SUBSCRIPTION AGREEMENT
Exhibit 1.2
March 1,
2010
Procera
Networks, Inc.
000-X
Xxxxxx Xxxxx
Xxx
Xxxxx, XX 00000
Gentlemen:
The
undersigned (the “Investor”) hereby
confirms its agreement with Procera Networks, Inc., a Nevada corporation (the
“Company”), as
follows:
1.
This Subscription Agreement, including the Terms
and Conditions for Purchase of Shares attached hereto as Annex I (collectively, this
“Agreement”) is
made as of the date set forth below between the Company and the
Investor. Capitalized terms used in this Agreement and not otherwise
defined shall have the meaning given in Annex I.
2.
The Company has authorized the sale and issuance
to certain investors of up to an aggregate of 18,000,000 shares (the “Shares”) of its
common stock, par value $0.001 per share (the “Common Stock”),
subject to adjustment by the Company’s Board of Directors or a committee
thereof, for a purchase price of $0.40 per Share (the “Purchase
Price”).
3.
The offering and sale of the Shares (the “Offering”) are being
made pursuant to (a) an effective Registration Statement on Form S-3, No.
333-164314 (the “Registration
Statement”) filed by the Company on January 13, 2010 with the Securities
and Exchange Commission (the “Commission”),
including the Prospectus contained therein (the “Base Prospectus”),
(b) if applicable, certain “free writing prospectuses” (as that term is defined
in Rule 405 under the Securities Act of 1933, as amended (the “Act”)), that have
been or will be filed, if required, with the Commission and delivered to the
Investor on or prior to the date hereof (the “Issuer Free Writing
Prospectus”), containing certain supplemental information regarding the
Shares, the terms of the Offering and the Company and (c) a Prospectus
Supplement (the “Prospectus
Supplement” and, together with the Base Prospectus, the “Prospectus”)
containing certain supplemental information regarding the Shares and terms of
the Offering that will be filed with the Commission and delivered to the
Investor prior to the Closing (which may be delivered to the Investor
electronically).
4.
The Company and the Investor agree that the Investor
will purchase from the Company and the Company will issue and sell to the
Investor the Shares set forth below for the aggregate purchase price set forth
below. The Shares shall be purchased pursuant to the Terms and
Conditions for Purchase of Shares attached hereto as Annex I and incorporated
herein by this reference as if fully set forth herein. The Investor
acknowledges that the Offering is not being underwritten by Xxxxxxxx Curhan Ford
& Co. (the “Placement Agent”) and
that there is no minimum offering amount.
5.
The manner of settlement of the Shares purchased by the Investor
shall be delivery by crediting the account of the Investor’s prime broker (as
specified by such Investor on Exhibit A annexed hereto) with the Depository
Trust Company (“DTC”) through its
Deposit/Withdrawal At Custodian (“DWAC”) system,
whereby Investor’s prime broker shall initiate a DWAC transaction on the Closing
Date using its DTC participant identification number, and released by Pacific
Stock Transfer, the Company’s transfer agent (the “Transfer Agent”), at
the Company’s direction. NO LATER THAN ONE (1) BUSINESS DAY AFTER THE
EXECUTION OF THIS AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR
SHALL:
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(I)
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DIRECT
THE BROKER−DEALER AT WHICH THE ACCOUNT OR ACCOUNTS TO BE CREDITED WITH THE
SHARES ARE MAINTAINED TO SET UP A DWAC INSTRUCTING THE TRANSFER AGENT TO
CREDIT SUCH ACCOUNT OR ACCOUNTS WITH THE SHARES,
AND
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(II)
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REMIT
BY WIRE TRANSFER THE AMOUNT OF FUNDS EQUAL TO THE AGGREGATE PURCHASE PRICE
FOR THE SHARES BEING PURCHASED BY THE INVESTOR TO THE FOLLOWING
ACCOUNT:
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JPMorgan
Chase Bank, N.A.
