Exhibit 10.2

 

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this "Agreement") is made and entered into
as of August 5, 2003, by and among Socket Communications, Inc., a Delaware
corporation (the "Company"), and the persons and entities listed on Exhibit A
hereto (each, a "Purchaser" and, collectively, the "Purchasers").

WHEREAS, upon the terms and subject to the conditions of the Securities Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), or any
substantially similar agreement, if any, entered into with holders of the
Company's Series F Convertible Preferred Stock (the "Second Purchase
Agreement"), the Company has agreed to issue and sell shares of its Common Stock
and Warrants to purchase shares of its Common Stock to the Purchasers; and

WHEREAS, to induce the Purchasers to execute and deliver the Purchase Agreement
or the Second Purchase Agreement and to purchase the Shares and the Warrants,
the Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, with respect to the Shares and the Warrant
Shares (each as respectively defined in the Purchase Agreement and, if
applicable, the Second Purchase Agreement).

NOW, THEREFORE, in consideration of the representations, warranties and
agreements contained herein and other good and valuable consideration, the
receipt and legal adequacy of which are hereby acknowledged by the parties, the
Company and the Purchasers hereby agree as follows:

1. Definitions.

Capitalized terms used but not otherwise defined herein shall have the meanings
given such terms in the Purchase Agreement. As used in this Agreement, the
following terms shall have the following meanings:

"Affiliate" means, with respect to any Person, any other Person that directly or
indirectly controls or is controlled by or under common control with such
Person. For the purposes of this definition, "control," when used with respect
to any Person, means the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "affiliated," "controlling" and "controlled" have meanings correlative to
the foregoing.

"Board" shall have the meaning set forth in Section 3(m).

"Business Day" means any day except Saturday, Sunday and any day which is a
legal holiday or a day on which banking institutions in the state of California
generally are authorized or required by law or other government actions to
close.

"Commission" means the Securities and Exchange Commission.

"Common Shares" shall have the meaning set forth in the definition of
"Registrable Securities."

"Common Stock" means the Company's Common Stock, $0.001 par value.

"Effectiveness Date" means, with respect to the Registration Statement, the date
on which the Registration is declared effective by the SEC, which date shall not
be more than 135 days after the date of this Agreement.

"Effectiveness Period" shall have the meaning set forth in Section 2.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.

"Holder" means, collectively, each holder from time to time of Registrable
Securities including, without limitation, each Purchaser and its assignees. To
the extent this Agreement refers to an election, consent, waiver, request or
approval of or by the Holder, such reference shall mean an election, consent,
waiver, request or approval by the holders of a majority in interest of the
then-outstanding Registrable Securities (on an as exercised basis).

"Indemnified Party" shall have the meaning set forth in Section 6(c).

"Indemnifying Party" shall have the meaning set forth in Section 6(c).

"Liquidated Damages" shall have the meaning set forth in Section 8(d).

"Losses" shall have the meaning set forth in Section 6(a).

"NASDAQ" shall mean the NASDAQ Stock Market.

"Person" means an individual or a corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.

"Proceeding" means an action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.

"Prospectus" means the prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference in such Prospectus, as applicable.

"Registrable Securities" means (i) the shares of Common Stock issued or issuable
pursuant to the Purchase Agreement and the Second Purchase Agreement, and upon
any stock split, stock dividend, recapitalization or similar event with respect
to such shares of Common Stock and any other securities issued in exchange of or
replacement of such shares of Common Stock (collectively, the "Common Shares");
until in the case of any of the Common Shares (a) a Registration Statement
covering such Common Share has been declared effective by the Commission and
continues to be effective during the Effectiveness Period, or (b) such Common
Share is sold in compliance with Rule 144 or may be sold pursuant to Rule
144(k), after which time such Common Share shall not be a Registrable Security;
and (ii) the shares of Common Stock issued and issuable pursuant to the exercise
of the Warrants, and shares of Common Stock issued or issuable upon exercise or
conversion of the warrants issued to the placement agent, and/or its assigns,
that managed the transactions contemplated under the Purchase Agreement, and
upon any stock split, stock dividend, recapitalization or similar event with
respect to such shares of Common Stock and any other securities issued in
exchange of or replacement of such shares of Common Stock (collectively, the
"Warrant Shares"); until in the case of any of the Warrant Shares (a) a
Registration Statement covering such Warrant Share has been declared effective
by the Commission and continues to be effective during the Effectiveness Period,
or (b) such Warrant Share is sold in compliance with Rule 144 or may be sold
pursuant to Rule 144(k), after which time such Warrant Share shall not be a
Registrable Security.

