STOCK EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION
EXHIBIT
2.1
AND
PLAN OF REORGANIZATION
This
STOCK
EXCHANGE AGREEMENT AND PLAN OF REORGANIZATION (the
"Agreement
”)
dated
as of 29th
September, 2006, by and among the shareholders listed on Exhibit
A
who are
two of the three shareholders of Netintact PTY LTD, Australian Company Number
103 004 744, (collectively
referred to as “Sellers”);
and
Procera Networks, Inc., a Nevada corporation
(“Procera”).
R
E C I T
A L S
A.
Procera
is in the business of developing
and
marketing intelligent, application driven, converged platforms for the
management of mission critical IP network traffic.
B.
Netintact
PTY
LTD,
Australian Company Number 103 004 744
(“Netintact”)
whose
principal office is located at Xxxxx 000, 000 Xx Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx
0000 is in the business of developing and working with traffic management for
mission critical internet protocol networks.
X.
Xxxxxxx
own collectively 49 shares of Common Stock of Netintact which constitutes forty
nine (49%) of the issued and outstanding securities of Netintact, and
individually the number of shares as set out across from their name on
Exhibit
A
hereto.
D.
Prior
to
the Stock Exchange Agreement by and between sellers of Netintact AB, a Swedish
corporation (“Netintact
AB”)
and
Procera, Netintact AB owned 51 shares of Common Stock of Netintact which
constitutes fifty one (51%) of the issued and outstanding securities of
Netintact.
E.
Procera
seeks to purchase Sellers interests in Netintact based upon the terms and
conditions set forth in this Agreement.
AGREEMENT
NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE
I
ACQUISITION
OF NETINTACT SHARES BY PROCERA
1.1 Acquisition
of Netintact. In
the
manner and subject to the terms and conditions set forth herein, Procera shall
acquire from Sellers, 49 shares of Netintact stock representing forty nine
percent (49%) of the issued and outstanding shares of Netintact (the
“Netintact
Shares”)
1.2 Effective
Date.
If all
of the conditions precedent to the obligations of each of the parties hereto
as
hereinafter set forth shall have been satisfied or shall have been waived,
the
transactions set forth herein (the “Exchange”)
shall
become effective on the Closing Date as defined herein.
1.3 Consideration.
The
consideration in connection with the acquisition of the Netintact Shares shall
be as follows:
(a) Seller’s
Closing Date Shares:
Procera
shall issue to Sellers Six Hundred Eighty Four Thousand (684,000) shares of
Procera’s Common Stock on the Closing Date (the “Seller’s
Closing Date Shares”)
to be
distributed as follows:
Seller
|
Number
of Shares
|
Xxxxxx
Xxxxxxx
|
348,840
|
Johan
Wikenstedt
|
335,160
|
684,000
|
(b) Seller’s
Incentive
Shares: In
addition to Seller’s Closing Date Shares, Sellers shall be eligible to receive
One Hundred Twenty Thousand (120,000) shares of Procera’s Common Stock (the
“Seller’s
Incentive Shares”)
if all
milestones and conditions set forth on Exhibit
C
are met.
Such Seller’s Incentive Shares shall be distributed to the Sellers and in the
numbers as set out in Exhibit
A-1
hereto.
(c) Escrow
Shares:
Procera
shall hold in escrow Seventy Six Thousand (76,000) shares (the “Escrow
Shares”)
of
Procera’s Common Stock pursuant to
an
escrow agreement substantially in the form as that set out in Exhibit
B hereto,
(the “Escrow
Agreement”).
The
Seller’s Closing Date Shares, Escrow Shares and, to the extent earned, Seller’s
Incentive Shares shall collectively be referred to as the “Procera
Shares.”
1.4 Disclosure
Schedules.
Simultaneously with the execution of this Agreement Sellers shall deliver a
schedule relating to Netintact (the “Sellers
Disclosure Schedules”).
In
addition, Procera shall deliver a schedule relating to Procera (the
“Procera
Disclosure Schedule”)
(collectively the Sellers Disclosure Schedule and Procera Disclosure Schedule
shall be referred to as the “Disclosure
Schedules.”)
The
Disclosure
Schedules
shall be
deemed to be part of this Agreement.
1.5 Effect
of Stock Exchange.
As of
the Closing Date, all of the following shall occur:
(a) The
Articles of Incorporation of Procera and Netintact, as in effect on the
Effective Date, shall continue in effect without change or
amendment.
2
(b) The
Bylaws
of
Procera, as
in
effect on the Closing Date, shall continue in effect without change or
amendment.
(c) Sellers
shall become owners of the Closing Date Shares and the Escrow
Shares.
(d) Upon
the
Closing Date, the Sellers shall cause a shareholders' meeting of Netintact
to be
held for purposes of electing new directors and auditors. The Sellers covenant
that the present directors and auditors will be removed from their positions
without any claim for compensation or remuneration. The Sellers agree to cause
general powers of attorney to be duly and validly issued in favour of persons
appointed by Procera which individuals shall have unlimited authority to
represent Netintact in all matters until the new Board of Directors of Netintact
has been officially registered.
1.6 Further
Action.
From
time to time after the Closing Date, without further consideration, the parties
shall execute and deliver such instruments of conveyance and transfer and shall
take such other action as any party reasonably may request to more effectively
transfer the Netintact Shares and Procera Shares.
ARTICLE
II
CONDUCT
OF BUSINESS PENDING CLOSING
Sellers
and Procera covenant that between the date hereof and the Closing Date (as
hereinafter defined):
2.1 Access
by Procera and Sellers. Sellers
shall afford to Procera, and legal
counsel, accountants and other representatives, throughout the period prior
to
the Closing Date, full access, during normal business hours, to (a) all of
the
books, contracts and records of Netintact, and shall furnish Procera, during
such period, with all information concerning Netintact that Procera may
reasonably request, and (b) the properties of Netintact in order to conduct
inspections, at Procera’s expense, to determine that Netintact is operating in
material compliance with all applicable federal, state, provincial and local
and
foreign statutes, rules and regulations, and that Netintact assets are
substantially in the condition and of the capacities represented and warranted
in this Agreement. Any such investigation or inspection by Procera shall not
be
deemed a waiver of, or otherwise limit, the representations, warranties and
covenants contained herein. Procera shall grant identical access to Sellers
and
their agents.
Any
such investigation or inspection by Sellers shall not be deemed a waiver of,
or
otherwise limit, the representations, warranties and covenants contained herein.
2.2 Conduct
of Business.
During
the period from the date hereof to the Closing Date, the respective businesses
of Netintact and Procera shall be operated by the respective entities in the
usual and ordinary course of such business and in material compliance with
the
terms of this Agreement. Without limiting the generality of the
foregoing:
3
(a) Sellers
and Procera, respectively, shall each use its reasonable efforts to (i) keep
available the services of the present officers and key employees of Netintact
and Procera; (ii) complete or maintain all existing material arrangements;
(iii)
maintain the integrity of all confidential information of Netintact and Procera;
and (iv) comply in all material respects with all applicable laws; and
(b) Except
as
contemplated by this Agreement, Sellers shall not cause Netintact to and Procera
shall not (i) sell, lease, assign, transfer or otherwise dispose of any of
their
material assets or property including cash, (ii) enter into any transaction
concerning a merger or consolidation other than with the other party hereto
or
liquidate or dissolve itself (or suffer any liquidation or dissolution) or
convey, sell, lease, transfer or otherwise dispose of, in one transaction or
a
series of related transactions, all or a substantial part of its property,
business, or assets, or stock or securities convertible into stock of any
subsidiary, or make any material change in the present method of conducting
business; (iii) declare or pay any dividends or make any other distribution
(whether in cash or property) on any shares of its capital stock or purchase,
redeem, retire or otherwise acquire for value any shares of its capital stock
or
warrants or options whether now or hereafter outstanding; (iv) make or suffer
to
exist any advances or loans to, or investments in any person, firm, corporation
or other business entity not a party to this Agreement; (v) enter into any
new
material agreement or be or become liable under any new material agreement,
for
the lease, hire or use of any real or personal property; (vi) create, incur,
assume or suffer to exist, any mortgage, pledge, lien, charge, security interest
or encumbrance of any kind upon any of its property or assets, income or
profits, or (vii) agree
to
do any of the foregoing.
