**EXHIBIT 10.13**

 

**EMPLOYMENT AGREEMENT**

 

**THIS AGREEMENT,**dated effective as of June 1, 2003, is entered into by and between CipricoInc., a Delaware corporation (the “Company”) and Robert H. Kill, a Minnesotaresident (“Executive”).

 

**WHEREAS,** the Companydesires to employ Executive upon and subject to the terms and conditions setforth in this agreement (“Agreement”), and Executive desires to render servicesfor the Company on such terms and conditions.

 

**NOW, THEREFORE,** inconsideration of the premises and the respective undertakings of the Companyand Executive set forth below, the Company and Executive agree as follows:

 

**1.****             Employment.**  The Company hereby employs Executive asChief Executive Officer and President and other such positions of divisions orsubsidiaries as assigned by the Board of Directors, and Executive accepts suchemployment and agrees to perform services for the Company, for the period andupon the other terms and conditions set forth in this Agreement.

 

**2.****             Term of Employment**.  The term of Executive’s employment hereundershall commence on the effective date hereof and shall continue for an initialterm of two (2) years (“Initial Term”). Prior to and within ninety (90) days of a date that is one year prior tothe scheduled termination date of this Agreement, the Board of Directors, orcommittee thereof, shall review Executive’s goals and objectives and notifyExecutive in writing whether the Agreement will be extended for an additionalone year beyond the scheduled termination date or notification date, whicheveris later, or terminate as scheduled.  IfExecutive chooses not to extend the Agreement, Executive must notify theCompany in writing within thirty (30) days of Executive’s receipt of theextension.  Notwithstanding anything tothe contrary in this Agreement, this Agreement may be terminated as provided inSection 8 below.  The Initial Termand additional terms are collectively referred to as “Term of Employment”).

 

**3.****             Position and Duties**.

 

3.01         Servicewith Company.  During his Term of Employment,Executive agrees to perform such reasonable employment duties,****consistent with the terms of thisAgreement and the offices held by Executive as provided in section 1above, as the Board of Directors of the Company shall assign to him from time totime.  Such duties and employmentresponsibilities is set forth in Exhibit A and shall be performed in accordancewith the Company’s rules, regulations and instructions now in force or whichmay be adopted by the Company in the future.

 

3.02         Performanceof Duties.  During his Term ofEmployment, the Executive agrees to serve the Company to the best of hisability.  The Executive shall haveactive involvement and be fully committed to the business and affairs of theCompany.  Executive hereby confirms thathe is under no contractual commitments inconsistent with his obligations setforth in this Agreement.  During hisTerm of Employment, Executive shall not render or perform services for anyother corporation, firm, entity or person, nor will he become involved in theoperations or management of any other commercial corporation, firm, entity orperson, that is in competition with the business of the Company.

 

3.03         Noncompetition.  In consideration of the payments to be madeto the Executive under this Agreement as provided in Sections 4.05 and 8.02which the Executive acknowledges constitute new and valuable consideration, theExecutive hereby covenants and agrees that during the Term of Employment, andfor a period of twenty-four (24) months following the termination ofExecutive’s employment for any reason (the “Restricted Period”), the Executiveshall not, directly or indirectly, own, manage, operate, control, act as anadvisor or consultant to, or participate in, the ownership, management,operation, or control of any business involving the digital media storagedevice and related services in any geographic market served by the Companyduring the Restricted Period; provided, however, that the foregoing shall notprevent the Executive from owning not more than two percent (2%) interest inany entity engaged in such a competing business whose securities are traded onany securities exchange or in the over-the-counter markets.

 

3.04         Nonsolicitation.  During the term of this Agreement or anysuccessor employment relationship between Executive and the Company, and for aperiod of twelve (12) months following the termination of the employmentrelationship between Executive and the Company, Executive agrees that he willnot solicit or accept, either directly or indirectly, as an individual orthrough a partnership, corporation, or other entity, any employee of theCompany or consultant under contract with the Company for employment or anyother arrangement for compensation to perform services.

 

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**4.****             Compensation**.

