Document:

Exhibit 10.2

 

EXHIBIT B

 

FORM OF CONVERTIBLE
PROMISSORY NOTE

 

THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND STATUTES, UNLESS OFFERED,
SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF THOSE
LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

CIPRICO
INC.

CONVERTIBLE
PROMISSORY NOTE

 

	
  $

  	
   

  	
  December     ,
  2007

  
	
   

  	
   

  	
  St.
  Louis Park, Minnesota

  

 

FOR
VALUE RECEIVED, Ciprico Inc., a Delaware corporation (the “Company”),
hereby promises to pay to                                  ,
or any authorized holder hereof (the “Holder”), the principal sum of                                   
and no/100 Dollars ($          ),
or so much of said principal sum as may be outstanding, plus any interest
calculated in accordance with paragraph 2 below, on the Maturity Date (as
defined below) in accordance with the provisions of this Promissory Note (the “Note”).
This Note is one of a series of Notes being issued pursuant to the terms of
that certain Convertible Note Purchase Agreement, dated December     ,
2007, by and among the Company and the original
Holder of this Note and the other parties named therein (the “Purchase Agreement”). Capitalized terms not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Purchase Agreement.

 

This Note is subject to the
following terms and conditions:

 

1.               Maturity
Date. The entire principal amount of
this Note and all accrued but unpaid interest thereon shall be due and payable
in full on March 1, 2009 (the “Maturity Date”).

 

2.               Interest. Simple interest shall accrue on the unpaid principal amount
of this Note at a fluctuating annual rate of interest equal to the LIBOR Rate,
as in effect on the date hereof and as the same may adjust monthly, plus
6.0%; provided, that, notwithstanding anything to the contrary

 

B-1

 

contained
herein, upon the occurrence and during the continuance of any Event of Default,
the rate of interest hereunder shall be the LIBOR Rate plus 9.0% (the “Default
Rate”). The interest rate shall automatically adjust on the first business
day of each month in the event there has been any change in the LIBOR Rate. As
used herein, “LIBOR Rate” means the “London Interbank Offered Rates
(LIBOR)” for one month as published in the “Money Rates” column of The Wall
Street Journal on the first business day of each month (or, if The Wall Street
Journal ceases to publish a rate so designated, any similar successor rate as
the Company shall in good faith designate). Interest shall be computed on the
actual number of days elapsed and a 365-day year, and accrued interest shall be
payable upon the Maturity Date of this Note.

 

3.               Payment. Payments on this Note will be made at the address of the
Holder on the Company’s books in legal tender of the United States of America.  All payments on this Note shall be applied
(i) first to the payment of any costs of collection that may be due
hereunder, (ii) then to the payment of accrued interest (if any), and (iii) the
balance shall be applied to principal. This Note may be prepaid without penalty
by the Company at any time upon three (3) days prior notice to Holder.

 

4.               Conversion.

 

4.1         General. The
unpaid principal balance of this Note and any accrued interest may be converted
into shares of the Company’s Common Stock (“Shares”) in accordance with
this Section 4; provided, however, that the Holder acknowledges and agrees
that under no circumstances will the Company be required to issue Shares
exceeding nineteen and ninety-nine one hundredths percent (19.99%) of the
Company’s outstanding Common Stock including the aggregate number of shares
converted and/or exercised in connection with the Purchase Agreement. Upon
conversion, the number of Shares that shall be issued shall equal the number
derived by dividing (a) the unpaid principal balance and accrued interest,
if any, by (b) the applicable conversion price set forth below.

 

4.2         Optional Conversion.
At any time after the date of this Note, the Holder may, in such Holder’s
discretion, elect to convert all of the unpaid principal balance of this Note
and all or none of the accrued interest into Shares in accordance with the
terms and conditions herein.

 

4.3         Automatic Conversion.
If the Company files a registration or
offering statement (the “Registration Statement”) with the Securities and Exchange
Commission to facilitate a public offering of its securities under the
Securities Act that is underwritten and through which the Company raises gross
cash proceeds of at least $10,000,000 (a “Qualified Offering”) and
should the managing underwriter of such offering require, all principal
and accrued interest under this Note will be automatically converted into
Shares in accordance with the terms and conditions herein; provided, however,
that the Holder may elect to be paid in cash for all accrued interest. Such
automatic conversion shall be effective upon the closing of the Qualified
Offering.

 

4.4         Conversion Price. The
conversion price  shall
mean an amount equal to the average closing bid price of the Common Stock for
the five (5) consecutive trading days ending

 

B-2

 

on the
trading day prior to the date hereof, or $           per share, subject
to adjustment as set forth in this Section 4.4 (the “Conversion Price”).
If, at any time, the Company subdivides its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately
prior to such subdivision will be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Company will be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination will be proportionately increased. All calculations
under this Section 4.4 will be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.

 

4.5         Conversion Procedure.

 

(a)                                  Optional Conversion.
To exercise the right to convert this Note into Common Stock, the Holder shall (i) provide
the Company with a ten-day advance written notice of conversion specifying the
date and amount of such conversion and the name in which the Shares shall be
issued (if the name is other than that of Holder), (ii) surrender this
Note to the Company; (iii) furnish any appropriate endorsements and
documents reasonably requested by the Company, and (iv) pay any
documentary, stamp, transfer or similar tax if required.

