ex4_14.htm


    
      

    

    Exhibit
      4.14

     

    PROCERA
      NETWORKS, INC.

     

     

    REGISTRATION
      RIGHTS AGREEMENT

     

    THIS
      REGISTRATION RIGHTS AGREEMENT (the “Agreement”) is made as of _________,
      2003, by and among Procera Networks, Inc., a Delaware corporation (the
“Company”), and the undersigned holders of common stock of the Company
      together with their qualifying transferees (the “Holders”).

    RECITALS:

     

    A.          The
      Company has sold shares of common stock (“Common Shares”) to the Holders
      pursuant to one or more Registrable Common Stock Subscription
      Agreements.

     

    B.           The
      sale of the Common Shares is conditional upon the extension of the rights set
      forth herein, and by this Agreement the Company and the Holders desire to
      provide for certain rights as set forth herein.

     

    NOW,
      THEREFORE, in consideration of the foregoing and of the mutual promises and
      covenants contained herein, the parties, severally and not jointly, hereby
      agree
      as follows:

     

    AGREEMENT:

     

    NOW,
      THEREFORE, in consideration of the foregoing and of the mutual promises and
      covenants contained herein, the parties agree as follows:

    1           Registration
      Rights.

     

    1.1           Definitions.  As
      used in this Agreement, the following terms shall have the following respective
      meanings:

     

    1.1.1           The
      terms “register”, “registered” and “registration” refer to
      a registration effected by preparing and filing a registration statement in
      compliance with the Securities Act of 1933, as amended (the “Securities
      Act”), and the declaration or ordering of the effectiveness of such
      registration statement.

     

    1.1.2           The
      term “Registrable Securities” means (i) any and all shares of Common
      Stock of the Company issued and sold by the Company pursuant to the Registrable
      Common Stock Subscription Agreement (which shares of Registrable Common Stock
      are referred to herein as the “Common Shares”); (ii) stock issued in
      lieu of the stock referred to in (i) in any reorganization which has not
      been sold to the public; or (iii) stock issued in respect of the stock
      referred to in (i) and (ii) as a result of a stock split, stock
      dividend, recapitalization or the like, which has not been sold to the
      public.

     

    1.1.3           The
      terms “Holder” or “Holders” means any person or persons to whom
      Registrable Securities were originally issued or qualifying transferees under
      subsection 1.9 hereof who hold Registrable Securities.

     

    1.1.4           The
      term “Initiating Holders” means any Holder or Holders, of 40% or greater
      of the aggregate of the Registrable Securities then outstanding.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    1.1.5           The
      term “SEC” means the Securities and Exchange Commission.

     

    1.1.6           The
      term “Registration Expenses” shall mean all expenses incurred by the
      Company in complying with subsections 1.2, 1.3 and 1.4 hereof, including,
      without limitation, all registration, qualification and filing fees, printing
      expenses, escrow fees, fees and disbursements of counsel for the Company, blue
      sky fees and expenses, and the expense of any special audits incident to or
      required by any such registration (but excluding the compensation of regular
      employees of the Company which shall be paid in any event by the
      Company.)

     

    1.2           Company
      Registration.

     

    1.2.1           Registration.  If
      at any time or from time to time, the Company shall determine to register any
      of
      its securities, for its own account or the account of any of its shareholders,
      other than a registration on Form S-8 relating solely to employee stock
      option or purchase plans, or a registration on Form S-4 relating solely to
      a SEC Rule 145 transaction, the Company will:

     

    1.2.1.A          promptly
      give to each Holder written notice thereof at least 30 days prior to the initial
      filing of the registration statement relating to such offering; and

     

    1.2.1.B           include
      in such registration (and compliance), and in any underwriting involved therein,
      all the Registrable Securities specified in a written request or requests,
      made
      within 20 days after receipt of such written notice from the Company, by any
      Holder or Holders, except as set forth in subsection 1.2(b) below.

     

    1.2.2           Underwriting.

     

    1.2.2.A       
        If the registration of which the Company gives notice is for a
      registered public offering involving an underwriting, the Company shall so
      advise the Holders as a part of the written notice given pursuant to subsection
      1.2(a)(i).  In such event the right of any Holder to registration
      pursuant to subsection 1.2 shall be conditioned upon such Holder’s
      participation in such underwriting and the inclusion of such Holder’s
      Registrable Securities in the underwriting to the extent provided
      herein.  All Holders proposing to distribute their securities through
      such underwriting shall (together with the Company and the other shareholders
      distributing their securities through such underwriting) enter into an
      underwriting agreement in customary form with the underwriter or underwriters
      selected for such underwriting by the Company.

