Document:

Exhibit 10.2

 

SUPPLEMENT

to the

Loan and Security Agreement

dated as of June 6, 2012

between

Meru Networks, Inc. (“Borrower”)

and

Venture Lending & Leasing VI, Inc. (“Lender”)

 

This is a Supplement identified in the document entitled Loan and Security Agreement dated as of June 6, 2012 (as the same may be amended, restated, supplemented and modified from time to time, the “Loan and Security Agreement”), by and between Borrower and Lender.  All capitalized terms used in this Supplement and not otherwise defined in this Supplement have the meanings ascribed to them in Article 10 of the Loan and Security Agreement, which is incorporated in its entirety into this Supplement.  In the event of any inconsistency between the provisions of the Loan and Security Agreement and this Supplement, this Supplement is controlling.

 

In addition to the provisions of the Loan and Security Agreement, the parties agree as follows:

 

Part 1. - Additional Definitions:

 

“Commitment”: Subject to the terms and conditions set forth in the Loan and Security Agreement and this Supplement, Lender commits to make a Growth Capital Loan to Borrower up to the original principal amount of Twelve Million Dollars ($12,000,000).

 

“Designated Rate”:  The Designated Rate for the Growth Capital Loan shall be a fixed rate of interest per annum equal to twelve percent (12.00%).

 

“Growth Capital Loan” means the Loan requested by Borrower and funded by Lender under its Commitment for general corporate purposes of Borrower.

 

“Loan Commencement Date” means, with respect to the Growth Capital Loan, (i) the first day of the first full calendar month following the Borrowing Date of such Loan if such Borrowing Date is not the first day of a month; or (ii) the same day as the Borrowing Date if the Borrowing Date is the first day of a month.

 

“Termination Date”:  The Termination Date is the earlier of:  (i) the date Lender may terminate its Commitment or extending other credit pursuant to the rights of Lender under Article 7 of the Loan and Security Agreement; and (ii) the Closing Date.

 

“Threshold Amount”: Two Hundred Fifty Thousand Dollars ($250,000).

 

 

Part 2. - Additional Covenants and Conditions:

 

1.                                      Commitment; Additional Conditions Precedent Regarding; Funding and Repayment of Growth Capital Loan.

 

(a)                                 Additional Condition Precedent.  In addition to the satisfaction of all the other conditions precedent specified in Article 4 of the Loan and Security Agreement and this Supplement, Lender’s obligation to fund the Growth Capital Loan under Lender’s Commitment is subject to receipt by Lender of evidence satisfactory to it, as determined by Lender in its reasonable judgment, that as of the Borrowing Date of such Loan, Borrower does not have any outstanding Indebtedness to SVB.  Subject to the foregoing and the other terms and conditions of the Loan and Security Agreement and this Supplement, Lender agrees to make a Growth Capital Loan

 

 

to Borrower from the Closing Date up to and including the Termination Date in an original principal amount up to but not exceeding the Commitment.

 

(b)                                 Repayment of Growth Capital Loan.  Principal of and interest on the Growth Capital Loan funded by Lender shall be payable as set forth in a Note evidencing such Loan (substantially in the form attached hereto as Exhibit “A”), which Note shall provide substantially as follows:  principal and interest at the Designated Rate shall be fully amortized over a period of thirty-nine (39) months in equal, monthly installments.  In particular, on the Borrowing Date applicable to such Growth Capital Loan, Borrower shall pay to Lender the first amortization installment of principal and interest at the Designated Rate, in advance, for the month of June 2012.  Commencing on July 1, 2012, and continuing on the first day of each consecutive calendar month thereafter, Borrower shall pay to Lender principal, plus interest at the Designated Rate, in advance, in thirty-eight (38) equal consecutive monthly installments.  For clarity, Borrower and Lender acknowledge and agree that $369,405.09 represents the monthly payment amount that will be required to amortize the principal balance of the Growth Capital Loan, together with interest thereon at the Designated Rate, over a 39-month term.

 

2.                                      Prepayment.

 

(a)                                 Generally.  Except as set forth in Section 2(b) below, the Growth Capital Loan may be voluntarily prepaid as provided in this Section 2(a) only.  Borrower may voluntarily prepay all but not less than all of such Growth Capital Loan in whole but not in part at any time by tendering to Lender cash payment in respect of such Growth Capital Loan in an amount equal to the sum of: (i) the accrued and unpaid interest on such Growth Capital Loan as of the date of prepayment, and (ii) an amount equal to the total amount of all scheduled but unpaid payments of principal and interest that would have accrued and been payable from the date of prepayment through the stated date of maturity of such Growth Capital Loan had it remained outstanding and been paid in accordance with the terms of the related Note.

 

(b)                                 From and after January 1, 2014.  Notwithstanding anything to the contrary in Section 2(a), commencing at any time from and after January 1, 2014 and so long as no Event of Default has occurred and is continuing, Borrower may voluntarily prepay all but not less than all of the Growth Capital Loan in whole but not in part by tendering to Lender cash payment in respect of such Growth Capital Loan in an amount (as determined by Lender) equal to the sum of: (i) the accrued and unpaid interest on such Growth Capital Loan as of the date of prepayment; (ii) the unpaid principal balance of such Growth Capital Loan as of the date of prepayment and (iii) the product of (A) 0.80 and (B) the interest that would have accrued and been payable from the date of prepayment through the stated date of maturity of such Growth Capital Loan had it remained outstanding and been paid in accordance with the terms of the related Note.

 

3.                                      SVB Credit Facility; Subordination of Lien Priority.  Lender agrees that Lender will subordinate to SVB the priority of the Liens granted to Lender pursuant to the Security Documents as to that portion of the Collateral consisting of Borrower’s accounts receivable, the proceeds thereof and Borrower’s cash.  Lender agrees to negotiate in good faith and to enter an intercreditor agreement with SVB, in form and substance acceptable to Lender, setting forth SVB’s and Lender’s rights and obligations with respect to their respective Liens in Collateral.   Borrower and Lender acknowledge and agree that:  (i) the SVB Credit Facility shall have an advance rate of no more than 80% and other terms and conditions acceptable to Lender; (ii) the Indebtedness of Borrower to SVB under the SVB Credit Facility shall not exceed an aggregate amount outstanding at any time equal to the difference between Twenty Million Dollars ($20,000,000) and the outstanding principal balance of the Growth Capital Loan advanced to Borrower by Lender hereunder; (iii) advances under the SVB Credit Facility shall be made as close to the end of Borrower’s then-current fiscal quarter as practicable, and no earlier than three (3) Business Days prior to the end of such fiscal quarter; (iv) any such advances made under the SVB Credit Facility shall be repaid by Borrower as soon as practicable, and no later than three (3) Business Days following the end of the fiscal quarter in which an advance was made; and (v) no later than four (4) Business Days after the end of each fiscal quarter, Borrower shall deliver to Lender a certificate from Borrower’s chief financial officer or other authorized officer, substantially in the form of Exhibit “C-2” to this Supplement (“Advance Certificate”), setting forth the details of any amounts advanced and repaid by Borrower in connection with the SVB Credit Facility.  Borrower and Lender further acknowledge and agree that upon Borrower’s achieving two (2) consecutive quarters of increasing profitability of at least One Million Dollars ($1,000,000) per quarter (based on non-GAAP income, and excluding stock compensation and other non-cash items), and so long as Borrower maintains such profitability (i.e., at least One Million Dollars ($1,000,000) per quarter), Lender will remove the temporal limitations relating to advances under the SVB Credit Facility.