2.3 Exclusivity
to Sellers and Procera.
Sellers
or their respective officers, directors, representatives and agents, from the
date hereof, until the Closing Date (unless this Agreement shall be earlier
terminated as hereinafter provided), shall not hold discussions with any person
or entity, other than Procera or its respective agents concerning the Exchange,
nor solicit, negotiate or entertain any inquiries, proposals or offers to
purchase the business of Netintact, nor the shares of capital stock, units
or
other ownership interests of Netintact from any person other than Procera,
nor,
except in connection with the normal operation of Netintact business, or as
required by law, or as authorized in writing by Procera, disclose any
confidential information concerning Netintact to any person other than Sellers,
Procera and Sellers and Procera’s representatives or agents. Procera shall from
the date hereof, and until the Closing Date, owe the identical obligations
of
confidentiality and exclusivity to Netintact as stated in this Section
2.3.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF PROCERA
Except
as
set forth in the Procera Disclosure
Schedule,
as of
August 18, 2006, immediately prior to the closing of Procera’s purchase of
Netintact AB, Procera represents and warrants to Sellers as follows, with the
knowledge and understanding that Sellers are relying materially upon such
representations and warranties, the following:
4
3.1 Organization
and Standing. Procera
is a corporation duly organized, validly existing and in good standing under
the
laws of the State of Nevada. Procera has all requisite corporate power to carry
on its business as it is now being conducted and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary under applicable law except where the
failure to qualify (individually or in the aggregate) will not have any material
adverse effect on the business or prospects of Procera. The copies of the
Articles of Incorporation and Bylaws of Procera, as amended to date and made
available to Sellers are true and complete copies of these documents as now
in
effect.
3.2 Authority.
Procera’s Board of Directors have determined that the Exchange is fair to and in
the best interests of Procera’s stockholders. The execution, delivery and
performance by Proceraof this Agreement have been duly authorized by all
necessary action on the part of Procera. Procera has the absolute and
unrestricted right, power and authority to perform its obligations under this
Agreement. This Agreement, and all other agreements contemplated hereby will
constitute, when executed and delivered by Procera in accordance herewith,
the
valid and binding obligations of Procera, enforceable in accordance with their
respective terms.
3.3 No
Conflict.
The
making and performance of this Agreement will not (i) conflict with the Articles
of Incorporation or other charter or organizational documents of Procera, (ii)
violate any laws, ordinances, rules, or regulations, or any order, writ,
injunction or decree to which Procera is a party or by which Procera or any
of
their material assets, business, or operations may be bound or affected, or
(iii) result in any breach or termination of, or constitute a default under,
or
constitute an event which, with notice or lapse of time, or both, would become
a
default under, or result in the creation of any encumbrance upon any material
asset of Procera, or create any rights of termination, cancellation, or
acceleration in any person under any material agreement, arrangement, or
commitment.
3.4 Properties.
Procera
has good and marketable title to all of the Procera Shares, free and clear
of
all liens, claims and encumbrances of third persons whatsoever, and Procera
has
good and marketable title to all of the assets and properties which it purports
to own as reflected on the balance sheet included in the Procera Financial
Statements (as hereinafter defined), or thereafter acquired.
3.5 Capitalization
of Procera.
(a) Procera
has Forty-Six Million, Seven Hundred Ninety Thousand Three Hundred Forty-Two
(46,790,342) shares of Common Stock issued and outstanding; Eight Million Six
Hundred Sixty-three Thousand One Hundred Seventy-Eight (8,663,178) warrants
issued and outstanding; Five Million Two hundred Thirty-one Thousand (5,231,000)
stock options and Stock Purchase rights issued; and Two Million Four Hundred
Nineteen Thousand (2,419,000) unissued stock options in its Stock Option Plan
that are available for issuance for at total of Sixty-Three Million and Three
Thousand (63103,520) shares of Common stock reserved on a fully diluted basis.
5
(b) All
outstanding shares of Procera capital stock have been issued and granted in
compliance with all applicable securities laws and other applicable legal
requirements.
3.6 Governmental
Approvals and Consents.
No
authorization, license, permit, franchise, approval, order or consent of, and
no
registration, declaration or filing by Procera with any governmental authority,
domestic or foreign, federal, state or local, is required in connection with
Procera’s execution, delivery and performance of this Agreement. No consents of
any other parties are required to be received by or on the part of Procera
to
enable Procera to enter into and carry out this Agreement.
3.7 Adverse
Developments.
Since
January 1, 2006 there have been no material adverse changes in the assets,
liabilities, properties, operations or financial condition of Procera , and
no
event has occurred other than in the ordinary and usual course of business
or as
set forth in the Procera Financial Statements which could be reasonably expected
to have a materially adverse effect upon Procera .
3.8 Taxes.
For
purposes of this Agreement, (A) “Tax”
(and,
with correlative meaning, “Taxes”)
shall
mean any federal, state, local or foreign income, alternative or add- on
minimum, business, employment, franchise, occupancy, payroll, property, sales,
transfer, use, value added, withholding or other tax, levy, impost, fee,
imposition, assessment or similar charge together with any related addition
to
tax, interest, penalty or fine thereon; and (B) "Returns"
shall
mean all returns (including, without limitation, information returns and other
material information), reports and forms relating to Taxes.
(a) Procera
has duly filed all Returns required to be filed by it other than Returns
(individually and in the aggregate) where the failure to file would have no
material adverse effect on the business or prospects of Procera. All such
Returns were, when filed, and to the knowledge of Procera are, accurate and
complete in all material respects and were prepared in conformity with
applicable laws and regulations. Procera has paid or will pay in full or has
adequately reserved against all Taxes otherwise assessed against
it.
(b) Procera
is not a party to any pending action or proceeding by any governmental authority
for the assessment of any Tax, and, to the knowledge of Procera, no claim for
assessment or collection of any Tax related to Procera has been asserted against
Procera that has not been paid. There are no Tax liens upon the assets of
Procera. There is no valid basis, to Procera’s knowledge, for any assessment,
deficiency, notice, 30-day letter or similar intention to assess any Tax to
be
issued to Procera by any governmental authority.
3.9 Litigation.
There is
no claim, action, proceeding, or investigation pending or, to its knowledge,
threatened against or affecting Procera before or by any court, arbitrator
or
governmental agency or authority. There are no decrees, injunctions or orders
of
any court, governmental department, agency or arbitration outstanding against
Procera or asserted against Procera that has not been paid.
6
3.10
Compliance
with Laws and Regulations. Procera
has complied in all material respects, with all laws, rules, regulations, orders
and requirements applicable to it in all jurisdictions in which its operations
are currently conducted or to which it is currently subject.
3.11
Governmental
Licenses, Permits and Authorizations to Conduct Business.
Procera
has all governmental licenses, permits, authorizations and approvals necessary
for the conduct of its business as currently conducted. All such licenses,
permits, authorizations and approvals are in full force and effect, and no
proceedings for the suspension or cancellation of any thereof is pending or
threatened.
3.12
Liabilities.
