AMENDED SECURITIES PURCHASE AGREEMENT

 
THIS AMENDED SECURITIES PURCHASE AGREEMENT (this “Agreement”), is dated as of
May 8, 2013 (the “Effective Date”), by and among Plures Technologies, Inc., a
publicly reporting corporation organized under the laws of the State of Delaware
(the “Borrower” or “Company”), the subscriber identified on the signature page
hereto as listed on Schedule A annexed hereto (the  “Subscriber” and
collectively with all persons who have previously signed copies of this
Agreement or will sign copies of this  Agreement, the “Subscribers”) and RENN
Capital Group, Inc., as Collateral Agent for the Subscribers.

R E C I T A L S

A.           The Company has previously sold approximately $2,433,333 of 2%
notes (the “Prior Notes”) to investors (“Prior Subscribers”) and now desires to
sell an additional $3,200,000 of 2% notes to investors.  All of the investors in
the 2% notes (approximately $5,633,333) desire to combine their loans by virtue
of this Amended Securities Purchase Agreement into one consolidated loan and
security interest.  The holders of the $2,433,333 of 2% notes have evidenced
their agreement by signing a Modification Agreement of even date herewith.  The
subscribers for the $3,200,000 of 2% notes (the “Subscribers”) are signing this
Amended Securities Purchase Agreement and related documents.

B.           The Company and the Subscribers are executing and delivering this
Agreement in reliance upon an exemption from securities registration afforded by
the provisions of Section 4(2), Section 4(6) and/or Regulation D (“Regulation
D”) as promulgated by the United States Securities and Exchange Commission (the
“Commission”) under the Securities Act of 1933, as amended (the “1933 Act”).
 
C.           The Company desires to raise capital by sale to the Prior
Subscribers and the Subscribers of (i) up to $5,633,333 of 2% Secured
Convertible Promissory Notes substantially in the form as annexed hereto as
Exhibit A (each, a “Note”) at face value (the “Purchase Price”) based on the
principal amount of Note acquired by such Subscriber (the “Principal Amount”),
which Notes mature on the Fifty Four (54) month anniversary of the date of
issuance (subject to acceleration) and are voluntarily convertible into shares
of the Company’s Common Stock, $.001 par value (the “Common Stock” and, the
shares issuable upon conversion of the Notes, are sometimes referred to herein
as the “Conversion Shares”) at an initial per share conversion price of $1.60
per share for Notes provided that if the cash of the Company and its
subsidiaries is less than $1,000,000, the conversion price will become $1.00
(the “Conversion Price”) and (ii) Common Stock Purchase Warrants exercisable for
four (4) years from the date of issuance at $0.01 per share, for such number of
shares as equals the number of Common Stock into which the Notes are convertible
(the “Warrant Shares”) substantially in the form as annexed hereto as Exhibit B
(the “Warrant”).  The Notes, and shares of Common Stock issuable upon conversion
of the Notes (the “Conversion Shares”), the Warrants and the Warrant Shares are
sometimes collectively referred to herein as the “Securities”.
 
D.           As a further inducement to Subscribers to invest in the Notes and
Warrants, and among other representations, warranties, covenants or benefits
provided, the Company and its Subsidiaries (as hereinafter defined) have each
agreed to provide Subscribers with a security interest in all of their
respective assets, which interest shall be pari passu with the Prior Notes and
senior to all other security interests of the Company other than that certain
senior, first priority security interest in all assets of Advanced Microsensors
Corporation, a New York corporation and wholly owned subsidiary of the Company
(“AMS”) (excluding any intellectual property)  in favor of the Massachusetts
Development Finance Agency (the “MDFA Lien”) and, the Subsidiaries have each
agreed to guarantee, jointly and severally, repayment of the Notes; provided
however, that the Company expects to borrow up to $3,000,000 from Hercules
Technology Growth Capital, Inc. which will be granted a super senior lien on all
of the assets of the Company and its subsidiaries (the “Super Senior Lien”),
senior to that of MDFA and the Subscribers, so that the Notes will then be
subordinate to both the Super Senior Lien and the MDFA Lien, and the holders of
the Notes agree to execute and deliver a subordination agreement or agreements
confirming the same.
 
 
 

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E.            In order to perfect the liens granted by the Company and each
Subsidiary and to effectuate the Subsidiary guarantees in favor of Prior
Subscribers and Subscribers (i) each of: Plures Holdings, Inc., a Delaware
corporation  and wholly owned subsidiary of the Company (“Plures Holdings”),
Advanced MicroSensors Corporation, a New York corporation and wholly owned
subsidiary of the Company, AMS, and 95% owned subsidiary of Plures Holdings
and  Magnetic Sense, Inc., a Delaware corporation (“MSI” and, together with
Plures Holdings and AMS, the “Subsidiaries” and each, a “Subsidiary”) have
executed a Guaranty Agreement in favor of Collateral Agent (as hereinafter
defined) on behalf of the Prior Subscribers and Subscribers substantially in the
form as annexed hereto as Exhibit C (each, a “Subsidiary Guaranty”), jointly and
severally guaranteeing all of the Company’s obligations under all of the Notes,
(ii) the Company has agreed to grant a security interest and pledge, in favor of
Collateral Agent on behalf of the Prior Subscribers and Subscribers as secured
parties, with respect to its assets (subject to the MDFA Lien and the Super
Senior Lien) and all of the shares of Plures Holdings (the “Amended Plures
Holdings Pledge”) and of MSI (the “Amended MSI Pledge”), and Plures Holdings has
agreed to pledge all of the shares it owns of AMS (the “Amended AMS Pledge”),
each in accordance with the form of Pledge and Security Agreement in the form
annexed hereto as Exhibit D (the “Security Agreement” and, together with the
together with this Agreement, the Notes, the Guaranty agreement executed by the
Company and each subsidiary, as the case may be, being collectively referred to
herein as the “Transaction Documents”)
 
WHEREAS, Prior Subscribers and Subscribers understand that there is a great deal
of risk, illiquidity and uncertainty in the purchase of the Securities herein
and that no assurance can be made that the Company will raise the substantial
additional capital needed or that it will complete its business plans or, if
completed, that it will be successful in doing so and, have already, in good
faith, submitted funds to the Company;
 
WHEREAS, Prior Subscribers and Subscribers have agreed, as secured lenders, to
appoint RENN Capital Group, Inc. or its successor as Collateral Agent (the
“CollateralAgent”) for the Subscribers as secured parties under the Security
Agreements, Pledges and Subsidiary Guaranty.
 
WHEREAS, each Subscriber understands it will share a security interest with the
other Subscribers and with the Prior Subscribers, which will be subordinate to
the Super Senior Lien and the MDFA Lien.
 
NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Agreement the Company and the Subscribers hereby agree as
follows:
 
1.           Date and Time.
 
(a)  Closing. The sale of Notes and Warrants will take place in one or more
closings (each, a “Closing” and, each date a Closing occurs being referred to as
a “Closing Date”), subject to the satisfaction of all the parties hereto of
their obligations herein, at the sole discretion of the Company, provided that
the Company and its Subsidiaries have duly executed and delivered all of the
Transaction Documents to which they are a party and have satisfied all other
obligations herein and therein.   There is no minimum offering amount . Closings
will take place at such times as subscriptions are received without notice to
the Subscribers.  Schedule A sets forth information as to the Subscribers and
the Securities being purchased.
 
(b)           No Escrow Collateral Agent.    There is no escrow Collateral Agent
in this offering and moneys will not be held in any segregated or secured
account pending acceptance or rejection.  Accordingly, there is also no minimum
offering amount and funds reflecting the Purchase Price are immediately
available for use by the Company and susceptible to rights of third party
creditors without protection.  The Company has agreed to issue the Notes and
enter into this Agreement and all related agreements, or return funds to any
Subscriber whose investment is not accepted.
 