     

    1.2.2.B           Notwithstanding
      any other provision of this subsection 1.2, if the underwriter managing
      such public offering determines that marketing factors require a limitation
      of
      the number of shares to be underwritten, and (A) if such registration is
      the first registered offering of the sale of the Company’s securities to the
      general public, the underwriter may limit the number of Registrable Securities
      to be included in the registration and underwriting, or may exclude Registrable
      Securities entirely from such registration and underwriting, or (B) if such
      registration is other than the first registered offering of the sale of the
      Company’s securities to the general public, the underwriter may limit the amount
      of securities to be included in the registration and underwriting by the
      Company’s shareholders; provided however, the number of Registrable Securities
      to be included in such registration and underwriting under this
      subsection 1.2(b)(ii) shall not be reduced to less than thirty percent
      (30%) of the aggregate securities included in such registration without the
      prior consent of at least a majority of the Holders who have requested their
      shares to be included in such registration and underwriting. The Company shall
      so advise all Holders of Registrable Securities which would otherwise be
      registered and underwritten pursuant hereto, and the number of shares of
      Registrable Securities that may be included in the registration and underwriting
      shall be allocated among Holders requesting registration in proportion, as
      nearly as practicable, to the respective amounts of Registrable Securities
      held
      by each of such Holders as of the date of the notice pursuant to subsection
      1.2(a)(i) above; provided that the number of shares of Registrable
      Securities requested to be included in such underwriting shall not be reduced
      unless all other securities being sold by shareholders other than the Holders
      are first entirely excluded from the Underwriting.  If any Holder
      disapproves of the terms of any such underwriting, he may elect to withdraw
      therefrom by written notice to the Company and the underwriter.  Any
      Registrable Securities excluded or withdrawn from such underwriting shall be
      withdrawn from such registration.

     

    
      
        
        

      

      
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    1.3           Form S-3.  In
      addition to the rights and obligations set forth in subsection 1.2 above, if
      Holders request that the Company file a registration statement on Form S-3
      (or any successor to Form S-3) for a public offering of shares of
      Registrable Securities, the reasonably anticipated aggregate price to the public
      of which (net of underwriting discounts and commissions) would exceed $5,000,000
      and the Company is then a registrant entitled to use Form S-3 to register
      the shares for such an offering, the Company shall use its best efforts to
      cause
      such shares to be registered for the offering as soon as practicable on
      Form S-3 (or any successor form to Form S-3); provided, however the
      Company shall not be required to effect a registration pursuant to this
      subsection 1.3:

     

    1.3.1           in
      any particular jurisdiction in which the Company would be required to execute
      a
      general consent to service of process in effecting such registration,
      qualification or compliance unless the Company is already subject to service
      in
      such jurisdiction and except as may be required by the Securities
      Act;

     

    1.3.2           during
      the period starting with the date of filing of, and ending on a date 90 days
      following the effective date of, a registration statement pursuant to subsection
      1.2, provided that the Company is actively employing in good faith all
      reasonable efforts to cause such registration statement to become effective
      and
      further provided that no other person or entity could require the Company to
      file a registration statement in such period;

     

    1.3.3           if
      the Company has effected a registration pursuant to this subsection 1.3 within
      a
      12-month period from the date of such request; or

     

    1.3.4           if
      the Company shall furnish to such Initiating Holders a certificate signed by
      the
      President of the Company stating that in the good faith judgment of the Board
      of
      Directors of the Company, it would be detrimental to the Company and its
      shareholders for such registration statement to be filed on or before the date
      filing would be required and it is therefore essential to defer the filing
      of
      such registration statement, in which case the Company shall have the right
      to
      defer such filing for a period of not more than 90 days after the furnishing
      of
      such a certificate of deferral, provided that the Company may not defer such
      filing pursuant to this subsection 1.3 more than once in any six month
      period.

     

    
      
        
        

      

      
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    In
      the
      event such Initiating Holders propose to offer the shares of Registrable
      Securities pursuant to this subsection 1.3 by means of an underwriting, the
      proposed underwriter(s) shall be selected by a majority in interest of the
      Initiating Holders and shall be reasonably acceptable to the
      Company.  The Company shall give written notice to all Holders of the
      receipt of a request for registration pursuant to this subsection 1.3 and
      shall provide a reasonable opportunity for other Holders to participate in
      the
      registration. The right of any Holder to registration pursuant to this
      subsection 1.3 shall be conditioned upon such Holder’s participation in
      such underwriting and the inclusion of such Holder’s Registrable Securities in
      the underwriting (unless otherwise mutually agreed by a majority in interest
      of
      the Initiating Holders and such Holder) to the extent provided
      herein.  The Company shall (together with all Holders proposing to
      distribute their securities through such underwriting) enter into an
      underwriting agreement in customary form with the underwriter or
      underwriters.  Notwithstanding any other provision of this
      subsection 1.3, if the underwriter advises the Company in writing that
      marketing factors require a limitation of the number of shares to be
      underwritten, the Company shall so advise all Holders, and the number of shares
      of Registrable Securities that may be included in the registration and
      underwriting shall be allocated among all Holders thereof in proportion, as
      nearly as practicable, to the respective amounts of Registrable Securities
      held
      by such Holders; provided, however, that the number of shares of Registrable
      Securities to be included in such underwriting shall not be reduced unless
      all
      other securities are first entirely excluded from the
      underwriting.  If any Holder of Registrable Securities disapproves of
      the terms of the underwriting, such Holder may elect to withdraw therefrom
      by
      written notice to the Company, the underwriter and the Initiating
      Holders.  Any Registrable Securities which are excluded from the
      underwriting by reason of the underwriter’s marketing limitation or withdrawn
      from such underwriting shall be withdrawn from such registration.

