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CIPRICO INC. CONVERTIBLE PROMISSORY NOTE

Convertible Promissory Note

CIPRICO INC.

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CIPRICO INC

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Title: CIPRICO INC. CONVERTIBLE PROMISSORY NOTE
Governing Law: Minnesota     Date: 12/27/2007
Industry: Computer Storage Devices     Sector: Technology

CIPRICO INC.

CONVERTIBLE PROMISSORY NOTE, Parties: ciprico inc
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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







 
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