Document:

Exhibit 10.4

 

COMMERCIAL
LEASE

(Highway
7 Corporate Center)

 

In consideration of the
mutual promises and covenants contained in this Lease, HIGHWAY 7 BUSINESS
CENTER LLC, a Minnesota limited liability company (“Landlord”), and CIPRICO
INC., a Delaware corporation (“Tenant”) agree as follows:

 

1.                                       PREMISES. 
Landlord agrees to lease to Tenant and Tenant agrees to lease from
Landlord, approximately 20,605  square feet of
which approximately 12,367 square feet is office space, 3,198 square feet is
lab space, 4,971 square feet is operations space, and 69 square feet is Tenant’s
pro rata share of mechanical room space (collectively the “Premises”), together
with rights in common with other tenants to the Common Areas (as hereinafter
defined), within the building (“Building”) which is situated on that certain
land (“Land”) in the City of St. Louis Park, Minnesota, commonly known as
Highway 7 Corporate Center, with an address of 7003 Lake Street West, St. Louis
Park, Minnesota, and more particularly described on Exhibit A attached
hereto (the Building and the Land are collectively the “Property”).  The Premises are depicted on Exhibit B,
attached hereto.

 

The “Common Areas” are
defined as all areas and facilities outside the Premises and within the
exterior boundary line of the Land which are provided and designated by
Landlord from time to time for the general non-exclusive use of Landlord,
Tenant, and other tenants of the Building and their respective employees,
suppliers, shippers, customers and invitees. 
The Common Areas may include, but are not limited to, the parking areas,
loading and unloading areas, trash areas, roadways, sidewalks, walkways,
parkways and landscaped areas. 
Notwithstanding the foregoing, Landlord agrees (i) to keep the
landscaped areas in front of the Premises (including the east side hill area)
substantially the same as it exists as of the date hereof with the effect that
the substation is screened from view; (ii) not to increase the size of the
Common Areas in a manner that will increase Tenant’s Share of Operating
Expenses, as hereinafter defined; and (iii) not to make changes to the
Common Area that deny Tenant reasonable access to the Premises.

 

2.                                       CONDITION OF PREMISES.  Except as otherwise expressly set forth in Section 21
hereof, or in Exhibits B and D attached hereto, Tenant agrees to accept the
Premises “as-is.”

 

3.                                       TERM. 
The term of this Lease (the “Term”) shall commence on the later of October 13,
2007, or the date that Landlord’s Work (as hereinafter defined) is
Substantially Complete (the “Commencement Date”), and continue for a period of
eighty-five and one-half (851⁄2) months thereafter, at which time the Term of the
Lease shall expire without further action on the part of either party
hereto.  “Substantially Complete” shall
mean the point at which (i) a temporary certificate of occupancy has been
issued, and (ii) Landlord’s Work is complete in accordance with Exhibits B
and D and in compliance with all applicable laws to the degree that any items
remaining to be completed or corrected do not materially interfere with Tenant’s
ability to take occupancy and prepare to conduct its business within the
Premises.  Tenant shall have no
obligation to accept possession of the Premises before the Premises are
Substantially Complete.  Upon notice from
Landlord that the Premises are Substantially Complete, the parties shall
inspect the Premises and prepare a punchlist of items necessary to finally
complete the portions of the Premises for which Landlord is responsible.  Landlord agrees to cause to be completed or
corrected all such punchlist items promptly after the same have been
identified.  Landlord covenants to obtain
a final certificate of occupancy for the Premises; provided that Landlord shall
not be deemed to be in default of this covenant to the extent Landlord’s
inability to obtain a final certificate of occupancy is the result of
improvements, furnishings, or other activities of Tenant within the
Premises.  Upon determination of the
actual Commencement Date, Landlord and Tenant will confirm such date in
writing.  In the event that the Premises
are not delivered to Tenant by October 13, 2007, Tenant shall receive one
day of additional free Base Rent (as hereinafter defined) for each day that
elapses between October 13 and the actual Commencement Date.  In addition, if the Premises have not been
delivered to Tenant by October 31, 2007, Landlord shall be responsible to
pay the difference between the rent which would have been payable under this
Lease had the Premises been delivered by October 31, 2007 (ignoring for
purposes of this provision any free rent to be granted to Tenant hereunder and
assuming the rental amounts payable starting in month 2, as set out in
paragraph 5 hereof) and the holdover rent payable by Tenant in its current
location.  Tenant 

 

 

 

represents that its
holdover rate will be 150% under its current lease if Tenant does not vacate
its current space by October 31, 2007. 
In no event will the Commencement Date be prior to Landlord’s completion
of Landlord’s Work, as hereinafter defined.

 

4.                                       HOLDING OVER.  If Tenant shall retain possession of the
Premises after termination or expiration of this Lease, then (i) for each
day, or part thereof the Tenant so retains possession of the Premises, Tenant
shall pay Landlord 150% of the amount of the daily rate of Base Rent payable by
Tenant under Section 5 during the calendar month immediately preceding
such termination or expiration together with any damages sustained by Landlord
as a result thereof, (ii) if such retention of the Premises is with the
express written consent of Landlord, such tenancy shall be from month to month
and in no event from year to year or any period longer than month to month, and
(iii) except as provided in this Section 4, any such tenancy shall be
upon the same terms and conditions as contained in this Lease.

 

5.                                       RENT.

 

(a)                                  Base Rent.  The annual
Base Rent set forth below consists of rent for the Premises and assumes
$624,945 in a Tenant Improvement Allowance (as hereinafter defined).  Subject to adjustment pursuant to the terms
of Section 21, Tenant covenants and agrees to pay to Landlord or its
authorized agent, at Landlord’s address, without prior demand and without
deduction or set-off, rent (“Rent”) for the Premises as follows:

 

	
  Months

  	
   

  	
  Annual Base Rent

  	
   

  	
  Monthly Base Rent

  	
   

  
	
   

  	
   

  	
  (per
  square foot)

  	
   

  	
   

  	
   

  
	
  Oct. 13-31

  	
   

  	
  $

  	
  0.00

  	
   

  	
  $

  	
  0.00

  	
   

  
	
  1st full month

  	
   

  	
  $

  	
  0.00

  	
   

  	
  $

  	
  0.00

  	
   

  
	
  2-13

  	
   

  	
  $

  	
  11.25

  	
   

  	
  $

  	
  19,317.19

  	
   

  
	
  14-25

  	
   

  	
  $

  	
  11.48

  	
   

  	
  $

  	
  19,712.12

  	
   

  
	
  26-37

  	
   

  	
  $

  	
  11.71

  	
   

  	
  $

  	
  20,107.05

  	
   

  
	
  38-49

  	
   

  	
  $

  	
  11.94

  	
   

  	
  $

  	
  20,501.98

  	
   

  
	
  50-61

  	
   

  	
  $

  	
  12.18

  	
   

  	
  $

  	
  20,914.08

  	
   

  
	
  62-73

  	
   

  	
  $

  	
  12.42

  	
   

  	
  $

  	
  21,326.18

  	
   

  
	
  74-85

  	
   

  	
  $

  	
  12.67

  	
   

  	
  $

  	
  21,755.45

  	
   

  

 

Tenant shall also
pay Additional Rent as provided in section 5(b), and any other additional
payments due under this Lease, such Additional Rent to commence on the
Commencement Date.  All such payments
shall be made in equal monthly installments, payable in advance on or before
the first day of each calendar month with the first payment due on or before
the Commencement Date.  Rent for any
partial month at the beginning or end of the Term of this Lease shall be
prorated based upon the actual number of days of such month included within the
Term of this Lease.

 

(b)                                 Additional Rent. 
Tenant shall pay, as “Additional Rent,” the amount of Tenant’s Share of
Operating Expenses for each Lease Year, as reasonably estimated by Landlord
prior to the beginning of such Lease Year, in equal monthly installments, in
advance, on the first day of each month during each applicable Lease Year.

 

The parties hereto agree
upon the following Definitions:

 

i.                                          The term “Lease Year” shall mean each
twelve (12) month period which ends on December 31 of any year during
which all or any part of the Term occurs.

 

ii.                                       The term “Real Estate Taxes” shall mean
and include all real estate taxes, and installments of special assessments (with
payments extended over the longest period allowable by the authority levying
same), including interest thereon, relating to the Property, and all other 

 

2

 

governmental charges,
general and special, ordinary and extraordinary, foreseen as well as
unforeseen, of any kind and nature whatsoever, or other tax, however described,
which is levied or assessed by any governmental entity, against Landlord or all
or any part of the Property as a result of Landlord’s ownership of or interest
in the Property, and payable during the respective Lease Year.

 

Tenant also shall
pay, as Additional Rent, any tax or excise on rents, gross receipts tax, or
other tax, however described, which is levied or assessed by any governmental
entity, against Landlord in respect to the Rent, Additional Rent, or other
charges reserved under this Lease or as a result of Landlord’s receipt of such
rents or other charges accruing under this Lease, except income, franchise,
gift, succession, foreign ownership, foreign control, transfer, sales,
inheritance, estate, payroll or personal property taxes.

 

iii.                                    The term “Operating Expenses” shall mean
and include all expenses incurred with respect to the maintenance and operation
of the Property, including, but not limited to, Real Estate Taxes, public
liability, casualty and other insurance premiums reasonably required by
Landlord’s lender, Common Area maintenance and repair costs, steam,
electricity, water, sewer, gas, and other Common Area utility charges, fuel,
lighting, window washing, janitorial services, trash and rubbish removal, snow
removal, lawn mowing and maintenance, repair and replacement of exterior
windows, repair and replacement of the non-structural portions of the roof and
roof membrane, wages and benefits payable to employees of Landlord whose duties
are directly connected with the operation, maintenance and management of the
Property (but only to the level of building manager), and to the extent such
employee’s time is directly charged to working at the Property, amounts paid to
contractors or subcontractors for work or services performed in connection with
the operation and maintenance of the Property, all services, supplies, repairs,
replacements or other expenses for maintaining and operating the Property,
reasonable attorneys’ fees and costs in connection with the appeal or contest
of Real Estate Taxes or levies (to the extent of any reduction realized), and
such other expenses as may be ordinarily incurred in the operation, maintenance
and management of the Property and not specifically set forth herein.  Landlord agrees that any management fee
charged as part of Operating Expenses shall not exceed amounts customarily
charged for such services.  With respect
to repairs or replacements to the Property which would be recognized as capital
improvements under generally accepted accounting principles (“GAAP”), the term “Operating
Expenses” shall only include a prorata portion of the cost of such repairs or
replacements determined by amortizing at prevailing interest rates over the
useful life of the repair or replacement as determined in accordance with
GAAP.  Landlord agrees that it will incur
replacement costs only when it is consistent with sound business and building
ownership practices, or as otherwise required by law or the requirements of
Landlord’s lender.