    


    1.4           Expenses
      of Registration.  All Registration Expenses incurred in connection
      with any registration, qualification or compliance pursuant to this
      Section 1 shall be borne by the Company except as follows:

     

    1.4.1           The
      Company shall not be required to pay for expenses of any registration proceeding
      begun pursuant to subsection 1.3, the request for which has been
      subsequently withdrawn by the Initiating Holders, in which latter such case,
      such expenses shall be borne by the Holders requesting such
      withdrawal.  In the event that a withdrawal by the Holders is based on
      material adverse information relating to the Company that is different from
      the
      information known or available to the Holders requesting registration at the
      time of their request for registration under subsection 1.3, such registration
      shall not be treated as a counted requested registration for the purposes of
      subsection 1.3 hereof, and in which case, such expenses shall be borne by the
      Company.

     

    1.4.2           The
      Company shall not be required to pay fees or disbursements of more than one
      firm
      of legal counsel to the Holders, such fees to not exceed $10,000 in the
      aggregate.

     

    1.4.3           The
      Company shall not be required to pay underwriters’ fees, discounts or
      commissions relating to Registrable Securities.

     

    1.5           Registration
      Procedures.  In the case of each registration, qualification or
      compliance effected by the Company pursuant to this Rights Agreement, the
      Company will keep each Holder participating therein advised in writing as to
      the
      initiation of each registration, qualification and compliance and as to the
      completion thereof.  Except as otherwise provided in
      subsection 1.4, at its expense the Company will:

     

    1.5.1           Prepare
      and file with the SEC a registration statement with respect to such Registrable
      Securities and use its best efforts to cause such registration statement to
      become effective, and, upon the request of the Holders of a majority of the
      Registrable Securities registered thereunder, keep such registration statement
      effective for up to 120 days or if such registration statement is on Form S-3
      (or any successor to Form S-3) and provides for sales of securities from time
      to
      time pursuant to Rule 415 under the Securities Act for up to one
      year.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    1.5.2           Prepare
      and file with the SEC such amendments and supplements to such registration
      statement and the prospectus used in connection with such registration statement
      as may be necessary to comply with the provisions of the Securities Act with
      respect to the disposition of all securities covered by such registration
      statement.

     

    1.5.3           Furnish,
      without charge, to the Holders such numbers of copies of a prospectus, including
      each preliminary prospectus, in conformity with the requirements of the
      Securities Act, and such other documents as they may reasonably request in
      order
      to facilitate the disposition of Registrable Securities owned by
      them.

     

    1.5.4           Use
      its best efforts to register and qualify the securities covered by such
      registration statement under such other securities or Blue Sky laws of such
      jurisdictions as shall be reasonably requested by the Holders or any managing
      underwriter, provided that the Company shall not be required in connection
      therewith or as a condition thereto to qualify to do business or to file a
      general consent to service of process in any such states or
      jurisdictions.

     

    1.5.5           In
      the event of any underwritten public offering, enter into and perform its
      obligations under an underwriting agreement, in usual and customary form, with
      the managing underwriter of such offering.  Each Holder participating
      in such underwriting shall also enter into and perform its obligations under
      such an agreement.

     

    1.5.6           Notify
      each Holder of Registrable Securities covered by such registration statement
      at
      any time when a prospectus relating thereto is required to be delivered under
      the Securities Act or the happening of any event as a result of which the
      prospectus included in such registration statement, as then in effect, includes
      an untrue statement of a material fact or omits to state a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading in the light of the circumstances then existing.

     

    1.5.6.A          make
      available for inspection by a representative of the Holders, the managing
      underwriter participating in any disposition pursuant to such registration
      statement and one firm of attorneys designated by the Holders (upon execution
      of
      customary confidentiality agreements reasonably satisfactory to the Company
      and
      its counsel), at reasonable times and in reasonable manner, financial and other
      records, documents and properties of the Company that are pertinent to the
      conduct of due diligence customary for an underwritten offering, and cause
      the
      officers, directors and employees of the Company to supply all information
      reasonably requested by any such representative, underwriter or attorney in
      connection with a registration statement as shall be necessary to enable such
      persons to conduct a reasonable investigation within the meaning of Section
      11
      of the Securities Act.

