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 Registration Rights Agreement, attached hereto as Exhibit
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B;
(iii) The Warrant Agreement, attached hereto as Exhibit D, whereby
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the Participant shall acquire the right to purchase one Share for each Share
purchased pursuant to this Subscription; and
(iv) The Participant's check in the amount of $__________________
in exchange for ____________shares purchased, or wire transfer sent with the
following instructions:
COMERICA BANK
000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Special Corporate Financial Services, Br #80947
Routing Number: 000000000
Account Name: Comerica Bank
Account No: 1892247352
Special Instructions: Escrow #49508-0088SUB
Benefit Of: Procera Networks
(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) This Offering, as defined in the Private Placement Memorandum, is
scheduled to close on December 5, 2003 at 1:00 p.m. Pacific Standard Time (the
"Closing Date"), provided
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the Company has received the Minimum Offering of $3,000,000. The Target Offering
is $6,000,000.
2. REPRESENTATIONS BY PARTICIPANT. In consideration of the Company's acceptance
of the Subscription, I make the following representations and warranties to the
Company, to its principals, and to participating broker-dealers, if any, 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 the Registration
Rights Agreement, 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
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(iii) I am a director or executive officer of the Company; or
(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
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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
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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
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Agreement, the Registration Rights Agreement and any other agreements 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 Warrant Agreement, the
Registration Rights Agreement and such other agreements and to perform its
obligations hereunder and under all other agreements entered into by the Company
relating hereto.
(d) Additional Issuances. There are no outstanding agreements or
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preemptive or similar rights affecting the Company's common stock or equity and
no outstanding rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, or agreements or understandings with
respect to the sale or issuance of any shares of common stock or equity of the
Company or other equity interest in the Company, except as described on Schedule
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2 attached hereto.
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(e) Consents. No consent, approval, authorization or order of any
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court, 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.
(f) No Violation or Conflict. Assuming the representations and
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warranties of the Participants in Section 2 are true and correct, neither the
issuance and sale of the Shares nor the performance of the Company's obligations
under this Subscription and all other agreements entered into by the Company
relating thereto by the Company will:
(i) violate, conflict with, result in a breach of, or constitute a
default (or an event which with the giving of notice or the lapse of time or
both would be reasonably likely to constitute a default) under: (A) the
articles of incorporation, charter or bylaws of the Company; (B) to the
Company's knowledge, any decree, judgment, order, law, treaty, rule, regulation
or determination applicable to the Company of any court, governmental agency or
body, or arbitrator having jurisdiction over the Company or over the properties
or assets of the Company; (C) the terms of any bond, debenture, note or any
other evidence of indebtedness, or any agreement, stock option or other similar
plan, indenture, lease, mortgage, deed of trust or other instrument to which the
Company or any of its affiliates is a party, by which the Company is bound, or
to which any of the properties of the Company is subject; or (D) the terms of
any "lock-up" or similar provision of any underwriting or similar agreement to
which the Company is a party, except the violation, conflict, breach, or default
of which would not have a material adverse effect on the Company; or
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(ii) result in the creation or imposition of any lien, charge or
encumbrance upon the Securities or any of the assets of the Company.
(g) 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; and
(iv) will not subject the holders thereof to personal liability by
reason of being such holders.
(h) Litigation. There is no pending or, to the best knowledge of the
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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.
(i) Reporting Company. The Company is a publicly-held company subject
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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. 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.
(j) No Market Manipulation. The Company has not taken, and will not
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take, directly or indirectly, any action designed to, or that might reasonably
be expected to, cause or result in stabilization or manipulation of the price of
the common stock of the Company to facilitate the sale or resale of the Shares
or affect the price at which the Shares may be issued or resold.
(k) 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.
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(l) 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.
(m) No Integrated Offering. Neither the Company, nor any of its
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affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances that would cause the offer of the Shares
pursuant to this Subscription to be integrated with prior offerings by the
Company for purposes of the Securities Act or any applicable stockholder
approval provisions, including, without limitation, under the rules and
regulations of the OTC Bulletin Board, nor will the Company or any of its
affiliates or subsidiaries take any action or steps that would cause the offer
of the Shares to be integrated with other offerings. The Company will not
conduct any offering other than the transactions contemplated hereby that will
be integrated with the offer or issuance of the Shares.
(n) No General Solicitation. Neither the Company, nor any of its
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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.
(o) Listing. The Company's common stock is listed for trading on the
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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 and the Company satisfies the requirements for the continued listing
of its common stock on the OTC Bulletin Board.