 

(b)                                 Automatic Conversion.
If this Note is to be converted automatically pursuant to Section 4.4
above, written notice must be delivered to the Holder at the address last shown
on the records of the Company at least fifteen (15) days prior to the closing
of the Qualified Offering (i) notifying the Holder of the conversion; (ii) specifying
the principal amount of the Note converted, and the amount of accrued and
unpaid interest; and (c) calling upon the Holder to (A) return an
acknowledgement to the Company within ten (10) days after receipt of the
notice specifying whether the Holder elects to receive Shares or cash for the
accrued interest and (B) surrender this Note to the Company in exchange
for Shares and cash, if any, in the manner and at the place designated by the
Company.

 

(c)                                  Delivery of Shares and Cash.
As promptly as practicable after the Company’s receipt of the written notice of
conversion or acknowledgement of automatic conversion, the Company shall
deliver to the Holder certificates, whether paper or electronic, representing
the number of fully paid and nonassessable shares into which this Note, or such
part thereof, may be converted, and cash, if any, for the accrued interest due
and payable. Thereupon, the rights of the Holder as a noteholder shall cease
and this Note shall be deemed satisfied and discharged.

 

4.6         Fractional Shares. In lieu
of issuing any fractional shares upon conversion, the Company instead shall deliver
an amount of cash equal to such fraction multiplied by the Conversion Price
then in effect.

 

B-3

 

5.               Security
Interest. In
order to secure the payment and performance of the obligations hereunder and to
provide the Holder with a preference upon liquidation of the Company, the
Company hereby grants to the Holders a security interest (herein called the “Security
Interest”) in and to the following property (hereinafter collectively
referred to as the “Collateral”):

 

All
assets of the Company, including without limitation any and all furniture,
fixtures, machinery, equipment, inventory, accounts, vehicles, prepaid
insurance, supplies, patents, patent rights, copyrights, trademarks, trade
names, goodwill, royalty rights, franchise rights, chattel paper, license
rights, documents, instruments, general intangibles, payment intangibles,
investment property and any and all other goods, now owned or hereafter
acquired by the Company and wherever located, together with all substitutions
and replacements for and products and proceeds of any of the foregoing property
and, in the case of all tangible Collateral, together with (i) all
accessories, attachments, parts, equipment, accessions and repairs now or
hereafter attached or affixed to or used in connection with any such goods, and
(ii) all warehouse receipts, bills of lading and other documents of title
now or hereafter covering such goods.

 

6.               Subordination. Notwithstanding Section 5 above, the Company covenants
and agrees, and each Holder of this Note by acceptance hereof covenants and
agrees, that the payment of the principal of and the interest on this Note
shall be subordinate in right of payment, to the extent and in the manner
hereinafter set forth, to the prior payment of Senior Indebtedness (as defined
below) of the Company outstanding on the date hereof or hereafter incurred. For
purposes of this Note, “Senior Indebtedness” shall mean indebtedness of
the Company: (i) for money borrowed by the Company from banks, finance
companies, trust companies, pension trusts, insurance companies or other
financial institutions in the business of commercial finance; (ii) in
connection with the issuance of tax exempt notes or debentures; and (iii) in
connection with the acquisition of capital equipment. Furthermore, each Holder
of this Note hereby covenants and agrees to do or cause to be done any and all
further acts and things and to execute and deliver any and all further
documents and instruments as the Company or holders of the Senior
Interestedness deem necessary or appropriate to carry out the full intent and
purpose of this Section 6.

 

7.               Registration
Rights. The Company hereby grants to the
Holder the following registration rights pertaining to the Shares:

 

7.1         Demand
Rights.

 

(a)                                  At any time
within 60 days after the Maturity Date, Holders holding at least fifty-one
percent (51%) (a “Majority-in-Interest”) of the aggregate Shares then
outstanding as a result of conversion pursuant to Section 4, may request
that the Company file a registration statement for the resale of the Shares (“Requested
Registration Statement”). Upon receipt of such request, the Company shall promptly
deliver notice of such request to all Holders holding Shares, who shall

 

B-4

 

then
have 15 days to notify the Company in writing of their desire to participate in
such registration. If the request for registration contemplates an underwritten
public offering, the Company shall state such in the written notice.

 

(b)                                 The Company
will use its reasonable commercial efforts to expeditiously effect (but in any
event no later than ninety (90) days after such request) the Requested
Registration Statement in such registration under the Securities Act, but only
to the extent provided for in this Note; provided, however, that the Company
shall not be required to effect a registration pursuant to a request under this
Section 7 more than one (1) time for all Holders as a group. Notwithstanding
anything to the contrary contained herein, no request may be made under this Section 7
within six (6) months after the effective date of a registration statement
filed by the Company covering a firm commitment underwritten public offering.