     

    1.5.6.B           use
      its best efforts to cause all Registrable Securities covered by a registration
      statement to be listed on any securities exchange or any automated quotation
      system on which similar securities issued by the Company are then
      listed;

     

    1.5.6.C           cause
      to be provided to the Holders that are selling Registrable Securities pursuant
      to such registration statement and to the managing underwriter if any
      disposition pursuant to such registration statement is an underwritten offering,
      upon the effectiveness of such registration statement, a customary
“10b-5” opinion of independent counsel (an “Opinion”) and a
      customary “cold comfort” letter of independent auditors (a “Comfort
      Letter”) in each case addressed to such Holders and managing underwriter, if
      any;

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    1.5.6.D          notify
      in writing the Holders that are selling Registrable Securities pursuant to
      such
      registration statement and any managing underwriter if any disposition pursuant
      to such registration statement is an underwritten offering, (A) when the
      registration statement has become effective and when any post-effective
      amendment thereto has been filed and becomes effective, (B) of any request
      by
      the SEC or any state securities authority for amendments and supplements to
      the
      registration statement or of any material request by the SEC or any state
      securities authority for additional information after the registration statement
      has become effective, (C) of the issuance by the SEC or any state securities
      authority of any stop order suspending the effectiveness of the registration
      statement or the initiation of any proceedings for that purpose, (D) if, between
      the effective date of the registration statement and the closing of any sale
      of
      Registrable Securities covered thereby, the representations and warranties
      of
      the Company contained in any underwriting agreement, securities sales agreement
      or other similar agreement, including this Agreement, relating to disclosure
      cease to be true and correct in all material respects or if the Company receives
      any notification with respect to the suspension of the qualification of the
      Registrable Securities for sale in any jurisdiction or the initiation of any
      proceeding for such purpose, (E) of the happening of any event during the period
      the registration statement is effective such that such registration statement
      or
      the related prospectus contains an untrue statement of a material fact or omits
      to state a material fact required to be stated therein or necessary to make
      statements therein not misleading (in the case of a prospectus, in light of
      circumstances under which they were made) and (F) of any determination by the
      Company that a post-effective amendment to the registration statement would
      be
      appropriate.  The Holders hereby agree to suspend, and to cause any
      managing underwriter to suspend, use of the prospectus contained in a
      registration statement upon receipt of such notice under clause (C), (E) or
      (F)
      above until, in the case of clause (C), such stop order is removed or rescinded
      or, in the case of clauses (E) and (F), the Company has amended or supplemented
      such prospectus to correct such misstatement or omission or
      otherwise.

     

    If
      the
      notification relates to an event described in clauses (E) or (F), the Company
      shall promptly prepare and furnish to such seller and each underwriter, if
      any,
      a reasonable number of copies of a prospectus supplemented or amended so that,
      as thereafter delivered to the purchasers of such Registrable Securities, such
      prospectus shall not include an untrue statement of a material fact or omit
      to
      state a material fact required to be stated therein or necessary to make the
      statements therein no misleading.

     

    1.5.6.E           provide
      and cause to be maintained a transfer agent and registrar for all such
      Registrable Securities covered by such registration statement not later than
      the
      effective date of such registration statement;

     

    1.5.6.F           deliver
      promptly to each Holder participating in the offering and each underwriter,
      if
      any, copies of all correspondence between the SEC and the Company, its counsel
      or auditors and all memoranda relating to discussions with the SEC and its
      staff
      with respect to the registration statement, other than those portions of any
      such correspondence and memoranda which contain information subject to
      attorney-client privilege with respect to the Company, and, upon receipt of
      such
      confidentiality agreements as the Company may reasonably request, make
      reasonably available for inspection by any Holder of such Registrable Securities
      covered by such registration statement, by any underwriter, if any,
      participating in any disposition to be effected pursuant to such registration
      statement and by any attorney, accountant or other agent retained by any such
      Holder or any such underwriter, all pertinent financial and other records,
      pertinent corporate documents and properties of the Company, and cause all
      of
      the Company’s officers, directors and employees to supply all information
      reasonably requested by any such Holder, underwriter, attorney, accountant
      or
      agent in connection with such registration statement;

     

    
      
        
        

      

      
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    1.5.6.G          
      use its best efforts to obtain the withdrawal of any order suspending the
      effectiveness of the registration statement;

     

    1.5.6.H         
       provide a CUSIP number for all Registrable Securities not later than the
      effective date of the registration statement;

     

    1.5.6.I            make
      reasonably available its employees and personnel and otherwise provide
      reasonable assistance to the underwriters in the marketing of Registrable
      Securities in any underwritten offering;

     

    1.5.6.J            promptly
      prior to the filing of any document which is to be incorporated by reference
      into the registration statement or the prospectus (after the initial filing
      of
      such registration statement) provide copies of such document to counsel to
      the
      seller of Registrable Securities and to the managing underwriter, if any, and
      make the Company’s representatives reasonably available for discussion of such
      document and make such changes in such document concerning such sellers prior
      to
      the filing thereof as counsel for such sellers or underwriters may reasonably
      request; and

     

    1.5.6.K          cooperate
      with the sellers of Registrable Securities and the managing underwriter, if
      any,
      to facilitate the timely preparation and delivery of certificates not bearing
      any restrictive legends representing the Registrable Securities to be sold,
      and
      cause such Registrable Securities to be issued in such denominations and
      registered in such names in accordance with the underwriting agreement prior
      to
      any sale of Registrable Securities to the underwriters or, if not an
      underwritten offering, in accordance with the instructions of the sellers of
      Registrable Securities at least three business days prior to any sale of
      Registrable Securities.