 

The term “Operating
Expenses” shall not include repairs, restoration or other work occasioned by
fire, windstorm or other insured casualty, expenses incurred in leasing or
procuring tenants, leasing commissions, advertising expenses, expenses for
renovating space for Landlord or new tenants, payments made to affiliates of
Landlord including inside or related contractors and executives (but only to
the extent the amount paid exceeds market rate for the services provided),
legal expenses incident to enforcement by Landlord of the terms of any lease,
interest or principal payments on any mortgage, depreciation allowances or
expenses, costs to cure construction defects, costs to remedy building code
violations or other violations of applicable laws, codes, ordinances or
regulations existing as of the Commencement Date, costs to remediate Hazardous
Substances (as hereinafter defined) which are not due to the acts or omissions
of Tenant, costs for the maintenance, repair and replacement of those items
identified as “Excluded Items” in paragraph 7(a) hereof, rent under any
ground lease or underlying lease, or any costs incurred by Landlord in
connection with the transfer or disposition of Landlord’s interest in the
Property.  Notwithstanding the foregoing,
in the event Landlord installs equipment in or makes improvements or
alterations to the Property which are required under any governmental laws,
regulations, or ordinances which were not required as of the date of this
Lease, Landlord shall include in Operating Expenses reasonable charges for the
same so as to amortize such investment at 

 

3

 

prevailing interest rates
over the useful life of such equipment, improvement or alteration, as
determined in accordance with GAAP.

 

iv.                                   The term “Tenant’s Share of Operating
Expenses” shall mean twenty-six percent (26%) of the Operating Expenses for the
applicable Lease Year.  The above
percentage has been agreed upon by the parties hereto after due consideration
of the number of leasable square feet in the Premises compared to the number of
leasable square feet in the Building.

 

As to each Lease
Year after the initial Lease Year, Landlord shall reasonably estimate for each
such Lease Year the total amount of (i) Operating Expenses; (ii) Tenant’s
Share of Operating Expenses; and (iii) the computation of the annual and
monthly Additional Rent payable during such Lease Year as a result of changes
in Tenant’s Share of Operating Expenses. 
Landlord shall make the estimate in writing and deliver or mail it to
Tenant at its address for notice purposes hereunder.

 

From time to time
during any applicable Lease Year, Landlord may re-estimate the amount of Operating
Expenses and Tenant’s Share thereof, and in such event Landlord shall notify
Tenant, in writing, of such re-estimate in the manner above set forth and fix
monthly installments for the then remaining balance of such Lease Year in an
amount sufficient to pay the re-estimated amount over the balance of such Lease
Year after giving credit for payments made by Tenant on the previous estimate.

 

Upon completion of
each Lease Year, Landlord shall determine the actual amount of Operating
Expenses for such Lease Year and Tenant’s Share thereof and deliver a written
report of the amounts thereof to Tenant within 120 days after the end of each
Lease Year.  The report shall be
certified by a financial officer of Landlord. 
If Tenant has paid less than its Share of Operating Expenses for any
Lease Year, Tenant shall pay the balance of Tenant’s Share within thirty (30)
days after the receipt of such statement. 
If Tenant has paid more than Tenant’s Share of Operating Expenses for
any Lease Year, Landlord shall credit such excess against the most current
installment or installments due Landlord for its estimate of Tenant’s Share of
Operating Expenses for the next following Lease Year.  A pro rata adjustment shall be made for any
fractional Lease Year occurring during the Term of this Lease or any renewal or
extension thereof based upon the number of days of the term of this Lease
during such Lease Year as compared to three hundred sixty-five (365) days.  If an overpayment occurs during the last
Lease Year, Landlord shall refund the amount overpaid to Tenant.

 

Tenant shall have
the right during any Lease Year, after reasonable notice and at reasonable
times, to inspect Landlord’s accounting records relating to Operating Expense
charges (for the immediately preceding Lease Year only) at Landlord’s
accounting office.  Tenant shall furnish
Landlord with the results of such inspection, and if such inspection shows that
Tenant has paid less than its Share of Operating Expenses for any Lease Year,
Tenant shall pay the balance of Tenant’s Share within thirty (30) days after
the receipt of such inspection results. 
If Tenant has paid more than Tenant’s Share of Operating Expenses for
any Lease Year, Landlord shall credit such excess against the most current
installment or installments due Landlord for its estimate of Tenant’s Share of
Operating Expenses for the next following Lease Year.  If an overpayment occurs during the last
Lease Year, Landlord shall refund the amount overpaid to Tenant.  Upon Tenant’s written request, Landlord will
provide Tenant with copies of documentation substantiating any Operating
Expense.

 

6.                                       USE. 
Subject to any limitations imposed by applicable laws, rules and
regulations, the Premises may be used and occupied solely for general office,
showroom, light assembly and warehouse purposes.  Tenant will not use the Premises in a manner
contrary to law, or in any manner that may increase the insurance risk, prevent
the obtaining of insurance, or be in violation of any applicable federal, state
or local law, rule or regulation.

 

4

 

7.                                       MAINTENANCE AND REPAIR.

 

(a)                                  Landlord’s Obligations for Maintenance. 
Landlord shall keep and maintain the Common Areas, foundation, exterior
walls, and roof (structural and roof membrane) of the Building in which the
Premises are located, the structural portions of the Premises (exclusive of
doors, door frames, door checks, windows, and exclusive of window frames
located in the exterior building walls), and building systems that do not
exclusively serve Tenant or any other single tenant, in good condition and
repair (including replacements, as necessary) except that Landlord shall not be
called upon to make such repairs occasioned by the act or negligence of Tenant,
its agents, employees, invitees, licensees or contractors.  Except to the extent the same are Tenant’s
obligation under paragraph 7(b)(ii) or (iii) below, or as otherwise
provided elsewhere in this Lease, Landlord shall maintain the Property in
compliance with applicable law and the requirements of applicable insurance
underwriters.  Except as otherwise
provided in the last sentence of this paragraph 7(a), the costs incurred by
Landlord in the performance of the obligations set forth in this paragraph 7(a) shall
be included as Operating Expenses, subject to the provisions of paragraph
5(b).  Costs to maintain, repair and
replace the foundation, exterior walls (other than painting or other cosmetic
treatments), structural portions of the roof, and structural portions of the
Premises (collectively, the “Excluded Items”) shall not be included in
Operating Expenses, but shall be the sole cost of Landlord, except to the
extent that such maintenance, repairs or replacements are occasioned by the act
or negligence of Tenant, its agents, employees, invitees, licensees or
contractors.

 

(b)                                 Tenant’s Obligations for Maintenance.

 

(i)                                     Except as provided in section 7(a),
Tenant shall repair (including replacement of parts and equipment if necessary)
the Premises and every part thereof, including, without limitation, all
plumbing and sewage facilities, fixtures, heating and air conditioning (repair
and maintenance only, including seasonal inspections, filter replacements and
adjustments — replacement addressed below) and electrical systems, sprinkler
system, walls, floors, ceilings, together with any other Improvements (as
hereinafter defined) included within and exclusively serving the Premises,
provided that such maintenance and/or repairs are not due to manufacturer
defects or improper installation of any of the aforementioned items which occur
during any relevant warranty period.  At
Landlord’s option, Landlord may perform the repair and maintenance on the
heating and air conditioning units serving the Premises, and charge the cost
thereof to Tenant so long as such costs are at competitive market rates.  Tenant shall also be responsible to repair
other parts of the Property to the extent such repairs are made necessary by
the act or negligence of Tenant, its agents, employees, invitees, licensees or
contractors.  Landlord shall be
responsible for improvements to the Premises of a capital nature (including the
replacement of the heating and air conditioning system, and those
required by changes in law coming into effect after the Commencement Date which
are not specific to Tenant’s use), provided that the cost of any such capital
improvements shall be amortized at prevailing interest rates over the useful
life of such improvements (as determined in accordance with GAAP) and Tenant
shall pay to Landlord Tenant’s Share of the amortized portion of such costs
attributable to the term of the Lease as part of Operating Expenses.

 

(ii)                                  Tenant shall keep and maintain the
Premises in a clean, sanitary and safe condition in accordance with the laws of
the State of Minnesota and in accordance with all directions, rules and
regulations of the health officer, fire marshal, building inspector, or other
proper officials of the governmental agencies having jurisdiction, at the sole
cost and expense of Tenant, and Tenant shall comply with all requirements of
law, ordinance and otherwise, affecting the 

 

5

 

Premises including, but
not limited to, the Americans With Disabilities Act (“ADA”); provided, however,
that Tenant shall not be obligated to cure a violation of any law or ordinance
which existed as of the Commencement Date unless (a) such violation was
the result of Tenant’s activities on the Premises, or (b) such cure is
required as the result of Tenant’s particular use of the Premises and not a
general requirement of like buildings regardless of use.  If Tenant refuses or neglects to commence and
to promptly and adequately complete any repairs which are the obligation of
Tenant pursuant to this section 7(b), Landlord may, but shall not be required
to, make or complete such repairs and Tenant shall pay the cost thereof to
Landlord immediately upon demand.

 

(iii)                               Tenant, at its own expense, shall install
and maintain fire extinguishers and other fire protection devices (in addition
to the ESFR sprinkler system provided by Landlord) as may be required from time
to time by any agency having jurisdiction thereof and the insurance
underwriters insuring the Premises, but only to the extent such requirements
are the result of Tenant’s particular use of the Premises and not a general
requirement of like buildings regardless of use.

 

8.                                       UTILITIES, TAXES, AND ASSESSMENTS.  The Premises shall be separately metered for
electrical and natural gas.  Tenant shall
be billed directly by the utility companies for electrical, natural gas and
telephone services.  Tenant shall pay
either directly or, at Landlord’s option, as a part of Tenant’s Share of
Operating Expenses, all charges for any other utility or service used, rendered
or supplied upon or in connection with the Premises including, but not limited
to, sewer and water.  Tenant shall
provide its own trash and janitorial service.

 

9.                                       ADDITIONAL COVENANTS OF TENANT.

 

(a)                                  Signs.  Subject to
applicable municipal ordinances, Tenant shall have the right to install signage
at their own cost above, or adjacent to, the main entrance to the Premises in
accordance with the Sign Criteria which is attached hereto as Exhibit C.  Landlord will provide front and back door
vinyl graphics for the Premises’ suite number, and will also provide tenant
signage on the monument sign at the Lake Street entrance to the Property, in
the manner depicted on Exhibit E attached hereto.  During the last nine (9) months of the
Term, Landlord may place “For Lease/Sale” signs upon the Premises in a manner
that does not obstruct Tenant’s signage.

 

(b)                                 Compliance with Laws. 
Except as otherwise provided in this Lease, Tenant agrees, at Tenant’s
expense, to comply with all laws, orders, ordinances and regulations and with any
direction made pursuant to law of any public officer, relating to Tenant’s use
of the Premises.

 

(c)                                  Surrender.  Tenant agrees
upon the termination of this Lease for any reason, to remove Tenant’s personal
property and trade fixtures (including Tenant’s modular furniture) and those of
any other persons claiming under Tenant, and to quit and deliver up the
Premises to Landlord peaceably and quietly in as good order and condition as
the same are at the commencement of this Lease or thereafter may be improved by
Landlord and Tenant, reasonable use and wear and damage due to fire or other
casualty excepted.  Tenant, at Tenant’s
cost, shall repair any damage resulting from Tenant’s removal of its personal
property and trade fixtures from the Premises.

 

(d)                                 Personal Property Taxes. 
Tenant agrees to pay, before delinquency, any and all taxes levied or
assessed and which become payable during the Term hereof upon Tenant’s
equipment, fixtures, furniture, and other personal property located on the
Premises.

