registration may not be
available if, notwithstanding the Purchaser’s representations contained herein,
the Purchaser is merely acquiring the Securities for a fixed or determinable
period in the future, or for a market rise, or for sale if the market does not
rise. The Purchaser does not have any such intention.
(b) The
Purchaser is acquiring the Securities solely for the Purchaser’s own beneficial
account, for investment purposes, and not with view to, or resale in connection
with, any distribution of the Securities.
(c) The
Purchaser has the financial ability to bear the economic risk of his, her or its
investment, has adequate means for providing for their current needs and
contingencies, and has no need for liquidity with respect to the investment in
the Company.
(d) The
Purchaser and the Purchaser’s attorney, accountant, purchaser representative
and/or tax advisor, if any (collectively, “Advisors”), have
received this Agreement, together with the Private Placement Memorandum, and all
other documents provided by the Company pursuant to the requests of the
Purchaser or its Advisors, if any, and have carefully reviewed them and they
understand the information contained therein, prior to the execution of this
Agreement.
(e) The
Purchaser
(together with his, her or its Advisors, if any) has such knowledge and
experience in financial and business matters as to be capable of evaluating the
merits and risks of the prospective investment in the Securities. If
other than an individual, the Purchaser also represents it has not been
organized solely for the purpose of acquiring the Securities.
4.3 Information and
Sophistication. The Purchaser acknowledges that it has
received all the information it has requested from the Company that it considers
necessary or appropriate for deciding whether to acquire the
Securities. The Purchaser represents that it has had an opportunity
to ask questions and receive answers from the Company regarding the terms and
conditions of the offering of the Securities and to obtain any additional
information necessary to verify the accuracy of the information given to the
Purchaser. The Purchaser further represents that it has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risk of this investment.
4.4 Ability to Bear Economic
Risk. The Purchaser acknowledges that its investment in the
Securities involves a high degree of risk, and represents that the Purchaser is
able, without materially impairing the Purchaser’s financial condition, to hold
the Securities for an indefinite period of time and to suffer a complete loss of
the Purchaser’s investment in the Securities.
4.5 Restricted
Securities. The Purchaser represents, warrants and agrees that
he, she or it will not sell or otherwise transfer any securities issued
hereunder (the “Securities”) without
registration under the Securities Act or an exemption therefrom, and fully
understands and agrees that the Purchaser must bear the economic risk of his,
her or its purchase because, among other reasons, the Securities have not been
registered under the Securities Act or under the securities laws of any state
and, therefore, cannot be resold, pledged, assigned or otherwise disposed of
unless they are subsequently registered under the Securities Act and under the
applicable securities laws of such states, or an exemption from such
registration is available. In particular, the Purchaser is aware that
the Securities are “restricted securities,” as such term is defined in Rule 144
promulgated under the Securities Act (“Rule 144”), and they
may not be sold pursuant to Rule 144 unless all of the conditions of Rule 144
are met. The Purchaser also understands that the Company is under no
obligation to register the Securities on his, her or its behalf or to assist
them in complying with any exemption from registration under the Securities Act
or applicable state securities laws. The Purchaser understands that
any sales or transfers of the Securities are further restricted by state
securities laws and the provisions of this Agreement.
4.6 Legend. Each
Purchaser further understands and agrees that, until so registered or
transferred pursuant to the provisions of Rule 144 under the Securities
Act, the Note, the Warrant and all certificates evidencing any of the shares of
the Company’s Common Stock, issuable upon conversion or exercise thereof,
whether upon initial issuance or upon any transfer thereof, shall bear a legend,
prominently stamped or printed thereon, reading substantially as
follows:
These
securities have not been registered under the Securities Act of 1933, as amended
(the “Securities Act”), or applicable state securities laws. These
securities have been acquired for investment and not with a view to their
distribution or resale, and may not be sold, pledged, or otherwise transferred
without an effective registration statement for such securities under the
Securities Act and applicable state securities laws, or an opinion of counsel
satisfactory to the Company to the effect that such registration is not
required.
4.7 Accredited Investor
Status. The Purchaser is an “accredited investor” as such term
is defined in Rule 501 under the Securities Act.
5. Expenses. Each party shall be
responsible for bearing such party’s costs and expenses incurred in connection
with the negotiation, execution and delivery of this Agreement.
6. Miscellaneous.
6.1 Survival of
Warranties. The warranties, representations and covenants of
the Company contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement until the Closing and shall in no way
be affected by any investigation of the subject matter thereof made by or on
behalf of the Purchasers or the Company.
6.2 Remedies. In
case any one or more of the covenants and/or agreements set forth in this
Agreement shall have been breached by any party hereto, the party or parties
entitled to the benefit of such covenants or agreements may proceed to protect
and enforce their rights either by suit in equity and/or action at law,
including, but not limited to, an action for damages as a result of any such
breach and/or an action for specific performance of any such covenant or
agreement contained in this Agreement. The rights, powers and
remedies of the parties under this Agreement are cumulative and not exclusive of
any other right, power or remedy which such parties may have under any other
agreement or law. No single or partial assertion or exercise of any
right, power or remedy of a party hereunder shall preclude any other or further
assertion or exercise thereof.
6.3 Successors and
Assigns. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the
parties. Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this
Agreement. The Company may not assign its rights or obligations under
this Agreement, except with the consent of the Purchasers.
6.4 Governing
Law. This Agreement shall be governed by and construed under
the laws of the State of New York.
6.5 Counterparts; Facsimile
Signatures. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Counterpart
signature pages to this Agreement may be delivered by facsimile
transmission.