     

    1.6           Indemnification.

     

    1.6.1           The
      Company will indemnify and hold harmless to the fullest extent permitted by
      law
      each Holder of Registrable Securities and each of its officers, directors and
      partners, and each person controlling such Holder, with respect to which such
      registration, qualification or compliance has been effected pursuant to this
      Rights Agreement, and each underwriter, if any, and each person who controls
      any
      underwriter of the Registrable Securities held by or issuable to such Holder,
      against all claims, losses, expenses, damages and liabilities (or actions in
      respect thereto) arising out of or based on (i) any untrue statement (or alleged
      untrue statement) of a material fact contained in any registration statement
      under which such securities were registered under the Securities Act or the
      omission or alleged omission to state therein a material fact required to be
      stated therein or necessary to make the statements therein not misleading;
      (ii)
      any untrue statement (or alleged untrue statement) of a material fact contained
      in any preliminary, final or summary prospectus, offering circular or other
      document (including any related registration statement, notification or the
      like) incident to any such registration, qualification or compliance, or based
      on any omission (or alleged omission) to state therein a material fact required
      to be stated therein or necessary to make the statement therein, in light of
      the
      circumstances under which they were made, or not misleading, or (iii) any
      violation or alleged violation by the Company of the Securities Act, the
      Securities Exchange Act of 1934, as amended, (the “Exchange Act”) or any
      state securities law applicable to the Company or any rule or regulation
      promulgated under the Securities Act, the Exchange Act or any such state law
      and
      relating to action or inaction required of the Company in connection with any
      such registration, qualification of compliance, and will reimburse each such
      Holder, each of its officers, directors and partners, and each person
      controlling such Holder, each such underwriter and each person who controls
      any
      such underwriter, within a reasonable amount of time after incurred for any
      reasonable legal and any other expenses incurred in connection with
      investigating, defending or settling any such claim, loss, damage, liability
      or
      action; provided, however, that the indemnity agreement contained in this
      subsection 1.6(a) shall not apply to amounts paid in settlement of any such
      claim, loss, damage, liability, or action if such settlement is effected without
      the consent of the Company (which consent shall not be unreasonably withheld);
      and provided further, that the Company will not be liable in any such case
      to
      the extent that any such claim, loss, damage or liability arises out of or
      is
      based on any untrue statement or omission based upon written information
      furnished to the Company by an instrument duly executed by such Holder or
      underwriter specifically for use therein.

     

    
      
        
        

      

      
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    1.6.2           Each
      Holder will, if Registrable Securities held by or issuable to such Holder are
      included in the securities as to which such registration, qualification or
      compliance is being effected, severally and not jointly, indemnify and hold
      harmless to the fullest extent permitted by law the Company, each of its
      directors and officers, each underwriter, if any, of the Company’s securities
      covered by such a registration statement, each person who controls the Company
      within the meaning of the Securities Act, and each other such Holder, each
      of
      its officers, directors and partners and each person controlling such Holder,
      against all claims, losses, expenses, damages and liabilities (or actions in
      respect thereof) arising out of or based on any untrue statement (or alleged
      untrue statement) of a material fact contained in any such registration
      statement, prospectus, offering circular or other document, or any omission
      (or
      alleged omission) to state therein a material fact required to be stated therein
      or necessary to make the statements therein not misleading, and will reimburse
      the Company, such Holders, such directors, officers, partners, persons or
      underwriters for any reasonable legal or any other expenses incurred in
      connection with investigating, defending or settling any such claim, loss,
      damage, liability or action, in each case to the extent, but only to the extent,
      that such untrue statement (or alleged untrue statement) or omission (or alleged
      omission) is made in such registration statement, prospectus, offering circular
      or other document in reliance upon and in conformity with written information
      furnished to the Company by the Holder in an instrument duly executed by such
      Holder specifically for use therein; provided, however, that the indemnity
      agreement contained in this subsection 1.6(b) shall not apply to amounts paid
      in
      settlement of any such claim, loss, damage, liability or action if such
      settlement is effected without the consent of the Holder, (which consent shall
      not be unreasonably withheld); provided further, that the total amount for
      which
      any Holder shall be liable under this subsection 1.6(b) shall not in any event
      exceed the net proceeds received by such Holder from the sale of Registrable
      Securities held by such Holder in such registration; and provided further,
      that
      a Holder will not be liable in any such case to the extent that any such claim,
      loss, damage or liability arises out of or is based on any untrue statement
      or
      omission based upon written information furnished to the Holder by an instrument
      duly executed by the Company or underwriter specifically for use
      therein.

     