 

(c)                                  If a Requested
Registration Statement involves an underwritten public offering, and the
managing underwriter of such offering determines in good faith and advises the
Holders in writing that the number of securities sought to be offered must be
limited due to market conditions, then the number of securities to be included
in such underwritten public offering shall be reduced to a number deemed
satisfactory by such managing underwriter. The shares to be excluded shall be
determined on a pro rata basis based upon the aggregate number of Shares
requested for inclusion in such registration by each Holder.

 

7.2         Piggy
Back Rights.

 

(a)                                  Whenever the Company shall propose to file a registration
statement under the Securities Act on a form which permits the inclusion of the
Shares for resale (a “Qualifying Registration Statement”), including a
registration on Form S-8, if applicable, it will give written notice to
the Holder at least 30 calendar days prior to the anticipated filing thereof,
specifying the approximate date on which the Company proposes to file the
Qualifying Registration Statement and the intended method of distribution in
connection therewith, and advising the Holder of his right to have any or all
of the Shares then held by him included among the securities to be covered by
such registration statement (the “Piggy-Back Rights”). The Holder shall
have the right to include the Shares in one or more Qualifying Registration
Statement until all of the Shares have been sold, or until all of the Shares
are eligible for sale under Rule 144 promulgated by the SEC or any similar
or successor rule, whichever shall first occur.

 

(b)                                 Subject to (d) and (e) below, in the event that the
Holder elects to utilize the Piggy-Back Rights, the Company shall include in
the Qualifying Registration Statement the number of the Shares identified by
the Holder in a written request (the “Piggy-Back Request”) given to the
Company not later than 10 calendar days prior to the proposed filing date of
the Qualifying Registration Statement. The Shares identified in the Piggy-Back
Request shall be included in the Qualifying

 

B-5

 

Registration Statement on the same
terms and conditions as the other shares of Common Stock included in the
Qualifying Registration Statement.

 

(c)                                  Notwithstanding anything in this Note to the contrary, the
Holder shall not have Piggy-Back Rights with respect to (i) a registration
statement on Form S-4 or any successor forms thereto, (ii) a
registration statement filed in connection with an exchange offer or an
offering of securities solely to existing stockholders or employees of the
Company, or (iii) a registration statement filed in connection with an
offering by the Company of securities convertible into or exchangeable for
Common Stock.

 

(d)                                 If the lead managing underwriter selected by the Company for
an underwritten offering for which Piggy-Back Rights are requested determines
that marketing or other factors require a limitation on the number of shares of
Common Stock to be offered and sold in such offering, then (i) such
underwriter shall provide written notice thereof to each of the Company and the
Holder, and (ii) there shall be included in the offering, first, all
shares of Common Stock proposed by the Company to be sold for its account (or
such lesser amount as shall equal the maximum number determined by the lead
managing underwriter as aforesaid) and, second, only that number of Shares
requested to be included in the Qualifying Registration Statement by the Holder
that such lead managing underwriter reasonably and in good faith believes will
not substantially interfere with (including, without limitation, adversely
affect the pricing of) the offering of all the shares of Common Stock that the
Company desires to sell for its own account.

 

(e)                                  Nothing contained in this Section 7 shall create any
liability on the part of the Company to the Holder if the Company for any
reason should decide not to file a Qualifying Registration Statement for which
Piggy-Back Rights are available or to withdraw such Qualifying Registration
Statement subsequent to its filing, regardless of any action whatsoever that
the Holder may have taken, whether as a result of the issuance by the Company
of any notice hereunder or otherwise.

 

7.3         Registration Expenses.
Except as set forth below, the Company shall bear all expenses of a Requested
Registration Statement and/or Qualifying Registration Statement. The Holder
will be individually responsible for payment of his/her/its own legal fees,
underwriting fees and brokerage discounts, commissions and other sales expenses
incident to any registration hereunder.

 

7.4         Information by Holders.
Each Holder of Shares shall furnish to the Company such information regarding
such Holder and the distribution proposed by such Holder as the Company may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification, or compliance referred to in this Note.

 

B-6

 

8.               Restriction
on Transfer. The Holder may not
transfer this Note until it has delivered to the Company a written opinion of
counsel, satisfactory to the Company, that the proposed transfer may be
lawfully made without registration under the Securities Act and any applicable
state securities law and has received the prior written consent of the Company.

 

9.               Governing
Law. This Note and all rights,
obligations and liabilities hereunder shall be governed by the laws of the
State of Minnesota without regard to the principles of conflict of laws.

 

10.         Payment
Date. In case any payment date is not a
business day, then payment may be made on the next succeeding business day with
the same force and effect as if made on such original date and no interest will
accrue for the period after such date.

 

11.         Construction. If any provision of this Note is prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition without invalidating the remainder of such provision or this
Note.

 

12.         Amendments. This Note may not be and will not be deemed or construed to
have been modified, amended, rescinded, canceled, or waived, in whole or in
part, except by written instruments signed by the Company and the Holder.

 

13.         Cancellation. After all the principal and accrued interest at any time
owed on this Note have been paid in full or this Note has been converted, this
Note shall be surrendered to the Company for cancellation and the Security
Interest herein shall be terminated.

 

[Signature Page Follows]

 

B-7

 

IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed as of the day and year first set forth above.

 

CIPRICO INC.

