Exhibit 4.1
PROCERA NETWORKS, INC.
SUBSCRIPTION AGREEMENT
RESTRICTED COMMON STOCK AT $2.00 PER SHARE
1. SUBSCRIPTION:
(a) The undersigned (individually and/or collectively, the "Participant")
hereby applies to purchase shares of restricted common stock (the "Shares" or
the "Common Stock") of Procera Networks, Inc., a Nevada corporation (the
"Company"), in accordance with the terms and conditions of this Subscription
Agreement (the "Subscription").
(b) Before this subscription for the Shares is considered, the Participant
must complete, execute and deliver to the Company the following:
(i) This Subscription;
(ii) The Warrant Agreement, attached hereto as Exhibit A (the
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"Warrant"), whereby the Participant shall acquire the right to purchase one
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Share for each Share purchased pursuant to this Subscription; and
(iii) The Participant's check in the amount of $500,000 in exchange
for 250,000 shares purchased, or wire transfer sent with the following
instructions:
SILICON VALLEY BANK
0000 Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Routing Number: 000000000
Account No.: [omitted for confidentiality]
Benefit Of: Procera Networks, Inc.
(c) This Subscription is irrevocable by the Participant.
(d) This Subscription is not transferable or assignable by the
Participant.
(e) This Subscription may be rejected in whole or in part by the Company
in its sole discretion. In the event this Subscription is rejected by the
Company, all funds and documents tendered by the Participant shall be returned.
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2. REPRESENTATIONS BY PARTICIPANT. In consideration of the Company's
acceptance of the Subscription, I make the following representations and
warranties to the Company and to its principals, jointly and severally, which
warranties and representations shall survive any acceptance of my subscription
of the Shares:
(a) I have had the opportunity to ask questions and receive any additional
information from persons acting on behalf of the Company to verify my
understanding of the terms thereof and of the Company's business and status
thereof, and that no oral information furnished to the undersigned or my
advisors in connection with my subscription of the Shares has been in any way
inconsistent with other documentary information provided.
(b) I acknowledge that I have not seen, received, been presented with, or
been solicited by any leaflet, public promotional meeting, newspaper or magazine
article or advertisement, radio or television advertisement, or any other form
of advertising or general solicitation with respect to the Shares.
(c) The Shares are being purchased for my own account for long-term
investment and not with a view to immediately re-sell the Shares. No other
person or entity will have any direct or indirect beneficial interest in, or
right to, the Shares. I or my agents or investment advisors have such knowledge
and experience in financial and business matters that will enable me to utilize
the information made available to me in connection with the purchase of the
Shares to evaluate the merits and risks thereof and to make an informed
investment decision.
(d) I acknowledge that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or qualified under
the California Securities Law, or any other applicable blue sky laws, in
reliance, in part, on my representations, warranties and agreements made herein.
(e) Other than the rights specifically set forth in this Subscription and
the Warrant, I represent, warrant and agree that the Company and the officers of
the Company (the "Company's Officers") are under no obligation to register or
qualify the Shares under the Securities Act or under any state securities law,
or to assist the undersigned in complying with any exemption from registration
and qualification.
(f) I represent that I meet the criteria for participation because (i) I
have a preexisting personal or business relationship with the Company or one or
more of its partners, officers, directors or controlling persons or (ii) by
reason of my business or financial experience, or by reason of the business or
financial experience of my financial advisors who are unaffiliated with, and are
not compensated, directly or indirectly, by the Company or any affiliate or
selling agent of the Company, I am capable of evaluating the risk and merits of
an investment in the Shares and of protecting my own interests; AND
(i) I have minimum net worth in excess of $1,000,000, or
(ii) I have income in excess of $200,000 or joint income with my
spouse in excess of $300,000 in each of the two most recent years, and I/we have
a reasonable expectation of reaching the same income level in the current year;
or
(iii) I am a director or executive officer of the Company; or
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(iv) If a trust, the trust has total assets in excess of $5,000,000
and was not formed for the specific purpose of acquiring the Shares and the
purchase was directed by a sophisticated person as described in 7 CFR Sec.
230.506(b)(2)(ii); or
(v) If a corporation or partnership, the corporation or partnership
has total assets in excess of $5,000,000 and was not formed for the specific
purpose of acquiring the Shares; or
(vi) If an entity, all of the equity owners meet the criteria for
participation set forth in this Paragraph 2(f).