 

6

 

10.                                 ENVIRONMENTAL RESTRICTIONS.  Tenant covenants and agrees that during the
Term of this Lease (i) no Hazardous Substances (as hereinafter defined)
shall be located, stored, used, disposed of, released or discharged from
(including groundwater contamination) the Premises, provided that the Tenant
may store, use and dispose of (in compliance with this paragraph 10) normal
office materials and limited amounts of manufacturing materials and other
amounts of materials customarily used in accordance with the use permitted by
this Lease; (ii) the Premises and its use and operation shall at all times
and in all respects comply with all federal, state and local laws, ordinances
and regulations relating to the protection of health and with all Environmental
Laws (as hereinafter defined); and (iii) Tenant will obtain all permits,
if any, required under Environmental Laws relating to Tenant’s use and
occupancy of the Premises.

 

(a)                                  For purposes of this section, the term “Hazardous
Substances” shall mean the following: (i) any “hazardous substance” as now
defined pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act (“CERCLA”), 42 U.S.C.A. § 960 1(14) as amended by the
Superfund Amendments and Reauthorization Act (“SARA”), and including the
judicial interpretation thereof (ii) any “pollutant or contaminant” as now
defined in 42 U.S.C.A. § 960 1(33); (iii) any petroleum, including
crude oil or any fraction thereof; (iv) natural gas, natural gas liquids,
liquefied natural gas, or synthetic gas usable for fuel; (v) any “hazardous
chemical” as now defined pursuant to 29 C.F.R. part 1910; and (vi) any
other substance subject to regulation as a hazardous or-toxic substance under
existing Environmental Laws.

 

(b)                                 For purposes of this section, the term “Environmental
Laws” shall mean and include all federal, state and local statutes, ordinances,
regulations and rules presently in force or hereafter enacted relating to
environmental quality, contamination and clean-up, including, without
limitation, CERCLA, 42 U.S.C.A. § 9601 et seq., as amended by the SARA,
the Resource Conservation and Recovery Act of 1976, 42 U.S.C.A. § 6901 et
seq., as amended by the Hazardous and Solid Waste Amendments of 1984, and any applicable
state superlien and environmental clean-up statutes and all rules and
regulations presently or hereafter promulgated under said statutes, as amended.

 

Tenant shall indemnify,
defend (with counsel reasonably acceptable to Landlord), protect and hold
Landlord and each of Landlord’s officers, directors, partners, employees,
agents, attorneys, successors and assigns free and harmless from and against
any and all claims, liabilities, damages, costs, penalties, forfeitures, losses
or expenses (including attorneys’ fees) for death or injury to any person or
damage to any property whatsoever (including water tables and atmosphere)
arising or resulting in whole or in part, directly or indirectly, from the
release or discharge of Hazardous Materials, in, on, under, upon or from the
Premises or the Improvements located thereon or from the transportation or
disposal of Hazardous Materials to or from the Premises, to the extent caused
by Tenant whether knowingly or unknowingly. 
Tenant’s obligations hereunder shall include, without limitation, and
whether foreseeable or unforeseeable, all costs of any required or necessary
repairs, clean-up or detoxification or decontamination of the Premises or the
Improvements, and the presence and implementation of any closure, remedial
action or other required plans in connection therewith, to the extent required
by Environmental Laws.  For purposes of
the indemnity provided herein, any acts or omissions of Tenant, or its
employees, agents, customers, sublessees, assignees, contractors or
sub-contractors of Tenant (whether or not they are negligent, intentional,
willful or unlawful) shall be strictly attributable to Tenant; any acts or
omissions of Landlord, its employees, agents, customers, assignees, contractors
or sub-contractors shall be strictly attributable to Landlord.  Landlord agrees to remediate, or cause to be
remediated, to the extent required by Environmental Laws, any Hazardous
Materials which are not the responsibility of Tenant.

 

The foregoing covenants
shall survive the termination or expiration of this Lease or Tenant’s right to
possession of the Premises hereunder.

 

11.                                 INSURANCE.

 

(a)                                  Tenant’s Liability Insurance. 
Tenant agrees to carry, at its expense, during the entire term hereof, a
policy of comprehensive general liability and property damage insurance in an 

 

7

 

amount of not less than
$2,000,000.00 per occurrence, with respect to the Premises, and the business
operated by Tenant in the Premises.

 

(b)                                 Tenant’s Property Insurance. 
Tenant agrees to carry, at its expense, during the entire term hereof,
insurance against fire, vandalism, malicious mischief, and such other perils as
are from time to time included in a standard extended coverage endorsement
insuring Tenant’s merchandise, trade fixtures, furnishings, equipment and all
other items of personal property of Tenant located on the Premises on a
replacement value basis.

 

(c)                                  Requirements of Tenant’s Insurance. 
All policies of insurance to be carried by Tenant under this Lease shall
(i) be in the amounts stated above, subject to adjustment from time to
time as reasonably required by Landlord or Landlord’s lender; (ii) as to
liability insurance only, name Landlord, and any other parties in interest
designated by Landlord as additional insureds; (iii) contain such
endorsements as Landlord may from time to time reasonably require; and (iv) be
in form and substance reasonably satisfactory to Landlord.  Such insurance may be furnished by Tenant
under any blanket policy carried by it or under a separate policy
therefor.  The insurance shall be with an
insurance company authorized to do business in the State of Minnesota and a
copy of the paid-up policies evidencing such insurance or certificates of
insurers certifying to the issuance of such policies shall be delivered to
Landlord prior to the Commencement Date and upon renewals not less than 30 days
prior to expiration of such coverage. 
Such policies shall also provide that no act or default of any person
other than the Landlord or its agents shall render the policy void as to
Landlord or effect Landlord’s right to recover thereon.

 

(d)                                 Landlord’s Liability Insurance. 
Landlord agrees to carry during the entire term hereof, a policy of
comprehensive general liability and property damage insurance in an amount of
not less than $3,000,000.00 per occurrence ($3,000,000.00 aggregate), with
respect to the Property.

 

(e)                                  Landlord’s Property Insurance. 
Landlord agrees to carry during the entire term hereof, insurance against
fire, vandalism, malicious mischief, and such other perils as are from time to
time included in a standard extended coverage endorsement insuring the Building
and Landlord’s Work on a replacement value basis.

 

12.                                 WAIVER OF SUBROGATION.  Notwithstanding anything in this Lease to the
contrary, neither Landlord nor Tenant shall be liable to the other for loss
arising out of damage or destruction of the Premises, the Building, the
Property, or other Improvement, or personal property or contents therein if
such damage or destruction is caused by a peril included within a standard form
of fire insurance policy, with full extended coverage endorsement added, as
from time to time issued in Minnesota. 
Such absence of liability shall exist whether or not the damage or
destruction is caused by the negligence of Landlord or Tenant, or their
respective officers, employees, agents or customers.  It is the intention and agreement of Landlord
and Tenant that each party shall look to its insurer for reimbursement of any
such loss, and the insurer involved shall have no subrogation rights against
the other party.  Each party shall advise
its insurance company of this release and such policy shall, if necessary,
contain a waiver of any right of subrogation by the insurer against the other
party.

 

13.                                 INDEMNIFICATION.  Tenant shall defend and indemnify Landlord
and hold it harmless from and against any and all liability, damages, costs, or
expenses, including attorneys’ fees, arising from any act, omission or
negligence of Tenant or its officers, contractors, licensees, agents, servants,
employees, guests, invitees, or visitors in or about the Premises or Building,
or arising from any default under this Lease by Tenant.  Landlord shall defend and indemnify Tenant
and save it harmless from and against any and all liability, damages, costs, or
expenses, including attorneys’ fees, arising from any act, omission or
negligence of Landlord or its officers, contractors, licensees, agents,
servants, employees, guests, invitees, or visitors in or about the Premises or
Building, or arising from any default under this Lease by Landlord.  Landlord shall not be liable for any loss or
damage to person or property sustained by Tenant, which may be caused by the
Premises, or appurtenances thereto, being out of repair or by theft, or by
vandalism, or by any other cause of whatsoever nature except to the extent
caused by the 

 

8

 

intentional act of
Landlord, or the failure of Landlord to perform its obligations under the terms
of this Lease.  Tenant shall not be
liable for any loss or damage to person or property sustained by Landlord,
which may be caused by the Property (other than the Premises), or appurtenances
thereto, being out of repair or by theft, or by vandalism, or by any other
cause of whatsoever nature except to the extent caused by the intentional act
of Tenant, or the failure of Tenant to perform its obligations under the terms
of this Lease.

 

14.                                 IMPROVEMENTS AND ALTERATIONS.  Tenant may not make alterations or
improvements (“Improvements”) to the Premises at a cost in excess of $7,500.00
per instance without the prior written consent of Landlord, which consent shall
not be unreasonably withheld. 
Improvements shall be made at Tenant’s sole cost and any contractor must
first be approved by Landlord.  Tenant
shall obtain all necessary permits and provide Landlord with copies.  Tenant shall promptly repair any damage and
perform any necessary cleanup resulting from any Improvements.  All Improvements (except trade fixtures,
furniture and equipment belonging to Tenant which are removable without causing
damage to the Premises) shall be Landlord’s property and shall remain upon the
Premises upon the expiration or other termination of this Lease, all without
compensation to Tenant.  Tenant agrees
not to create, incur, impose or permit any lien against the Premises or
Landlord by reason of any Improvement and Tenant agrees to hold Landlord
harmless from and against any such lien claim. 
At its expense, Tenant shall cause to be discharged, within thirty (30)
days of notice of the filing thereof, any construction lien claim filed against
the Premises for work claimed to have been done for, or materials claimed to
have been furnished to, or on behalf of Tenant. 
Tenant may contest any such lien in a manner prescribed by law after
posting security for the benefit of Landlord in an amount reasonably determined
by Landlord, but in no event not less than 150% of the amount claimed by such
lien.

 

15.                                 CONDEMNATION.

 

(a)                                  If the Property shall be taken or
condemned for any public purpose, or purchased under threat of such taking, to
such an extent as to render the Premises untenantable, this Lease shall
forthwith cease and terminate as of the date title vests in the condemning
authority or the date the condemning authority takes possession, whichever
shall occur first.

 

(b)                                 In the event this Lease is not terminated
as contemplated by subparagraph (a) above, Landlord shall promptly restore
the Property to substantially the same condition as the Property was in as of
the Commencement Date (with the exception of those portions of the Property
taken).  Rent and Additional Rent shall
be abated during any period of restoration to the extent that Tenant is unable
to occupy all or a portion of the Premises during said restoration.  After restoration, Rent and Additional Rent
shall be proportionately adjusted to reflect any diminution in Premises square
footage.

 

(c)                                  In any taking of the Property, or any
portion thereof, whether or not this Lease is terminated as provided in this
article, Tenant shall not be entitled to any portion of the award for the
taking of the Property or damage to the Tenant Improvements, with the exception
that Tenant may apply for a separate award for Tenant’s relocation expenses,
and the taking of Tenant’s furniture, fixtures or equipment, or personal
property.

 

16.                                 ASSIGNMENT AND SUBLETTING.  Tenant shall not voluntarily, involuntarily
or by operation of law assign, transfer, mortgage or encumber this Lease, nor
sublet the whole or any part of the Premises without first obtaining Landlord’s
written consent, which consent shall not be unreasonably withheld.