 
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2.           Closing/Ratio of Notes and Warrants.   Subject to the satisfaction
or waiver of the terms and conditions of this Agreement, on the Closing Date,
each Subscriber shall purchase and the Company shall sell to each Subscriber a
Note in the Principal Amount designated on the signature page for such
Subscriber hereto for the Purchase Price indicated thereon, and warrants to
purchase such number of shares as equals the Principal Amount divided by the
Conversion Price, rounded down to the nearest share.  There is no minimum per
subscriber.  All references herein to purchase or sale of the Note shall be
deemed to include, and intend, the Note and the Warrant.
 
3.           Acceptance of Appointment of Collateral Agent.  Each Subscriber
hereby appoints RENN Capital Group Inc. to act as its Collateral Agent, in all
respects on behalf of such Subscriber as a Secured Party under the Transaction
Documents.  The Subscribers understand that they are authorizing and entrusting
Collateral Agent with certain authority to act on their behalf, to hold and
dispose of collateral on their behalf and to make certain decisions as provided
herein and in the Transaction Documents.  Each Prior Subscriber and Subscriber
hereby waives any conflict of interest of Collateral Agent, as more fully
provided below, and holds harmless Collateral Agent from any and all claims,
liabilities and suits.  Subscriber understands that Collateral Agent may resign
at any time.  The Company and each Subsidiary accepts the appointment of the
Collateral Agent and hereby accepts the appointment of any successor Collateral
Agent appointed by the lenders from time to time in accordance with these
Transaction Documents, provided that written notice to the Company is provided
to it advising of such successor Collateral Agent, executed by holders of 70% or
greater of outstanding Notes and interest.
 
4.           Subscriber Representations and Warranties.  In order to induce the
Company to enter into this Agreement and the Transaction Agreements and to
consummate the transactions contemplated hereby and thereby, each Subscriber
hereby represents and warrants to and agrees with the Company and each
Subsidiary only as to such Subscriber, as of the Effective Date and each Closing
Date on which such Subscriber purchases a Note, that:

(a)           Organization and Standing of the Subscribers.  If such Subscriber
is an entity, such Subscriber is a corporation, partnership or other entity duly
incorporated or organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization.

(b)           Authorization and Power.  Such Subscriber has the requisite power
and authority or capacity, as the case may be, to enter into and perform this
Agreement and to purchase the Notes being sold to it hereunder, and to appoint
Collateral Agent as Collateral Agent on its behalf.

(c)           Information on Company.   Such Subscriber has access to  the
Securities and Exchange Commission’s (the “SEC”) EDGAR database, to enable
review of all of the reports of the Company filed with the SEC
(collectively  the “Reports”) which Reports are part of, and are incorporated by
reference by Company herein.

(e)           Information on Subscriber.  Such Subscriber is, an “accredited
investor”, as such term is defined in Regulation D promulgated by the Commission
under the 1933 Act, is experienced in investments and business matters, has made
investments of a speculative nature and has purchased securities of United
States and non-U.S. publicly-owned companies in private placements in the past
and, with its representatives, has such knowledge and experience in financial,
tax and other business matters as to enable such Subscriber to utilize the
information made available by the Company to evaluate the merits and risks of
and to make an informed investment decision with respect to the proposed
purchase, which represents a speculative investment.

 
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(f)           Purchase of Notes and Warrants.  On such Closing Date, such
Subscriber will purchase the Notes and Warrants as principal for its own
account, not as a nominee or Collateral Agent, for investment only and not with
a view toward, or for resale in connection with, the public sale or any
distribution thereof and such Subscriber has no present intention of selling,
granting any participation in or otherwise distributing the same. Subscriber has
subscribed for, and agrees to purchase on the terms herein, for such Principal
Amount of Notes and such number of Warrants as set forth on the signature page
hereto for such Subscriber, as reflected on Schedule A.

(g)           Shares Legend.  The Securities (including any Conversion Shares,
the Warrant and Warrant Shares) shall bear substantially the following or
similar legend:

“NEITHER THE ISSUANCE OF THIS SECURITY NOR THE UNDERLYING SHARES OF COMMON STOCK
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED (THE “ACT”).
THIS SECURITY HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT BE
TRANSFERRED UNTIL (i) A REGISTRATION STATEMENT UNDER THE ACT SHALL HAVE BECOME
EFFECTIVE WITH RESPECT THERETO OR (ii) RECEIPT BY THE COMPANY OF AN OPINION OF
COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION
UNDER THE ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS
IN VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS.  THIS LEGEND SHALL BE
ENDORSED UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

(h)           Representative of Note holders; Waivers of Conflict of
Interest.   Subscriber understands that it is entrusting certain decision making
on its behalf to the Collateral Agent as more fully provided
therein.  Subscriber understands that Collateral Agent, and or one or more of
its affiliates and other noteholders and their affiliates, may be officers,
directors, or affiliates of the Borrower, or may represent Borrower in one or
more capacities as counsel.  Subscriber hereby states that (i) it has reviewed
and understands the risks and conflicts relating thereto and that (ii) it hereby
forever waives any conflict of interest interposed as a result of such
affiliations of Collateral Agent or of other Note holders whose interests may
not be aligned with Note holders that are not otherwise affiliated with the
Borrower.  Each Subscriber advises that it understands the nature of the
conflict and that it has sought the advice of its own counsel in connection
herewith.

(i)            Other Risks; Need for Additional Capital.  The Subscribers
understand that an investment in the Company involves a significant amount of
risk and illiquidity, including risk of loss of one’s entire investment and,
among other things, that the Company is in need of substantial additional
capital even after closing of this financing.

(j)           Permitted Transfers.   Notwithstanding anything to the contrary
contained in this Agreement, such Subscriber may transfer (without restriction,
without the consent of the Company and without the need for an opinion of
counsel) the Securities to its Affiliates (as defined below) provided that each
such Affiliate is an “accredited investor” under Regulation D, such Affiliate
agrees to be bound by the terms and conditions of this Agreement, and written
notice of such transfer is provided the Company within ten (10) business days of
said transfer. For the purposes of this Agreement, an “Affiliate” of any person
or entity means any other person or entity directly or indirectly controlling,
controlled by or under direct or indirect common control with such person or
entity.  With respect to the Company, Affiliate includes each Subsidiary (as
defined below) of the Company.  For purposes of this definition, “control” means
the power to direct the management and policies of such person or firm, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise.
 
 
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5.           Company Representations and Warranties.  The Company represents and
warrants to each Subscriber and agrees with each Subscriber, as of the Effective
Date and each Closing Date (except to the extent a different date is specified
in this Section 5) that:
 
(a)           Due Incorporation.  The Company is a corporation or other entity
duly incorporated or organized, validly existing and in good standing under the
laws of the jurisdiction of the State of Delaware and has the requisite
corporate power to own its properties and to carry on its business as presently
conducted.  The Subsidiaries are each incorporated in the jurisdictions set
forth in the recitals above.  The Company and each Subsidiary are duly qualified
as a foreign corporation to do business and are in good standing in each
jurisdiction where the nature of the business conducted or property owned by it
makes such qualification necessary, other than those jurisdictions in which the
failure to so qualify would not have a Material Adverse Effect.  For purposes of
this Agreement, a “Material Adverse Effect” shall mean a material adverse effect
on the financial condition, results of operations, prospects, properties or
business of the Company and its Subsidiaries taken as a whole.  The Company does
not have any wholly owned or partially owned subsidiaries other than the
Subsidiaries or parent companies, or other entities that it operates through or
with for its business generally except as set forth herein.
 