(g) I understand that the Shares are illiquid, and until registered with
the Securities Exchange Commission or an exemption from registration becomes
available, cannot be readily sold as there will not be a public market for them
and that I may not be able to sell or dispose of the Shares, or to utilize the
Shares as collateral for a loan. I must not purchase the Shares unless I have
liquid assets sufficient to assure myself that such purchase will cause me no
undue financial difficulties and that I can still provide for my current and
possible personal contingencies, and that the commitment herein for the Shares,
combined with other investments of mine, is reasonable in relation to my net
worth.
(h) I understand that my right to transfer the Shares will be restricted
against unless the transfer is not in violation of the Securities Act, the
California Securities Law, and any other applicable state securities laws
(including investment suitability standards), that the Company will not consent
to a transfer of the Shares unless the transferee represents that such
transferee meets the financial suitability standards required of an initial
participant and that the Company has the right, in its absolute discretion, to
refuse to consent to such transfer.
(i) I have been advised to consult with my own attorney or attorneys
regarding all legal matters concerning an investment in the Company and the tax
consequences of purchasing the Shares, and have done so, to the extent I
consider necessary.
(j) I acknowledge that the tax consequences to me of investing in the
Company will depend on my particular circumstances, and neither the Company, the
Company's Officers, any other investors, nor the partners, shareholders,
members, managers, agents, officers, directors, employees, affiliates or
consultants of any of them, will be responsible or liable for the tax
consequences to me of an investment in the Company. I will look solely to and
rely upon my own advisers with respect to the tax consequences of this
investment
(k) All information which I have provided to the Company concerning
myself, my financial position and my knowledge of financial and business matters
is truthful, accurate, correct and complete as of the date set forth herein.
3. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents and
warrants that:
(a) Due Incorporation. The Company is a corporation duly organized,
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validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power to own its properties and to
carry on its business as now being conducted. The Company is duly qualified as
a foreign corporation to do business and is in good standing in each
jurisdiction where the nature of the business conducted or property owned by it
makes such
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qualification necessary, other than those jurisdictions in which the failure to
so qualify would not have a material adverse effect on the business, operations
or financial condition of the Company.
(b) Outstanding Stock. All issued and outstanding shares of capital stock
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of the Company have been duly authorized and validly issued and are fully paid
and non-assessable.
(c) Authority; Enforceability. This Subscription and the Warrant
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delivered together with this Subscription or in connection herewith have been
duly authorized, executed and delivered by the Company and are valid and binding
agreements enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights generally and
to general principles of equity; and the Company has full corporate power and
authority necessary to enter into this Subscription and the Warrant to perform
its obligations hereunder and under all other agreements entered into by the
Company relating hereto.
(d) Consents. No consent, approval, authorization or order of any court,
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governmental agency or body or arbitrator having jurisdiction over the Company,
the National Association of Securities Dealers, Inc., the Over the Company
Bulletin Board (the "OTC Bulletin Board"), nor the Company's stockholders is
required for execution of this Subscription, and all other agreements entered
into by the Company relating thereto, including, without limitation, the
issuance and sale of the Shares, and the performance of the Company's
obligations hereunder and under all such other agreements.
(e) The Shares. The Shares upon issuance:
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(i) are, or will be, free and clear of any security interests, liens,
claims or other encumbrances, subject to restrictions upon transfer under the
Securities Act and any applicable state securities laws;
(ii) have been, or will be, duly and validly authorized and on the
date of issuance, and upon exercise of the Warrants, the Warrant Shares will be
duly and validly issued, fully paid and nonassessable (and if registered
pursuant to the Securities Act, and resold pursuant to an effective registration
statement will be free trading and unrestricted, provided that each Participant
complies with the prospectus delivery requirements of the Securities Act and any
state securities laws);
(iii) will not have been issued or sold in violation of any preemptive
or other similar rights of the holders of any securities of the Company;
(iv) will not subject the holders thereof to personal liability by
reason of being such holders; and
(v) will be registered for resale and included in the Company's next
registration statement(the "Registration Statement").
(f) Reporting Company. The Company is a publicly-held company subject to
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reporting obligations pursuant to Sections 15(d) and 13 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and has a class of common
shares registered pursuant to Section 12(g) of the Exchange Act. Pursuant to
the provisions of the Exchange Act, the Company has filed all reports and other
materials required to be filed thereunder with the Commission during the
preceding twelve months.
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(g) Stop Transfer. The Shares, when issued, will be restricted
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securities. The Company will not issue any stop transfer order or other order
impeding the sale, resale or delivery of any of the Shares, except as may be
required by any applicable federal or state securities laws. Except as
described in this Subscription, the Company will not issue any stop transfer or
other order impeding the sale, resale or delivery of the Shares unless
contemporaneous notice of such instruction is given to the Participants.