 

17.                                 DEFAULT BY TENANT AND RIGHTS OF LANDLORD.

 

(a)                                  Defaults.  If Tenant (i) fails
to pay when due any installment of Rent, Additional Rent, or other charges due
hereunder for 5 days after the same is due, or (ii) fails to perform any
other covenant, term, agreement or condition of this Lease, and such failure
continues for 20 days after written notice from Landlord (provided, however,
that if the nature of such default other than for nonpayment is such that the
same cannot reasonably be cured within such 20-day period, Tenant shall not be
deemed in default if Tenant shall commence such cure within said 20-day period
and thereafter diligently prosecute the same to completion), then, Landlord, in
addition to all other rights and remedies available to Landlord at law or
equity or by other provisions hereof, 

 

9

 

may, without process,
immediately re-enter the Premises and remove all persons and property and, at
Landlord’s option, terminate this Lease or terminate Tenant’s right to
possession of the Premises without terminating the Lease.  Tenant further agrees that in case of any
such termination Tenant will indemnify Landlord against all loss of rents and
other damage which Landlord may incur by reason of such termination, including,
without limitation, reasonable attorneys’ fees. 
Notwithstanding the five (5) day grace period set forth in this
paragraph 17(a)(i) above, if Tenant’s payments of Rent, Additional Rent or
other charges are received after the date due by 7 or more days in the
aggregate in any given Lease Year (meaning, for example, 3 days late in one
month, 2 days late in another month and 2 days late in yet another month, for a
cumulative total of 7 days), Tenant will thereafter for the balance of said
Lease Year be deemed to be in default under this paragraph 17(a)(i) if
such payments are not received on the due date (provided, however, that
Landlord must provide notice to Tenant when Tenant’s late payments first total
seven (7) or more days in any Lease Year, after which notice Tenant shall
be allowed one (1) additional late payment within such five (5) day
grace period before Tenant is thereafter deemed to be in default if payments
are not received on the due date for the balance of said Lease Year).  The terms of the grace periods set forth
herein shall be reinstated as of the commencement of each subsequent Lease
Year.

 

(b)                                 Right of Landlord to Cure Defaults. 
If Tenant shall default in the observance or performance of any term or
covenant of this Lease, or if Tenant shall fail to pay any sum of money, other
than Rent required to be paid by Tenant hereunder, Landlord may, but shall not
be obligated to, and without waiving or releasing Tenant from any obligation to
make any such payment or perform any such other act on Tenant’s part to be made
or performed as provided in this Lease, remedy such default for the account and
at the expense of Tenant, immediately and without notice in case of emergency,
or in any other case after notice and expiration of any applicable cure
period.  If Landlord makes any expenditures
or incurs any obligations for the payment of money in connection with Tenant’s
default including, but not limited to, attorneys’ fees, Tenant shall pay to
Landlord as Additional Rent such sums paid or obligations incurred, with costs
and interest at the rate of 15% per year or the maximum rate permitted by law,
whichever is lower.  In any event,
Landlord shall have (in addition to any other right or remedy of Landlord) the
same rights and remedies in the event of the nonpayment of sums due under this
section as in the case of default by Tenant in the payment of Rent or
Additional Rent.

 

(c)                                  Unpaid Sums. 
Any amounts owing from Tenant to Landlord under this Lease shall bear
interest at the highest rate permitted by law in the State of Minnesota, not to
exceed the annual rate of 15% calculated from the date due until the date of
payment.  In addition to the foregoing
remedies, if any payment of Rent or Additional Rent is not paid within five (5) days
of the date due, Tenant shall (without the necessity of notice from Landlord)
pay a late charge equal to 5% of the amount of such overdue payment per month
or proportion thereof as liquidated damages for Landlord’s extra expense in
handling such past due account.

 

18.                                 SALE OR MORTGAGE OF LANDLORD’S INTEREST.

 

(a)                                  Conveyance of Landlord’s Interest. 
Landlord may sell, assign or otherwise transfer, in whole or in part,
its interest in this Lease and the Property. 
Landlord shall require the transferee to accept the interest transferred
subject to this Lease, and assume the obligations of Landlord under the Lease
arising from and after the date of transfer. 
The transfer shall release Landlord from any further liability to Tenant
hereunder for acts occurring after the transfer and, after any such transfer,
Tenant shall look solely to the transferee for the performance of any
obligations of the party who from time to time is the landlord under this
Lease.

 

(b)                                 Estoppel Certificate. 
Within ten (10) business days after written request by either
party, the other party shall execute, acknowledge and deliver to the requesting
party a statement in writing (i) certifying that this Lease is unmodified
and in full force and effect (or if modified, stating the nature of such
modification and certifying that this Lease, as so modified, is 

 

10

 

in full force and
effect), the dates to which Rent and any other charges payable by Tenant
hereunder are paid in advance, if any, (ii) acknowledging that there are
not, to the certifying party’s knowledge, any uncured defaults on the part of
the requesting party hereunder or specifying such defaults if any are claimed,
and (iii) in case of a transfer of Landlord’s interest, attorning to the
transferee, provided the transferee acknowledges Tenant’s rights under this
Lease.  Landlord and Tenant hereby
acknowledge that prospective purchasers and encumbrancers of the Premises,
Tenant’s business, or of the Property, may incur obligations or extend credit
in reliance upon the representations contained in such statement.  If the certifying party fails to deliver such
statement to the requesting party within said ten (10) business day
period, the requesting party shall give the certifying party an additional
written notice of such request.  If such
statement in not received by the requesting party within two (2) business
days after such additional request, such failure shall conclusively evidence
the representation and agreement that: this Lease is in full force and effect,
without modification, except as the requesting party may represent; there are
no uncured defaults in the requesting party’s performance hereunder; and Tenant
has not paid more than one month’s rent in advance.

 

19.                                 SUBORDINATION.  This Lease, and the term and estate hereby
granted, and all of the rights of Tenant hereunder, are subject and subordinate
to any underlying leases and the liens of any mortgage or mortgages now or
hereafter in force against the Premises or the building in which the Premises
are located or the land on which it sits, as well as to any and all zoning
laws, ordinances and regulations, conditions and agreements affecting said real
estate at any time, and Tenant shall execute such further instruments
subordinating this Lease to the lien or liens of any such lease or mortgage as
shall be requested by Landlord and reasonably acceptable to Tenant; provided,
however, that this subordination and any such further instruments shall not, so
long as Tenant is not in default in the performance of any of the terms,
covenants and conditions of this Lease beyond any applicable notice and cure
periods provided in this Lease, terminate or modify this Lease or any of the
rights of Tenant hereunder.  Landlord,
Landlord’s lender and Tenant shall enter into a Subordination, Attornment and
Nondisturbance Agreement substantially in the form attached hereto as Exhibit F,
promptly after execution of this Lease.

 

20.                                 QUIET ENJOYMENT.  Landlord covenants that if Tenant shall pay
the rent and observe and perform all the terms, covenants and conditions of
this Lease on its part to be observed and performed, Tenant may peaceably and
quietly enjoy the Premises subject to the terms and conditions of this Lease.

 

21.                                 BUILDING IMPROVEMENTS/TENANT
EQUIPMENT/WARRANTY.  Landlord shall cause
to be performed those certain improvements to the Premises as depicted on Exhibit B
attached hereto and described on Exhibit D attached hereto (“Landlord’s
Work”).  Tenant hereby confirms the
acceptability of Exhibits B and D, including the budget for the cost of
Landlord’s Work shown on page 2 of Exhibit D (the “Budget”).  Tenant shall have the right to request and
authorize changes to Landlord’s Work during construction, which changes shall
be subject to Landlord’s prior approval, not to be unreasonably withheld.  Landlord shall respond to Tenant’s request
for changes to Landlord’s Work within three (3) business days after
receipt thereof.  Prior to commencing any
change, Landlord shall prepare and deliver to Tenant, for Tenant’s approval, a
change order (“Change Order”) setting forth the total cost of such change and
any delay in Substantial Completion of Landlord’s Work caused by the Change
Order.  If Tenant fails to approve such
Change Order within three (3) business days after delivery by Landlord,
the Change Order shall not be implemented. 
Upon Landlord’s receipt of Tenant’s approval, Landlord shall proceed
with the Change Order.  Landlord’s Work
shall be completed by the Commencement Date. 
Landlord’s Work shall be performed by contractors selected by
Landlord.  Tenant shall cooperate with
Landlord and those engaged by Landlord to perform Landlord’s Work in the
scheduling of such work and the supplying of access and utility services
necessary for the performance of such work. 
Tenant shall also cooperate with Landlord’s contractor in coordinating
any work to be done by Tenant’s contractors or subcontractors during the period
that Landlord’s Work is being completed. 
Such coordination shall require that Tenant’s work not adversely affect
the schedule for Landlord’s Work or result in any labor dispute.

 

The Base Rent includes
$624,945.00 for tenant improvements (“Tenant Improvement Allowance”).  In the event the cost of the tenant
improvements exceeds the Tenant Improvement Allowance and any excess cost is
consistent with the Budget and any Change Order costs approved by Tenant,
Tenant shall pay the cost of such excess to Landlord in full on or before the
Commencement Date.  In the event the cost
of the tenant improvements is less 

 

11

 

than the Tenant Improvement
Allowance, the unused portion shall be used to offset future Rent
payments.  Landlord shall provide Tenant
a certified statement of actual costs for Landlord’s Work, together with any
supporting documentation requested by Tenant, upon completion of Landlord’s
Work.

 

Tenant shall have the
benefit of any labor and material warranties given by Landlord’s contractor or
available from a manufacturer and, in addition, Landlord hereby warrants to
Tenant that the Premises (including Landlord Work) shall be free from defective
materials and workmanship for a period of one (1) year from the date of
Tenant’s occupancy of the Premises.

 

Fourteen (14) days prior
to the Commencement Date, Tenant shall be allowed access to the Premises for
the purposes of installing telecommunications systems, racking systems,
fixtures, furniture and equipment; provided, however, that such early access
shall only be permitted to the extent Tenant’s access does not (i) delay
the completion of Landlord’s Work, (ii) result in a labor dispute, (iii) delay
the issuance of a certificate of occupancy (temporary or permanent), or (iv) damage
Landlord’s property.  Said early
occupancy shall be subject to all of the terms and conditions of this Lease
except that Tenant shall not be required to pay Rent or real estate taxes or
assessments until the Commencement Date.

 

22.                                 SECURITY DEPOSIT.  Prior to taking possession of the Premises,
Tenant shall deposit with Landlord the sum of one month’s gross rent, which
deposit is to be held by Landlord, without liability for interest, as a
security and damage deposit for the faithful performance by Tenant during the
Term hereof.  In the event of a failure
of Tenant to keep and perform any of the terms, covenants and conditions of
this Lease to be kept and performed by Tenant, then Landlord, either with or
without terminating this Lease, may (but shall not be required to) apply such
portion of said deposit as may be necessary to compensate or repay Landlord for
all losses or damages sustained or to be sustained by Landlord due to such
breach on the part of Tenant, including, but not limited to overdue and unpaid
rent, any other sum payable by Tenant to Landlord, damages or deficiencies  in the reletting of the Premises, and
reasonable attorneys’ fees incurred by Landlord.  Should any portion of the deposit be
appropriated and applied by Landlord in accordance with this paragraph, Tenant
shall, upon demand by Landlord, immediately replenish said deposit to its
original amount, and Tenant’s failure to do so within fifteen (15) days after
Landlord’s demand shall constitute a default under this Lease.  The security deposit shall be returned to
Tenant (less any depletion thereof pursuant to this paragraph) at the end of
the Term or upon earlier termination of this Lease.  Tenant shall have no right to anticipate
return of the deposit by withholding any amount required to be paid pursuant to
the provisions of this Lease or otherwise.

