Document:

EXHIBIT
10.15

EMPLOYMENT AGREEMENT

 

 

THIS AGREEMENT, dated effective as of June
1, 2005, is entered into by and between Ciprico Inc., a Delaware corporation
(the “Company”) and Monte S. Johnson, a Minnesota resident (“Executive”).

 

WHEREAS, the Company desires to employ Executive
upon and subject to the terms and conditions set forth in this agreement (“Agreement”),
and Executive desires to render services for the Company on such terms and
conditions.

 

NOW, THEREFORE, in consideration of the
premises and the respective undertakings of the Company and Executive set forth
below, the Company and Executive agree as follows:

 

1.             Employment.  The Company hereby employs Executive as Vice
President — Finance and Chief Financial Officer and other such positions of divisions
or subsidiaries as assigned by the Board of Directors, and Executive accepts
such employment and agrees to perform services for the Company, for the period
and upon the other terms and conditions set forth in this Agreement.

 

2.             Term of
Employment.  The term of
Executive’s employment hereunder shall commence on the effective date hereof
and shall continue for an initial term of two (2) years (“Initial Term”).  Prior to and within ninety (90) days of a
date that is one year prior to the expiration of the Initial Term, the Chief
Executive Officer shall review Executive’s goals and objectives and notify
Executive in writing whether the Agreement will be extended for an additional
one year beyond the scheduled termination date or notification date, whichever
is later, or terminate as scheduled.  If
the Agreement is renewed upon expiration of the Initial Term, the Company shall
notify Executive in writing whether the Agreement will be renewed for
additional one year, or terminate as scheduled, ninety (90) days prior to the
expiration date of then extension term. 
If Executive chooses not to extend the Agreement, Executive must notify
the Company in writing within thirty (30) days of Executive’s receipt of the
extension.  Notwithstanding anything to
the contrary in this Agreement, this Agreement may be terminated as provided in
Section 8 below.  The Initial Term and
additional terms are collectively referred to as “Term of Employment”).

 

3.             Position
and Duties.

 

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

 

 

 

 

3.02         Performance of Duties.  During his Term of Employment, the Executive
agrees to serve the Company to the best of his ability.  The Executive shall have active involvement
and be fully committed to the business and affairs of the Company.  Executive hereby confirms that he is under no
contractual commitments inconsistent with his obligations set forth in this
Agreement.  During his Term of
Employment, Executive shall not render or perform services for any  other corporation, firm, entity or person
that is in competition with the business of the Company.

 

3.03         Noncompetition. 
In consideration of the payments to be made to the Executive under this
Agreement as provided in Sections 4.05 and 8.02 which the Executive
acknowledges constitute new and valuable consideration, the Executive hereby
covenants and agrees that during the Term of Employment or any successor
employment relationship between Executive and the Company, and for a period of
twelve (12) months following the termination of Executive’s employment for any
reason (the “Restricted Period”), the Executive shall not, directly or
indirectly, own, manage, operate, control, act as an advisor or consultant to,
or participate in, the ownership, management, operation, or control of any
business involving the digital media storage device and related services in any
geographic market served by the Company during the Restricted Period; provided,
however, that the foregoing shall not prevent the Executive from owning not
more than two percent (2%) interest in any entity engaged in such a competing
business whose securities are traded on any securities exchange or in the
over-the-counter markets.

 

3.04         Nonsolicitation. 
In consideration of the payments to be made to the Executive under this
Agreement as provided in Sections 4.05 and 8.02 which the Executive
acknowledges constitute new and valuable consideration, the Executive hereby
covenants and agrees that during the Term of Employment or any successor
employment relationship between Executive and the Company, and for a period of
twelve (12) months following the termination of the employment relationship
between Executive and the Company, Executive agrees that he will not solicit or
accept, either directly or indirectly, as an individual or through a
partnership, corporation, or other entity, any employee of the Company or
consultant under contract with the Company for employment or any other
arrangement for compensation to perform services.

 

4.             Compensation.

 

4.01         Base Salary   As base compensation for all services to be
rendered by the Executive under this Agreement during the Term of Employment,
the Company shall pay to Executive a minimum monthly base salary of $11,500 per
month for the first four (4) months and $12,333 per month for the remaining
twenty (20) months of the Initial Term, which salary shall be paid in
accordance with the Company’s normal payroll procedures and policies and be
reviewed annually by the Board of Directors.