(p) No Undisclosed Liabilities. The Company has no liabilities or
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obligations which are material, individually or in the aggregate, which have not
been disclosed to Participants, other than those incurred in the ordinary course
of the Company's business, since September 30, 2003 and which, individually or
in the aggregate, would reasonably be expected to have a material adverse effect
on the Company's financial condition.
(q) No Undisclosed Events or Circumstances. Since September 30, 2003,
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no event or circumstance has occurred or exists with respect to the Company or
its businesses, properties, operations or financial condition, that, under
applicable law, rule or regulation, requires public disclosure or announcement
prior to the date hereof by the Company but which has not been so publicly
announced or disclosed in the Reports.
(r) Capitalization. The authorized and outstanding capital stock of
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the Company as of the date of this Subscription and the Closing Date are set
forth on Schedule 1 attached hereto and in the Private Placement Memorandum.
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Except as set forth on Schedule 2 attached hereto, there are no options,
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warrants, or rights to subscribe to, securities, rights or obligations
convertible into or exchangeable for or giving any right to subscribe for any
shares of capital stock of the
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Company. All of the outstanding shares of Common Stock of the Company have been
duly and validly authorized and issued and are fully paid and nonassessable.
(s) Dilution. The Company's executive officers and directors have
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studied 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.
(t) 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
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after 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
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on 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 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
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for the purposes set forth in the Private Placement Memorandum 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, except
as set forth on Schedule 2 attached hereto.
(e) Reservation of Common Stock. The Company undertakes to reserve
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from 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.
(f) Taxes. For a period of two (2) years after the date hereof, the
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Company will promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all
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lawful taxes, assessments and governmental charges or levies imposed upon the
income, profits, property or business of the Company; provided, however, that
any such tax, assessment, charge or levy need not be paid if the validity
thereof shall currently be contested in good faith by appropriate proceedings
and if the Company shall have set aside on its books adequate reserves with
respect thereto, and provided, further, that the Company will pay all such
taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security therefore.
(g) Insurance. For a period of two (2) years after the date hereof,
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the Company will keep its assets which are of an insurable character insured by
financially sound and reputable insurers against loss or damage by fire,
explosion and other risks customarily insured against by companies in the
Company's line of business, in amounts sufficient to prevent the Company from
becoming a co-insurer and not in any event less than 100% of the insurable value
of the property insured; and the Company will maintain, with financially sound
and reputable insurers, insurance against other hazards and risks and liability
to persons and property to the extent and in the manner customary for companies
in similar businesses similarly situated and to the extent available on
commercially reasonable terms.
(h) Books and Records. For a period of two (2) years after the date
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hereof, the Company will keep true records and books of account in which full,
true and correct entries will be made of all dealings or transactions in
relation to its business and affairs in accordance with generally accepted
accounting principles applied on a consistent basis.
(i) Governmental Authorities. For a period of two (2) years after the
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date hereof, the Company shall duly observe and conform in all material respects
to all valid requirements of governmental authorities relating to the conduct of
its business or to its properties or assets.
(j) Intellectual Property. For a period of two (2) years after the
----------------------
date hereof, the Company shall maintain in full force and effect its corporate
existence, rights and franchises and all licenses and other rights to use
intellectual property owned or possessed by it and reasonably deemed to be
necessary to the conduct of its business.
(k) Properties. For a period of two (2) years after the date hereof,
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the Company will keep its properties in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions and improvements
thereto; and the Company will at all times comply with each provision of all
leases to which it is a party or under which it occupies property if the breach
of such provision could reasonably be expected to have a material adverse
effect.
(l) Confidentiality. For a period of two (2) years after the date
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hereof, the Company agrees that it will not disclose publicly or privately the
identity of the Subscribers unless expressly agreed to in writing by a
Participant or only to the extent required by law.
(m) Offering Restrictions. The Company will not issue any equity,
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convertible debt or other securities convertible into common stock on any terms
more favorable to such other investor than any of the terms of the Offering,
until after 180 days from the Closing Date ("Exclusion Period") without the
prior written consent of the Subscriber, which consent may be withheld for any
reason. Notwithstanding the above, this provision shall not apply to the
issuance of incentive stock options under the Company's 2003 Stock Option Plan.