 

 

 

Monte
S. Johnson, Chief Financial OfficerExhibit 10.3

 

EXHIBIT C

 

FORM OF WARRANT

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON
EXERCISE THEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED
FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND STATUTES, UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT
TO AN AVAILABLE EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE
REGISTRATION REQUIREMENTS OF THOSE LAWS. 
THE COMPANY SHALL BE ENTITLED TO REQUIRE AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.

 

CIPRICO
INC.

WARRANT
TO PURCHASE COMMON STOCK

 

No.                                                                                                                                                                   December         ,
2007

 

Void
After December     , 2012

 

THIS CERTIFIES THAT, for value received,
                                                ,
with its principal office at
                                                                          ,
or its assigns (the “Holder”), is entitled to subscribe for and purchase at
the Exercise Price (defined below) from Ciprico Inc., a Delaware corporation,
with its principal office at 7003 West Lake Street, Suite 400, St. Louis
Park, MN 55426 (the “Company”) up to                     
shares [Warrant coverage of $0.25
worth of warrant shares for each $1 of principal invested.] of the
Common Stock of the Company (the “Common Stock”), subject to
adjustment as provided herein.  This
Warrant is one of a series of Warrants being issued pursuant to the terms of
that certain Convertible Note Purchase Agreement, dated December     ,
2007, by and among the Company and the
original Holder of this Warrant and the other parties named therein (the “Purchase Agreement”). 
Capitalized terms not otherwise defined herein shall have the respective
meanings ascribed to such terms in the Purchase Agreement.

 

1.                                      DEFINITIONS.  As used herein, the
following terms shall have the following respective meanings:

 

1.1                               “Exercise Period” shall mean the
period commencing after the date hereof and ending December     ,
2012, unless sooner terminated as provided below.

 

1.2                               “Exercise Price”  shall mean an
amount equal to the average closing bid price of the Common Stock for the five (5) consecutive
trading days ending on the trading day prior to the date hereof, or $                  per share, subject
to adjustment pursuant to Section 6 below.

 

C-1

 

1.3                               “Exercise Shares” shall mean the shares of the Company’s Common Stock
issuable upon exercise of this Warrant, subject to adjustment pursuant to the
terms herein, including but not limited to adjustment pursuant to Section 6
below.

 

1.4                               “Fair Market Value” of a share of
Common Stock shall be calculated as follows:

 

(a)           if the Common Stock is listed on the
Nasdaq Global Select Market, Nasdaq Global Market, Nasdaq Capital Market, or an
established stock exchange, then the average of the prices of such stock at the
close of the regular trading session of such market or exchange for the five (5) consecutive
trading days ending on the trading day immediately preceding the applicable
valuation date, or

 

(b)           if the Common Stock is not so listed on
the Nasdaq Global Select Market, Nasdaq Global Market, Nasdaq Capital Market,
or an established stock exchange, then the average of the closing “bid” and “asked”
prices quoted by the OTC Bulletin Board, the National Quotation Bureau, or any
comparable reporting service for the five (5) consecutive trading days
ending on the trading day immediately preceding the applicable valuation date,
or

 

(c)           if the Common Stock is not publicly
traded as of such date, the per share fair market value as reasonably
determined in good faith by the Company’s Board of Directors.

 

2.                                      EXERCISE
OF WARRANT.

 

2.1                               Method of Exercise. 
The rights represented by this Warrant may be exercised in whole or in
part at any time during the Exercise Period, by surrendering this Warrant, with
the Notice of Exercise attached hereto filled in and duly executed by such
Holder or by such Holder’s duly authorized attorney, to the Company at its
principal office accompanied by payment of the Exercise Price of the
Exercise Shares purchased thereby.

 

At the
option of the Holder, the Exercise Price may be paid in one or more of the
following manners:

 

(a)                                  a certified check or wire transfer of
immediately available funds,

 

(b)                                  surrender of stock certificates then held
representing that number of shares having an aggregate current Fair Market
Value on the date of exercise equal to the aggregate Exercise Price for all
Exercise Shares to be purchased pursuant to this Warrant,

 

(c)                                  by a “Cashless Exercise,” in which event
the Company shall issue to the Holder the number of Exercise Shares determined
as follows:

 

X = Y [(A-B)/A]

where:

 

X = the number of Exercise
Shares to be issued to the Holder.

 

C-2

 

Y = the number of Exercise
Shares with respect to which this Warrant is being exercised.

 

A = the Fair Market Value of
the Common Stock on the date of exercise.

 

B = the Exercise Price, or

 

(d)                                  any combination of the foregoing methods.

 

Upon the exercise of the rights represented by this
Warrant, shares of Common Stock shall be issued for the Exercise Shares so
purchased, and shall be registered in the name of the Holder or persons
affiliated with the Holder, if the Holder so designates, within a reasonable
amount of time following receipt by the Company of all of the items set forth
above and shall be issued in certificate form, whether paper or electronic, and
delivered to the Holder, if so requested.

 

The person in whose name any Exercise Shares are to
be issued upon exercise of this Warrant shall be deemed to have become the
holder of record of such shares on the date on which this Warrant was
surrendered and payment of the Exercise Price was made, irrespective of the
date of issuance of the shares of Common Stock, except that, if the date of
such surrender and payment is a date when the stock transfer books of the
Company are closed, such person shall be deemed to have become the holder of
such shares at the close of business on the next succeeding date on which the
stock transfer books are open.