 

2

 

4.                                      Issuance of Warrant.  As additional consideration for the making of its Commitment, Lender has earned and is entitled to receive immediately upon the execution of the Loan and Security Agreement and this Supplement a warrant instrument issued by Borrower, substantially in the form of Exhibit “D” attached hereto (the “Warrant”).  Borrower acknowledges that Lender has assigned its rights to receive the Warrant to its parent, Venture Lending & Leasing VI, LLC (“LLC”).  In connection therewith, Borrower shall issue the Warrant directly to LLC.  Upon request of Borrower, Lender shall furnish to Borrower a copy of the agreement in which Lender assigned its rights to receive the Warrant to LLC.

 

5.                                      Success Bonus.  As additional consideration for the making of its Commitment, Lender has earned and is entitled to receive a cash payment in an amount equal to Two Million Dollars ($2,000,000) (the “Success Bonus”) at the earlier to occur of (i) a Change of Control (as defined below) and (ii) September 1, 2015.  Borrower and Lender acknowledge and agree that the Success Bonus shall be and constitutes an Obligation secured by the Collateral for purposes of this Supplement and the other Loan Documents.  Borrower and Lender further acknowledge and agree that the Success Bonus shall be paid by Borrower prior to, or concurrently with, any payments to Borrower’s stockholders and other creditors and Lender’s right to receive the Success Bonus shall survive the payment and satisfaction of all of Borrower’s other Obligations to Lender.  Borrower acknowledges that Lender may assign its rights to receive the Success Bonus to LLC.  If such assignment is made then Lender shall notify Borrower and Borrower shall pay the Success Bonus to LLC when due.  If such assignment is made, upon request of Borrower, Lender shall furnish to Borrower a copy of the agreement in which Lender assigned its rights to receive the Success Bonus to LLC.  “Change of Control” shall mean any sale, exclusive license, or other disposition of all or substantially all of the assets of Borrower, any reorganization, privatization, consolidation, merger or other transaction involving Borrower, or any transaction where the holders of Borrower’s securities before such transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after such transaction.

 

6.                                      Completion of Due Diligence; Payment and Disposition of Commitment Fee.  As an additional condition precedent under Section 4.1 of the Loan and Security Agreement, Lender shall have completed to its satisfaction its due diligence review of Borrower’s business and financial condition and prospects, and Lender’s investment committee shall have approved its Commitment.  If this condition is not satisfied, the $120,000 commitment fee (the “Commitment Fee”) previously paid by Borrower shall be refunded.  Except as set forth in this Section 6, the Commitment Fee is not refundable.

 

7.                                      Documentation  Fee Payment.  Pursuant to Section 9.8(a) of the Loan and Security Agreement, Borrower shall reimburse Lender, on demand, for Lender’s actual reasonable, documented and out-of-pocket  attorneys’ fees, costs and expenses incurred in connection with the preparation and negotiation of the Loan Documents, plus Lender’s actual costs and filing fees related to perfection of its Liens in the Collateral in any jurisdiction in which the same is located, recording a copy of the Intellectual Property Security Agreement with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, and confirming the priority of such Liens (collectively, the “Documentation Fee Payment”).  The Documentation Fee Payment shall not exceed $12,000 in the aggregate.

 

8.                                      Borrower’s Primary Operating Account and Wire Transfer Instructions:

 

	
Institution   Name:
    	
Silicon   Valley Bank
    
	
Address:
    	
3003   Tasman Drive, Santa Clara, CA 95054
    
	
ABA   No.:
    	
121140399
    
	
Contact   Name:
    	
Laurie   Chimpky
    
	
Phone   No.:
    	
925.737.6028
    
	
E-mail:
    	
LChimpky@svb.com
    
	
Account   Title:
    	
Meru   Networks, Inc.
    
	
Account   No.:
    	
33003   45156
    

 

3

 

9.                                      Debits to Account for ACH Transfers.  For purposes of Sections 2.2 and 5.10 of the Loan and Security Agreement,  the Primary Operating Account  shall be the bank account set forth in Section 8 above.  Borrower hereby agrees that the Growth Capital Loan will be advanced to the account specified above and regularly scheduled payments of principal and interest will be automatically debited from the same account.

 

 

Part 3. - Additional Representations:

 

Borrower represents and warrants that as of the Closing Date and the Borrowing Date:

 

a)                                     Its chief executive office is located at:  894 Ross Drive, Sunnyvale, CA  94089.

 

b)                                     Its Equipment is located at:  894 Ross Drive, Sunnyvale, CA  94089.

 

c)                                      Its Records are located at:  894 Ross Drive, Sunnyvale, CA  94089.

 

d)                                     Its Inventory is located at:  894 Ross Drive, Sunnyvale, CA  94089.

 

e)                                      In addition to its chief executive office, Borrower maintains offices or operates its business at the following locations:

 

Meru Networks U.S. and Canada Corporate

Corporate Headquarters

894 Ross Drive

Sunnyvale, CA 94089

Tel: +1 (408) 215-5300

Fax: +1 (408) 215-5301

Email: info@merunetworks.com

 

Meru Networks (Eastern U.S.)

7650 Courtney Campbell Causeway

Suite 300

Tampa, FL 33607 USA

Tel:  +1 (877) 952-6725

Fax: +1 (813) 288-8626

Email: info@merunetworks.com

 

Meru Networks India Pvt. Ltd.

“Adarsh Crystal”

#16/3, Ground Floor

Cambridge Road

Cambridge Layout

(Opp. Frank Anthony School)

Bangalore — 560 008

Tel: +91 80 66961000

Fax: +91 80 66961082

Email: info.india@merunetworks.com

 

Meru Networks India Pvt. Ltd.

FIRST FLOOR, Salarpuria Adonis,

Municipal No. 3/1, situated at Kolar Road

(earlier known as Old Madras Road),

Sarvagna Nagar, Ward no. 85, Bangalore

 

Meru Networks UK

 

4

 

Atrium Court

The Ring

Bracknell

RG12 1BW

United Kingdom

Tel: +44 (0) 1344 393055

Email: info.emea@merunetworks.com

 

Meru Networks Nordics

North & Eastern Europe

Stureplan 4 C, 4th floor

114 35 Stockholm

Sweden

Tel: +46 8 50 90 12 83

Fax: +46 8 50 90 13 10

Email: info.nordics@merunetworks.com

 

Meru Networks MEA

G01-6WA, West Wing, Building 6, Block A

Dubai Airport Free Zone

Dubai, UAE

Tel: +971-4-2146057

Fax: +971-4-2146059

Email: info.mea@merunetworks.com

 

Meru Networks Japan

5F Nomura 3rd Building

2-19, Kanda Suda-cho, Chiyoda-ku

Tokyo 101-0041, Japan

Tel: +81 3 5297 1221

Fax: +81 3 5297 1222

Email: info.jp@merunetworks.com

 

Meru Networks Korea

KyungAn Building  Suite 602, 769-12

Yeoksam-don, Kangnam-ku

Seoul   135-080

Korea

Tel: +82 2 365 6252

Fax: +82 2 365 6254

Mobile: +82 10 7637 7999

Email: info.korea@merunetworks.com

 

Meru Networks Australia

Level 1

483 Riley Street

Surry Hills NSW 2010

Australia

Tel: +61 3 98324466

Email: info.australia@merunetworks.com

 

Meru Networks China

Suite 1901, Level 19, Tower E2

Oriental Plaza

1st East Chang An Ave.

