Document:

exhibit105.htm

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED, OR ANY STATE SECURITIES LAWS.  THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL (WHICH MAY BE COMPANY COUNSEL) REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE  SECURITIES ACT OF 1933 ACT AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS.

 

WARRANT AGREEMENT

To Purchase Shares of Series A Preferred Stock of

Plures Technologies, Inc., a Delaware corporation

Dated as of May __, 2013 (the “Effective Date”)

WHEREAS, Plures Technologies, Inc., a Delaware corporation (the “Company”), has entered into that certainLoan and Security Agreement of even date herewith (as the same has been and may from time to time be further amended, modified or supplemented in accordance with its terms, the “Loan Agreement”) by and between the Company and Hercules Technology Growth Capital, Inc. a Maryland corporation(the “Warrantholder”), pursuant to which the Lender has established atermloan in favor of the Company in the original principal amount of up to $3,000,000.00;

WHEREAS, the Company desires to grant to Warrantholder, in consideration for, among other things, the financial accommodations provided for in the Loan Agreement, the right to purchase shares of its Series A Preferred Stock (as defined below) subject  and pursuant to the terms and conditions of this Warrant Agreement (this “Agreement”);

 

NOW, THEREFORE, in consideration of the Warrantholder executing and delivering the Loan Agreement and providing the financial accommodations contemplated therein, and in consideration of the mutual covenants and agreements contained herein, the Company and Warrantholder agree as follows:

 

SECTION 1.  DEFINITIONS

 

          As used herein, the following terms shall have the following meanings:

 

“Act” means the Securities Exchange Act of 1933, as amended.

 

“Applicable Percentage” shall mean three and one-half percent (3.5%) of the outstanding stock of the Company on a Fully-Diluted Basis; provided that on each exercise of this Warrant, the Applicable Percentage shall be reduced by the percentage of the outstanding shares of Series A Preferred Stock, on a Fully Diluted Basis, which are issued as a result of such exercise.

 

“Charter” means the Company’s Amended and Restated Certificate of Incorporation, as may be amended and/or restated from time to time.

 

“Common Stock” means the Company’s common stock, $0.001 par value per share;

 

“Exercise Price” shall have the meaning ascribed to such term in Section 2 hereof.

 

“Fully Diluted Basis” means all shares of stock of the Company outstanding and any shares of stock issuable upon exercise or conversion of stock options, convertible debt or securities (including without limitation this Warrants), whether such right is exercisable or convertible immediately or only after the passage of time.

 

  

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“Initial Public Offering” means the initial underwritten  public offering of the Common Stock pursuant to a registration statement under the Act, which public offering has been declared effective by the Securities and Exchange Commission (“SEC”).

 

“Merger Event” means a merger or consolidation involving the Company in which the Company is not the surviving entity, or in which the outstanding shares of the Company’s capital stock are otherwise converted into or exchanged for shares of capital of another entity.

 

“Preferred Stock” meansthe Series A Preferred Stock.

 

“Purchase Price” means, with respect to any exercise of this Agreement, an amount equal to the Exercise Price as of the relevant time multiplied by the number of shares of Series A Preferred Stock requested to be exercised under this Agreement pursuant to such exercise.

 

“Series A Preferred Stock” means the Series A Preferred Stock, par value $0.001 per share, of the Company and any other stock into or for which the Series APreferred Stock may be converted or exchanged, and upon and after the occurrence of an event which results in the automatic or voluntary conversion, redemption or retirement of all (but not less than all) of the outstanding shares of such Series A Preferred Stock, including, without limitation, the consummation of an Initial Public Offering of the Common Stock in which such a conversion occurs, then from and after the date upon which such outstanding shares are so converted, redeemed or retired, “Series A Preferred Stock” shall mean such Common Stock.

 

“Investors’ Rights Agreement” shall mean the Investors’ Rights Agreement dated as of  August 10, 2011, as amended, by and among CMSF Corp., and the stockholders listed on Schedule A therein.

 

SECTION 2.    GRANT OF THE RIFHT TO PURCHASE PREFERRED STOCK

 

For value received, the Company hereby grants to the Warrantholder, and the Warrantholder is entitled, upon the terms and subject to the conditions hereinafter set forth, to subscribe for and purchase, from the Company, that number of duly authorized, validly issued, fully paid and non-assessable shares (such number subject to adjustment as set forth herein) of Series A Preferred Stock representing the Warrantholder’s Applicable Percentageat a purchase price of $0.01 per share (the “Exercise Price”).  The number and Exercise Price of such shares are subject to adjustment as provided in Section 10.

 

	
SECTION   3. 

	
  TERM OF THE AGREEMENT.

 

Except as otherwise provided for herein, the term of this Agreement and the right to purchase Series A Preferred Stockgranted to the Warrantholder pursuant to this Agreement (the “Warrant”), shall commence on the Effective Date and shall be exercisable for a period ending seven (7) years from the Effective Date.

 

	
SECTION 4.  

	
  EXERCISE OF THE PURCHASE RIGHTS.

 

(a)    Exercise.  The purchase rights set forth in this Agreement are exercisable by the Warrantholder, in whole or in part, at any time, or from time to time, prior to the expiration of the term set forth in Section 3 of this Agreement, by tendering to the Company at its principal office a notice of exercise in the form attached hereto as Exhibit I (the “Notice of Exercise”), duly completed and executed.  Promptly upon receipt of the Notice of Exercise and the payment of the Purchase Price in accordance with the terms set forth below, and in no event later than three (3) days thereafter, the Company shall issue to the Warrantholder a certificate for the number of shares of Series A Preferred Stock purchased and shall execute the acknowledgment of exercise in the form attached hereto as Exhibit II (the "Acknowledgment of Exercise") indicating the number of shares which remain subject to future purchases, if any.