 

23.                                 BROKER/COMMISSIONS.  Tenant and Landlord hereby acknowledge that
they have dealt with no brokers other than Welsh Companies and United
Properties.  Landlord shall be
responsible for any commission or fee due to Welsh Companies and United
Properties, such commission being payable 50% upon lease execution and 50% upon
Tenant occupancy and acceptance of the Premises.  Landlord and Tenant agree to indemnify,
defend and hold each other harmless from any other claims by any other broker
or agent arising out of the respective actions of Landlord or Tenant.

 

24.                                 DAMAGE OR DESTRUCTION.  If the Property is damaged or destroyed by
fire or other casualty (“Casualty”) to the extent of fifty percent (50%) or
more of the Property’s value at the time, then Landlord, by giving written
notice to Tenant within thirty (30) days after the Casualty, may terminate this
Lease.  If less than fifty percent (50%)
of the Property’s value is so damaged or destroyed by Casualty (or if Landlord
does not elect to terminate in the event of damage of 50% or more), Landlord
shall promptly commence restoration of the damaged areas to substantially the
same condition that existed immediately prior to the Casualty.  If the same cannot likely be restored within
two hundred forty (240) days after the Casualty, as reasonably determined by Landlord,
then either Landlord or Tenant, by giving written notice to the other within
thirty (30) days after the Casualty, may terminate this Lease.  If this Lease is not terminated as provided
herein, but Landlord has not completed the restoration of the Property within
two hundred forty (240) days after the Casualty, Tenant may thereafter
terminate this Lease by giving written notice of termination to Landlord within
ten (10) days after the expiration of the 240-day period.  Any Lease termination under this paragraph
shall be effective ten (10) days after such notice is given, except that
if the Casualty has materially disrupted or prevented Tenant’s use of the
Premises as of or about the date of said Casualty, the termination shall be
effective as of the date of said Casualty. 
In no event shall Tenant be entitled to any part of any of Landlord’s
insurance proceeds resulting from the Casualty. 
Rent and Additional Rent shall be abated during any 

 

12

 

period of restoration to
the extent that Tenant is unable to occupy all or a portion of the Premises
during said restoration.  If there occurs
a Casualty during the last twelve (12) months of the Lease Term, such that
Landlord otherwise would be required under the terms of this Lease to restore
the Premises, either Landlord or Tenant shall have the option to terminate this
Lease by written notice to the other within thirty (30) days of the date of
such Casualty if it is not reasonable to expect that Landlord will complete the
restoration of the Premises on or before 60 days prior to the end of the Lease
Term.

 

25.                                 RIGHT OF FIRST OFFER.   In the event that any rentable space
contiguous to the Premises becomes available for lease, Landlord shall first
offer such space to Tenant.  Landlord will
give Tenant notice of the terms at which Landlord intends to market such space
(“Landlord’s Notice”) and Tenant shall notify Landlord within ten (10) days
after receipt of Landlord’s Notice if Tenant desires to lease such space on the
terms identified in Landlord’s Notice. 
If Tenant elects to lease such additional space, this Lease shall be
amended to include such space on the terms set forth in Landlord’s Notice
except that the lease term for such additional space shall be co-terminus with
the Term hereof.  If Tenant declines the
offer to lease such space, Landlord may proceed to offer the space to others
provided that any lease entered into for such space shall be at a rental rate
not less than 90% of the rate specified in Landlord’s Notice, or such space
will be re-offered to Tenant at such lower rate.

 

26.                                 MISCELLANEOUS PROVISIONS.

 

(a)                                  Headings.  The titles to
sections of this Lease are not a part of this Lease and shall have no effect
upon the construction or interpretation of any part hereof

 

(b)                                 Heirs and Assigns. 
All of the covenants, agreements, terms and conditions contained in this
Lease shall inure to and be binding upon Landlord and Tenant and their
respective heirs, executors, administrators, successors and assigns.

 

(c)                                  Non-waiver.  Waiver by
Landlord or Tenant of any breach of any term, covenant or condition herein
contained in any instance shall not be deemed to be a waiver of any other
breach of such term, covenant, or condition of this Lease.

 

(d)                                 Entire Agreement. 
This Lease contains all covenants and agreements between Landlord and
Tenant relating in any manner to the Premises. 
No prior agreements or understandings pertaining thereto shall be valid
or of any force or effect.  This Lease
shall not be altered, modified or amended except in writing signed by Landlord
and Tenant.

 

(e)                                  Severability. 
Any provision of this Lease which shall prove to be invalid, void or
illegal shall in no way affect, impair or invalidate any other provision hereof
and the remaining provisions hereof shall nevertheless remain in full force and
effect.  If the intent of any sections of
this Lease so indicate, the obligations of Landlord and Tenant pursuant to such
sections of this Lease shall survive the termination of this Lease.

 

(f)                                    No Accord and Satisfaction. 
No payment by Tenant or receipt by Landlord of a lesser amount than the
Rent, Additional Rent and other charges stipulated herein shall be deemed to be
other than on account of the earliest stipulated Rent, Additional Rent or other
charges, nor shall any endorsement or statement on any check or any letter
accompanying any check or payment as Rent be deemed an accord and satisfaction,
and Landlord shall accept such check or payment without prejudice to Landlord’s
right to recover the balance of such Rent, Additional Rent and any other
charges or pursue any other remedy in this Lease.

 

(g)                                 Notices.  Whenever in
this Lease it shall be required or permitted that notice or demand be given or
served by either party to this Lease, such notice or demand shall be given or
served in writing and sent to Landlord and Tenant at the addresses set forth
below:

 

13

 

	
  Tenant:

  	
  Ciprico Inc.

  
	
   

  	
  Attn: Monte S. Johnson

  
	
   

  	
  17400 Medina Road,
  Suite 800

  
	
   

  	
  Plymouth, MN 55447

  
	
   

  	
  Tel: (763) 551-4016

  
	
   

  	
  Fax: (763) 551-4002

  
	
   

  	
   

  
	
  Landlord:

  	
  Highway 7 Business
  Center LLC

  
	
   

  	
  Attn.: Paul M. Hyde

  
	
   

  	
  Suite 4500

  
	
   

  	
  90 South 7th Street

  
	
   

  	
  Minneapolis, MN 55402

  
	
   

  	
  Tel: 612-904-1513

  
	
   

  	
  Fax: 612-904-1590

  

 

 

All such notices
shall be sent by (i) certified or registered mail, return receipt
requested, and shall be effective three (3) days after the date of
mailing; (ii) Federal Express or similar overnight courier and shall be
effective one (1) day after delivery to Federal Express or similar
overnight courier; and (iii) personal service or facsimile, and shall be
effective on the same day as service or facsimile.  Any such address may be changed from time to
time by either party serving notices as provided above.

 

(h)                                 Parking.  Tenant will
have the exclusive use of not fewer than seventy (70) parking spaces at the
Building.

 

14

 

(i)                                     Attorneys’ Fees.  If either party institutes a suit  against the other for violation of or to enforce any
covenant, term or condition of this Lease, the prevailing party shall be
entitled to all of its costs and expenses, including, without limitation,
reasonable attorneys’ fees.

 

(j)                                     Time is of the Essence. 
Time is of the essence as to the payment of Rent and the performance of
all other obligations of Landlord and Tenant under this Lease.

 

Dated this 3rd
day of August, 2007.

 

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  HIGHWAY 7 BUSINESS CENTER LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  CIPRICO INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  

 

15

 

EXHIBIT A

 

Description
of Land

 

                Lot 1, Block 1, RER Addition,
Hennepin County, Minnesota

 

 

 

 

16

 

 

EXHIBIT B

 

Depiction
of the Premises

 

 

 

17

 

 

EXHIBIT C

 

Sign
Criteria

 

1.             GENERAL

 

A.                                   An area identification sign (Ground Sign)
will be provided for the site containing only the project name.

 

B.                                     No pylon sign will be permitted.

 

C.                                     Signage on the building façade will be
permitted for those tenancies located in those areas of the buildings designed
for combined office/warehouse use.

 

D.                                    All signage permitted on the buildings
shall be of the unlighted type.

 

E.                                      The furnishing and installation of signs
as provided for herein and costs incurred will be the responsibility of the
tenant.

 

F.                                      It is intended that the signage for each
combination office/warehouse use be uniform in design and style of lettering
and although previous and current signage practice of the tenant will be
considered, it will not be the governing factor in the approval of signs to be
installed.

 

G.                                     Service doors at the rear of the service
areas of the building may be identified with professionally applied signs,
identifying the business name and address of the tenant only.  Lettering shall not be larger than 3” in
height and shall be uniformly placed at each tenant location as approved by the
Owner/Landlord.

 

H.                                    Tenants shall not post any signs other
than those provided for herein.

 

2.             SIGN CRITERIA

 

A.                                   The wording of the signage provided for
herein shall be limited to the tenant’s business identification (name) only and
shall not include items sold or services provided.  (The intent here being that of business
identification and not product or service advertising.)

 

B.                                     The use of corporate shields, logos or
insignias will be permitted (subject to Landlord’s approval), provided such
corporate shields, logos, or insignias shall not exceed the allowable height
for sign letter.

 

C.                                     Multiple or repetitive signage will be
allowed only with the approval of the Landlord provided the area of such
signage conforms to the limitations set forth herein.

 

D.                                    All signs and identifying marks shall be
within the limitations of the sign fascia as set forth on the building
elevation drawings.

 

E.                                      Internally lighted and/or flood lighted
signage will not be approved.

 

F.                                      Tenant’s signage shall be of the same
material and color as may be designated by Landlord to be used uniformly for
all tenant’s of the building.

 

18

 

 

3.             PROHIBITED TYPES OF SIGNS OR SIGN COMPONENTS

 

                A.            Moving
or rating signs

 

                B.            Illuminated
signs.

 

                C.            Signs
employing moving or flashing lights.

 

                D.            Signs
employing exposed raceways.

 

 

 

19

 

EXHIBIT
D

 

Landlord’s
Work

 

EXHIBIT E

 

Depiction
of Monument Signage

EXHIBIT F

 

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT AND
ESTOPPEL CERTIFICATE

 

THIS
AGREEMENT (“Agreement”), made and entered into as of August     ,
2007, by and between CIPRICO INC., a Delaware corporation (“Tenant”), whose
address is 17400 Medina Rd., Plymouth, MN 55447, HIGHWAY 7 BUSINESS CENTER LLC
, a Minnesota limited liability company (“Landlord”), whose address is 90 So. 7th St., Suite 4500,
Minneapolis, MN, and FIRST NATIONAL BANK OF
OMAHA, a national banking association (together with its successors and
assigns, “Lender”), whose address is 11404 West Dodge Road, 3rd Floor,
Omaha, NE 68154.

 

RECITALS

 

A.                              Lender has made one or
more loans to Landlord (collectively, the “Loan”), repayment of which is
secured by one or more combination Mortgage, Security Agreement, Fixture
Financing Statement and Assignment of Leases and Rents (as modified, amended,
restated or replaced from time to time, collectively, the “Mortgage”) on the
premises (the “Premises”) more fully described in Exhibit “A” attached
hereto.