 

2.2                               Partial Exercise.  If this Warrant
is exercised in part only, the Company shall, upon surrender of this Warrant,
execute and deliver, within 10 days of the date of exercise, a new Warrant
evidencing the rights of the Holder, or such other person as shall be
designated in the Notice of Exercise, to purchase the balance of the Exercise
Shares purchasable hereunder.  In no
event shall this Warrant be exercised for a fractional Exercise Share, and the
Company shall not distribute a Warrant exercisable for a fractional Exercise
Share.  Fractional Exercise Shares shall
be treated as provided in Section 5 hereof.

 

3.                                      COVENANTS
OF THE COMPANY.

 

3.1                               Covenants
as to Exercise Shares.  The
Company covenants and agrees that all Exercise Shares that may be issued upon
the exercise of the rights represented by this Warrant will, upon issuance, be
duly authorized and validly issued and outstanding, fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the
issuance thereof.  The Company further
covenants and agrees that the Company will at all times during the Exercise
Period, have authorized and reserved, free from preemptive rights, a sufficient
number of shares of its Common Stock to provide for the exercise of the rights
represented by this Warrant.  If at any
time during the Exercise Period the number of authorized but unissued shares of
Common Stock shall not be sufficient to permit exercise of this Warrant, the
Company will take such corporate action as may, in the opinion of counsel, be
necessary to increase its authorized but unissued shares of Common Stock (or
other securities as provided herein) to such number of shares as shall be
sufficient for such purposes.

 

C-3

 

3.2                               No
Impairment.  Except and
to the extent as waived or consented to by the Holder in accordance with Section 11
hereof, the Company will not, by amendment of its Certificate of Incorporation (as such may be amended from time to
time), or through any means, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed hereunder by the
Company, but will at all times in good faith carry out of all the provisions of
this Warrant and take all such action as may be necessary or appropriate in
order to protect the exercise rights of the Holder against such impairment.

 

3.3                               Notices
of Record Date.  In the event
of any taking by the Company of a record of the holders of any class of
securities for the purpose of determining the holders thereof who are entitled
to receive any dividend (other than a cash dividend which is the same as cash
dividends paid in previous quarters) or other distribution, the Company shall
mail to the Holder, at least ten days prior to the date specified therein, a
notice specifying the date on which any such record is to be taken for the
purpose of such dividend or distribution.

 

4.                                      DISPOSITION
OF WARRANT AND EXERCISE SHARES.  The Holder further agrees not to make any
disposition of all or any part of the Warrant or Exercise Shares in any event
unless and until one of the following occurs:

 

4.1                               The Company shall
have received a letter secured by the Holder from the Securities and Exchange
Commission (“SEC”) stating that no action will be recommended to the SEC
with respect to the proposed disposition;

 

4.2                               There is then
in effect a registration statement under the Securities Act of 1933, as amended
(“Securities Act”) covering such Warrant or Exercise Shares and such
disposition is made in accordance with said registration statement; or

 

4.3                               The Holder
shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, for the Holder to the effect that such disposition
will not require registration of such Warrant or Exercise Shares under the
Securities Act or any applicable state securities laws; provided,
that so long as the Holder provides the Company a with a representation letter in customary form with respect to a
disposition under Rule 144, no opinion shall be
required for any disposition made or to be made in accordance with the
provisions of Rule 144.

 

4.4                               The Holder understands
and agrees that all certificates evidencing the Exercise Shares to be issued to
the Holder may bear a legend in substantially the following form (provided that
no such legend will be borne by Exercise Shares issued following the
disposition of such shares pursuant to a registration statement which is
effective under the Securities Act and provided, further, that the Company will
remove such legend at the request of the Holder (i) following any sale of
the Exercise Shares pursuant to an effective registration statement or Rule 144,
or (ii) if such Exercise Shares are eligible for sale under Rule 144(k) or
any similar or successor Rule of the SEC):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS 

 

C-4

 

AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES.  THE SECURITIES MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, TRANSFERRED OR ASSIGNED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED, HYPOTHECATED OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM OR IN A TRANSACTION NOT
SUBJECT TO THE REGISTRATION REQUIREMENTS OF THOSE LAWS.  THE COMPANY SHALL BE ENTITLED TO REQUIRE AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN OPINION IS REQUIRED PURSUANT
TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE ISSUED.

 

5.                                      FRACTIONAL
SHARES.  No fractional shares shall
be issued upon the exercise of this Warrant as a consequence of any adjustment
pursuant hereto.  All Exercise Shares
(including fractions) issuable upon exercise of this Warrant may be aggregated
for purposes of determining whether the exercise would result in the issuance
of any fractional share.  If, after
aggregation, the exercise would result in the issuance of a fractional share,
the Company shall, in lieu of issuance of any fractional share, pay the Holder
otherwise entitled to such fraction a sum in cash equal to the product
resulting from multiplying the then current Fair Market Value (as of the
applicable exercise date) of an Exercise Share by such fraction.

