Exhibit 10.3
EXHIBIT C
FORM OF
WARRANT
THIS WARRANT AND THE
SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES
LAWS OF ANY STATE AND MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND STATUTES,
UNLESS OFFERED, SOLD,
PLEDGED, HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE
EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION
REQUIREMENTS OF THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO
REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE
COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
CIPRICO
INC.
WARRANT TO
PURCHASE COMMON STOCK
No.
December ,
2007
Void After
December , 2012
THIS
CERTIFIES THAT , for value received,
,
with its principal office at
,
or its assigns (the “ Holder ”), is entitled to
subscribe for and purchase at the Exercise Price (defined below)
from Ciprico Inc., a Delaware corporation, with its principal
office at 7003 West Lake Street, Suite 400, St. Louis Park, MN
55426 (the “ Company ”) up to
shares [Warrant coverage of $0.25 worth of warrant shares for
each $1 of principal invested.] of the Common Stock of the
Company (the “ Common Stock ”), subject to
adjustment as provided herein. This Warrant is one of a
series of Warrants being issued pursuant to the terms of that
certain Convertible Note Purchase Agreement, dated
December , 2007, by and among the
Company and the original Holder of this Warrant and the other
parties named therein (the “ Purchase Agreement
”). Capitalized terms not otherwise defined herein
shall have the respective meanings ascribed to such terms in the
Purchase Agreement.
1.
DEFINITIONS.
As used herein, the
following terms shall have the following respective
meanings:
1.1
“ Exercise
Period ” shall mean the period commencing after the date
hereof and ending December , 2012,
unless sooner terminated as provided below.
1.2
“ Exercise
Price ” shall mean an amount equal to the average
closing bid price of the Common Stock for the five
(5) consecutive trading days ending on the trading day prior
to the date hereof, or
$
per share, subject to adjustment pursuant to Section 6
below.
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1.3
“ Exercise
Shares ” shall mean the shares of the Company’s
Common Stock issuable upon exercise of this Warrant, subject to
adjustment pursuant to the terms herein, including but not limited
to adjustment pursuant to Section 6 below.
1.4
“ Fair Market
Value ” of a share of Common Stock shall be calculated as
follows:
(a)
if the Common Stock is
listed on the Nasdaq Global Select Market, Nasdaq Global Market,
Nasdaq Capital Market, or an established stock exchange, then the
average of the prices of such stock at the close of the regular
trading session of such market or exchange for the five
(5) consecutive trading days ending on the trading day
immediately preceding the applicable valuation date, or
(b)
if the Common Stock is not
so listed on the Nasdaq Global Select Market, Nasdaq Global Market,
Nasdaq Capital Market, or an established stock exchange, then the
average of the closing “bid” and “asked”
prices quoted by the OTC Bulletin Board, the National Quotation
Bureau, or any comparable reporting service for the five
(5) consecutive trading days ending on the trading day
immediately preceding the applicable valuation date, or
(c)
if the Common Stock is not
publicly traded as of such date, the per share fair market value as
reasonably determined in good faith by the Company’s Board of
Directors.
2.
EXERCISE OF
WARRANT.
2.1
Method
of Exercise. The rights represented by this Warrant
may be exercised in whole or in part at any time during the
Exercise Period, by surrendering this Warrant, with the Notice of
Exercise attached hereto filled in and duly executed by such Holder
or by such Holder’s duly authorized attorney, to the Company
at its principal office accompanied by payment of the Exercise Price of the Exercise
Shares purchased thereby .
At the option of the Holder,
the Exercise Price may be paid in one or more of the following
manners:
(a)
a certified check or wire
transfer of immediately available funds,
(b)
surrender of stock
certificates then held representing that number of shares having an
aggregate current Fair Market Value on the date of exercise equal
to the aggregate Exercise Price for all Exercise Shares to be
purchased pursuant to this Warrant,
(c)
by a “Cashless
Exercise,” in which event the Company shall issue to the
Holder the number of Exercise Shares determined as
follows:
X = Y
[(A-B)/A]
where:
X = the number of
Exercise Shares to be issued to the Holder.
C-2
Y = the number of
Exercise Shares with respect to which this Warrant is being
exercised.
A = the Fair Market
Value of the Common Stock on the date of exercise.
B = the Exercise Price,
or
(d)
any combination of the
foregoing methods.
Upon the exercise of
the rights represented by this Warrant, shares of Common Stock
shall be issued for the Exercise Shares so purchased, and shall be
registered in the name of the Holder or persons affiliated with the
Holder, if the Holder so designates, within a reasonable amount of
time following receipt by the Company of all of the items set forth
above and shall be issued in certificate form, whether paper or
electronic, and delivered to the Holder, if so
requested.
The person in whose
name any Exercise Shares are to be issued upon exercise of this
Warrant shall be deemed to have become the holder of record of such
shares on the date on which this Warrant was surrendered and
payment of the Exercise Price was made, irrespective of the date of
issuance of the shares of Common Stock, except that, if the date of
such surrender and payment is a date when the stock transfer books
of the Company are closed, such person shall be deemed to have
become the holder of such shares at the close of business on the
next succeeding date on which the stock transfer books are
open.
