PROCERA NETWORKS, INC. Restricted Common Stock at $2.00 per Share
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EXHIBIT
10.1
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Form
of Subscription Agreement.
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PROCERA
NETWORKS, INC.
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”) and the
Confidential Private Placement Memorandum, dated May 25, 2007, 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 Five Percent (5%) of the total
Shares purchased by Participant, at an exercise price equal to $2.00 per
share.
(g) This
Offering, as defined in the Memorandum, is scheduled to close no later than
June
30, 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
days. The Target Offering is for up to 3,000,000 Shares ($6,000,000)
and an additional over-allotment at the Company’s discretion of up to 1,000,000
Shares ($2,000,000), 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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Email:
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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 investor's domicile and his or
her particular personal circumstances.
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INDIVIDUAL OWNERSHIP (one signature required)
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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)
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TENANTS IN COMMON (both or all parties must sign)
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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)
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LIMITED LIABILITY COMPANY (fill out all documents in the name of the LIMITED
LIABILITY COMPANY, by a member authorized to sign)
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CORPORATION (fill out all documents in the name of the CORPORATION, by the
President or other officer authorized to sign)
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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
________, 2007, 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 ____________,
2007.
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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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Exhibit
A
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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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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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 __________________, 2007.
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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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