Exhibit 10.2
THIS WARRANT AND THE SHARES OF COMMON STOCK WHICH MAY BE PURCHASED UPON THE
EXERCISE OF THIS WARRANT HAVE BEEN ACQUIRED SOLELY FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
OR ANY STATE SECURITIES LAWS. SUCH SECURITIES MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH SALE,
OFFER, PLEDGE OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE ACT AND OF ANY APPLICABLE STATE SECURITIES LAWS
UNLESS SOLD PURSUANT TO RULE 144 OF THE ACT.
September ___, 1999
SOCKET COMMUNICATIONS, INC.
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, , a Delaware corporation
(together with any registered assignee(s), the "Holder") is entitled, upon the
terms and subject to the conditions hereinafter set forth, at such times after
the date hereof as are set forth below, to acquire from Socket Communications,
Inc., a Delaware corporation (the "Company"), in whole or from time to time in
part, up to [NUMBER] fully paid and nonassessable shares of Common Stock,
$.001 par value, of the Company ("Warrant Shares") at a purchase price per
share (the "Exercise Price") of $1.08. Such number of shares, type of
security and Exercise Price are subject to adjustment as provided herein, and
all references to "Warrant Shares" and "Exercise Price" herein shall be deemed
to include any such adjustment or series of adjustments. This Warrant is
granted by the Company to the Holder pursuant to that certain Subscription
Agreement of even date herewith by and among the Company and the Holder (the
"Subscription Agreement").
1. Term.
(a) Commencement of Exercisability. The Warrant is exercisable,
in whole or in part, at any time and from time to time from the date hereof
through the Expiration Date (as defined in Section 1(b) below), subject to
Section 4 below.
(b) Termination and Expiration. If not earlier exercised, the
Warrant shall expire on the third anniversary of the date hereof (the
"Expiration Date"), subject to Section 4 below.
2. Method of Exercise; Payment; Issuance of New Warrant. Subject to
Section 1 hereof, exercise of this Warrant shall be made, in whole or in part,
by the surrender of this Warrant (with the notice of exercise form attached
hereto as Exhibit A duly executed) at the principal office of the Company and
by the payment to the Company of an amount equal to the Exercise Price
multiplied by the number of Warrant Shares being purchased, which amount may
be paid in cash or by check. In the event of any exercise of the rights
represented by this Warrant, certificates for the Warrant Shares so purchased
shall be delivered to the Holder hereof within a reasonable time and, unless
this Warrant has been fully exercised or expired, a new Warrant representing
that portion of the Warrant Shares, if any, with respect to which this Warrant
shall not then have been exercised, shall also be issued to the Holder within
such reasonable time.
3. Stock Fully Paid; Reservation of Warrant Shares. All of the Warrant
Shares issuable upon the exercise of the rights represented by this Warrant
will, upon issuance and receipt of the Exercise Price therefor, be fully paid
and nonassessable, and free from all taxes, liens and charges with respect to
the issue thereof. During the period within which the rights represented by
this Warrant may be exercised, the Company shall at all times have authorized
and reserved for issuance a sufficient number of shares of Common Stock to
provide for the exercise of the rights represented by this Warrant.
4. Adjustment of Exercise Price and Number of Shares of Warrant Shares.
Subject to the provisions of Section 2 hereof, the number and kind of
securities purchasable upon the exercise of this Warrant and the Exercise
Price therefor shall be subject to adjustment from time to time upon the
occurrence of certain events, as follows:
(a) In the event the Company shall at any time following the date
hereof subdivide the outstanding shares of Common Stock, or shall issue a
stock dividend on its outstanding Common Stock, the number of shares of Common
Stock issuable upon exercise of this Warrant immediately prior to such
subdivision or to the issuance of such stock dividend shall be proportionately
increased, and the Exercise Price shall be proportionately decreased; and in
the event the Company shall at any time following the date hereof combine the
outstanding shares of Common Stock, the number of shares of Common Stock
issuable upon exercise of this Warrant immediately prior to such combination
shall be proportionately decreased, and the Exercise Price shall be
proportionately increased, effective at the close of business on the date
of such subdivision, stock dividend or combination, as the case may be.