Dongcheng District

 

5

 

Beijing 100738, P.R. China

Tel: +86 10 8520 0463

Fax: +86 10 8520 0473

Email: info.china@merunetworks.com

 

Meru Networks Germany

Landsbergerstrasse 155

80687 München

Germany

Email: dach@merunetworks.com

 

Meru Networks Pte Ltd

7 Temasek Boulevard

#44-01, Suntec Tower One

Singapore 038987

Tel: +65-6430-6678

Fax: +65-6430-6679

Email: info.apac@merunetworks.com

 

f)                                       Other than its full corporate name, Borrower has conducted business using the following legal names, trade names or fictitious business names:  None.

 

g)                                      Its Delaware state corporation I.D. number is:  3483993.

 

h)                                     Its federal tax identification number is:  26-0049840.

 

i)                                         In addition to Borrower’s Primary Operating Account identified in Section 8 above, Borrower maintains the following other Deposit Accounts and investment accounts:

 

	
Institution   Name:
    	
Silicon   Valley Bank
    
	
Address:
    	
3003   Tasman Drive, Santa Clara, CA 95054
    
	
ABA   No.:
    	
121140399
    
	
Contact   Name:
    	
Laurie   Chimpky
    
	
Phone   No.:
    	
925.737.6028
    
	
E-mail:
    	
LChimpky@svb.com
    
	
Account   No.:
    	
33003   45156 (Operating)
    
	
Account   No.:
    	
33008   12554 (Payable ZBA)
    
	
Account   No.:
    	
33006   10031 (Payroll ZBA)
    
	
Account   No.:
    	
33005   49484 (Cash Collateral ZBA)
    
	
Account   No.:
    	
486-02689-13   RR ZGQ (Investment)
    
	
 
    	
 
    
	
Institution   Name:
    	
Mellon   Bank (thru Silicon Valley Bank)
    
	
Address:
    	
3003   Tasman Drive, Santa Clara, CA 95054
    
	
ABA   No.:
    	
043301601
    
	
Contact   Name:
    	
Laurie   Chimpky
    
	
Phone   No.:
    	
925.737.6028
    
	
E-mail:
    	
LChimpky@svb.com
    
	
Account   No.:
    	
901   2307 (Controlled Disbursements ZBA)
    

 

6

 

	
Institution   Name:
    	
SVB   Asset Management
    
	
Address:
    	
555   Mission St, Ste 900 San Francisco, CA 94105
    
	
ABA   No.:
    	
 
    
	
Contact   Name:
    	
Judy   Lee
    
	
Phone   No.:
    	
415.764.3150
    
	
E-mail:
    	
julee@svb.com
    
	
Account   No.:
    	
19-SV739   (Investment -Asset Mgmt)
    

 

	
Institution   Name:
    	
UBS   Financial Services
    
	
Address:
    	
One   North Wacker Drive, 25th Floor Chicago, IL 60606
    
	
ABA   No.:
    	
26007993
    
	
Contact   Name:
    	
Paul   Tashima
    
	
Phone   No.:
    	
800.372.1993
    
	
E-mail:
    	
paul.tashima@ubs.com
    
	
Account   No.:
    	
CP   - 41931 (Investment- Cash Mgmt)
    

 

Part 4. - Additional Loan Documents:

 

	
Form of   Note
    	
Exhibit “A”
    
	
Form of   Borrowing Request
    	
Exhibit “B”
    
	
Form of   Compliance Certificate
    	
Exhibit “C-1”
    
	
Form of   Advance Certificate
    	
Exhibit “C-2”
    
	
Form of   Warrant
    	
Exhibit “D”
    
	
Form of   Landlord Waiver
    	
Exhibit “E”
    
	
Form of   Legal Opinion
    	
Exhibit “F”
    
	
Form of   Intellectual Property Security Agreement
    	
Exhibit “G”
    
	
Form of   Insurance Authorization Letter
    	
Exhibit “H”
    
	
Form of   Certificate Concerning Capitalization
    	
Exhibit “I”
    

 

Remainder of this page intentionally left blank; signature page follows

 

7

 

[Signature page to Supplement]

 

 

IN WITNESS WHEREOF, the parties have executed this Supplement as of the date first above written.

 

	
 
    	
BORROWER:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
MERU   NETWORKS, INC.
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Bami Bastani
    
	
 
    	
Name:
    	
Bami   Bastani
    
	
 
    	
Title:
    	
President &   CEO
    
	
 
    	
 
    
	
Address   for Notices:
    	
894   Ross Drive
    	
 
    
	
 
    	
Sunnyvale, CA  94089
    	
 
    
	
 
    	
Attn:
    	
 
    
	
 
    	
Fax   #
    	
 
    
	
 
    	
Phone   #
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
LENDER:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
VENTURE   LENDING & LEASING VI, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Jay Cohan
    
	
 
    	
Name:
    	
Jay   Cohan
    
	
 
    	
Title:
    	
Vice   President
    
	
 
    	
 
    	
 
    
	
Address   for Notices:
    	
104 La Mesa Dr., Suite 102
    
	
 
    	
Portola Valley, CA  94028
    
	
 
    	
Attn:   Chief Financial Officer
    
	
 
    	
Fax   # 650 234-4343
    
	
 
    	
Phone   # 650 234-4300
    
					

 

 

EXHIBIT “A”

 

FORM OF PROMISSORY NOTE

 

[Note No. X-XXX]

 

	
$12,000,000
    	
June     , 2012
    
	
 
    	
Portola Valley, California
    

 

The undersigned (“Borrower”) promises to pay to the order of VENTURE LENDING & LEASING VI, INC., a Maryland corporation (“Lender”), at its office at 104 La Mesa Dr., Suite 102, Portola Valley, CA 94028, or at such other place as Lender may designate in writing, in lawful money of the United States of America, the principal sum of Twelve Million Dollars ($12,000,000), with interest thereon from the date hereof until maturity, whether scheduled or accelerated, at a fixed rate per annum equal to twelve percent (12.00%) (the “Designated Rate”).

 

This Note is one of the Notes referred to in, and is entitled to all the benefits of, a Loan and Security Agreement dated as of June 6, 2012, between Borrower and Lender (as the same has been and may be amended, restated and supplemented from time to time, the “Loan Agreement”).  Each capitalized term not otherwise defined herein shall have the meaning set forth in the Loan Agreement.  The Loan Agreement contains provisions for the acceleration of the maturity of this Note upon the happening of certain stated events.

 

Principal of and interest on this Note shall be payable as follows:

 

On the Borrowing Date, Borrower shall pay the first amortization installment of principal, plus interest at the Designated Rate, in advance, for the month of June 2012 in the amount of [                                    ].

 

Commencing on July 1, 2012, and continuing on the first day of each consecutive month thereafter, Borrower shall pay to Lender principal, plus interest at the Designated Rate, in advance, in thirty-eight (38) equal consecutive monthly installments of Three Hundred Sixty Nine Thousand Four Hundred Five and 09/100 Dollars ($369,405.09) each.

 

This Note may be voluntarily prepaid only as permitted under Section 2 of Part 2 of the Supplement to the Loan Agreement.

 

Any unpaid payments of principal or interest on this Note shall bear interest from their respective maturities, whether scheduled or accelerated, at a rate per annum equal to the Default Rate.  Borrower shall pay such interest on demand.