Procera
has no material direct or indirect liabilities ("Procera
Liabilities"),
whether or not of a kind required by U.S. GAAP to be set forth on a financial
statement, other than (i) Procera Liabilities fully and adequately reflected
or
reserved against on the Procera Balance Sheet, (ii) Procera Liabilities incurred
in the ordinary course of the business of Procera , and (iii) Procera
Liabilities otherwise disclosed in this Agreement, including the Exhibits
hereto.
3.13
Contracts
and Other Commitments. Procera’s
Disclosure Schedule
consists
of a true and complete list of all material contracts, agreements, commitments
and other instruments (whether oral or written) to which Procera is a party.
All
such contracts are valid and binding upon Procera and are in full force and
effect and are enforceable in accordance with their respective terms. No such
contracts are in breach, and no event has occurred which, with the lapse of
time
or action by a third party, could result in a material default under the terms
thereof. To Procera’s knowledge, no stockholder of Procera has received any
payment from any contracting party in connection with or as an inducement for
causing Procera to enter into any such contract.
3.14
Absence
of Certain Changes or Events.
Except
as set forth in Procera’s
Disclosure Schedule,
since
January 1, 2006 (the "Procera
Balance Sheet Date"),
there
has not been:
(a) any
material adverse change in the financial condition, properties, assets,
liabilities or business of Procera;
(b) any
material damage, destruction or loss of any material properties of Procera,
whether or not covered by insurance;
(c) any
material adverse change in the manner in which the business of Procera and
has
been conducted;
(d) any
material adverse change in the treatment and protection of trade secrets or
other confidential information of Procera; and
(e) any
occurrence not included in paragraphs (a) through (d) of this Section 3.14
which
has resulted, or which Procera has reason to believe, might be expected to
result in a material adverse change in the business or prospects of
Procera.
7
3.15 Financial
Statements. Procera’s
Disclosure Schedules
contain
(a) an audited balance sheet and related audited financial statements of Procera
for the one year period ending January 1, 2006, and (b) an unaudited balance
sheet and related unaudited financial statements of Procera for the three month
period ending April 2, 2006 (collectively the “Procera
Financial Statements").
The
Procera Financial Statements present fairly, in all material respects, the
financial position on the dates thereof and results of operations of Procera
for
the periods indicated, prepared in accordance with U.S. generally accepted
accounting principles (“U.S.
GAAP”),
consistently applied. There are no assets of Procera the value of which is
materially overstated in the Procera Financial Statements.
3.16 Procera
Intellectual Property. Procera’s
Disclosure Schedule
sets
forth a complete and correct list and summary description of all intellectual
property, including computer software, trademarks, trade names, service marks,
service names, brand names, copyrights and patents, registrations thereof and
applications therefore, applicable to or used in the business of Procera,
together with a complete list of all licenses granted by or to Procera with
respect to any of the above. Except as otherwise set forth in Procera’s
Disclosure Schedule
all such
trademarks, trade names, service marks, service names, brand names, copyrights
and patents are owned by Procera, free and clear of all liens, claims, security
interests and encumbrances of any nature whatsoever. Procera is not currently
in
receipt of any notice of any violation or infringements of, and is not knowingly
violating or infringing, the rights of others in any trademark, trade name,
service xxxx, copyright, patent, trade secret, know-how or other intangible
asset. Procera has not (i) licensed any of the material proprietary assets
to
any person or entity on an exclusive basis, or (ii) entered into any covenant
not to compete or agreement limiting its ability to exploit fully any
proprietary asset or to transact business in any market or geographical area
or
with any person or entity.
3.17
Subsidiaries.
Procera
owns no subsidiaries nor does it own or have an interest in any other
corporation, partnership, joint venture or other entity.
3.18
Hazardous
Materials.
To the
knowledge of Procera, Procera has not violated, or received
any written notice from any governmental authority with respect to the violation
of any law, rule, regulation or ordinance pertaining to the use, maintenance,
storage, transportation or disposal of "Hazardous
Materials."
As
used herein, the term “Hazardous Materials” means any substance now or hereafter
designated which is found to be toxic or harmful to humans or the environment
when present in certain amounts or quantities.
3.19
Employees.
Procera
has no employees that are represented by any labor union or collective
bargaining unit.
3.20
Employee
Benefit Plans. Procera’s
Disclosure Schedules
identifies each salary, bonus, material deferred compensation, material
incentive compensation, stock purchase, stock option, severance pay, termination
pay, hospitalization, medical, insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program or material
agreement.
8
3.21
Business
Locations.
Other
than as set forth in Procera’s
Disclosure Schedules,
Procera
does not own or lease any real or personal property in any state or country.
3.22
[Intentionally
deleted].
3.23
Insurance.
Except
as set forth in Procera’s
Disclosure Schedule,
Procera
has
no
insurance policies in effect.
3.24
SEC
Filings. Procera
has made available to Sellers (i) its Annual Reports on Form 10-K for the fiscal
years ended January 1, 2006 and January 2, 2005, (ii) its Quarterly Report
on
Form 10-Q for the quarterly period ended April 2, 2006, and, (iii) all proxy
statements relating to the Company’s meetings of stockholders (whether annual or
special) held since 2003, (iv) all other reports or registration statements,
including any Current Report on Form 8-K, filed by the Company with the SEC
since 2003 and (v) all amendments and supplements to all such reports and
registration statements filed by the Company with the SEC (collectively, the
“SEC
Reports”).
The
SEC Reports (i) were prepared in all material respects in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and
(ii) did not at the time they were filed (or if amended or superseded by a
filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material
fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.
3.25
No
Omission or Untrue Statement.
To the
best of Procera’s knowledge, no representation or warranty made by Procera to
Sellers’ in this Agreement, in Procera’s
Disclosure Schedules
or in
any certificate of a Procera officer required to be delivered to Procera
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading
as
of August 18, 2006, immediately prior to the closing of Procera’s purchase of
Netintact AB.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF SELLERS
Except
as
set forth in Sellers’
Disclosure Schedules,
Sellers
jointly and severally, represent and warrant to Procera as follows as of the
date hereof and as of the Closing Date:
4.1 Organization
and Standing of Netintact. Netintact
is a corporation duly organized, validly existing and in good standing under
the
laws of Australia, and has the corporate power to carry on its business as
now
conducted and to own its assets and is duly qualified to transact business
as a
foreign corporation in each state where such qualification is necessary except
where the failure to qualify will not have a material adverse effect on the
business or prospects of Netintact. The copies of the Certificate of
Incorporation of Netintact, as amended to date, and made available to Procera
are true and complete copies of those documents as now in effect.
9
4.2 No
Conflict.
The
making and performance of this Agreement will not (i) conflict with the
Certificate of Incorporation or other charter or organizational documents of
Netintact, (ii) violate any laws, ordinances, rules, or regulations, or any
order, writ, injunction or decree to which Netintact is a party or by which
Netintact or any of their material assets, business, or operations may be bound
or affected or (iii) result in any breach or termination of, or constitute
a
default under, or constitute an event which, with notice or lapse of time,
or
both, would become a default under, or result in the creation of any encumbrance
upon any material asset of Netintact, or create any rights of termination,
cancellation, or acceleration in any person under any material agreement,
arrangement, or commitment.
4.3 [Intentionally
deleted].
4.4 Properties.
Except
as set forth in Sellers’
Disclosure Schedules,
Sellers
have good and marketable title to 49 % of the shares in Netintact and to the
Sellers knowledge Netintac AB, has good and marketable title to 51% of
Netintact. The Netintact Shares, held by the Sellers, are free and clear of
all
liens, claims and encumbrances of third persons whatsoever, and Netintact has
good and marketable title to all of the assets and properties which it purports
to own as reflected on the balance sheet included in Netintact financial
statements, or thereafter acquired.
