EXHIBIT A PROCERA NETWORKS, INC. SUBSCRIPTION AGREEMENT Restricted Common Stock at $[X.XX] per Share
EXHIBIT
10.1
EXHIBIT A
PROCERA
NETWORKS, INC.
Restricted
Common Stock at $[X.XX] 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”) and the
Confidential Private Placement Memorandum, dated August 4, 2008, to which this
Subscription is attached (the “Memorandum”).
(b) Before
this Subscription is considered, the Participant must complete, execute and
deliver to the Company the following:
(i) This
Subscription;
(ii) The
Certificate of Accredited Investor Status, attached to the this Subscription
Agreement as Exhibit A
and to the PPM as Exhibit B; and
(iii) The
Participant’s check in the amount of $[X.XX]
in exchange for [XXX]
Shares purchased (at a price per share of $[X.XX]) net to the Company, or wire
transfer sent according to the Company’s instructions:
(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.
(f) The
Company’s may choose to employ one or more placement agents, and/or other
advisors, broker dealers and/or finders, (collectively “Placement Agents”). In
the event the Company uses one or more Placement Agents, such Placement Agent(s)
shall receive commissions , fees and other consideration by the Company
individually and in aggregate of not greater than (i) Seven and one
half Percent (7.5%) of Participant’s investment amount, and (ii) a warrant to
purchase shares of common stock of the Company equal to Three Percent (3%) of
the total Shares purchased by Participant, at an exercise price equal to $1.75
per share. All cash commissions are costs to the Participant in
addition to the net $[X.XX] per share to the Company.
(g) This
Offering, as defined in the Memorandum, is scheduled to close no later than
August 29, 2008 at 5:00 P.M. Pacific Standard Time (the “Closing Date”), provided, however,
that the Company, at its sole election, may extend this Offering up to an
additional sixty days. The Target Offering is for up to 10,000,000
Shares ($11,000,000) and an additional over-allotment at the Company’s
discretion of up to 5,000,000 Shares ($5,500,000), but this Offering has no
prescribed minimum amount and the Company may accept lessor amounts from
investors or have multiple closings of this Offering.
(h) Participant
hereby agrees not to, and will cause its affiliates not to, enter into any “put
equivalent position” as such term is defined in Rule 16a-1 under the Securities
Exchange Act of 1934, as amended, or short sale position with respect to the
Common Stock.
2.Representations by
Participant. In consideration of the Company’s acceptance of
the Subscription, Participant makes the following representations and warranties
to the Company and to its principals, jointly and severally, which warranties
and representations shall survive any acceptance of the Subscription by the
Company:
(a) Prior
to the time of purchase of any Shares, Participant received a copy of the
Memorandum. Participant has reviewed the Memorandum and the Company’s
filings with the Securities and Exchange Commission (the “Public
Information”). Participant has had the opportunity to ask
questions and receive any additional information from persons acting on behalf
of the Company to verify Participant’s understanding of the terms thereof and of
the Company’s business and status thereof. Participant acknowledges that no
officer, director, broker-dealer, placement agent, finder or other person
affiliated with the Company has given Participant any information or made any
representations, oral or written, other than as provided in the Memorandum and
the Public Information, on which Participant has relied upon in deciding to
invest in the Shares, including without limitation, any information with respect
to future operations of the Company or the economic returns which may accrue as
a result of the purchase of the Shares.
(b) Participant
acknowledges that Participant has 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 Participant’s 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. Participant or its agents or investment advisors have such
knowledge and experience in financial and business matters that will enable
Participant to utilize the information made available to it in connection with
the purchase of the Shares to evaluate the merits and risks thereof and to make
an informed investment decision.
(d) Participant
acknowledges 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 Participant’s representations, warranties and agreements
made herein.
(e) Participant
represents, warrants and agrees 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) Participant
represents that Participant meets the criteria for participation because: (i)
Participant has 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 Participant’s business or financial experience, or by reason
of the business or financial experience of its 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, Participant is capable
of evaluating the risk and merits of an investment in the Shares and of
protecting its own interests;
(g) Participant
represents that Participant is an “accredited investor” within the meaning of
Rule 501 of Regulation D under the Securities Act and Participant has executed
the Certificate of Accredited Investor Status, attached hereto as Exhibit
A.