 

4.01         BaseSalary           As base compensationfor all services to be rendered by the Executive under this Agreement duringthe Term of Employment, the Company shall pay to Executive a minimum monthlybase salary of $16,500 per month in 2003, which salary shall be paid inaccordance with the Company’s normal payroll procedures and policies and bereviewed annually by the Board of Directors.

 

4.02         StockOptions.  Executive shall begranted, in 2003, an option to purchase              shares of the Company’s common stock, par value $.01 per share, pursuant to theCompany’s Stock Option Plan, at an exercise price equal to the closing bidprice for such common stock on the day of issuance consistent with pastpractices.  All such stock options shallbe granted under, and pursuant to all terms and conditions of, the QualifiedStock Option Plan.  The Board mayconsider additional grants annually. These stock options will vest in accordance with the terms of theQualified Stock Option Plan.

 

4.03         Benefits.  Executive shall be entitled to suchcompany-sponsored benefits as are provided to executive employees of theCompany, subject to the terms and conditions of the applicable policies and/orplans.

 

4.04         Expenses.  The Company will pay or reimburse Executivefor all reasonable and necessary out-of-pocket expenses incurred by him in theperformance of his duties under this Agreement, subject to the presentment ofappropriate vouchers in accordance with the Company’s normal policies forexpense verification.  Executive shallbe entitled to reimbursement for educational expenses approved by the Board ofDirectors.

 

4.05         DeferredCompensation.  The Company shallmaintain on its books a Deferred Compensation Account for Executive, withamounts credited as set forth in the Company’s Deferred Compensation Plan.  As soon as practicable, the Company shallcredit to Executive’s Deferred Compensation Account the sum of Twenty-FiveThousand Dollars ($25,000).

 

4.06         Development.  Executive will receive an annual writtenperformance review from the Board of Directors, or committee thereof, and theCompany will pay for any developmental, learning or training experiencesrecommended by the Board of Directors or committee thereof.

 

4.07         Bonuses.  Executive shall be entitled to participationin the Company’s management bonus program as defined by management and approvedby the Board.

 

**5.****             ConfidentialInformation**.  Except as permitted ordirected by the Company’s Board of Directors, during the Term of Employment orat any time thereafter, Executive shall not divulge, furnish or make accessibleto anyone or use in any way (other than in the ordinary course of the businessof the Company) any confidential or secret knowledge or information of the Companywhich Executive has acquired or become acquainted with or will acquire orbecome acquainted with prior to the termination of the Term of Employment,whether developed by himself or by others, concerning any trade secrets,confidential or secret designs, processes, formulae, plans, devices or material(whether or not patented or patentable) directly or indirectly useful in anyaspect of the business of the Company, any customer or supplier lists of theCompany, any confidential or secret development or research work of theCompany, or any other confidential information or secret aspects of thebusiness of the Company.  Executiveacknowledges that the above-described knowledge or information constitutes aunique and valuable asset of the Company and represents a substantialinvestment of time and expense by the Company and its predecessors, that anydisclosure or other use of such knowledge or information other than for thesole benefit of the Company would be wrongful and would cause irreparable harmto the Company.  Both during and afterthe Term of Employment, Executive will refrain from any act or omissions thatwould reduce the value of such knowledge or information to the Company.  The foregoing obligations ofconfidentiality, however, shall not apply to any knowledge or information whichis now published or which subsequently becomes generally publicly known in theform in which it was obtained from the Company, other than as a direct orindirect result of the breach of this Agreement by Executive.  It is hereby acknowledged that it is not theintention of the foregoing provisions to preclude the Executive from securinggainful employment with subsequent employers who are not competitors of theCompany or who would otherwise have no reasonable commercial use of the abovedescribed knowledge or information, but only to protect the Company’sconfidential and proprietary information or knowledge.

 

**6.****             Ventures**.  If, during the Term of Employment, Executiveis engaged in or associated with the planning or implementing of any project,program or venture involving the Company and a third party or parties, allrights in such project, program or venture shall belong to the Company.  Except as formally approved by the Company’sBoard of Directors, Executive shall not be entitled to any interest in suchproject, program or venture or to any commission, finder’s fee or othercompensation in connection therewith other than the salary or othercompensation to be paid to Executive as provided in this Agreement.