4.5 Capitalization
of Netintact.
Netintact has a total paid up share capital of 100 shares. Sellers
own 49 shares of Common Stock of Netintact which represent 49% of the
outstanding securities of Netintact. Such outstanding securities are duly
authorized, validly issued, fully paid, and non-assessable. As of the date
hereof, there were no outstanding options, warrants or rights of conversion
or
other rights, agreements, arrangements or commitments relating to the capital
stock of Netintact or obligating Netintact to issue or sell shares of Common
Stock. All
outstanding shares of Netintact capital stock have been issued and granted
in
compliance with all applicable legal requirements.
4.6 Governmental
Approvals and Consents.
No
authorization, license, permit, franchise, approval, order or consent of, and
no
registration, declaration or filing by Sellers or Netintact with any
governmental authority, domestic or foreign, federal, state or local, is
required in connection with Sellers’s execution, delivery and performance of
this Agreement. Except as set forth in Sellers
Disclosure Schedules,
no
consents of any other parties are required to be received by or on the part
of
Sellers to enable Sellers to enter into and carry out this
Agreement.
4.7 Adverse
Developments and Material Changes.
To the
Sellers knowledge, since June 30, 2006 (the “Seller’s
Balance Sheet Date”)
there
have been no material adverse changes in the assets, liabilities, properties,
operations or financial condition of Netintact, and except as set forth in
Sellers Disclosure Schedules, no event has occurred other than in the ordinary
and usual course of business or as set forth in the Netintact financial
statements which could be reasonably expected to have a materially adverse
effect upon Netintact.
10
4.8 Taxes.
Netintact has duly filed all returns required to be filed by it other than
Returns which the failure to file would have no material adverse effect on
the
business of Netintact. To the knowledge of the Sellers, all such returns were,
when filed, are accurate and complete in all material respects and were prepared
in conformity with applicable laws and regulations. Netintact has paid or will
pay in full or has adequately reserved against all Taxes otherwise assessed
against it through the Closing Date. Netintact is not a party to any pending
action or proceeding by any governmental authority for the assessment of any
Tax, and, to the knowledge of Netintact, no claim for assessment or collection
of any Tax has been asserted against Netintact that have not been paid. There
are no Tax liens upon the assets of Netintact (other than the lien of personal
property taxes not yet due and payable). There is no valid basis, to Sellers’
knowledge, for any assessment, deficiency, notice, letter or similar intention
to assess any Tax to be issued to Netintact by any governmental
authority.
4.9 Litigation.
There is
no claim, action, proceeding, or investigation pending or, to their knowledge,
threatened against or affecting Sellers or Netintact before or by any court,
arbitrator or governmental agency or authority. There are no material decrees,
injunctions or orders of any court, governmental department, agency or
arbitration outstanding against Sellers or Netintact.
4.10
Compliance
with Laws and Regulations. Netintact
has complied and is presently complying, in all material respects, with all
laws, rules, regulations, orders and requirements applicable to it in all
jurisdictions in which its operations are currently conducted or to which it
is
currently subject.
4.11
Governmental
Licenses, Permits and Authorizations to Conduct Business.
Netintact has all governmental licenses, permits, authorizations and approvals
necessary for the conduct of its business as currently conducted. All such
licenses, permits, authorizations and approvals are in full force and effect,
and no proceedings for the suspension or cancellation of any thereof is pending
or threatened.
4.12
Liabilities.
To the
knowledge of the Sellers, Netintact has no material direct or indirect
liabilities (the
“Netintact Liabilities"),
whether or not of a kind required by Austrailian GAAP, to be set forth on a
financial statement, other than (i) Netintact Liabilities fully and adequately
reflected or reserved against on the Netintact Balance Sheet, (ii) Netintact
Liabilities incurred in the ordinary course of the business of Netintact, and
(iii) Netintact Liabilities otherwise disclosed in this Agreement, including
the
Exhibits hereto.
4.13
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Sellers’
Representations Regarding Procera Shares.
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(a) Sellers
acknowledge that Procera has limited assets and business and that the Procera
Shares are speculative and involve a high degree of risk, including among many
other risks that the Procera Shares will be restricted as elsewhere described
in
this Agreement and will not be transferable unless first registered under the
Securities Act of 1933, as amended ("Act"),
or
pursuant to an exemption from the Act's registration requirements.
(b) Sellers
acknowledge and agree that they have been furnished with copies of the periodic
reports of Procera filed with the United States Securities and Exchange
Commission including those on Forms 10-KSB and 10-QSB for the past two years.
Sellers have had an opportunity to ask questions of and receive answers from
Procera regarding its business, assets, results of operations, financial
condition and plan of operation and the terms and conditions of the issuance
of
the Procera Shares.
11
(c) Sellers
are not U.S. persons (as defined in Regulation S promulgated under the Act
(“Regulation
S”),
are
acquiring the Procera Shares for their own account, and not for the account
of
any other person other than the benefit of Sellers, and Sellers have no current
intent to make any resale, pledge, hypothecation, distribution or public
offering of the Procera Shares except as permitted by applicable law, including
the provisions of Regulation S.
(d) Sellers,
acting with the assistance of counsel and other professional advisers, possess
such knowledge and experience in xxxxx-cial, tax and business matters as to
enable them to utilize the information made available by Procera, to evaluate
the merits and risks of acquiring the Procera Shares and to make an informed
investment decision with respect thereto.
(e) Sellers
were not solicited by Procera or anyone on Procera's behalf to enter into any
transaction whatever, by any form of general solicitation or general
advertising, as those terms are defined in Regulation D.
(f)
Sellers:
(i) are domiciled and have Seller’s principal place of business and/or
residence outside the United States; and (ii) certify that Sellers are not
U.S. Persons and are not acquiring the Procera Shares for the account or benefit
of any U.S. Person; and (iii) at the time of the Closing, Sellers or
persons acting on Seller's behalf in connection therewith, will be located
outside the United States.
4.14
Contracts
and Other Commitments.
To the
knowledge of the Sellers, Schedule
4.14
of
Sellers’
Disclosure Schedule
consists
of a true and complete list of all material contracts, agreements, commitments
and other instruments (whether oral or written) to which Netintact is a party.
Sellers have made or will make available to Procera a copy of each such
contract. To the knowledge of the Sellers, all such contracts are valid and
binding upon Netintact and are in full force and effect and are enforceable
in
accordance with their respective terms. No such contracts are in breach, and
no
event has occurred which, with the lapse of time or action by a third party,
could result in a material default under the terms thereof. To Sellers’
knowledge, no stockholder of Netintact has received any payment from any
contracting party in connection with or as an inducement for causing Netintact
to enter into any such contract.
4.15
Absence
of Certain Changes or Events.
To the
knowledge of the Sellers, except as set forth in Sellers’
Disclosure Schedule,
since
June 30, 2006 (the "Sellers
Balance Sheet Date"),
there
has not been:
(a) any
material adverse change in the financial condition, properties, assets,
liabilities or business of Netintact;
(b) any
material damage, destruction or loss of any material properties of Netintact,
whether or not covered by insurance;
12
(c) any
material adverse change in the manner in which the business of Netintact and
has
been conducted;
(d) any
material adverse change in the treatment and protection of trade secrets or
other confidential information of Netintact; and
(e) any
occurrence not included in paragraphs (a) through (d) of this Section 4.15
which
has resulted, or which Netintact has reason to believe, might be expected to
result in a material adverse change in the business or prospects of Netintact
.
