REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT is entered into as of October
4, 2000, by and among SOCKET COMMUNICATIONS, INC., a Delaware
corporation (the "Company"), and the persons named in Schedule A
hereto (the "Stockholders").
RECITALS
WHEREAS, the Stockholders acquired shares of the Company's
common stock (the "Merger Shares") pursuant to an Agreement and Plan
of Reorganization by and among the Company, 3rd Rail Acquisition
Corporation ("Sub") and 3rd Rail Engineering, Inc. ("3rd Rail") dated
October 4, 2000 (the "Merger Agreement") in connection with the
merger of Sub with and into 3rd Rail. Pursuant to Section 5.12 of
the Merger Agreement, the Company agreed to provide the Stockholders
certain registration rights as provided herein;
WHEREAS, as an inducement for 3rd Rail to enter into the Merger
Agreement, the Company desires to grant the registration rights to
the Stockholders as contained herein;
NOW, THEREFORE, in consideration of the promises and the mutual
covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the
Company and the Stockholders hereby agree as follows:
1. Definitions. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth
in the Merger Agreement. As used in this Agreement, the following
terms shall have the following meanings:
(a) "Holders" are stockholders of the Company who, by
virtue of agreements with the Company, are entitled to include their
securities in certain Registration Statements filed by the Company.
(b) "Investors" means the Stockholders and any transferees
or assignees of the Investors who agree to become bound by the
provisions of this Agreement in accordance with Section 8 hereof.
(c) "Registrable Securities" means all of the following to
the extent the same have not been sold to the public (i) any and all
Merger Shares or (ii) stock issued in respect of the stock referred
to in (i) as a result of a stock split, stock dividend,
recapitalization or combination.
(d) "Registration Period" means the period between the
effective date of a Registration Statement and the earlier of (i) the
date on which all of the Registrable Securities have been sold, or
(ii) for each individual Investor, the date on which all the
Registrable Securities relating to the Merger Shares (in the opinion
of Company counsel) may be immediately sold without registration and
without restriction as to the number of Registrable Securities to be
sold pursuant to Rule 144 as promulgated under the 1933 Act ("Rule
144") or otherwise.
(e) "Registration Statement" means, collectively, each
registration statement filed with the Securities and Exchange
Commission (the "SEC") under the 1933 Act pursuant to the terms
hereof.
(f) The terms "register," "registered," and "registration"
refer to a registration effected by preparing and filing a
Registration Statement or Statements in compliance with the 1933 Act
and pursuant to Rule 415 as promulgated under the 1933 Act or any
successor rule providing for offering securities on a continuous
basis ("Rule 415") and applicable rules and regulations thereunder,
and the declaration or ordering of effectiveness of such Registration
Statement by the SEC.
2. Registration.
(a) Mandatory Registration. The Company shall file
pursuant to its obligations under the Merger Agreement, within sixty
(60) days of the Closing Date a Registration Statement on Form S-3
(or, if such form is unavailable for such a registration, on such
other form as is available for such a registration) with the SEC
registering for resale Registrable Securities and any other
securities of the Company which are held by Holders who are entitled
to include securities in such registration.
The Company shall use reasonable best efforts to cause such
Registration Statement to be declared effective by the SEC as soon as
practicable after filing. Such reasonable best efforts shall
include, but not be limited to, promptly responding to all comments
received from the staff of the SEC and filing of documents and
supplements as soon as commercially practicable. Should the Company
receive notification from the SEC that the Registration Statement
will receive no action or no review from the SEC, the Company shall
cause such Registration Statement to become effective within five (5)
business days of such SEC notification. Once declared effective by
the SEC, the Company shall cause such Registration Statement to
remain effective throughout the Registration Period, except as
otherwise permitted pursuant to Section 3(a).
(b) Eligibility for Form S-3. The Company represents and
warrants that it meets the requirements for the use of Form S-3 for
registration of the sale by the Investors of the Registrable
Securities. The Company shall file all reports required to be filed
by the Company with the SEC in a timely manner so as to preserve its
eligibility for the use of Form S-3. In the event that Form S-3 is
not available for sale by the Investors of the Registrable
Securities, then the Company (i) with the consent of the Investors
holding a majority of the Registrable Securities pursuant to Section
2(a), shall register the sale of the Registrable Securities on
another appropriate form and (ii) the Company shall undertake to
register the Registrable Securities on Form S-3 as soon as such form
is available, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such
time as a Registration Statement on Form S-3 covering the Registrable
Securities has been declared effective by the SEC.