 

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**7.****             Patent, Copyrightsand Related Matters**.

 

7.01         Disclosureand Assignment.  Executive willpromptly disclose in writing to the Company complete information concerningeach and every invention, discovery, improvement, device, design, apparatus,practice, process, method or product, whether patentable or not, made,developed, perfected, devised, conceived or first reduced to practice byExecutive, either solely or in collaboration with others, during the Term of Employment,or within six months thereafter, whether or not during regular working hours,relating to any phase of the business of the Company conducted at such time(hereinafter referred to as “Developments”). Executive, to the extent that he has the legal right to do so, herebyassigns and agrees to assign to the Company and all of the Executive’s right,title and interest in and to any and all of such Developments.

 

7.02         FutureDevelopments.  As to any futureDevelopments made by Executive and which are first conceived or reduced topractice during the Term of Employment, or within six months thereafter, butwhich are claimed for any reason to belong to an entity or person other thanthe Company, Executive will promptly disclose the same in writing to theCompany and shall not disclose the same to others if the Company, within sixty(60) days thereafter, shall claim ownership of such Development under the termsof this Agreement.  If the Company makessuch claim, Executive agrees that, insofar as the rights (if any) of Executiveare involved, it will be settled by arbitration in accordance with the rules ofthe American Arbitration Association. The locale of the arbitration shall be Minneapolis, Minnesota (or otherlocale convenient to the Company’s principal executive offices).  If the Company makes no such claim,Executive hereby acknowledges that the Company has made no promise to receiveand hold in confidence any such information disclosed by Executive.

 

7.03         Limitationon Section 7.01 and 7.02.  The provisionsof section 7.01 and 7.02 shall not apply to any Development meeting thefollowing conditions:

 

(a)           such Development was developed entirely onExecutive’s own time;

 

(b)           such Development was made without the use ofany Company equipment, supplies, facility or trade secret information; and

 

(c)           such Development does not relate (i)directly to the business of the Company, or (ii) of the Company’s actual ordemonstrably anticipated research or development.

 

7.04         ExecutiveAssistance.  Executive agrees toassist Company in obtaining patents or copyrights on any Developments assignedto the Company that Company, in its sole discretion, seeks to patent orcopyright.  Executive also agrees tosign all documents and do all things deemed necessary by Company to obtainand/or maintain such patens or copyrights, to assign them to Company, and toprotect them against infringement.  Theobligations of this Section 7 are continuing and shall survive thetermination of Executive’s employment with Company.

 

7.05         Appointmentof Agent.  Executive irrevocablyappoints the Company to act as Executive’s agent and attorney in fact toperform all acts necessary to obtain/or maintain patents or copyrights to anyDevelopments assigned by Executive to Company under this Agreement if (i)Executive refuses to perform those acts or (ii) is unavailable, within themeaning of the United States patent and copyright laws.  Executive acknowledges that the grant of theforegoing power of attorney is coupled with an interest and shall survive thedeath or disability of Executive and the termination of Executive’s employmentwith Company.

 

7.06         Noticeand Acknowledgment.  Executiveacknowledges that this section of this Agreement does not apply to aDevelopment for which there was no equipment, supplies, facilities or tradesecret information of the Company used and which was developed entirely onExecutive’s own time, and which does not relate directly to the business of theCompany or the Company’s actual or demonstrably anticipated research ordevelopment, or which does not result from any work performed by Executive forthe Company.

 

**8.****             Termination.**

 

8.01         Groundsfor Termination.  Notwithstandingany other provision of this Agreement to the contrary, this Agreement willterminate prior to the end of the Term of Employment under the followingcircumstances:

 

(a)           Bymutual agreement of Executive and the Company;

 

(b)           Immediatelyupon the death of Executive;

 

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(c)           Immediately upon the bankruptcy orinsolvency of the Company;

 

(d)           Immediately, in the event of (i) Executive’spersonal dishonesty, willful misconduct, breach of fiduciary duty, intentionalfailure to perform stated duties, willful violation of any laws (other thanminor traffic violations or similar offenses), or material breach of thepolicies or procedures of the Company; and

 

(e)           Upon Executive’s inability to perform theessential functions of his position due to physical or mental disability, withor without reasonable accommodation, as determined in the good faith judgmentof the Board of Directors, and such inability continues for a period consistentwith Company policy as may otherwise be required by applicable law.

