PROCERA NETWORKS, INC. SUBSCRIPTION AGREEMENT Restricted Common Stock at $0.40 per Share
EXHIBIT
10.1
PROCERA
NETWORKS, INC.
Restricted
Common Stock at $0.40 per Share
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1.
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Subscription:
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(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 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
Certificate of Accredited Investor Status, 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:
(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, will be paid commissions, fees and other
consideration by the Company equal to: (i) Eight Percent (8%) of Participant’s
investment amount, and (ii) a warrant to purchase shares of common stock of
the
Company equal to Ten Percent (10%) of the total Shares purchased by Participant,
at an exercise price equal to $0.40 per share.
(g) This
Offering, as defined in the Memorandum, is scheduled to close no later than
December 31, 2005 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 7,500,000 Shares ($3,000,000)
and
an additional over-allotment at the Company’s discretion of up to 1,500,000
Shares ($3,750,000)), 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) 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 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) Other
than the rights specifically set forth in this Subscription 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 Certificate of Accredited Investor Status, attached hereto as Exhibit
A.
(h) Participant
understands 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 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.
(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 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 and the Rights 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.
(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 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
currently satisfies the requirements for the continued listing of its common
stock on the OTC Bulletin Board.
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.)
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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:
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Business
or
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Residence
Address
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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.
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INDIVIDUAL OWNERSHIP (one signature required)
_______
JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON (both
or
all parties must sign)
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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 ________________, 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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▇▇▇▇▇▇▇
▇▇▇▇▇▇, CEO
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Address
for notice:
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Procera
Networks, Inc.
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▇▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attn:
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