 

  

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The Purchase Price may be paid at the Warrantholder’s election either (i) by cash or check, or (ii) by surrender of all or a portion of this Agreement for shares of Series A Preferred Stock to be exercised under this Agreement and, if applicable, an amended Agreement representing the remaining number of shares purchasable hereunder, as determined below (“Net Issuance”).  If the Warrantholder elects the Net Issuance method, the Company will issue Series A Preferred Stock in accordance with the following formula:

 

X = Y(A-B)

A

	
  

	
Where:

	
X =

	
the number of shares of Series A Preferred Stock to be issued to the Warrantholder pursuant to the Net Issuance.

 

	
  

	
Y =

	
the number of shares of Series A Preferred Stock requested to be exercised under this Agreement.

 

	
  

	
A =

	
the fair market value of one (1) share of Series A Preferred Stock at the time of issuance of such shares of Preferred Stock.

 

B =           the Exercise Price.

 

For purposes of the above calculation, current fair market value of Series A Preferred Stock shall mean with respect to each share of Series A Preferred Stock:

 

(i)   if the exercise is in connection with an Initial Public Offering, and if the Company’s Registration Statement relating to such Initial Public Offering has been declared effective by the SEC, then the fair market value per share shall be the product of (x) the initial "Price to Public" of the Common Stock specified in the final prospectus with respect to the offering and (y) the number of shares of Common Stock into which each share of Series A Preferred Stock is convertible at the time of such exercise;

 

(ii)   if the exercise is after, and not in connection with an Initial Public Offering, and:

 

(A) if the Common Stock is traded on a securities exchange, the fair market value shall be deemed to be the product of (x) the average of the closing prices over a five (5) day period ending three (3) days before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Series A Preferred Stock is convertible at the time of such exercise; or

 

(B) if the Common Stock is traded over-the-counter, the fair market value shall be deemed to be the product of (x) the average of the closing bid and asked prices quoted on the NASDAQ system (or similar system) over the five (5) day period ending three (3) days before the day the current fair market value of the securities is being determined and (y) the number of shares of Common Stock into which each share of Series A Preferred Stock is convertible at the time of such exercise;

 

(iii)  if at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ National Market or the over-the-counter market, the current fair market value of Series A Preferred Stock shall be the product of (x) the highest price per share which the Company could then obtain from a willing buyer (not a current employee or director) for shares of Common Stock sold by the Company, from authorized but unissued shares, as determined in good faith by its Board of Directors and (y) the number of shares of Common Stock into which each share of Series A Preferred Stock is convertible at the time of such exercise, unless the Company shall become subject to a Merger Event, in which case the fair market value of Series A Preferred Stock shall be deemed to be the per share value received by the holders of the Series A Preferred Stock on a common equivalent basis pursuant to such Merger Event.

 

  

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Upon partial exercise by either cash or Net Issuance, the Company shall promptly issue an amended Agreement representing the remaining number of shares purchasable hereunder. All other terms and conditions of such amended Agreement shall be identical to those contained herein, including, but not limited to the Effective Date hereof.

 

(b)   Exercise Prior to Expiration.  To the extent this Agreement is not previously exercised as to all Series A Preferred Stock subject hereto, and if the fair market value of one share of the Series A Preferred Stock is greater than the Exercise Price then in effect, this Agreement shall be deemed automatically exercised pursuant to Section 4(a) (even if not surrendered) immediately before its expiration.  For purposes of such automatic exercise, the fair market value of one share of the Series A Preferred Stock upon such expiration shall be determined pursuant to Section 4(a) of this Agreement.  To the extent this Agreement or any portion thereof is deemed automatically exercised pursuant to this Section 4(b), the Company agrees to promptly notify the Warrantholder of the number of shares of Series A Preferred Stock, if any, the Warrantholder is to receive by reason of such automatic exercise.

 

	
SECTION 5.  

	
RESERVATION OF SHARES.

 

During the term of this Agreement, the Company will at all times have authorized and reserved a sufficient number of shares of its Series A Preferred Stock to provide for the exercise of the rights to purchase Series A Preferred Stock as provided for herein, and shall have authorized and reserved a sufficient number of shares of its Common Stock to provide for the conversion of the Series A Preferred Stock available hereunder.

 

	
SECTION 6.  

	
NO FRACTIONAL SHARES OR SCRIP.

 

No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Agreement, but in lieu of such fractional shares the Company shall make a cash payment therefor upon the basis of the Exercise Price then in effect.

 

	
SECTION 7.  

	
NO RIGHTS AS STOCKHOLDER.

 

This Agreement does not entitle the Warrantholder to any voting rights or other rights as a stockholder of the Company prior to the exercise of this Agreement.

 

	
SECTION 8.  

	
INVESTORS’ RIGHTS AGREEMENT.

 

The shares of Series A Preferred Stock issuable upon exercise of this Warrant (or upon conversion of any shares of Common Stock issued upon such exercise) shall constitute Registrable Securities (as such term is defined in the Investors’ Rights Agreement).  Each holder of this Warrant shall be entitled to all of the benefits afforded to a holder of any such Registrable Securities under the Investors’ Rights Agreement and such holder, by its acceptance of this Warrant, agrees to be bound by and to comply with the terms and conditions of the Registration Rights Agreement applicable to such holder as a holder of such Registrable Securities.  Upon the exercise of this Warrant, the Company covenants to join the holders of  such shares to the Investors’ Rights Agreement and provide them with all of the benefits afforded to a holder of any Registrable Securities under the Investors’ Rights Agreement.

 

	
SECTION 9.  

	
WARRANTHOLDER REGISTRY.

 

The Company shall maintain a registry showing the name and address of the registered holder of this Agreement.  Warrantholder’s initial address, for purposes of such registry, is set forth below Warrantholder’s signature on this Agreement.  Warrantholder may change such address by giving written notice of such changed address to the Company.