(b)           Outstanding Stock.  All issued and outstanding shares of capital
stock of the Company and of each Subsidiary, have been duly authorized and
validly issued and are fully paid and non-assessable.  At each Closing, and
other than Conversion Shares or Notes issued herein, there are 1,375,000 shares
of Series A preferred Stock and approximately 5,000,000 shares of Common Stock
issued and outstanding. The Company’s capitalization is, substantially as
provided in the SEC Reports.
 
(c)           Authority; Enforceability.  This Agreement, the Note, the
Warrants, the Security Agreement, the Subsidiary Guaranty, and any other
agreements delivered together with this Agreement or in connection herewith
(collectively “Transaction Documents”) have been duly authorized, executed and
delivered by the Company and / or its Subsidiaries (as applicable) and are valid
and binding agreements of the Company or respective Subsidiary, as the case may
be, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors’ rights generally and
to general principles of equity.  The Company has full corporate power and
authority necessary to enter into and deliver the Transaction Documents and to
perform its obligations thereunder.  Company further warrants and represents
that (i) it has assessed with its counsel and advisors all of the fees,
interests and costs associated with this Note and the Warrants and, the actual
annual percentage rate and related costs of issuance of the Note and, (ii) it
has determined that each of the Transaction Documents is fully enforceable as
against the Company in all respects and reasonable, without counterclaim,
defense or set off or deduction.  Company acknowledges and understand that,
among other things, Subscriber have each relied on and continue to rely on such
representations, among other representations, in making an investment hereby.
 
(d)           Additional Issuances.  There are no outstanding agreements or
preemptive or similar rights affecting the Company’s Common Stock, preferred
stock or equity and no outstanding rights, warrants or options to acquire, or
debt equity or other instruments or derivatives convertible into or exchangeable
for, or agreements or understandings with respect to the sale or issuance of any
shares of Common Stock or equity of the Company or any Subsidiary (if any) or
other equity interest in the Company after the date of the Reports before or
existing on Closing Date (other than pursuant to this Agreement and the
Transaction Documents) of Company except as described in the Reports.  The
Common Stock, preferred stock, options and derivative securities of the Company
on a fully diluted basis outstanding as of the last Business Day preceding the
first Closing Date is set forth on Schedule 5(d).  Plures Holdings has 1,000,000
shares authorized with 100 shares outstanding all of which are issued in the
name of, and held by the Company (the “Plures Shares”).  AMS has 250,000 shares
of Common Stock and 50,000,000 shares of preferred stock authorized and100,000
shares of Common Stock outstanding of which 95,000 shares are held by Plures
Holdings (the “AMS Shares”) with 5% of AMS (i.e. 5,000 shares of AMS) owned by
third parties.  MSI has 100 shares outstanding, all of which are issued in the
name of and held by the Company (the “MSI Shares” and, together with the Plures
Shares and the AMS Shares are sometimes collectively referred to herein as the
“Subsidiary Shares” or “Pledge Shares”).  None of the Subsidiaries have any
preferred shares authorized or designated or any derivative securities
outstanding which are convertible into or exchangeable or exercisable for any
shares of the Subsidiaries or Company.  None of the Pledge Shares are encumbered
or subject to any liens or encumbrances.  All of the Pledge Shares are duly
authorized, validly issued fully paid and non assessable, by the respective
entity holding said shares as provided above in this Section 5(d). There are no
shares, securities, options, warrants, or rights to subscribe to, securities,
rights or obligations convertible into or exchangeable for or giving any right
to subscribe for any shares of capital stock of the Company or any of its
Subsidiaries except as set forth on Schedule 5(d). If the Super Senior Lien is
granted, the Pledged Shares will be pledged with the holder of the Super Senior
Lien.
 
 
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(e)           Consents.  No consent, approval, authorization or order of any
court, governmental agency or body or arbitrator having jurisdiction over the
Company, or any of its Affiliates or the Company’s shareholders is required for
the execution by the Company of the Transaction Documents and compliance and
performance by the Company of its obligations under the Transaction Documents,
including, without limitation, the issuance and sale of the Securities except
from MDFA pursuant to the terms of that certain Loan Agreement between AMS and
MDFA dated as of October 13, 2011 (the “MDFA Loan Agreement”) and the Super
Senior Lien holder under its Loan and Security Agreement (the “Super Senior Lien
Loan Agreement”).. The Transaction Documents and the Company’s performance of
its obligations thereunder have been approved by the Company’s Board of
Directors.  Other than the filing of a Form D with the Commission and applicable
state securities commissioners with respect to the offer and sale of the
Securities (which filings will be made within the time prescribed by law), no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority, is required
by the Company or any Affiliate of the Company in connection with the
consummation of the transactions contemplated by this Agreement and the
Transaction Documents, or the consummation of any of the other agreements,
covenants or commitments of the Company or any Subsidiary contemplated by the
other Transaction Documents, except as would not otherwise have a Material
Adverse Effect. Any such qualifications and filings will, in the case of
qualifications, be effective on the Closing and will, in the case of filings, be
made within the time prescribed by law.  No consent of any third party is
required to be obtained by the Company other than those consents necessary from
MDFA pursuant to the terms of the MDFA Loan Agreement and from the Super Senior
Lien holder pursuant to the terms of the Super Senior Lien Loan Agreement
relating to subordination of Subscribers’ security interests to the MDFA Lien
and the Super Senior Lien, respectively.
 
(f)           No Violation or Conflict.  Assuming the representations and
warranties of the Subscribers in Section 4 are true and correct, and with the
necessary consent of MDFA and the Super Senior Lien holder, neither the issuance
and sale of the Securities, nor the performance of the Company’s or any
Subsidiaries’ obligations under this Agreement, the Transaction Documents and
all other agreements entered into by the Company or any Subsidiary relating
thereto by the Company (or such Subsidiary) will:
 
(i)           violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse of time or
both would be reasonably likely to constitute a default) under (A) the articles
or certificate of incorporation, charter or bylaws of the Company or of any
Subsidiary, (B) to the Company’s Knowledge (as defined below), any decree,
judgment, order, law, treaty, rule, usury or other lending limitation or rule,
or other regulation or determination applicable to the Company of any court,
governmental agency or body, or arbitrator having jurisdiction over the Company
or over the properties or assets of the Company, and Subsidiary or any of their
Affiliates, (C) the terms of any bond, debenture, note or any other evidence of
indebtedness, or any agreement, stock option or other similar plan, indenture,
lease, mortgage, deed of trust or other instrument to which the Company or any
of its Affiliates is a party, by which the Company or any of its Affiliates is
bound, or to which any of the properties of the Company or any of its Affiliates
is subject, or (D) the terms of any “lock-up” or similar provision of any
underwriting or similar agreement to which the Company, or any of its Affiliates
is a party, except the violation, conflict, breach, or default of which would
not have a Material Adverse Effect. For purposes of this Agreement, “Knowledge”
shall mean the actual knowledge of the Company’s or any of its Subsidiary’s
President and Chief Executive Officer, Chief Financial Officer or a member of
the board of directors of the Company or a Subsidiary as of the Effective Date;
or
 
 
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(ii)           result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company or any of
its Affiliates except as described herein.
 