 

Notwithstanding any termination of this Agreement, Executive, inconsideration of his employment hereunder to the date of such termination,shall remain bound by the provisions of this Agreement which specificallyrelate to periods, activities or obligations upon or subsequent to thetermination of Executive’s employment.

 

8.02         SeverancePayment for Termination Following a Change in Control.  The rights and obligations of the Companyand Executive as to a termination following a Change of Control (as defined ina Change of Control Agreement) are governed by a Change of Control Agreementbetween the Company and Executive dated effective as of April 17,2003.  In the event of anyinconsistencies between this Agreement and the Change of Control Agreement, theChange of Control Agreement shall control.

 

8.03         Surrenderof Records and Property.  Upontermination of his employment with the Company, Executive shall deliverpromptly to the Company all records, manuals, books, blank forms, documents,letters, memoranda, notes, notebooks, reports, data, tables, calculations orcopies thereof, which are the property of the Company or which relate in anyway to the business, products, information of the Company, including, but notlimited to, all documents which in whole or in part contain any trade secretsor confidential information of the Company, which in any of these cases are inhis possession or under his control. Provided, however, that Executive shall be entitled to retain items ofsentimental value, copies of which shall be provided to the Company at therequest of the Company and at the Company’s expense.

 

**9.****             Miscellaneous**.

 

9.01         GoverningLaw.  This Agreement is made underand shall be governed by and construed in accordance with the laws of the Stateof Minnesota.

 

9.02         PriorAgreements.  This Agreement,together with the Change of Control Agreement, contain the entire Agreement ofthe parties relating to the subject matter hereof and supersede all prioragreements and understandings with respect to such subject matter, and theparties hereto have made no agreements, representations or warranties relatingto the subject matter of this Agreement which are not set forth herein.

 

9.03         WithholdingTaxes.  The Company shall****withhold from all salary, bonus, severancepay or other benefits payable under this Agreement all federal, state, city orother taxes as shall be required pursuant to any law or governmental regulationor ruling.

 

9.04         Amendments.  No amendment or modification of thisAgreement shall be deemed effective unless made in writing and signed by theparties hereto.

 

9.05         NoWaiver.  No term or condition ofthis Agreement shall be deemed to have been waived, nor shall there be anyestoppel to enforce any provisions of this Agreement except by a statement inwriting signed by the party by whom enforcement of the waiver or estoppel issought.  Any written waiver shall not bedeemed a continuing waiver unless specifically stated, shall operate only as tothe specific term or condition waived and shall not constitute a waiver of suchterm or condition for the future or as to any act other than specificallywaived.

 

9.06         Severability.  To the extent any term or provision of thisAgreement shall be invalid or unenforceable, the term or provision shall beconsidered deleted herefrom and the remaining term and provision of theAgreement shall be unaffected and shall continue in full force and effect.  In furtherance and not in limitation of theforegoing, should the duration or geographical extent of, or businessactivities covered by, any provision of this Agreement be in excess of thatwhich is valid and enforceable under applicable law, then such provision shallbe construed to cover only that duration, extent or activities which mayvalidly and enforceable be covered. Executive acknowledges the uncertainty of the law in this respect andexpressly stipulates that this Agreement be given the construction whichrenders its provisions valid and enforceable to the maximum extent (notexceeding its express terms) possible under applicable law.

 

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9.07         Assignment.  This Agreement shall be binding upon andinure to the benefit of the Company’s successor or assigns.  This Agreement shall not be assignable, inwhole or in part, by Executive without prior written consent of the Company.

 

9.08         InjunctiveRelief.  Executive agrees that itwould be difficult to compensate the Company fully for damages for anyviolation of the provisions of this Agreement, including without limitation theprovisions of Sections 3, 5, 6 and 7. Accordingly, Executive specifically agrees that the Company shall beentitled to temporary and permanent injunctive relief in any court of competentjurisdiction, to enforce the provisions of this Agreement and that such reliefmay be granted without the necessity of proving actual damages.  This provision with respect to injunctiverelief shall not, however, diminish the right of the Company to claim andrecover damages in addition to injunctive relief.