4.16
Financial
Statements. Sellers’
Disclosure Schedules
contains an unaudited balance sheet and profit and loss of Netintact for
the one year periods ending June 30, 2006 (collectively the "Netintact
Financial Statements").
Netintact Financial Statements present fairly, in all material respects, the
financial position on the dates thereof and results of operations of Netintact
for the periods indicated, and with respect to Netinact is prepared in
accordance with Australian GAAP, respectively, and Netintact Financial
Statements are consistently applied. There are no assets of Netintact the
value of which is materially overstated in the Netintact Financial
Statements."
4.17
Netintact
Intellectual Property. Schedule
4.17
of
Sellers’
Disclosure Schedules
sets
forth a complete and correct list and summary description of all intellectual
property, including computer software, trademarks, trade names, service marks,
service names, brand names, copyrights and patents, registrations thereof and
applications therefore, applicable to or used in the business of Netintact,
together with a complete list of all licenses granted by or to Netintact with
respect to any of the above. Except as otherwise set forth in Schedule
4.17
all such
trademarks, trade names, service marks, service names, brand names, copyrights
and patents are owned by Netintact, free and clear of all liens, claims,
security interests and encumbrances of any nature whatsoever. To the knowledge
of the Sellers, Netintact are not currently in receipt of any notice of any
violation or infringements of, and is not knowingly violating or infringing,
the
rights of others in any trademark, trade name, service xxxx, copyright, patent,
trade secret, know-how or other intangible asset. Netintact has not (i) licensed
any of the material proprietary assets to any person or entity on an exclusive
basis, or (ii) entered into any covenant not to compete or agreement limiting
its ability to exploit fully any proprietary asset or to transact business
in
any market or geographical area or with any person or entity.
4.18
Subsidiaries.
Except
as set out on Sellers Disclosure Schedules, Netintact owns no subsidiaries
nor
does it own or have an interest in any other corporation, partnership, joint
venture or other entity.
4.19
Hazardous
Materials.
To the
knowledge of the Sellers, Netintact has not violated, or received
any written notice from any governmental authority with respect to the violation
of any law, rule, regulation or ordinance pertaining to the use, maintenance,
storage, transportation or disposal of "Hazardous Materials." As used herein,
the term “Hazardous
Materials”
means
any substance now or hereafter designated which is found to be toxic or harmful
to humans or the environment when present in certain amounts or
quantities.
13
4.20
Employees.
Netintact is not part of any collective bargaining agreement.
4.21
Employee
Benefit Plans. Sellers
Disclosure Schedules
identifies each salary, bonus, material deferred compensation, material
incentive compensation, stock purchase, stock option, severance pay, termination
pay, hospitalization, medical, insurance, supplemental unemployment benefits,
profit-sharing, pension or retirement plan, program or material agreement of
Netintact.
4.22
Business
Locations.
Netintact owns or leases real or personal property as set forth in Sellers
Disclosure Schedules.
4.23
Insurance.
Schedule
4.23
of
Sellers
Disclosure Schedule,
sets
forth all insurance policies of Netintact in effect.
4.24
Due
Diligence Material. Sellers
have made available to Procera a package of due diligence materials containing
the documents of Netintact .
4.25
No
Omission or Untrue Statement.
To the
best of each party’s knowledge, no representation or warranty made by Sellers to
Procera in this Agreement, in Sellers’
Disclosure Schedules
or in
any certificate of a Netintact officer required to be delivered to Procera
pursuant to the terms of this Agreement contains or will contain any untrue
statement of a material fact, or omits or will omit to state a material fact
necessary to make the statements contained herein or therein not misleading
as
of the date hereof and as of the Closing Date.
ARTICLE
V
CLOSING
5.1 Closing.
The
Exchange shall be completed on the first business day after the day on which
the
last of the conditions contained in this Article V is fulfilled or waived (the
“Closing
Date”);
provided, however, that in no event shall the Closing occur later than September
30, 2006, unless otherwise agreed to by the parties. The Closing shall take
place at 000X Xxxxxx Xxxxx, Xxx Xxxxx, XX 00000, or such other place as the
parties may agree. At the Closing, Sellers and Procera shall make the deliveries
contemplated by this Agreement, and in accordance with the terms of this
Agreement.
5.2 Procera’s
Closing Deliverables.
At the
Closing, in addition to documents referred elsewhere, Procera shall deliver,
or
cause to be delivered, to Sellers:
(a) a
certificate, dated as of the Closing Date, executed by the Chief Executive
Officer of Procera to the effect that the representations and warranties
contained in this Agreement are true and correct in all material respects at
and
as of August 18, 2006, prior to the closing of the Netintact AB transaction,
and
that Procera has complied with or performed in all material respects all terms,
covenants and conditions to be complied with or performed by
Procera;
14
(b) certificate
by the Secretary of Procera stating that he will immediately after closing
order
directing Procera’s stock transfer agent to promptly issue share certificates
representing Seller’s Closing Date Shares, and Escrow shares;
(c) the
Closing Date Shares and Escrow Shares issuable upon consummation of the
Exchange;
(d) a
certified resolution of the Board of Directors of Procera authorizing and
approving the transactions set forth herein;
(e) An
Escrow
Agreement substantially in the form set out in Exhibit
B
fully
executed.
(f) The
Procera Disclosure
Schedule;
and
(g) such
other documents as Sellers, or their counsel may reasonably
require.
5.3 Sellers’s
Closing Deliveries.
At the
Closing, in addition to documents referred to elsewhere, Sellers shall deliver
to Procera:
(a) a
certificate of Sellers, dated as of the Closing Date, executed by the Sellers
to
the effect that the representations and warranties Sellers contained in this
Agreement are true and correct in all material respects and that Sellers have
complied with or performed in all material respects all terms, covenants, and
conditions to be complied with or performed by Sellers on or prior to the
Closing Date;
(b) the
share
register of Netintact where Procera is named as a 100% owner of
Netintact;
(c) Sellers
Disclosure Schedules;
(d) a
Lockup
Agreement (as referenced subsequently in Section 10.2 hereof) executed by each
Seller substantially in the form as set out in Exhibit
D;
(e) an
opinion of Netintact’s counsel reasonably acceptable to Procera and its counsel;
and
(f)
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such
other documents as Procera or its counsel may reasonably
require.
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5.4 Audit.
If
requested by Procera, the Sellers shall cooperate in conducting an audit of
Netintact financial statements which comply with all requirements set forth
by
the Securities and Exchange Commission for consummation of this transaction.
15
ARTICLE
VI
CONDITIONS
TO OBLIGATIONS OF PROCERA
The
obligation of Procera to consummate the Closing is subject to the following
conditions, any of which may be waived by it in its sole
discretion.
6.1 Compliance
by Sellers. Sellers
shall have performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed or complied with
in
all material respects by Sellers prior to or on the Closing Date.
6.2 Accuracy
of Sellers’ Representations.
Sellers’ representations and warranties contained in this Agreement (including
Sellers
Disclosure Schedule)
or any
schedule, certificate, or other instrument delivered pursuant to the provisions
hereof or in connection with the transactions contemplated hereby shall be
true
and correct in all material respects at and as of the Closing Date (except
for
such changes permitted by this Agreement) and shall be deemed to be made again
as of the Closing Date.
6.3 Documents.
All
documents and instruments required hereunder to be delivered by Sellers to
Procera at the Closing shall be delivered in form and substance reasonably
satisfactory to Procera and its counsel.
6.4 Litigation.
No
litigation seeking to enjoin the transactions contemplated by this Agreement
or
to obtain damages on account hereof shall be pending or, to Sellers’ knowledge,
be threatened.
6.5 Material
Adverse Change.