 

4.02         Stock Options. 
Executive shall be granted, at signing, an option to purchase 25,000
shares of the Company’s common stock, par value $.01 per share, pursuant to the
Company’s Qualified Stock Option Plan, at an exercise price equal to 100% of
the closing sale price for such common stock on the day of issuance consistent
with past practices.  All such stock
options shall be granted under, and pursuant to all terms and conditions of,
the Qualified 

 

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Stock Option Plan.  The Board may consider additional grants
annually.  These stock options will vest
in accordance with the terms of the Qualified Stock Option Plan.

 

4.03         Benefits. 
Executive shall be eligible to participate such company-sponsored
benefits as are provided to executive employees of the Company, subject to the
terms and conditions of the applicable policies and/or plans.

 

4.04         Expenses.  The
Company will pay or reimburse Executive for all reasonable and necessary
out-of-pocket expenses incurred by him in the performance of his duties under
this Agreement including monthly cost of a cell phone, subject to the
presentment of appropriate vouchers in accordance with the Company’s normal
policies for expense verification. 
Executive shall be entitled to reimbursement for educational expenses
approved by the Board of Directors.

 

4.05         Consulting Arrangement.  The Company will pay MSJ & Associates,
LLC, an affiliate of Executive, $1,000 per month for the first four (4) months
of the Initial Term and $1,250 per month for the remaining twenty (20) months
of the Initial Term for strategic planning services.

 

4.06         Development. 
Executive will receive an annual written performance review from the
Chief Executive Officer and the Company will pay for any developmental,
learning or training experiences recommended by the Chief Executive Officer.

 

4.07         Bonuses. 
Executive shall be eligible to participate in the Company’s short-term
and long-term management bonuses programs as defined by management and approved
by the Board.

 

5.             Confidential
Information.  Except as
permitted or directed by the Company’s Board of Directors, during the Term of
Employment or at any time thereafter, Executive shall not divulge, furnish or
make accessible to anyone or use in any way (other than in the ordinary course
of the business of the Company) any confidential or secret knowledge or
information of the Company which Executive has acquired or become acquainted
with or will acquire or become acquainted with prior to the termination of the
Term of Employment, whether developed by himself or by others, concerning any
trade secrets, confidential or secret designs, processes, formulae, plans,
devices or material (whether or not patented or patentable) directly or
indirectly useful in any aspect of the business of the Company, any customer or
supplier lists of the Company, any confidential or secret development or
research work of the Company, or any other confidential information or secret
aspects of the business of the Company. 
Executive acknowledges that the above-described knowledge or information
constitutes a unique and valuable asset of the Company and represents a
substantial investment of time and expense by the Company and its predecessors,
that any disclosure or other use of such knowledge or information other than
for the sole benefit of the Company would be wrongful and would cause
irreparable harm to the Company.  Both
during and after the Term of Employment, Executive will refrain from any act or
omissions that would reduce the value of such knowledge or information to the
Company.  The foregoing obligations of
confidentiality, however, shall not 

 

 

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apply to any knowledge or information which
is now published or which subsequently becomes generally publicly known in the
form in which it was obtained from the Company, other than as a direct or
indirect result of the breach of this Agreement by Executive.  It is hereby acknowledged that it is not the
intention of the foregoing provisions to preclude the Executive from securing
gainful employment with subsequent employers who are not competitors of the
Company or who would otherwise have no reasonable commercial use of the above
described knowledge or information, but only to protect the Company’s
confidential and proprietary information or knowledge.

 

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

 

                7.             Patent,
Copyrights and Related Matters.

 

                                7.01         Disclosure and Assignment.  Executive will promptly disclose in writing
to the Company complete information concerning each and every invention,
discovery, improvement, device, design, apparatus, practice, process, method or
product, whether patentable or not, made, developed, perfected, devised,
conceived or first reduced to practice by Executive, either solely or in collaboration
with others, during the Term of Employment, or within six (6) months
thereafter, whether or not during regular working hours, relating to any phase
of the business of the Company conducted at such time (hereinafter referred to
as “Developments”).  Executive, to the
extent that he has the legal right to do so, hereby assigns and agrees to
assign to the Company and all of the Executive’s right, title and interest in
and to any and all of such Developments.