"Registration Statement" means the registration statement, including the
Prospectus, amendments and supplements to such registration statement or
Prospectus, including, as applicable, any pre- and post-effective amendments,
all exhibits thereto, and all material incorporated by reference in such
registration statement, for the Shares and the Warrant Shares required to be
filed by the Company with the Commission pursuant to this Agreement.

"Required Filing Date" means the forty-fifth (45th) day immediately following
the date of this Agreement.

"Rule 144" means Rule 144 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

"Rule 158" means Rule 158 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

"Rule 415" means Rule 415 promulgated by the Commission pursuant to the
Securities Act, as such Rule may be amended from time to time, or any similar
rule or regulation hereafter adopted by the Commission having substantially the
same effect as such Rule.

"Securities Act" means the Securities Act of 1933, as amended.

"Special Counsel" means a single attorney selected by and acting as special
counsel on behalf of all of the Holders, for which the Holders shall be
reimbursed by the Company pursuant to Section 5 of this Agreement.

"Warrant Shares" shall have the meaning set forth in the definition of
"Registrable Securities."

2. Registration. On or prior to the Required Filing Date, the Company shall
prepare and file with the Commission a Registration Statement covering the
resale of the Registrable Securities for an offering to be made on a continuous
basis pursuant to Rule 415. The Registration Statement shall be on Form S-3
(except if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3, in which case such registration shall be on
another appropriate form in accordance with the Securities Act and the rules
promulgated thereunder) and shall contain (except if otherwise directed by the
Purchasers) the "Plan of Distribution" attached hereto as Exhibit B. The Company
hereby represents and warrants to the Purchasers that it is currently eligible
to register for resale the Registrable Securities on Form S-3. The Company shall
(i) not permit any securities other than the Registrable Securities to be
included in the Registration Statement, (ii) use its commercially reasonable
efforts to cause the Registration Statement to be declared effective under the
Securities Act (including filing with the Commission a request for acceleration
of effectiveness in accordance with Rule 461 promulgated under the Securities
Act within five (5) Business Days of the date that the Company is notified in
writing by the Commission that the Registration Statement will not be
"reviewed," or not be subject to further review) as soon as possible after the
filing thereof, but in any event prior to the Effectiveness Date, and (iii) keep
such Registration Statement continuously effective under the Securities Act
until the date on which all Registrable Securities may be sold without
restriction pursuant to Rule 144(k) of the Securities Act (the "Effectiveness
Period").

3. Registration Procedures; Company's Obligations.

In connection with the registration of the Registrable Securities, the Company
shall:

(a) Prepare and file with the Commission, on or prior to the Required Filing
Date, a Registration Statement on Form S-3 (or if the Company is not then
eligible to register for resale the Registrable Securities on Form S-3 such
registration shall be on another appropriate form in accordance with the
Securities Act and the Rules promulgated thereunder) in accordance with the
method or methods of distribution thereof as specified herein, and use its
commercially reasonably efforts to cause the Registration Statement to become
effective and remain effective as provided herein; provided, however, that not
less than three (3) Business Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto
(including any document that would be incorporated therein by reference), the
Company shall furnish to the Special Counsel copies of all such documents
proposed to be filed, which documents (other than those incorporated by
reference) will be subject to the timely review of and comment by such Special
Counsel.