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ABA/Routing
Number:
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000000000
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Account
Number:
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507972473
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Account
Name:
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JPMC
West Coast Escrow Incoming Wires
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OBI/Details:
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Procera
Networks Inc./Xxxxxxxx Curhan Ford & Co. Escrow
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Attn:
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Xxxxx
Xxxxxx (000) 000-0000
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IT IS THE
INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE
PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY
OF DWAC IN A TIMELY MANNER. IF THE INVESTOR DOES NOT DELIVER THE
AGGREGATE PURCHASE PRICE FOR THE SHARES OR DOES NOT MAKE PROPER ARRANGEMENTS FOR
SETTLEMENT IN A TIMELY MANNER, THE SHARES MAY NOT BE DELIVERED AT CLOSING TO THE
INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING
ALTOGETHER.
6.
The Investor represents that, except as set forth below,
(a) it has had no position, office or other material relationship within the
past three (3) years with the Company or persons known to it to be affiliates of
the Company, (b) it is not a member of the Financial Industry Regulatory
Authority, Inc. or an Associated Person (as such term is defined under the NASD
Membership and Registration Rules Section 1011) as of the Closing, and (c)
neither the Investor nor any group of Investors (as identified in a public
filing made with the Commission) of which the Investor is a part in connection
with the Offering of the Shares, acquired, or obtained the right to acquire, 20%
or more of the Common Stock (or securities convertible into or exercisable for
Common Stock) or the voting power of the Company on a post-transaction
basis. Exceptions:
(If no
exceptions, write “none.” If left blank, response will be deemed to be
“none.”)
7.
The Investor represents that it has received (or otherwise had
made available to it by the filing by the Company of an electronic version
thereof with the Commission) (i) the Base Prospectus, dated February 9, 2010,
which is a part of the Company’s Registration Statement and the documents
incorporated by reference therein and (ii) the Prospectus Supplement dated March
1, 2010 (collectively, the “Disclosure Package”),
prior to or in connection with the receipt of this Agreement. The
Investor acknowledges that, prior to the delivery of this Agreement to the
Company, the Investor will receive certain additional information regarding the
Offering, including pricing information (the “Offering
Information”). Such information may be provided to the
Investor by any means permitted under the Act, including the Prospectus
Supplement, a free writing prospectus and oral communications.
8.
No offer by the Investor
to buy Shares will be accepted and no part of the Purchase Price will be
delivered to the Company until the Investor has received the Offering
Information and the Company has accepted such offer by countersigning a copy of
this Agreement, and any such offer may be withdrawn or revoked, without
obligation or commitment of any kind, at any time prior to the Company (or the
Placement Agent on behalf of the Company) sending (orally, in writing or by
electronic mail) notice of its acceptance of such offer. An
indication of interest will involve no obligation or commitment of any kind
until the Investor has been delivered the Offering Information and this
Agreement is accepted and countersigned by or on behalf of the
Company.
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9.
The Company acknowledges that the only material, non-public
information relating to the Company it has provided to the Investor in
connection with the Offering prior to the date hereof is the existence of the
Offering.
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Number
of Shares:
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Purchase
Price Per Share:
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$
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Aggregate
Purchase Price:
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$
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Please
confirm that the foregoing correctly sets forth the agreement between us by
signing in the space provided below for that purpose.
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INVESTOR
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By:
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Print
Name:
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Title:
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Address:
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Agreed
and Accepted
as of the
date first above written:
PROCERA
NETWORKS, INC.
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By:
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Name:
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Title:
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Dated:
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,
2010
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ANNEX I
Terms and
Conditions for Purchase of Shares
1.
Authorization and Sale of the
Shares. Subject to the terms and conditions of this Agreement,
the Company has authorized the sale of the Shares.
2.
Agreement to Sell and Purchase the
Shares; Placement Agent.
2.1. At
the Closing (as defined in Section 3.1), the
Company will sell to the Investor, and the Investor will purchase from the
Company, upon the terms and conditions set forth herein, the number of Shares
set forth on the last page of the Agreement to which these Terms and Conditions
for Purchase of Shares are attached as Annex I (the “Signature Page”) for
the aggregate purchase price therefor set forth on the Signature
Page.
