Exhibit 10.2


 


EXHIBIT B


 


FORM OF CONVERTIBLE
PROMISSORY NOTE


 


THIS CONVERTIBLE PROMISSORY NOTE AND THE SECURITIES ISSUABLE UPON
CONVERSION HEREOF 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.


CONVERTIBLE
PROMISSORY NOTE


 


	
  $

  	
   

  	
  December     ,
  2007

  
	
   

  	
   

  	
  St.
  Louis Park, Minnesota

  



 


FOR
VALUE RECEIVED, Ciprico Inc., a Delaware corporation (the “Company”),
hereby promises to pay to                                  ,
or any authorized holder hereof (the “Holder”), the principal sum of                                   
and no/100 Dollars ($          ),
or so much of said principal sum as may be outstanding, plus any interest
calculated in accordance with paragraph 2 below, on the Maturity Date (as
defined below) in accordance with the provisions of this Promissory Note (the “Note”).
This Note is one of a series of Notes 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 Note 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.


 


This Note is subject to the
following terms and conditions:


 


1.               Maturity
Date. The entire principal amount of
this Note and all accrued but unpaid interest thereon shall be due and payable
in full on March 1, 2009 (the “Maturity Date”).


 


2.               Interest. Simple interest shall accrue on the unpaid principal amount
of this Note at a fluctuating annual rate of interest equal to the LIBOR Rate,
as in effect on the date hereof and as the same may adjust monthly, plus
6.0%; provided, that, notwithstanding anything to the contrary


 


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contained
herein, upon the occurrence and during the continuance of any Event of Default,
the rate of interest hereunder shall be the LIBOR Rate plus 9.0% (the “Default
Rate”). The interest rate shall automatically adjust on the first business
day of each month in the event there has been any change in the LIBOR Rate. As
used herein, “LIBOR Rate” means the “London Interbank Offered Rates
(LIBOR)” for one month as published in the “Money Rates” column of The Wall
Street Journal on the first business day of each month (or, if The Wall Street
Journal ceases to publish a rate so designated, any similar successor rate as
the Company shall in good faith designate). Interest shall be computed on the
actual number of days elapsed and a 365-day year, and accrued interest shall be
payable upon the Maturity Date of this Note.


 


3.               Payment. Payments on this Note will be made at the address of the
Holder on the Company’s books in legal tender of the United States of America.  All payments on this Note shall be applied
(i) first to the payment of any costs of collection that may be due
hereunder, (ii) then to the payment of accrued interest (if any), and (iii) the
balance shall be applied to principal. This Note may be prepaid without penalty
by the Company at any time upon three (3) days prior notice to Holder.


 


4.               Conversion.


 


4.1         General. The
unpaid principal balance of this Note and any accrued interest may be converted
into shares of the Company’s Common Stock (“Shares”) in accordance with
this Section 4; provided, however, that the Holder acknowledges and agrees
that under no circumstances will the Company be required to issue Shares
exceeding nineteen and ninety-nine one hundredths percent (19.99%) of the
Company’s outstanding Common Stock including the aggregate number of shares
converted and/or exercised in connection with the Purchase Agreement. Upon
conversion, the number of Shares that shall be issued shall equal the number
derived by dividing (a) the unpaid principal balance and accrued interest,
if any, by (b) the applicable conversion price set forth below.


 


4.2         Optional Conversion.
At any time after the date of this Note, the Holder may, in such Holder’s
discretion, elect to convert all of the unpaid principal balance of this Note
and all or none of the accrued interest into Shares in accordance with the
terms and conditions herein.


 


4.3         Automatic Conversion.
If the Company files a registration or
offering statement (the “Registration Statement”) with the Securities and Exchange
Commission to facilitate a public offering of its securities under the
Securities Act that is underwritten and through which the Company raises gross
cash proceeds of at least $10,000,000 (a “Qualified Offering”) and
should the managing underwriter of such offering require, all principal
and accrued interest under this Note will be automatically converted into
Shares in accordance with the terms and conditions herein; provided, however,
that the Holder may elect to be paid in cash for all accrued interest. Such
automatic conversion shall be effective upon the closing of the Qualified
Offering.


