Exhibit 4.5
PROCERA NETWORKS, INC.
WARRANT AGREEMENT
RESTRICTED COMMON STOCK AT $2.00 PER SHARE
THE SECURITIES REPRESENTED HEREBY HAVE BEEN ACQUIRED BY INVESTOR FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL
SATISFACTORY IN FORM AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933.
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES LAWS
OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON EXEMPTIONS FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND SUCH STATE LAWS. THE
SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT
BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND SUCH
STATE LAWS PURSUANT TO REGISTRATION OR AN EXEMPTION THEREFROM. THE SECURITIES
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION,
ANY STATE SECURITIES COMMISSION OR OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF
THE FOREGOING AUTHORITIES PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING.
ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
THE COMPANY IS RELYING ON CERTAIN FEDERAL AND STATE LAWS, POLICIES AND
JUDICIAL PRECEDENTS WHICH EXEMPT THIS OFFERING FROM THE NECESSITY OF
REGISTRATION. AS A CONSEQUENCE, SUCH SECURITIES WILL BE REQUIRED TO BE HELD
INDEFINITELY UNLESS THEY ARE SUBSEQUENTLY REGISTERED UNDER THE SECURITIES ACT OR
AN EXEMPTION FROM REGISTRATION IS AVAILABLE. THERE IS NO PUBLIC MARKET FOR THE
SECURITIES AND NONE IS LIKELY TO DEVELOP. THE COMPANY IS UNDER NO OBLIGATION TO
REGISTER THE SECURITIES UNDER THE SECURITIES ACT.
This Warrant Agreement (the "Agreement") is entered into this [SEE SCHEDULE
1], 2004, by and between Procera Networks, Inc. (the "Company") and [SEE
SCHEDULE 1] (the "Holder"). For good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
1. ISSUANCE OF WARRANTS. The Company, subject to the terms and
conditions hereinafter set forth, hereby issues Warrants ("Warrants") to
purchase [SEE SCHEDULE 1] shares of Company Common Stock (the "Shares") pursuant
to the Special Warrant Agreement executed by the parties on December 9, 2003.
The Purchase Price upon exercise of the Warrants shall be Two Dollars ($2.00)
per Share of Common Stock purchased subject to adjustment in accordance with
Paragraph 8 of this Agreement.
2. TERM. The Warrants may be exercised at any time after the date set
forth above and for a period of 24 months following the date on which the
registration statement (the "Registration Statement") for the Shares has been
declared effective (the "Effective Date") by the Securities and Exchange
Commission.
3. EXERCISE.
(a) The Holder shall exercise the Warrants granted hereunder, in
whole or in part, by delivering to the Company at the office of the Company, or
at such other address as the Company may designate by notice in writing to the
holder hereof, (1) the Notice of Exercise attached hereto as Schedule 1 and
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incorporated herein by reference and, (2) a certified check or wire transfer in
lawful money of the United States in the amount of the Purchase Price multiplied
by the number of Shares to be received.
(b) Upon delivery of the items set forth in (a) above, the Holder
shall be entitled to receive a certificate or certificates representing the
Shares issued upon exercise of the Warrants. Such Shares shall be validly
issued, fully paid and non-assessable.
(c) Warrants shall be deemed to have been exercised immediately prior
to the close of business on the day of such delivery, and the Holder shall be
deemed the holder of record of the Shares issuable upon such exercise at such
time. The Warrants may be exercised in whole or in part and from time to time
as the Holder may determine.
(d) Upon any partial exercise, at the request of the Company, this
Agreement shall be surrendered and a new Warrant Agreement evidencing the right
to purchase the number of Shares not purchased upon such exercise shall be
issued to the Holder.
(e) Any portion of this Warrant that is converted shall be
immediately canceled. This Warrant or any portion hereof shall be deemed to
have been converted immediately prior to the close of business on the date of
its surrender for conversion as provided above, and the person entitled to
receive the shares of stock issuable upon such conversion shall be treated for
all purposes as Holder of such shares of record as of the close of business on
such date. As promptly as practicable after such date, the Company shall issue
and deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of full shares issuable upon such conversion. If
the Warrant shall be converted for less than the total number of shares of the
Warrant then issuable upon conversion, promptly after surrender of the Warrant
upon such conversion, the Company will execute and deliver a new Warrant, dated
the date hereof, evidencing the right of the Holder to the balance of the shares
purchasable hereunder upon the same terms and conditions set forth herein.
4. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. In consideration of the
Company's acceptance of the Subscription, I make the following representations
and warranties to the Company, to its principals, and to participating
broker-dealers, if any, jointly and severally, which warranties and
representations shall survive the exercise, whole or partial, of this Warrant:
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(a) I have had the opportunity to ask questions and receive any
additional information from persons acting on behalf of the Company to verify my
understanding of the terms thereof and of the Company's business and status
thereof, and that no oral information furnished to the undersigned or my
advisors in connection with this Warrant has been in any way inconsistent with
other documentary information provided.
(b) I acknowledge that I have not seen, received, been presented
with, or been solicited by any leaflet, public promotional meeting, newspaper or
magazine article or advertisement, radio or television advertisement, or any
other form of advertising or general solicitation with respect to the Shares.
(c) When purchased, the Shares will be purchased for my own account
for long-term investment and not with a view to immediately re-sell the Shares.
No other person or entity will have any direct or indirect beneficial interest
in, or right to, the Shares. I or my agents or investment advisors have such
knowledge and experience in financial and business matters that will enable me
to utilize the information made available to me in connection with the purchase
of the Shares to evaluate the merits and risks thereof and to make an informed
investment decision.
(d) I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or qualified under
the California Securities Law, or any other applicable blue sky laws, in
reliance, in part, on my representations, warranties and agreements made herein.
(e) Other than the rights specifically set forth in the Procera
Registration Rights Agreement, I represent, warrant and agree that the Company
and the officers of the Company (the "Company's Officers") are under no
obligation to register or qualify the Shares under the Securities Act or under
any state securities law, or to assist the undersigned in complying with any
exemption from registration and qualification.
(f) I represent that I meet the criteria for participation because
(i) I have a preexisting personal or business relationship with the Company or
one or more of its partners, officers, directors or controlling persons or (ii)
by reason of my business or financial experience, or by reason of the business
or financial experience of my financial advisors who are unaffiliated with, and
are not compensated, directly or indirectly, by the Company or any affiliate or
selling agent of the Company, I am capable of evaluating the risk and merits of
an investment in the Shares and of protecting my own interests; AND
(i) I have minimum net worth in excess of $1,000,000, or
(ii) I have income in excess of $200,000 or joint income with my
spouse in excess of $300,000 in each of the two most recent years, and I/we have
a reasonable expectation of reaching the same income level in the current year;
or
(iii) I am a director or executive officer of the Company; or
(iv) If a trust, the trust has total assets in excess of
$5,000,000 and was not formed for the specific purpose of acquiring the Shares
and the purchase was directed by a sophisticated person as described in 7 CFR
Sec. 230.506(b)(2)(ii); or
(v) If a corporation or partnership, the corporation or
partnership has total assets in excess of $5,000,000 and was not formed for the
specific purpose of acquiring the Shares; or
(vi) If an entity, all of the equity owners meet the criteria for
participation set forth in this Paragraph 2(f).
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(g) I understand that the Shares are illiquid, and until registered
with the Securities Exchange Commission or an exemption from registration
becomes available, cannot be readily sold as there will not be a public market
for them and that I may not be able to sell or dispose of the Shares, or to
utilize the Shares as collateral for a loan. I must not purchase the Shares
unless I have liquid assets sufficient to assure myself that such purchase will
cause me no undue financial difficulties and that I can still provide for my
current and possible personal contingencies, and that the commitment herein for
the Shares, combined with other investments of mine, is reasonable in relation
to my net worth.
(h) I understand that my right to transfer the Shares will be
restricted against unless the transfer is not in violation of the Securities
Act, the California Securities Law, and any other applicable state securities
laws (including investment suitability standards), that the Company will not
consent to a transfer of the Shares unless the transferee represents that such
transferee meets the financial suitability standards required of an initial
participant and that the Company has the right, in its absolute discretion, to
refuse to consent to such transfer.