(g)           The Securities.  The Securities, upon issuance:
 
(i)           are, or will be, free and clear of any security interests, liens,
claims or other encumbrances, subject to restrictions upon transfer under the
1933 Act and any applicable state securities laws;

(ii)           have been, or will be, duly and validly authorized and on the
date of issuance of the Conversion Shares upon conversion of the Notes and/or
issuance of the Warrant Shares on exercise of the Warrants, the Conversion
Shares/and or Warrant Shares will be validly issued, fully paid and
non-assessable;
 
(iii)           will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the Company;
 
(iv)           will not subject the holders thereof to personal liability by
reason of being such holders;
 
           (v)           assuming the representations warranties of the
Subscribers as set forth in Section 4 hereof are true and correct, will not
result in a violation of Section 5 under the 1933 Act, and
 
(h)           Litigation.  There is no pending or, to the Knowledge of the
Company, threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
or any of its Affiliates that would affect the execution by the Company or the
performance by the Company of its obligations under the Transaction Documents.

(i)           Information Concerning Company. The Company has made available to
each Purchaser through the SEC’s EDGAR system accurate and complete copies
(excluding copies of exhibits) of each report, registration statement, and
definitive proxy statement filed by the Borrower with the SEC.  All statements,
reports, schedules, forms and other documents required to have been filed by the
Company with the SEC have been so filed.  As of the time it was filed with the
SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Reports complied in
all material respects with the applicable requirements of the 1933 Act, or the
Securities Exchange Act of 1934 (the “1934 Act”), as amended; and (ii) none of
the Reports 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.
 
 
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(j)           Stop Transfer.  The Company and Subsidiaries will not issue any
stop transfer order or other order impeding the sale, resale or delivery of any
of the Securities, except as may be required by any applicable federal or state
securities laws and unless contemporaneous notice of such instruction is given
to the affected Subscriber.
 
(k)           Defaults.   Neither the Company nor any Subsidiary is in violation
of its articles of incorporation or bylaws.  Neither the Company nor any
Subsidiary is (i) in default under or in violation of any other material
agreement, license, lease, intellectual property assignment or lease, or other
instrument to which it is a party or by which it or any of its properties are
bound or affected, which default or violation would have a Material Adverse
Effect, except for certain payments due under the lease for its premises, which
are expected to be made from the proceeds of this loan and the loan in
connection with the Super Senior Lien (ii) in default with respect to any order
of any court, arbitrator or governmental body or subject to or party to any
order of any court or governmental authority arising out of any action, suit or
proceeding under any statute or other law respecting antitrust, monopoly,
restraint of trade, unfair competition or similar matters, or (iii) in violation
of any statute, rule or regulation of any governmental authority which violation
would have a Material Adverse Effect.
 
 (l)           No Undisclosed Liabilities.  The Company has no liabilities or
obligations which are material, individually or in the aggregate, other than
those incurred in the ordinary course of the Company business since the end of
the last period set forth in the Reports, and which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect,
except as disclosed in the Reports or on Schedule 5(o).
 
(m)           No Undisclosed Events or Circumstances.  Since December 31, 2010,
no event or circumstance has occurred or exists with respect to the Company or
its businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed
 
(n)           Intellectual Property.   The Company owns or possesses (or, can
acquire on commercially reasonable terms) sufficient legal rights to all Company
Intellectual Property (as defined below), without any known conflict with, or
infringement of, the rights of others.  To the Company’s Knowledge, no product
or service marketed or sold (or proposed to be marketed or sold) by the Company,
violates or will violate any license, or infringes or will infringe any
intellectual property rights of any other party.  Other than with respect to
commercially available software products under standard end-user object code
license agreements, the Company is not bound by or a party to any options,
licenses, leases, assignments or agreements of any kind or liens or pledges of
any kind, with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other Person except for a license agreement with Quantum
Corporation.  The Company has not received any communications alleging that the
Company has violated or, by conducting its business, would violate any of the
patents, trademarks, service marks, tradenames, copyrights, trade secrets, mask
works or other proprietary rights or processes of any other Person.  For
purposes of this Agreement, the term “Company Intellectual Property” shall mean
all patents, patent applications, trademarks, trademark applications, service
marks, tradenames, copyrights, trade secrets, licenses, domain names, mask
works, information and proprietary rights and processes as are necessary to the
conduct of the Company’s business as now conducted.
 
 
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(o)           Certain Transactions. Other than (i) as relates to this Agreement
and the Transaction Documents (ii) standard employee benefits generally made
available to all employees, (iii) the purchase of shares of the Company’s
capital stock and the issuance of options to purchase Common Stock, in each
instance, approved in the written minutes of the Board of Directors, there are
no agreements, understandings or proposed transactions between the Company and
any of its officers, directors, consultants or key employees except for
representation by Ruskin Moscou Faltischek, P.C. of which a board member and
officer is an employee.
 
 (p)           [Omitted.]
 
 (q)           Correctness of Representations.  The Company represents that the
foregoing representations and warranties are true and correct as of the date
hereof in all material respects, and, unless the Company otherwise notifies the
Subscribers prior to each Closing Date, shall be true and correct in all
material respects as of each Closing Date; provided, that, if such
representation or warranty is made as of a different date in which case such
representation or warranty shall be true as of such date.
 
(r)           Third Party Beneficiary. The Subscriber acknowledges that
Collateral Agent is a third party beneficiary to the covenants and warranties
made hereby.
 
(s)           Survival.  The foregoing representations and warranties shall
survive the Closing Date until the one-year anniversary of the date that the
Notes are fully repaid or converted.
 
6.           Regulation D Offering.  The offer and issuance of the Securities to
the Subscribers is being made pursuant to the exemption from the registration
provisions of the 1933 Act afforded by Section 4(2) or Section 4(6) of the 1933
Act and/or Rule 506 of Regulation D promulgated thereunder.
 
7.           Certain Miscellaneous Matters.
 
7.1.           Conversion of Note.
 
(a)           Upon the conversion of a Note or part thereof, the Company shall,
at its own cost and expense, take all necessary action, including obtaining and
delivering, an opinion of counsel to assure that the Company’s transfer agent
shall issue stock certificates in the name of the converting Subscriber (or its
permitted nominee) or such other persons as designated by Subscriber and in such
denominations to be specified at conversion representing the number of shares of
Common Stock issuable upon such conversion.  The Company warrants and covenants
that no instructions other than these instructions have been or will be given to
any transfer Collateral Agent of the Company’s Common Stock and that the
certificates representing such shares shall contain no legend other than the
usual 1933 Act restriction from transfer legend.  In the event that the Shares
are sold in a manner that complies with an exemption from registration, the
Company will, to the extent such removal is permissible under applicable law as
determined by the Company in its reasonable discretion (including, without
limitation, based on the advice of the Company’s legal counsel), promptly
instruct its counsel to issue to the transfer agent an opinion permitting
removal of the legend indefinitely, provided that Subscriber delivers all
reasonably requested representations in support of such opinion.

(b)           Pursuant to the terms of a Notice of Conversion and the Note, the
Company shall (or, if a transfer agent is appointed, shall cause the transfer
agent to) transmit the certificates representing the Shares to the holder of the
Note by (i) issuing certificated shares to such holder, or (ii) if a transfer
Collateral Agent is appointed and the  holder so elects, by crediting the
account of the holder’s designated broker with the Depository Trust Corporation
(“DTC”) through its Deposit Withdrawal Collateral Agent Commission (“DWAC”)
system within seven (7) business days after receipt by the Company of the Notice
of Conversion (the “Delivery Date”).  In the case of the exercise of the
conversion rights set forth herein, the conversion privilege shall be deemed to
have been exercised and the Shares issuable upon such conversion shall be deemed
to have been issued upon the date of receipt by the Company of the Notice of
Conversion in accordance with the requirements of the Note. The holder of the
Note shall be treated for all purposes as the beneficial holder of such Shares,
or, in the case that Company delivers physical certificates as set forth below,
the record holder of such Shares, unless the holder provides the Company written
instructions to the contrary.  For avoidance of doubt, in the event that Shares
cannot be delivered to the Holder via DWAC, (or, if no transfer agent is
appointed) the Company shall deliver physical certificates representing the
Shares by the Delivery Date to an address designated by the holder.

