ex10_1.htm






EXHIBIT 10.1

 

EXHIBIT  A





PROCERA NETWORKS, INC.





SUBSCRIPTION AGREEMENT





Restricted Common Stock at $0.40 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 April 9, 2009, to which this Subscription is attached (the “Memorandum”).





(b)Before this Subscription is considered, the Participant must complete, execute and deliver to the Company the following:





(i)           This Subscription;





(ii)          The Certificate of Accredited Investor Status, attached to the this Subscription Agreement as Exhibit 1 and to the PPM as Exhibit B; and





(iii)         The Participant’s check in the amount of $ _____________ in exchange for _____________ Shares purchased (at a price per share of $0.40) net to the Company, or wire transfer sent according to the Company’s instructions:





(c)This Subscription is irrevocable by the Participant.





(d)This Subscription is not transferable or assignable by the Participant.





(e)This Subscription may be rejected in whole or in part by the Company in its sole discretion.  In the event this Subscription is rejected by the Company, all funds and documents tendered by the Participant shall be returned.





(f)[this section intentionally omitted]





(g)This Offering, as defined in the Memorandum, is scheduled to close no later than April 30, 2009 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 6,250,000 Shares ($2,500,000) and an additional over-allotment at the Company’s discretion of up to 5,000,000 Shares ($2,000,000), but this Offering has no prescribed minimum amount and the Company may accept lessor amounts from investors and/or have multiple closings of this Offering.





  



  







  





(h)Participant hereby agrees not to, and will cause its affiliates not to, enter into any “put equivalent position” as such term is defined in Rule 16a-1 under the Securities Exchange Act of 1934, as amended, or short sale position with respect to the Common Stock.





2.Representations by Participant.  In consideration of the Company’s acceptance of the Subscription, Participant makes the following representations and warranties to the Company and to its principals, jointly and severally, which warranties and representations shall
survive any acceptance of the Subscription by the Company:





(a)Prior to the time of purchase of any Shares, Participant received a copy of the Memorandum.  Participant has reviewed the Memorandum and the Company’s filings with the Securities and Exchange Commission (the “Public Information”).  Participant
has had the opportunity to ask questions and receive any additional information from persons acting on behalf of the Company to verify Participant’s understanding of the terms thereof and of the Company’s business and status thereof. Participant acknowledges that no officer, director, broker-dealer, placement agent, finder or other person affiliated with the Company has given Participant any information or made any representations, oral or written, other than as provided in the Memorandum and the
Public Information, on which Participant has relied upon in deciding to invest in the Shares, including without limitation, any information with respect to current or future operations of the Company or the economic returns which may accrue as a result of the purchase of the Shares.





(b)Participant acknowledges that Participant has not seen, received, been presented with, or been solicited by any leaflet, public promotional meeting, newspaper or magazine article or advertisement, radio or television advertisement, or any other form of advertising or general solicitation with respect to the Shares.





(c)The Shares are being purchased for Participant’s own account for long-term investment and not with a view to immediately re-sell the Shares.  No other person or entity will have any direct or indirect beneficial interest in, or right to, the Shares.  Participant
or its agents or investment advisors have such knowledge and experience in financial and business matters that will enable Participant to utilize the information made available to it in connection with the purchase of the Shares to evaluate the merits and risks thereof and to make an informed investment decision.





(d)Participant acknowledges that the Shares have not been registered under the Securities Act of 1933, as amended (the "Securities Act"),
or qualified under the California Securities Law, or any other applicable blue sky laws, in reliance, in part, on Participant’s representations, warranties and agreements made herein.





(e)Participant represents, warrants and agrees that the Company and the officers of the Company (the “Company’s Officers”) are under no obligation to register or qualify the Shares under the Securities Act or under any state securities law, or to assist the undersigned
in complying with any exemption from registration and qualification.





  



  







  





(f)Participant represents that Participant meets the criteria for participation because: (i) Participant has a preexisting personal or business relationship with the Company or one or more of its partners, officers, directors or controlling persons; or (ii) by reason of Participant’s business or financial experience, or by reason
of the business or financial experience of its financial advisors who are unaffiliated with, and are not compensated, directly or indirectly, by the Company or any affiliate or selling agent of the Company, Participant is capable of evaluating the risk and merits of an investment in the Shares and of protecting its own interests;





(g)Participant represents that Participant is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act and Participant has executed the Certificate of Accredited Investor Status, attached hereto as Exhibit 1.





(h)Participant understands that the Shares are illiquid and will not be registered under the Securities Act, and until an exemption from registration becomes available, cannot be readily sold as there will not be a public market for them, and that Participant may not be able to sell or dispose of the Shares, or to utilize the Shares as
collateral for a loan.  Participant must not purchase the Shares unless Participant has liquid assets sufficient to assure Participant that such purchase, and/or the loss of Participant’s entire investment in the Shares will cause Participant 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 Participant’s
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 appropriate and/or 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, Participant’s financial position and Participant’s 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 and therein.