3. Additional Obligations of the Company. In connection with
the registration of the Registrable Securities, the Company shall
have the following additional obligations:
(a) The Company shall keep the Registration Statement
effective pursuant to Rule 415 under the 1933 Act at all times during
the Registration Period. Notwithstanding the foregoing, the Company
may by written notice (a "Shelf Blackout Right") require that the
Investors immediately cease sales of shares pursuant to the
Registration Statement and use of the prospectus under the
Registration Statement at any time that (i) the Company becomes
engaged in business activity or negotiation which is not disclosed in
the Registration Statement (or the prospectus included therein) which
the Company reasonably believes must be disclosed therein under
applicable law and which the Company desires to keep confidential for
business purposes, (ii) the Company determines that a particular
disclosure so determined to be required to be disclosed therein would
be premature or would adversely affect the Company or its business or
prospects, (iii) the Company has knowledge of an event as a result of
which the prospectus included in the Registration Statement as then
in effect would include an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading or (iv) the
Registration Statement otherwise can no longer be used under the
existing rules and regulations promulgated under the Securities Act.
The Company shall not be required to disclose to the Holders which of
the reasons specified in clauses (i), (ii), (iii) or (iv) above are
the basis for requiring a suspension of sales hereunder.
Notwithstanding the foregoing, until the elapse of the Registration
Period, the Company may only exercise the Shelf Blackout Right based
upon (x) the good faith judgment of the Board of Directors pursuant
to their fiduciary obligations or (y) the advice of counsel that the
exercise of such Shelf Blackout Right is necessary in order to enable
the Company to amend the registration statement to comply with the
existing rules and regulations promulgated under the Securities Act.
Upon receipt of a notice of a Shelf Blackout Right, the Investors
will forthwith discontinue, for a period of up to twenty (20)
consecutive business days, disposition of such Registrable Securities
covered by such Registration Statement or prospectus until advised in
writing by the Company that use of the applicable prospectus may be
resumed, and until each such Investor has received notice from the
Company of the termination of the need for a Shelf Blackout Right.
Following the delivery of any notice of a Shelf Blackout Right,
Company shall use all reasonable efforts to ensure that the use of
the prospectus may be resumed as soon as practicable, and in any
event shall not be entitled to require the Investors to suspend use
of any prospectus during Deferral Period for more than thirty (30)
business days in any twelve (12) month period.
(b) The Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) filed by
the Company shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading. Except as
otherwise provided in Section 3(a) herein, the Company shall prepare
and file with the SEC such amendments (including post-effective
amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may
be necessary to permit sales pursuant to the Registration Statement
at all times during the Registration Period, and, during such period,
shall comply with the provisions of the 1933 Act with respect to the
disposition of all Registrable Securities of the Company covered by
the Registration Statement until the termination of the Registration
Period, or if earlier, such time as all of such Registrable
Securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth
in the Registration Statement.
(c) The Company shall furnish to each Investor whose
Registrable Securities are included in the Registration Statement and
its legal counsel (i) promptly after the same is prepared and
publicly distributed, filed with the SEC or received by the Company,
one copy of the Registration Statement (and any amendment thereto);
and each preliminary prospectus and final prospectus (and each
amendment or supplement thereto); and (ii) such number of copies of a
prospectus, including a preliminary prospectus, (and all amendments
and supplements thereto), and such other documents as such Investor
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned by such Investor.
(d) The Company shall use its reasonable best efforts to
(i) register and qualify the Registrable Securities covered by the
Registration Statement under such other securities or blue sky laws
of such jurisdictions as each Investor who holds (or has the right to
hold) Registrable Securities being offered reasonably request,
(ii) prepare and file in those jurisdictions such amendments
(including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such
other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the Registration Period,
and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions.
Notwithstanding the foregoing provision, the Company shall not be
required in connection therewith or as a condition thereto to
(i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(d),
(ii) subject itself to general taxation in any such jurisdiction,
(iii) file a general consent to service of process in any such
jurisdiction, (iv) provide any undertakings that cause material
expense or burden to the Company, or (v) make any change in its
charter or bylaws, which in each case the Board of Directors of the
Company determines to be contrary to the best interests of the
Company and its stockholders.