 
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(c)           The Company understands that a delay in the delivery of the
Conversion Shares in the form required pursuant to Section 7.1 hereof later than
the Delivery Date could result in economic loss to the affected Subscriber.  In
addition to other damages or remedies at law or in equity to which the
converting Note holder may be entitled, in the event that the Company fails for
any reason to effect delivery of the Conversion Shares within ten (10) business
days after the Delivery Date, such Subscriber will be entitled to revoke all or
part of the relevant Notice of Conversion by delivery of a written notice to
such effect to the Company whereupon the Company and such Subscriber shall each
be restored to their respective positions immediately prior to the delivery of
such notice, except that the liquidated damages described above shall be payable
through the date notice of revocation or rescission is given to the Company.

7.2.           Conditions Precedent to the Obligation of the Subscribers to
Close and to Purchase the Notes.  The obligation hereunder of the Subscribers to
purchase the Notes and Warrants and to consummate the transactions contemplated
by this Agreement is subject to the satisfaction or waiver, at or before such
Closing, of each of the conditions set forth below.  These conditions are for
the Subscribers’ and Collateral Agent’s sole benefit and may be waived by the
Subscribers and Collateral Agent at any time in their sole discretion.
 
                                (a)           Accuracy of the Company’s and
Subscriber’s Representations and Warranties.  Each of the representations and
warranties of the Company in this Agreement and the other Transaction Documents
shall be true and correct in all material respects as of each Closing, except
for representations and warranties that speak as of a particular date, which
shall be true and correct in all material respects as of such date.
 
 
                                (b)           Performance by the Company and
each Subsidiary.  The Company and each Subsidiary shall have executed and
delivered, and duly authorized each of the Transaction Documents to which they
are a party.  The Company and each Subsidiary shall have performed, satisfied
and complied in all material respects with all covenants, agreements and
conditions required by this Agreement or the respective Transaction Document(s)
to which it or they are a party, to be performed, satisfied or complied with by
the Company or such Subsidiary at or prior to such Closing.
 
 
                                (c)           [omitted]
 
 
                                (d)           No Injunction.  No statute, rule,
regulation, executive order, decree, ruling or injunction shall have been
enacted, entered, promulgated or endorsed by any court or governmental authority
of competent jurisdiction which prohibits the consummation of any of the
transactions contemplated by this Agreement.
 
 
                                (e)           No Proceedings or Litigation.  No
action, suit or proceeding before any arbitrator or any governmental authority
shall have been commenced, and no investigation by any governmental authority
shall have been initiated, against the Company or any subsidiary, or any of the
officers, directors or affiliates of the Company or any subsidiary seeking to
restrain, prevent or change the transactions contemplated by this Agreement, or
seeking damages in connection with such transactions.  .
 
 
                                (f)           Notes and Warrants.  At the
Closing, the Company shall have delivered to the Subscribers the Notes and
Warrants in such amounts and to such Subscribers as set forth on Schedule A
hereto, along with all appropriate board resolutions or other necessary
documentation in order to issue the Notes and Warrants in such denominations as
each Subscriber may request.   The Company shall also deliver this Agreement,
duly executed by the Company.  The Company and each Subsidiary shall have
executed and delivered the Transaction Documents to which they are a party to
the Subscriber and to Collateral Agent.
 
 
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                                (g)           Secretary’s Certificate.  The
Company  shall have delivered to the Subscribers a secretary’s certificate,
dated as of the Closing Date, as to (i) the resolutions adopted by the Board of
Directors approving the transactions contemplated hereby, (ii) the Company’s
Certificate of Incorporation, (iii) the Bylaws, each as in effect at such
Closing, and (iv) the authority and incumbency of the officers of the Company
executing the Transaction Documents and any other documents required to be
executed or delivered in connection therewith.
 
(h)           Officer’s Certificate. On the each Closing Date, the Company shall
have delivered to the Subscribers a certificate signed by an executive officer
on behalf of the Company, dated as of such Closing Date, confirming the accuracy
of the Company’s representations, warranties, and covenants as of such initial
Closing Date and confirming the compliance by the Company with the conditions
precedent set forth in paragraphs (7.2.(b))-(7.2(e)) and (7.2(h)) as of such
Closing (provided that, with respect to the matters in paragraphs (7.2(d)) and
(7.2(e)) such confirmation shall be based on the knowledge of the executive
officer after due inquiry).
 
                                (h)           Material Adverse Effect.  No
Material Adverse Effect shall have occurred at or before such Closing Date.
 
                                  (i)           [Omitted.]
 
(j)  Subsidiary Guarantees.  At each Closing, Company shall deliver to
Collateral Agent for the Subscribers, a Subsidiary Guaranty guaranteeing the
Company’s obligations under each Note made by each of the Company’s Subsidiaries
in favor of such Subscriber. The Company and each Subsidiary, as the case may be
shall also deliver the UCC 1 Financing Statements naming the Collateral Agent as
Secured Party on behalf of the Subscribers, in such form as is satisfactory to
the Collateral Agent, and stock certificates representing the Pledge Shares and
stock powers in favor of Collateral Agent on behalf of the Subscribers, so as to
enable Collateral Agent to perfect the Lien on said shares.
 
7.3.           Injunction Posting of Bond.  In the event a Subscriber shall
elect to convert a Note or part thereof, the Company may not refuse conversion
or exercise based on any claim that such Subscriber or anyone associated or
affiliated with such Subscriber has been engaged in any violation of law, or for
any other reason, unless, an injunction from a court, on notice, restraining and
or enjoining conversion of all or part of such Note shall have been sought and
obtained by the Company or at the Company’s request or with the Company’s
assistance, and the Company has posted a surety bond for the benefit of such
Subscriber in the amount of 120% of the outstanding principal and interest of
the Note, or aggregate purchase price of the Shares which are sought to be
subject to the injunction, which bond shall remain in effect until the
completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such Subscriber to the extent Subscriber obtains judgment in
Subscriber’s favor.

8.           Placement Collateral Agent/Due Diligence Fee/Legal Fees.

(a)                      Fees.   The parties acknowledge that there are no
placement agents, finders or brokers fees owed or paid in connection with this
financing, and that no services of a broker, finder or placement Collateral
Agent have been utilized with the possible exception of sales which may be
negotiated through one or more registered broker dealers, the fees of which will
be paid by the Company.
 
9.           Covenants of the Company.  The Company covenants and agrees with
the Subscribers as follows:
 
(a)           Commencing after the initial Closing and continuing for so long as
any of the principal or interest on the Notes are outstanding, the Company may
not take the following actions without consent of the Collateral Agent
(regardless of whether such designee is holding a formal board seat, and, if no
director designee is agreed to or appointed or then in office, then such
decisions shall be made by a consent of the Majority of Note Holders) which
consent shall be deemed final and binding and accepted by all Note holders
subject to waiver at any time from the Collateral Agent:
 
 
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(i)           make any loan or advance in excess of $15,000 to any person or
entity more than once a year, including, without limitation, any employee or
director, except, advances and similar expenditures (A) under terms of an
employee stock or option plans approved by the Board of Directors and Collateral
Agent or in effect prior to the date of first Closing, and (b) in the ordinary
course of business, consistent with past practice;
 
(ii)           guarantee any indebtedness of any person except with regard to
the debt secured by the Super Senior Lien and the MDFA Lien;
 
(iii)           make any investment in securities other than US money market
funds or FDIC insured CD accounts;
 
(iv)           incur any aggregate indebtedness in excess of $100,000 that is
not already included in a Board-approved budget or that is part of the normal
course of business, i.e. purchase of equipment or grant or permit to exist any
liens or pledges other than Permitted Liens (as hereinafter defined)  as
provided below unless the same is approved by the majority of the Board;
(v)           Omitted;
 
(vi)           Omitted;
 
(vii)           sell, assign, license, lease, transfer pledge or encumber
material technology or intellectual property except in the ordinary course of
business, consistent with past practice or allow the same to lapse or terminate
for any reason;
 
(viii)           Omitted;
 
(ix)  liquidate, dissolve, wind up, merge or consolidate the Company (including
a reverse merger or similar transaction) or  sell, lease, transfer, license or
dispose of all or substantially all of the assets of the Company.
 