 

6.                                      CERTAIN EVENTS.

 

6.1                               Distribution
of Assets.  In case the
Company shall declare or make any distribution of its assets (or rights to
acquire its assets) to holders of Common Stock as a partial liquidating
dividend, by way of return of capital or otherwise (including any dividend or
distribution to the Company’s stockholders of cash or shares (or rights to
acquire shares) of capital stock of a subsidiary) (a “Distribution”), at
any time after the initial issuance of this Warrant, then the Holder shall be
entitled upon exercise of this Warrant for the purchase of any or all of the
shares of Common Stock subject hereto, to receive the amount of such assets (or
rights) which would have been payable to the Holder had such Holder been the
holder of such shares of Common Stock on the record date for the determination
of stockholders entitled to such Distribution.

 

6.2                               Dividends,
Subdivisions, Combinations and Reclassifications.  The number and kind of securities purchasable
upon the exercise of this Warrant and the Exercise Price shall be subject to
adjustment from time to time upon the happening of any of the following.  In case the Company shall (i) pay a
dividend in shares of Common Stock or make a distribution in shares of Common
Stock to holders of its outstanding Common Stock, (ii) subdivide its outstanding
shares of Common Stock into a greater number of shares, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of Common
Stock, or (iv) issue any shares of its capital stock in a reclassification
of the Common Stock, then the number of Warrant Shares purchasable upon
exercise of this Warrant immediately prior thereto 

 

C-5

 

shall
be adjusted so that the Holder shall be entitled to receive the kind and number
of Warrant Shares or other securities of the Company which it would have owned
or have been entitled to receive had such Warrant been exercised in advance
thereof.  Upon each such adjustment of
the kind and number of Warrant Shares or other securities of the Company which
are purchasable hereunder, the Holder shall thereafter be entitled to purchase
the number of Warrant Shares or other securities resulting from such adjustment
at an Exercise Price per Warrant Share or other security obtained by
multiplying the Exercise Price in effect immediately prior to such adjustment
by the number of Warrant Shares purchasable pursuant hereto immediately prior
to such adjustment and dividing such product by the number of Warrant Shares or
other securities of the Company resulting from such adjustment.  An adjustment made pursuant to this paragraph
shall become effective immediately after the effective date of such event
retroactive to the record date, if any, for such event.

 

6.3                               Reorganization,
Reclassification, Merger, Consolidation or Disposition of Assets.  In case the Company shall reorganize its
capital, reclassify its capital stock, consolidate or merge with or into
another corporation (where the Company is not the surviving corporation or
where there is a change in or distribution with respect to the Common Stock of
the Company), or sell, transfer or otherwise dispose of all or substantially
all its property, assets or business to another corporation and, pursuant to
the terms of such reorganization, reclassification, merger, consolidation or
disposition of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or property of
any nature whatsoever (including warrants or other subscription or purchase
rights) in addition to or in lieu of common stock of the successor or acquiring
corporation (“Other Property”), are to be received by or distributed to
the holders of Common Stock of the Company, then the Holder shall have the
right thereafter to receive upon exercise of this Warrant, the number of shares
of Common Stock of the successor or acquiring corporation or of the Company, if
it is the surviving corporation, and Other Property receivable upon or as a
result of such reorganization, reclassification, merger, consolidation or
disposition of assets by a Holder of the number of shares of Common Stock for
which this Warrant is exercisable immediately prior to such event.  In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, the successor
or acquiring corporation (if other than the Company) shall expressly assume the
due and punctual observance and performance of each and every covenant and
condition of this Warrant to be performed and observed by the Company and all
the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the Board
of Directors of the Company) in order to provide for adjustments of Warrant
Shares for which this Warrant is exercisable which shall be as nearly
equivalent as practicable to the adjustments provided for in this Section 6.3.  For purposes of this Section 6.3, “common
stock of the successor or acquiring corporation” shall include stock of such
corporation of any class which is not preferred as to dividends or assets over
any other class of stock of such corporation and which is not subject to
redemption and shall also include any evidences of indebtedness, shares of
stock or other securities which are convertible into or exchangeable for any
such stock, either immediately or upon the arrival of a specified date or the
happening of a specified event, and any warrants or other rights to subscribe
for or purchase any such stock.  The
foregoing provisions of this Section 6.3 shall similarly apply to
successive reorganizations, reclassifications, mergers, consolidations or
disposition of assets.

 

C-6

 

6.4                               Adjustment
of Exercise Price.  The form of
this Warrant need not be changed because of any adjustment in the number,
class, and kind of shares or Other Property subject to this Warrant.  The Company shall promptly provide a
certificate from its principal accounting officer notifying the Holder in
writing of any adjustment in the Exercise Price and/or the total number, class,
and kind of shares or Other Property issuable upon exercise of this Warrant,
which certificate shall specify the Exercise Price and number, class and kind
of shares or Other Property under this Warrant after giving effect to such
adjustment and shall set forth a brief statement of the facts requiring such
adjustment and setting forth the computation by which such adjustment was made.