 

Interest, charges and fees shall be calculated for actual days elapsed on the basis of a 360-day year, which results in higher interest, charge or fee payments than if a 365-day year were used.  In no event shall Borrower be obligated to pay interest, charges or fees at a rate in excess of the highest rate permitted by applicable law from time to time in effect.

 

 

If Borrower is late in making any payment under this Note by more than five (5) Business Days, Borrower agrees to pay a “late charge” of five percent (5%) of the installment due, but not less than fifty dollars ($50.00) for any one such delinquent payment.  This late charge may be charged by Lender for the purpose of defraying the expenses incidental to the handling of such delinquent amounts.  Borrower acknowledges that such late charge represents a reasonable sum considering all of the circumstances existing on the date of this Note and represents a fair and reasonable estimate of the costs that will be sustained by Lender due to the failure of Borrower to make timely payments.  Borrower further agrees that proof of actual damages would be costly and inconvenient.  Such late charge shall be paid without prejudice to the right of Lender to collect any other amounts provided to be paid or to declare a default under this Note or any of the other Loan Documents or from exercising any other rights and remedies of Lender.

 

This Note shall be governed by, and construed in accordance with, the laws of the State of California, excluding those laws that direct the application of the laws of another jurisdiction.

 

 

	
 
    	
MERU   NETWORKS, INC.
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Its:
    	
 
    

 

 

EXHIBIT “B”

 

FORM OF BORROWING REQUEST

 

[Date]

 

Venture Lending & Leasing VI, Inc.

104 La Mesa Dr., Suite 102

Portola Valley, CA  94028

 

Re:                             Meru Networks, Inc.

 

Ladies and Gentlemen:

 

Reference is made to the Loan and Security Agreement dated as of June 6, 2012 (as the same has been and may be amended, restated and supplemented from time to time, the “Loan Agreement”, the capitalized terms used herein as defined therein), between Venture Lending & Leasing VI, Inc. (“Lender”) and Meru Networks, Inc. (“Borrower”).

 

The undersigned is the                               of Borrower, and hereby requests on behalf of Borrower a Loan under the Loan Agreement, and in that connection certifies as follows:

 

1.             The amount of the proposed Loan is                                 and     /100 Dollars ($                       ).  The Borrowing Date of the proposed Loan is                       , 201   .

 

2.             As of this date, no Default or Event of Default has occurred and is continuing, or will result from the making of the proposed Loan, the representations and warranties of Borrower contained in Article 3 of the Loan Agreement and Part 3 of the Supplement are true and correct in all material respects, and the applicable conditions precedent described in Article 4 of the Loan Agreement and Part 2 of the Supplement have been met.

 

3.             No event that has had or could reasonably be expected to have a Material Adverse Change has occurred.

 

4.             Borrower’s most recent financial projections or business plan dated                 , as approved by Borrower’s Board of Directors on                     , are enclosed herewith in the event such financial projections or business plan have not been previously provided to Lender.

 

Remainder of this page intentionally left blank; signature page follows

 

 

Borrower shall notify you promptly before the funding of the Loan if any of the matters to which I have certified above shall not be true and correct on the Borrowing Date.

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
MERU   NETWORKS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:*
    	
 
    

 

* Must be executed by Borrower’s Chief Financial Officer or other executive officer.

 

 

EXHIBIT “C-1”

 

FORM OF

COMPLIANCE CERTIFICATE

 

Venture Lending & Leasing VI, Inc.

104 La Mesa Dr., Suite 102

Portola Valley, CA  94028

 

Re:          Meru Networks, Inc.

 

Ladies and Gentlemen:

 

Reference is made to the Loan and Security Agreement dated as of June 6, 2012 (as the same has been and may be amended, restated, modified and supplemented from time to time, the “Loan Agreement”, the capitalized terms used herein as defined therein), between Meru Networks, Inc. (“Borrower”) and Venture Lending & Leasing VI, Inc. (“Lender”).

 

The undersigned authorized representative of Borrower hereby certifies that in accordance with the terms and conditions of the Loan Agreement, (i) no Default or Event of Default has occurred and is continuing, except as noted below, and (ii) Borrower is in complete compliance for the financial reporting period ending                     with all required financial reporting and other covenants under the Loan Agreement, except as noted below.  Attached herewith are the required documents supporting the foregoing certification.  The undersigned further certifies that the accompanying financial statements have been prepared in accordance with GAAP applied on a consistent basis throughout the periods indicated.  The financial statements fairly present in all material respects in accordance with GAAP the financial condition and operating results of Borrower and its subsidiaries as of the dates, and for the periods, indicated therein, excluding footnotes and subject to normal year-end audit adjustments (in the case of interim monthly financial statements), except as explained below.

 

Please provide the following requested information and

indicate compliance status by circling Yes/No under “Complies”:

 

	
REPORTING REQUIREMENT
    	
 
    	
REQUIRED
    	
 
    	
COMPLIES
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Interim   Financial Statements
    	
 
    	
Monthly   within 30 days
    	
 
    	
YES   / NO
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Operating   Budgets/
    	
 
    	
 
    	
 
    	
 
    
	
Updated   Capitalization Tables
    	
 
    	
As   modified
    	
 
    	
YES   / NO
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Annual   Financial Statements
    	
 
    	
Annually   within 180 days after fiscal year-end
    	
 
    	
YES   / NO
    

 

Date of most recent Board-approved budget/plan:                                 

Any change in budget/plan since version most recently delivered to Lender?  YES/NO

If YES, please attach

 

Date of most recent capitalization table:                                 

Any substantive changes in capitalization table since version most recently delivered to Lender?  YES/NO

If YES, please attach a copy of latest capitalization table

 

	
Patents,   Trademarks and Copyrights applied
    	
 
    	
Quarterly   within 30 days
    	
 
    	
YES*   / NO
    
	
and/or   filed with the U.S. Patent &
    	
 
    	
 
    	
 
    	
 
    

 

 

Trademark Office or U.S. Copyright Office

during the quarter ending 

 

* if “YES” then please list by application/registration number and title

 

Date of Last Round Raised:                             

Has there been any new financing since the last Compliance Certificate submitted?  YES/NO

Please complete information below each time this Compliance Certificate is furnished to Lender

 

Date Closed:                        Series:                                            Per Share Price:  $                         

Amount Raised:                      Post Money Valuation:                        

 

Any stock splits since date of last report?  YES/NO

If YES, please provide any information on stock splits which would affect valuation:

 

 

Any dividends since date of last report?  YES/NO

If YES, please provide any information on dividends which would affect valuation:

 

 

Any unusual terms?  (i.e., Anti-dilution, multiple preference, etc.)  YES/NO

If YES, please explain:

 

 

AGREEMENTS WITH PERSONS IN POSSESSION OF TANGIBLE COLLATERAL

 

Pursuant to Section 5.9(e) of the Loan Agreement, Borrower represents and warrants that: (i) as of the date hereof, tangible Collateral is located at the addresses set forth below; and (ii) to the extent required by Section 5.9(e) of the Loan Agreement, a Waiver has been executed and delivered to Lender with respect to each such location at which the value of the Collateral located there is greater than $50,000 [Note: If Borrower has located Collateral at any new location since the date of the last Compliance Certificate, please so indicate].

 

	
 
    	
 
    	
Location of Collateral
    	
 
    	
Value of Collateral at such
   Locations
    	
 
    	
Waiver
   In place?
    	
 
    	
Complies?
    	
 
    	
New
   Location?
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.)
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.)
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
3.)
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
4.)
    	