(b) Use its commercially reasonable efforts to (i) prepare and file with the
Commission such amendments, including post-effective amendments, to the
Registration Statement as may be necessary to keep the Registration Statement
continuously effective as to the applicable Registrable Securities for the
Effectiveness Period in order to register for resale under the Securities Act
all of the Registrable Securities; (ii) cause the related Prospectus to be
amended or supplemented by any required Prospectus supplement, and as so
supplemented or amended to be filed pursuant to Rule 424 (or any similar
provisions then in force) promulgated under the Securities Act; (iii) respond
promptly to any comments received from the Commission with respect to the
Registration Statement or any amendment thereto and promptly provide the Special
Counsel with true and complete copies of all correspondence from and to the
Commission relating to the Registration Statement; and (iv) comply in all
material respects with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all Registrable Securities covered by the
Registration Statement during the Effectiveness Period in accordance with the
intended methods of disposition set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.

(c) Promptly notify the Special Counsel (and, in the case of (i)(C) below, no
later than the first Business Day following the date on which the Registration
Statement becomes effective) and (only if requested by such Special Counsel)
confirm such notice in writing no later than three (3) Business Days following
the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective
amendment to the Registration Statement is proposed to be filed, (B) when the
Commission notifies the Company whether there will be a "review" of such
Registration Statement and whenever the Commission comments in writing on such
Registration Statement, and (C) with respect to the Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the Commission or any other Federal or state governmental authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional information; (iii) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the Registrable Securities or the initiation of any Proceedings for that
purpose; (iv) of the receipt by the Company of any notification with respect to
the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose; and (v) of the occurrence of any
event that makes any statement made in the Registration Statement or Prospectus
or any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires any revisions to the
Registration Statement, Prospectus or other documents so that, in the case of
the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.

The Company shall promptly furnish to the Special Counsel, without charge, (i)
any correspondence from the Commission or the Commission's staff to the Company
or its representatives relating to any Registration Statement, and (ii) promptly
after the same is prepared and filed with the Commission, a copy of any written
response to the correspondence received from the Commission.

(d) Use its commercially reasonable efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, (i) any order suspending the effectiveness of
the Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any U.S. jurisdiction, at the earliest practicable moment.

(e) If requested by the Special Counsel, (i) promptly incorporate in a
Prospectus supplement or post-effective amendment to the Registration Statement
such information as the Company reasonably agrees should be included therein,
and (ii) make all required filings of such Prospectus supplement or such
post-effective amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.

(f) Furnish to the Holder and any Special Counsel, without charge, at least one
conformed copy of each Registration Statement and each amendment thereto,
including financial statements and schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits to the extent
requested by such Holder or Special Counsel (including those incorporated by
reference, but excluding those previously furnished) promptly after the filing
of such documents with the Commission.

(g) Promptly deliver to the Holder and any Special Counsel, without charge, as
many copies of the Registration Statement, Prospectus or Prospectuses (including
each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request; and the Company hereby consents to the use of
such Prospectus and each amendment or supplement thereto by the selling Holder
in connection with the offering and sale of the Registrable Securities covered
by such Prospectus and any amendment or supplement thereto.

(h) Prior to any public offering of Registrable Securities, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holder
and any Special Counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as the Holder reasonably requests in
writing, to keep each such registration or qualification (or exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or things necessary or advisable to enable the disposition in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided, however, that the Company shall not be required to qualify generally
to do business in any jurisdiction where it is not then so qualified or to take
any action that would subject it to general service of process in any such
jurisdiction where it is not then so subject or subject the Company to any tax
in any such jurisdiction where it is not then so subject.

(i) Cooperate with the Holder to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold pursuant to a
Registration Statement and to enable such Registrable Securities to be in such
denominations and registered in such names as the Holder may request to the
Company's transfer agent at least two (2) Business Days prior to any sale of
Registrable Securities.

(j) Upon the occurrence of any event contemplated by Section 3(c)(v), promptly
prepare a supplement or amendment, including a post-effective amendment, to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, and file any
other required document so that, as thereafter delivered, neither the
Registration Statement nor such Prospectus will contain an 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 the light of the circumstances
under which they were made, not misleading.

(k) Use its commercially reasonable efforts to cause all Registrable Securities
relating to such Registration Statement to be quoted on any securities exchange,
quotation system, market or over?the?counter bulletin board on which the same
securities issued by the Company are then listed.

