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.
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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
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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, d
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