 

9.09         Survival.  The parties agree that sections 3, 5 and 7shall survive termination of this Agreement and term of Executive’s employmentfor any reason.

 

9.10         BluePencil Doctrine.  In the event thatany provision of this Agreement is held to be overbroad as written, suchprovision shall be deemed amended to narrow its application to the extentnecessary to make the provision enforceable according to applicable law andshall be enforced as amended.

 

9.11         MandatoryArbitration.  In the event anydispute arises under this Agreement, or as to the breach hereof, the partiesshall discuss the dispute in a good faith effort to arrive at a mutualsettlement.  If notwithstanding, suchdispute cannot be settled, except for sections 9.08 (which the partiesspecifically acknowledge and agree entitles the Company to, among other relief,injunction relief, relief in any court of competent jurisdiction if Executivebreaches section 3, 5, 6 and 7), such dispute shall be submitted tobinding arbitration conducted in Minneapolis, Minnesota, in accordance with thethen-current Commercial Rules of the American Arbitration Association )(“AAA”).  The costs and expenses of thearbitration shall be paid by the party against whom the arbitrators render adecision, if a decision is rendered against a party; otherwise the costs andexpenses shall be shared equally by Executive and the Company.  The arbitrators shall have full power andauthority to rule on any question of law in the same manner as any judge of anycourt of competent jurisdiction, and the decision of the arbitrators shall befinal and conclusive upon the parties, and shall not be subject to any appealor review if the arbitrators have followed the Commercial Rules of theAAA.  The arbitrators shall have fullpower to make any award (including the award of equitable remedies) that shallunder the circumstances presented to them be deemed to be proper; provided thatthe arbitrators shall not have the power to award punitive damages or to limit,expand or otherwise modify the terms of this Agreement.  Judgment may be entered upon any awardrendered by the arbitrators in accordance with applicable law in any court ofcompetent jurisdiction.

 

**IN WITNESS WHEREOF,**theparties have executed this Agreement effective as of the date and year firstwritten above.

 

 
|   | **CIPRICO INC.**   |   |
|--------|--------------------|--------|
|   |               |   |
|   | By:                | /s/    | James W. Hansen |   |   |
|   |               | Its    | Chairman of the Board |   |   |
|   |               |   |
|   | **EXECUTIVE**      |   |
|   |               |   |
|   | /s/ Robert H. Kill |   |   |
|   | Robert H. Kill     |   |
|        |                    |        |  |  |  |  |  |  |

 

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**CHANGE OF CONTROL AGREEMENT**

** **
| Parties:        | Ciprico Inc.                          | (“Company”)   |
|-----------------|---------------------------------------|-------------------------|
|            | 17400 Medina Road  Plymouth, MN 55447 |                    |
|            |                                  |                    |
|            | Robert H. Kill                        | (“Executive”) |
|            |                                  |                    |
| Effective Date: | 06/01/03                              |                    |   |
|                 |                                       |                         |  |

 

**RECITALS:**

 

1.             Executivehas been employed by Company since 08/86 as President/CEO, has extensiveknowledge and expertise relating to Company’s business and has contributed to Company’ssuccess.

 

2.             Theparties recognize that a “Change of Control” may materially change or diminishExecutive’s responsibilities and substantially frustrate Executive’s commitmentto the Company.

 

3.             Theparties further recognize that it is in the best interests of the Company andits stockholders to provide certain benefits payable upon a “Change of ControlTermination” to encourage Executive to continue in his position in the event ofa Change of Control, although no such Change of Control is now contemplated orforeseen.

 

4.             Theparties further desire to provide for certain benefits payable upon certaininvoluntary terminations of Executive’s employment.

 

**AGREEMENTS:**

 

In consideration of the mutual covenants set forth herein and for othergood and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the parties agree as follows:

 

1.             **Term ofAgreement**.  The term of thisAgreement shall commence on the Effective Date and shall continue in effectuntil termination of Executive’s employment which does not constitute a Changeof Control Termination; provided, however, that if a Change of Control of theCompany shall occur during the term of this Agreement, this Agreement shallinstead continue in effect for a period of twelve (12) months following thedate of such Change of Control.  Anyrights and obligations accruing before the termination or expiration of thisAgreement shall survive to the extent necessary to enforce such rights andobligations.

