Exhibit 4.6
PROCERA NETWORKS, INC.
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SECURED CONVERTIBLE PROMISSORY NOTE
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$________________ ______________________
Sunnyvale, California
1. Principal and Interest.
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1.1 PROCERA NETWORKS, INC., a Delaware Corporation (the "Company"), for
value received, hereby promises to pay to the order of _________________ or his,
her, their or its assigns (the "Investor" or the "Holder") the amount of
_______________________ dollars ($_________) plus interest, as set forth
hereinafter.
1.2 This Secured Convertible Promissory Note (the "Note") shall bear
interest from the date of issuance of this Note until paid in full at a rate
equal to one-half percent (1/2%) per month. This Note shall be due and payable
on Holder's written demand which may be made on or after March 31, 2003 (the
"Demand Date"), and shall be paid pro rata with the other outstanding senior
creditors set forth in Exhibit A hereto (the "Outstanding Senior Secured
Creditors"), unless this Note is converted into shares of the Company's Series B
Preferred Stock (the "Series B Preferred Stock"), pursuant to Section 2.1
hereof. On the Demand Date, all principal and accrued interest hereunder shall
be due and payable upon demand by the Holder.
1.3 As additional consideration for this Note, the Holder shall received
from the date hereof until full repayment a monthly loan fee of one and one-half
percent (1 %) of the outstanding principal amount of this Note in cash, and two
percent (2%) of the outstanding principal amount of this Note in shares of the
Company's common stock. For example, such shares for a loan of $100,000 shall
be calculated as follows: $100,000 times 2% equals 2,000 shares of common stock
per month. Commencing on the Demand Date, all loan fees accrued hereunder shall
be immediately due, payable and issuable to the Holder.
1.4 This Note shall be secured by a senior security interest in all of the
assets of the Company, held pro rata with the outstanding Senior Secured
Creditors and solely subordinate to senior bank financing, such assets to
include but not be limited to accounts receivable, proceeds from sale of
inventory, owned inventory, equipment, furniture, patents, trademarks and
copyrights.
1.5 Upon conversion of the principal and accrued interest hereunder into
the Company's Series B Preferred Stock pursuant to Section 2.3 hereof, this Note
shall be surrendered to the Company for cancellation.
1.6 Payments of both principal, interest, and loan fees are to be made at
the address of the Holder set forth in Section 7 below or at such other place in
the United States as the Holder shall designate to the Company in writing, in
lawful money of the United Sates of America. Interest and loan fees on this
Note shall be computed on the basis of a 365-day year and actual days elapsed.
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1.7 The provisions of this Note are a statement of the rights of the
Holder and the conditions to which this Note is subject and to which the Holder,
by the acceptance of this Note, agrees.
2. Prepayment. The Company may pre-pay this Note, at any time, in whole
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or in part, without penalty.
2.1 Conversion. Upon the consummation of the sale and issuance of shares
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of Series B Preferred Stock (the "Financing"), the Holder shall have the right
to convert the outstanding principal and all accrued interest hereunder into
that number of fully paid and nonassessable whole shares of Series B Preferred
Stock, determined in accordance with Section 2.2 hereof at the Series B
Conversion Price (hereinafter defined) concurrently with the closing of the
Financing. Upon conversion, this Note shall be canceled.
2.2 Shares Issuable.
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(a) The number of whole shares of Series B Preferred Stock into which
this Note shall be converted pursuant to Section 2.1 hereof shall be determined
by dividing (i) the aggregate principal amount of this Note, together with all
accrued interest to the date of conversion, by (ii) the Series B Conversion
Price. The Series B Conversion Price shall be equal to the purchase price of
Series B Preferred Stock as determined at the first closing of the Financing
(the "Series B Conversion Price").
(b) The Series B Preferred Stock shall be issued to the Holder upon
execution of a Series B Preferred Stock Purchase Agreement, identical to the
Series B Preferred Stock Purchase Agreement executed by all parties to the
Financing together with all documents relating thereto (the "Series B
Documents"), upon such terms and subject to such conditions as contained in the
Series B Documents.
2.3 Conversion Procedures. In the event Holder has not already demanded
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payment of the Note, within fifteen (15) business days of the Financing, written
notice shall be delivered to the Holder of this Note at the address last shown
on the records of the Company for the Holder or given by the Holder to the
Company for the purpose of notice or, if no such address appears or is given, at
the place where the principal executive office of the Company is located,
notifying the Holder that the Financing will be occurring, notifying the Holder
of its right, at such Holder's option, to convert this Note into shares of
Series B Preferred Stock, specifying the Series B Conversion Price, the
principal amount of the Note and accrued interest that may be converted, and
calling upon such Holder to surrender the Note to the Company within the time,
in the manner and at the place designated, or demand repayment of the Note,
including all accrued and unpaid interest thereon.