 

	
SECTION 10.  

	
ADJUSTMENT RIGHTS.

 

The Exercise Price and the number of shares of Series A Preferred Stock purchasable hereunder are subject to adjustment, as follows:

 

  

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(a)   Merger Event.  If at any time there shall be a Merger Event, then, as a part of such Merger Event, lawful provision shall be made so that the Warrantholder shall thereafter be entitled to receive, upon exercise of this Agreement, the number of shares of preferred stock or other securities or property of the successor corporation resulting from such Merger Event that would have been issuable if Warrantholder had exercised this Agreement immediately prior to the Merger Event.  In any such case, appropriate adjustment (as determined in good faith by the Company’s Board of Directors) shall be made in the application of the provisions of this Agreement with respect to the rights and interests of the Warrantholder after the Merger Event to the end that the provisions of this Agreement (including adjustments of the Exercise Price and number of shares of Series A Preferred Stock purchasable) shall be applicable in their entirety, and to the greatest extent possible.  Without limiting the foregoing, in connection with any Merger Event, upon the closing thereof, the successor or surviving entity shall assume the obligations of this Agreement.  In connection with a Merger Event and upon Warrantholder’s written election to the Company, the Company shall cause this Agreement to be exchanged for the consideration that Warrantholder would have received if Warrantholder chose to exercise its right to have shares issued pursuant to the Net Issuance provisions of this Agreement without actually exercising such right, acquiring such shares and exchanging such shares for such consideration.

 

(b)   Reclassification of Shares.  Except as set forth in Section 10(a) hereof, if the Company at any time shall, by combination, reclassification, exchange or subdivision of securities or otherwise, change any of the securities as to which purchase rights under this Agreement exist into the same or a different number of securities of any other class or classes, this Agreement shall thereafter represent the right to acquire such number and kind of securities as would have been issuable as the result of such change with respect to the securities which were subject to the purchase rights under this Agreement immediately prior to such combination, reclassification, exchange, subdivision or other change.

 

(c)   Subdivision or Combination of Shares.  If the Company at any time shall combine or subdivide its Series A Preferred Stock, (i) in the case of a subdivision, the Exercise Price shall be proportionately decreased, and the number of shares of Series A Preferred Stock issuable upon exercise of this Agreement shall be proportionately increased, or (ii) in the case of a combination, the Exercise Price shall be proportionately increased, and the number of shares of Series A Preferred Stock issuable upon the exercise of this Agreement shall be proportionately decreased.

 

(d)   Stock Dividends.  If the Company at any time while this Agreement is outstanding and unexpired shall:

 

(i)   pay a dividend with respect to the Series A Preferred Stock payable in Series A Preferred Stock, then the Exercise Price shall be adjusted, from and after the date of determination of shareholders entitled to receive such dividend or distribution, to that price determined by multiplying the Exercise Price in effect immediately prior to such date of determination by a fraction (A) the numerator of which shall be the total number of shares of Series A Preferred Stock outstanding immediately prior to such dividend or distribution, and (B) the denominator of which shall be the total number of shares of Series A Preferred Stock outstanding immediately after such dividend or distribution; or

 

(ii)   make any other distribution with respect to Series A Preferred Stock (or stock into which the Series A Preferred Stockis convertible), except any distribution specifically provided for in any other clause of this Section 10, then, in each such case, provision shall be made by the Company such that the Warrantholder shall receive upon exercise or conversion of this Warrant a proportionate share of any such distribution as though it were the holder of the Series A Preferred Stock(or other stock for which the Series A Preferred Stock is convertible) as of the record date fixed for the determination of the shareholders of the Company entitled to receive such distribution.

 

  

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(e)   No Dilution or Impairment.  TheCompany shall not, by amendment of its certificate of incorporation or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholder against dilution or other impairment.  Without limiting the generality of the foregoing, the Company (i) shall not permit the par value of any shares of stock receivable upon the exercise of this Warrant to exceed the amount payable therefor upon such exercise, (ii) shall take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of stock, free from all taxes, liens, security interests, encumbrances, preemptive rights and charges on the exercise of the Warrants from time to time outstanding, and (iii) shall not take any action which results in any adjustment of the total number of shares of Common Stock issuable after the action upon the exercise of all of the Warrants if such number of issuable shares would exceed the total number of shares of Common Stockthen authorized by the Company's certificate of incorporation and available for the purpose of issue upon such exercise.The Company shall provide Warrantholder with prior written notice of any issuance of its stock or other equity security to occur after the Effective Date of this Agreement, which notice shall include (a) the price at which such stock or security is to be sold, (b) the number of shares to be issued, and (c) such other information as necessary for Warrantholder to determine if a dilutive event has occurred or will occur. For the avoidance of doubt, in the event that a dilutive event is to take place, this Warrant shall be adjusted appropriately so as to maintain Warrantholder’s Applicable Percentage.

 

(f)     Notice of Adjustments.  If: (i) the Company shall declare any dividend or distribution upon its stock, whether in stock, cash, property or other securities (assuming Warrantholder consents to a dividend involving cash, property or other securities); (ii) the Company shall offer for subscription prorata to the holders of any class of its Series A Preferred Stock or other convertible stock any additional shares of stock of any class or other rights; (iii) there shall be any Merger Event; (iv) there shall be an Initial Public Offering; (v) the Company shall sell, lease, license or otherwise transfer all or substantially all of its assets; or (vi) there shall be any voluntary dissolution, liquidation or winding up of the Company; then, in connection with each such event, the Company shall send to the Warrantholder: (A) at least twenty (20) days’ prior written notice of the date on which the books of the Company shall close or a record shall be taken for such dividend, distribution, subscription rights (specifying the date on which the holders of Series A Preferred Stock shall be entitled thereto) or for determining rights to vote in respect of such Merger Event, dissolution, liquidation or winding up; (B) in the case of any such Merger Event, sale, lease, license or other transfer of all or substantially all assets, dissolution, liquidation or winding up, at least twenty(20) days’ prior written notice of the date when the same shall take place (and specifying the date on which the holders of Series A Preferred Stock shall be entitled to exchange their Preferred Stock for securities or other property deliverable upon such Merger Event, dissolution, liquidation or winding up); and (C) in the case of an Initial Public Offering, the Company shall give the Warrantholder at least twenty (20) days’ written notice prior to the effective date thereof.