    1.6.3           Each
      party entitled to indemnification under this subsection 1.6 (the
“Indemnified Party”) shall give notice to the party required to provide
      indemnification (the “Indemnifying Party”) promptly after such
      Indemnified Party has actual knowledge of any claim as to which indemnity may
      be
      sought, and shall permit the Indemnifying Party to assume the defense of any
      such claim or any litigation resulting therefrom; provided that counsel for
      the
      Indemnifying Party, who shall conduct the defense of such claim or litigation,
      shall be approved by the Indemnified Party (whose approval shall not be
      unreasonably withheld), and the Indemnified Party may participate in such
      defense at such party’s expense; and provided further, that the failure of any
      Indemnified Party to give notice as provided herein shall not relieve the
      Indemnifying Party of its obligations hereunder, except to the extent such
      failure resulted in material prejudice to the Indemnifying Party; and provided
      further, that an Indemnified Party (together with all other Indemnified Parties
      which may be represented without conflict by one counsel) shall have the right
      to retain one separate counsel, with the fees and expenses to be paid by the
      Indemnifying Party, if representation of such Indemnified Party by the counsel
      retained by the Indemnifying Party would be inappropriate due to actual or
      potential differing interests between such Indemnified Party and any other
      party
      represented by such counsel in such proceeding.  No Indemnifying
      Party, in the defense of any such claim or litigation, shall, except with the
      consent of each Indemnified Party, consent to entry of any judgment or enter
      into any settlement which does not include as an unconditional term thereof
      the
      giving by the claimant or plaintiff to such Indemnified Party of a release
      from
      all liability in respect to such claim or litigation.

     

    
      
        
        

      

      
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    1.6.4           If
      for any reason the foregoing indemnity is unavailable or is insufficient to
      hold
      harmless an indemnified party under Section 1.6, then each Indemnifying Party
      shall contribute to the amount paid or payable by such Indemnified Party as
      a
      result of any Claim in such proportion as is appropriate to reflect the relative
      fault of the Indemnifying Party, on the one hand, and the Indemnified Party,
      on
      the other hand, with respect to such offering of securities.  The
      relative fault shall be determined by reference to, among other things, whether
      the untrue or alleged untrue statement of a material fact or the omission or
      alleged omission to state a material fact relates to information supplied by
      the
      Indemnifying Party or the Indemnified Party and the parties' relative intent,
      knowledge, access to information and opportunity to correct or prevent such
      untrue statement or omission.  If, however, the allocation provided in
      the second preceding sentence is not permitted by applicable law, then each
      Indemnifying Party shall contribute to the amount paid or payable by such
      Indemnified Party in such proportion as is appropriate to reflect not only
      such
      relative faults, but also any other relevant equitable
      considerations.  The parties hereto agree that it would not be just
      and equitable if contributions pursuant to this Section 1.6(d) were to be
      determined by pro rata allocation or by any other method of allocation which
      does not take into account the equitable considerations referred to in the
      preceding sentences of this Section 1.6(d).  The amount paid or
      payable in respect of any Claim shall be deemed to include any legal or other
      expenses reasonably incurred by such Indemnified Party in connection with
      investigating or defending any such Claim.  No person guilty of
      fraudulent misrepresentation (within the meaning of Section 11(f) of the
      U.S. Securities Act) shall be entitled to contribution from any person who
      was
      not guilty of such fraudulent misrepresentation.  Notwithstanding
      anything in this Section 1.6 to the contrary, no Indemnifying Party (other
      than the Company) shall be required pursuant to this Section 1.6(d) to
      contribute any amount in excess of the net proceeds received by such
      Indemnifying Party from the sale of Registrable Securities in the offering
      to
      which the losses, claims, damages or liabilities of the Indemnified Parties
      relate, less the amount of any indemnification payment made pursuant to Section
      1.6.

     

    1.6.5           The
      indemnity agreements contained herein shall be in addition to any other rights
      to indemnification or contribution which any Indemnified Party may have pursuant
      to law or contract and shall remain operative and in full force and effect
      regardless of any investigation made or omitted by, or on behalf of, any
      Indemnified Party and shall survive the transfer of the Registrable Securities
      by any such party.

     

    1.7           Information
      by Holder.  Any Holder or Holders of Registrable Securities
      included in any registration shall promptly furnish to the Company such
      information regarding such Holder or Holders and the distribution proposed
      by
      such Holder or Holders as the Company may request in writing and as shall be
      required in connection with any registration, qualification or compliance
      referred to herein.

     

    
      
        
        

      

      
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    1.8           Rule
      144 Reporting.  With a view to making available to Holders the
      benefits of certain rules and regulations of the SEC which may permit the sale
      of the Registrable Securities to the public without registration, the Company
      agrees at all times to:

     

    1.8.1           make
      and keep public information available, as those terms are understood and defined
      in SEC Rule 144, after 90 days after the effective date of the first
      registration filed by the Company for an offering of its securities to the
      general public;

     

    1.8.2           file
      with the SEC in a timely manner all reports and other documents required of
      the
      Company under the Securities Act and the Exchange Act (at any time after it
      has
      become subject to such reporting requirements); and

     

    1.8.3           so
      long as a Holder owns any Registrable Securities, to furnish to such Holder
      forthwith upon request a written statement by the Company as to its compliance
      with the reporting requirements of said Rule 144 (at any time after 90 days
      after the effective date of the first registration statement filed by the
      Company for an offering of its securities to the general public), and of the
      Securities Act and the Exchange Act (at any time after it has become subject
      to
      such reporting requirements), a copy of the most recent annual or quarterly
      report of the Company, and such other reports and documents so filed by the
      Company as the Holder may reasonably request in complying with any rule or
      regulation of the SEC allowing the Holder to sell any such securities without
      registration.