Except
for operations in the ordinary course of business, no material adverse change
shall have occurred subsequent to June 30, 2006 in the financial position,
results of operations, assets, or liabilities of Netintact, nor shall any event
or circumstance have occurred which would result in a material adverse change
in
the financial position, results of operations, assets, or liabilities of
Netintact.
6.6 Satisfaction
with due diligence.
Procera
shall have been satisfied with its due diligence review of Netintact and its
operations.
6.7 Regulatory
Compliance.
Procera
shall have received any and all regulatory approvals and consents required
to
complete the transactions contemplated hereby.
ARTICLE
VII
CONDITIONS
TO SELLERS OBLIGATIONS
Sellers’
obligation to consummate the Closing is subject to the following conditions,
any
of which may be waived by either party in its sole discretion:
16
7.1 Compliance
by Procera.
Procera
shall have performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed or complied with
by
them prior to or on the Closing Date.
7.2 Accuracy
of Representations of Procera.
The
representations and warranties of Procera contained in this Agreement (including
the exhibits hereto and the Procera
Disclosure Schedule)
or any
schedule, certificate, or other instrument delivered pursuant to the provisions
hereof or in connection with the transactions contemplated hereby shall be
true
and correct in all material respects at and as of August 18, 2006 immediately
prior to the Netintact AB closing (except for changes permitted by this
Agreement).
7.3 Documents.
All
documents and instruments required hereunder to be delivered by Procera to
Sellers at the Closing shall be delivered in form and substance reasonably
satisfactory to Sellers and their counsel.
7.4 Litigation.
No
litigation seeking to enjoin the transactions contemplated by this Agreement
or
to obtain damages on account hereof shall be pending or to Procera’s knowledge,
be threatened.
7.5 Material
Adverse Change.
Except
for operations in the ordinary course of business, no material adverse change
shall have occurred subsequent to January 1, 2006 in the financial position,
results of operations, assets, or liabilities of Procera, nor shall any event
or
circumstance have occurred which would result in a material adverse change
in
the financial position, results of operations, assets, or liabilities of
Procera.
7.6 Approval
Board of Directors.
The
Board of Directors of Procera shall have approved this Agreement and the
transactions contemplated hereby.
7.7 Regulatory
Compliance.
Procera
shall have received any and all regulatory approvals and consents required
to
complete the transactions contemplated hereby.
7.8 Satisfaction
with due diligence.
Sellers
shall have been satisfied with its due diligence review of Procera.
ARTICLE
VIII
TERMINATION
8.1 Termination
Prior to Closing.
(a) If
the
Closing has not occurred by September 30, 2006, any party may terminate this
Agreement at any time thereafter by giving written notice of termination to
the
other, provided, however, that no party may terminate this Agreement if such
party has breached any material terms or conditions of this Agreement and such
breach has prevented the timely closing of the Exchange. Notwithstanding the
above, such deadline may be extended one or more times, only by mutual written
consent of Sellers and Procera.
17
(b) Prior
September 30, 2006, any party may terminate this Agreement following the
insolvency or bankruptcy of the other party hereto, or if any one or more of
the
conditions to Closing set forth in Article VI or Article VII shall become
incapable of fulfillment or there shall have occurred a material breach of
this
Agreement and either such condition of breach shall not have been waived by
the
party for whose benefit the condition was established, then Procera (in the
case
of a condition in Article VI) or Sellers (in the case of a condition specified
in Article VII) may terminate this Agreement.
8.2 Consequences
of Termination.
Upon
termination of this Agreement pursuant to this Article VIII or any other express
right of termination provided elsewhere in this Agreement, the parties shall
be
relieved of any further obligation under this Agreement except, in case of
such
material breach of this Agreement as referred to in Section 8.1 (b), for the
obligations in Article XI and Section 12.4 provided, however, that no
termination of this Agreement, pursuant to this Article VIII hereof or under
any
other express right of termination provided elsewhere in this Agreement shall
operate to release any party from any liability to any other party incurred
otherwise than under this Agreement before the date of such termination, or
from
any liability resulting from any willful misrepresentation of a material fact
made in connection with this Agreement or willful breach of any material
provision hereof.
ARTICLE
IX
ADDITIONAL
COVENANTS
9.1.
Mutual
Cooperation.
The
parties hereto will cooperate with each other, and will use all reasonable
efforts to cause the fulfillment of the conditions to the parties' obligations
hereunder and to obtain as promptly as possible all consents, authorizations,
orders or approvals from each and every third party, whether private or
governmental, required in connection with the transactions contemplated by
this
Agreement.
9.2.
Changes
in Representations and Warranties of a Party. Between
the date of this Agreement and the Closing Date, no party shall directly or
indirectly, enter into any transaction, take any action, or by inaction permit
an otherwise preventable event to occur, which would result in any of the
representations and warranties of such party herein contained not being true
and
correct at and as of the Closing Date. Each party shall promptly give written
notice to the other parties upon becoming aware of (A) any fact which, if known
on the date hereof, would have been required to be set forth or disclosed
pursuant to this Agreement, and (B) any impending or threatened breach in any
material respect of any of the party's representations and warranties contained
in this Agreement and with respect to the latter shall use all reasonable
efforts to remedy same.
18
ARTICLE
X
SECURITIES
MATTERS
10.1
Procera
Shares Not Registered.
Sellers
have been advised (i) that
the Procera Shares have not been, and such Procera Shares, when issued, will
not
be registered under the Act, the securities laws of any state of the United
States or the securities laws of any other country; and (ii) that in
issuing and selling the Procera Shares to Sellers pursuant hereto, Procera
is
relying upon the "safe harbor" provided by Regulation S for offers and
sales of securities occurring outside the United States ("Regulation S")
and/or
Regulation D (“Regulation
D”)
and/or
on Section 4(2) under the Act. The foregoing restrictions are binding upon
subsequent transferees of the Procera Shares, except for transferees pursuant
to
an effective registration statement. All
certificates evidencing the Procera Shares shall, unless and until removed
in
accordance with law, bear a restrictive legend substantially in the following
form:
“THE
SHARES REPRESENTED HEREBY MAY NOT BE OFFERED AND SOLD BY THE HOLDER HEREOF
EXCEPT: (A) IF THE OFFER OR SALE IS WITHIN THE UNITED STATES OR TO OR FOR
THE ACCOUNT OF A U.S. PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT")) AND THE SECURITIES
ARE
OFFERED AND SOLD PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT
TO
RULE 144 UNDER THE ACT; OR (B) IF THE OFFER OR SALE IS OUTSIDE THE
UNITED STATES AND TO OR FOR THE ACCOUNT OF SOMEONE OTHER THAN A U.S.
PERSON.”
10.2
Lockup.
Sellers
agree that Sellers will not sell or otherwise dispose of any Procera Shares,
to
the extent earned, without the prior written consent of Procera; provided
however that such restriction against sale or disposition shall fall away with
respect to one third (1/3) of such shares 12 months from the date hereof; with
respect to an additional one third (1/3) of such shares 24 months from the
date
hereof; and with respect to the remaining one third (1/3) of such shares 36
months from the date hereof. The terms and conditions of the Lockup Agreement
are set forth on Exhibit
D
hereto
and incorporated by reference.
ARTICLE
XI
INDEMNIFICATION
11.1
Indemnification
by Sellers.
Sellers
shall severally and jointly indemnify Procera in respect of, and hold Procera
harmless against, any and all debts, obligations and other liabilities (whether
absolute, accrued, contingent, fixed or otherwise, or whether known or unknown,
or due or to become due or otherwise), monetary damages, fines fees, penalties,
interest obligations, deficiencies, losses and expenses (including without
limitation attorneys fees and litigation costs) incurred or suffered by
Procera:
19
(a) resulting
from any misrepresentation, breach of warranty or failure to perform any
covenant or agreement of Sellers contained in this Agreement; and
(b) resulting
from any liability of Sellers incurred or resulting from activities that took
place prior to the Closing not disclosed on the unaudited June 30, 2006
Netintact financial statements and not incurred in the ordinary course of
business between June 30, 2006 and the Closing.