 

                                7.02         Future Developments.  As to any future Developments made by
Executive and which are first conceived or reduced to practice during the Term
of Employment, or within six (6) months thereafter, but which are claimed for
any reason to belong to an entity or person other than the Company, Executive
will promptly disclose the same in writing to the Company and shall not
disclose the same to others if the Company, within sixty (60) days thereafter,
shall claim ownership of such Development under the terms of this Agreement.  If the Company makes such claim, Executive
agrees that, insofar as the rights (if any) of Executive are involved, it will
be settled by arbitration in accordance with the rules of the American
Arbitration Association.  The locale of
the arbitration shall be Minneapolis, Minnesota (or other locale convenient to
the Company’s principal executive offices). 
If the Company makes no such claim, Executive hereby acknowledges that
the Company has made no promise to receive and hold in confidence any such
information disclosed by Executive.

 

                                7.03         Limitation on Section 7.01 and 7.02.  The provisions of section 7.01 and 7.02 shall
not apply to any Development meeting the following conditions:

 

 

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

 

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

 

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

 

                                7.04         Executive Assistance.  Executive agrees to assist Company in
obtaining patents or copyrights on any Developments assigned to the Company
that Company, in its sole discretion, seeks to patent or copyright.  Executive also agrees to sign all documents
and do all things deemed necessary by Company to obtain and/or maintain such
patents or copyrights, to assign them to Company, and to protect them against
infringement.  The obligations of this
Section 7 are continuing and shall survive the termination of Executive’s
employment with Company.

 

                                7.05         Appointment of Agent.  Executive irrevocably appoints the Company to
act as Executive’s agent and attorney in fact to perform all acts necessary to
obtain/or maintain patents or copyrights to any Developments assigned by
Executive to Company under this Agreement if (i) Executive refuses to perform
those acts or (ii) is unavailable, within the meaning of the United States
patent and copyright laws.  Executive
acknowledges that the grant of the foregoing power of attorney is coupled with
an interest and shall survive the death or disability of Executive and the
termination of Executive’s employment with Company.

 

                                7.06         Notice and Acknowledgment.  Executive acknowledges that this section of
this Agreement does not apply to a Development for which there was no
equipment, supplies, facilities or trade secret information of the Company used
and which was developed entirely on Executive’s own time, and which does not
relate directly to the business of the Company or the Company’s actual or
demonstrably anticipated research or development, or which does not result from
any work performed by Executive for the Company.

 

                8.             Termination.

 

                                8.01         Grounds for Termination.  Notwithstanding any other provision of this
Agreement to the contrary, this Agreement will terminate prior to the end of
the Term of Employment under the following circumstances:

 

(a)                                  By mutual
agreement of Executive and the Company;

 

(b)                                 Immediately
upon the death of Executive;

 

(c)                                  Immediately
upon the bankruptcy or insolvency of the Company;

 

 

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(d)                                 Immediately, in
the event of (i) Executive’s personal dishonesty, willful misconduct, breach of
fiduciary duty, intentional failure to perform stated duties, willful violation
of any laws (other than minor traffic violations or similar offenses), or
material breach of the policies or procedures of the Company; or

 

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

 

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

 

                                8.02         Severance Payments.

 

(a)                                  The rights and
obligations of the Company and Executive as to a termination following a Change
of Control (as defined in a Change of Control Agreement) are governed by a
Change of Control Agreement between the Company and Executive dated effective
as of June 1, 2005.  In the event of any
inconsistencies between this Agreement and the Change of Control Agreement, the
Change of Control Agreement shall control.

 

(b)                                 If Executive’s
employment is terminated by the Company other than pursuant to Section 8.01(d)
or in connection with a Change of Control, the Company shall pay Executive as
severance pay an amount equal to the total compensation (base salary, target
bonus and consulting pay) paid to Executive during the 12-month period
immediately preceding his termination or the total compensation for the
remaining portion of the Initial Term, whichever is greater, payable at the
Company’s option in either a lump sum or in installments in accordance with the
Company’s standard payroll policies (beginning after the expiration of any
applicable consideration and/or rescission periods), subject to required
withholding and deductions.  Any
severance pay provided herein may, at Company’s discretion, be conditioned upon
the execution of a full and final release by the Executive of all claims
against the Company arising out of his employment and the termination thereof, the
form of which will be provided by the Company.