 

B.                                   Tenant is the intended tenant under a commercial lease dated August       , 2007 between Tenant
and Landlord (as it may be modified, amended, restated or replaced from time to
time, the “Lease”) demising a portion of the Premises described in the Lease
(the “Leased Premises”).

 

C                                 Landlord is the current
holder of the landlord’s interest in the Lease.

 

D.                              Lender has required
that Tenant subordinate the Lease and its interest in the Leased Premises in
all respects to the lien of the Mortgage.

 

E.                               In return, Lender is
agreeable to not disturbing Tenant’s possession of the Leased Premises.

 

 

2

 

F.                                Lender is disbursing
the Loan proceeds in reliance upon the agreements contained in this instrument
and has conditioned further disbursements under the Loan upon execution of this
Agreement.

 

AGREEMENT

 

                NOW,
THEREFORE, for and in
consideration of the mutual covenants and agreements herein contained, the
continuing disbursements under the Loan by Lender to Landlord and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby covenant and agree as follows:

 

                1.             Subordination.  The
Lease, including any
option in favor of Tenant to renew the Lease or to purchase the Leased Premises
or the Premises, is hereby subjected and
subordinated and shall remain in all respects and for all purposes subject,
subordinate and junior of the lien of the Mortgage.

 

                2.             Tenant Not to Be Disturbed.  So long as Tenant is not in default (beyond
any period given Tenant to cure such default) in the payment of rent to be paid
under the Lease or in the performance of any of the terms, covenants or
conditions of the Lease on Tenant’s part to be performed, Tenant’s possession
of the Leased Premises under all of the terms, covenants and conditions of the
Lease and any extensions or renewals thereof which may be effected in
accordance with any renewal rights therefor in the Lease, shall not be
diminished or interfered with by Lender, and Tenant’s occupancy of the Leased
Premises under all of the terms, covenants and conditions of the Lease shall
not be disturbed by Lender during the term of the Lease or any such extensions
or renewals thereof, subject, however, to the rights and remedies of the
Landlord under the Lease and the exercise thereof, including but not limited to
rights of re-entry and termination.

 

                3              Tenant Not to be Joined in Foreclosure Unless Required by Law.  So long as Tenant is not in default (beyond
any period given Tenant to cure such default) in the payment of rent to be paid
under the Lease or in the performance of any of the terms, covenants or
conditions of the Lease on Tenant’s part to be performed, Lender will not name
or join Tenant in any action or proceeding foreclosing the Mortgage unless such
naming or joinder is necessary to foreclose the Mortgage and then only for such
purpose and not for the purpose of terminating the Lease.

 

                4              Tenant to Attorn to Lender; Lender not Bound by Certain Acts.  After the receipt by Tenant of written notice
from Lender of completion of a foreclosure sale under the Mortgage or that
Lender has received a conveyance of the Premises lieu of foreclosure, Tenant
will be considered to have attorned to and recognized Lender or any purchaser
at the foreclosure sale, as its substitute lessor under the Lease, and, having
thus attorned, Tenant’s possession shall not thereafter be disturbed by Lender
during the term of the Lease, as long as Tenant shall 

 

3

 

continue
to pay the rents and otherwise observe and perform the covenants, terms and
conditions of the Lease to be observed and performed by Tenant thereunder.  Lender and Tenant shall execute and deliver,
upon request, appropriate agreements of attornment and recognition, but this
Agreement shall be deemed to be self-operative, and no such separate agreements
shall be required to effectuate the foregoing attornment and recognition.

 

                                                                                                The respective rights
and obligations of Tenant and Lender upon such attornment, to the extent of the
then remaining balance of the term of the Lease and any such extensions and
renewals, shall be and are the same as now set forth therein, it being the
intention of the parties hereto for this purpose to incorporate the Lease in
this Agreement by reference with the same force and effect as if set forth
herein.  If Lender or any other person,
party or entity becomes the owner of the Project (“New Owner”) or should
succeed to the interest of Landlord under the Lease, as a result of a
foreclosure sale under the Mortgage or a conveyance in lieu of foreclosure,
Tenant shall have no claim against New Owner resulting from, and New Owner
shall not be:

 

 (a)                              liable for any act or
omission of any prior landlord (including, without limitation, Landlord),
except for those of a continuing nature that relate to Landlord’s maintenance
and repair obligations under the Lease;

 

(b)                                 subject to any offsets
or defenses which Tenant might have against any prior landlord (including,
without limitation, Landlord), except for those offsets and defenses for which
Lender has been given notice under Section 5 hereof and which offsets and
defenses are specifically provided for in the Lease;

 

(c)                                  bound by any fixed
monthly rent which Tenant might have paid for more than 30 days in advance; or

 

(e)                                  liable for the return
of any security deposit except to the extent actually received by Lender.

 

Upon any assignment or
other transfer by a New Owner of its interest in the Leased Premises,
including all rights of Landlord under the Lease, and an assumption in
writing of all obligations of Landlord under the Lease by the assignee or
other transferee, New Owner shall thereupon automatically be released and
discharged from all liability thereafter accruing under the Lease.

 

                5.             Notice of Default. 
In the event of a default by the Landlord under the Lease or an
occurrence that would give rise to Tenant’s right to terminate the Lease,
Tenant will give Lender notice of such default or occurrence at the address of
Lender as set forth above and Lender shall have the right to cure such default
on the part of the Landlord:

 

(a)                                 by curing the same
within thirty (30) days after notice; or

 

(b)                                 by curing the same
within such period as may be reasonably required to cure the same (including
time for Lender to have a receiver appointed to 

 

4

 

cure the default or take possession,
as the case may be) if the cure requires more than 30 days and Tenant’s peaceful
possession and use of the Leased Premises is not substantially impaired by such
default.

 

                6.             Assignment of Lease. 
Landlord has by the Mortgage assigned its interest in the rents and
payments due under the Lease to Lender as security for repayment of the
Loan.  If in the future there is a
default by Landlord in the performance and observance of the terms of the
Mortgage, Lender may, at its option under the Mortgage, require that all rents
and other payments due under the Lease be paid directly to it.  Upon written notification to that effect by
Lender to Tenant, Landlord hereby authorizes and directs Tenant and Tenant
agrees to pay the rent and any payments due under the terms of the Lease to
Lender, and Landlord consents to such payments by Tenant.  The Mortgage does not diminish any
obligations of Landlord under the Lease nor impose any such obligations on
Lender.

 

                7.             Successors and Assigns; Counterparts.  This Agreement is binding upon the parties
hereto and their successors and assigns, and shall inure to the benefit of
Lender and its successors and assigns. 
As used here, the words “successors and assigns” shall include without
limitation any successor entity to any entity which is a party to this
Agreement, and the heirs, administrators and representatives of any natural
person who is a party to this Agreement. 
This Agreement
may be executed in any number of counterparts, all of which shall constitute a
single Agreement.

 

                8.             Choice of Law.  This
Agreement is made and executed under and in all respects is to be governed and
construed by the laws of the State where the Premises is situated.

 

                9.             Captions and Readings. 
The captions and headings of the various sections of this Agreement are
for convenience only and are not to be construed as continuing or limiting in
any way the scope or intent of the provisions hereof.  Whenever the context requires or permits, the
singular shall include the plural, the plural shall include the singular and
the masculine, feminine and neuter shall be freely interchangeable.

 

                10.          Notices.  Any notice or other communication to any
party in connection with this Agreement shall be in writing and shall be sent
by manual delivery, facsimile transmission (confirmed by electronic receipt of
such facsimile), overnight courier or United States registered or certified
mail, postage prepaid, return receipt requested, addressed to such party at the
address specified on the first page hereof, or at such other address as
such party shall have specified to the other parties hereto in writing.  Unless otherwise specified herein, all
periods of notice shall be measured from the date of delivery thereof if
manually delivered, from the date of sending thereof if sent by facsimile
transmission, from the first “business day” (defined as any day except a
Saturday, a Sunday or a legal holiday on which Lender is closed for business)
after the date of sending if sent by overnight courier, or from four days after
the date of mailing if mailed.

 

                11.          Estoppel.  Tenant hereby certifies, represents, warrants
and confirms to Lender that, as of the date hereof:

 

 

5

 

(a)           The Lease sets forth all of the
agreements and understandings of Landlord and Tenant with respect to the Leased
Premises, and has not been modified or amended.

 

                                (b)           There are no other written or oral
agreements or understandings between Landlord and Tenant with respect to the
Leased Premises.

 

                                (c)           Tenant has not subleased any portion
of the Leased Premises, and Tenant has not assigned, whether outright or by
collateral assignment, all or any portion of its rights under the Lease.

 

                                (d)           The Lease is in full force and effect
in accordance with its terms; and a complete copy of the Lease is attached
hereto as Exhibit B.

 

                                (e)           The term of the Lease is set forth in
Section 3 of the Lease.

 

(f)            As
contemplated under the Lease, as of the date hereof, the improvements and
space required to be furnished according to the Lease are in process, but have
not yet been delivered by Landlord or accepted by Tenant, nor has occupancy
commenced.  To the best of Tenant’s
knowledge, no default by Landlord or Tenant in the performance of the Lease to
be performed exists on the date hereof. 
To the best of Tenant’s knowledge, no occurrences or events exist which
would, with the passage of time or expiration of any notice, grace or right to
cure period, constitute a default by either Landlord or Tenant under the Lease

 

(g)           Base
monthly rent and additional rent to be paid by Tenant are set forth in Section 5
of the Lease.  No rents have been paid
under the Lease to date.

 

                                (h)           To the best of Tenant’s knowledge,
Tenant does not now have any current claim against Landlord that might be
set-off against past or future rents due under the Lease or which might be used
as a defense to enforcement of the Lease.

 

                                (i)            The amount of security or other
advance deposit, if any, paid or to be paid on account of the Lease is
$23,110.00.

 

[Remainder of page intentionally left blank.  Signature pages immediately follow.]

 

6

 

IN
WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
executed as of the date first above written.

 

	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  CIPRICO
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Its:

  	
   

  

 

	
  STATE
  OF MINNESOTA)

  	
   

  
	
   

  	
  ) ss.

  
	
  COUNTY
  OF

  	
   

  	
  )

  
			

 

The foregoing instrument was
acknowledged before me this         
day of August, 2007, by
                                                    ,
the                                     
of CIPRICO INC., a Delaware corporation, on behalf of the corporation.

 

	
  Insert
  Notarial Seal Below:

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
  My
  commission expires

  	
   

  

 

 

	
   

  	
  LANDLORD:

  
	
   

  	
  HIGHWAY
  7 BUSINESS CENTER LLC

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
  Paul Hyde, CEO

  

 

 

	
  STATE
  OF MINNESOTA)

  	
   

  
	
   

  	
  ) ss.

  
	
  COUNTY
  OF

  	
  HENNEPIN

  	
  )

  
			

 

The foregoing instrument was
acknowledged before me this         
day of August, 2007, by Paul Hyde, the CEO of HIGHWAY 7 BUSINESS CENTER LLC, a
Minnesota limited liability company, on behalf of the limited liability
company.