(l) Use its commercially reasonable efforts to comply in all material respects
with all applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as reasonably practicable, earning
statements satisfying the provisions of Section 11(a) of the Securities Act and
Rule 158 not later than forty-five (45) days after the end of any twelve (12)
month period (or ninety (90) days after the end of any twelve (12) month period
if such period is a fiscal year) commencing on the first day of the first fiscal
quarter of the Company after the effective date of the Registration Statement,
which statement shall conform to the requirements of Rule 158.

(m) If, in the good faith judgment of the Board of Directors of the Company (the
"Board") and reflected in a formal resolution of the Board, the continued
effectiveness of the Registration Statement covering the Registrable Securities
would be detrimental to the Company, and the Board concludes, as a result, that
it is in the best interests of the Company to suspend the effectiveness of such
Registration Statement at such time, then the Company may suspend effectiveness
of the Registration Statement and suspend the sale of Registrable Securities
under the Registration Statement; provided, however, that the Company may not
suspend effectiveness of the Registration Statement or suspend the sale of
Registrable Securities thereunder for more than sixty (60) days in the aggregate
in any twelve (12) month period or for more than thirty (30) consecutive days.

(n) Within two (2) Business Days of the Effectiveness Date, the Company shall
deliver, or shall cause its legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Special
Counsel) confirmation that the Registration Statement has been declared
effective by the Commission in the form attached hereto as Exhibit C.

4. Registration Procedures; Holder's Obligations

In connection with the registration of the Registrable Securities, the Holder
shall:

(a) (i) not sell any Registrable Securities under the Registration Statement
until it has received copies of the Prospectus as then amended or supplemented
as contemplated by Section 3(g) and notice from the Company to the Special
Counsel that such Registration Statement and any post-effective amendments
thereto have become effective as contemplated by Section 3(c), (ii) comply with
the prospectus delivery requirements of the Securities Act as applicable to it
in connection with sales of Registrable Securities pursuant to the Registration
Statement, and (iii) furnish to the Company information regarding such Holder
and the distribution of such Registrable Securities as is required by law to be
disclosed in the Registration Statement, and the Company may exclude from such
registration the Registrable Securities of the Holder if it fails to furnish
such information within a reasonable time prior to the filing of each
Registration Statement, supplemented Prospectus and/or amended Registration
Statement.

(b) upon receipt of a notice from the Company of the occurrence of any event of
the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv), 3(c)(v) or 3(m),
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until the Holder's receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement contemplated by
Section 3(j), or, with respect to the suspension of effectiveness of a
Registration Statement under Section 3(m), until it is advised in writing by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement.

5. Registration Expenses

All reasonable fees and expenses incident to the performance of or compliance
with this Agreement by the Company shall be borne by the Company whether or not
the Registration Statement is filed or becomes effective and whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and expenses referred to in the foregoing sentence shall include, without
limitation, the following: (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with each securities exchange or other market on which Registrable
Securities are listed, (B) with respect to filings required to be made with the
Commission, and (C) in compliance with state securities or Blue Sky laws); (ii)
printing expenses (including, without limitation, expenses of printing
certificates for Registrable Securities and of printing prospectuses if the
printing of prospectuses is requested by the holders of a majority of the
Registrable Securities included in the Registration Statement); (iii) messenger,
telephone and delivery expenses; (iv) fees and disbursements of counsel for the
Company; and (v) fees and expenses of all other Persons retained by the Company
in connection with the consummation of the transactions contemplated by this
Agreement, including, without limitation, the Company's independent public
accountants (including the expenses of any comfort letters or costs associated
with the delivery by independent public accountants of a comfort letter or
comfort letters). In addition, the Company shall be responsible for all of its
internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit, and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder. The Company shall not be responsible
for the payment of any commissions or other expenses incurred by the Holder in
connection with their sales of Registrable Securities or for the fees of any
Special Counsel; provided, however, that the Company shall pay up to $30,000 to
Gryphon Master Fund, L.P. ("Gryphon") in accordance with Section 8.1 of the
Purchase Agreement to reimburse it for the fees and expenses (including
attorneys' fees and expenses) incurred by it in connection with its due
diligence review of the Company and the preparation, negotiation, execution,
delivery and performance of the Purchase Agreement and the transactions
contemplated thereunder. In no event shall the amount paid to Gryphon, the
Holders or the Special Counsel exceed $30,000 in aggregate under this Section 5
or Section 8.1 of the Purchase Agreement.

