PROCERA NETWORKS, INC. SUBSCRIPTION AGREEMENT Restricted Common Stock at $1.00 per Share and Warrants with an exercise price of $1.50 per Share
EXHIBIT
2.1
PROCERA
NETWORKS, INC.
Restricted
Common Stock at $1.00 per Share
and
Warrants with an exercise price of $1.50 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”)
and
warrants convertible into shares of restricted Common Stock (“Warrants”)
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 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
Registration Rights Agreement, attached to the Memorandum as Exhibit
C
(the
“Rights
Agreement”);
(iii) The
Investor Questionnaire attached to the Memorandum as Exhibit
A;
and
(iv) The
Participant’s check in the amount of $__________ in exchange for _________
Shares purchased, or wire transfer sent according to the Company’s
instructions:
(v) The
Form
of Warrant Agreement, attached to the Memorandum as Exhibit
D,
convertible into that number of shares of Common Stock totaling Twenty Percent
(20%) of the Shares purchased by Participant in this Offering. The Warrants
shall have an exercise price of $1.50 per share.
(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 placement agent,
Chadbourn Securities, Inc., and/or other advisors,
placement
agents, broker dealers and/or finders (collectively the “Placement Agent”)
shall
receive total cash fees not to exceed 8% of the proceeds raised in this Offering
from investors introduced to the Company by Placement Agent plus total warrants
not to exceed 10% of the shares of common stock purchased in this Offering
from
investors introduced to the Company by Placement Agent, exercisable at the
Offering Price. Cash fees not to exceed 1% of the proceeds raised in this
Offering from investors introduced to the Company by other than the Placement
Agent and
total
warrants not to exceed 5% of the shares of common stock purchased in this
Offering from investors introduced to the Company by other than the Placement
Agent, exercisable at the Offering Price, shall be paid to the Placement
Agent.
The Company has also agreed to indemnify the Placement Agent against certain
civil liabilities, including liabilities under the Securities Act. The Placement
Agent has agreed to offer the Shares on an agency and “best efforts” basis.
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Networks, Inc.
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B-1
(g) This
Offering, as defined in the Memorandum, is scheduled to close no later
than
December 31, 2006 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 (60) days. The Target Offering is for up to 5,000,000 shares of common
stock and warrants convertible to purchase up to 1,000,000 shares of common
stock at an exercise price of $1.50 per share, but this Offering has no
prescribed minimum amount and the Company may accept smaller amounts from
participants or have multiple closings of this Offering.
(h) Until
the
registration statement contemplated by the Rights Agreement is declared
effective, 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 Company’s securities.
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.
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Networks, Inc.
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(d) Participant
acknowledges that the Shares and the shares underlying the Warrants 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) Other
than the rights specifically set forth in this Subscription, the Warrant
Agreement and the Rights Agreement, 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 Investor Questionnaire attached to the Memorandum as Exhibit
A.
(h) Participant
understands that the Shares and Warrants 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 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 and Warrants 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
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Networks, Inc.
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B-3
(l) All
information which Participant has provided to the Company concerning
Participant, including but not limited to, its financial position and
its
knowledge of financial and business matters, is truthful, accurate, correct,
and
complete as of the date set forth herein.
(l) 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 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 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, the Warrant Agreement and the Rights Agreement 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, the Rights Agreement
and
the Warrant 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 Over the Counter 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.
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Networks, Inc.
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(e) The
Shares.
The
Shares, and the shares of common stock issuable upon conversion of the
Warrants,
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 OTC Bulletin Board.
The
Company has not received any oral or written notice that its common stock
will
be delisted from the OTC Bulletin Board nor that its common stock does
not meet
all requirements for the continuation of such quotation.
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 in
this
Subscription, Investor Questionnaire, the Rights Agreement or any other
document
attached to the Memorandum; 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.
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Networks, Inc.
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B-5
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.
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Name
(please print):
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If
entity named above,
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By:
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Its:
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Social
Security or Taxpayer I.D. Number:
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Business
Address (including zip code):
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Business
Phone:
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Residence
Address (including zip code):
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Residence
Phone:
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All
communications to be sent to:
________Business
or _________Residence
Address
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Procera
Networks, Inc.
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B-6
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
inves-tor'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.)
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Networks, Inc.
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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 ________________, at
_________________________.
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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
_________________________
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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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Xxxxxxx
Xxxxxx, CEO
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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:
Xxx Xxxxxxx
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Subscription
Agreement
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Participant’s
Initials
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Procera
Networks, Inc.
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B-8