(c) resulting
from any liability of Sellers incurred or resulting from activities that took
place prior to the Closing regarding (i) ownership of any Netintact products
or
intellectual property thereof and (ii) any claims of infringement of the rights
of others in any trademark, trade name, service xxxx, copyright, patent, trade
secret, know-how or other intangible asset.
11.2
Limitation of
Liability.
Subject
to clause 11.3, the Sellers liability shall be calculated on a pro rata basis
in
relation to the number of Escrow Shares each Seller receives under this
Agreement. In order to cover any deficiency as stated above, each Seller may,
at
its own discretion decide to either transfer Escrow Shares to Procera (in which
case the Escrow Shares shall be transferred at fair market value) or make
payment in cash. The aggregate maximum liability of the Sellers in respect
of
all claims under this agreement, including all claims under the indemnification
in clause 11.1, shall in no event exceed an amount corresponding to the fair
market value of the Escrow Shares.
11.3
Proportionate
Liability. If
Procera is entitled to bring a claim against both the Sellers and Netintact
AB
or its shareholders, which claim arises out of the same fact, matter or
circumstance, then the Sellers liability under this Agreement will be limited
to
49% of the aggregate amount of the loss or damage suffered by Procera in respect
of the subject matter of that claim, which for the avoidance of doubt equates
to
the proportionate number of shares held by the Sellers in
Netintact.
11.4
Escrow Shares.
In
order
to satisfy Seller’s indemnification obligations set forth in this Article XI,
Seventy Six Thousand (76,000) shares of Procera common stock shall be placed
in
escrow, pursuant to the Escrow Agreement attached hereto as Exhibit
B.
At
the
end of the twelve (12) month period following the Closing Date, in accordance
with the Escrow Agreement, the Escrow Shares not subject to claims for breaches
of representations, warranties, covenants, agreements or other indemnification
obligations shall be released from Escrow. The Escrow Shares deposited in Escrow
shall be deposited ratably from the Procera Shares to be issued individually
to
Sellers.
11.5 Indemnification
by Procera. Procera
shall indemnify Sellers in respect of, and hold Sellers harmless against, any
and all debts, obligations and other liabilities (whether absolute, accrued,
contingent, fixed or otherwise, or whether known or unknown, or due or to become
due or otherwise), monetary damages, fines fees, penalties, interest
obligations, deficiencies, losses and expenses (including without limitation
attorneys fees and litigation costs) incurred or suffered by Sellers resulting
from any misrepresentation, breach of warranty or failure to perform any
covenant or agreement of Procera contained in this Agreement.
20
11.6
Limitations
on Procera’s Liability.
Procera’s aggregate liability in respect of all claims shall in no event exceed
an amount corresponding to the fair market value of the Escrow Shares. Seller’s
may choose to receive shares of Procera or cash in their sole
discretion.
11.7 Third
Party Claims. In
the
event Procera becomes aware of a third-party claim which Procera reasonably
believes may result in a demand against the Escrow Fund, Procera shall notify
the Representative (as defined in Exhibit
B
hereto)
of such claim, and Representative shall be entitled on behalf of the Sellers,
at
its expense, to control the defense of such claim. No claim relating to a demand
against the Escrow Fund shall be settled or compromised without the consent
of
Representative, unless he or she shall have failed, after the lapse of a
reasonable time, but in no event more than thirty (30) days, after notice of
a
proposed settlement, to express a written objection to the terms thereof. In
the
event that the Representative has consented to any such settlement, the Sellers
shall have no power or authority to object under any provision of this Section
7
to the amount of any claim by Procera against the Escrow Fund with respect
to
such settlement.
ARTICLE
XII
MISCELLANEOUS
12.1
Expenses.
Procera
shall be responsible for payment of Seller’s expenses and its own expenses in
connection with the transactions contemplated hereby; provided,
however, that the fees of Sellers’ counsel, accountants, and any other of its
representatives in connection with the transaction under this Agreement will
not, without the express written consent of Procera (which consent shall not
be
unreasonably withheld), exceed $7,500 Australian Dollars.
12.2 Survival
of Representations, Warranties and Covenants. All
statements contained in this Agreement or in any certificate delivered by or
on
behalf of Netintact, or Sellers or Procera pursuant hereto, or in connection
with the actions contemplated hereby shall be deemed representations, warranties
and covenants by Sellers, and Procera as the case may be, hereunder. All
representations, warranties, and covenants made by Sellers or Procera in this
Agreement, or pursuant hereto, shall survive the Closing for a period of one
(1)
year and, for the avoidance of doubt, unless Procera has given written notice
to
the Sellers setting out specific details of any breach of any representations,
warranties or covenants made by the Sellers, within 1 year of Closing, the
Sellers will not be liable in respect of any breach of those representations,
warranties or covenants.
12.3
Publicity.
Unless
otherwise required by law, Sellers, and Procera, shall not issue any press
release or make any other public statement, in each case, relating to, in
connection with or arising out of this Agreement or the transactions
contemplated hereby, without obtaining the prior approval of the other, which
shall not be unreasonably withheld or delayed.
21
12.4
Non-Disclosure.
Each
party hereto will not at any time after the date of this Agreement, without
the
other party’s consent, except as required
by law, divulge, furnish to or make accessible to any third party any knowledge
or information with respect to confidential or secret processes, inventions,
discoveries, improvements, formulae, plans, material, devices or ideas or
know-how, whether patentable or not, with respect to any confidential or secret
aspects of the other party (including, without limitation, customer lists,
supplier lists and pricing arrangements with customers or suppliers)
("Confidential
Information").
The
parties will not at any time after the date of this Agreement and prior to
the
Exchange use, divulge, furnish to or make accessible to anyone any Confidential
Information (other than to its representatives as part of its due diligence
or
corporate investigation). Any information, which (i) at or prior to the time
of
disclosure by the disclosing party was generally available to the public through
no breach of this covenant, (ii) was available to the public on a
non-confidential basis prior to its disclosure by the disclosing party, or
(iii)
was made available to the public from a third party provided that such third
party did not obtain or disseminate such information in breach of any legal
obligation of the disclosing party, shall not be deemed Confidential Information
for purposes hereof, and the undertakings in this covenant with respect to
Confidential Information shall not apply thereto. The undertakings of the
parties set forth above in this Section 12.4 shall terminate two (2) years
after
the Closing or the termination of this Agreement, whichever occurs later. If
this Agreement is terminated pursuant to the provisions of Article VIII or
any
other express right of termination set forth in this Agreement, the recipient
shall return to the disclosing party all copies of all Confidential Information
previously furnished to it by the disclosing party.
12.5
Succession
and Assignments and Third Party Beneficiaries.
This
Agreement may not be assigned (either voluntarily or involuntarily) by any
party
hereto without the express written consent of the other parties. Any attempted
assignment in violation of this Section shall be void and ineffective for all
purposes. In the event of an assignment permitted by this Section, this
Agreement shall be binding upon the heirs, successors and assigns of the parties
hereto. There shall be no third party beneficiaries of this Agreement except
as
expressly set forth herein.
12.6
Notices.