2.4 Delivery of Stock Certificates. Upon the conversion of this Note and
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return of the original Note to the Company together with executed Series B
Documents, the Company at its expense will issue and deliver to the Holder of
this Note a certificate or certificates (bearing such legends as are required by
applicable state and federal securities laws in the opinion of counsel to the
Company) for the number of whole shares of Series B Preferred Stock issuable
upon such conversion.
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2.5 No Fractional Shares. No fractional shares of Series B Preferred
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Stock shall be issued upon conversion of this Note. In lieu of the Company
issuing any fractional shares to the Holder upon the conversion of this Note,
the Company shall pay to the Holder the amount of outstanding principal
hereunder that is not so converted.
2.6 No Rights as Stockholder. This Note does not entitle the Holder
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hereof to any voting rights or other rights as a shareholder of the Company
prior to the conversion hereof.
2.7 Charges, Taxes and Expenses. Issuance of a certificate for shares of
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the Series B Preferred Stock upon the conversion of this Note shall be made
without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificate, all of which taxes and
expenses shall be paid by the Company, and such certificate shall be issued in
the name of the Holder, or such certificates shall be issued in such name or
names as may be directed by the Holder; provided, however, that in the event
certificates for shares of the Series B Preferred Stock (or replacement Notes),
are to be issued in a name other than the name of the Holder, this Note when
surrendered for exercise or transfer shall be accompanied by the Assignment Form
attached hereto duly executed by the Holder; provided, further, that upon any
transfer involved in the issuance or delivery of any certificates for shares of
the Series B Preferred Stock or replacement Notes, the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto.
3. Reservation of Stock Issuable Upon Conversion. The Company shall at
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all times on and after the Financing, reserve and keep available from its
authorized and unissued shares of Series B Preferred Stock (and shares of Common
Stock issuable upon conversion thereof), solely for the purpose of effecting the
conversion of the Note, such number of its shares of Series B Preferred Stock
(and shares of Common Stock issuable upon conversion thereof), as shall from
time to time be sufficient to effect the conversion of the Note; and if at any
time the number of authorized but unissued shares of Series B Preferred Stock
(or shares of its Common Stock issuable upon conversion thereof), shall not be
sufficient to effect the conversion of the entire outstanding principal amount
of and accrued interest on this Note, in addition to such other remedies as
shall be available to the Holder of this Note, the Company will use its
commercially reasonable efforts to promptly take such corporate action as may,
in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Series B Preferred (and shares of its Common Stock issuable
upon conversion thereof), to such number of shares as shall be sufficient for
such purposes.
4. Assignment. Subject to the restrictions on transfer described in
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Section 6 hereof, the rights and obligations of the Company and the Holder of
this Note shall be binding upon and benefit the successors, assigns, heirs,
administrators and transferees of the parties. Effective upon any such
assignment, the person or entity to whom such rights, interests and obligations
were assigned shall have and exercise all of the Holder's rights, interests and
obligations hereunder as if such person or entity were the original Holder of
this Note.
5. Waiver and Amendment. Any provision of this Note may be amended,
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waived or modified (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), upon the written consent of the Company and of Holder.
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6. Transfer of This Note or Securities Issuable on Conversion Hereof.
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With respect to any offer, sale or other disposition of this Note or securities
into which this Note may be converted, the Holder will give written notice to
the Company prior thereto, describing briefly the manner thereof. Unless the
Company reasonably determines that such transfer would violate applicable
securities laws, or that such transfer would adversely affect the Company's
ability to account for future transactions to which it is a party as a pooling
of interests, and notifies the Holder thereof within ten (10) business days
after receiving notice of the transfer, the Holder may effect such transfer.
Each Note thus transferred and each certificate representing the securities thus
transferred shall bear a legend as to the applicable restrictions on
transferability in order to ensure compliance with the Securities Act of 1933,
as amended (the "Securities Act"), unless in the opinion of counsel for the
Company such legend is not required in order to ensure compliance with the
Securities Act. The Company may issue stop transfer instructions to its
transfer agent in connection with such restrictions.
7. Notices. Any notice, request, other communication or payment required
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or permitted hereunder shall be in writing and shall be deemed to have been
given upon delivery if personally delivered, or five (5) business days after
deposit if deposited in the United States mail for mailing by certified mail,
postage prepaid, and addressed as follows:
If to Investor: at the address indicated on the signature page hereto.
If to Company: Procera Networks, Inc.
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Attention: ▇▇▇ ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Pillsbury Winthrop LLP
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Each of the above addressees may change its address for purposes of this Section
7 by giving to the other addressee notice of such new address in conformance
with this Section 7.