 

 

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                                8.03         Surrender of Records and Property.  Upon termination of his employment with the
Company, Executive shall deliver promptly to the Company all records, manuals,
books, blank forms, documents, letters, memoranda, notes, notebooks, reports,
data, tables, calculations or copies thereof, which are the property of the
Company or which relate in any way to the business, products, information of
the Company, including, but not limited to, all documents which in whole or in
part contain any trade secrets or confidential information of the Company,
which in any of these cases are in his possession or under his control.  Provided, however, that Executive shall be
entitled to retain items of sentimental value, copies of which shall be
provided to the Company at the request of the Company and at the Company’s
expense.

 

                9.             Miscellaneous.

 

                                9.01         Governing Law.  This Agreement is made under and shall be
governed by and construed in accordance with the laws of the State of
Minnesota.

 

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

 

                                9.03         Withholding Taxes.  The Company shall withhold from all salary, bonus, severance
pay or other benefits payable under this Agreement all federal, state, city or
other taxes as shall be required pursuant to any law or governmental regulation
or ruling.

 

                                9.04         Amendments.  No amendment or modification of this
Agreement shall be deemed effective unless made in writing and signed by the
parties hereto.

 

                                9.05         No Waiver.  No term or condition of this Agreement shall
be deemed to have been waived, nor shall there be any estoppel to enforce any
provisions of this Agreement except by a statement in writing signed by the
party by whom enforcement of the waiver or estoppel is sought.  Any written waiver shall not be deemed a
continuing waiver unless specifically stated, shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than specifically
waived.

 

                                9.06         Severability.  To the extent any term or provision of this
Agreement shall be invalid or unenforceable, the term or provision shall be
considered deleted herefrom and the remaining term and provision of the
Agreement shall be unaffected and shall continue in full force and effect.  In furtherance and not in limitation of the
foregoing, should the duration or geographical extent of, or business
activities covered by, any provision of this Agreement be in excess of that
which is valid and enforceable under applicable law, then such provision shall
be construed to cover only that duration, extent or activities which may
validly and enforceably be covered. 
Executive acknowledges the uncertainty of the law in this respect and
expressly stipulates that this Agreement be given the construction which
renders its provisions valid and 

 

 

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enforceable to the maximum extent (not
exceeding its express terms) possible under applicable law.

 

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

 

                                9.08         Injunctive Relief.  Executive agrees that it would be difficult
to compensate the Company fully for damages for any violation of the provisions
of this Agreement, including without limitation the provisions of Sections 3,
5, 6 and 7.  Accordingly, Executive
specifically agrees that the Company shall be entitled to temporary and
permanent injunctive relief in any court of competent jurisdiction, to enforce
the provisions of this Agreement and that such relief may be granted without
the necessity of proving actual damages. 
This provision with respect to injunctive relief shall not, however,
diminish the right of the Company to claim and recover damages in addition to
injunctive relief.

 

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

 

                                9.10         Blue Pencil Doctrine.  In the event that any provision of this
Agreement is held to be overbroad as written, such provision shall be deemed
amended to narrow its application to the extent necessary to make the provision
enforceable according to applicable law and shall be enforced as amended.

 

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

 

 

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IN WITNESS
WHEREOF, the parties have executed this Agreement effective
as of the date and year first written above.

 

	
   

  	
  CIPRICO
  INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James W. Hansen

  
	
   

  	
   

  	
  Its Chief Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EXECUTIVE

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ Monte S. Johnson

  
	
   

  	
   

  	
   

  

 

 

9

 

CHANGE OF
CONTROL AGREEMENT

 

	
  Parties:

  	
   

  	
  Ciprico Inc.