(i) I have been advised to consult with my own attorney or attorneys
regarding all legal matters concerning an investment in the Company and the tax
consequences of purchasing the Shares, and have done so, to the extent I
consider necessary.
(j) I acknowledge that the tax consequences to me of investing in the
Company will depend on my particular circumstances, and neither the Company, the
Company's Officers, any other investors, nor the partners, shareholders,
members, managers, agents, officers, directors, employees, affiliates or
consultants of any of them, will be responsible or liable for the tax
consequences to me of an investment in the Company. I will look solely to and
rely upon my own advisers with respect to the tax consequences of this
investment
(k) All information which I have provided to the Company concerning
myself, my financial position and my knowledge of financial and business matters
is truthful, accurate, correct and complete as of the date set forth herein.
5. AGREEMENT TO INDEMNIFY COMPANY. I hereby agree to indemnify and hold
harmless the Company, its principals, the Company's officers, directors
attorneys, and agents, from any and all damages, costs and expenses (including
actual attorneys' fees) which they may incur (i) by reason of my failure to
fulfill any of the terms and conditions of this Warrant, (ii) by reason of my
breach of any of my representations, warranties or agreements contained herein;
(iii) with respect to any and all claims made by or involving any person, other
than me personally, claiming any interest, right, title, power or authority in
respect to the Shares. I further agree and acknowledge that these
indemnifications shall survive any sale or transfer, or attempted sale or
transfer, of any portion of the Shares.
6. EXECUTION AUTHORIZED. If this Warrant is executed on behalf of a
corporation, partnership, trust or other entity, the undersigned has been duly
authorized and empowered to legally represent such entity and to execute this
Warrant and all other instruments in connection with the Shares and the
signature of the person is binding upon such entity.
7. ADOPTION OF TERMS AND PROVISIONS. The Holder hereby adopts, accepts
and agrees to be bound by all the terms and provisions hereof.
8. ANTI-DILUTION ADJUSTMENTS. The Warrants granted hereunder and the
Purchase Price thereof shall be subject to adjustment from time to time upon the
happening of certain events as set forth below. Notwithstanding the above or
any provision of this Agreement, no adjustment shall be made to the Purchase
Price or the amount of Warrants granted hereunder once the shares of Company's
Common Stock have been offered for sale in connection with an initial public
offering.
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(a) Stock Splits and Dividends. If outstanding shares of the Company
Common Stock shall be split into a greater number of shares or a dividend in
Common Stock shall be paid in respect of Common Stock, the Purchase Price in
effect immediately prior to such split or at the record date of such dividend
shall simultaneously with the effectiveness of such split or immediately after
the record date of such dividend be proportionately reduced. If outstanding
shares of Common Stock shall be combined into a smaller number of Shares, the
Purchase Price in effect immediately prior to such combination shall,
simultaneously with the effectiveness of such combination, be proportionately
increased. When any adjustment is required to be made in the Purchase Price,
the number of Shares purchasable upon the exercise of this Warrant shall be
changed to the number determined by dividing (i) an amount equal to the number
of shares issuable upon the exercise of this Warrant immediately prior to such
adjustment, multiplied by the Purchase Price in effect immediately prior to such
adjustment, by (ii) the Purchase Price in effect immediately after such
adjustment.
(b) Reclassification, Etc. In case there occurs any reclassification
or change of the outstanding securities of the Company or of any reorganization
of the Company (or any other corporation the stock or securities of which are at
the time receivable upon the exercise of this Warrant) or any similar corporate
reorganization on or after the date hereof, then and in each such case the
Holder, upon the exercise hereof at any time after the consummation of such
reclassification, change, or reorganization shall be entitled to receive, in
lieu of the stock or other securities and property receivable upon the exercise
hereof prior to such consummation, the stock or other securities or property to
which the Holder would have been entitled upon such consummation if the Holder
had exercised this Warrant immediately prior thereto, all subject to further
adjustment pursuant to the provisions of this Section.
(c) Adjustment Certificate. When any adjustment is required to be
made in the Shares or the Purchase Price pursuant to this Section, the Company
shall promptly mail to the Holder a certificate setting forth (i) a brief
statement of the facts requiring such adjustment, (ii) the Purchase Price after
such adjustment and (iii) the kind and amount of stock or other securities or
property into which this Warrant shall be exercisable after such adjustment.