(e) In the event Investors who hold a majority in interest
of the Registrable Securities being offered in an offering pursuant
to a Registration Statement or any amendment or supplement thereto
under Section 2(a) select underwriters reasonably acceptable to the
Company for such offering, the Company shall enter into and perform
its obligations under an underwriting agreement in usual and
customary form including, without limitation, customary
indemnification and contribution obligations, with the managing
underwriter of such offering.
(f) Subject to the Company's rights under Section 3(a),
the Company shall use its reasonable best efforts to prevent the
issuance of any stop order or other suspension of effectiveness of a
Registration Statement and, if such an order is issued, shall use its
reasonable best efforts to obtain the withdrawal of such order at the
earliest possible time and to notify each Investor who holds
Registrable Securities being sold (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of
such order and the resolution thereof.
(g) The Company shall permit a single firm of counsel
designated by the Investors who hold a majority in interest of the
Registrable Securities being sold pursuant to such registration to
review the Registration Statement and all amendments and supplements
thereto (as well as all requests for acceleration or effectiveness
thereof) a reasonable period of time prior to their filing with the
SEC, and shall not file any document in a form to which such counsel
reasonably objects, unless required by law in the opinion of the
Company's counsel. The sections of such Registration Statement
covering information with respect to the Investors, the Investors'
beneficial ownership of securities of the Company or the Investors'
intended method of disposition of Registrable Securities shall
conform to the information provided to the Company by each of the
Investors.
(h) At the request of the Investors who hold a majority in
interest of the Registrable Securities being sold pursuant to such
registration, the Company shall furnish on the date that Registrable
Securities are delivered to an underwriter for sale in connection
with the Registration Statement (i) a letter, dated such date, from
the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering,
addressed to the underwriters; and (ii) an opinion, dated such date,
from counsel representing the Company for purposes of such
Registration Statement, in form and substance as is customarily given
in an underwritten public offering, addressed to the underwriters and
Investors.
(i) The Company shall make available for inspection by any
Investor whose Registrable Securities are being sold pursuant to such
registration, any underwriter participating in any disposition
pursuant to the Registration Statement, and any attorney, accountant
or other agent retained by any such Investor or underwriter
(collectively, the "Inspectors"), all pertinent financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records"), as shall be reasonably deemed
necessary by each Inspector to enable each Inspector to exercise its
due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; provided,
however, that each Inspector shall hold in confidence and shall not
make any disclosure (except to an Investor) of any Record or other
information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (i) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration
Statement, (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court or government body of competent
jurisdiction, or (iii) the information in such Records has been made
generally available to the public other than by disclosure in
violation of this or any other agreement (to the knowledge of the
relevant Investor). The Company shall not be required to disclose
any confidential information in such Records to any Inspector until
and unless such Inspector shall have entered into confidentiality
agreements (in form and substance satisfactory to the Company) with
the Company with respect thereto. Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or
by a court or governmental body of competent jurisdiction or through
other means, give prompt notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein shall be deemed to limit the
Investor's ability to sell Registrable Securities in a manner which
is otherwise consistent with applicable laws and regulations.
(j) The Company shall hold in confidence and shall not
make any disclosure of information concerning an Investor provided to
the Company pursuant hereto unless (i) disclosure of such information
is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or
correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a
subpoena or other order from a court or governmental body of
competent jurisdiction, or (iv) such information has been made
generally available to the public other than by disclosure in
violation of this or any other agreement or (v) such Investor
consents to the form and content of any such disclosure. The Company
agrees that it shall, upon learning that disclosure of such
information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means,
give prompt notice to such Investor prior to making such disclosure
and allow such Investor, at its expense, to undertake appropriate
action to prevent disclosure of, or to obtain a protective order for,
such information.
(k) The Company shall cause the listing and the
continuation of listing of all the Registrable Securities covered by
the Registration Statement on the Nasdaq National Market System, the
Nasdaq Small Cap Market, the New York Stock Exchange, the American
Stock Exchange or any successor national exchange or market, and
cause the Registrable Securities to be quoted or listed on each
additional national securities exchange or quotation system upon
which the Common Stock is then listed or quoted.
(l) The Company shall provide a transfer agent and
registrar, which may be a single entity, for the Registrable
Securities not later than the effective date of the Registration
Statement.
(m) At the request of any Investor, the Company shall
promptly prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with the Registration
Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.
(n) The Company shall comply with all applicable laws
related to a Registration Statement and offering and sale of
securities and all applicable rules and regulations of governmental
authorities in connection therewith (including, without limitation,
the 1933 Act and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations promulgated by the
SEC).