Notwithstanding the foregoing, the Company may take the foregoing actions in a
financing where the Note holders will be repaid in full at the first closing of
such financing.
 
(b)                      Collateral Agent. The Collateral Agent may resign at
any time, or be removed or replaced at the discretion of holders of Notes
holding greater than 70% of the principal outstanding (the “Majority of Note
Holders”).  In the event of inability of Collateral Agent to act on any matter,
or in the event that Collateral Agent desires to obtain consent on any matter or
amendment from Note holders, then the Majority of Note Holders’ consent shall be
required for such matter.
 
 
 (c)           Use of Proceeds.   The proceeds of the Offering will be employed
by the Company for expenses of the Offering and for working capital.  The
Purchase Price may not and will not be used for accrued and unpaid officer and
director salaries, redemption of outstanding notes or equity instruments of the
Company nor non-trade obligations outstanding on a Closing Date  other than as
approved by the board’s disinterested members.  For so long as any Notes are
outstanding, the Company will not redeem any equity instruments of the Company.
 
(d)           Reservation.  Prior to the Closing Date, and at all times
thereafter, the Company shall have reserved, pro rata, on behalf of each holder
of a Note, from its authorized but unissued Common Stock, 120% of the Conversion
Shares initially underlying the Note shares of Common Stock necessary so as  to
allow each holder of a Note to be able to convert all such outstanding Notes and
interest (if any).  Prior to the Closing Date, and at all times thereafter, the
Company shall have reserved, pro rata on behalf of each holder of Warrants, from
its authorized but unissued Common Stock, sufficient shares of Common Stock
necessary to allow each holder of Warrants to be able to exercise the same for
Common Stock.  The Company agrees to immediately reserve additional shares as
may be necessary from time to time, in the event of an adjustment to be made in
accordance with the Note, or Warrant, as the case may be.
 
 
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 (e)           Taxes.  For so long as any Notes are outstanding, the Company
will promptly pay and discharge, or cause to be paid and discharged, when due
and payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company; provided,
however, that any such tax, assessment, charge or levy need not be paid if the
validity thereof shall currently be contested in good faith by appropriate
proceedings and if the Company shall have set aside on its books adequate
reserves with respect thereto, and provided, further, that the Company will pay
all such taxes, assessments, charges or levies forthwith upon the commencement
of proceedings to foreclose any lien which may have attached as security
therefore.
 
(f)           Insurance. For so long as any Notes are outstanding, the Company
will keep its assets which are of an insurable character in the locations where
they are situated, insured by financially sound and reputable insurers against
loss or damage by fire, explosion and other risks customarily insured against by
companies in the Company’s line of business; and the Company will maintain, with
financially sound and reputable insurers, insurance against other hazards and
risks and liability to persons and property to the extent and in the manner
customary for companies in similar businesses similarly situated and to the
extent available on commercially reasonable terms.
 
(g)           Books and Records. For so long as any Notes are outstanding, the
Company will keep true records and books of account in which full, true and
correct entries will be made of all dealings or transactions in relation to its
business and affairs in accordance with generally accepted accounting principles
applied on a consistent basis.
 
(h)           Governmental Authorities. For so long as any Notes are
outstanding, the Company shall duly observe and conform in all material respects
to all valid requirements of governmental authorities relating to the conduct of
its business or to its properties or assets.
 
(i)           Intellectual Property.  For so long as any Notes are outstanding,
the Company shall maintain in full force and effect its corporate existence,
rights and franchises and all licenses and other rights to use intellectual
property owned or possessed by it and reasonably deemed to be necessary to the
conduct of its business, unless it is sold for value.
 
(j)           Properties. For so long as any Notes are outstanding, the Company
will keep its properties in good repair, working order and condition, reasonable
wear and tear excepted, and from time to time make all necessary and proper
repairs, renewals, replacements, additions and improvements thereto; and the
Company will at all times comply with each provision of all leases to which it
is a party or under which it occupies property if the breach of such provision
could reasonably be expected to have a Material Adverse Effect.
 
(k)           Filing of Reports. The Company shall, for so long as any Notes are
outstanding, file timely all Reports that it is required to file pursuant to the
Exchange Act from time to time, on a timely basis, subject only to duly notified
extensions in accordance with Rule 12b-25 of the Exchange Act.

(l)           Negative Covenants.   So long as a Note is outstanding, without
the consent of the Collateral Agent and the holders of a majority in principal
amount of the Notes (in accordance with Section 12(h) hereof), the Company will
not and will not permit any of its Subsidiaries to directly or indirectly,
without consent of Collateral Agent:

 
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(i)           create, incur, assume or suffer to exist any pledge,
hypothecation, assignment, deposit arrangement, lien, charge, claim, security
interest, security title, mortgage, security deed or deed of trust, easement or
encumbrance, or preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any lease or title
retention agreement, any financing lease having substantially the same economic
effect as any of the foregoing, and the filing of, or agreement to give, any
financing statement perfecting a security interest under the Uniform Commercial
Code or comparable law of any jurisdiction) (each, a “Lien”) upon any of its
property, whether now owned or hereafter acquired except for:  (a) Liens imposed
by law for taxes that are not yet due or are being contested in good faith and
for which adequate reserves have been established in accordance with generally
accepted accounting principles; (b) carriers’, landlords’ warehousemen’s,
mechanics’, material men’s, repairmen’s and other like Liens imposed by law,
arising in the ordinary course of business and securing obligations that are not
overdue by more than 60 days or that are being contested in good faith and by
appropriate proceedings; (c) pledges and deposits made in the ordinary course of
business in compliance with workers’ compensation, unemployment insurance and
other social security laws or regulations; (d) deposits to secure the
performance of bids, trade contracts, leases, statutory obligations, surety and
appeal bonds, performance bonds and other obligations of a like nature, in each
case in the ordinary course of business; (e) Liens created with respect to the
financing of the purchase of property in the ordinary course of the Company’s
business up to the amount of the purchase price of such property; (f) Liens
created with respect to the financing or factoring of the Company’s accounts
receivable; (g) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary course
of business that do not secure any monetary obligations and do not materially
detract from the value of the affected property; and (h) Liens disclosed on
Schedule 9(l)(i) hereto (each of (a) through (h), a “Permitted Lien”);

                                            (ii)           amend its certificate
of incorporation, bylaws or its charter documents so as to materially and
adversely affect any rights of the Subscribers (an increase in the amount of
authorized shares and an increase in the number of directors will not be deemed
adverse to the rights of the Subscribers);

(iii)           repay, repurchase or offer to repay, repurchase or otherwise
acquire or make any dividend or distribution in respect of any of its Common
Stock, preferred stock, or other equity securities other than to the extent
permitted or required under this Agreement or the other Transaction Documents.
 