(b) If the Company is, following the date hereof, recapitalized
through the subdivision or combination of its outstanding shares of Common
Stock into a larger or smaller number of shares, the number of shares of
Common Stock for which this Warrant may be exercised shall be increased or
reduced in the same proportion as the increase or decrease in the outstanding
shares of Common Stock and the then applicable Exercise Price shall be
adjusted by multiplying by a fraction with a numerator equal to the number of
shares of Common Stock purchasable upon exercise hereof immediately prior to
such subdivision or combination and the denominator of which shall be the
number of shares of Common Stock purchasable immediately following such
subdivision or combination.
(c) Subject to Section 1 hereof, in the event of any consolidation
or merger of the Company with another entity in a bona fide transaction (i.e.,
not a mere recapitalization, reincorporation for the purpose of changing
corporate domicile, or similar transaction), at any time prior to the
Expiration Date, the Holder shall have the right upon exercise of this
Warrant, to receive the same kind and number of Warrant Shares and other
securities, cash or other property as would have been distributed to the
Holder had the Holder exercised this Warrant immediately prior to such
consolidation or merger.
5. Fractional Shares. No fractional shares of Common Stock will be
issued in connection with any exercise hereunder, but in lieu thereof the
Company shall make a cash payment therefor upon the basis of the Exercise
Price then in effect.
6. Transfer, Exchange, Assignment or Loss of Warrant and Warrant Shares.
(a) This Warrant and the Warrant Shares to be issued or issuable
upon exercise of this Warrant, may not be assigned or transferred except as
provided in this Section 7 and in accordance with and subject to the
provisions of the Securities Act of 1933, as amended, and the Rules and
Regulations promulgated thereunder (said Act and such Rules and Regulations
being hereinafter collectively referred to as the "Act"). Upon exercise of
this Warrant, the holder hereof shall confirm in writing, in the form of
Exhibit B, that the shares of Series D Preferred so purchased are being
acquired for investment and not with a view toward distribution or resale.
Any purported transfer or assignment made other than in accordance with this
Section 7 shall be null and void and of no force and effect.
(b) The holder of this Warrant by acceptance hereof agrees to
comply in all respects with the provisions of Section 6.4 of that Stock
Purchase Agreement with respect to any proposed transfer of this Warrant
or any part hereof.
(c) Each certificate for Warrant Shares or for any Warrant Shares
issued or issuable upon exercise of this Warrant shall contain a legend
substantially to the effect as set forth in Section 6.3 of the Stock Purchase
Agreement.
(d) Any assignment permitted hereunder shall be made by surrender
of this Warrant to the Company at its principal office with the Assignment
Form attached hereto as Exhibit C duly executed. In such event the Company
shall, upon payment by the Holder of any issuance or transfer tax incurred or
to be incurred by the Company with respect to such transfer, execute and
deliver a new Warrant in the name of the assignee named in such instrument
of assignment and this Warrant shall promptly be canceled. This Warrant may
be divided or combined with other warrants which carry the same rights upon
presentation thereof at the principal office of the Company together with a
written notice signed by the Holder thereof, specifying the names and
denominations in which new warrants are to be issued. Upon any partial
transfer, the Company will sign, issue and deliver to the Holder a new
Warrant with respect to any portion not so transferred.
(e) Upon receipt by the Company of evidence satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant (provided that an
affidavit of the Holder shall be satisfactory for such purpose), and of
indemnity satisfactory to it (provided that if the Holder is the original
Holder of this Warrant, its own indemnification agreement shall under all
circumstances be satisfactory, and no bond shall be required), and upon
surrender and cancellation of this Warrant, if mutilated, the Company will
execute and deliver a new Warrant of like tenor and date and any such lost,
stolen, or destroyed Warrant shall thereupon become void.