2.2
Partial
Exercise. If this Warrant is exercised in part only, the
Company shall, upon surrender of this Warrant, execute and deliver,
within 10 days of the date of exercise, a new Warrant evidencing
the rights of the Holder, or such other person as shall be
designated in the Notice of Exercise, to purchase the balance of
the Exercise Shares purchasable hereunder. In no event shall
this Warrant be exercised for a fractional Exercise Share, and the
Company shall not distribute a Warrant exercisable for a fractional
Exercise Share. Fractional Exercise Shares shall be treated
as provided in Section 5 hereof.
3.
COVENANTS OF THE
COMPANY.
3.1
Covenants as to Exercise
Shares.
The Company covenants and agrees that all Exercise Shares that may
be issued upon the exercise of the rights represented by this
Warrant will, upon issuance, be duly authorized and validly issued
and outstanding, fully paid and nonassessable, and free from all
taxes, liens and charges with respect to the issuance
thereof. The Company further covenants and agrees that the
Company will at all times during the Exercise Period, have
authorized and reserved, free from preemptive rights, a sufficient
number of shares of its Common Stock to provide for the exercise of
the rights represented by this Warrant. If at any time during
the Exercise Period the number of authorized but unissued shares of
Common Stock shall not be sufficient to permit exercise of this
Warrant, the Company will take such corporate action as may, in the
opinion of counsel, be necessary to increase its authorized but
unissued shares of Common Stock (or other securities as provided
herein) to such number of shares as shall be sufficient for such
purposes.
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3.2
No
Impairment . Except and to the extent as waived or
consented to by the Holder in accordance with Section 11
hereof, the Company will not, by amendment of its Certificate of
Incorporation (as such may be amended from time to time), or
through any means, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed
hereunder by the Company, but will at all times in good faith carry
out of all the provisions of this Warrant and take all such action
as may be necessary or appropriate in order to protect the exercise
rights of the Holder against such impairment.
3.3
Notices of Record
Date. In
the event of any taking by the Company of a record of the holders
of any class of securities for the purpose of determining the
holders thereof who are entitled to receive any dividend (other
than a cash dividend which is the same as cash dividends paid in
previous quarters) or other distribution, the Company shall mail to
the Holder, at least ten days prior to the date specified therein,
a notice specifying the date on which any such record is to be
taken for the purpose of such dividend or distribution.
4.
DISPOSITION OF WARRANT AND
EXERCISE SHARES . The Holder further agrees not to make
any disposition of all or any part of the Warrant or Exercise
Shares in any event unless and until one of the following
occurs:
4.1
The Company shall have
received a letter secured by the Holder from the Securities and
Exchange Commission (“ SEC ”) stating that no
action will be recommended to the SEC with respect to the proposed
disposition;
4.2
There is then in effect a
registration statement under the Securities Act of 1933, as amended
(“ Securities Act ”) covering such Warrant or
Exercise Shares and such disposition is made in accordance with
said registration statement; or
4.3
The Holder shall have
furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, for the Holder to the effect that such
disposition will not require registration of such Warrant or
Exercise Shares under the Securities Act or any applicable state
securities laws; provided, that so long as the Holder
provides the Company a with a
representation letter in customary form with respect to a
disposition under Rule 144, no opinion shall be
required for any disposition made or to be made in accordance with
the provisions of Rule 144.
4.4
The Holder understands and
agrees that all certificates evidencing the Exercise Shares to be
issued to the Holder may bear a legend in substantially the
following form (provided that no such legend will be borne by
Exercise Shares issued following the disposition of such shares
pursuant to a registration statement which is effective under the
Securities Act and provided, further, that the Company will remove
such legend at the request of the Holder (i) following any
sale of the Exercise Shares pursuant to an effective registration
statement or Rule 144, or (ii) if such Exercise Shares
are eligible for sale under Rule 144(k) or any similar or
successor Rule of the SEC):
THE SECURITIES
REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS
C-4
AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE
SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD, PLEDGED,
HYPOTHECATED OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM
OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS OF
THOSE LAWS. THE COMPANY SHALL BE ENTITLED TO REQUIRE AN
OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED TO THE EXTENT THAT AN OPINION IS
REQUIRED PURSUANT TO THE AGREEMENT UNDER WHICH THE SECURITIES WERE
ISSUED.
5.
FRACTIONAL
SHARES. No fractional shares shall be issued upon the
exercise of this Warrant as a consequence of any adjustment
pursuant hereto. All Exercise Shares (including fractions)
issuable upon exercise of this Warrant may be aggregated for
purposes of determining whether the exercise would result in the
issuance of any fractional share. If, after aggregation, the
exercise would result in the issuance of a fractional share, the
Company shall, in lieu of issuance of any fractional share, pay the
Holder otherwise entitled to such fraction a sum in cash equal to
the product resulting from multiplying the then current Fair Market
Value (as of the applicable exercise date) of an Exercise Share by
such fraction.
6.
CERT
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