(o) The Company shall take all other reasonable actions as
any Investor or the underwriters, if any, may reasonably request to
expedite and facilitate disposition by such Investor of the
Registrable Securities pursuant to the Registration Statement.
(p) Within two (2) business days after the Registration
Statement which includes the Registrable Securities is ordered
effective by the SEC, the Company shall deliver, and shall cause
legal counsel for the Company to deliver, to the transfer agent for
such Registrable Securities (with copies to the Investors whose
Registrable Securities are included in such Registration Statement)
confirmation that the Registration Statement has been declared
effective by the SEC.
4. Obligations of the Investors. In connection with the
registration of the Registrable Securities, the Investors shall have
the following obligations:
(a) It shall be a condition precedent to the obligations
of the Company to complete the registration pursuant to this
Agreement with respect to the Registrable Securities of each Investor
that such Investor shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by
it as shall be reasonably required to effect the registration of the
Registrable Securities. At least ten (10) business days prior to the
first anticipated filing date of the Registration Statement, the
Company shall notify each Investor of the information the Company
requires from each such Investor (the "Requested Information") if
such Investor elects to have any of such Investor's Registrable
Securities included in the Registration Statement. If within five
(5) business days prior to the filing date the Company has not
received the Requested Information from an Investor (a "Non-
Responsive Investor"), then the Company may file the Registration
Statement without including Registrable Securities of such Non-
Responsive Investor.
(b) Each Investor, by such Investor's acceptance of the
Registrable Securities, agrees to cooperate with the Company as
reasonably requested by the Company in connection with the
preparation and filing of the Registration Statement hereunder,
unless such Investor has notified the Company in writing of such
Investor's election to exclude all of such Investor's Registrable
Securities from the Registration Statement.
(c) Each Investor agrees that, upon receipt of any notice
from the Company of the kind described in Section 3(a), such Investor
will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable
Securities until (i) the Investor has received the notice of
termination of the Shelf Blackout Right from the Company required
under Section 3(a), and, if so directed by the Company, such Investor
shall deliver to the Company (at the expense of the Company) or
destroy (and deliver to the Company a certificate of destruction) all
copies in such Investor's possession (other than a limited number of
file copies), of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
(d) Without limiting any Investor's rights under Section
2(a) hereof, no Investor may participate in any underwritten
distribution hereunder unless such Investor (i) agrees to sell such
Investor's Registrable Securities on the basis provided in any
underwriting arrangements approved by the Investors entitled
hereunder to approve such arrangements, (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of
such underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions and other fees
and expenses of investment bankers and any manager or managers of
such underwriting and legal expenses of the underwriter applicable
with respect to its Registrable Securities, in each case to the
extent not payable by the Company pursuant to the terms of this
Agreement.
5. Expenses of Registration. All reasonable expenses, other
than underwriting discounts and commissions, incurred in connection
with registrations, filings or qualifications pursuant to Sections 2
and 3, including, without limitation, all registration, listing and
qualifications fees and printers and accounting fees, the fees and
disbursements of counsel for the Company shall be borne and paid by
the Company. Notwithstanding the foregoing, the Investors
participating in any registrations, filings or qualifications
pursuant to sections 2 and 3 shall pay all fees, underwriting
discounts, commissions and disbursements of its own counsel and any
investment bankers on a pro rata basis based on the number of shares
proposed to be sold under the Registration Statement.