6. Indemnification

(a) Indemnification by the Company. To the extent permitted by law, the Company
shall, notwithstanding any termination of this Agreement, indemnify and hold
harmless each Holder, each of its officers, directors, legal counsel, and
accountants, each Person who controls any such Holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, agents and employees of each such controlling Person, and
the respective successors, assigns, estate and personal representatives of each
of the foregoing, to the fullest extent permitted by applicable law, from and
against any and all claims, losses, damages, liabilities, penalties, judgments,
costs (including, without limitation, costs of investigation) and expenses
(including, without limitation, reasonable attorneys' fees and expenses)
(collectively, "Losses"), as incurred, arising out of or relating to any untrue
or alleged untrue statement of a material fact contained in the Registration
Statement, any Prospectus, as supplemented or amended, if applicable, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of any Prospectus or form of prospectus or supplement thereto, in the
light of the circumstances under which they were made) not misleading, except
(i) to the extent, but only to the extent, that such untrue statements or
omissions are based solely upon information regarding the Holder furnished in
writing to the Company by the Holder, or its officers, directors, legal counsel,
or accountants, or each person controlling such Holder, which information was
reviewed and expressly approved by the Holder or Special Counsel expressly for
use in the Registration Statement, such Prospectus or such form of Prospectus or
in any amendment or supplement thereto, (ii) as a result of the failure of the
Holder to deliver a Prospectus, as amended or supplemented, to a purchaser in
connection with an offer or sale (provided that copies of the Prospectus, as
amended or supplemented, have been provided, as required by this Agreement, to
the Holder by the Company for delivery to such purchaser), or (iii) for amounts
paid in settlement of any such Loss if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably withheld,
conditioned or delayed). Each party shall notify the other promptly of the
institution, threat or assertion of any Proceeding of which it is aware in
connection with the transactions contemplated by this Agreement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of an Indemnified Party (as defined in Section 6(c) hereof) and shall
survive the transfer of the Registrable Securities by the Holder.

(b) Indemnification by Purchaser. Each Holder shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and
employees, each Person who controls the Company (within the meaning of Section
15 of the Securities Act , and the directors, officers, agents or employees of
such controlling Persons, and the respective successors, assigns, estate and
personal representatives of each of the foregoing, to the fullest extent
permitted by applicable law, from and against any and all Losses, as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus, as
supplemented or amended, if applicable, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under
which they were made) not misleading, to the extent, but only to the extent,
that (i) such untrue statement or omission is contained in or omitted from any
information so furnished in writing by the Holder or the Special Counsel to the
Company specifically for inclusion in the Registration Statement or such
Prospectus, and (ii) such information was reasonably relied upon by the Company
for use in the Registration Statement, such Prospectus or such form of
prospectus. Notwithstanding anything to the contrary contained herein, the
Holder shall be liable under this Section 6(b) for only that amount as does not
exceed the gross proceeds to the Holder as a result of the sale of Registrable
Securities pursuant to such Registration Statement.

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought
or asserted against any Person entitled to indemnity pursuant to Section 6(a) or
6(b) hereunder (an "Indemnified Party"), such Indemnified Party promptly shall
notify the Person from whom indemnity is sought (the "Indemnifying Party) in
writing, and the Indemnifying Party shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection with defense
thereof; provided, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have materially
and adversely prejudiced the Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party or Parties
unless: (i) the Indemnifying Party has agreed in writing to pay such fees and
expenses; or (ii) the Indemnifying Party shall have failed promptly to assume
the defense of such Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (iii) the named parties to any
such Proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party, and such Indemnified Party shall have been
advised by counsel that a conflict of interest is likely to exist if the same
counsel were to represent such Indemnified Party and the Indemnifying Party (in
which case, if such Indemnified Party notifies the Indemnifying Party in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the defense
thereof and such counsel shall be at the expense of the Indemnifying Party). The
Indemnifying Party shall not be liable for any settlement of any such Proceeding
effected without its written consent, which consent shall not be unreasonably
withheld, conditioned or delayed. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, which consent shall not unreasonably
be withheld, conditioned or delayed, effect any settlement of any pending
Proceeding in respect of which any Indemnified Party is a party, unless such
settlement includes an unconditional release of such Indemnified Party from all
liability on claims that are the subject matter of such Proceeding.