 

7.                                      REGISTRATION RIGHTS.  The
Company hereby grants to the Holder the following registration rights
pertaining to the Exercise Shares:

 

7.1                               Piggy-Back
Rights.

 

(a)                                  Whenever the
Company shall propose to file a registration statement under the Securities Act
on a form which permits the inclusion of the Exercise Shares for resale (a “Qualifying
Registration Statement”), including a registration on Form S-8, if
applicable, it will give written notice to the Holder at least thirty (30)
calendar days prior to the anticipated filing thereof, specifying the
approximate date on which the Company proposes to file the Qualifying
Registration Statement and the intended method of distribution in connection
therewith, and advising the Holder of his right to have any or all of the
Exercise Shares then held by him included among the securities to be covered by
such registration statement (the “Piggy-Back Rights”).  The Holder shall have the right to include
the Exercise Shares in one or more Registration Statements until all of the
Exercise Shares have been sold, or until all of the Exercise Shares are
eligible for sale under Rule 144 promulgated by the SEC or any similar or
successor Rule, whichever shall first occur.

 

(b)                                  Subject to (d) and
(e), in the event that the Holder elects to utilize the Piggy-Back Rights, the
Company shall include in the Qualifying Registration Statement the number of
the Exercise Shares identified by the Holder in a written request (the “Piggy-Back
Request”) given to the Company not later than ten (10) calendar days
prior to the proposed filing date of the Qualifying Registration
Statement.  The Exercise Shares
identified in the Piggy-Back Request shall be included in the Qualifying
Registration Statement on the same terms and conditions as the other shares of
Common Stock included in the Qualifying Registration Statement.

 

(c)                                  Notwithstanding
anything in this Warrant to the contrary, the Holder shall not have Piggy-Back
Rights with respect to (i) a registration statement on Form S-4 or
any successor forms thereto, (ii) a registration statement filed in
connection with an exchange offer or an offering of securities solely to
existing stockholders or employees of the Company, or (iii) a registration
statement filed in connection with an offering by the Company of securities
convertible into or exchangeable for Common Stock.

 

(d)                                  If the lead
managing underwriter selected by the Company for an underwritten offering for
which Piggy-Back Rights are requested determines that marketing or 

 

C-7

 

other
factors require a limitation on the number of shares of Common Stock to be
offered and sold in such offering, then (i) such underwriter shall provide
written notice thereof to each of the Company and the Holder, and (ii) there
shall be included in the offering, first, all shares of Common Stock proposed
by the Company to be sold for its account (or such lesser amount as shall equal
the maximum number determined by the lead managing underwriter as aforesaid)
and, second, only that number of Exercise Shares requested to be included in
the Qualifying Registration Statement by the Holder that such lead managing
underwriter reasonably and in good faith believes will not substantially
interfere with (including, without limitation, adversely affect the pricing of)
the offering of all the shares of Common Stock that the Company desires to sell
for its own account.

 

(e)                                  Nothing
contained in this Section 7 shall create any liability on the part of the
Company to the Holder if the Company for any reason should decide not to file a
Qualifying Registration Statement for which Piggy-Back Rights are available or
to withdraw such Qualifying Registration Statement subsequent to its filing,
regardless of any action whatsoever that the Holder may have taken, whether as
a result of the issuance by the Company of any notice hereunder or otherwise.

 

7.2                               Registration
Expenses.  Except as
set forth below, the Company shall bear all expenses of a Qualifying
Registration Statement.  The Holder will
be individually responsible for payment of his/her/its own legal fees,
underwriting fees and brokerage discounts, commissions and other sales expenses
incident to any registration hereunder.

 

7.3                               Information
by Holders.  Each Holder
of Exercise Shares shall furnish to the Company such information regarding such
Holder and the distribution proposed by such Holder as the Company may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification, or compliance referred to in this
Warrant.

 

8.                                      NO
STOCKHOLDER RIGHTS.  This Warrant in
and of itself shall not entitle the Holder to any voting rights or other rights
as a stockholder of the Company.

 

9.                                      TRANSFER
OF WARRANT.  Subject to
applicable laws and compliance with Section 4.3 hereof, this Warrant and
all rights hereunder are transferable, by the Holder in person or by duly
authorized attorney, upon delivery of this Warrant and the form of assignment
attached hereto to any transferee designated by Holder.  The transferee will sign an investment letter
in form and substance reasonably satisfactory to the Company.

 

10.                               LOST,
STOLEN, MUTILATED OR DESTROYED WARRANT.  If this Warrant
is lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of
like denomination and tenor as the Warrant so lost, stolen, mutilated or
destroyed.  Any such new Warrant shall
constitute an original contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated or destroyed Warrant shall be at any time
enforceable by anyone.

 

C-8

 

11.                               MODIFICATIONS AND WAIVER.  This Warrant and any provision hereof may be
changed, waived, discharged or terminated only by an instrument in writing
signed by the Company and the Holder.

 

12.                               NOTICES,
ETC.  All notices required or
permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon
personal delivery to the party to be notified, (b) when sent by confirmed
facsimile if sent during normal business hours of the recipient, if not, then
on the next business day, (c) five days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or (d) one
business day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt.  All communications shall be sent to the
Company at the address listed on the signature page and to the Holder at
the addresses on the Company records, or at such other address as the Company
or Holder may designate by ten (10) days’ advance written notice to the
other party hereto.