2.2. The
Company anticipates that other investors (the “Other Investors” will
participate in the Offering, and expects to complete sales of Shares to
them. The Company agrees that such Other Investors will execute
substantially the same form of Subscription Agreement as this
Agreement. The Investor and the Other Investors are hereinafter
sometimes collectively referred to as the “Investors,” and this
Agreement and the Subscription Agreements executed by the Other Investors are
hereinafter sometimes collectively referred to as the “Agreements.”
2.3. Investor
acknowledges that the Company has agreed to pay Xxxxxxxx Curhan Ford & Co.
(the “Placement
Agent”) a fee of seven percent (7%) (the “Placement Fee”) in
respect of the sale of Shares to the Investor. In addition, Investor
acknowledges that the Company has agreed to issue to the Placement Agent, upon
completion of the Offering, warrants to purchase shares of Common Stock in an
amount equal to one percent (1%) of the shares of Common Stock sold in the
Offering at a per share exercise price equal to the Purchase Price.
2.4. The
Company has entered into a Placement Agent Agreement, dated March 1, 2010 (the
“Placement
Agreement”), with the Placement Agent that contains certain
representations, warranties, covenants and agreements of the Company that may be
relied upon by the Investor, which shall be a third party beneficiary
thereof.
3.
Closing
and Delivery of the Shares and Funds.
3.1. Closing. The
completion of the purchase and sale of the Shares (the “Closing”) shall occur
at a place and time (the “Closing Date”) to be
specified by the Company and the Placement Agent, and of which the Investors
will be notified in advance by the Placement Agent, in accordance with Rule
15c6-1 promulgated under the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”). At the Closing, (a) the Company shall cause the
Transfer Agent to deliver to the Investor the number of Shares set forth on the
Signature Page registered in the name of the Investor or, if so indicated on the
Investor Questionnaire attached hereto as Exhibit A, in the name of a
nominee designated by the Investor, and (b) the aggregate purchase price for the
Shares being purchased by the Investor will be delivered by or on behalf of the
Investor to the Company.
3.2. Conditions to the
Obligations of the Parties.
(a) Conditions to the Company’s
Obligations. The Company’s obligation to issue and sell the
Shares to the Investor shall be subject to: (i) the receipt by the Company of
the purchase price for the Shares being purchased hereunder as set forth on the
Signature Page and (ii) the accuracy of the representations and warranties made
by the Investor and the fulfillment of those undertakings of the Investor to be
fulfilled prior to the Closing Date.
A-1
(b) Conditions to the Investor’s
Obligations. The Investor’s obligation to purchase the Shares
will be subject to (x) the representations and warranties made by the Company in
the Agreements and the Placement Agreement shall be true and correct as of the
date hereof and as of the Closing Date and the Company shall have fulfilled
those undertakings of the Company required to be fulfilled prior to the Closing
Date, including without limitation, those contained in the Placement Agreement,
and (y) that the Placement Agent shall not have: (i) terminated the Placement
Agreement pursuant to the terms thereof or (ii) determined that the conditions
to the Closing in the Placement Agreement have not been
satisfied. The Investor’s obligations are expressly not conditioned
on the purchase by any or all of the Other Investors of the Shares that they
have agreed to purchase from the Company. The Investor understands
and agrees that, in the event that the Placement Agent in its sole discretion
determines that the conditions to the Closing in the Placement Agreement have
not been satisfied or if the Placement Agreement may be terminated for any other
reason permitted by such Agreement, then the Placement Agent may, but shall not
be obligated to, terminate such Agreement, which shall have the effect of
terminating this Subscription Agreement pursuant to Section 14
below. The Placement Agent shall not have the authority to amend or
modify the Company’s representations and warranties set forth in Section 3 of
the Placement Agreement or the closing conditions contained in Section 7 of the
Placement Agreement in a manner adverse to the Investor or waive any material
provisions or conditions contained therein without the consent of the
Investor.