 

Each such written notice shall set forth, in reasonable detail, (i) the event requiring the notice, and (ii) if any adjustment is required to be made, (A) the amount of such adjustment, (B) the method by which such adjustment was calculated, (C) the adjusted Exercise Price (if the Exercise Price has been adjusted), and (D) the number of shares subject to purchase hereunder after giving effect to such adjustment, and shall be given by first class mail, postage prepaid, or by reputable overnight courier with all charges prepaid, addressed to the Warrantholder at the address for Warrantholder set forth in the registry referred to in Section 9 of this Agreement.

 

(g)   Timely Notice.  Failure to timely provide such notice required by subsection (f) above shall entitle Warrantholder to retain the benefit of the applicable notice period notwithstanding anything to the contrary contained in any insufficient notice received by Warrantholder.  For purposes of this subsection (g), and notwithstanding anything to the contrary in Section 13(g) of this Agreement, the notice period shall begin on the date Warrantholder actually receives a written notice containing all the information required to be provided in such subsection (f).

 

  

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SECTION 11.  

	
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY.

 

(a)    Reservation of Series A Preferred Stock.  The Series A Preferred Stock issuable upon exercise of the Warrantholder’s rights has been duly and validly reserved and, when issued in accordance with the provisions of this Agreement, will be validly issued, fully paid and non-assessable, and will be free of any taxes, liens, charges or encumbrances of any nature whatsoever; provided, that the Series A Preferred Stock issuable pursuant to this Agreement may be subject to restrictions on transfer under state and/or federal securities laws.  The Company has made available to the Warrantholder true, correct and complete copies of its Charter and current bylaws. The issuance of certificates for shares of Series A Preferred Stock upon exercise of this Agreement shall be made without charge to the Warrantholder for any issuance tax in respect thereof, or other cost incurred by the Company in connection with such exercise and the related issuance of shares of Series A Preferred Stock; provided, that the Company shall not be required to pay any tax which may be payable in respect of any transfer and the issuance and delivery of any certificate in a name other than that of the Warrantholder.

 

(b)    Due Authority.  The execution and delivery by the Company of this Agreement and the performance of all obligations of the Company hereunder, including the issuance to the Warrantholder of the right to acquire the shares of Series A Preferred Stock and the Common Stock into which it may be converted, have been duly authorized by all necessary corporate action on the part of the Company.  The Loan Agreement and this Agreement: (1) are not inconsistent with the Company's Charter or current bylaws; (2) do not contravene any law or governmental rule, regulation or order applicable to it; and (3) do not and will not contravene any provision of, or constitute a default under, any indenture, mortgage, contract or other instrument to which it is a party or by which it is bound.  The Loan Agreement and this Agreement constitute legal, valid and binding agreements of the Company, enforceable in accordance with their respective terms.

 

(c)    Consents and Approvals.  No consent or approval of, giving of notice to, registration with, or taking of any other action in respect of any state, federal or other governmental authority or agency is required with respect to the execution, delivery and performance by the Company of its obligations under this Agreement, except for the filing of notices pursuant to Regulation D under the Act and any filing required by applicable state securities law, which filings will be effective by the time required thereby.

 

(d)    Issued Securities.  All issued and outstanding shares of Common Stock, Preferred Stock or any other securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable.  All outstanding shares of Common Stock, Preferred Stock and any other securities were issued in full compliance with all federal and state securities laws.  In addition, as of the date immediately preceding the date of this Agreement:

 

(i)    The authorized capital of the Company consists of (A) 50,000,000 shares of Common Stock, of which 5,494,893 shares are issued and outstanding, and (B) 5,000,000 shares of Preferred Stock, of which 1,375,000 shares are issued and outstanding and are convertible into 1,672,264 shares of Common Stock at $.001 per share.

 

(ii)    The Company has reserved  750,000 shares of Common Stock for issuance under its Stock Option Plan(s), under which 473,000 options are outstanding.  There are convertible notes outstanding convertible into 3,520,834 shares of Common Stock and there are warrants outstanding to purchase 3,934,525 shares of Common Stock. There are no other options, warrants, conversion privileges or other rights presently outstanding to purchase or otherwise acquire any authorized but unissued shares of the Company's capital stock or other securities of the Company. The Company has no outstanding loans to any employee, officer or director of the Company, and the Company agrees not to enter into any such loan or otherwise guarantee the payment of any loan made to an employee, officer or director by a third party.

 

  

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(iii)    In accordance with the Company’s Charter, no shareholder of the Company has preemptive rights to purchase new issuances of the Company’s capital stock.

 

(e)    Insurance.  The Company has in full force and effect insurance policies, with extended coverage, insuring the Company and its property and business against such losses and risks, and in such amounts, as are customary for corporations engaged in a similar business and similarly situated and as otherwise may be required pursuant to the terms of any other contract or agreement.

 

(f)    Other Commitments to Register Securities.  Except as set forth in this Agreement, the Company is not, pursuant to the terms of any other agreement currently in existence or otherwise, under any obligation to register under the Act any of its presently outstanding securities or any of its securities which may hereafter be issued.