 


4.4         Conversion Price. The
conversion price  shall
mean an amount equal to the average closing bid price of the Common Stock for
the five (5) consecutive trading days ending


 


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on the
trading day prior to the date hereof, or $           per share, subject
to adjustment as set forth in this Section 4.4 (the “Conversion Price”).
If, at any time, the Company subdivides its outstanding shares of Common Stock
into a greater number of shares, the Conversion Price in effect immediately
prior to such subdivision will be proportionately reduced, and conversely, in
case the outstanding shares of Common Stock of the Company will be combined
into a smaller number of shares, the Conversion Price in effect immediately
prior to such combination will be proportionately increased. All calculations
under this Section 4.4 will be made to the nearest cent or to the nearest
one-hundredth of a share, as the case may be.


 


4.5         Conversion Procedure.


 


(a)                                  Optional Conversion.
To exercise the right to convert this Note into Common Stock, the Holder shall (i) provide
the Company with a ten-day advance written notice of conversion specifying the
date and amount of such conversion and the name in which the Shares shall be
issued (if the name is other than that of Holder), (ii) surrender this
Note to the Company; (iii) furnish any appropriate endorsements and
documents reasonably requested by the Company, and (iv) pay any
documentary, stamp, transfer or similar tax if required.


 


(b)                                 Automatic Conversion.
If this Note is to be converted automatically pursuant to Section 4.4
above, written notice must be delivered to the Holder at the address last shown
on the records of the Company at least fifteen (15) days prior to the closing
of the Qualified Offering (i) notifying the Holder of the conversion; (ii) specifying
the principal amount of the Note converted, and the amount of accrued and
unpaid interest; and (c) calling upon the Holder to (A) return an
acknowledgement to the Company within ten (10) days after receipt of the
notice specifying whether the Holder elects to receive Shares or cash for the
accrued interest and (B) surrender this Note to the Company in exchange
for Shares and cash, if any, in the manner and at the place designated by the
Company.


 


(c)                                  Delivery of Shares and Cash.
As promptly as practicable after the Company’s receipt of the written notice of
conversion or acknowledgement of automatic conversion, the Company shall
deliver to the Holder certificates, whether paper or electronic, representing
the number of fully paid and nonassessable shares into which this Note, or such
part thereof, may be converted, and cash, if any, for the accrued interest due
and payable. Thereupon, the rights of the Holder as a noteholder shall cease
and this Note shall be deemed satisfied and discharged.


 


4.6         Fractional Shares. In lieu
of issuing any fractional shares upon conversion, the Company instead shall deliver
an amount of cash equal to such fraction multiplied by the Conversion Price
then in effect.


 


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5.               Security
Interest. In
order to secure the payment and performance of the obligations hereunder and to
provide the Holder with a preference upon liquidation of the Company, the
Company hereby grants to the Holders a security interest (herein called the “Security
Interest”) in and to the following property (hereinafter collectively
referred to as the “Collateral”):


 


All
assets of the Company, including without limitation any and all furniture,
fixtures, machinery, equipment, inventory, accounts, vehicles, prepaid
insurance, supplies, patents, patent rights, copyrights, trademarks, trade
names, goodwill, royalty rights, franchise rights, chattel paper, license
rights, documents, instruments, general intangibles, payment intangibles,
investment property and any and all other goods, now owned or hereafter
acquired by the Company and wherever located, together with all substitutions
and replacements for and products and proceeds of any of the foregoing property
and, in the case of all tangible Collateral, together with (i) all
accessories, attachments, parts, equipment, accessions and repairs now or
hereafter attached or affixed to or used in connection with any such goods, and
(ii) all warehouse receipts, bills of lading and other documents of title
now or hereafter covering such goods.