 

2.             **“Changeof Control.”**  For purposes ofthis Agreement, “Change of Control” shall mean any of the following eventsoccurring after the date of this Agreement:

 

(a)           Amerger or consolidation to which the Company is a party if the individuals andentities who were shareholders of the Company immediately prior to theeffective date of such merger or consolidation have, immediately following theeffective date of such merger or consolidation, beneficial ownership (asdefined in Rule 13d-3 under the Securities Exchange Act of 1934) of less thanfifty percent (50%) of the total combined voting power of all classes ofsecurities issued by the surviving corporation for the election of directors ofthe surviving corporation;

 

(b)           Theacquisition of direct or indirect beneficial ownership (as defined in Rule13d-3 under the Securities Exchange Act of 1934) of securities of the Companyby any person or entity or by a group of associated persons or entities actingin concert in one or a series of transactions, which causes the aggregate beneficialownership of such person, entity or group to equal or exceed twenty percent(20%) or more of the total combined voting power of all classes of theCompany’s then issued and outstanding securities;

 

(c)           Thesale of substantially all of the assets of the Company to any person or entitythat is not a wholly-owned subsidiary of the Company;

 

(d)           Theapproval by the stockholders of the Company of any plan or proposal for theliquidation of the Company;

 

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(e)           Achange in the composition of the Board of the Company at any time during anyconsecutive twenty-four (24) month period such that the “Continuity Directors”no longer constitute at least a seventy percent (70%) majority of the Board.  For purposes of this event, “ContinuityDirectors” means those members of the Board who were directors at the beginningof such consecutive twenty-four (24) month period or were elected by, or on thenomination or recommendation of, at least a two thirds (2/3) majority of thethen-existing Board of Directors; or

 

(f)            Theexecution by the Company of an agreement in principle or a definitive agreementrelating to an event described in Section 2(a), 2(b), 2(c), 2(d) or 2(e)that ultimately results in such a Change of Control, or a tender or exchangeoffer or proxy contest is commenced that ultimately results in an eventdescribed in Section 2(b) or 2(e).

 

3.             **Termination**.  For purposes of this Agreement, “Change ofControl Termination” shall mean any of the following events occurring withintwelve (12) months after a change of control occurring during the term of thisAgreement.

 

(a)           Thetermination of Executive’s employment by the Company for any reason except GoodCause.  For purposes of this Agreement,“Good Cause” shall include, but not be limited to, the following:

 

(i) Executive’s conviction of or plea of guilty or *nolo contendere* to a felony resulting fromconduct occurring on or after the date of the Change of Control;

 

(ii) Executive’s incurable breach of any material element of anyproprietary or confidential information agreement with the Company;

 

(iii) Executive’s conduct that is materially detrimental to Company’sbusiness reputation or goodwill;

 

(iv) Any dishonesty in dealing between Executive and Company or betweenExecutive and Company’s vendors, advisors, other employees, or customers;

 

(v) Executive’s active use of alcohol or controlled substances in amanner which impairs Executive’s ability to perform his duties;

 

(vi) Executive’s violation of any material portion of this Agreement;

 

(vii) Executive’s failure to substantially perform his material duties,which failure is not cured within thirty (30) days after Executive’s receipt ofwritten notice from Company specifying the non-performance.

 

In no event shall Executive’s death or disability (as defined below)constitute Good Cause.  “Disability”shall mean Executive’s failure or inability, for reasons of health, to performExecutive’s usual and customary duties on behalf of the Company in the usualand customary manner for a total of more than 90 consecutive business days(excluding Saturdays, Sundays and days during which the Company is closed dueto a recognized holiday).