(f) In order to ensure compliance with the restrictions referred
to herein, the Company may issue appropriate "stop transfer" instructions to
its transfer agent.
(g) The Company shall not be required (i) to transfer on its books
the Warrant or any Warrant Shares that have been sold or otherwise transferred
in violation of any of the provisions of this Warrant or the Investor Rights
Agreement or (ii) to treat as owner of such Warrant Shares or to accord the
right to vote or pay dividends to a purchaser or other transferee to whom
such Warrant Shares shall have been so transferred.
7. Representations and Covenants of the Holder. The Holder represents
that this Warrant and any Warrant Shares issued or issuable upon exercise of
this Warrant, to be received will be acquired for investment for its own
account, not as a nominee or agent, and not with a view to the sale or
distribution of any part thereof, and that it has no present intention of
selling, granting any participation in or otherwise distributing the same.
Such Holder understands and acknowledges that the offering of this Warrant,
and any issuance of Common Stock on conversion thereof , will not be
registered under the Securities Act on the ground that the sale provided for
in this Agreement and the issuance of securities hereunder is exempt from
registration pursuant to Section 4(2) of the Act, and that the Company's
reliance on such exemption is predicated on the Holder's representations set
forth herein. Such Holder represents that it is experienced in evaluating
companies such as the Company, is able to fend for itself in investments such
as this one, and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of its
prospective investment in the Company.
8. Rights of Stockholders. No holder of this Warrant shall be entitled,
as a Warrant holder, to vote or receive dividends or be deemed the holder of
Common Stock or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall anything contained
herein be construed to confer upon the holder of this Warrant, as such, any
of the rights of a stockholder of the Company or any right to vote for the
election of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate action
(whether upon any recapitalization, issuance of stock, reclassification of
stock, change of par value or change of stock to no par value, consolidation,
merger, conveyance, or otherwise) or to receive notice of meetings, or to
receive dividends or subscription rights or otherwise until the Warrant shall
have been exercised and the Warrant Shares purchasable upon the exercise
hereof shall have become deliverable, as provided herein.
9. Registration and Other Rights. The shares of Common Stock obtained
upon exercise of this Warrant shall have the registration and other rights
set forth in the Subscription Agreement and the Registration Rights Agreement
of even date herewith and the term "Registrable Securities" as defined in
such Registration Rights Agreement shall include the Common Stock obtained
upon exercise of this Warrant.
10. Notices, Etc. All notices and other communications from the Company
to the Holder shall be mailed by first class registered or certified mail,
postage prepaid, at such address as may have been furnished to the Company in
writing by the Holder.
11. Governing Law, Headings. This Warrant is being delivered in the
State of Delaware and shall be construed and enforced in accordance with and
governed by the laws of such State. The headings in this Warrant are for
purposes of reference only, and shall not limit or otherwise affect any of the
terms hereof.
"COMPANY" "HOLDER"
SOCKET COMMUNICATIONS, INC.
By: _/s/__David_W._Dunlap______ By: ___________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Name: ___________________________
Title: Vice President, Finance and Title: ___________________________
Administration, and
Chief Financial Officer
[Signature Page to Investor Warrant]
EXHIBIT A
NOTICE OF EXERCISE
TO: Socket Communications, Inc.
(i) The undersigned hereby elects to purchase ___________
shares of Common Stock pursuant to the terms of the attached Warrant, and
tenders herewith payment of the purchase price of such Common Stock in full.
(ii) Please issue a certificate or certificates representing
said Common Stock in the name of the undersigned or in such other name as is
specified
below:
Name:
Address:
(iii) The undersigned hereby represents and warrants that the
aforesaid shares of Common Stock are being acquired for the account of the
undersigned for investment and not with a view to, or, for resale in
connection with the distribution thereof, and that the undersigned has no
present intention of distributing or reselling such shares.