  	
   

  	
  (“Company”)

  
	
   

  	
   

  	
  17400 Medina Road

  	
   

  	
   

  
	
   

  	
   

  	
  Plymouth, MN 55447

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Monte S. Johnson

  	
   

  	
  (“Employee”)

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Effective Date:

  	
   

  	
  June 1, 2005

  	
   

  	
   

  

 

RECITALS:

 

1.             Employee
has been employed by Company since June 1, 2005 in various capacities, has
extensive knowledge and expertise relating to Company’s business and has
contributed to Company’s success.

 

2.             The
parties recognize that a “Change of Control” may materially change or diminish
Employee’s responsibilities and substantially frustrate Employee’s commitment
to the Company.

 

3.             The
parties further recognize that it is in the best interests of the Company and
its stockholders to provide certain benefits payable upon a “Change of Control
Termination” to encourage Employee to continue in his position in the event of
a Change of Control, although no such Change of Control is now contemplated or
foreseen.

 

4.             The
parties further desire to provide for certain benefits payable upon certain
involuntary terminations of Employee’s employment.

 

AGREEMENTS:

 

In consideration of the mutual covenants set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.             Term of Agreement.  The term of this Agreement shall commence on
the Effective Date and shall continue in effect until termination of Employee’s
employment which does not constitute a Change of Control Termination; provided,
however, that if a Change of Control of the Company shall occur during the term
of this Agreement, this Agreement shall instead continue in effect for a period
of twelve (12) months following the date of such Change of Control.  Any rights and obligations accruing before
the termination or expiration of this Agreement shall survive to the extent
necessary to enforce such rights and obligations.

 

1

 

2.             “Change of Control.”  For purposes of this Agreement, “Change of
Control” shall mean any of the following events occurring after the date of
this Agreement:

 

(a)           A
merger or consolidation to which the Company is a party if the individuals and
entities who were shareholders of the Company immediately prior to the
effective date of such merger or consolidation have, immediately following the
effective date of such merger or consolidation, beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934) of less
than fifty percent (50%) of the total combined voting power of all classes of
securities issued by the surviving corporation for the election of directors of
the surviving corporation;

 

(b)           The
acquisition of direct or indirect beneficial ownership (as defined in Rule 13d-3
under the Securities Exchange Act of 1934) of securities of the Company by any
person or entity or by a group of associated persons or entities acting in
concert in one or a series of transactions, which causes the aggregate
beneficial ownership of such person, entity or group to equal or exceed twenty
percent (20%) or more of the total combined voting power of all classes of the
Company’s then issued and outstanding securities;

 

(c)           The
sale of substantially all of the assets of the Company to any person or entity
that is not a wholly-owned subsidiary of the Company;

 

(d)           The
approval by the stockholders of the Company of any plan or proposal for the
liquidation of the Company;

 

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

 

(f)            The
execution by the Company of a letter of intent, an agreement in principle or a
definitive agreement relating to an event described in Section 2(a), 2(b),
2(c), 2(d) or 2(e) that ultimately results in such a Change of
Control, or a tender or exchange offer or proxy contest is commenced that
ultimately results in an event described in Section 2(b) or 2(e).

 

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

 

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

 

2

 

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

 

(ii)           Employee’s
willful and repeated failure to fulfill his employment duties with the Company;
provided, however, that for purposes of this clause (ii), an act or failure to
act by Employee shall not be “willful” unless it is done, or omitted to be
done, in bad faith and without any reasonable belief that Employee’s action or
omission was in the best interests of the Company;

 

(iii)          Employee’s
incurable breach of any material element of any proprietary or confidential
information agreement with the Company;

 

(iv)          Employee’s
conduct that is materially detrimental to Company’s business reputation or
goodwill;

 

(v)           Any
dishonesty in dealing between Employee and Company or between Employee and
Company’s vendors, advisors, other employees, or customers;

 

(vi)          Employee’s
active use of alcohol or controlled substances in a manner which impairs
Employee’s ability to perform his duties;

 

(vii)         Employee’s
violation of any material portion of this Agreement;

 

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

 

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

 

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

 

(i)            A
change in Employee’s reporting responsibilities, titles or offices as in effect
immediately prior to the date of the Change of Control, or any 

 

3

 

removal of Employee from or any
failure to re-elect Employee to any of such positions, which has the effect of
diminishing Employee’s responsibility or authority;

 

(ii)           A
reduction in Employee’s base salary in effect immediately prior to the date of
the Change of Control;

 