All reasonable fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such Proceeding in a manner not inconsistent with this
Section) shall be paid to the Indemnified Party, as incurred, within ten (10)
Business Days of written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not entitled to
indemnification hereunder; provided, that the Indemnifying Party may require
such Indemnified Party to undertake to reimburse all such fees and expenses to
the extent it is finally judicially determined that such Indemnified Party is
not entitled to indemnification hereunder or pursuant to applicable law).

(d) Contribution. If a claim for indemnification under Section 6(a) or 6(b) is
unavailable to an Indemnified Party because of a failure or refusal of a
governmental authority to enforce such indemnification in accordance with its
terms (by reason of public policy or otherwise), then each Indemnifying Party,
in lieu of indemnifying such Indemnified Party, shall contribute to the amount
paid or payable by such Indemnified Party as a result of such Losses, in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party and Indemnified Party in connection with the actions, statements or
omissions that resulted in such Losses as well as any other relevant equitable
considerations. The relative fault of such Indemnifying Party and Indemnified
Party shall be determined by reference to, among other things, whether any
action in question, including any untrue or alleged untrue statement of a
material fact or omission or alleged omission of a material fact, has been taken
or made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 6(c), any
reasonable attorneys' or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have been
indemnified for such fees or expenses if the indemnification provided for under
Section 6(a) or 6(b) was available to such party in accordance with its terms.
Notwithstanding anything to the contrary contained herein, the Holder shall be
liable or required to contribute under this Section 6(d) for only that amount as
does not exceed the net proceeds to the Holder as a result of the sale of
Registrable Securities pursuant to the Registration Statement.

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 6(d) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No Person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was
not guilty of such fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Section are in
addition to any liability that the Indemnifying Parties may have to the
Indemnified Parties.

7. Rule 144.

As long as the Holder owns Registrable Securities, the Company covenants to use
its commercially reasonable efforts to timely file (or obtain extensions in
respect thereof and file within the applicable grace period) all reports
required to be filed by the Company after the date hereof pursuant to Section
13(a) or 15(d) of the Exchange Act for so long as the Company is subject to such
reporting requirements. As long as the Holder owns Registrable Securities, if
the Company is not required to file reports pursuant to Section 13(a) or 15(d)
of the Exchange Act, it will use its commercially reasonable efforts to prepare
and furnish to the Holder, and make publicly available in accordance with Rule
144(c) promulgated under the Securities Act, annual and quarterly financial
statements, together with a discussion and analysis of such financial statements
in form and substance substantially similar to those that would otherwise be
required to be included in reports required by Section 13(a) or 15(d) of the
Exchange Act, as well as any other information required thereby, in the time
period that such filings would have been required to have been made under the
Exchange Act. The Company further covenants to use its commercially reasonable
efforts to take such further action as the Holder may reasonably request, all to
the extent required from time to time to enable the Holder to sell Common Shares
and Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.

8. Miscellaneous.

(a) Remedies. The remedies provided in this Agreement and the Purchase Agreement
and the Second Purchase Agreement are cumulative and not exclusive of any
remedies provided by law. In the event of a breach by the Company or by the
Holder of any of their obligations under this Agreement, the Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement.

(b) No Inconsistent Agreements. Neither the Company nor any of its Affiliates
has as of the date hereof entered into, nor shall the Company or any of its
Affiliates, on or after the date of this Agreement, enter into, any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holder in this Agreement or otherwise conflicts with the provisions hereof.
Without limiting the generality of the foregoing, without the written consent of
the Holder, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company under the Securities Act if
the rights so granted are inconsistent with the rights granted to the Holder set
forth herein, or otherwise prevent the Company with complying with all of its
obligations hereunder.

(c) No Piggyback on Registrations. Neither the Company nor any of its security
holders (other than the Holder in such capacity pursuant hereto) may include
securities of the Company in the Registration Statement.