By: ________________________________________
Name: ________________________________________
Title: ________________________________________
Date: ________________________________________
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER:
COMPANY: SOCKET COMMUNICATIONS, INC.
SECURITY: COMMON STOCK
AMOUNT:
DATE:
In connection with the purchase of the above-listed securities (the
"Securities"), I, the Purchaser, represent to the Company the following:
(a) I am aware of the Company's business affairs and financial condition,
and have acquired sufficient information about the Company to reach an informed
and knowledgeable decision to acquire the Securities. I am purchasing these
Securities for my own account for investment purposes only and not with a view
to, or for the resale in connection with, any "distribution" thereof for
purposes of the Securities Act of 1933 ("Securities Act").
(b) I understand that the Securities have not been registered under the
Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bona fide nature of my
investment intent as expressed herein. In this connection, I understand that,
in the view of the Securities and Exchange Commission ("SEC"), the statutory
basis for such exemption may be unavailable if my representation was
predicated solely upon a present intention to hold these Securities for the
minimum capital gains period specified under tax statutes, for a deferred sale,
for or until an increase or decrease in the market price of the Securities, or
for a period of one year or any other fixed period in the future.
(c) I further understand that the Securities must be held for at least
one (1) year under Rule 144 promulgated under the Securities Act, unless
subsequently registered under the Securities Act or unless an exemption from
registration is otherwise available. Moreover, I understand that the Company
is under no obligation to register the Securities except as set forth in the
Investor Rights Agreement. In addition, I understand that the certificate
evidencing the Securities will be imprinted with a legend which prohibits the
transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel for the Company.
(d) I am aware of the provisions of Rule 144, promulgated under the
Securities Act, which, in substance, permits limited public resale of
"restricted securities" acquired, directly or indirectly, from the issuer
thereof (or from an affiliate of such issuer), in a non-public offering
subject to the satisfaction of certain conditions.
(e) I am aware that the Securities involve a high degree of risk and
that I may suffer a total loss of my investment. I have been provided with
the Company's periodic reports filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as amended, including
the Company's most recently filed Annual Report on Form 10-K and Quarterly
Report on Form 10-Q. I have read the information in such reports, including
the information under the caption "Risk Factors" included in the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
section. I am further aware that the Company may need to raise additional
capital to maintain continued listing of its Common Stock on the Pacific
Exchange. Should the Company's Common Stock be delisted from the Pacific
Exchange, I understand that I would find it more difficult to dispose of,
or obtain accurate quotations as to the price of, the Company's securities,
and that the ability or willingness of broker-dealers to sell or make a market
in the Company's Common Stock, and therefore my ability to sell the Securities
in the secondary market would be materially and adversely affected.
(f) I further understand that in the event all of the requirements of
Rule 144 are not satisfied, registration under the Securities Act, compliance
with Regulation A, or some other registration exemption will be required; and
that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of
the SEC has expressed its opinion that persons proposing to sell private
placement securities other than in a registered offering and otherwise than
pursuant to Rule 144 will have a substantial burden of proof in establishing
that an exemption from registration is available for such offers or sales,
and that such persons and their respective brokers who participate in such
transactions do so at their own risk.
___________________________________
Name of Purchaser
___________________________________
Signature of Authorized Signatory
___________________________________
Print Name and Title
___________________________________
Date
EXHIBIT C
ASSIGNMENT FORM
FOR VALUE RECEIVED, _______________________________ hereby sells,
assigns and transfers unto ______________________________________ (Name and
Address) the right to purchase Warrant Shares represented by this Warrant to
the extent of ___________ shares and does hereby irrevocably constitute and
appoint ____________________________ __________________, attorney, to transfer
the same on the books of the Company with full power of substitution in the
premises.
Dated: _______________ , ____
By: ________________________
Name: ________________________
Title: ________________________