6.6 Titles and
Subtitles. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
6.7 Notices. Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given upon personal delivery
to the party to be notified (or upon the date of attempted delivery where
delivery is refused) or five days after deposit with the United States Postal
Service, by first class certified or registered mail, return receipt
requested, or one day after deposit with next day air courier, with
postage and fees prepaid and addressed to the party entitled to such notice
(with a facsimile copy, which shall not be considered notice, to the facsimile
numbers below):
If to the Company:
0000 Xxxxxxxx Xxxx, Xxxxx
000
Xxxxxxxx, Xxxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Attn: Xxxx X. Xxxxxxxxx
If to a Purchaser:
At the address set forth on the
signature page executed by such Purchaser
or at
such other address or addresses as each party may designate by 10 days’ advance
written notice to the other parties to this Agreement.
6.8 Finder’s Fee.
Purchasers represent that they neither are nor will be obligated for any
finder’s fee or commission in connection with this transaction. Each
Purchaser agrees to indemnify and hold harmless the Company from any liability
for any commission or compensation in the nature of a finder’s fee (and the
costs and expenses of defending against such liability or asserted liability)
for which the Purchaser or any of its officers, partners, employees or
representatives is responsible. The Company agrees to indemnify and
hold harmless each of the Purchasers from any liability for any commission or
compensation in the nature of a finder’s fee (and the costs and expenses of
defending against such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
6.9 Amendments and
Waivers. Except as otherwise provided herein, any term of this
Agreement may be amended and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and [the holders of
at least 51% of the outstanding principal amount due under the Notes[; provided,
however, that no amendment or waiver which uniquely or adversely affects any
Purchaser shall be binding upon such Purchaser without his, her or its prior
written consent. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any securities purchased
under this Agreement at the time outstanding (including securities into which
such securities are convertible), each future holder of all such securities, and
the Company. Notwithstanding the foregoing, it is understood and
agreed that the Company may (a) add Additional Purchasers as counterparts to
this Agreement from time to time pursuant to Section 2.2(b) hereof
and (b) modify Schedule I to reflect
such additional purchases, in each case without the consent of any other party
hereto.
6.10 Severability. If
one or more provisions of this Agreement are held to be unenforceable under
applicable law, such provision shall be excluded from this Agreement and the
balance of this Agreement shall be interpreted as if such provision were so
excluded and shall be enforceable in accordance with its terms.
6.11 Exculpation Among
Purchasers. Each Purchaser acknowledges that such Purchaser is
not relying upon any person, firm or corporation, other than the Company and its
officers and directors, in making its investment or decision to invest in the
Company. Each Purchaser agrees that no other Purchaser nor the
respective controlling persons, officers, directors, partners, agents or
employees of any other Purchaser shall be liable for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with sale
and issuance of the Notes and the Warrants.
6.12 Entire
Agreement. This Agreement and the documents referred to herein
constitute the entire agreement among the parties and no party shall be liable
or bound to the other party in any manner by any warranty, representation, or
covenant except as specifically set forth herein.
[SIGNATURE
PAGE FOLLOWS]
IN
WITNESS WHEREOF, the parties hereto have executed this Note and Warrant Purchase
Agreement as of the date first above written.
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COMPANY:
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By:
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Name:
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Title:
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PURCHASER:
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(name of individual or
entity)
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(signature of individual or
authorized signatory)
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(if an entity, print name and
title of authorized signatory)
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Address:
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Phone:
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Fax:
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Social
Security Number:
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(for individual
investors)
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EIN
or TIN:
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(for entity
investors)
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NOTE
PRINCIPAL AMOUNT TO BE PURCHASED
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BY PURCHASER:
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[Signature
Page to Note and Warrant Purchase Agreement]
Schedule
I
Purchaser
of Notes and Warrants
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Name of Purchaser
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Note Purchase
Price
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Note Principal
Amount
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Warrant
Securities
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PURCHASES
AT CLOSING ( _/_/2010)
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INITIAL
CLOSING SUBTOTALS
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$ | |||||||||||
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ADDITIONAL
PURCHASERS
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ADDITIONAL
PURCHASERS SUBTOTALS
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TOTALS
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EXHIBIT
A
JOINDER
AGREEMENT
, 2010
The
undersigned hereby acknowledges and agrees to become party to and to succeed to
all of the rights and obligations of a “Purchaser” under that certain
Note and Warrant Purchase Agreement, dated as
of , 2010 (the “Purchase Agreement”), by and
between New Generations Biofuels Holdings, Inc., a Florida corporation, and the
Purchasers party thereto. Capitalized terms used but not defined
herein shall have the meanings given such terms in the Purchase
Agreement.
By
execution hereof, the undersigned hereby authorizes the Company to append this
Joinder Agreement as a counterpart signature page to the Purchase
Agreement. The undersigned hereby subscribes for the purchase of a
Note in the original principal amount specified below and shall be issued a
Warrant for the number of shares of Warrant Shares specified
below. Pursuant to Section 4.7 of the
Purchase Agreement, the undersigned represents and warrants that the undersigned
is an “accredited investor” within the meaning of Rule 501 of the Securities
Act.
[SIGNATURE
PAGE FOLLOWS]
IN WITNESS WHEREOF, the undersigned has
executed this Joinder Agreement as of the date first above written.
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ADDITIONAL PURCHASER:
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(name of individual or
entity)
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(signature of individual or
authorized signatory)
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(if an entity, print name and
title of authorized signatory)
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Address:
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Tel:
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Fax:
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Social Security Number:
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(for individual
investors)
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EIN or TIN:
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(for entity
investors)
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PRINCIPAL
AMOUNT OF NOTE PURCHASED BY ADDITIONAL PURCHASER:
$
Signature
page to Note and Warrant Purchase Agreement Joinder
EXHIBIT
B
FORM OF
NOTE
EXHIBIT
C
FORM OF
WARRANT
EXHIBIT
D
PLEDGE
AGREEMENT