 
    	
 
    	
 
    	
$
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    

 

ACCOUNT CONTROL AGREEMENTS

 

Pursuant to Section 6.11 of the Loan Agreement, Borrower represents and warrants that: (i) as of the date hereof, it maintains only those deposit and investment accounts set forth below; and (ii) if required pursuant to the terms of the Loan Agreement, a control agreement has been executed and delivered to Lender with respect to each such account [Note: If Borrower has established any new account(s) since the date of the last compliance certificate, please so indicate].

 

 

Deposit Accounts

 

	
 
    	
 
    	
Name of Institution
    	
 
    	
Account Number
    	
 
    	
Control Agt.
   In place?
    	
 
    	
Complies
    	
 
    	
New
   Account
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
3.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
4.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    

 

Investment Accounts

 

	
 
    	
 
    	
Name of Institution
    	
 
    	
Account Number
    	
 
    	
Control Agt.
   In place?
    	
 
    	
Complies
    	
 
    	
New
   Account
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
1.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
2.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
3.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
4.)
    	
 
    	
 
    	
 
    	
 
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    	
YES   / NO
    	
 
    

 

 

EXPLANATIONS

 

 

 

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MERU   NETWORKS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:*
    

 

* Must be executed by the Borrower’s Chief Financial Officer or other executive officer.

 

 

EXHIBIT “C-2”

 

FORM OF

ADVANCE CERTIFICATE

 

Venture Lending & Leasing VI, Inc.

104 La Mesa Dr., Suite 102

Portola Valley, CA 94028

 

Re:           Meru Networks, Inc.

 

Ladies and Gentlemen:

 

Reference is made to the Loan and Security Agreement dated as of June 6, 2012 (as the same has been and may be amended, restated, modified and supplemented from time to time, the “Loan Agreement”, the capitalized terms used herein as defined therein), between Meru Networks, Inc. (“Borrower”) and Venture Lending & Leasing VI, Inc. (“Lender”).

 

The undersigned authorized representative of Borrower hereby certifies that in accordance with the terms and conditions of the Loan Agreement, Borrower is in complete compliance for the financial reporting period ending                     with the requirements set forth in Supplement with respect to the SVB Credit Facility.  Attached herewith are the required documents supporting the foregoing certification.

 

REQUIREMENTS

 

as of   [date]

 

	
1.
    	
 
    	
Date and amount of advance under SVB Credit Facility:
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
 
    	
Date   such advance under SVB Credit Facility was repaid and amount repaid:
    	
 
    

 

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
MERU   NETWORKS, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:*
    

 

* Must be executed by the Borrower’s Chief Financial Officer or other executive officer.

 

 

EXHIBIT “D”

 

FORM OF WARRANT

 

 

EXHIBIT “E”

 

FORM OF LANDLORD WAIVER

 

 

EXHIBIT “F”

 

FORM OF LEGAL OPINION

 

 

EXHIBIT “G”

 

FORM OF INTELLECTUAL PROPERTY SECURITY AGREEMENT

 

 

EXHIBIT “G”

 

FORM OF INSURANCE AUTHORIZATION LETTER

 

 

EXHIBIT “G”

 

FORM OF CERTIFICATE CONCERNING CAPITALIZATIONExhibit 10.3

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

Date of Issuance:  June 6, 2012

 

WARRANT TO PURCHASE

SHARES OF COMMON STOCK OF

MERU NETWORKS, INC.

 

(Void after June 1, 2017)

 

This certifies that VENTURE LENDING & LEASING VI, LLC, a Delaware limited liability company, or assigns (“Holder”), for value received, is entitled to purchase from MERU NETWORKS, INC., a Delaware corporation (“Company”), Four Hundred Sixty Eight Thousand Two Hundred Ninety Three (468,293) fully paid and nonassessable shares of Company’s common stock (the “Stock”), for cash, at a purchase price per share (the “Stock Purchase Price”) equal to $2.05.  Holder may also exercise this Warrant on a cashless or “net issuance” basis under certain circumstances as described in Section 1(b) below, and this Warrant shall be deemed to have been exercised in full on such basis on the Expiration Date (hereinafter defined), to the extent not fully exercised prior to such date.  This Warrant is issued in connection with that certain Loan and Security Agreement of even date herewith (as the same may be amended, restated, supplemented or modified from time to time, the “Loan Agreement”) between Company, as borrower, and Holder’s subsidiary, Venture Lending & Leasing VI, Inc., as lender (“Lender”). Capitalized terms used herein and not otherwise defined in this Warrant shall have the meanings ascribed to them in the Loan Agreement, unless the context would otherwise require.

 

This Warrant may be exercised at any time or from time to time up to and including 5:00 p.m. (Pacific Time) on June 1, 2017 (the “Expiration Date”), upon surrender to Company at its principal office at 894 Ross Drive, Sunnyvale, CA  94089 (or at such other location as Company may advise Holder in writing) of this Warrant properly endorsed with the Form of Subscription attached hereto duly completed and signed and upon payment in cash or by check of the aggregate Stock Purchase Price for the number of shares for which this Warrant is being exercised determined in accordance with the provisions hereof.  The Stock Purchase Price and the number of shares purchasable hereunder are subject to further adjustment as provided in Section 4 of this Warrant

 

This Warrant is subject to the following terms and conditions:

 

1.                                      Exercise; Issuance of Certificates; Payment for Shares.

 

(a)           Unless an election is made pursuant to clause (b) of this Section 1, this Warrant shall be exercisable at the option of Holder, at any time or from time to time, on or before the Expiration Date for all or any

 

 

portion of the shares of Stock (but not for a fraction of a share) which may be purchased hereunder for the Stock Purchase Price multiplied by the number of shares to be purchased.  Company agrees that the shares of Stock purchased under this Warrant shall be and are deemed to be issued to Holder as the record owner of such shares as of the close of business on the date on which the Form of Subscription attached hereto shall have been delivered and payment made for such shares.  Subject to the provisions of Section 2, certificates for the shares of Stock so purchased, together with any other securities or property to which Holder is entitled upon such exercise, shall be delivered to Holder by Company, at Company’s expense, within a reasonable time after the rights represented by this Warrant have been so exercised.  Except as provided in clause (b) of this Section 1, in case of a purchase of less than all the shares which may be purchased under this Warrant, Company shall cancel this Warrant and execute and deliver a new warrant or warrants of like tenor for the balance of the shares purchasable under this Warrant surrendered upon such purchase to Holder within a reasonable time.  Each stock certificate so delivered shall be in such denominations of Stock as may be requested by Holder and shall be registered in the name of Holder or such other name as shall be designated by Holder, subject to the limitations contained in Section 2.

 

(b)           Holder, in lieu of exercising this Warrant by the cash payment of the Stock Purchase Price pursuant to clause (a) of this Section 1, may elect, at any time on or before the Expiration Date, to surrender this Warrant and receive that number of shares of Stock computed using the following formula:

 

 

	
Where:
    	
X
    	
=
    	
the   number of shares of Stock to be issued to Holder.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
Y
    	
=
    	
the   number of shares of Stock that Holder would otherwise have been entitled to   purchase hereunder pursuant to Section 1(a) (or such lesser number   of shares as Holder may designate in the case of a partial exercise of this   Warrant).
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
A
    	
=
    	
the   Per Share Price (as defined in Section 1(c) below) of one   (1) share of Stock at the time the net issuance election under this   Section 1(b) is made.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
B
    	
=
    	
the   Stock Purchase Price then in effect.
    