All
notices, requests, demands, or other communications with respect to this
Agreement shall be in writing and shall be (i) sent by facsimile transmission,
(ii) sent by the United States Postal Service, registered or certified mail,
return receipt requested, or (iii) personally delivered by a nationally
recognized express overnight courier service, charges prepaid, to the following
addresses (or such other addresses as the parties may specify from time to
time
in accordance with this Section)
(a) To
Sellers:
Xxxxxx
Xxxxxxx
0/000
Xxxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxx, Xxxxxxxxx, 0000
22
With
a copy to:
Xxxxx
Oakley Lawyers
Att:
Xxxxxx Xxxxxxxxx
0/000
Xxxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxxx, Xxxxxxxxx 0000
Phone:
(x000)
0000 0000
(b) To
Procera:
Xxxxxxx
Xxxxxx
000X
Xxxxxx Xxxxx
Xxx
Xxxxx, XX 00000
Phone:
408/000-0000
With
a copy to:
Silicon
Valley Law Group
Attn:
Xxxxx X. Xxxxxxx
00
Xxxxx
Xxxxx, Xxxxx 000
Xxx
Xxxx,
Xxxxxxxxxx 00000
Phone
No.
(000) 000-0000
Fax
No.
(000) 000-0000
Email:
xxx@xxxx.xxx
Any
such
notice shall, when sent in accordance with the preceding sentence, be deemed
to
have been given and received on the earliest of (i) the day delivered to such
address or sent by facsimile transmission, (ii) the fifth business day following
the date deposited with the United States Postal Service, or (iii) 24 hours
after shipment by such courier service.
12.7
Applicable
Law, Arbitration and Venue. This
Agreement shall be construed and enforced in accordance with the internal laws
of the State of California, U.S.A. without giving effect to the principles
of
conflicts of law thereof.
All
parties hereby irrevocably submit to the exclusive jurisdiction of the state
and
federal courts sitting in Santa Xxxxx County, California for the adjudication
of
any dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waive, and
agree
not to assert in any suit, action or proceeding, any claim that he/she/it is
not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service
of process and consents to process being served in any such suit, action or
proceeding by mailing via overnight mail or otherwise a copy thereof to such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing contained herein shall be deemed to limit in any way
any
right to serve process in any manner permitted by law.
23
12.8
Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which shall together constitute one and the
same
Agreement.
12.9
No
Implied Waiver; Remedies.
No
failure or delay on the part of the parties hereto to exercise any right, power,
or privilege hereunder or under any instrument executed pursuant hereto shall
operate as a waiver nor shall any single or partial exercise of any right,
power, or privilege preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. All rights, powers, and
privileges granted herein shall be in addition to other rights and remedies
to
which the parties may be entitled at law or in equity.
12.10 Entire
Agreement.
This
Agreement, including the Exhibits and Disclosure
Schedules
attached
hereto, sets forth the entire understandings of the parties with respect to
the
subject matter hereof, and it incorporates and merges any and all previous
communications, understandings, oral or written as to the subject matter hereof,
and cannot be amended or changed except in writing, signed by the parties.
12.11 Headings.
The
headings of the Sections of this Agreement, where employed, are for the
convenience of reference only and do not form a part hereof and in no way
modify, interpret or construe the meanings of the parties.
12.12 Severability.
To the
extent that any provision of this Agreement shall be invalid or unenforceable,
it shall be considered deleted hereof and the remainder of such provision and
of
this Agreement shall be unaffected and shall continue in full force and
effect.
12.13 Attorneys
Fees.
In the
event any legal action is brought to interpret or enforce this Agreement, the
party prevailing in such action shall be entitled to recover its attorneys’ fees
and costs in addition to any other relief that it is entitled.
12.14 Consultants.
Each
party represents to the others that there is no broker or finder entitled to
a
fee or other compensation for bringing the parties together to effect the
Exchange.
12.15 Recitals.
The
Recitals to this Agreement are hereby incorporated by reference into this
Agreement.
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remainder of this page is intentionally left blank]
24
IN
WITNESS WHEREOF,
the
parties hereto have executed this Agreement the day and year first above
written.
Procera
|
PROCERA
NETWORKS, INC.
|
||||
By:
|
/s/ Xxxxxxx Xxxxxx | ||||
Xxxxxxx
Xxxxxxx, President
|
|||||
Sellers:
|
/s/
Xxxxxx Xxxxxxx
|
||||
Xxxxxx
Xxxxxxx
|
|||||
/s/
Johan Wikenstedt
|
|||||
Johan
Wikenstedt
|
25
EXHIBIT
A TO THE STOCK EXCHANGE AGREEMENT
PROCERA
NETWORKS, INC AND NETINTACT
SCHEDULE
OF SELLERS
Shareholder
|
No.
of Shares
|
Xxxxxx
Xxxxxxx
|
25
|
Johan
Wikenstedt
|
24
|
26
EXHIBIT
A-1 TO THE STOCK EXCHANGE AGREEMENT
|
||
PROCERA
NETWORKS INC AND NETINTACT
|
||
SCHEDULE
OF SELLERS INCENTIVE SHARES
|
||
Persons
|
Shares
|
|
Xxxxxx
Xxxxxxx
|
61,200
|
|
Johan
Wikenstedt
|
58,800
|
|
Totals
|
120,000
|
27
PROCERA
NETWORKS, INC AND NETINTACT
INCENTIVE
SHARES PLAN
Subsequent
to Closing, Procera will make additional distributions of Procera common stock
to Sellers based on the future gross revenues (the “Earnout”) of all Procera
products offered for sale after the Closing Date as follows:
Period
1:
From July 1, 2006 through December 31, 2006, if Procera’s gross revenue equals
or exceeds $3 million (US), then Sellers shall be entitled to receive 60,000
Incentive Shares per this agreement. In the event that Procera’s gross revenue
is between 95% and 100% of $3,000,000, then Sellers shall be entitled to 60,000
incentive shares multiplied by the same percentage that the revenue is of
$3,000,000.
Period
2:
From January 1, 2007 through June 30, 2007, if Procera’s gross revenue equals or
exceeds $4.5 million (US), then Sellers shall be entitled to receive an
additional 60,000 Incentive Shares per this agreement. (Aggregate Incentive
Shares to be 120,000 shares). In the event that Procera’s gross revenue is
between 95% and 100% of $4,500,000, then Sellers shall be entitled to 60,000
incentive shares multiplied by the same percentage that the revenue is of
$4,500,000.
The
foregoing notwithstanding, if Procera’s gross revenue equals or exceeds $7.5
million for Periods 1 and 2 combined, then Sellers shall be entitled to 120,000
incentive shares of Incentive Stock. In the event that Procera’s gross revenue
is between 95% and 100% of $7,500,000, then Sellers shall be entitled to 120,000
incentive shares multiplied by the same percentage that the revenue is of
$7,500,000.
Gross
Revenue shall be defined as the revenue that Procera reports to the SEC for
the
relevant
time period; provided that for purposes of determining the gross revenue of
the
combined periods, Procera shall add to its reportable revenue to the SEC 15%
of
the amount of any contracts received prior to June 30, 2007 that (1) lead to
a
purchase orders in excess of $1,000,000 (US) and (2) invoiced by Procera prior
to December 31, 2007.
In
order
to qualify for the distribution of Incentive Shares, each Seller must be an
employee of Netintact on June 30, 2007 for distributions relating to Period
1
and Period 2. Any incentive shares that otherwise be subject to distribution
to
one or more Seller(s) had such Seller(s) remained an employee of Netintact
on
the relevant date shall be distributed prorate to those Sellers that remain
employees of Netintact.
Incentive
Shares shall be distributed no later than 90 days after the number of Incentive
Shares for the respective periods are determined per this agreement.
Distributions
of Incentive Shares earned shall be consistent with Schedule A-1 of the Stock
Exchange Agreement.
28