 

13.                               GOVERNING
LAW.  This Warrant and all rights,
obligations and liabilities hereunder shall be governed by the laws of the
State of Minnesota without regard to the principles of conflict of laws.

 

14.                               SEVERABILITY.  The
invalidity or unenforceability of any provision of this Warrant in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction, or affect any other provision of this Warrant, which
shall remain in full force and effect.

 

C-9

 

IN WITNESS WHEREOF, the Company has caused
this Warrant to be executed by its duly authorized officer as of the date first
set forth above.

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  CIPRICO INC.

  	
   

  	
   

  	 

	
   

  	
   

  	
   

  	
   

  	 

	
   

  	
  Monte S. Johnson, Chief
  Financial Officer

  	 

	
   

  	
   

  	 

	
   

  	
  Address:

  	
   

  	
  7003
  West Lake Street, Suite 400

  
	
   

  	
   

  	
   

  	
  St.
  Louis Park, MN 55426

  
	
   

  	
   

  	
   

  	
  Attn:
  Steven D. Merrifield

  
	
   

  	
   

  	
   

  	
  Facsimile:
  (952) 540-2402

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  W/copy
  to:

  	
   

  	
  Fredrikson &
  Byron, P.A.

  
	
   

  	
   

  	
   

  	
  200
  South Sixth Street, Suite 4000

  
	
   

  	
   

  	
   

  	
  Minneapolis,
  MN 55402

  
	
   

  	
   

  	
   

  	
  Attn:
  Melodie R. Rose

  
	
   

  	
   

  	
   

  	
  Facsimile:
  (612) 492-7077

  
							

 

 

 

NOTICE OF EXERCISE

 

TO:  CIPRICO INC.

 

(1)                                 The undersigned
hereby elects to purchase
                
shares of the Common Stock of Ciprico Inc. (the “Company”) pursuant to the terms
of the attached Warrant, and tenders herewith payment of the Exercise Price in
full for such shares as follows:

 

                                                o  by certified check or wire transfer of
immediately available funds in the amount of
$                        ,
which check or wire reference information has been provided herewith;

 

                                                o  by tendering herewith
                
shares of Common Stock held by the undersigned, the value of which equals the
aggregate Exercise Price of the shares of Common Stock set forth above in
accordance with Section 2 of the Warrant;

 

                                                o  by means of the Cashless Exercise option
provided in Section 2 of the Warrant (Holder has provided concurrently
herewith its calculations regarding the net number of Exercise Shares to be
issued to it in accordance with Section 2 hereof)

 

(2)                                 Please issue a
certificate or certificates, whether paper or electronic,
representing said shares of Common Stock in the name of the undersigned or in
such other name as is specified below:

 

 

(Name)

 

 

 

(Address)

 

(3)                                 If the Warrant
is not being exercised in full, please issue a certificate  representing a
new Warrant evidencing the right of the Holder to purchase the balance of the
Exercise Shares purchasable under the Warrant, such certificate to be
registered in the name of the undersigned or in such other name as is specified
below:

 

 

(Name)

 

 

 

(Address)

 

(4)                                 The undersigned
represents that (i) the aforesaid shares of Common Stock are being
acquired for the account of the undersigned not with a view to, or for resale
in connection with, the distribution thereof in violation of the Securities Act
of 1933, as amended (the “Securities Act”), and that the undersigned has no
present intention of distributing or reselling such shares in violation of the
Securities Act; (ii) the undersigned is aware of the Company’s business
affairs and financial condition and has acquired sufficient information about
the Company to reach an informed and knowledgeable decision regarding its
investment in the Company; (iii) the undersigned is experienced in making
investments of this type and has such knowledge and background in financial and
business matters that the undersigned is capable of evaluating the merits and
risks of this investment and protecting the undersigned’s own interests; (iv) the
undersigned understands that the shares of Common Stock issuable upon exercise
of this Warrant 

 

1

 

must
be held indefinitely unless subsequently registered under the Securities Act or
an exemption from such registration is available, and (v) the undersigned
agrees not to make any disposition of all or any part of the aforesaid shares
of Common Stock unless and until there is then in effect a registration
statement under the Securities Act covering such proposed disposition and such
disposition is made in accordance with said registration statement, or the undersigned
has provided the Company with an opinion of counsel satisfactory to the
Company, stating that such registration is not required.

 

 

 

	
  (Date)

  	
  (Signature)

   

   

  (Print name)

  

 

2

 

ASSIGNMENT FORM

 

(To
assign the foregoing Warrant, subject to compliance with section 4.3 hereof,
execute this form and supply required information.  Do not use this form to purchase shares.)

 

 

TO:  CIPRICO INC.

 

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

 

Name:

 

(Please Print)

 

 

Address:

 

(Please Print)

 

 

Dated: 
                    ,
20    

 

 

Holder’s

Signature:

 

 

Holder’s

Address:

 

 

 

NOTE:  The signature to this Assignment Form must
correspond with the name as it appears on the face of the Warrant, 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 Warrant.

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