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(n) Anti-Dilution Protection. If during the Exclusion Period the
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Company shall offer, issue or agree to issue any Common Stock or securities
convertible into or exercisable for shares of Common Stock to any person, firm
or corporation at a price per share or conversion or exercise price per share
which shall be less than the per share purchase price of the Shares, without the
consent of Subscriber still holding Shares (the "Triggering Event"), then the
Company shall issue, for each such Triggering Event, additional shares of Common
Stock to the Subscriber (the "Additional Shares") so that the average per share
purchase price of the shares of Common Stock issued to the Subscriber is equal
to such other lower price per share. The delivery to the Subscriber of the
Additional Shares shall be on or before the closing date of the Triggering
Event. The Additional Shares shall be delivered to the Subscriber under the
same terms as the shares issued pursuant to the Triggering Event. For purposes
of the issuance and adjustment described in this paragraph, the issuance of any
security of the Company carrying the right to convert such security into shares
of Common Stock or of any warrant, right or option to purchase Common Stock
shall result in the issuance of the Additional Shares upon the issuance of such
convertible security, warrant, right or option and again upon any subsequent
issuances of shares of Common Stock upon exercise of such conversion or purchase
rights if such issuance is at a price lower than the then purchase price per
share of the shares of Company Stock. This Section 4(n) shall apply only if the
Company violates the provisions of Section 4(m) above, and this provision shall
not apply to the issuance of incentive stock options under the Company's 2003
Stock Option Plan.
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,
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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 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.
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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 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)
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_____ 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, 2003, at______________,_______________.
[See Schedule 3]
------------------------------
Participant
The Company has accepted this subscription this 5th day of December, 2003.
"COMPANY"
PROCERA NETWORKS, INC.,
A NEVADA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Xxxxxxx Xxxxxx, CEO
Address for notice:
Procera Networks, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
A-12
SCHEDULE 1
----------
CAPITALIZATION.
Pro forma Capitalization as of November 14, 2003:
AUTHORIZED OUTSTANDING
---------- -----------
Preferred Stock 5,000,000 0
Common Stock 50,000,000 21,227,947
Common Stock Warrants --- 1,732,375
-----------
Pro Forma 55,000,000 22,960,322
A-13
SCHEDULE 2
----------
ADDITIONAL ISSUANCES
1. Warrants issued to 19 Holders to purchase 1,157,375 shares of the Company's
common stock at a total purchase price of $403,450.
NO. OF HOLDERS FACE AMOUNT WARRANTS ISSUED
-------------- ------------ ---------------
Group 1 3 $ 75 75,000
Group 2 1 4,000 400,000
Group 3 4 17,625 235,000
Group 4 8 303,000 404,000
Group 5 1 6,000 6,000
Group 6 2 74,750 37,375
Totals 19 $ 403,450 1,157,375
2. Non-qualified stock options granted to 3 Holders to purchase 575,000 shares
of the Company's common stock at a total purchase price of $73,750.
3. In October 2003, issued an unsecured convertible promissory note in the
amount of $500,000 to an investor. The principal amount of the convertible note
payable, together with interest at 8% per annum, is due and payable on April 22,
2004. The outstanding principal and accrued interest of the note is
convertible, at the option of the holder, into common stock at a conversion rate
of $2.00 per share.
A-14
SCHEDULE 3
----------
SIGNATORIES TO SUBSCRIPTION AGREEMENT
DECEMBER INVESTORS
------------------------------------------------------------------------------
SIGNATORY DATE
-------------------------------------------------------------------- --------
Platinum Partners Value Arbitrage Fund LP 12/1/03
-------------------------------------------------------------------- --------
Castle Creek Technology Partners LLC 12/4/03
-------------------------------------------------------------------- --------
Capital Ventures International 12/4/03
-------------------------------------------------------------------- --------
Gamma Opportunity Capital Partners LP 12/2/03
-------------------------------------------------------------------- --------
Alpha Capital AG 12/2/03
-------------------------------------------------------------------- --------
XxxxxXxxxxx XX 11/26/03
-------------------------------------------------------------------- --------
Professional Traders Fund LLC 12/1/03
-------------------------------------------------------------------- --------
First Mirage, Inc. 12/1/03
-------------------------------------------------------------------- --------
Greenwich Growth Fund Limited 11/28/03
-------------------------------------------------------------------- --------
Whalehaven Fund Limited 11/28/03
-------------------------------------------------------------------- --------
Platinum Partners Global Macro Fund 12/1/03
-------------------------------------------------------------------- --------
OTAPE Investments LLC 12/2/03