(d) Failure of Registration Statement to Become Effective. The Company and the
Holder agree that the Holder will suffer damages if the Registration Statement
is not (i) filed with the Commission on or prior to the Required Filing Date, or
(ii) declared effective by the Commission on or prior to the Effectiveness Date.
The Company and the Holder further agree that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, if the
Registration Statement is not filed with the Commission on or prior to the
Required Filing Date and/or declared effective by the Commission on or prior to
the Effectiveness Date, the Company shall pay as liquidated damages for any such
failure or breach and not as a penalty (the "Liquidated Damages") to the Holder
an amount equal to two percent (2%) of the purchase price of the Common Stock
paid by the Holder pursuant to the Purchase Agreement or the Second Purchase
Agreement for each thirty (30) day period pro rated for any period less than
thirty (30) days, following the Required Filing Date until the Registration
Statement is filed with the Commission and/or following the Effectiveness Date
until the Registration Statement is declared effective. Notwithstanding the
foregoing, in no event shall the Company be required to pay aggregate Liquidated
Damages under this Section 8(d) in excess of twelve percent (12%) of the
purchase price of the Common Stock paid by the Holder pursuant to the Purchase
Agreement or the Second Purchase Agreement. Payments to be made pursuant to this
Section 8(d) shall be due and payable immediately upon demand in cash. The
parties agree that the Liquidated Damages represent a reasonable estimate on the
part of the parties, as of the date of this Agreement, of the amount of damages
that may be incurred by the Holder if the Registration Statement is not filed
with the Commission on or prior to the Required Filing Date and/or declared
effective on or prior to the Effectiveness Date.

(e) Consent to Jurisdiction. The Company and each Purchaser (i) hereby
irrevocably submit to the exclusive jurisdiction of the United States District
Court for the Northern District of Texas for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement, the Purchase Agreement
or the Second Purchase Agreement, and (ii) hereby waive, and agree not to assert
in any such suit, action or proceeding, any claim that it is not personally
subject to the jurisdiction of such court, that the suit, action or proceeding
is brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. The Company and each Purchaser consent to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address in effect for notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and
notice thereof. Nothing in this Section 8(e) shall affect or limit any right to
serve process in any other manner permitted by law.

(f) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the same shall be in writing and signed by the Company and the Holders
holding a majority of the Registrable Securities (excluding any of such shares
that have been sold to the public or pursuant to Rule 144); provided, however,
that parties to the Second Purchase Agreement may become parties to this
Agreement, by executing a counterpart of this Agreement without any amendment of
this Agreement pursuant to this paragraph or any consent or approval of any
other Holder; provided further, however, that if any amendment, modification, or
supplement operates in a manner that treats any Holder different from other
Holders, the consent of such Holder shall also be required for such amendment,
modification or supplement. Any such amendment, modification, or supplement
effected in accordance with this paragraph shall be binding upon each Holder and
each future holder of all such securities of Holder. Each Holder acknowledges
that by the operation of this paragraph, the holders of a majority of the
Registrable Securities (excluding any of such shares that have been sold to the
public or pursuant to Rule 144) will have the right and power to diminish or
eliminate all rights of such Holder under this Agreement.

(g) Notices. Any and all notices or other communications or deliveries required
or permitted to be provided hereunder shall be in writing and shall be deemed
given and effective on the earlier of (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice prior to 5:00 p.m., Pacific Time, on a Business Day,
(ii) the first Business Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile telephone number
specified for notice later than 5:00 p.m., Pacific Time, on any date and earlier
than 11:59 p.m., Pacific Time, on such date, (iii) the Business Day following
the date of mailing, if sent by nationally recognized overnight courier service,
or (iv) actual receipt by the party to whom such notice is required to be given.

> > > (x) if to the Company:
> > > 
> > > Socket Communications, Inc.
> > > 37400 Central Court
> > > Newark, California 94560
> > > Attention: Dave Dunlap, Chief Financial Officer
> > > Telecopier: 510-744-2727
> > > 
> > > Telephone: 510-744-2735
> > > 
> > > with a copy to:
> > > 
> > > Wilson Sonsini Goodrich & Rosati, P.C.
> > > 650 Page Mill Road
> > > Palo Alto, California 94304
> > > Attention: Herbert Fockler, Esq.
> > > Telephone No.: (650) 493-9300
> > > Facsimile No.: (650) 493-6811
> > > 
> > > (y) if to any Purchaser:
> > > 
> > > At the address of such Purchaser set forth on Exhibit A to this Agreement.