(h) Defaults. The Company is not in violation of its Articles of
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Incorporation or Bylaws. The Company is (i) not in default under or in
violation of any other material agreement or instrument to which it is a party
or by which it or any of its properties are bound or affected, which default or
violation would have a material adverse effect on the Company, (ii) not in
default with respect to any order of any court, arbitrator or governmental body
or subject to or party to any order of any court or governmental authority
arising out of any action, suit or proceeding under any statute or other law
respecting antitrust, monopoly, restraint of trade, unfair competition or
similar matters, or (iii) to its knowledge in violation of any statute, rule or
regulation of any governmental authority which violation would have a material
adverse effect on the Company.
(i) Dilution. The Company's executive officers and directors have studied
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and fully understand the nature of the Shares being sold hereby and recognize
that they have a potential dilutive effect on the interests of other holders of
the Company's securities. The board of directors of the Company has concluded,
in its good faith business judgment that such issuance is in the best interests
of the Company.
(j) Correctness of Representations. The Company represents that the
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foregoing representations and warranties are true and correct as of the date
hereof in all material respects, will be true and correct as of the Closing Date
in all material respects, and, unless the Company otherwise notifies the
Participants prior to the Closing Date, shall be true and correct in all
material respects as of the Closing Date. The foregoing representations and
warranties shall survive the Closing Date for a period of one year.
4. COVENANTS OF THE COMPANY. The Company covenants and agrees with the
Participants as follows:
(a) Stop Orders. The Company will advise the Participants promptly after
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it receives notice of issuance by the Commission, any state securities
commission or any other regulatory authority of any stop order or of any order
preventing or suspending any offering of any securities of the Company, or of
the suspension of the qualification of the Common Stock of the Company for
offering or sale in any jurisdiction, or the initiation of any proceeding for
any such purpose.
(b) Listing. The Company will maintain the listing of its Common Stock on
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the OTC Bulletin Board (the "Principal Market"), and will comply in all respects
with the Company's reporting, filing and other obligations under the bylaws or
rules of the Principal Market, as applicable.
(c) Market Regulations. If required, the Company shall notify the
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Commission, the Principal Market and applicable state authorities, in accordance
with their requirements, if any, of the transactions contemplated by this
Subscription, and shall take all other necessary action and proceedings as may
be required and permitted by applicable law, rule and regulation, for the
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legal and valid issuance of the Shares to the participants, including the filing
of a Form 8-K with the Securities and Exchange Commission.
(d) Use of Proceeds. The Purchase Price will be used by the Company for
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the purpose of continuing the development of its new technology platform and
may not and will not be used for accrued and unpaid officer and director
salaries, payment of financing related debt, redemption of redeemable notes or
equity instruments of the Company nor non-trade obligations outstanding on the
Closing Date.
(e) Reservation of Common Stock. The Company undertakes to reserve from
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its authorized but unissued common stock, at all times that Warrants and Options
remain outstanding, a number of common shares equal to the amount of common
shares issuable upon exercise of the Warrants and Options.
5. COVENANTS OF THE COMPANY AND PARTICIPANT REGARDING INDEMNIFICATION.
(a) The Company agrees to indemnify, hold harmless, reimburse and defend
the Participants, the Participants' officers, directors, agents, affiliates,
control persons, and principal shareholders, against any claim, cost, expense,
liability, obligation, loss or damage (including reasonable legal fees) of any
nature, incurred by or imposed upon the Participant or any such person which
results, arises out of or is based upon (i) any material misrepresentation by
Company or breach of any warranty by Company in this Subscription or in any
Exhibits or Schedules attached hereto, or other agreement delivered pursuant
hereto; or (ii) after any applicable notice and/or cure periods, any breach or
default in performance by the Company of any covenant or undertaking to be
performed by the Company hereunder, or any other agreement entered into by the
Company and Participant relating hereto.
(b) Each Participant agrees to indemnify, hold harmless, reimburse and
defend the Company and each of the Company's officers, directors, agents,
affiliates, control persons against any claim, cost, expense, liability,
obligation, loss or damage (including reasonable legal fees) of any nature,
incurred by or imposed upon the Company or any such person which results, arises
out of or is based upon (i) any material misrepresentation by such Participant
in this Subscription or in any Exhibits or Schedules attached hereto, or other
agreement delivered pursuant hereto; or (ii) after any applicable notice and/or
cure periods, any breach or default in performance by such Participant of any
covenant or undertaking to be performed by such Participant hereunder, or any
other agreement entered into by the Company and Participants relating hereto.