     

    1.9           Transfer
      of Registration Rights.  Holders’ rights to cause the Company to
      register their securities and keep information available, granted to them by
      the
      Company under subsections 1.2, 1.3 and 1.8, may be assigned to a transferee
      or assignee of (i) at least 100,000 shares (as adjusted for stock splits,
      stock dividends, recapitalizations and like events), (ii) the transfer is
      in connection with the transfer of all shares of a Holder, or (iii) to any
      constituent partners or members of a Holder which is a partnership or limited
      liability company, or to affiliates (as such term is defined in Rule 405 of
      the
      Securities Act) of a Holder, provided, that (a) the Company is given written
      notice by such Holder at the time of or within a reasonable time after said
      transfer, stating the name and address of said transferee or assignee; and
      identifying the securities with respect to which such registration rights are
      being assigned; and (b) solely as to transfers pursuant to clause
      (iii) above, any transferees or assignees agree to act through a single
      representative.  The Company may prohibit the transfer of any Holders’
rights under this subsection 1.9 to any proposed transferee or assignee who
      the
      Company reasonably believes is a competitor of the
      Company.  Notwithstanding anything else in this subsection 1.9, any
      Holder may transfer rights to a transferee of a Holder’s Registrable Securities
      if such transferee is a partner, member or shareholder or a retired partner,
      member or shareholder of such Holder.

     

    1.10           Limitations
      on Subsequent Registration Rights.  From and after the date
      hereof, the Company shall not, without the prior written consent of the Holders
      (which consent will not be unreasonably withheld) of not less than a majority
      of
      the Registrable Securities then outstanding enter into any agreement with any
      holder or prospective holder of any securities of the Company which would allow
      such holder or prospective holder to demand any registration including any
      registration rights similar to those rights described in subsection 1.3 or
      include such securities in any registration filed under subsections 1.2 or
      1.3 hereof if such inclusion would adversely affect the rights of any Holder
      (or
      any qualifying transferee under subsection 1.9) under such
      subsections.

     

    
      
        
        

      

      
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    1.11         “Market
      Stand-Off” Agreement.  Each Holder hereby agrees that, during the
      period of duration (not to exceed 90 days) specified by the Company and an
      underwriter of common stock or other securities of the Company following the
      effective date of an IPO or reverse merger with a public company, it shall
      not,
      to the extent requested by the Company and such underwriter, directly or
      indirectly sell, offer to sell, contract to sell (including, without limitation,
      any short sale), grant any option to purchase, pledge or otherwise transfer
      or
      dispose of (other than to donees who agree to be similarly bound) any securities
      of the Company held by it at any time during such period except common stock
      included in such registration; provided, however, that:

     

    1.11.1         such
      agreement shall be applicable only to the first such registration statement
      of
      the Company which covers common stock (or other securities) to be sold on its
      behalf to the public in an offering.

     

    In
      order
      to enforce the foregoing covenant, the Company may impose stop-transfer
      instructions with respect to the Registrable Securities of each Holder (and
      the
      shares of securities of every other person subject to the foregoing restriction)
      until the end of such period.

     

    1.12         Delay
      of Registration.  No Holder shall have any rights to take any
      actions to restrain, enjoin, or otherwise delay any registration as the result
      of any controversy that might arise with respect to the interpretation or
      implementation of this Section 1.

     

    1.13         Termination
      of Registration Rights.  No holder shall be entitled to exercise
      any right provided for in this Section 1 at any time when such Holder may sell
      all its shares in a three (3) month period under Rule 144 of the
      Act.

     

    2           Affirmative
      Covenants of the Company.  The Company hereby covenants and agrees
      as follows:

     

    2.1           Annual
      Financial Information.  The Company shall deliver to each Holder
      of at least ten thousand (10,000) Registrable Securities (a “Qualified
      Holder”) as soon as practicable after the end of each fiscal year of the
      Company, but in any event within 90 days thereafter, statements of
      operations, shareholders’ equity and cash flows of the Company for such year,
      and a balance sheet of the Company as of the end of such year, such year-end
      financial reports to be in reasonable detail, prepared in accordance with
      generally accepted accounting principles (“GAAP”), and audited by
      independent public accountants selected by the Company’s Board of
      Directors.

     

    2.2           Inspection.  The
      Company shall permit each Qualified Holder, at such Qualified Holder’s expense,
      to visit and inspect the Company’s properties, to examine its books of account
      and records and to discuss the Company’s affairs, finances and accounts with its
      officers, all at such reasonable times as may be requested by the Qualified
      Holder; provided, however, that the Company shall not be obligated pursuant
      to
      this subsection to provide access to any information which it reasonably
      considers to be a trade secret or similar confidential information.