9. RESERVATION OF SHARES. The Company shall at all times keep reserved a
sufficient number of authorized Shares to provide for the exercise of the
Warrants in full.
10. NON-TRANSFERABILITY. Unless the Company consents in writing, the
Warrants issued hereunder and any and all Shares issued upon exercise of the
Warrants are not transferable, except to a related party of the Holder.
11. VOTING. Nothing contained in this Agreement shall be construed as
conferring upon the Holder the right to vote or to receive dividends or to
consent or receive notice as a shareholder in respect to any meeting of
shareholders for the election of directors of the Company or for any other
purpose not specified herein.
12. MISCELLANEOUS.
(a) Amendment. This Agreement may be amended only by written
agreement between the Company and the Holder.
(b) Notice. Any notice, demand or request required or permitted to be
given under this Agreement will be in writing and will be deemed sufficient when
delivered personally or with a commercial courier service, with postage prepaid,
and addressed, if to the Company, at its principal place of business, attention
the President, and if to the Holder, at the Holder's address as shown on the
stock records of the Company.
(c) Further Assurances. Both parties agree to execute any additional
documents necessary to carry out the purposes of this Agreement.
(d) Severability. If any provision of this Agreement is held by any
court of competent jurisdiction to be illegal, unenforceable or void, such
provision will be enforced to the greatest extent possible and all other
provisions of this Agreement will continue in full force and effect.
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(e) Governing Law. This Agreement will be interpreted and enforced in
accordance with California Law as applied to agreements made and performed in
California.
(f) Entire Agreement; Successors and Assigns. This Agreement and the
documents and instruments attached hereto constitute the entire agreement
between the Holder and the Company relative to the subject matter hereof. Any
previous agreements between the parties are superseded by this Agreement.
Subject to any exceptions specifically set forth in this Agreement, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective executors, administrators, heirs, successors and assigns of
the parties.
(g) Headings. The headings of the Paragraphs of this Agreement are
for convenience and shall not by themselves determine the interpretation of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Warrant as of the date first set forth above.
"COMPANY"
PROCERA NETWORKS, INC.
A Nevada corporation
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chief Executive Officer
Date: May 24, 2004
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"HOLDER"
[SEE SCHEDULE 1]
By: ___________________________________________
Print: ________________________________________
Title: ________________________________________
Date: _________________________________________
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SCHEDULE 1
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NOTICE OF EXERCISE
To: PROCERA NETWORKS, INC.
(1) ALPHA CAPITAL AG ("Holder") hereby elects to purchase ______________
shares of Common Stock of Procera Networks, Inc. (the "Company") pursuant to the
terms of the Warrant Agreement executed by the Holder and the Company, dated
__________________, and tenders herewith payment of the purchase price in full,
together with all applicable transfer taxes, if any.
(2) Please issue a certificate or certificates representing said shares in
the name of the Holder or in such other name as is specified below.
"HOLDER"
_______________________________________________
By: ___________________________________________
Print: ________________________________________
Title: ________________________________________
Date: _________________________________________
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SCHEDULE 1
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SIGNATORIES TO WARRANT AGREEMENT
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SIGNATORY SHARES DATE
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Platinum Partners Value Arbitrage Fund LP 125,000 5/5/04
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Castle Creek Technology Partners LLC 125,000 5/3/04
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Capital Ventures International 125,000 5/3/04
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Gamma Opportunity Capital Partners LP 125,000 4/27/04
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Alpha Capital AG 125,000 4/28/04
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XxxxxXxxxxx XX 125,000 4/29/04
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Professional Traders Fund LLC 93,750 4/28/04
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First Mirage, Inc. 62,500 4/27/04
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Greenwich Growth Fund Limited 50,000 4/28/04
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Whalehaven Fund Limited 42,500 5/3/04
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Platinum Partners Global Macro Fund 37,500 5/5/04
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OTAPE Investments LLC 25,000 4/26/04
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WEC Partners LLC 25,000 5/4/04
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X.X. Xxxxxx & Company, Inc. 47,438 5/5/04
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Instream Partners 44,000 5/5/04
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Xxxx Xxxxx 18,750 5/5/04
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