 


6.               Subordination. Notwithstanding Section 5 above, the Company covenants
and agrees, and each Holder of this Note by acceptance hereof covenants and
agrees, that the payment of the principal of and the interest on this Note
shall be subordinate in right of payment, to the extent and in the manner
hereinafter set forth, to the prior payment of Senior Indebtedness (as defined
below) of the Company outstanding on the date hereof or hereafter incurred. For
purposes of this Note, “Senior Indebtedness” shall mean indebtedness of
the Company: (i) for money borrowed by the Company from banks, finance
companies, trust companies, pension trusts, insurance companies or other
financial institutions in the business of commercial finance; (ii) in
connection with the issuance of tax exempt notes or debentures; and (iii) in
connection with the acquisition of capital equipment. Furthermore, each Holder
of this Note hereby covenants and agrees to do or cause to be done any and all
further acts and things and to execute and deliver any and all further
documents and instruments as the Company or holders of the Senior
Interestedness deem necessary or appropriate to carry out the full intent and
purpose of this Section 6.


 


7.               Registration
Rights. The Company hereby grants to the
Holder the following registration rights pertaining to the Shares:


 


7.1         Demand
Rights.


 


(a)                                  At any time
within 60 days after the Maturity Date, Holders holding at least fifty-one
percent (51%) (a “Majority-in-Interest”) of the aggregate Shares then
outstanding as a result of conversion pursuant to Section 4, may request
that the Company file a registration statement for the resale of the Shares (“Requested
Registration Statement”). Upon receipt of such request, the Company shall promptly
deliver notice of such request to all Holders holding Shares, who shall


 


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then
have 15 days to notify the Company in writing of their desire to participate in
such registration. If the request for registration contemplates an underwritten
public offering, the Company shall state such in the written notice.


 


(b)                                 The Company
will use its reasonable commercial efforts to expeditiously effect (but in any
event no later than ninety (90) days after such request) the Requested
Registration Statement in such registration under the Securities Act, but only
to the extent provided for in this Note; provided, however, that the Company
shall not be required to effect a registration pursuant to a request under this
Section 7 more than one (1) time for all Holders as a group. Notwithstanding
anything to the contrary contained herein, no request may be made under this Section 7
within six (6) months after the effective date of a registration statement
filed by the Company covering a firm commitment underwritten public offering.


 


(c)                                  If a Requested
Registration Statement involves an underwritten public offering, and the
managing underwriter of such offering determines in good faith and advises the
Holders in writing that the number of securities sought to be offered must be
limited due to market conditions, then the number of securities to be included
in such underwritten public offering shall be reduced to a number deemed
satisfactory by such managing underwriter. The shares to be excluded shall be
determined on a pro rata basis based upon the aggregate number of Shares
requested for inclusion in such registration by each Holder.


 


7.2         Piggy
Back Rights.


 


(a)                                  Whenever the Company shall propose to file a registration
statement under the Securities Act on a form which permits the inclusion of the
Shares for resale (a “Qualifying Registration Statement”), including a
registration on Form S-8, if applicable, it will give written notice to
the Holder at least 30 calendar days prior to the anticipated filing thereof,
specifying the approximate date on which the Company proposes to file the
Qualifying Registration Statement and the intended method of distribution in
connection therewith, and advising the Holder of his right to have any or all
of the Shares then held by him included among the securities to be covered by
such registration statement (the “Piggy-Back Rights”). The Holder shall
have the right to include the Shares in one or more Qualifying Registration
Statement until all of the Shares have been sold, or until all of the Shares
are eligible for sale under Rule 144 promulgated by the SEC or any similar
or successor rule, whichever shall first occur.