(h) Participant
understands that the Shares are illiquid and will not be registered under the
Securities Act, and until an exemption from registration becomes available,
cannot be readily sold as there will not be a public market for them, and that
Participant may not be able to sell or dispose of the Shares, or to utilize the
Shares as collateral for a loan. Participant must not purchase the
Shares unless Participant has liquid assets sufficient to assure Participant
that such purchase will cause it no undue financial difficulties, and that
Participant can still provide for current and possible personal contingencies,
and that the commitment herein for the Shares, combined with other investments
of Participant, is reasonable in relation to its net worth.
(i) Participant
understands that the right to transfer the Shares will be restricted 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.
(j) Participant
has been advised to consult with its 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 Participant considers
necessary.
(k) Participant
acknowledges that the tax consequences of investing in the Company will depend
on 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 Participant of an
investment in the Company. Participant will look solely to and rely
upon its own advisers with respect to the tax consequences of this
investment
(l) All
information which Participant has provided to the Company concerning
Participant, its financial position and its knowledge of financial and business
matters, and any information found in the Certificate of Accredited Investor
Status, is truthful, accurate, correct, and complete as of the date set forth
herein.
(m) Each
Participant hereby: (i) acknowledges that it has received all the information it
has requested from the Company and it considers necessary or appropriate for
deciding whether to acquire the Shares, (ii) represents that it has had an
opportunity to ask questions and receive answers from the Company regarding the
terms and conditions of the offering of the Shares and to obtain any additional
information necessary to verify the accuracy of the information given the
Participant and (iii) further represents that it has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risk of this investment.
(n) Each
certificate or instrument representing securities issuable pursuant to this
Agreement will be endorsed with the following legend:
THE
SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED
OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE
HOLDER OF THESE SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY,
STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.
3. Representations and Warranties by the
Company. The Company represents and warrants
that:
(a) Due
Incorporation. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada 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
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 of
the Company have been duly authorized and validly issued and are fully paid and
non-assessable.
(c) Authority;
Enforceability. This Subscription has been duly authorized,
executed, and delivered by the Company and is a valid and binding agreement,
enforceable in accordance with its 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 Agreement and 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, governmental agency or
body or arbitrator having jurisdiction over the Company, the National
Association of Securities Dealers, Inc., the American Stock Exchange (the “AMEX”), 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, provided
however that the approval of the AMEX will be required prior to the issuance of
the Shares.
(e) The
Shares. The Shares upon issuance:
(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, fully
paid and nonassessable;
(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; and
(iv) will
not subject the holders thereof to personal liability by reason of being such
holders.
(f) Litigation. There
is no pending or, to the best knowledge of the Company, threatened action, suit,
proceeding, or investigation before any court, governmental agency or body, or
arbitrator having jurisdiction over the Company that would affect the execution
by the Company or the performance by the Company of its obligations under this
Subscription, and all other agreements entered into by the Company relating
hereto. There is no pending or, to the best knowledge of the Company,
threatened action, suit, proceeding or investigation before any court,
governmental agency or body, or arbitrator having jurisdiction over the Company,
which litigation, if adversely determined, could have a material adverse effect
on the Company.
(g) Reporting
Company. The Company is a publicly held company subject to
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.
(h) No General
Solicitation. Neither the Company, nor any of its affiliates,
nor to its knowledge, any person acting on its or their behalf, has engaged in
any form of general solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) in connection with the offer or sale of
the Shares.
(i) Listing. The
Company's common stock is listed for trading on the AMEX Board. The
Company has not received any oral or written notice that its common stock will
be delisted from the AMEX nor that its common stock
does not meet all requirements for the continuation of such quotation and the
Company currently satisfies the requirements for the continued listing of its
common stock on the AMEX.
4.Agreement to Indemnify
Company. Participant hereby agrees 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 Participant’s
failure to fulfill any of the terms and conditions of this Subscription; (ii) by
reason of Participant’s breach of any of representations, warranties or
agreements contained herein (including the Certificate of Accredited Investor
Status); or (iii) with respect to any and all claims made by or involving any
person, other than Participant personally, claiming any interest, right, title,
power, or authority in respect to the Shares. Participant further
agrees and acknowledges that these indemnifications shall survive any sale or
transfer, or attempted sale or transfer, of any portion of the
Shares.