 

(g)    Exempt Transaction.  Subject to the accuracy of the Warrantholder’s representations in Section 11 hereof, the issuance of the Series A Preferred Stock upon exercise of this Agreement, and the issuance of the Common Stock upon conversion of the Series A Preferred Stock, will each constitute a transaction exempt from (i) the registration requirements of Section 5 of the Act, in reliance upon Section 4(2) thereof, and (ii) the qualification requirements of the applicable state securities laws.

 

(h)    Compliance with Rule 144. If the Warrantholder proposes to sell Preferred Stock issuable upon the exercise of this Agreement, or the Common Stock into which it is convertible,  in compliance with Rule 144 promulgated by the SEC, then, upon Warrantholder’s written request to the Company, the Company shall furnish to the Warrantholder, within ten days after receipt of such request, a written statement confirming the Company’s compliance with the filing requirements of the SEC as set forth in such Rule, as such Rule may be amended from time to time.

 

(i)    Information Rights.  During the term of this Warrant, Warrantholder shall be entitled to the information rights contained in Sections 7.1(a) and 7.1(b) of the Loan Agreement, and Sections 7.1(a) and 7.1(b) of the Loan Agreement are hereby incorporated into this Agreement by this reference as though fully set forth herein.The Warrantholder acknowledges and agrees to be bound by the confidentiality provisions in Section 11.12 of the Loan Agreement which are also hereby incorporated into this Agreement by this reference as though fully set forth herein.

 

	
SECTION 12.  

	
REPRESENTATIONS AND COVENANTS OF THE WARRANTHOLDER.

 

This Agreement has been entered into by the Company in reliance upon the following representations and covenants of the Warrantholder:

 

(a)    Investment Purpose.  The right to acquire Series A Preferred Stock issuable upon exercise of the Warrantholder’s rights contained herein and the underlying Common Stock upon a conversion of the Series A Preferred Stock will be acquired for investment and not with a view to the sale or distribution of any part thereof, and the Warrantholder has no present intention of selling or engaging in any public distribution of the same except pursuant to a registration or exemption.

 

(b)   Private Issue.  The Warrantholder understands (i) that the Series A Preferred Stock issuable upon exercise of this Agreement is not registered under the Act or qualified under applicable state securities laws on the ground that the issuance contemplated by this Agreement will be exempt from the registration and qualifications requirements thereof, and (ii) that the Company’s reliance on such exemption is predicated on the representations set forth in this Section 12.

 

(c)    Financial Risk.  The Warrantholder has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment, and has the ability to bear the economic risks of its investment.

 

  

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(d)    Risk of No Registration.  The Warrantholder understands that if the Company does not register with the SEC pursuant to Section 12 of the Securities Exchange Act of 1934 (the "1934 Act"), or file reports pursuant to Section 15(d) of the 1934 Act, or if a registration statement covering the securities under the Act is not in effect when it desires to sell (i) the rights to purchase Series A Preferred Stock pursuant to this Agreement or (ii) the Series A Preferred Stock issuable upon exercise of the right to purchase, it may be required to hold such securities for an indefinite period.  The Warrantholder also understands that any sale of (A) its rights hereunder to purchase Series A Preferred Stock , or (B) Series A Preferred Stock issued or issuable hereunder which might be made by it in reliance upon Rule 144 under the Act may be made only in accordance with the terms and conditions of that Rule.

 

(e)    Accredited Investor.  Warrantholder is an "accredited investor" within the meaning of the Securities and Exchange Rule 501 of Regulation D, as presently in effect.

 

	
SECTION 13.  

	
TRANSFERS.

 

Subject to compliance with applicable federal and state securities laws, this Agreement and all rights hereunder are transferable, in whole or in part, without charge to the holder hereof (except for transfer taxes) upon surrender of this Agreement properly endorsed.  Each taker and holder of this Agreement, by taking or holding the same, consents and agrees that this Agreement, when endorsed in blank, shall be deemed negotiable, and that the holder hereof, when this Agreement shall have been so endorsed and its transfer recorded on the Company’s books, shall be treated by the Company and all other persons dealing with this Agreement as the absolute owner hereof for any purpose and as the person entitled to exercise the rights represented by this Agreement.  The transfer of this Agreement shall be recorded on the books of the Company upon receipt by the Company of a notice of transfer in the form attached hereto as Exhibit III (the “Transfer Notice”), at its principal offices and the payment to the Company of all transfer taxes and other governmental charges imposed on such transfer.  Until the Company receives such Transfer Notice,  the Company may treat the registered owner hereof as the owner for all purposes.

 

	
SECTION 14.  

	
MISCELLANEOUS.

 

(a)    Effective Date.  The provisions of this Agreement shall be construed and shall be given effect in all respects as if it had been executed and delivered by the Company on the date hereof.  This Agreement shall be binding upon any successors or assigns of the Company.

 

(b)    Remedies.  In the event of any default hereunder, the non-defaulting party may proceed to protect and enforce its rights either by suit in equity and/or by action at law, including but not limited to an action for damages as a result of any such default, and/or an action for specific performance for any default where Warrantholder will not have an adequate remedy at law and where damages will not be readily ascertainable. The Company expressly agrees that it shall not oppose an application by the Warrantholder or any other person entitled to the benefit of this Agreement requiring specific performance of any or all provisions hereof or enjoining the Company from continuing to commit any such breach of this Agreement.

 

(c)    No Impairment of Rights.  The Company will not, by amendment of its Charter or through any other means, avoid or seek to avoid the observance or performance of any of the terms of this Agreement, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate in order to protect the rights of the Warrantholder against impairment.

 

(d)    Additional Documents.  The Company, upon execution of this Agreement, shall provide the Warrantholder with certified resolutions with respect to the representations, warranties and covenants set forth in Sections 11(a) through 11(d), 11(f) and 11(g) of this Agreement. The Company shall also supply such other documents as the Warrantholder may from time to time reasonably request.