  



  







  





(m)Each Participant hereby: (i) acknowledges that it has received all the information it has requested from the Company and that Participant considers necessary or appropriate for deciding whether to acquire the Shares, (ii) represents that Participant has had an opportunity to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Shares and to obtain any additional information necessary to verify the accuracy of the information given the Participant and (iii) further represents that Participant has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risk of this investment.





(n)Each certificate or instrument representing securities issuable pursuant to this Agreement will be endorsed with the following legend:





THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER
SUCH ACT OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES WHICH IS REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT.





3.Representations and Warranties by the Company.  The Company represents and warrants that:





(a)Due Incorporation.  The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada and has the requisite corporate power to own its properties and to carry on its business as now being conducted.  The
Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have a material adverse effect on the business, operations or financial condition of the Company.





(b)Outstanding Stock.  All issued and outstanding shares of capital stock of the Company have been duly authorized and validly issued and are fully paid and non-assessable.





(c)Authority; Enforceability.  This Subscription has been duly authorized, executed, and delivered by the Company and is a valid and binding agreement, enforceable in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws of general applicability relating to or affecting creditors' rights generally and to general principles of equity; and the Company has full corporate power and authority necessary to enter into this Subscription Agreement and to perform its obligations hereunder and under all other agreements entered into by the Company relating hereto.





  



  







  





(d)Consents.  No consent, approval, authorization, or order of any court, governmental agency or body or arbitrator having jurisdiction over the Company, the National Association of Securities Dealers, Inc., the NYSE  AMEX LLC (the “AMEX”),
nor the Company's stockholders is required for execution of this Subscription, and all other agreements entered into by the Company relating thereto, including, without limitation, the issuance and sale of the Shares, and the performance of the Company's obligations hereunder and under all such other agreements, provided however that the approval of the AMEX will be required prior to the issuance of the Shares.





(e)The Shares.  The Shares upon issuance:





(i)          are, or will be, free and clear of any security interests, liens, claims or other encumbrances, subject to restrictions upon transfer under the Securities Act and any applicable state securities laws;





(ii)         have been, or will be, duly and validly authorized and on the date of issuance, fully paid and nonassessable;





(iii)        will not have been issued or sold in violation of any preemptive or other similar rights of the holders of any securities of the Company; and





(iv)        will not subject the holders thereof to personal liability solely by reason of being such holders.





(f)Litigation.  There is no pending or, to the best knowledge of the Company, threatened action, suit, proceeding, or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Company that would affect the execution
by the Company or the performance by the Company of its obligations under this Subscription, and all other agreements entered into by the Company relating hereto.  There is no pending or, to the best knowledge of the Company, threatened action, suit, proceeding or investigation before any court, governmental agency or body, or arbitrator having jurisdiction over the Company, which litigation, if adversely determined, could have a material adverse effect on the Company.





(g)Reporting Company.  The Company is a publicly held company subject to reporting obligations pursuant to Sections 15(d) and 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
has a class of common shares registered pursuant to Section 12(g) of the Exchange Act.





(h)No General Solicitation.  Neither the Company, nor any of its affiliates, nor to its knowledge, any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities
Act) in connection with the offer or sale of the Shares.





(i)Listing.  The Company's common stock is listed for trading on the AMEX Board.  The Company has not received any oral or written notice that
its common stock will be delisted from the AMEX nor that its common stock does not meet all requirements for the continuation of such quotation and the Company currently satisfies the requirements for the continued listing of its common stock on the AMEX.





  



  







  





4.Agreement to Indemnify Company.  Participant hereby agrees to indemnify and hold harmless the Company, its principals, the Company’s officers, directors attorneys, and agents, from any and all damages, costs and expenses (including actual attorneys’ fees) which
they may incur: (i) by reason of Participant’s failure to fulfill any of the terms and conditions of this Subscription; (ii) by reason of Participant’s breach of any of representations, warranties or agreements contained herein (including the Certificate of Accredited Investor Status); or (iii) with respect to any and all claims made by or involving any person, other than Participant personally, claiming any interest, right, title, power, or authority in respect to the Shares.  Participant
further agrees and acknowledges that these indemnifications shall survive any sale or transfer, or attempted sale or transfer, of any portion of the Shares.





5.Subscription Binding on Heirs, etc.  This Subscription, upon acceptance by the Company, shall be binding upon the heirs, executors, administrators, successors and assigns of the Participant.  If the undersigned is more than one person, the obligations of the undersigned
shall be joint and several and the representations and warranties shall be deemed to be made by and be binding on each such person and his or her heirs, executors, administrators, successors, and assigns.





6.Execution Authorized.  If this Subscription is executed on behalf of a corporation, partnership, trust or other entity, the undersigned has been duly authorized and empowered to legally represent such entity and to execute this Subscription and all other instruments in
connection with the Shares and the signature of the person is binding upon such entity.





7.Adoption of Terms and Provisions.  The Participant hereby adopts, accepts and agrees to be bound by all the terms and provisions hereof.





8.Governing Law.  This Subscription shall be construed in accordance with the laws of the State of California as applied to agreements among California residents, made and to be performed entirely within the State of California, without giving effect to conflicts of laws
principles.