 

(b)           Thetermination of employment with the Company by Executive for Good Reason.  Such termination shall be accomplished by,and effective upon, Executive giving written notice to the Company of hisdecision to terminate.  “Good Reason”shall mean a good faith determination by Executive, in Executive’s sole andabsolute judgment that any one or more of the following events has occurred onor after the date of the Change of Control without the Executive’s expresswritten consent:

 

(i)            Achange in Executive’s reporting responsibilities, titles or offices as ineffect immediately prior to the date of the Change of Control, or any removalof Executive from or any failure to re-elect Executive to any of suchpositions, which has the effect of diminishing Executive’s responsibility orauthority;

 

(ii)           Areduction in Executive’s base salary in effect immediately prior to the date ofthe Change of Control;

 

(iii)**         **RequiringExecutive to move to or work from a location that is outside of a fifty (50)mile radius of Executive’s job location on the date of the Change of Control;

 

(iv)          Withoutthe adoption of a replacement plan, program or arrangement that providesbenefits to Executive that are equal to or greater than those benefits that arediscontinued or adversely affected:

 

(A)          TheCompany’s failure to continue in effect, within its maximum stated term, anypension, bonus, incentive, stock ownership, stock purchase, stock option, lifeinsurance, health, accident, disability, or any other employee compensation or 

 

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benefit plan, program or arrangement, in which Executive isparticipating immediately prior to the date of the Change of Control; or

 

(B)           TheCompany taking any action that would adversely affect Executive’s participationor materially reduce Executive’s benefits under any of such plans, programs orarrangements; or

 

(v)           Anymaterial breach by the Company of this Agreement so long as Executive has giventhe Company thirty (30) days notice of such breach, and the Company has notcured the breach during that thirty (30) day period.

 

Termination for “Good Reason” shall not include Executive’s death or atermination of employment by Executive for any reason other than the eventsspecified in clauses (1) through (5) above.

 

4.             **Compensationand Benefits**.  Subject to thelimitations contained in Section 5 below, upon a Change of ControlTermination, Executive shall be entitled to the following compensation andbenefits:

 

(a)           TheCompany shall pay to Executive:

 

Within five (5) days of the Change of Control Termination, all salaryand other compensation earned by Executive through the date of the Change ofControl Termination at the rate in effect immediately prior to such Change ofControl Termination;

 

(ii)           Withinfifteen (15) days of the Change of Control Termination, all other amounts towhich the Board of Directors in its discretion determines Executive is entitledto receive under any compensation plan maintained by the Company, subject toany distribution requirements contained in such compensation plans and proratedas appropriate if termination occurs prior to the end of any Compensation planperiod; and

 

(iii)          Aseverance benefit in a single lump sum payment, an aggregate amount equal toone hundred percent (100%) of Executive’s then current annual base salary.

 

(b)           TheCompany shall provide, at no cost to Executive, continued coverage under theCompany’s group life, health or dental benefit plans, if any, at a levelcomparable to the benefits which Executive was receiving or entitled to receiveimmediately prior to the Change of Control Termination or, if greater, at alevel comparable to the benefits which Executive was receiving immediatelyprior to the event which constituted Good Reason.  Executive shall be entitled to such continued coverage for themaximum period required by applicable federal and state law following suchChange of Control Termination or, if earlier, until Executive is eligible to becovered for such benefits through his employment with another employer.  The Company may, in its sole discretion,provide such coverage through the purchase of individual insurance contractsfor Executive.

 

5.             **Non-Solicitation**.  During the term of this Agreement or anysuccessor employment relationship between Executive and the Company, and for aperiod of twelve (12) months following the termination of the employmentrelationship between Executive and the Company, Executive agrees that he willnot solicit or accept, either directly or indirectly, as an individual orthrough a partnership, corporation, or other entity, any employee of theCompany or consultant under contract with the Company for employment or anyother arrangement for compensation to perform services.

 

6.             **Paymentof Attorneys Fees and Other Costs**. If, after a Change in Control of the Company, a good faith disputearises with respect to the enforcement of Executive’s rights under thisAgreement or if any legal or arbitration proceeding shall be brought in goodfaith to enforce or interpret any provision contained herein or to recoverdamages for breach hereof, Executive shall recover from the Company (a)reasonable attorneys’ fees and necessary costs and disbursements incurred byExecutive as a result of such dispute or such legal or arbitration proceeding,and (b) prejudgment interest on any money judgment or arbitration awardobtained by Executive calculated at the prime rate announced from time to timeby Wells Fargo Bank Minnesota, N. A., or the maximum rate permitted underSection 280G(d)(4) of the Internal Revenue Code of 1986, as amended, orany successor provision, whichever rate is lower, such prejudgment interest tobe paid from the date that payments to Executive should have been made underthis Agreement.