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

 

(iv)          Without
the adoption of a replacement plan, program or arrangement that provides
benefits to Employee that are equal to or greater than those benefits that are
discontinued or adversely affected:

 

(A)          The
Company’s failure to continue in effect, within its maximum stated term, any
pension, bonus, incentive, stock ownership, stock purchase, stock option, life
insurance, health, accident, disability, or any other employee compensation or
benefit plan, program or arrangement, in which Employee is participating
immediately prior to the date of the Change of Control; or

 

(B)           The
Company taking any action that would adversely affect Employee’s participation
or materially reduce Employee’s benefits under any of such plans, programs or
arrangements; or

 

(v)           Any
material breach by the Company of this Agreement so long as Employee has given
the Company thirty (30) days notice of such breach, and the Company has not
cured the breach during that thirty (30) day period.

 

Termination for “Good Reason” shall not
include Employee’s death or a termination of employment by Employee for any
reason other than the events specified in clauses (1) through (5) above.

 

4.             Compensation and Benefits.  Subject to the limitations contained in Section 5
below, upon a Change of Control Termination, Employee shall be entitled to the
following compensation and benefits:

 

(a)           The
Company shall pay to Employee:

 

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

 

4

 

(ii)           Within
fifteen (15) days of the Change of Control Termination, all other amounts to
which Employee may be entitled to receive under any compensation plan
maintained by the Company, subject to any distribution requirements contained
in such compensation plans; and

 

(iii)          A
severance benefit in a single lump sum payment, an aggregate amount equal to
one hundred percent (100%) of Employee’s then current annual base salary.

 

(b)           The
Company shall provide, at no cost to Employee, continued coverage under the
Company’s group life, health or dental benefit plans, if any, at a level
comparable to the benefits which Employee was receiving or entitled to receive
immediately prior to the Change of Control Termination or, if greater, at a
level comparable to the benefits which Employee was receiving immediately prior
to the event which constituted Good Reason. 
Employee shall be entitled to such continued coverage for a six month
period following such Change of Control Termination or, if earlier, until Employee
is eligible to be covered for such benefits through his employment with another
employer.  The Company may, in its sole
discretion, provide such coverage through the purchase of individual insurance
contracts for Employee.

 

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

 

6.             Withholding Taxes. The Company shall be
entitled to deduct from all payments or benefits provided for under this
Agreement any federal, state or local income and employment related taxes
required by law to be withheld with respect to such payments or benefits.

 

7.             Successors and Assigns.  This Agreement shall inure to the benefit of
and shall be enforceable by Employee, his heirs and the personal representative
of his estate, and shall be binding upon and inure to the benefit of the
Company and its successors and assigns. 
The Company will require the transferee of any sale of all or
substantially all of the business and assets of the Company or the survivor of
any merger, consolidation or other transaction expressly to agree to honor this
Agreement in the same manner and to the same extent that the Company would be
required to perform this Agreement if no such event had taken place.  Failure of the Company to obtain such
agreement before the effective date of such event shall be a breach of 

 

5

 

this Agreement and shall
entitle Employee to the benefits provided in Section 4 as if Employee had
terminated employment for Good Reason following a Change in Control.

 

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

 

	
  For Ciprico:

  	
  17400 Medina
  Road

  
	
   

  	
  Plymouth, MN
  55447

  
	
   

  	
   

  
	
  For
  Employee:

  	
  1033 Brooks
  Avenue West

  
	
   

  	
  Roseville,
  MN 55113

  

 

9.             Captions. 
The headings or captions set forth in this Agreement are for convenience
only and shall not affect the meaning or interpretation of this Agreement.

 

10.           Governing Law.  The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
Minnesota.

 

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

 

12.           Amendment; Waivers.  This Agreement may not be modified, amended,
waived or discharged in any manner except by an instrument in writing signed by
both parties hereto.  The waiver by
either party of compliance with any provision of this Agreement by the other
party shall not operate or be construed as a waiver of any other provision of
this Agreement, or of any subsequent breach by such party of a provision of
this Agreement.