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice.

(h) Successors and Assigns. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns and shall
inure to the benefit of the Holder and its successors and assigns. The Company
may not assign this Agreement or any of its respective rights or obligations
hereunder without the prior written consent of the Purchasers. Each Purchaser
may assign its rights hereunder in the manner and to the Persons as permitted
under the Purchase Agreement or Second Purchase Agreement, as applicable.

(i) Assignment of Registration Rights. The rights of the Holder hereunder,
including the right to have the Company register for resale Registrable
Securities in accordance with the terms of this Agreement, shall be assignable
by each Holder to any transferee of the Holder of all or a portion of the shares
of Registrable Securities if: (i) the Holder 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 (A) the name and address of such transferee or
assignee, and (B) 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 assignees is
restricted under the Securities Act and applicable state securities laws; (iv)
at or before the time the Company receives the written notice contemplated by
clause (ii) of this Section, the transferee or assignee agrees in writing with
the Company to be bound by all of the provisions of this Agreement; and (v) such
transfer shall have been made in accordance with the applicable requirements of
the Purchase Agreement or Second Purchase Agreement, as applicable, and shall be
for no less than 20% of the Registrable Securities. In addition, the Holder
shall have the right to assign its rights hereunder to any other Person with the
prior written consent of the Company, which consent shall not be unreasonably
withheld, conditioned or delayed. The rights to assignment shall apply to the
Holder (and to subsequent) successors and assigns. In the event of an assignment
pursuant to this Section 8(i), the Purchaser shall pay all incremental costs and
expenses incurred by the Company in connection with filing a Registration
Statement (or an amendment to the Registration Statement) to register the shares
of Registrable Securities assigned to any assignee or transferee of the
Purchaser.

(j) Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the same Agreement. In the event
that any signature is delivered by facsimile transmission, such signature shall
create a valid binding obligation of the party executing (or on whose behalf
such signature is executed) the same with the same force and effect as if such
facsimile signature were the original thereof.

(k) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without regard to principles
of conflicts of law thereof. This Agreement shall not be interpreted or
construed with any presumption against the party causing this Agreement to be
drafted.

(l) Cumulative Remedies. The remedies provided herein are cumulative and not
exclusive of any remedies provided by law.

(m) Termination. This Agreement shall terminate on the earlier of the date when
the Effectiveness Period expires and the date on which the Registrable
Securities may be sold without restriction pursuant to Rule 144(k) of the
Securities Act.

(n) Severability. If any term, provision, covenant or restriction of this
Agreement is held to be invalid, illegal, void or unenforceable in any respect,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their reasonable
efforts to find and employ an alternative means to achieve the same or
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

(o) Headings. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.

(p) Independent Nature of each Holder's Obligations and Rights. The obligations
of each Holder under this Agreement are several and not joint with the
obligations of any other Holder, and no Holder shall be responsible in any way
for the performance of the obligations of any other Holder under this Agreement.
Nothing contained herein, and no action taken by any Holder pursuant hereto,
shall be deemed to constitute the Holders as a partnership, an association, a
joint venture or any other kind of entity, or create a presumption that the
Holders are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement. Each Holder
confirms that it has independently participated in the negotiation of the
transactions contemplated hereby with the advice of its own counsel and
advisors. Each Holder shall be entitled to independently protect and enforce its
rights, including, without limitation, the rights arising out of this Agreement,
and it shall not be necessary for any other Holder to be joined as an additional
party in any proceeding for such purpose.

[Remainder of page intentionally left blank. Signature pages to follow.]

 

 

 

 

 

 

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized persons as of the date first indicated
above.

  SOCKET COMMUNICATIONS, INC.

   

By: /s/ David W. Dunlap

 

Name: David Dunlap
Title: Chief Financial Officer