PROCERA NETWORKS, INC AND NETINTACT, AB INCENTIVE WARRANT AGREEMENT
EXHIBIT
2.3
PROCERA
NETWORKS, INC AND NETINTACT, AB
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, AS AMENDED (THE “SECURITIES
ACT”).
THE
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER 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.
This
Warrant Agreement (the "Agreement")
is
entered into this ____ day of _____, 2006, by and between Procera Networks,
Inc.
(the "Company”)
and
______________
(the
“Holder").
WHEREAS,
all of the shareholders of Netintact, AB are exchanging all of their ownership
shares therein for common shares of Procera Networks, Inc.(the “Company”)
pursuant to a Stock Exchange Agreement dated June 27, 2006; (the “SEA”) and
WHEREAS,
the Company has agreed in connection with said SEA to cause certain warrants
to
be issued.
THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows:
11. Issuance
of Warrants.
The
Company, subject to the terms and conditions hereinafter set forth, hereby
issues Warrants (“Warrants”)
to
purchase up to ___ shares of Company Common Stock (the “Shares”).
The
exercise price of the Warrants shall be ______ per Share of Common Stock (the
“Purchase
Price”)
subject to adjustment in accordance with Paragraph 5 of this
Agreement.
12. Term.
The
Warrants may be exercised at any time after the Effective Date set forth on
the
signature page hereof and for a period of sixty (60) months
thereafter.
13. Conditions.
Warrants may be exercised if and only if;
(a) The
market price of the Company’s common stock is or exceeds $2.00 US for a period
of 90 consecutive days; and
(b) Holder
is
an employee of the Company at the time of exercise.
(c) The
conditions set out in Exhibit C of the SEA have been met.
14. Number
of Shares Subject to Exercise.
The
number of shares subject to exercise under this warrant shall be determined
by
the formula and conditions set out in Exhibit C to the SEA.
15. 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 Exhibit
A
(or the
Notice of Net Issue Exercise attached hereto as Exhibit
B)
and
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 (except in the case of a Net Issue
Exercise).
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(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) Net
Issue
Exercise.
(i) In
lieu
of exercising this Warrant in the manner provided above in Section 3(a), the
Holder may elect to receive Shares equal to the value of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at the principal
office of the Company together with notice of such election in which event
the
Company shall issue to the Holder a number of Shares computed using the
following formula:
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X
=
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(P)(Y)(A
- B)
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A
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Where
X =
The number of Shares to be issued to the Holder for the portion of the Warrant
being converted;
P
= The
portion of the Warrant being converted expressed as a decimal
fraction;
Y
= The
number of Shares purchasable under this Warrant (as adjusted under Section
5
herein, on the date of such calculation);
A
= The
fair market value of one Share (at the date of such calculation);
and
B
= The
Purchase Price (as adjusted under Section 5 herein, on the date of such
calculation).
(ii) For
purposes of this Section 3(e), the fair market value of one Share on the date
of
calculation shall mean the following:
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(A) If
the
stock of the Company is listed on any established stock exchange or a national
market system, including without limitation the National Market System of the
National Association of Securities Dealers Automated Quotation System or the
Over the Counter Bulletin Board, its fair market value shall be the closing
trading price (as reported in the Wall
Street Journal)
for the
shares of common stock of the Company on the date such portion of this Warrant
is delivered to the Company for exercise;
(B) If
(A) is
not applicable, the fair market value of a Share shall be at the highest price
per Share which the Company could obtain on the date of calculation from a
willing buyer (not a current employee or director) for Shares sold by the
Company, from authorized but unissued Shares, as determined in good faith by
the
Board of Directors, unless the Company is at such time subject to an
acquisition, in which case the fair market value of one Share shall be deemed
to
be the per-share value received by the holders of such stock pursuant to such
acquisition.
(f) 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.
16. Representations
and Warranties of the Holder.
The
Holder hereby represents and warrants to the Company as follows:
(b) Holder
acknowledge that Procera has limited assets and business and that the Procera
Shares are speculative and involve a high degree of risk, including among many
other risks that the Procera Shares will be restricted as elsewhere described
in
this Agreement and will not be transferable unless first registered under the
Securities Act of 1933, as amended ("Act"), or pursuant to an exemption from
the
Act's registration requirements.
(b) Holder
acknowledge and agree that they have been furnished with copies of the periodic
reports of Procera filed with the United States Securities and Exchange
Commission including those on Forms 10-KSB and 10-QSB for the past two years.
Holder have had an opportunity to ask questions of and receive answers from
Procera regarding its business, assets, results of operations, financial
condition and plan of operation and the terms and conditions of the issuance
of
the Procera Shares.
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(c) Holder
are not U.S. persons (as defined in Regulation S promulgated under the Act
(“Regulation S”), are acquiring the Procera Shares for their own account, and
not for the account of any other person other than the benefit of Holder, and
Holder have no current intent to make any resale, pledge, hypothecation,
distribution or public offering of the Procera Shares except as permitted by
applicable law, including the provisions of Regulation S.
(d) Holder,
acting with the assistance of counsel and other professional advisers, possess
such knowledge and experience in ▇▇▇▇▇-cial, tax and business matters as to
enable them to utilize the information made available by Procera, to evaluate
the merits and risks of acquiring the Procera Shares and to make an informed
investment decision with respect thereto.
(e) Holder
were not solicited by Procera or anyone on Procera's behalf to enter into any
transaction whatever, by any form of general solicitation or general
advertising, as those terms are defined in Regulation D.
(f) Holder:
(i) is domiciled and has Holder’s principal place of business and/or
residence outside the United States; and (ii) certify that Holder is not
U.S. Persons and is not acquiring the Procera Shares for the account or benefit
of any U.S. Person; and (iii) at the time of the Closing, Holder or persons
acting on Holder's behalf in connection therewith, will be located outside
the
United States.
17.
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.
(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.
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(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.
18.
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.
19.
Non-Transferability.
The
Warrants issued hereunder and any and all Shares issued upon exercise of the
Warrants are not transferable.
20.
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.
21.
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.
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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.
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 Agreement
as of the date first written above (“Effective
Date”).
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The
Company:
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PROCERA
NETWORKS, INC.
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▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, President
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The
Holder:
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7
EXHIBIT
A
WARRANT
NOTICE
OF EXERCISE
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To:
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PROCERA
NETWORKS, INC.
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(1) [
]
("Holder") hereby elects to purchase [ ] shares of Common Stock of Procera
Networks, Inc. (the “Company”) pursuant to the terms of the Agreement executed
by the Holder and the Company, dated December 13, 2002, 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.
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The
Holder:
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[
]
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Date:
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EXHIBIT
B
WARRANT
NOTICE
OF NET ISSUE EXERCISE
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To:
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PROCERA
NETWORKS, INC.
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(1) [
]
(“Holder”) hereby elects to acquire ______________ 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 June 20, 2003, by
conversion of _____________ percent (________ %) of the
Warrant.
(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.
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The
Holder:
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[
]
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Date:
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