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CIPRICO INC. WARRANT TO PURCHASE COMMON STOCK

Warrant Agreement

CIPRICO INC.

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CIPRICO INC

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Title: CIPRICO INC. WARRANT TO PURCHASE COMMON STOCK
Governing Law: Minnesota     Date: 12/27/2007
Industry: Computer Storage Devices     Law Firm: Fredrikson Byron     Sector: Technology

CIPRICO INC.

WARRANT TO PURCHASE COMMON STOCK, Parties: ciprico inc
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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.

 

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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

 

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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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