 

7.             **WithholdingTaxes**. The Company shall be entitled to deduct from all payments orbenefits provided for under this Agreement any federal, state or local incomeand employment related taxes required by law to be withheld with respect tosuch payments or benefits.

 

8.             **Successorsand Assigns**.  This Agreementshall inure to the benefit of and shall be enforceable by Executive, his heirsand the personal representative of his estate, and shall be binding upon andinure to the benefit of the Company and its successors and assigns.  The Company will require the transferee ofany sale of all or substantially all of the business and assets of the Companyor the survivor of any merger, consolidation or other transaction expressly toagree to

 

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honor this Agreement in the same manner and to the same extent that theCompany would be required to perform this Agreement if no such event had takenplace.  Failure of the Company to obtainsuch agreement before the effective date of such event shall be a breach ofthis Agreement and shall entitle Executive to the benefits provided inSection 4 as if Executive had terminated employment for Good Reasonfollowing a Change in Control.

 

9.             **Notices**.  For the purpose of this Agreement, noticesand all other communications provided for in the Agreement shall be in writingand shall be deemed to have been duly given when delivered or mailed by UnitedStates certified or registered mail, return receipt requested, postage prepaid,addressed to the respective addresses set forth on the first page of thisAgreement or to such other address as either party may have furnished to theother in writing in accordance herewith, except that notice of change ofaddress shall be effective only upon receipt. All notices to the Company shall be directed to the attention of theBoard of Directors of the Company.

 

 
| For Ciprico:   | 17400 Medina Road  Plymouth, MN 55447                          |
|----------------|----------------------------------------------------------------|
|           |                                                           |
| For Executive: | Robert H.Kill  14479 Boulder Pointe Rd  Eden Prairie, MN 55347 |

 

10.           **Captions**.  The headings or captions set forth in thisAgreement are for convenience only and shall not affect the meaning or interpretationof this Agreement.

 

11.           **GoverningLaw**.  The validity,interpretation, construction and performance of this Agreement shall begoverned by the laws of the State of Minnesota.

 

12.           **Construction**.  Wherever possible, each term and provisionof this Agreement shall be interpreted in such manner as to be effective andvalid under applicable law.  If any termor provision of this Agreement is invalid or unenforceable under applicablelaw, (a) the remaining terms and provisions shall be unimpaired, and (b) theinvalid or unenforceable term or provision shall be deemed replaced by a termor provision that is valid and enforceable and that comes closest to expressingthe intention of the unenforceable term or provision.

 

13.           **Amendment;Waivers**.  This Agreement maynot be modified, amended, waived or discharged in any manner except by aninstrument in writing signed by both parties hereto.  The waiver by either party of compliance with any provision ofthis Agreement by the other party shall not operate or be construed as a waiverof any other provision of this Agreement, or of any subsequent breach by suchparty of a provision of this Agreement.

 

14.           **EntireAgreement**.  This Agreementsupersedes all prior or contemporaneous negotiations, commitments, agreements(written or oral) and writings between the Company and Executive with respectto the subject matter hereof and constitutes the entire agreement andunderstanding between the parties hereto. All such other negotiations, commitments, agreements and writings willhave no further force or effect, and the parties to any such other negotiation,commitment, agreement or writing will have no further rights or obligationsthereunder.

 

15.           **Counterparts**.  This Agreement may be executed in severalcounterparts, each of which shall be deemed to be an original but all of whichtogether shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to beduly executed and delivered as of the day and year first above written.

 

 
|   | CIPRICO INC.           |                  |
|--------|------------------------|-----------------------|
|   |                   |
|   | By:                    | /s/ James W. Hansen   |   |
|   |    Its: | Chairman of the Board |   |
|   |                   |
|   | /s/ Robert H. Kill     |                  |
|   | Robert H. Kill         |
|        |                        |                       |  |  |  |  |  |

 

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