 

Election to exercise under this Section 1(b) may be made by delivering a signed form of subscription to Company via facsimile, to be followed by delivery of this Warrant.  Notwithstanding anything to the contrary contained in this Warrant, if as of the close of business on the last business day preceding the Expiration Date this Warrant remains unexercised as to all or a portion of the shares of Stock purchasable hereunder, then effective as 9:00 a.m. (Pacific Standard Time) on the Expiration Date, Holder shall be deemed, automatically and without need for notice to Company, to have elected to exercise this Warrant in full pursuant to the provisions of this Section 1(b), and upon surrender of this Warrant shall be entitled to receive that number of shares of Stock computed using the above formula, provided that the application of such formula as of the Expiration Date yields a positive number for “X”.

 

(c)           For purposes of Section 1(b), “Per Share Price” means:

 

(i)            If Company’s common stock is traded on a securities exchange or actively traded over-the-counter:

 

(1)           If Company’s common stock is traded on a securities exchange, the Per Share Price shall be deemed to be the closing price of Company’s common stock as quoted on any exchange, as published on Yahoo! Finance (or a successor thereto or equivalent publisher) for the trading day immediately prior to the date of Holder’s election hereunder.

 

2

 

(2)           If Company’s common stock is actively traded over-the-counter, the Per Share Price shall be deemed to be the closing bid or sales price, whichever is applicable, of Company’s common stock for the trading day immediately prior to the date of the Holder’s election hereunder.

 

(ii)           If (i) is not applicable, the Per Share Price shall be determined in good faith by the Board of Directors of Company based on relevant facts and circumstances at the time of the net exercise under Section 1(b), including in the case of a Change of Control (as defined in Section 4.3(a) hereof), the consideration receivable by the holders of the Stock in such Change of Control and the liquidation preference (including any declared but unpaid dividends), if any, then applicable to the Stock.

 

2.             Limitation on Transfer.

 

(a)           This Warrant and the Stock shall not be transferable except upon the conditions specified in this Section 2, which conditions are intended to ensure compliance with the provisions of the Securities Act.  Each holder of this Warrant or the Stock issuable hereunder will cause any proposed transferee of the Warrant or Stock to agree to take and hold such securities subject to the provisions and upon the conditions specified in this Section 2.

 

(b)           Each certificate representing (i) this Warrant, (ii) the Stock and (iii) any other securities issued in respect of the Stock upon any stock split, stock dividend, recapitalization, merger, consolidation or similar event, shall (unless otherwise permitted by the provisions of this Section 2 or unless such securities have been registered under the Securities Act or sold under Rule 144) be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required under applicable state securities laws):

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE AND DISTRIBUTION THEREOF, AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR ANY STATE SECURITIES LAWS.  SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION OF COUNSEL IN A FORM REASONABLY ACCEPTABLE TO COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED DUE TO AN EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

 

(c)           Holder and each person to whom this Warrant is subsequently transferred represents and warrants to Company (by acceptance of such transfer) that it will not transfer this Warrant or securities issuable upon exercise hereof, except pursuant to (i) an effective registration statement under the Securities Act, (ii) Rule 144 under the Securities Act (or any other rule under the Securities Act relating to the disposition of securities), or (iii) an opinion of counsel, reasonably satisfactory to counsel for Company, that an exemption from such registration is available.

 

3.             Shares to be Fully Paid; Reservation of Shares. Company covenants and agrees that all shares of Stock which may be issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any stockholder and free of all liens and similar charges with respect to the issue thereof.  Company further covenants and agrees that during the period within which the rights represented by this Warrant may be exercised, Company will at all times have authorized and reserved, for the purpose of issue or transfer upon exercise of the subscription rights evidenced by this Warrant, a sufficient number of shares of authorized but unissued Stock, or other securities and property, when and as required to provide for the exercise of the rights represented by this Warrant.  Company will take all such action as may be necessary to assure that such shares of Stock may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any domestic securities exchange upon which the Stock may be listed.  Company will not take any action which would result in any adjustment of the Stock Purchase Price (as described in Section 4 hereof) (i) if the total number of shares of Stock issuable after such action upon exercise of all outstanding warrants, together with all shares of Stock 

 

3

 

then outstanding and all shares of Stock then issuable upon exercise of all options and upon the conversion of all convertible securities then outstanding, would exceed the total number of shares of Stock then authorized by Company’s Certificate of Incorporation, or (ii) if the par value per share of the Stock would exceed the Stock Purchase Price.

 

4.             Adjustment of Stock Purchase Price and Number of Shares.  The Stock Purchase Price and the number of shares purchasable upon the exercise of this Warrant shall be subject to adjustment from time to time upon the occurrence of certain events described in this Section 4.  Upon each adjustment of the Stock Purchase Price, Holder shall thereafter be entitled to purchase, at the Stock Purchase Price resulting from such adjustment, the number of shares obtained by multiplying the Stock Purchase Price in effect immediately prior to such adjustment by the number of shares purchasable pursuant hereto immediately prior to such adjustment, and dividing the product thereof by the Stock Purchase Price resulting from such adjustment.

 

4.1          Subdivision or Combination of Stock.  In case Company shall at any time subdivide its outstanding shares of Stock into a greater number of shares, the Stock Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced, and conversely, in case the outstanding shares of Stock of Company shall be combined into a smaller number of shares, the Stock Purchase Price in effect immediately prior to such combination shall be proportionately increased.

 

4.2          Dividends in Stock or Property, Reclassification.  If at any time or from time to time the holders of Stock (or any shares of stock or other securities at the time receivable upon the exercise of this Warrant) shall have received or become entitled to receive, without payment therefor,

 

(a)           Stock, or any shares of stock or other securities whether or not such securities are at any time directly or indirectly convertible into or exchangeable for Stock, or any rights or options to subscribe for, purchase or otherwise acquire any of the foregoing by way of dividend or other distribution,

 

(b)           any cash paid or payable otherwise than as a cash dividend, or

 

(c)           Stock or other or additional stock or other securities or property (including cash) by way of spin off, split-up, reclassification, combination of shares or similar corporate rearrangement, (other than shares of  Stock issued as a stock split, adjustments in respect of which shall be covered by the terms of Section 4.1 above),

 

then and in each such case, Holder hereof shall, upon the exercise of this Warrant, be entitled to receive, in addition to the number of shares of Stock receivable thereupon, and without payment of any additional consideration therefor, the amount of stock and other securities and property (including cash in the cases referred to in clauses (b) and (c) above) which such Holder would hold on the date of such exercise had it been the holder of record of such Stock as of the date on which holders of Stock received or became entitled to receive such shares and/or all other additional stock and other securities and property.

 

4.3          Change of Control. In the event of a Change of Control (as hereinafter defined), this Warrant shall be automatically exchanged for a number of shares of Company’s securities, such number of shares being equal to the maximum number of shares issuable pursuant to the terms hereof (after taking into account all adjustments described herein) had Holder elected to exercise this Warrant immediately prior to the closing of such Change of Control and purchased all such shares pursuant to the cashless exercise provision set forth in Section 1(b) hereof.  Company acknowledges and agrees that Holder shall not be required to make any additional payment (cash or otherwise) for such shares as further consideration for their issuance pursuant to the terms of the preceding sentence.  “Change of Control” shall mean any sale, license or other disposition of all or substantially all of the assets of Company, or any reorganization, privatization, consolidation, merger or other transaction involving Company, or any transaction where the holders of Company’s securities before such transaction beneficially own less than 50% of the outstanding voting securities of the surviving entity after such transaction.  This Warrant shall terminate upon Holder’s receipt of the number of shares of Company’s equity securities described in this Section 4.3.