-------------------------------------------------------------------- --------
WEC Partners LLC 12/1/03
-------------------------------------------------------------------- --------
AUGUST INVESTORS
-------------------------------------------------------------------- --------
SIGNATORY DATE
-------------------------------------------------------------------- --------
Xxxx Xxxxxxxx 7/31/03
-------------------------------------------------------------------- --------
Xxxx X. Xxxxxxx 1979 Revocable Trust 7/15/03
-------------------------------------------------------------------- --------
Bear Xxxxxxx Securities Corp, custodian for Xxxxx X. Xxxxxxx 7/23/03
-------------------------------------------------------------------- --------
Xxxx Xxxxxxx 7/22/03
-------------------------------------------------------------------- --------
Xxxx Xxxxxxxxxxxxx 7/16/03
-------------------------------------------------------------------- --------
Xxx Xxxxxx 7/15/03
-------------------------------------------------------------------- --------
PJE Investments #2 7/16/03
-------------------------------------------------------------------- --------
Xxxxxx X. Xxxxx 7/15/03
-------------------------------------------------------------------- --------
MLPF&S Custodian FBO Xxxxxxx X. Xxxxxxxx XXX 7/22/03
-------------------------------------------------------------------- --------
Xxxx X. Xxxx 7/15/03
-------------------------------------------------------------------- --------
Jupiter Partners 7/31/03
-------------------------------------------------------------------- --------
Xxxx X. Xxxxxx 7/31/03
-------------------------------------------------------------------- --------
Xxxxxxx Xxxxxx 7/31/03
-------------------------------------------------------------------- --------
Xxxxxxx Xxxxxx 7/18/03
-------------------------------------------------------------------- --------
Xxx X. Xxxxxx & Xxxx X. Xxxxxx 7/17/03
-------------------------------------------------------------------- --------
Xxxx & Xxxxxxxx Xxxxxxxx 7/31/03
-------------------------------------------------------------------- --------
Xxxxxx X. Childrey 8/21/03
-------------------------------------------------------------------- --------
Xxxxxxx XxXxxxx 7/15/03
-------------------------------------------------------------------- --------
A-15
-------------------------------------------------------------------- --------
Xxxxxx X. Xxxxx 7/15/03
-------------------------------------------------------------------- --------
Xxxxxx X. Xxxxxx 7/31/03
-------------------------------------------------------------------- --------
Xxxxx X. Xxxxxxxxxxxx/Xxx-Xxxxx Xxxxxxxxxxxx 7/23/03
-------------------------------------------------------------------- --------
Xxxxx X. Xxxxxx 7/16/03
-------------------------------------------------------------------- --------
BRIDGE LENDERS
-------------------------------------------------------------------- --------
SIGNATORY DATE
-------------------------------------------------------------------- --------
Xxxx McAfee Companies LLC 7/31/03
-------------------------------------------------------------------- --------
Xxxx Xxxxxx 7/31/03
-------------------------------------------------------------------- --------
Xxxxx Xxxx 7/31/03
-------------------------------------------------------------------- --------
Xxxxxxxxx Xxxxx 7/31/03
-------------------------------------------------------------------- --------
Xxxxxxxxx Xxxx 8/26/03
-------------------------------------------------------------------- --------
The Xxxxxx Living Trust DTD 3/05/97 8/15/03
-------------------------------------------------------------------- --------
Xxxxxxx Xxxxxx 8/25/03
-------------------------------------------------------------------- --------
Xxxxxx X. and Xxxxxxxx X. Xxxxxxxxx Revocable Trust DTD May 25, 1996 8/20/03
-------------------------------------------------------------------- --------
X. X. Xxxxxx Revocable Trust DTD 5/15/87 8/8/03
-------------------------------------------------------------------- --------
Xxxxxxxx Xxxxxx 8/6/03
-------------------------------------------------------------------- --------
Xxxxx Diversified, Inc. 8/22/03
-------------------------------------------------------------------- --------
Xxx Xxxxx 8/22/03
-------------------------------------------------------------------- --------
Xxxxxx Xxxxxxx 8/6/03
-------------------------------------------------------------------- --------
JUNE INVESTORS
-------------------------------------------------------------------- --------
SIGNATORY DATE
-------------------------------------------------------------------- --------
Xxxxxxx X. Xxxxxxx 6/19/03
-------------------------------------------------------------------- --------
Pepper Xxxxxx 6/19/03
-------------------------------------------------------------------- --------
Xxxxxxx X. Xxxxxxx 6/18/03
-------------------------------------------------------------------- --------
Xxxxx X. Xxxxxxxx 6/18/03
-------------------------------------------------------------------- --------
Xxxxx Xxxxxxx 6/18/03
-------------------------------------------------------------------- --------
Xxxxxx Xxxxxx 6/19/03
-------------------------------------------------------------------- --------
Iwasaka 2000 Living Trust 6/19/03
-------------------------------------------------------------------- --------
Xxxxxxx and Xxxxxx X. Xxxxxxxx 6/19/03
-------------------------------------------------------------------- --------
Xxx Xxxxxxxx and Xxxxx Xxxxxxxx 7/16/03
-------------------------------------------------------------------- --------
A-16