8. Loss, Theft or Destruction of Note. Upon receipt by the Company of
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evidence reasonably satisfactory to it of the loss, theft or destruction of this
Note and of indemnity or security reasonably satisfactory to it, the Company
will make and deliver a new Note which shall carry the same rights to interest
(unpaid and to accrue) carried by this Note, stating that such Note is issued in
replacement of this Note, making reference to the original date of issuance of
this Note (and any successors hereto) and dated as of such cancellation, in lieu
of this Note.
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9. Usury Disclosure. Regardless of any provision contained in this Note,
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it is expressly stipulated and agreed that the intent of the Holder and the
Company is to comply at all times with all usury and other laws relating to this
Note. If the laws of the State of California would now or hereafter render
usurious, or are revised, repealed or judicially interpreted so as to render
usurious, the indebtedness evidenced by this Note, or if any prepayment by the
Company results in the Company's having paid any interest in excess of that
permitted by law, then it is the Holder's and the Company's express intent that
all excess amounts theretofore collected by the Holder be credited to the
principal balance of this Note (or, if this Note has been paid in full, refunded
to the Company), and the provisions of this Note immediately be deemed reformed
and the amounts therefor collectible hereunder reduced, without the necessity of
execution of any new document, so as to comply with the then applicable law, but
so as to permit the recovery of the fullest amount otherwise called for
hereunder.
10. Governing Law. This Note is being delivered in and for all purposes
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shall be construed in accordance with and governed by the laws of the State of
California, without regard to the conflicts of laws provisions thereof.
11. Issue Date. The provisions of this Note shall be construed and shall
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be given effect in all respects as if this Note had been issued and delivered by
the Company on the earlier of the date hereof or the date of issuance of any
Note for which this Note is issued in replacement. This Note shall be binding
upon any successors or assigns of the Company. This Note shall constitute a
contract under the laws of the State of California.
12. Heading; References. All headings used herein are used for
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convenience only and shall not be used to construe or interpret this Note.
Except as otherwise indicated, all references herein to Sections refer to
Sections hereof.
13. Waiver by the Company. The Company hereby waives demand, notice,
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presentment, protest and notice of dishonor.
14. Delays. No delay by the Holder in exercising any power or right
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hereunder shall operate as a waiver of any power or right.
15. Severability. If one or more provisions of this Note are held to be
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unenforceable under applicable law, such provision shall be excluded from this
Note and the balance of the Note shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its terms.
16. No Impairment. The Company will not, by any voluntary action, avoid
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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 assist in the carrying out of all the provisions of this Note and in the
taking of all such action as may be necessary or appropriate in order to protect
the rights of the Holder of this Note against impairment.
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IN WITNESS WHEREOF, PROCERA NETWORKS, INC. has caused this Note to be
executed in its corporate name and this Note to be dated, issued and delivered,
all on the date first above written.
PROCERA NETWORKS, INC.,
a Delaware corporation
By: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President & CEO
Accepted and Agreed to:
[See Schedule 1]
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ASSIGNMENT FORM
(To Assign the foregoing Note, execute
this form and supply required information.
Do not use this form to convert the Note.)
FOR VALUE RECEIVED, an interest corresponding to the unpaid principal
amount of the foregoing Note and all rights evidenced thereby are hereby
assigned to
________________________________________________________________________________
(Please Print)
whose address is_______
________________________________________________________________________________
Dated:_
Holder's Signature: ________
Holder's Address: ________
Signature Guaranteed:
NOTE: The signature to this Assignment Form must correspond with the name as
it appears on the face of the Note, without alteration or enlargement
or any change whatever, and must be guaranteed by a bank or trust
company. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority
to assign the foregoing Note.
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EXHIBIT A
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PROCERA NETWORKS, INC.
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OUTSTANDING SENIOR SECURED CREDITORS
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▇▇▇▇ McAfee Companies, LLC
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual
The ▇▇▇▇▇▇ Living Trust DTD 3/5/97
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an individual
▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Trust DTD 5/25/96
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Living Trust DTD 5/15/87
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SCHEDULE 1
SIGNATORIES TO BRIDGE LOAN
SIGNATORY DATE
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▇▇▇▇ McAfee Companies LLC 7/31/03
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▇▇▇▇ ▇▇▇▇▇▇ 7/31/03
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▇▇▇▇▇ ▇▇▇▇ 7/31/03
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 7/31/03
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▇▇▇▇▇▇▇▇▇ ▇▇▇▇ 8/26/03
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Linden Growth Partners 12/15/03
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The ▇▇▇▇▇▇ Living Trust DTD 3/05/97 8/15/03
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 8/25/03
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▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Revocable Trust DTD May 25, 1996 8/20/03
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▇. ▇. ▇▇▇▇▇▇ Revocable Trust DTD 5/15/87 8/8/03
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 8/6/03
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▇▇▇▇▇ Diversified, Inc. 8/22/03
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▇▇▇ ▇▇▇▇▇ 8/22/03
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 8/6/03
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