(m)           Seniority.  Until the Notes are fully repaid or converted, the
Company shall not grant nor allow any security interest to be taken in the
assets of the Company or any subsidiary; nor issue any debt, equity or other
instrument which would give the holder thereof directly or indirectly, a right
in any assets of the Company or any subsidiary, superior to any right of the
holder of a Note in or to such assets except for the MDFA Lien and the Super
Senior Lien.
 
(n)           Notices.   For so long as the Subscribers hold any Securities, the
Company will maintain as United States address and United States fax number for
notices purposes under the Transaction Documents.

                      (o)           Default and Acceleration.  Notwithstanding
the foregoing, the occurrence of any of the items in this Section 9, among
others set forth in the Note, shall cause an acceleration and right of repayment
of the Note with interest.  Any acceleration of the Note may only be called upon
affirmative consent of the Collateral Agent.
 
 
10.           Covenants of the Company Regarding Indemnification.
 
 
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(a)           The Company agrees to indemnify, hold harmless, reimburse and
defend the Collateral Agent, Subscribers, the Subscribers’ officers, directors,
Collateral Agents, Affiliates, members, managers, control persons, and each of
their respective advisors and counsel, and principal shareholders, against any
claim, cost, expense, liability, obligation, loss or damage (including
reasonable legal fees) of any nature, incurred by or imposed upon the Subscriber
or any such person which results, arises out of or is based upon (i) any
material misrepresentation by Company or breach of any representation or
warranty by Company in this Agreement or in any Exhibits or Schedules attached
hereto, or other agreement delivered pursuant hereto; or (ii) after any
applicable notice and/or cure periods, any breach or default in performance by
the Company of any covenant or undertaking to be performed by the Company
hereunder, or any other agreement entered into by the Company and Subscriber
relating hereto.

 
If any claim, suit, action or other proceeding to which the indemnity set forth
herein applies (“Claim”) is brought against an Indemnified Party, such
Indemnified Party shall give the Company prompt notice of such Claim, and the
Company shall have the right, at its own expense, to participate in or assume,
the defense of such Claim, provided that, the Company shall use counsel
reasonably acceptable to the Indemnified Party in defending such Claim. The
Indemnified Party may not adjust, settle or compromise any Claim brought against
it for which the indemnity set forth herein is sought without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld.
 

11.           Note Anti-Dilution.
 
(a) Anti Dilution.  The initial Conversion Price of the Note shall be $1.60. (as
modified from time to time, the “Conversion Price”) into shares of Common Stock
of the Company or its successor in interest (the “Conversion Shares”).   The
Conversion Price shall not be adjustable for issuances of other securities,
other than a stock split or stock dividend, or for corporate combinations, or
for reduction of the cash of the Company and its subsidiaries below
$1,000,000,  as provided in the Note.
 
 
 12.           Miscellaneous.
 
 
(a)           Notices.  All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
delivered by reputable air courier service with charges prepaid, or (iv)
transmitted by hand delivery, telegram, or facsimile, addressed as set forth
below or to such other address as such party shall have specified most recently
by written notice.  Any notice or other communication required or permitted to
be given hereunder shall be deemed effective (a) upon hand delivery or delivery
by facsimile, with accurate confirmation generated by the transmitting facsimile
machine, at the address or number designated below (if delivered on a business
day during normal business hours where such notice is to be received), or the
first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur. The addresses for such
communications shall be:
 
if to the Company, to:
Plures Technologies, Inc.
5279 Parkside Drive
Canandaigua, NY 14424
Fax:
Phone: (585) 905-0554
Attn: David. R. Smith, CEO

with a copy by facsimile only to counsel for the Company at:
 
Ruskin Moscou Faltischek, P.C.
1425 RXR Plaza
Uniondale, NY 11556
ssieger@rmfpc.com
ph 516.663.6546
fx  516.663 6746
Attn. Stuart M. Sieger, Esq.

 
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If to a Subscriber, then to such subscriber’s address as set forth on the books
and records of the Company with a copy to Collateral Agent and to Subscriber’s
counsel as follows:

RENN Capital Group Inc.
8080 N. Central Expressway,
Ste 210, LB-50
Dallas Texas 75206
Phone:  (214) 891-8924
Fax:  (214) 891-8106
Attn:  Russell Cleveland, President
                   
With a copy to:
 
             Levy International Law, LLC
                c/o 590 Madison Avenue, 21st Floor
                                 New York, New York 10022
Attention: Ron Levy, Esq.
Fax: (646) 219-1574
E-mail: RLevy@LevyLawNY.com
 
 
(b)           Entire Agreement; Assignment.  This Agreement and other documents
delivered in connection herewith represent the entire agreement between the
parties hereto with respect to the subject matter hereof and may be amended only
by a writing executed by all parties hereto.  Neither the Company nor the
Subscribers have relied on any representations not contained or referred to in
this Agreement and the documents delivered herewith.   No right or obligation of
the Company shall be assigned without prior notice to and the written consent of
the Subscribers. No right or obligation of any Subscriber shall be assigned
without prior notice to and the written consent of the Company.  Notwithstanding
the foregoing or anything in this Agreement to the contrary, this Agreement and
Schedule A hereto, may be amended from time to time by the Company, Subsidiaries
and Collateral Agent, without consent of the Subscribers, for the sole purpose
of accepting additional subscribers and subsequent Closings until the maximum
offering amount has been sold.
 
(c)           Counterparts/Execution.  This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.  This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.
 
(d)           Law Governing this Agreement.  This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
regard to principles of conflicts of laws. Any action brought by either party
against the other concerning the transactions contemplated by this Agreement
shall be brought only in the federal courts located in the state and county of
New York.  The parties to this Agreement hereby irrevocably waive any objection
to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum
non conveniens.  The parties executing this Agreement and other agreements
referred to herein or delivered in connection herewith on behalf of the Company
agree to submit to the in personam jurisdiction of such courts and hereby
irrevocably waive trial by jury.  The prevailing party shall be entitled to
recover from the other party its reasonable attorney’s fees and costs.  In the
event that any provision of this Agreement or any other agreement delivered in
connection herewith is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such
statute or rule of law.  Any such provision which may prove invalid or
unenforceable under any law shall not affect the validity or enforceability of
any other provision of any agreement.  The Notes reflect an investment by the
Subscribers and, are deemed an irrevocable instrument for the payment of money
only, actionable and enforceable, among other remedies, by Collateral Agent or
by any owner of a Note independently or together, by Summary Proceeding in Lieu
of Complaint pursuant to CPLR rule 3213 or similar proceeding, as well as
through conventional proceeding.
 
 
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(e)           Specific Enforcement, Consent to Jurisdiction.  The Company and
Subscriber acknowledge and agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with specific terms or were otherwise breached.  It is accordingly
agreed that the parties shall be entitled to seek an injunction or injunctions
to prevent or cure breaches of the provisions of this Agreement and to enforce
specifically the terms and provisions hereof, this being in addition to any
other remedy to which any of them may be entitled by law or equity.  Subject to
Section 12(d) hereof, the Company hereby irrevocably waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction in New York of such court, that the suit,
action or proceeding is brought in an inconvenient forum or that the venue of
the suit, action or proceeding is improper.  Nothing in this Section shall
affect or limit any right to serve process in any other manner permitted by law.
 