 


(b)                                 Subject to (d) and (e) below, in the event that the
Holder elects to utilize the Piggy-Back Rights, the Company shall include in
the Qualifying Registration Statement the number of the Shares identified by
the Holder in a written request (the “Piggy-Back Request”) given to the
Company not later than 10 calendar days prior to the proposed filing date of
the Qualifying Registration Statement. The Shares identified in the Piggy-Back
Request shall be included in the Qualifying


 


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Registration Statement on the same
terms and conditions as the other shares of Common Stock included in the
Qualifying Registration Statement.


 


(c)                                  Notwithstanding anything in this Note to the contrary, the
Holder shall not have Piggy-Back Rights with respect to (i) a registration
statement on Form S-4 or any successor forms thereto, (ii) a
registration statement filed in connection with an exchange offer or an
offering of securities solely to existing stockholders or employees of the
Company, or (iii) a registration statement filed in connection with an
offering by the Company of securities convertible into or exchangeable for
Common Stock.


 


(d)                                 If the lead managing underwriter selected by the Company for
an underwritten offering for which Piggy-Back Rights are requested determines
that marketing or other factors require a limitation on the number of shares of
Common Stock to be offered and sold in such offering, then (i) such
underwriter shall provide written notice thereof to each of the Company and the
Holder, and (ii) there shall be included in the offering, first, all
shares of Common Stock proposed by the Company to be sold for its account (or
such lesser amount as shall equal the maximum number determined by the lead
managing underwriter as aforesaid) and, second, only that number of Shares
requested to be included in the Qualifying Registration Statement by the Holder
that such lead managing underwriter reasonably and in good faith believes will
not substantially interfere with (including, without limitation, adversely
affect the pricing of) the offering of all the shares of Common Stock that the
Company desires to sell for its own account.


 


(e)                                  Nothing contained in this Section 7 shall create any
liability on the part of the Company to the Holder if the Company for any
reason should decide not to file a Qualifying Registration Statement for which
Piggy-Back Rights are available or to withdraw such Qualifying Registration
Statement subsequent to its filing, regardless of any action whatsoever that
the Holder may have taken, whether as a result of the issuance by the Company
of any notice hereunder or otherwise.


 


7.3         Registration Expenses.
Except as set forth below, the Company shall bear all expenses of a Requested
Registration Statement and/or Qualifying Registration Statement. The Holder
will be individually responsible for payment of his/her/its own legal fees,
underwriting fees and brokerage discounts, commissions and other sales expenses
incident to any registration hereunder.


 


7.4         Information by Holders.
Each Holder of Shares shall furnish to the Company such information regarding
such Holder and the distribution proposed by such Holder as the Company may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification, or compliance referred to in this Note.


 


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8.               Restriction
on Transfer. The Holder may not
transfer this Note until it has delivered to the Company a written opinion of
counsel, satisfactory to the Company, that the proposed transfer may be
lawfully made without registration under the Securities Act and any applicable
state securities law and has received the prior written consent of the Company.


 


9.               Governing
Law. This Note 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.


 


10.         Payment
Date. In case any payment date is not a
business day, then payment may be made on the next succeeding business day with
the same force and effect as if made on such original date and no interest will
accrue for the period after such date.


 


11.         Construction. If any provision of this Note is prohibited by or invalid
under applicable law, such provision will be ineffective only to the extent of
such prohibition without invalidating the remainder of such provision or this
Note.


 


12.         Amendments. This Note may not be and will not be deemed or construed to
have been modified, amended, rescinded, canceled, or waived, in whole or in
part, except by written instruments signed by the Company and the Holder.


 


13.         Cancellation. After all the principal and accrued interest at any time
owed on this Note have been paid in full or this Note has been converted, this
Note shall be surrendered to the Company for cancellation and the Security
Interest herein shall be terminated.


 


[Signature Page Follows]


 


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IN WITNESS WHEREOF, the Company has caused
this Note to be duly executed as of the day and year first set forth above.


 


CIPRICO INC.


 


 


 


Monte
S. Johnson, Chief Financial Officer