 

  

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(e)    Attorney’s Fees.  In any litigation, arbitration or court proceeding between the Company and the Warrantholder relating hereto, the prevailing party shall be entitled to reasonable attorneys’ fees and expenses and all costs of proceedings incurred in enforcing this Agreement.  For the purposes of this Section 13(e), attorneys’ fees shall include without limitation fees incurred in connection with the following: (i) contempt proceedings; (ii) discovery; (iii) any motion, proceeding or other activity of any kind in connection with an insolvency proceeding; (iv) garnishment, levy, and debtor and third party examinations; and (v) post-judgment motions and proceedings of any kind, including without limitation any activity taken to collect or enforce any judgment.

 

(f)    Severability.  In the event any one or more of the provisions of this Agreement shall for any reason be held invalid, illegal or unenforceable, the remaining provisions of this Agreement shall be unimpaired, and the invalid, illegal or unenforceable provision shall be replaced by a mutually acceptable valid, legal and enforceable provision, which comes closest to the intention of the parties underlying the invalid, illegal or unenforceable provision.

 

(g)    Notices.  Except as otherwise provided herein, any notice, demand, request, consent, approval, declaration, service of process or other communication that is required, contemplated, or permitted under this Agreement or with respect to the subject matter hereof shall be in writing, and shall be deemed to have been validly served, given, delivered, and received upon the earlier of: (i) the first business day after transmission by facsimile or hand delivery or deposit with an overnight express service or overnight mail delivery service; or (ii) the third calendar day after deposit in the United States mail, with proper first class postage prepaid, and shall be addressed to the party to be notified as follows:

 

If to Warrantholder:

 

HERCULES TECHNOLOGY GROWTH CAPITAL, INC.

Legal Department

Attention:  Chief Legal Officer, Manuel Henriquez and Roy Liu

400 Hamilton Avenue, Suite 310

Palo Alto, California94301

Facsimile:  650.473.9194

Telephone:  650.289.3060

 

With a copy to:

 

SEYFARTH SHAW LLP

Attention:  Louis J. DiFronzo, Jr., Esq.

Two WorldTradeCenter East, Suite 300

Boston, Massachusetts02210-2028

Facsimile: 617.946.4801

Telephone: 617.946.4870

If to the Company:

 

PLURES TECHNOLOGIES, INC.

4070 West Lake Road

Canandaigua, New York 14424

Attn:  Glenn J. Fricano, President

Facsimile:

Telephone:

  

10

  

With a copy to:

 

RUSKIN MOSCOU FALTISCHEK, P.C.

East Tower, 15th Floor

Uniondale, New York 11556-1425

Attn:  Stuart M. Sieger, Esq.

Facsimile:  516.663.6640

Telephone:  516.663.6600

or to such other address as each party may designate for itself by like notice.

 

(h)    Entire Agreement; Amendments.  This Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof, and supersedes and replaces in its entirety any prior proposals, term sheets, letters, negotiations or other documents or agreements, whether written or oral, with respect to the subject matter hereof (including Lender’s proposal letter dated January 25, 2013).  None of the terms of this Agreement may be amended except by an instrument executed by each of the parties hereto.

 

(i)    Headings.  The various headings in this Agreement are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or any provisions hereof.

 

(j)     Advice of Counsel.  Each of the parties represents to each other party hereto that it has discussed (or had an opportunity to discuss) with its counsel this Agreement and, specifically, the provisions of Sections 14(n), 14(o), 14(p), 14(q) and 14(r) of this Agreement.

 

(k)    No Strict Construction.  The parties hereto have participated jointly in the negotiation and drafting of this Agreement.  In the event an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties hereto and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.

 

(l)    No Waiver.  No omission or delay by Warrantholder at any time to enforce any right or remedy reserved to it, or to require performance of any of the terms, covenants or provisions hereof by the Company at any time designated, shall be a waiver of any such right or remedy to which Warrantholder is entitled, nor shall it in any way affect the right of Warrantholder to enforce such provisions thereafter.

 

(m)    Survival.  All agreements, representations and warranties contained in this Agreement or in any document delivered pursuant hereto shall be for the benefit of Warrantholder and shall survive the execution and delivery of this Agreement and the expiration or other termination of this Agreement.

 

(n)    Governing Law.  This Agreement has been negotiated and delivered to Warrantholder in the State of California, and shall have been accepted by Warrantholder in the State of California.  Delivery of Series A Preferred Stock to Warrantholder by the Company under this Agreement is due in the State of California.  This Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California, excluding conflict of laws principles that would cause the application of laws of any other jurisdiction.

 

(o)    Consent to Jurisdiction and Venue.  All judicial proceedings arising in or under or related to this Agreement may be brought in any state or federal court of competent jurisdiction located in the State of California.  By execution and delivery of this Agreement, each party hereto generally and unconditionally: (a) consents to personal jurisdiction in San Mateo County, State of California; (b) waives any objection as to jurisdiction or venue in San Mateo County, State of California; (c) agrees not to assert any defense based on lack of jurisdiction or venue in the aforesaid courts; and (d) irrevocably agrees to be bound by any judgment rendered thereby in connection with this Agreement.  Service of process on any party hereto in any action arising out of or relating to this Agreement shall be effective if given in accordance with the requirements for notice set forth in Section 14(g) of this Agreement, and shall be deemed effective and received as set forth in Section 14(g) of this Agreement.  Nothing herein shall affect the right to serve process in any other manner permitted by law or shall limit the right of either party to bring proceedings in the courts of any other jurisdiction.