 

13.           Entire Agreement.  This Agreement supersedes all prior or contemporaneous
negotiations, commitments, agreements (written or oral) and writings between
the Company and Employee with respect to the subject matter hereof and
constitutes the entire agreement and understanding between the parties hereto.  All such other negotiations, commitments,
agreements and writings will have no further force or effect, and the parties
to any such other negotiation, commitment, agreement or writing will have no
further rights or obligations thereunder.

 

6

 

14.           Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.

 

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

 

	
   

  	
  CIPRICO INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ James W. Hansen

  	
   

  
	
   

  	
   

  	
  Its:

  	
  President / CEO

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  /s/ Monte S. Johnson

  	
   

  
						

 

7EXHIBIT 10.1

 

THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT

 

This
Third Amendment to Loan and Security Agreement (this “Amendment”) is entered
into as of December 1, 2005, by and between Venture Banking Group, a
division of Greater Bay Bank N.A. (“Bank”) and Focus Enhancements, Inc. (“Borrower”).

 

RECITALS

 

Borrower
and Bank are parties to that certain Loan and Security Agreement dated as of November 15,
2004, as amended (the “Agreement”). 
Borrower and Bank desire to amend certain provisions of the Agreement,
all in accordance with the terms of this Amendment.

 

NOW,
THEREFORE, the parties agree as follows:

 

1.                                       Amendments
to Agreement.  The Agreement is
hereby amended as follows:

 

(a)                                  The
following defined terms in Section 1.1 are amended to read as follows:

 

“Equity Event” means the
receipt by Borrower of not less than Three Million Dollars ($3,000,000) in cash
proceeds from the sale or issuance of Borrower’s equity securities or
Subordinated Debt to investors reasonably acceptable to Bank by January 31,
2006.

 

“Revolving Maturity Date”
means December 24, 2006.

 

(b)                                 Section 6.3
is amended by adding the following at the end thereof:

 

Borrower
shall deliver to Bank with the filings of reports on Form 10-K, 10-Q, a
Compliance Certificate signed by a Responsible Officer in substantially the
form of Exhibit E-1 hereto.

 

Bank
shall have a right from time to time hereafter to audit Borrower’s Accounts at
Borrower’s expense, provided that such audits will be conducted no more often
than every 12 months unless an Event of Default has occurred and is continuing.

 

Guarantor
shall deliver to Bank on an annual basis, an updated personal financial
statement and first page of the federal tax return within five (5) days
of tax return filing.

 

(c)                                  Section 6.8
is deleted and reserved.

 

(d)                                 Section 6.9
is amended to read as follows:

 

6.9                                 Maximum
Net Loss

 

For any fiscal quarter of
Borrower, Borrower shall not incur a net loss of more than one hundred twenty
five percent (125%) of the projected amount of net loss for such period as set
forth in Borrower’s financial projections, delivered to Bank and attached
hereto as Exhibit E.

 

2.                                       Conditions
Precedent to Effectiveness.  This
Amendment shall become effective only upon:

 

(a)                                  receipt
by the Bank of the following (each of which shall be in form and substance
satisfactory to Bank):

 

 

(i)                                     counterparts
of this Amendment duly executed on behalf of the Borrower and the Bank;

 

(ii)                                  copies
of resolutions of the Board of Directors or other authorizing documents of
Borrower, authorizing the execution and delivery of this Agreement;

 

(iii)                               an
affirmation of guaranty and intercreditor agreement by Carl Berg;

 

(iv)                              warrant
agreement;

 

(b)                                 Bank
shall have received a nonrefundable fee for the Committed Revolving Line in an
amount equal to $10,000, and all Bank Expenses incurred in connection with this
Amendment; and

 

(c)                                  completion
of such other matters and delivery of such other agreements, documents and
certificates as Bank may reasonably request.

 

3.                                       Representation
and Warranties.  Borrower represents
and warrants that the Representations and Warranties contained in the Agreement
are true and correct as of the date of this Amendment, and that no Event of
Default has occurred and is continuing.

 

4.                                       MISCELLANEOUS.

 

(a)                                  Successors
and Assigns.  This Amendment shall be
binding upon and shall inure to the benefit of Borrower and Bank and their
respective successors and assigns; provided, however, that the foregoing shall
not authorize any assignment by Borrower of its rights or duties hereunder.

