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.
SOCKET COMMUNICATIONS, INC. November 9, 1998
COMMON STOCK PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, THE HARMAT ORGANIZATION,
INC., 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
Four Hundred Thirty-Five Thousand Seven Hundred Twenty-Nine (435,729)
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 $0.57375. 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 Series D
Preferred Stock Purchase Agreement of even date herewith by and among the
Company, the Holder and Global Holdings, L.P., a Delaware limited
partnership (the "Stock Purchase 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. Company Right to Call Warrant.
(a) In the event at any time from and after the date hereof
until the Expiration Date the closing sale price of the Company's Common
Stock as quoted on the OTC Bulletin Board (or other automated quotation
system, such as the Nasdaq Stock Market, in which the Common Stock is
quoted in the future) is $2.00 per share or greater for twenty (20)
consecutive trading days, the Company may, at its option, elect to call
this Warrant, or any portion thereof, at a redemption price per share of
$0.10, payable in cash or in shares of Common Stock of the Company. In
the event that on the Redemption Date (as defined in Section 4(c) below)
the assets of the Company legally available for redemption shall be
insufficient to pay the holder of the Warrant in cash the full amount to
which such holder shall be entitled pursuant to this Section 4(a), the
Company, at its option, may either (i) pay such amount in shares of
Common Stock of the Company (with the per share value of the Common Stock
being the average of the closing prices of the Common Stock on the OTC
Bulletin Board over the ten (10) trading days immediately preceding the
Redemption Date), provided that a registration statement under the Act
covering such shares of Common Stock is effective as of the Redemption
Date, or (ii) redeem for cash such portion of the Warrant as it shall have
legally available funds to redeem, and the remainder of the Warrant shall
be redeemed in cash on the earliest practicable date next following the
day on which the Company shall first have funds legally available for the
redemption of such shares.
(b) Rights of Warrant Holder Following Call. On and after
the Redemption Date, provided that the redemption price has been duly paid
or segregated and held in trust by a duly authorized independent paying
agent for the benefit of the persons entitled thereto, the Warrant shall
no longer be deemed to be outstanding and all rights of the holder of the
Warrant, including the right to exercise the Warrant as provided in
Section 2 above, shall cease, except for the right to receive the moneys
or shares of Common Stock, as the case may be, payable upon such
redemption, without interest thereon, upon surrender of the Warrant.
(c) Notice of Intent to Call Warrant. In the event the
Company elects to call the Warrant as provided in Section 4(a) above, the
Company shall provide sixty (60) days written notice to the holder of the
Warrant of such election, and the date fixed for redemption (the
"Redemption Date") shall be the sixtieth (60th) day after the date of
such notice. Notice of redemption shall be given by first class mail to
such holder's address as shown on the books of the Company and will
specify (i) information with respect to the trading price levels of the
Company's Common Stock that give rise to the Company's right to call this
Warrant under this Section 4, (ii) the date fixed for redemption,
(iii) the applicable redemption price and (iv) in the case of a partial
redemption, the portion of the Warrant to be redeemed.
5. 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 propor-
tionately 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.
6. 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.
7. 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 an purchaser or other
transferee to whom such Warrant Shares shall have been so transferred.
8. Representations and Covenants of the Holderand Covenants of
the HolderCovenants of the Holder tc \l 2 "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.
9. 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.
10. 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 Stock Purchase Agreement and the term
"Registrable Securities" as defined in the Stock Purchase Agreement shall
include the Common Stock obtained upon exercise of this Warrant.
11. 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.
12. 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. THE HARMAT ORGANIZATION, INC.
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxxx Xxxxxxxxxx
Name: Xxxxx Xxxxxx Name: Xxxxxxx Xxxxxxxxxx
Title: Vice President, Finance and Administration, Title: President
and Chief Financial Officer