6. Indemnification. In the event any Registrable Securities
are included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Investor who holds such Registrable
Securities, the directors, if any, of such Investor, the officers, if
any, of such Investor, each person, if any, who controls any Investor
within the meaning of the 1933 Act or the Exchange Act, any
underwriter (as defined in the 0000 Xxx) for the Investors, the
directors, if any, of such underwriter and the officers, if any, of
such underwriter, and each person, if any, who controls any such
underwriter within the meaning of the 1933 Act or the Exchange Act
(each, an "Indemnified Person"), against any losses, claims, damages,
expenses or liabilities (joint or several) (collectively together
with actions, proceedings or inquiries by any regulatory or self-
regulatory organization, whether commenced or threatened in respect
thereof, "Claims") to which any of them become subject under the 1933
Act, the Exchange Act or otherwise, insofar as such Claims arise out
of or are based upon any of the following statements, omissions or
violations in the Registration Statement, or any post-effective
amendment thereof, or any prospectus included therein: (i) any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective
amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (ii) any untrue statement
or alleged untrue statement of a material fact contained in the
prospectus (as amended or supplemented, if the Company files any
amendment thereof or supplement thereto with the SEC) or the omission
or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under
which the statements therein were made, not misleading, or (iii) any
violation or alleged violation by the Company of the 1933 Act, the
Exchange Act or any other law, including without limitation any state
securities law or any rule or regulation thereunder (the matters in
the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section 6(c)
with respect to the number of legal counsel, the Company shall
reimburse the Investors and each such underwriter or controlling
person and each such other Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any legal fees or
other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything
to the contrary contained herein, the indemnification agreement
contained in this Section 6(a): (A) shall not apply to a Claim
arising out of or based upon a Violation which occurs in reliance
upon and in conformity with information furnished in writing to the
Company by any Indemnified Person expressly for use in connection
with the preparation of the Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was
timely made available by the Company pursuant to Section 3(c) hereof;
and (B) shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Persons and
shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 8.
(b) In connection with any Registration Statement in which
an Investor is participating, each such Investor agrees to indemnify
and hold harmless, to the same extent and in the same manner set
forth in Section 6(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, each person, if
any, who controls the Company within the meaning of the 1933 Act or
the Exchange Act, and any other stockholder selling securities
pursuant to the Registration Statement or any of its directors or
officers or any person who controls such stockholder within the
meaning of the 1933 Act or the Exchange Act (an "Indemnified Party"
and, collectively, "Indemnified Parties"), against any Claim to which
any of them may become subject, under the 1933 Act, the Exchange Act
or otherwise, insofar as such Claim arises out of or is based upon
any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement, and
subject to Section 6(c), such Investor will promptly reimburse any
legal or other expenses (promptly as such expenses are incurred and
due and payable) reasonably incurred by all Indemnified Parties in
connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 6(b)
shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of such
Investor, which consent shall not be unreasonably withheld; provided
further, however, that the Investor shall be liable under this
Agreement (including this Section 6(b) and Section 7) for only that
amount of a Claim as does not exceed the net proceeds actually
received by such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the
transfer of the Registrable Securities by the Investors pursuant to
Section 8.
(c) Promptly after receipt by an Indemnified Person or
Indemnified Party under this Section 6 of notice of the commencement
of any action (including any governmental action), such Indemnified
Person or Indemnified Party shall, if a Claim in respect thereof is
to made against any indemnifying party under this Section 6, deliver
to the indemnifying party a written notice of the commencement
thereof and this indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to
assume control of the defense thereof with counsel mutually
satisfactory to the indemnifying parties and the Indemnified Person
or the Indemnified Party, as the case may be; provided, however, that
such Indemnified Party shall diligently pursue such defense and that
such Indemnified Party shall not be entitled to assume such defense
and an Indemnified Person or Indemnified Party shall have the right
to retain its own counsel, with the fees and expenses to be paid by
the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such
counsel of the Indemnified Person or Indemnified Party and the
indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such Indemnified Person or Indemnified
Party and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of,
any such action including both the Indemnified Person or the
Indemnified Party and any such Indemnified Person or Indemnified
Party reasonably determines that there may be legal defenses
available to such Indemnified Person or Indemnified Party which are
different from or in addition to those available to such indemnifying
party. The Company shall pay for only one separate legal counsel for
the Investors; such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities. The
failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified
Person or Indemnified Party under this Section 6, except to the
extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 6
shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as such expense, loss, damage
or liability is incurred and is due and payable.
7. Contribution. To the extent any indemnification provided
for herein is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts
for which it would otherwise be liable under Section 6 to the fullest
extent permitted by law; provided, however, that (i) no contribution
shall be made under circumstances where the maker would not have been
liable for indemnification under the fault standards set forth in
Section 6, (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the 0000 Xxx) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent
misrepresentation, and (iii) contribution (together with any
indemnification or other obligations under this Agreement) by any
seller of Registrable Securities shall be limited in amount to the
net amount of proceeds received by such seller from the sale of such
Registrable Securities.
8. Assignment of Registration Rights. The rights of the
Investors hereunder, including the right to have the Company register
Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to transferees or assignees
of all or any portion of such securities only if (i) the Investor
agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (ii) the Company is,
within a reasonable time after such transfer or assignment, furnished
with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration
rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by
the transferee or assignee is restricted under the 1933 Act and
applicable state securities laws, (iv) at or before the time the
Company received the written notice contemplated by clause (ii) of
this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein and
(v) such transfer shall have been made in accordance with the
applicable requirements of the Merger Agreement.