3.3. Delivery of Funds by DWAC
Delivery. If the Investor elects to settle the Shares
purchased by such Investor through DTC’s Deposit/Withdrawal at Custodian (“DWAC”) delivery
system, no later than one (1) business day after the execution of this Agreement
by the Investor and the Company, the Investor shall remit by wire transfer the
amount of funds equal to the aggregate purchase price for the Shares being
purchased by the Investor to the following account designated by the Company and
the Placement Agent pursuant to the terms of that certain Escrow Agreement (the
“Escrow
Agreement”) dated as of the date hereof, by and among the Company, the
Placement Agent and JPMorgan Chase Bank, National Association (the “Escrow
Agent”):
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JPMorgan
Chase Bank, N.A.
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ABA/Routing
Number:
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000000000
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Account
Number:
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507972473
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Account
Name:
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JPMC
West Coast Escrow Incoming Wires
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OBI/Details:
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Procera
Networks Inc./Xxxxxxxx Curhan Ford & Co. Escrow
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Attn:
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Xxxxx
Xxxxxx (000) 000-0000
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Such funds shall be held in escrow
until the Closing and delivered by the Escrow Agent on behalf of the Investors
to the Company upon the satisfaction, in the sole judgment of the Placement
Agent, of the conditions set forth in Section 3.2(b) hereof. The
Placement Agent shall have no rights in or to any of the escrowed funds, unless
the Escrow Agent is notified in writing by the Company in connection with the
Closing that a portion of the escrowed funds shall be applied to the Placement
Fee. The Company agrees to indemnify and hold the Escrow Agent
harmless from and against any and all losses, costs, damages, expenses and
claims (including, without limitation, court costs and reasonable attorneys
fees) (“Losses”) arising
under this Section 3.3 or otherwise with respect to the funds held in escrow
pursuant hereto or arising under the Escrow Agreement, unless it is finally,
judicially determined that such Losses resulted directly from the willful
misconduct or gross negligence of the Escrow Agent. Anything in this
Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be
liable for any special, indirect or consequential loss or damage of any kind
whatsoever (including but not limited to lost profits), even if the Escrow Agent
has been advised of the likelihood of such loss or damage and regardless of the
form of action.
A-2
3.4. Delivery of Shares by DWAC
Delivery. If the Investor elects to settle the Shares
purchased by such Investor through DTC’s DWAC delivery system, no later than one
(1) business day after the execution of this Agreement by the Investor and the
Company, the Investor shall direct the broker-dealer at which the account or
accounts to be credited with the Shares being purchased by such Investor are
maintained, which broker/dealer shall be a DTC participant, to set up a DWAC
instructing Pacific Stock Transfer, the Company’s “Transfer Agent”, to credit
such account or accounts with the Shares. Such DWAC instruction shall
indicate the settlement date for the deposit of the Shares, which date shall be
provided to the Investor by the Placement Agent. Simultaneously with
the delivery to the Company by the Escrow Agent of the funds held in escrow
pursuant to Section 3.3 above, the Company shall direct the Transfer Agent to
credit the Investor’s account or accounts with the Shares pursuant to the
information contained in the DWAC.
4.
Representations,
Warranties and Covenants of the Investor.
The
Investor acknowledges, represents and warrants to, and agrees with, the Company
and the Placement Agent (as to itself), that:
4.1. The
Investor (a) is knowledgeable, sophisticated and experienced in making, and is
qualified to make decisions with respect to, investments in equity securities
requiring an investment decision like that involved in the purchase of the
Shares, including investments in securities issued by the Company and/or
investments in comparable companies, (b) has answered all questions on the
Investor Questionnaire and the answers thereto are true and correct as of the
date hereof and will be true and correct as of the Closing Date and (c) in
connection with its decision to purchase the number of Shares set forth on the
Signature Page, has received and is relying only upon the Disclosure Package and
the documents incorporated by reference therein and the Offering
Information.