 

  

11

  

(p)    Mutual Waiver of Jury Trial.  Because disputes arising in connection with complex financial transactions are most quickly and economically resolved by an experienced and expert person and the parties wish applicable state and federal laws to apply (rather than arbitration rules), the parties desire that their disputes be resolved by a judge applying such applicable laws.  EACH OF THE COMPANY AND WARRANTHOLDER SPECIFICALLY WAIVES ANY RIGHT IT MAY HAVE TO TRIAL BY JURY OF ANY CAUSE OF ACTION, CLAIM, CROSS-CLAIM, COUNTERCLAIM, THIRD PARTY CLAIM OR ANY OTHER CLAIM (COLLECTIVELY, "CLAIMS") ASSERTED BY THE COMPANY AGAINST WARRANTHOLDER OR ITS ASSIGNEE OR BY WARRANTHOLDER OR ITS ASSIGNEE AGAINST THE COMPANY.  This waiver extends to all such Claims, including Claims that involve Persons other than the Company and the Warrantholder; Claims that arise out of or are in any way connected to the relationship between the Company and Warrantholder; and any Claims for damages, breach of contract, specific performance, or any equitable or legal relief of any kind, arising out of this Agreement.

 

(q)    Arbitration.  If the Mutual Waiver of Jury Trial set forth in Section 14(p) of this Agreement is ineffective or unenforceable, the parties agree that all Claims shall be submitted to binding arbitration in accordance with the commercial arbitration rules of JAMS (the “Rules”), such arbitration to occur before one arbitrator, which arbitrator shall be a retired California state judge or a retired Federal court judge.  Such proceeding shall be conducted in San Francisco County, California, with California rules of evidence and discovery applicable to such arbitration.  The decision of the arbitrator shall be binding on the parties, and shall be final and nonappealable to the maximum extent permitted by law.  Any judgment rendered by the arbitrator may be entered in a court of competent jurisdiction and enforced by the prevailing party as a final judgment of such court.

 

(r)    Pre-arbitration Relief.  In the event Claims are to be resolved by arbitration, either party may seek from a court of competent jurisdiction identified in Section 14(o) of this Agreement, any prejudgment order, writ or other relief and have such prejudgment order, writ or other relief enforced to the fullest extent permitted by law notwithstanding that all Claims are otherwise subject to resolution by binding arbitration.

 

(s)    Counterparts.  This Agreement and any amendments, waivers, consents or supplements hereto may be executed in any number of counterparts, and by different parties hereto in separate counterparts, each of which when so delivered shall be deemed an original, but all of which counterparts shall constitute but one and the same instrument.

 

(t)    Specific Performance.  The parties hereto hereby declare that it is impossible to measure in money the damages which will accrue to Warrantholder by reason of the Company’s failure to perform any of the obligations under this Agreement and agree that the terms of this Agreement shall be specifically enforceable by Warrantholder.  If Warrantholder institutes any action or proceeding to specifically enforce the provisions hereof, any person against whom such action or proceeding is brought hereby waives the claim or defense therein that Warrantholder has an adequate remedy at law, and such person shall not offer in any such action or proceeding the claim or defense that such remedy at law exists.

 

[Remainder of Page Intentionally Left Blank]

 

 

  

12

  

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by its officers thereunto duly authorized as of the Effective Date.

 

 

 

COMPANY:                                           PLURES TECHNOLOGIES, INC.,

a Delaware corporation

By:     ________________________                                                           

Name:________________________                                                                           

Title:  ________________________                                         

Notice Address:                   Plures Technologies, Inc.

Attn:  Glenn J. Fricano, President

4070 West Lake Road

Canandaigua, New York 14424

Facsimile:

Telephone:

	
WARRANTHOLDER:

	
HERCULES TECHNOLOGY GROWTH CAPITAL, INC.,

	
  

	
a Maryland corporation

 

      

By: ______________________

Name:  Ben Bang                            

Its:  Senior Counsel                                                       

Notice Address:                    Hercules Technology III, L.P.

Attn: Manuel Henriquez

400 Hamilton Avenue, Suite 300

Palo Alto, CA94301

Facsimile: 650-473-9194

Telephone: 650-289-3060

cc:           Hercules Technology III, L.P.

Attn:  Chief Legal Officer

400 Hamilton Avenue, Suite 310

Palo Alto, CA94301

Facsimile:  650.473.9194

Telephone:  650.289.3060

 

 

  

13

  

EXHIBIT  I

NOTICE  OF  EXERCISE

To:           PLURES TECHNOLOGIES, INC.

	
(1)

	
The undersigned Warrantholder hereby elects to purchase [_______] shares of the [Series ___ Preferred Stock of Plures Technologies, Inc.], a Delaware corporation, pursuant to the terms of the Warrant Agreement dated as of the May __, 2013 (the “Agreement”) between Plures Technologies, Inc., a Delaware corporation, and the Warrantholder, and [CASH PAYMENT: tenders herewith payment of the Purchase Price in full, together with all applicable transfer taxes, if any.] [NET ISSUANCE: elects pursuant to Section 4(a) of the Agreement to effect a Net Issuance.]

	
(2)

	
Please issue a certificate or certificates representing said shares of Series ___ Preferred Stock in the name of the undersigned or in such other name as is specified below.

_________________________________

(Name)

_________________________________

(Address)

WARRANTHOLDER:                     HERCULES TECHNOLOGY GROWTH CAPITAL, INC.,

               a Maryland corporation

 

	
  

	
         

 

By:                                          

Name:

Its:      

 

 

  

14

  

EXHIBIT II

ACKNOWLEDGMENT OF EXERCISE

The undersigned Plures Technologies, Inc., a Delaware corporation, hereby acknowledge receipt of the “Notice of Exercise” from Hercules Technology Growth Capital, Inc., a Maryland corporation, to purchase [____] shares of the Series A Preferred Stock of Plures Technologies, Inc., a Delaware corporation, pursuant to the terms of the Agreement, and further acknowledges that [______] shares remain subject to purchase under the terms of the Agreement.