5.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 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.
6.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.
7.Adoption of Terms and
Provisions. The Participant hereby adopts, accepts and agrees
to be bound by all the terms and provisions hereof.
8.Governing Law. This
Subscription shall be construed in accordance with the laws of the State of
California.
9.Investor Information: (This
must be consistent with the form of ownership selected below and the information
provided in the Certificate of Accredited Investor Status (Exhibit A, included
herewith.)
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:__________________________________________________________________________________________
Email:___________________________________________________________________________________________________
All communications to be
sent
to:______________________________________________________________________________
__
Business or __ Residence Address
Number of Shares
subscribed for at [$X.XX per
share]:______________________________________________________________
Total Subscription Amount:
$
_________________________________________________________________________________
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. Participants
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 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 _______ day of ________, 2008, at
_________________________.
PARTICIPANT
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(Signature)
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By:
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Its:
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The
Company has accepted this subscription this _____ day of ____________,
2008.
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“COMPANY”
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PROCERA
NETWORKS, INC.,
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a
Nevada corporation
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By:
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Xxxxxx
X. Xxxxxxxx, CFO
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Address
for notice:
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Procera
Networks, Inc.
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000
Xxxxxx Xxxxx
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Xxx
Xxxxx, XX 00000
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Attn:
Xxxxxx X. Xxxxxxxx
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Exhibit
A
To
The Subscription Agreement
CERTIFICATE
OF ACCREDITED INVESTOR STATUS
Except as
may be indicated by the undersigned below, the undersigned is an “accredited
investor,” as that term is defined in Regulation D under the Securities Act of
1933, as amended (the “Securities
Act”). The undersigned has initialed the box below indicating
the basis on which he is representing his status as an “accredited
investor”:
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____
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a
bank as defined in Section 3(a)(2) of the Securities Act, or any savings
and loan association or other institution as defined in Section 3(a)(5)(A)
of the Securities Act whether acting in its individual or fiduciary
capacity; a broker or dealer registered pursuant to Section 15 of the
Securities Exchange Act of 1934, as amended (the “Securities Exchange
Act”); an insurance company as defined in Section 2(13) of the
Securities Act; an investment company registered under the Investment
Company Act of 1940 or a business development company as defined in
Section 2(a)(48) of that Act; a small business investment company licensed
by the U.S. Small Business Administration under Section 301(c) or (d) of
the Small Business Investment Act of 1958; a plan established and
maintained by a state, its political subdivisions, or any agency or
instrumentality of a state or its political subdivisions, for the benefit
of its employees, and such plan has total assets in excess of $5,000,000;
an employee benefit plan within the meaning of the Employee Retirement
Income Security Act of 1974, if the investment decision is made by a plan
fiduciary, as defined in Section 3(21) of such Act, which is either a
bank, savings and loan association, insurance company, or registered
investment adviser, or if the employee benefit plan has total assets in
excess of $5,000,000 or, if a self-directed plan, with investment
decisions made solely by persons that are “accredited
investors”;
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____
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a
private business development company as defined in Section 202(a)(22) of
the Investment Advisers Act of
1940;
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____
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an
organization described in Section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not
formed for the specific purpose of acquiring the securities offered, with
total assets in excess of
$5,000,000;
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____
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a
natural person whose individual net worth, or joint net worth with the
undersigned’s spouse, at the time of this purchase exceeds
$1,000,000;
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____
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a
natural person who had an individual income in excess of $200,000 in each
of the two most recent years or joint income with the undersigned’s spouse
in excess of $300,000 in each of those years and has a reasonable
expectation of reaching the same income level in the current
year;
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a
trust with total assets in excess of $5,000,000, not formed for the
specific purpose of acquiring the securities offered, whose purchase is
directed by a person who has such knowledge and experience in financial
and business matters that he is capable of evaluating the merits and risks
of the prospective investment;
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____
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an
entity in which all of the equity holders are “accredited investors” by
virtue of their meeting one or more of the above standards;
or
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an
individual who is a director or executive officer of Procera Networks,
Inc.
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IN
WITNESS WHEREOF, the undersigned has executed this Certificate of Accredited
Investor Status effective as of __________________, 2008.
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Name
of Participant
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By:
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Name:
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Title:
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