     

    2.3           Termination
      of Information Covenants and Confidentiality of Information.  The
      covenants of the Company set forth in subsections 2.1 and 2.2 shall terminate
      as
      to the Qualified Holder and be of no further force or effect when the Company
      first becomes subject to the periodic reporting requirements of Section 12(g)
      or
      15(d) of the Securities Exchange Act of 1934, as amended.  Each
      Qualified Holder agrees that it will keep confidential and will not disclose
      or
      divulge any confidential, proprietary or secret information which such Purchaser
      may obtain from the Company, and which the Company has prominently marked
“confidential”, “proprietary” or “secret” or has otherwise
      identified as being such, pursuant to financial statements, reports and other
      materials submitted by the Company as required hereunder, unless such
      information is or becomes known to the Qualified Holder from a source other
      than
      the Company without violation of any rights of the Company, or is or becomes
      publicly known, or unless the Company gives its written consent to the Qualified
      Holder’s release of such information, except that no such written consent shall
      be required (and the Qualified Holder shall be free to release such information
      to such recipient) if such information is to be provided to a Qualified Holder’s
      counsel or accountant (and the provision of such information is directly
      necessary in order for such recipient provide services to Qualified Holder),
      or
      to an officer, director or partner of a Qualified Holder, provided that the
      Qualified Holder shall inform the recipient of the confidential nature of such
      information, and such recipient agrees in writing in advance of disclosure
      to
      treat the information as confidential.

     

    
      
        
        

      

      
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    3           General.

     

    3.1           Waivers
      and Amendments.  With the written consent of the record holders of
      at least a majority of the Registrable Securities, the obligations of the
      Company and the rights of the parties under this Agreement may be waived (either
      generally or in a particular instance, either retroactively or prospectively,
      and either for a specified period of time or indefinitely), and with the same
      consent the Company, when authorized by resolution of its Board of Directors,
      may enter into a supplementary agreement for the purpose of adding any
      provisions to or changing in any manner or eliminating any of the provisions
      of
      this Agreement; provided, however, that no such modification, amendment or
      waiver shall reduce the aforesaid percentage of Registrable Securities without
      the consent of all of the Holders of the Registrable Securities. Notwithstanding
      the foregoing, subsections 2.1, 2.2, 2.3, 2.4 and 2.7 may be amended only
      with the written consent of the Company and a majority of the shares then held
      by Qualified Holders.  Upon the effectuation of each such waiver,
      consent, agreement of amendment or modification, the Company shall promptly
      give
      written notice thereof to the record holders of the Registrable Securities
      or
      Qualified Holders, as the case may be, who have not previously consented thereto
      in writing.  This Agreement or any provision hereof may be changed,
      waived, discharged or terminated only by a statement in writing signed by the
      party against which enforcement of the change, waiver, discharge or termination
      is sought, except to the extent provided in this
      subsection 3.1.  In addition, the Company will grant the Holders
      any rights of first refusal or registration rights granted to subsequent
      purchasers of the Company’s equity securities to the extent that such subsequent
      rights are superior, in good faith judgment of the Company’s Board of Directors,
      to those granted in connection with the transaction.

     

    3.2           Governing
      Law.  This Agreement shall be governed in all respects by the laws
      of the State of California as such laws are applied to agreements between
      California residents entered into and to be performed entirely within California
      without regard to its conflict of law principles.

     

    3.3           Successors
      and Assigns.  Except as otherwise expressly provided herein, the
      provisions hereof shall inure to the benefit of, and be binding upon, the
      successors, assigns, heirs, executors and administrators of the parties
      hereto.

     

    3.4           Entire
      Agreement.  Except as set forth below, this Agreement and the
      other documents delivered pursuant hereto constitute the full and entire
      understanding and agreement between the parties with regard to the subjects
      hereof and thereof, and this Agreement shall supersede and cancel all prior
      agreements between the parties hereto with regard to the subject matter
      hereof.

     

    
      
        
        

      

      
        
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    3.5           Notices,
      etc.  All notices and other communications required or permitted
      hereunder shall be in writing and shall be delivered by overnight courier
      service or mailed by first class mail, postage prepaid, certified or registered
      mail, return receipt requested, addressed (a) if to any Purchaser, at such
      party’s address as set forth in the Company’s records, or at such other address
      as such party shall have furnished to the Company in writing, or (b) if to
      the Company, at such address as the Company shall have furnished to the
      Purchaser in writing.

     

    3.6           Severability.  In
      case any provision of this Agreement shall be invalid, illegal, or
      unenforceable, the validity, legality and enforceability of the remaining
      provisions of this Agreement or any provision of the other Agreement s shall
      not
      in any way be affected or impaired thereby.

     

    3.7           Titles
      and Subtitles.  The titles of the sections and subsections of this
      Agreement are for convenience of reference only and are not to be considered
      in
      construing this Agreement.

     

    3.8           Counterparts.  This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      an original, but all of which together shall constitute one
      instrument.

     

    IN
      WITNESS WHEREOF, the parties hereby have executed this Agreement on the date
      set
      forth underneath their respective signatures below.

     

    “COMPANY”

    


    PROCERA
      NETWORKS, INC.,

    a
      Delaware corporation

     

    
      	
              By:

            	
               

            	 
	 	
              Doug
                Glader, Chief Executive Officer

            	 
	  	 
	
              Date:

            	
              ____________,
                2003

            	 
	  	 
	
              “HOLDER” 

            	 
	  	 
	
              By:

            	
               

            	 
	  	 
	
              Print:

            	
               

            	 
	  	 
	
              Date:

            	
              _______________,
                2003

            	 


    

     

     

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