4.2. (a)
No action has been or will be taken in any jurisdiction outside the United
States by the Company or the Placement Agent that would permit an offering of
the Shares, or possession or distribution of offering materials in connection
with the issue of the Shares, in any jurisdiction outside the United States
where action for that purpose is required, (b) if the Investor is outside the
United States, it will comply with all applicable laws and regulations in each
foreign jurisdiction in which it purchases, offers, sells or delivers Shares or
has in its possession or distributes any offering material, in all cases at its
own expense and (c) the Placement Agent is not authorized to make and has not
made any representation, disclosure or use of any information in connection with
the issue, placement, purchase and sale of the Shares, except as set forth or
incorporated by reference in the Base Prospectus, the Prospectus Supplement or
any Issuer Free Writing Prospectus.
4.3. (a)
The Investor has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken
all necessary action to authorize the execution, delivery and performance of
this Agreement, and (b) this Agreement constitutes a valid and binding
obligation of the Investor enforceable against the Investor in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and
contracting parties’ rights generally and except as enforceability may be
subject to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law) and except as
to the enforceability of any rights to indemnification or contribution that may
be violative of the public policy underlying any law, rule or regulation
(including any federal or state securities law, rule or
regulation).
A-3
4.4. The
Investor understands that nothing in this Agreement, the Prospectus, the
Disclosure Package, the Offering Information or any other materials presented to
the Investor in connection with the purchase and sale of the Shares constitutes
legal, tax or investment advice. The Investor has consulted its own
legal, tax and investment advisors and made such investigation as it, in its
sole discretion, has deemed necessary or appropriate in connection with its
purchase of Shares.
4.5. Since
the date on which the Placement Agent first contacted the Investor about the
Offering, the Investor has not disclosed any information regarding the Offering
to any third parties (other than its legal, accounting and other advisors) and
has not engaged in any purchases or sales involving the securities of the
Company (including, without limitation, any Short Sales involving the Company’s
securities). The Investor covenants that it will not engage in any
purchases or sales in the securities of the Company (including Short Sales)
prior to the time that the transactions contemplated by this Agreement are
publicly disclosed. The Investor agrees that it will not use any of
the Shares acquired pursuant to this Agreement to cover any short position in
the Common Stock if doing so would be in violation of applicable securities
laws. For purposes hereof, “Short Sales” include,
without limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act, whether or not against the box, and all
types of direct and indirect stock pledges, forward sales contracts, options,
puts, calls, short sales, swaps, “put equivalent positions” (as defined in Rule
16a−1(h) under the Exchange Act) and similar arrangements (including on a total
return basis), and sales and other transactions through non-U.S. broker dealers
or foreign regulated brokers.
5.
Survival of Representations,
Warranties and Covenants; Third Party
Beneficiary. Notwithstanding any investigation made by any
party to this Agreement or by the Placement Agent, all covenants, agreements,
representations and warranties made by the Company and the Investor herein will
survive the execution of this Agreement, the delivery to the Investor of the
Shares being purchased and the payment therefor. The Placement Agent
shall be a third party beneficiary with respect to the representations,
warranties and covenants of the Investor in Section 4
hereof.
6.
Notices. All
notices, requests, consents and other communications hereunder will be in
writing, will be mailed (a) if within the domestic United States by first-class
registered or certified airmail, or nationally recognized overnight express
courier, postage prepaid, or by facsimile or (b) if delivered from outside the
United States, by International Federal Express or facsimile, and (c) will be
deemed given (i) if delivered by first-class registered or certified mail
domestic, three (3) business days after so mailed, (ii) if delivered by
nationally recognized overnight carrier, one (1) business day after so mailed,
(iii) if delivered by International Federal Express, two (2) business days after
so mailed and (iv) if delivered by facsimile, upon electronic confirmation of
receipt and will be delivered and addressed as follows:
(a) if
to the Company, to:
Procera
Networks, Inc.
000X
Xxxxxx Xxxxx
Xxx
Xxxxx, XX 00000
Attention:
Xxxxxxx Xxxxxxxxx
Fax:
000-000-0000
with
copies to:
Xxxxxx
Godward Kronish LLP
Five Palo
Alto Square
0000 Xx
Xxxxxx Xxxx
Xxxx
Xxxx, XX 00000
Attention:
Xxxx X. Xxxxxx, Esq. and Xxxxxxx X. Xxxxx, Esq.