9. Amendment of Registration Rights. Provisions of this
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the
Company and Investors who hold a majority interest of the Registrable
Securities (but not an Investor who no longer owns any Registrable
Securities and who is not affected by such amendment or waiver). Any
amendment or waiver effected in accordance with this Section 9 shall
be binding upon each Investor and the Company. Notwithstanding the
foregoing, no amendment or waiver shall retroactively affect any
Investor without its comment or prospectively adversely affect any
Investor who no longer owns any Registrable Securities without its
consent.
10. Miscellaneous.
(a) Conflicting Instructions. A person or entity is
deemed to be a holder of Registrable Securities whenever such person
or entity owns of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions,
notice or election received from the registered owner of such
Registrable Securities.
(b) Notices. Any notices required or permitted to be
given under the terms of this Agreement shall be sent by certified or
registered mail (with return receipt requested) or delivered
personally or by courier (including a nationally recognized overnight
delivery service) or by facsimile transmission. Any notice so given
shall be deemed effective three days after being deposited in the
U.S. Mail, or upon receipt if delivered personally or by courier or
facsimile transmission, in each case addressed to a party at the
following address or such other address as each such party furnishes
to the other in accordance with this Section 10(b):
If to the Company:
Socket Communications, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Chief Financial Officer
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Tel: (000) 000-0000
Fax: (000) 000-0000
If to an Investor: To the address set forth immediately below
such Investor's name on the signature pages hereto.
Each party shall provide written notice to the other parties of
any change in address.
(c) Waiver. Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in
exercising such right or remedy, shall not operate as a waiver
thereof.
(d) Governing Law. This Agreement shall be enforced,
governed by and construed in accordance with the laws of the State of
California applicable to the agreements made and to be performed
entirely within such state, without giving effect to rules governing
the conflict of laws, and any disputes arising hereunder will be
adjudicated in federal or state court situated in California. Each
party hereto consents to such venue in California and to the personal
and subject matter jurisdiction of said courts and, to the extent
permitted by applicable law, agrees to waive any objection as to such
jurisdiction or venue, and agrees not to assert any defense based on
lack of jurisdiction or venue.
(e) Severability. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or
rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed modified to
conform with such statute or rule of law. Any provision hereof which
may prove invalid or unenforceable under any law shall not affect the
validity or enforceability of any other provision hereof.
(f) Entire Agreement. This Agreement and the Merger
Agreement (including all schedules and exhibits thereto) constitute
the entire agreement among the parties hereto with respect to the
subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or
referred to herein or therein. This Agreement supersedes all prior
agreements and understandings among the parties hereto with respect
to the subject matter hereof.
(g) Successors and Assigns. Subject to the requirements
of Section 8 hereof, this Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties
hereto. Notwithstanding anything to the contrary herein, including
without limitation, Section 8, the rights of an Investor hereunder
shall be assignable to and exercisable by a bona fide pledgee of the
Registrable Securities in connection with an Investor's margin or
brokerage accounts.
(h) Use of Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or
plural, as the context may require.
(i) Headings. The headings and subheadings in the
Agreement are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.
(j) Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original but
all of which shall constitute one and the same agreement. This
Agreement, once executed by a party, may be delivered to the other
party hereto by facsimile transmission, and facsimile signatures
shall be binding on the parties hereto.
(k) Further Acts. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and
shall execute and deliver all such other agreements, certificates,
instruments and documents, as the other party may reasonably request
in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
(l) Consents. All consents and other determinations to be
made by the Investors pursuant to this Agreement shall be made by the
Investors holding a majority of the Registrable Securities,
determined as if all Preferred Shares then outstanding had been
converted into or exercised for Registrable Securities.
The foregoing Registration Rights Agreement is hereby executed
as of the date first above written.
"COMPANY"
SOCKET COMMUNICATIONS, INC.
a Delaware corporation
By:__________________________
Name:________________________
Title:_______________________
STOCKHOLDER
_____________________________
(Print Name)
Address:_____________________
_____________________________
_____________________________
_____________________________
(Signature of Holder or
Authorized Signatory)
_____________________________
(Print Name and Title of
Authorized Signatory if
Applicable)
Schedule A
Stockholders Party to the Registration Rights Agreement