 

4

 

4.4          Intentionally Omitted.

 

4.5          Notice of Adjustment.  Upon any adjustment of the Stock Purchase Price, and/or any increase or decrease in the number of shares purchasable upon the exercise of this Warrant Company shall give written notice thereof, by first class mail, postage prepaid, addressed to the registered holder of this Warrant at the address of such holder as shown on the books of Company.  The notice, which may be substantially in the form of Exhibit “A” attached hereto, shall be signed by Company’s chief financial officer and shall state the Stock Purchase Price resulting from such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based.

 

4.6          Other Notices.  If at any time:

 

(a)           Company shall declare any cash dividend upon its Stock;

 

(b)           Company shall declare any dividend upon its Stock payable in stock or make any special dividend or other distribution to the holders of its Stock;

 

(c)           Company shall offer for subscription pro rata to the holders of its Stock any additional shares of stock of any class or other rights;

 

(d)           there shall be any capital reorganization or reclassification of the capital stock of Company, or consolidation or merger of Company with, or sale of all or substantially all of its assets to, another entity;

 

(e)           there shall be a voluntary or involuntary dissolution, liquidation or winding-up of Company; or

 

(f)            Company shall take or propose to take any other action, notice of which is actually provided to holders of the Stock;

 

then, in any one or more of said cases, Company shall give, by first class mail, postage prepaid, addressed to Holder of this Warrant at the address of such Holder as shown on the books of Company, (i) at least 20 days’ prior written notice of the date on which the books of Company shall close or a record shall be taken for such dividend, distribution or subscription rights or for determining rights to vote in respect of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action and (ii) in the case of any such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action, at least 20 days’ written notice of the date when the same shall take place.  Any notice given in accordance with the foregoing clause (i) shall also specify, in the case of any such dividend, distribution or subscription rights, the date on which the holders of Stock shall be entitled thereto.  Any notice given in accordance with the foregoing clause (ii) shall also specify the date on which the holders of Stock shall be entitled to exchange their Stock for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, sale, dissolution, liquidation or winding-up, or other action as the case may be.

 

4.7          Certain Events.  If any change in the outstanding Stock of Company or any other event occurs as to which the other provisions of this Section 4 are not strictly applicable or if strictly applicable would not fairly effect the adjustments to this Warrant in accordance with the essential intent and principles of such provisions, then the Board of Directors of Company shall make in good faith an adjustment in the number and class of shares issuable under this Warrant, the Stock Purchase Price and/or the application of such provisions, in accordance with such essential intent and principles, so as to protect such purchase rights as aforesaid.  The 

 

5

 

adjustment shall be such as will give Holder of this Warrant upon exercise for the same aggregate Stock Purchase Price the total number, class and kind of shares as Holder would have owned had this Warrant been exercised prior to the event and had Holder continued to hold such shares until after the event requiring adjustment.

 

5.             Issue Tax.  The issuance of certificates for shares of Stock upon the exercise of this Warrant shall be made without charge to Holder of this Warrant for any issue tax in respect thereof; provided, however, that Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Holder of this Warrant being exercised.

 

6.             Closing of Books.   Company will at no time close its transfer books against the transfer of this Warrant or of any shares of Stock issued or issuable upon the exercise of this Warrant in any manner which interferes with the timely exercise of this Warrant.

 

7.             No Voting or Dividend Rights; Limitation of Liability.  Nothing contained in this Warrant shall be construed as conferring upon Holder hereof the right to vote or to consent as a stockholder in respect of meetings of stockholders for the election of directors of Company or any other matters or any rights whatsoever as a stockholder of Company.  No dividends or interest shall be payable or accrued in respect of this Warrant or the interest represented hereby or the shares purchasable hereunder until, and only to the extent that, this Warrant shall have been exercised.  No provisions hereof, in the absence of affirmative action by Holder to purchase shares of  Stock, and no mere enumeration herein of the rights or privileges of Holder hereof, shall give rise to any liability of such Holder for the Stock Purchase Price or as a stockholder of Company, whether such liability is asserted by Company or by its creditors.

 

8.             Intentionally Omitted.

 

9.             Registration Rights.  Holder shall be entitled, with respect to the shares of Stock issuable upon exercise hereof or other securities issued upon conversion of such Stock, as the case may be, to all of the registration rights set forth in the that certain Amended and Restated Registration Rights Agreement dated as of January 28, 2010 (the “Rights Agreement”), to the same extent and on the same terms and conditions as possessed by the investors thereunder with the following exceptions and clarifications: (i) Holder will have no right to make a written request under Section 1.2 of the Rights Agreement that Company file a registration statement under Form S-1 of the Securities Act; (ii) Holder will be subject to the same provisions regarding indemnification and the other terms, conditions, limitations and qualifications as contained in the Rights Agreement with respect to the “Holders” as defined therein, except that the Holder shall be junior to the rights of the “Holders” as defined in the Right Agreement (including with respect to cutback under Section 1.3(b) of the Rights Agreement); and (iii) the registration rights are freely assignable by Holder of this Warrant in connection with a permitted transfer of this Warrant or the shares issuable upon exercise hereof.  Company shall take such action as may be reasonably necessary to assure that the granting of such registration rights to Holder does not violate the provisions of the Rights Agreement or any of Company’s charter documents or rights of prior grantees of registration rights.

 

10.          Rights and Obligations Survive Exercise of Warrant.  The rights and obligations of Company, of Holder of this Warrant and of the holder of shares of Stock issued upon exercise of this Warrant, contained in Sections 6 and 9 shall survive the exercise of this Warrant.

 

11.          Modification and Waiver.  This Warrant and any provision hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the same is sought.

 

12.          Notices.  Any notice, request or other document required or permitted to be given or delivered to Holder or Company shall be deemed to have been given (i) upon receipt if delivered personally or by courier (ii) upon confirmation of receipt if by facsimile or (iii) three business days after deposit in the US mail, with postage prepaid and certified or registered, to each such Holder at its address as shown on the books of Company or to Company at the address indicated therefor in the first paragraph of this Warrant.

 

6

 

13.          Binding Effect on Successors.  All of the obligations of Company relating to the Stock issuable upon the exercise of this Warrant shall survive the exercise and termination of this Warrant.  All of the covenants and agreements of Company shall inure to the benefit of the permitted successors and assigns of Holder hereof.

 

14.          Descriptive Headings and Governing Law.  The descriptive headings of the several sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a part of this Warrant.  This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California.

 

15.          Lost Warrants or Stock Certificates.  Company represents and warrants to Holder hereof that upon receipt of evidence reasonably satisfactory to Company of the loss, theft, destruction, or mutilation of any Warrant or stock certificate and, in the case of any such loss, theft or destruction, upon receipt of an indemnity reasonably satisfactory to Company, or in the case of any such mutilation upon surrender and cancellation of such Warrant or stock certificate, Company at its expense will make and deliver a new Warrant or stock certificate, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Warrant or stock certificate.

 

16.          Fractional Shares.  No fractional shares shall be issued upon exercise of this Warrant.  Company shall, in lieu of issuing any fractional share, pay the holder entitled to such fraction a sum in cash equal to such fraction multiplied by the then effective Stock Purchase Price.