COMPANY:                                                                 PLURES TECHNOLOGIES, INC.,

       a Delaware corporation

       By: ________________________                                                               

       Name: ______________________                                                                          

       Title: _______________________                                                               

 

  

15

  

EXHIBIT III

TRANSFER NOTICE

(To transfer or assign the foregoing Agreement execute this form and supply required information.  Do not use this form to purchase shares.)

FOR VALUE RECEIVED, the foregoing Agreement and all rights evidenced thereby are hereby transferred and assigned to

_________________________________________________________________

(Please Print)

whose address is___________________________________________________

_________________________________________________________________

Dated:           ____________________________________

Holder's Signature:            _______________________________

Holder's Address:          _______________________________

_____________________________________________________

Signature Guaranteed:       ____________________________________________

NOTE:     The signature to this Transfer Notice must correspond with the name as it appears on the face of the Agreement, without alteration or enlargement or any change whatever. Officers of corporations and those acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Agreement.

 

  

16exhibit106.htm

FIRST AMENDMENT TO TERM NOTE

WHEREAS, ADVANCED MICROSENSORS CORPORATION, a New York corporation having its principal place of business at 333 South Street, Shrewsbury, Massachusetts 01545 (the “Borrower”) executed and delivered to MASSACHUSETTS DEVELOPMENT FINANCE AGENCY, a body corporate and politic created under and acting pursuant to authority derived from Chapter 23G of the Massachusetts General Laws, as amended, having a principal place of business at 160 Federal Street, Boston, Massachusetts 02110 (the “Lender”), a Term Note dated as of October 13, 2011 in the original principal amount of TWO MILLION DOLLARS ($2,000,000) (the “Note”); and

 

WHEREAS, the Borrower and the Lender desire to amend the Note.

 

NOW, THEREFORE, the parties hereto, each in consideration of the acts and promises of the other and for other good and valuable consideration paid, the receipt and sufficiency of which is hereby acknowledged by each, agree as follows:

 

A.           AMENDMENTS TO THE NOTE

 

1.             Restate the fourth paragraph on Page 1 of the Note as follows:

 

“The unpaid principal of this Note from time to time outstanding shall bear interest, payable monthly in arrears and computed on the basis of the actual number of days elapsed over a year assumed to have 360 days, at a rate per annum equal to 6.25% (the “Interest Rate”). Notwithstanding the foregoing, from the date hereof through and including the Paydown Date (as defined herein), additional interest of 3% shall accrue on the outstanding principal amount due under this Note (the “Additional Interest”).  

 

2.             Restate the second paragraph on Page 2 of the Note as follows:

 

“Commencing on the first day of the thirteenth (13th) month following the month in which the First Payment Date occurs, and continuing on the same day of each successive month thereafter, or if any such day is not a Business Day, on the next succeeding Business Day, the Borrower shall pay equal constant monthly installments of the outstanding principal and accrued interest (at the Interest Rate) in an amount as shall fully amortize the outstanding principal balance of this Note on October 13, 2018 (the “Maturity Date”).  The entire indebtedness evidenced by this Note, if not earlier paid, shall be due and payable on the Maturity Date.  “Business Day” means any day on which the Lender is open for business.

 

Prior to the Maturity Date, the Borrower shall make a one-time lump sum principal payment of $500,000 (the “Paydown Amount”) to the Lender (such payment date shall be referred to as the “Paydown Date”) plus the Additional Interest.  Notwithstanding any other provision to the contrary, the Paydown Amount may be reasonably adjusted by the Lender following the Lender’s appraisal of the machinery and equipment which is part of the Lender’s collateral.  The Lender will give the Borrower notice of the adjusted Paydown Amount prior to the planned Paydown Date.”

 

3.           Restate the fourth paragraph on Page 2 of the Note as follows:

 

  

  

  

 

“The Borrower may, at any time, prepay any part or all of the unpaid principal balance of this Note.  If the Borrower prepays any of the outstanding principal of this Note, other than the $500,000 set forth in the second paragraph on page 2 of this Note, the Borrower will also pay to the Lender, simultaneously with such prepayment, a prepayment fee equal to one percent (1%) of the amount prepaid.  If, during the Loan term, any of the following events occur: (i) the sale of all or substantially all of the assets or the capital stock of the Borrower, or (ii) the merger with another entity or acquisition by another entity of the Borrower (“Triggering Event”), then, upon the earliest Triggering Event to occur, the Lender may accelerate this Note.”

 

B.           MISCELLANEOUS

 

1.            All payments to the Lender pursuant to the Note will be made by the Borrower to the Lender at the following address: Massachusetts Development Finance Agency, 89 Shrewsbury Street, Suite 300, Worcester, Massachusetts 01604.

 

2.            All capitalized terms used herein and not defined herein have the meaning ascribed in the Note.

 

3.           This First Amendment to Term Note will be attached to and become a part of the Note.

 

4.           Except as herein expressly modified, the Note and any other loan documents associated therewith shall remain unchanged, are in full force and effect, and are hereby ratified and confirmed.

 

IN WITNESS WHEREOF, the parties have executed this First Amendment to Term Note as an instrument under seal as of the ____ day of May, 2013.

 

 

	
 

	
ADVANCED MICROSENSORS CORPORATION

	  	  
	  	  
	
         /s/                                                                     

	
By:           /s/                                                                   

	
Witness

	
Name:  Glenn Fricano

	  	
Title:  CEO

	  	
MASSACHUSETTS DEVELOPMENT   FINANCE CORPORATION

	  	  
	  	  
	
         /s/                                                                   

	
By:          /s/                                                                   

	
Witness

	
Name:

	  	
Title:

 

  

2

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