 

	
  Insert
  Notarial Seal Below:

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
  My
  commission expires

  	
   

  

 

	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  FIRST
  NATIONAL BANK OF OMAHA

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Lorrie L. Becker, Vice President

  

 

 

	
  STATE
  OF NEBRASKA)

  	
   

  
	
   

  	
  ) ss.

  
	
  COUNTY
  OF

  	
  DOUGLAS

  	
  )

  
			

 

                The
foregoing instrument was acknowledged before me this
         day of August, 2007, by Lorrie
L. Becker, Vice President of FIRST NATIONAL BANK OF OMAHA, a national banking
association, on behalf of the national banking association.

 

 

	
  Insert
  Notarial Seal Below:

  	
   

  
	
   

  	
  Notary
  Public

  
	
   

  	
  My
  commission expires

  	
   

  

 

 

THIS INSTRUMENT WAS
DRAFTED BY:

 

TK Law, PLC (TFK)

13033 Ridgedale Drive, Ste.
137

Minnetonka,
MN 55305

EXHIBIT A TO SNDA

 

Premises

 

                Lot 2, Block 1, RER Addition, Hennepin
County, Minnesota.

 

EXHIBIT B TO SNDA

 

Lease

 

See attached.Exhibit 10.1

 

CONVERTIBLE NOTE PURCHASE AGREEMENT

 

THE
CONVERTIBLE PROMISSORY NOTES AND RELATED WARRANTS AND THE SECURITIES ISSUABLE
UPON CONVERSION OR 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.

 

                                                THIS AGREEMENT
is made by and among the parties listed on Exhibit A attached
hereto (each party referred to individually as an “Investor,” and
collectively, along with any other parties who become Investors under this
Agreement by executing the Counterpart and Joinder attached hereto, as the “Investors”),
and CIPRICO INC., a Delaware corporation (the “Company”).

 

RECITALS

 

                                                A.            The Company requires financing which
the Investors are willing to provide on the terms and subject to the conditions
set forth in this Agreement.

 

                                                B.            The parties desire to allow the
Company to raise additional financing on the terms and conditions provided in
this Agreement.

 

AGREEMENTS

 

In
consideration of the recitals and the mutual agreements which follow, the
Investors and the Company agree:

 

1.                                       Investment.

 

(a)           Purchase and Sale of Convertible
Notes.  Subject to and upon the terms
and conditions set forth in this Agreement, the Company shall issue and sell to
each of the Investors, and the Investors will each purchase from the Company, a
convertible promissory note, evidencing loans from the Investors, in the
original principal amounts set forth on Exhibit A (the “Principal
Amounts”) (each, a “Note” and collectively, the “Notes”).  The Notes shall be in the form attached
hereto as Exhibit B.

 

(b)           Issuance of Warrants.  Subject to and upon the terms and conditions
set forth in this Agreement, the Company shall issue to the Investors warrants
(the “Warrants”) to 

 

 

purchase
the number of shares of the Company’s Common Stock set forth on Exhibit A
(the “Warrant Shares”).  The
Warrants shall be in the form attached as Exhibit C.

 

(c)           Minimum Investment Size.  A
minimum original principal amount of $3,000,000 (the “Minimum”) must be raised
before the Company will accept investments for the Notes and Warrants pursuant
to this Agreement.  Prior to the Initial
Closing, as defined below, all funds received will be deposited in an escrow
account at Wells Fargo Bank, N.A., Minneapolis, Minnesota.  If no closing has occurred on or before December 21,
2007, the proceeds from the sales of Notes and Warrants will be refunded
promptly to the Investors in full, without interest, unless the Company decides
in its sole discretion to extend the deadline. 
Any income from escrowed funds will be retained by the Company and
applied to the cost of maintaining the escrow account.

 

(d)           Maximum Investment Size.  The Company may issue and sell:  (i) additional Notes, in the form of Exhibit B,
up to an aggregate original principal amount (including the Notes issued to the
Investors at the Initial Closing) of $7,800,000; and (ii) additional
Warrants, in the form of Exhibit C, up to an aggregate (including
the Warrants issued to the Investors listed on Exhibit A) of the
number of Warrant Shares necessary pursuant to the terms of the Notes.  The purchasers of such additional Notes and
Warrants (the “Additional Investors”) shall execute and deliver to the
Company a Counterpart and Joinder in the form attached to this Agreement.

 

                                                2.             Closing.

 

(a)           Initial Closing.  The initial purchase and sale of the Notes
and Warrants shall occur (the “Initial Closing”) as soon as practicable
after the Minimum has been received by the Company (the “Initial Closing
Date”) and at such location as shall be agreed upon by the Company
and the Investors.  The Company will
promptly notify the Investors of the date, place and time of the Initial
Closing by facsimile transmission or otherwise.

 

(b)           Additional Closings.  The purchase and sale of the Notes and
Warrants, if any, not purchased at the Initial Closing (each, an “Additional
Closing”) shall occur as soon as practicable after the execution of the
Agreement by the Company and each Investor purchasing Notes and Warrants at the
Additional Closing at the time and date (each, an “Additional Closing Date”)
and at such location as shall be agreed upon by the Company and the
Investors.  The Company will promptly
notify the Investors of the date, place and time of the Additional Closing by
facsimile transmission or otherwise.

 

(c)           Closing Procedure.  On the Initial Closing Date and each
Additional Closing Date, if any (each a “Closing”), each participating
Investor shall make a wire transfer of immediately available funds to an
account designated by the Company, in the amount of the aggregate principal
amount of the Note issuable to such Investor at the Closing, and the Company
shall issue and deliver to such Investor its Note and its Warrant, each duly
executed and in proper form.

 

2

 

                                                3.             Covenants of the Company.

 

(a)           Reservation of Stock.  At all times while the Notes and Warrants are
outstanding, the Company shall reserve sufficient shares of Common Stock to
allow for the conversion of the Notes and the exercise of the Warrants
according to their terms.

 

(b)           Use of Proceeds.  The Company shall use the proceeds hereunder
to support its ongoing business activities, including, but not limited to,
product development, sales and marketing, general corporate purposes and
working capital.  In addition, the Company has retained a placement agent for
this investment.  Such placement agent
may be compensated out of the proceeds of this investment.

 

(c)           Issuance
of Preferred Stock.  The Company
shall not issue any preferred stock during the time period that any Note
remains due and payable and has not been converted into common stock, unless
such issuance is for the payment in full of all amounts due pursuant to such
Notes.

 

(d)           Financing
Statement.  On or before December 31,
2007, the Company shall complete and file with the proper authority or
authorities a financing statement on Form UCC-1 or other proper form to
perfect the security interest in the Company’s property granted by the Note.

 

                                                4.             Representations and Warranties
of the Company.  The Company represents
and warrants to the Investors:

 

(a)           The Company has been duly organized
and is validly existing as a corporation in good standing under the laws of the
state of Delaware and has all requisite corporate power and authority to
execute and deliver this Agreement, the Notes and the Warrants (collectively,
the “Investment Documents”) and to consummate the transactions
contemplated hereby and thereby.

 

(b)           The
execution and delivery of this Agreement and the other Investment Documents and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Company.  This
Agreement and the other Investment Documents constitute the valid and legally
binding obligations of the Company, enforceable against the Company in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ and contracting parties’ rights generally and except as
enforceability may be subject to general principles of equity and except as
rights to indemnity and contribution may be limited by state or federal
securities laws or public policy underlying such laws.

 

(c)           The
execution, delivery and performance of this Agreement and the other Investment Documents
by the Company (i) will not constitute a default under or conflict with
the Company’s Certificate of Incorporation or Bylaws or any agreement or other 

 

3

 

instrument to which the Company is
a party or by which the Company is bound, (ii) will not conflict with or
violate any order, judgment, decree, statute, ordinance or regulation
applicable to the Company, and (iii) does not require the consent of any
person or entity that has not been obtained prior to the date hereof.

 

(d)           The
SEC Documents (as defined below) accurately reflected the authorized and
outstanding capital stock of the Company in all material respects as of June 30,
2007.  Except as disclosed in or
contemplated by the SEC Documents, the Company does not have outstanding any
options or warrants to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, or any securities or obligations convertible or
exchangeable or exercisable for, or any contracts or commitments to issue or
sell, shares of its capital stock, or any such options, warrants, rights,
convertible, exchangeable or exercisable securities or obligations other than
options granted under the Company’s stock option plans or disclosed in the SEC
Documents.  True, correct and complete
copies of the Company’s Certificate of Incorporation and the Company’s Bylaws
are each filed as exhibits to the SEC Documents.  The capital stock of the Company, including
the Common Stock, conforms to the description thereof contained in the SEC
Documents.  For purposes of this
Agreement, “SEC Documents” shall include all reports, schedules, forms,
statements and other documents required to be filed by the Company with the
Securities and Exchange Commission (“SEC”), pursuant to the reporting
requirements of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), (all of the foregoing filed prior to the date hereof) and all
exhibits included or incorporated by reference therein and financial statements
and schedules thereto and documents (other than exhibits) included or
incorporated by reference therein.

 

(e)           There is no notice, action, claim,
suit or proceeding before or by any court or governmental agency, domestic or
foreign, nor pending, or to the knowledge of the Company, threatened, against
or affecting the Company.

 

(f)            The Company is not and, after giving
effect to the offering and sale of the Notes, Warrants and shares of Common
Stock issuable upon conversion of the Notes and exercise of the Warrants (collectively,
the “Securities”) and the receipt of the proceeds therefrom, will not be
an “investment company,” as such
term is defined in the Investment Company Act of 1940, as amended.

 

                                                5.             Investment Representations.  Each Investor represents and warrants to the
Company that:

 

(a)           It has been informed by the Company
that the Securities have not been registered under the Securities Act or any
applicable state securities laws because the offer and sale of the Securities
are exempt from such registration pursuant to the Securities Act of 1933, as
amended (the “Securities Act”), and the rules and regulations of
the SEC thereunder and certain limited offering exemptions under state
securities laws based in part upon its representations made herein.

 

4

 

(b)           It has such knowledge and experience
in financial and business matters as to be able to evaluate the merits and
risks of the transactions contemplated by this Agreement, it has the ability to
bear the economic risks of this investment, and it is aware of the intended use
of proceeds of such investment.

 

(c)           It is acquiring the securities
described in this Agreement for purposes of investment for its own account, not
on behalf of others, and not with a view to the sale or other distribution
thereof as such terms are defined in the Securities Act and the regulations of
the SEC promulgated thereunder.

 

(d)           It will not attempt to sell or
otherwise distribute the Securities except in compliance with applicable
federal and state securities laws and this Agreement.

 

(e)           It has the authority to execute and
deliver this Agreement and perform the transactions contemplated herein.  Upon the execution and delivery of this
Agreement, this Agreement shall constitute a valid and binding obligation of
such Investor, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to
general principles of equity and except as rights to indemnity and contribution
may be limited by state or federal securities laws or public policy underlying
such laws.

 

(f)            It has its principal residence in
the state indicated on the signature page hereto and is an “Accredited
Investor” meeting one of the following criteria:

 

(i)            A
bank or savings and loan association as defined in Sections 3(a)(2) and
3(a)(5)(A), respectively, of the Securities Act; an insurance company as
defined in Section 2(13) of the Securities Act; an investment company
registered under the Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act; a Small Business
Investment Company licensed by the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958; an employee benefit plan
within the meaning of Title I of the Employee Retirement Income Security Act of
1974 and either the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and
loan association, insurance company, or registered investment adviser; or the
employee benefit plan has total assets in excess of $5,000,000; or the plan is
a self-directed plan with investment decisions made solely by persons who are “Accredited
Investors” as defined under the Securities Act.