Fax:
000-000-0000
A-4
(b) if
to the Investor, at its address on the Signature Page hereto, or at such other
address or addresses as may have been furnished to the Company in
writing.
7.
Changes. This
Agreement may not be modified or amended except pursuant to an instrument in
writing signed by the Company and the Investor.
8.
Headings. The
headings of the various sections of this Agreement have been inserted for
convenience of reference only and will not be deemed to be part of this
Agreement.
9.
Severability. In
case any provision contained in this Agreement should be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein will not in any way be affected or
impaired thereby.
10. Governing Law. This
Agreement will be governed by, and construed in accordance with, the internal
laws of the State of New York, without giving effect to the principles of
conflicts of law that would require the application of the laws of any other
jurisdiction.
11. Counterparts. This
Agreement may be executed in two or more counterparts, each of which will
constitute an original, but all of which, when taken together, will constitute
but one instrument, and will become effective when one or more counterparts have
been signed by each party hereto and delivered to the other
parties. The Company and the Investor acknowledge and agree that,
upon the Company’s acceptance of Investor’s offer to purchase Shares, the
Company shall deliver its counterpart signature to the Investor along with the
Prospectus Supplement (or the filing by the Company of an electronic version
thereof with the Commission).
12. Confirmation of
Sale. The Investor acknowledges and agrees that such
Investor’s receipt of the Company’s signed counterpart to this Agreement,
together with the Prospectus Supplement (or the filing by the Company of an
electronic version thereof with the Commission), shall constitute written
confirmation of the Company’s sale of Shares to such Investor.
13. Press Release. The
Company and the Investor agree that the Company shall, prior to the opening of
the financial markets in New York City on the business day immediately after the
date of the Prospectus Supplement, (a) issue a press release announcing the
Offering and disclosing all material information regarding the Offering and (b)
file a Current Report on Form 8-K with the Securities and Exchange Commission
including a form of this Agreement as an exhibit
thereto. Notwithstanding the foregoing, the Company shall not
publicly disclose the name of the Investor or any affiliate or investment
adviser of the Investor, or include the name of the Investor or any affiliate or
investment adviser of any Investor in any press release or filing with the
Securities and Exchange Commission or any regulatory agency or trading market,
without the prior written consent of such Investor, except (i) as required by
federal securities law and (ii) to the extent such disclosure is required by law
or trading market regulations, in which case the Company shall provide the
Placement Agent with prior written notice of such disclosure permitted under
this sub-clause (ii). From and after the issuance of the press
release described above, the Investor shall not be in possession of any
material, non public information received from the Company, any subsidiary of
the Company or any of their respective officers, directors or
employees.
X-0
00. Xxxxxxxxxxx. In the
event that the Placement Agreement is terminated by the Placement Agent pursuant
to the terms thereof prior to the Closing, this Agreement shall terminate
without any further action on the part of the parties hereto. The
Investor shall have the right to terminate this agreement if the Closing has not
occurred on or before March 15, 2010.
A-6
EXHIBIT
A
Procera
Networks, Inc.
Investor
Questionnaire
Pursuant
to Section 3 of
Annex I to the
Agreement, please provide us with the following information:
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1.
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The
exact name that your Shares are to be registered in. You may
use a nominee name if appropriate:
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2.
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The
relationship between the Investor and the registered holder listed in
response to item 1 above:
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3.
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The
mailing address of the registered holder listed in response to item 1
above:
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4.
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The
Social Security Number or Tax Identification Number of the registered
holder listed in the response to item 1 above:
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5.
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Name
of DTC Participant (broker-dealer at which the account or accounts to be
credited with the Shares are maintained):
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6.
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DTC
Participant Number:
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7.
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Name
of Account at DTC Participant being credited with the
Shares:
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8.
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Account
Number at DTC Participant being credited with the Shares:
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