 

17.          Representations of Holder.  With respect to this Warrant, Holder represents and warrants to Company as follows:

 

17.1        Experience.  It is experienced in evaluating and investing in companies engaged in businesses similar to that of Company;  it understands that investment in this Warrant involves substantial risks; it has made detailed inquiries concerning Company, its business and services, its officers and its personnel; the officers of Company have made available to Holder any and all written information it has requested; the officers of Company have answered to Holder’s satisfaction all inquiries made by it; in making this investment it has relied upon information made available to it by Company; and it has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of investment in Company and it is able to bear the economic risk of that investment.

 

17.2        Investment.  It is acquiring this Warrant for investment for its own account and not with a view to, or for resale in connection with, any distribution thereof.  It understands that this Warrant and the shares of Stock issuable upon exercise hereof have not been registered under the Securities Act, nor qualified under applicable state securities laws.

 

17.3        Rule 144.  It acknowledges that this Warrant and the Stock must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available.  It has been advised or is aware of the provisions of Rule 144 promulgated under the Securities Act.

 

17.4        Access to Data.  It has had an opportunity to discuss Company’s business, management and financial affairs with Company’s management and has had the opportunity to inspect Company’s facilities.

 

17.5        Accredited Investor. It is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act.

 

18.          Additional Representations and Covenants of Company.  Company hereby represents, warrants and agrees as follows:

 

7

 

18.1        Corporate Power.  Company has all requisite corporate power and corporate authority to issue this Warrant and to carry out and perform its obligations hereunder.

 

18.2        Authorization.  All corporate action on the part of Company, its directors and stockholders necessary for the authorization, execution, delivery and performance by Company of this Warrant has been taken.  This Warrant is a valid and binding obligation of Company, enforceable against Company in accordance with its terms.

 

18.3        Offering.  Subject to the truth and accuracy of Holder’s representations set forth in Section 17 hereof, the offer, issuance and sale of this Warrant by Company to Holder is, and the issuance of Stock to Holder upon exercise of this Warrant will be, exempt from the registration requirements of the Securities Act, and are exempt from the qualification requirements of any applicable state securities laws; and neither Company nor anyone acting on its behalf will take any action hereafter that would cause the loss of such exemptions.

 

18.4        Listing; Stock Issuance.  Company shall secure and maintain the listing of the Stock issuable upon exercise of this Warrant upon each securities exchange or over-the-counter market upon which securities of the same class or series issued by Company are listed.  Upon exercise of this Warrant, Company will use its reasonable best efforts to cause stock certificates or Direct Registration System (DRS) book-entries representing the shares of Stock purchased pursuant to the exercise to be issued in the names of Holder, its nominees or assignees, as appropriate promptly following the time of such exercise.

 

18.5        Certificates and By-Laws.  Company has provided Holder with true and complete copies of Company’s Certificate of Incorporation, By-Laws, and each Certificate of Designation or other charter document setting, forth any rights, preferences and privileges of Company’s capital stock, each as amended and in effect on the date of issuance of this Warrant.

 

18.6        Financial and Other Reports.  From time to time up to the earlier of the Expiration Date or the complete exercise of this Warrant, Company shall furnish to Holder (i) upon delivery to Company’s Board of Directors, as of the close of each fiscal year of Company, an audited balance sheet and statement of changes in financial position at and as of the end of such fiscal year, together with an audited statement of income for such fiscal year; and (ii) within 45 days after the close of each fiscal quarter of Company, an unaudited balance sheet and statement of cash flows at and as of the end of such quarter, together with an unaudited statement of income for such quarter and a capitalization table.  In addition, Company agrees to provide Holder at any time and from time to time with such information as Holder may reasonably request for purposes of Holder’s compliance with regulatory, accounting and reporting requirements applicable to Holder.  Notwithstanding the foregoing, Company shall not be required to furnish to Holder the financial information described in this Section 18.6 in the event such financial information has been previously delivered to Lender pursuant to the Loan Agreement or filed with the SEC via EDGAR (but, rather than within the time frames specified in the preceding sentences of this Section 18.6, within the time frames required by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and the rules promulgated thereunder (or within the period permitted by Rule 12b-25(b)(2)(ii) promulgated under the Exchange Act)).

 

[remainder of this page intentionally left blank; signature page follows]

 

8

 

[Signature page to Warrant]

 

IN WITNESS WHEREOF, Company has caused this Warrant to be duly executed by its officer, thereunto duly authorized as of the date of issuance set forth on the first page hereof.

 

	
MERU NETWORKS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Bami Bastani
    	
 
    
	
Name:
    	
Bami   Bastani
    	
 
    
	
Title:
    	
President &   CEO
    	
 
    

 

 

FORM OF SUBSCRIPTION

 

(To be signed only upon exercise of Warrant)

 

To:

 

·                  The undersigned, the holder of the within Warrant, hereby irrevocably elects to exercise the purchase right represented by such Warrant for, and to purchase thereunder, (1) See Below                                  (          ) shares (the “Shares”) of Stock of                      and herewith makes payment of                            Dollars ($                ) therefor, and requests that the certificates for such shares be issued in the name of, and delivered to,                   , whose address is                       .

 

·                  The undersigned hereby elects to convert              percent (    %) of the value of the Warrant pursuant to the provisions of Section 1(b) of the Warrant.

 

The undersigned acknowledges that it has reviewed the representations and warranties contained in Section 17 of this Warrant and by its signature below hereby makes such representations and warranties to Company.

 

	
 
    	
Dated
    	
 
    
	
 
    	
Holder:
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
(Address)
    
	
 
    	
 
    
	
 
    	
 
    

 

(1)                                 Insert here the number of shares called for on the face of the Warrant (or, in the case of a partial exercise, the portion thereof as to which the Warrant is being exercised), in either case without making any adjustment for additional Stock or any other stock or other securities or property or cash which, pursuant to the adjustment provisions of the Warrant, may be issuable upon exercise.

 

 

ASSIGNMENT

 

FOR VALUE RECEIVED, the undersigned, the holder of the within Warrant, hereby sells, assigns and transfers all of the rights of the undersigned under the within Warrant, with respect to the number of shares of Stock covered thereby set forth herein below, unto:

 

	
Name of Assignee
    	
 
    	
Address
    	
 
    	
No. of Shares
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    

 

	
 
    	
Dated
    	
 
    
	
 
    	
Holder:
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    

 

 

EXHIBIT “A”

 

[On letterhead of Company]

 

Reference is hereby made to that certain Warrant dated June 6, 2012, issued by MERU NETWORKS, INC., a Delaware corporation (the “Company”), to VENTURE LENDING & LEASING VI, LLC, a Delaware limited liability company (the “Holder”).

 

[IF APPLICABLE]  Notice is hereby given pursuant to Section 4.5 of the Warrant that the following adjustment(s) have been made to the Warrant:  [describe adjustments, setting forth details regarding method of calculation and facts upon which calculation is based].

 

This certifies that Holder is entitled to purchase from Company                                                      (                        ) fully paid and nonassessable shares of Company’s Common Stock at a price of                                                    Dollars ($                    ) per share (the “Stock Purchase Price”).  The Stock Purchase Price and the number of shares purchasable under the Warrant remain subject to adjustment as provided in Section 4 of the Warrant.

 

Executed this        day of                                 , 20          .

 

	
 
    	
MERU   NETWORKS, INC.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    	
 
    
	
 
    	
Title:

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