 

(b)                                 Entire
Agreement.  This Amendment and the
Loan Documents contain the entire agreement of the parties hereto and supersede
any other oral or written agreements or understandings.

 

(c)                                  Course
of Dealing; Waivers.  No course of
dealing on the part of Bank or its officers, nor any failure or delay in the
exercise of any right by Bank, shall operate as a waiver thereof, and any
single or partial exercise of any such right shall not preclude any later
exercise of any such right.  Bank’s
failure at any time to require strict performance by Borrower of any provision
shall not affect any right of Bank thereafter to demand strict compliance and
performance.  Any suspension or waiver of
a right must be in writing signed by an officer of Bank.

 

(d)                                 Legal
Effect.  Except as amended by this
Amendment, the Loan Documents remain in full force and effect.  If any provision of this Amendment conflicts
with applicable law, such provision shall be deemed severed from this
Amendment, and the balance of this Amendment shall remain in full force and
effect.  Unless otherwise defined, all
capitalized terms in this Amendment shall have the meaning set forth in the
Agreement.

 

(e)                                  Counterparts.  This Amendment may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one instrument.

 

 

IN
WITNESS WHEREOF, the undersigned have executed this Amendment as of the first
date above written.

 

 

	
   

  	
  FOCUS
  ENHANCEMENTS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Brett Moyer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
  President & CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  VENTURE BANKING GROUP, A
  DIVISION OF

  GREATER BAY BANK N.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
  /s/ Tod Racine

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title

  	
  Vice President

  	
   

  
						

 

 

EXHIBIT E-1

COMPLIANCE CERTIFICATE

 

TO:                            VENTURE
BANKING GROUP, A DIVISION OF GREATER BAY BANK N.A.

 

FROM:         Focus
Enhancements, Inc.

 

The
undersigned authorized officer of Focus Enhancements, Inc. hereby
certifies that in accordance with the terms and conditions of the Loan and
Security Agreement between Borrower and Bank (the “Agreement”), (i) Borrower
is in complete compliance for the period ending                               
with all required covenants except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and
correct in all material respects as of the date hereof.  Attached herewith are the required documents
supporting the above certification.  The
Officer further certifies that these are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) and are consistently applied from one
period to the next except as explained in an accompanying letter or
footnotes.  The Officer expressly
acknowledges that no borrowings may be requested by Borrower at any time or
date of determination that Borrower is not in compliance with any of the terms
of the Agreement, and that such compliance is determined not just at the date
this certificate is delivered.

 

Please indicate compliance status by circling Yes/No under “Complies”
column.

 

	
  Reporting Covenant

  	
   

  	
  Required

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10-Q,
  10-K, CC

  	
   

  	
  Within
  5 days after filing with SEC

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  A/R &
  A/P Agings, BBC

  	
   

  	
  Monthly
  within 20 days

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  A/R
  Audit

  	
   

  	
  Annual

  	
   

  	
  Yes

  	
   

  	
  No

  
	
  PFS
  and 1st page federal tax return from Guarantor

  	
   

  	
  Annual
  within 5 days of filing

  	
   

  	
  Yes

  	
   

  	
  No

  

 

	
  Financial Covenant

  	
   

  	
  Required

  	
   

  	
  Actual

  	
   

  	
  Complies

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maintain at
  all times (unless otherwise noted):

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Maximum Net Loss

  	
   

  	
  $

  	
  (1)

  	
  $

  	
   

  	
  Yes

  	
   

  	
  No

  

 

(1) For any fiscal quarter of Borrower,
Borrower shall not incur a net loss of more than one hundred twenty five
percent (125%) of the projected amount of net loss for such period as set forth
in Borrower’s financial projections, delivered to Bank and attached hereto as Exhibit E.

 

 

	
  Comments
  Regarding Exceptions:
  See Attached.

  	
  BANK
  USE ONLY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Received
  by:

  	
   

  	
   

  
	
  Sincerely,

  	
   

  	
  AUTHORIZED
  SIGNER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Verified:

  	
   

  	
   

  
	
  SIGNATURE

  	
   

  	
  AUTHORIZED
  SIGNER

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  	
   

  
	
  TITLE

  	
   

  	
   

  
	
   

  	
   

  	
  Compliance
  Status

  	
  Yes

  	
  No

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  DATE

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