(f)           Independent Nature of Obligations     The Company acknowledges
that the obligations of each Subscriber under the Transaction Documents are
several and not joint with the obligations of any other Subscriber, and no
Subscriber shall be responsible in any way for the performance of the
obligations of any other Subscriber under the Transaction Documents. Nothing
herein is deemed to imply or impute upon any subscriber any obligation to invest
further or invest any amounts other than the amount subscribed for hereby.  The
Company acknowledges that each Subscriber has represented that the decision of
each Subscriber to purchase Securities has been made by such Subscriber
independently of any other Subscriber and independently of any information,
materials, statements or opinions as to the business, affairs, operations,
assets, properties, liabilities, results of operations, condition (financial or
otherwise) or prospects of the Company which may have been made or given by any
other Subscriber or by any Collateral Agent or employee of any other Subscriber,
and no Subscriber or any of its Collateral Agents or employees shall have any
liability to any Subscriber (or any other person) relating to or arising from
any such information, materials, statements or opinions.  The Company
acknowledges that nothing contained in any Transaction Document, and no action
taken by any Subscriber pursuant hereto or thereto (including, but not limited
to, the (i) inclusion of a Subscriber in a registration statement and (ii)
review by, and consent to, any such registration statement by a Subscriber)
shall be deemed to constitute the Subscribers as a partnership, an association,
a joint venture or any other kind of entity, or create a presumption that the
Subscribers are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by the Transaction Documents.  The
Company acknowledges that, in the event that no Collateral Agent is acting on
its behalf, each Subscriber shall be entitled to independently protect and
enforce its rights, including without limitation, the rights arising out
of the Transaction Documents, and it shall not be necessary for any other
Subscriber to be joined as an additional party in any proceeding for such
purpose.  The Company acknowledges that it has elected to provide all
Subscribers with the same terms and Transaction Documents for the convenience of
the Company and not because Company was required or requested to do so by the
Subscribers.  The Company acknowledges that such procedure with respect to the
Transaction Documents in no way creates a presumption that the Subscribers are
in any way acting in concert or as a group with respect to the Transaction
Documents or the transactions contemplated thereby.
 
 
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(g)           [Omitted.]
 
(h)           Consent.   As used in the Agreement, “consent of the Subscribers”
or “Consent of the “Majority of Note Holders” or similar language means the
consent of holders of greater than 70% of the total Principal Amount of Notes
and interest outstanding on the date consent is requested.
 
(i)           Equal Treatment.   No consideration shall be offered or paid to
any person to amend or consent to a waiver or modification of any provision of
the Transaction Documents unless the same consideration is also offered and paid
to all the Subscribers and their permitted successors and assigns.
 
(j)           Maximum Payments.   Nothing contained herein or in any document
referred to herein or delivered in connection herewith shall be deemed to
establish or require the payment of a rate of interest or other charges in
excess of the maximum permitted by applicable law.  In the event that the rate
of interest, conversion rate or dividends required to be paid or other charges
hereunder exceed the maximum permitted by such law, any payments in excess of
such maximum shall be credited against amounts owed by the Company to the
Subscriber and thus refunded to the Company.
 
(k)           Calendar Days.   All references to “days” in the Transaction
Documents shall mean calendar days unless otherwise stated.  The terms “business
days” and “trading days” shall mean days that the New York Stock Exchange is
open for trading for three or more hours.  Time periods shall be determined as
if the relevant action, calculation or time period were occurring in New York
City.  Any deadline that falls on a non-business day in any of the Transaction
Documents shall be automatically extended to the next business day and interest,
if any, shall be calculated and payable through such extended period.

(l)           Captions: Certain Definitions.  The captions of the various
sections and paragraphs of this Agreement have been inserted only for the
purposes of convenience; such captions are not a part of this Agreement and
shall not be deemed in any manner to modify, explain, enlarge or restrict any of
the provisions of this Agreement.  As used in this Agreement the term “person”
shall mean and include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization and a government or any department or agency thereof.
 
(m)           Severability.  In the event that any term or provision of this
Agreement shall be finally determined to be superseded, invalid, illegal or
otherwise unenforceable pursuant to applicable law by an authority having
jurisdiction and venue, that determination shall not impair or otherwise affect
the validity, legality or enforceability: (i) by or before that authority of the
remaining terms and provisions of this Agreement, which shall be enforced as if
the unenforceable term or provision were deleted, or (ii) by or before any other
authority of any of the terms and provisions of this Agreement.
 
(n)           Successor Laws.  References in the Transaction Documents to laws,
rules, regulations and forms shall also include successors to and functionally
equivalent replacements of such laws, rules, regulations and forms.

[Signature Pages, Schedules and Exhibits Follow]

 
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 LIST OF EXHIBITS AND SCHEDULES
 
               Schedule A             Schedule of Subscribers
 
Exhibit A                 Form of 2% Secured Convertible Note
 
               Exhibit B                  Form of Common Stock Purchase Warrant
 
Exhibit C                 Form of Subsidiary Guaranty
 
Exhibit D                Form of Pledge and Security Agreement
 
Company Disclosure Schedules
 
                Schedule 5(d)         Outstanding Shares, Other Issuances,
Derivatives
 
Schedule 5(o)         Undisclosed Liabilities
 
Schedule 9(l)(i)       Permitted Liens
 

 
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SUBSCRIBER SIGNATURE PAGE
(for Corporation, Partnership, Trust or Other Entities)

This Securities Purchase Agreement of Plures Technologies, Inc. is hereby
executed and entered into by the below Subscriber.  Subscriber hereby further
consents to the appointment of Collateral Agent as provided in the within
Securities Purchase Agreement and related Transaction Documents.

 
Principal Amount of Notes
 
No. of Warrants:
 
Purchase Price
 
___________________________________
Name of Entity
 
___________________________________
Type of Entity (i.e., corporation, partnership, etc.)
 
___________________________________
Tax Identification or Social Security Number
 
___________________________________
State of Formation of Entity
 
____________________________________
Name of Signatory Typed or Printed
 
By __________________________________                                                                    
Name:
Title:   .
 

 
Address to Which Correspondence Should Be Directed (if different from above)
 
 
 
 
   
 
All Original Securities to:
 
 
 
 
 
 
       

 
SP-1

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SUBSCRIBER SIGNATURE PAGE
(For Individual Subscribers)

           This Securities Purchase Agreement of Plures Technologies, Inc. is
hereby executed and entered into by the below Subscriber.  Subscriber hereby
further consents to the appointment of Collateral Agent as provided in the
within Securities Purchase Agreement and related Transaction Documents.

 
Principal Amount of Notes
 
No. of Warrants:
 
Purchase Price
 
_______________________________
Signature (Individual)
 
_______________________________
Name (Print)
 
_______________________________
Street address
 
_______________________________
City, State and Zip Code
   

 
 
________________________________
Tax Identification or Social Security Number
 
 (______)____________________________
  Telephone Number
 
         (______)____________________________
   Facsimile Number

 
Address to Which Correspondence Should Be Directed (if different from above)
 
____________________________________
c/o Name
____________________________________
Street Address
 

 
____________________________________
City, State and Zip Code
 
(______)____________________________
Telephone Number
 
(______)____________________________
Facsimile Number

 
SP-2

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ACCEPTANCE PAGE TO CONVERTIBLE SECURITIES PURCHASE AGREEMENT OF
PLURES TECHNOLOGIES, INC.

The foregoing subscriptions for 2% Secured Convertible Promissory Notes for a
principal amount and at a purchase price of _________ (the “Purchase Price”),
along with Warrants to purchase ______ shares of Common Stock,  in accordance
with the foregoing Securities Purchase Agreement, to such Subscribers and in
such amounts as set forth on Schedule A annexed hereto, is AGREED AND ACCEPTED.

PLURES TECHNOLOGIES, INC.

By:        
/s/                                                                    
Name:
Title:

Accepted and Agreed to by Collateral Agent-

RENN Capital Group Inc.

By:         
/s/                                                                   
Name: Russell Cleveland
Title: President

 
SP-3

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Schedule A

Schedule of Subscribers

Name
 
Loan Amount
     
[TO BE COMPLETED]
         

Schedules and Exhibits

 
 

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