9.General.  If a court of competent jurisdiction finds any provision of this Subscription unenforceable, the parties agree to replace the offending provision with an enforceable provision that most nearly achieves the intent and economic effect of the unenforceable provision
and all other terms shall remain in full force and effect.  Except as otherwise expressly provided herein, the provisions of this Subscription are for the benefit of the parties hereto and not for any other person or entity.  This Subscription shall not provide any non-party with any remedy, claim, liability, reimbursement, claim of action or other right in excess of those existing without reference hereto. The titles and subtitles used in this Subscription are used for convenience only and
are not to be considered in construing or interpreting this Subscription.  This Subscription is the result of negotiations among, and has been received by, Participant and the Company and their respective counsel.  Accordingly, this Subscription shall be deemed to be the product of all parties hereto, and no ambiguity shall be construed in favor of or against either party.  This Subscription may be executed in two or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument. This Subscription, including the Exhibits, may only be amended or modified in a writing signed by both parties.  The Company and each Participant shall each bear its respective expenses and legal fees incurred with respect to this Agreement and the transactions contemplated herein.  This Subscription is the full and entire understanding and agreement between the parties and supersedes all prior agreements and other communications
between the parties, oral and written, with regard to the subjects hereof and no party shall be liable or bound to any other party in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein.





  



  







  





10.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 1, included herewith.)





Name (please print): ______________________________________________________





Person is domiciled (for tax purposes) in the following country:  USA





Social Security or Taxpayer I.D. Number:





Business Address (including zip code):









Business Phone:





Residence Address (including zip code and country):



 

Residence Phone:





Email:  __________________________________________________________





All communications to be sent to:





Business or Residence Address





Number of Shares subscribed for at $0.40 per share: _____________________________





Total Subscription Amount: $ _______________________________________________





  



  







  





Please indicate below the form in which you will hold title to your interest in the Shares.  PLEASE CONSIDER CAREFULLY.  ONCE YOUR SUBSCRIPTION IS ACCEPTED, A CHANGE IN THE FORM OF TITLE CONSTITUTES A TRANSFER OF THE INTEREST IN THE SHARES AND MAY THEREFORE BE RESTRICTED BY THE TERMS OF THIS SUBSCRIPTION, MAY HAVE TAX
CONSEQUENCES, AND/OR 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 Participant’s domicile and Participant’s particular personal circumstances.





INDIVIDUAL OWNERSHIP (one signature required)





JOINT TENANTS WITH RIGHT OF SURVIVORSHIP AND NOT AS TENANTS IN COMMON (both or all parties must sign)





COMMUNITY PROPERTY (one signature required if interest held in one name, i.e., managing spouse; two signatures required if interest held in both names)





TENANTS IN COMMON (both or all parties must sign)





GENERAL PARTNERSHIP (fill out all documents in the name of the PARTNERSHIP, by a PARTNER authorized to sign)





LIMITED PARTNERSHIP (fill out all documents in the name of the LIMITED PARTNERSHIP, by a GENERAL PARTNER authorized to sign)





LIMITED LIABILITY COMPANY (fill out all documents in the name of the LIMITED LIABILITY COMPANY, by a member authorized to sign)





CORPORATION (fill out all documents in the name of the CORPORATION, by the President or other officer authorized to sign)





TRUST (fill out all documents in the name of the TRUST, by the Trustee, and include a copy of the instrument creating the trust and any other documents necessary to show the investment by the Trustee is authorized.  The date of the trust must appear on the Notarial where indicated.)





  



  







  





Subject to acceptance by the Company, the undersigned has completed this Subscription Agreement to evidence his/her subscription for participation in the Shares of the Company, this _______ day of April, 2009, at _________________________.









PARTICIPANT









(Signature)


	  	
[name]












The Company has accepted this subscription this _____ day of ____________, 2009.










	  	
“COMPANY”

	  	  
	  	
PROCERA NETWORKS, INC.,

	  	
a Nevada corporation












By:           

James Brear, CEO









Address for notice:





Procera Networks, Inc.

100-C Cooper Court

Los Gatos, CA  95032

Attn: James Brear





  



  







  





Exhibit 1

To The Subscription Agreement





CERTIFICATE OF ACCREDITED INVESTOR STATUS





Except as may be indicated by the undersigned below, the undersigned is an “accredited investor,” as that term is defined in Regulation D under the Securities Act of 1933, as amended (the “Securities Act”).  The undersigned has initialed the
box below indicating the basis on which he or she is representing his or her status as an “accredited investor”:






	
____
	
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”;









	
____
	
a private business development company as defined in Section 202(a)(22) of the Investment Advisers Act of 1940;









	
____
	
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;









	
____
	
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;








  



  







  






	
____
	
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;









	
____
	
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;









	
____
	
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









	
____
	
an individual who is a director or executive officer of Procera Networks, Inc.












IN WITNESS WHEREOF, the undersigned has executed this Certificate of Accredited Investor Status effective as of __________________, 2009.









(signature)





[name]