 

(ii)           A
private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of 1940;

 

(iii)          An organization described in section
501(c)(3) of the Internal Revenue Code of 1986, as amended, corporation,
Massachusetts or similar business trust, 

 

5

 

or
partnership, not formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;

 

(iv)          A director, executive officer, or
general partner of the issuer of the securities being offered or sold, or any
director, executive officer, or general partner of a general partner of that
issuer;

 

(v)           A natural person whose individual net
worth, or joint net worth with his/her spouse, at the time of purchase exceeds
$1,000,000;

 

(vi)          A natural person who had an individual
income in excess of $200,000 in each of the two most recent years or joint
income with his/her spouse in excess of $300,000 in each of those years and has
a reasonable expectation of reaching the same income level in the current year;

 

(vi)          A trust, with total assets in excess
of $5,000,000, not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a sophisticated person as described in §
230.506(b)(2)(ii); or

 

(viii)        An entity in which all of the equity
owners are accredited investors.

 

(g)           It has been furnished with all
relevant materials relating to the business, finances and operations of the
Company necessary to make an investment decision, and materials relating to the
offer and sale of the Notes, that have been requested by such Investor,
including, without limitation, the Company’s SEC Documents, and such Investor
has had the opportunity to review the SEC Documents.  Such Investor has been afforded the
opportunity to ask questions, and to receive answers from, officers of the Company
concerning the Company and the terms and conditions of this offering and to
obtain additional information about the Company and the Notes and Warrants.

 

(h)           Between the time such Investor
learned about the offering and the public announcement of the offering, such
Investor has not engaged in any purchase, sale or other transaction, including
any short sales or similar transactions, with respect to the Common Stock, nor
has such Investor, directly or indirectly, caused any person to engage in any
purchase, sale or other transaction, including any short sales, with respect to
the Common Stock.

 

                                                6.                                       Default;
Remedies.

 

(a)                                  Each of the
following events, acts, occurrences or conditions shall constitute an Event of
Default under the Notes:

 

(i)            The Company shall fail to make when
due any payment of principal or interest under the Notes.

 

6

 

(ii)           The Company shall fail to perform or
observe, in any material respect, any other covenant or obligation arising
under this Agreement or the Note, which failure continues for a period of 30
days after written notice thereof to the Company by the Investors.

 

(iii)          Any representation or warranty made by
the Company in section 4 proves untrue in any material respect as of the date
made.

 

(iv)          (a) The Company shall commence a
voluntary case concerning itself under the Bankruptcy Code; (b) an
involuntary case is commenced against the Company and the petition is not
controverted within ten days, or is not dismissed within 30 days, after
commencement of the case; (c) a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Company or the Company commences any other proceedings under
any reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Company or there is
commenced against the Company any such proceeding which remains undismissed for
a period of 60 days; (d) any order of relief or other order approving
any such case or proceeding is entered; or (e) the Company is adjudicated
insolvent or bankrupt.

 

(v)           The Company shall fail to timely file
any report on Forms 10-KSB or 10-QSB, or any successor forms, in accordance
with the timeframe set forth in such Forms subject to any extension granted
under Rule 12b-25.

 

(b)           Remedies.  Upon the occurrence of any Event of Default
described in sections 6(a)(ii), (iii) or (v), the Investors may, at
their option and upon written notice to the Company, declare all of the Notes
to be immediately due and payable in full. 
Upon the occurrence of any Event of Default described in
section 6(a)(i) or (iv), all of the Notes shall become immediately
due and payable without any action on the part of the Investors.

 

(c)           Manner of Acting.  For purposes of this section 6, when any
action is required of the Investors, the Investors shall act by written notice
from Investors holding more than fifty percent (50%) of the principal amount of
the Notes then outstanding.

 

                                                7.             Payments on Notes.  All payments on the Notes, whether principal
or interest, whether a scheduled payment or as a voluntary prepayment, shall be
pari passu and pro rata among the Notes on the basis of the
respective principal amounts of the Notes.

 

                                                8.             Entire Agreement; Amendments;
Termination.  This Agreement
(including all schedules and exhibits hereto), the Notes and the Warrants, and
the Confidentiality Agreement entered into by each Investor constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof.  There are no
restrictions, promises, warranties or undertakings other than those set forth
or referred to herein or therein.  No
provision of this 

 

7

 

Agreement may be waived or amended and this Agreement may not be
terminated other than by an instrument in writing signed by the party to be
charged with such waiver or amendment.

 

                                                9.             Severability.  If any provision of
this Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision will be deemed modified in order to conform with such
statute or rule of law.  Any
provision hereof that may prove invalid or unenforceable under any law will not
affect the validity or enforceability of any other provision hereof.

 

                                                10.           Expenses.  Each Investor is liable for and will pay its
own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the Notes and Warrants, including,
without limitation, attorneys’ and consultants’ fees and expenses.

 

                                                11.           Counterparts.  This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.

 

                                                12.           Governing Law.  This Agreement 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.

 

                                                13.           Notices.  All communication or notices required or
permitted by this Agreement shall be in writing and shall be deemed to have
been given or made when delivered in hand, deposited in the mail, or sent by
facsimile.  Communications or notices
shall be delivered personally or by certified or registered mail, return
receipt requested and postage prepaid, or by facsimile with evidence of
transmission, and addressed as follows, unless and until either of such parties
notifies the other in accordance with this section of a change of address:

 

                                                                (a)           if to the Company:

 

                                                                                Ciprico Inc.

                                                                                Attn:  Monte S. Johnson

                                                                                7003 West Lake
Street, Suite 400

                                                                                St. Louis Park
MN 55426

                                                                                Fax:  (952) 540-2402

 

                                                                                with a copy to:

 

                                                                                Fredrikson &
Byron, P.A.

                                                                                Attn: Melodie R.
Rose

                                                                                200 South Sixth
Street, Suite 4000

                                                                                Minneapolis MN
55402-1425

                                                                                Fax:  (612) 492-7077

 

                                                                (b)           if to the Investors:

 

                                                                                at the addresses
shown on each Investor’s signature page hereto.

 

8

 

INDIVIDUAL SIGNATURE PAGE

 

All
individual investors must complete and sign this page.  If the individual is investing through an
Individual Retirement Account, then both the individual investor and the IRA
Custodian must sign this page.  Total
payment to be made now is the amount on line 7. 
Where the Notes and/or Warrants are to be held in joint tenancy or
tenancy in common, both parties must sign and
both Social Security numbers should be indicated.

 

1.                                       Investor Name(s) (please
print):

 

2.                                       Social Security
Number(s):

 

3.                                       Form of
Ownership:           
individual,
             joint
tenants,
             tenants
in common, 

 

                                                              community
property or
             other
(explain:                                                           )

 

 

4.                                       Residence
Address:

 

 

 

5.                                       Mailing
Address:

 

 

 

6.                                       Home:  Tel. No. 
(          )
                                          ;
Fax No. (          )
                                 

 

                                                Business:  Tel. No. 
(          )
                                      ;
Fax No. (          )
                                

 

                                                E-mail:

 

7.                                       Investment
Amount:  $

 

Investor
Signature:

 

Second
Signature (if applicable):

 

Date
of Signature:
                                                                                ,
2007

 

Name
of IRA Custodian (if applicable)

 

IRA
Custodian Signature — By:

 

Date:
                                                                                                    ,
2007

 

 

ENTITY SIGNATURE PAGE

 

All
entity investors must complete and sign this page.  Total payment to be made now is the amount on
line 6.

 

1.                                       Entity Name
(please print):

 

2.                                       Employer
Identification Number:

                                                (Also include
Social Security Numbers if a Trust or Partnership)

 

3.                                       Business
(Residence) Address:

 

 

 

4.                                       Mailing Address
(if different from above):

 

 

 

5.                                       Business:  Tel. No. 
(          )
                              ;
Fax No. (          )

 

6.                                       Investment
Amount:  $

 

 

 

 

Signature:

 

By
(print name):

 

Its:

 

Date:
                                                                                                              ,
2007

 

 

ACCEPTANCE:

 

Ciprico
Inc., hereby accepts this Agreement as of the date set forth below.

 

 

	
   

  	
  CIPRICO
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Monte
  S. Johnson, Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  Dated:

  

 

 

COUNTERPART AND JOINDER

INDIVIDUAL SIGNATURE PAGE

TO CONVERTIBLE NOTE PURCHASE
AGREEMENT

 

 

 

All
individual investors must complete and sign this page.  If the individual is investing through an
Individual Retirement Account, then both the individual investor and the IRA
Custodian must sign this page.  Total
payment to be made now is the amount on line 7. 
Where the Notes and/or Warrants are to be held in joint tenancy or
tenancy in common, both parties must sign and
both Social Security numbers should be indicated.

 

1.                                       Investor Name(s) (please
print):

 

2.                                       Social Security
Number(s):

 

3.                                       Form of
Ownership:           
individual,
             joint
tenants,
             tenants
in common, 

 

                                                              community
property or
             other
(explain:                                                           )

 

4.                                       Residence
Address:

 

 

 

5.                                       Mailing
Address:

 

 

 

6.                                       Home:  Tel. No. 
(          )
                                          ;
Fax No. (          )
                                 

 

                                                Business:  Tel. No. 
(          )
                                      ;
Fax No. (          )
                                

 

                                                E-mail:

 

7.                                       Investment
Amount:  $

 

Name
of IRA Custodian (if applicable)

 

IRA
Custodian Signature — By:

 

[Signatures continued on following page]

 

 

                IN WITNESS WHEREOF, the Investor
identified above and the Company have executed this Counterpart and Joinder
this        day of
                          ,
2007, pursuant to which such Investor has become party to, and an “Investor”
under, the Convertible Note Purchase Agreement.

 

	
   

  	
  INVESTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CIPRICO
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Monte
  S. Johnson, Chief Financial Officer

  

 

 

COUNTERPART AND JOINDER

ENTITY SIGNATURE PAGE

TO CONVERTIBLE NOTE PURCHASE
AGREEMENT

 

 

 

All
entity investors must complete and sign this page.  Total payment to be made now is the amount on
line 6.

 

1.                                       Entity Name
(please print):

 

2.                                       Employer
Identification Number:

                                                (Also include
Social Security Numbers if a Trust or Partnership)

 

3.                                       Business
(Residence) Address:

 

 

4.                                       Mailing Address
(if different from above):

 

 

5.                                       Business:  Tel. No. 
(          )
                                  ;
Fax No. (          )

 

6.                                       Investment
Amount:  $
                

 

                                                IN WITNESS
WHEREOF, the Investor identified above and the Company have executed this
Counterpart and Joinder this        day of
                          ,
2007, pursuant to which such Investor has become party to, and an “Investor”
under, the Convertible Note Purchase Agreement.

 

	
   

  	
  INVESTOR:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  CIPRICO
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Monte
  S. Johnson, Chief Financial Officer

  

 

 

EXHIBIT A

 

INVESTORS

 

 

	
  Investor

  	
   

  	
  Note Amount

  	
   

  	
  Warrant Shares

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

A-1

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