6. AGREEMENT TO INDEMNIFY COMPANY. I hereby agree to indemnify and hold
harmless the Company, its principals, the Company's officers, directors
attorneys, and agents, from any and all damages, costs and expenses (including
actual attorneys' fees) which they may incur (i) by reason of my failure to
fulfill any of the terms and conditions of this subscription, (ii) by reason of
my breach of any of my representations, warranties or agreements contained
herein; (iii) with respect to any and all claims made by or involving any
person, other than me personally, claiming any interest, right, title, power or
authority in respect to the Shares. I further agree and acknowledge that these
indemnifications shall survive any sale or transfer, or attempted sale or
transfer, of any portion of the Shares.
7. SUBSCRIPTION BINDING ON HEIRS, ETC. This Subscription, upon acceptance by
the Company, shall be binding upon the heirs, executors, administrators,
successors and assigns of the Participant. If the undersigned is more than one
person, the obligations of the undersigned shall
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be joint and several and the representations and warranties shall be deemed to
be made by and be binding on each such person and his or her heirs, executors,
administrators, successors, and assigns.
8. EXECUTION AUTHORIZED. If this Subscription is executed on behalf of a
corporation, partnership, trust or other entity, the undersigned has been duly
authorized and empowered to legally represent such entity and to execute this
Subscription and all other instruments in connection with the Shares and the
signature of the person is binding upon such entity.
9. ADOPTION OF TERMS AND PROVISIONS. The Participant hereby adopts, accepts
and agrees to be bound by all the terms and provisions hereof.
10. GOVERNING LAW. This Subscription shall be construed in accordance with the
laws of the State of California.
11. INVESTOR INFORMATION:
(The information below should be consistent with the form of ownership selected
below.)
Name (please print):__________________________________________________________
If entity named above, By:__________________________________________________
Its:_________________________________________________
Social Security or Taxpayer I.D. Number:___________________________________
Business Address (including zip code):______________________________________
________________________________________________________________________________
Business Phone:________________________________________________________________
Residence Address (including zip code):_____________________________________
________________________________________________________________________________
Residence Phone:_______________________________________________________________
All communications to be sent to:
_____ Business or
_____ Residence Address
Please indicate below the form in which you will hold title to your
interest in the Shares. PLEASE CONSIDER CAREFULLY. ONCE YOUR SUBSCRIPTION IS
ACCEPTED, A CHANGE IN THE FORM OF TITLE CONSTITUTES A TRANSFER OF THE INTEREST
IN THE SHARES AND MAY THEREFORE BE RESTRICTED BY THE TERMS OF THIS SUBSCRIPTION,
AND MAY RESULT IN ADDITIONAL COSTS TO YOU. Subscribers should seek the advice
of their attorneys in deciding in which of the forms they should take ownership
of the interest in the Shares, because different forms of ownership can have
varying
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gift tax, estate tax, income tax, and other consequences, depending on the state
of the investor's domicile and his or her particular personal circumstances.
_____ INDIVIDUAL OWNERSHIP (one signature required)
_____ JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON
(both or all parties must sign)
_____ COMMUNITY PROPERTY (one signature required if interest held in one name,
i.e., managing spouse; two signatures required if interest held in both names)
_____ TENANTS IN COMMON (both or all parties must sign)
_____ GENERAL PARTNERSHIP (fill out all documents in the name of the
PARTNERSHIP, by a PARTNER authorized to sign)
_____ LIMITED PARTNERSHIP (fill out all documents in the name of the LIMITED
PARTNERSHIP, by a GENERAL PARTNER authorized to sign)
_____ LIMITED LIABILITY COMPANY (fill out all documents in the name of the
LIMITED LIABILITY COMPANY, by a member authorized to sign)
_____ CORPORATION (fill out all documents in the name of the CORPORATION, by the
President or other officer authorized to sign)
_____ TRUST (fill out all documents in the name of the TRUST, by the Trustee,
and include a copy of the instrument creating the trust and any other documents
necessary to show the investment by the Trustee is authorized. The date of the
trust must appear on the Notarial where indicated.)
Subject to acceptance by the Company, the undersigned has completed this
Subscription Agreement to evidence his/her subscription for participation in the
Shares of the Company, this 24th day of May, 2004, at Scranton, PA.
LINDEN GROWTH PARTNERS
By: Xxxx X. Xxxxxxxx
/s/ Xxxx X. Xxxxxxxx
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(Signature)
Title: General Partner
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The Company has accepted this subscription this 24th day of May 2004.
"COMPANY"
PROCERA NETWORKS, INC.,
A NEVADA CORPORATION
By: /s/ Xxxxxxx Xxxxxx
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Xxxxxxx Xxxxxx, CEO
Address for notice:
Procera Networks, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
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