Exhibit 10.14

 

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this "Agreement") is made and entered into
as of February 23, 2011, by and between Socket Mobile, Inc., a Delaware
corporation (the "Company"), and AboCom Systems Inc., a corporation organized
under the laws of Taiwan (the "Purchaser").

WHEREAS, upon the terms and subject to the conditions of the Securities Purchase
Agreement, dated as of the date hereof (the "Purchase Agreement"), the Company
has agreed to issue and sell shares of its Common Stock; and

WHEREAS, to induce the Purchasers to execute and deliver the Purchase Agreement
and to purchase the Shares, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, with respect
to the Shares.

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 Purchaser 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.

 

 

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"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 90 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, the Purchaser and its assignees. To
the extent this Agreement refers to an election, consent, waiver, request or
approval of or by the Holders, 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.

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

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

"Investor Counsel" means an attorney selected by and acting as counsel on behalf
of the Holder(s).

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

"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 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
particular Common Share (a) a Registration Statement covering such Common Share
has been declared effective by the Commission and continues to be effective
during the Effectiveness Period, (b) such Common Share is sold in compliance
with Rule 144 or (c) such Common Share may be sold in compliance with Rule 144
without restriction, after which time such Common Share shall not be a
Registrable Security.

 

 

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"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 required to be filed by the Company with
the Commission pursuant to this Agreement.

"Required Effective Date" shall have the meaning set forth in Section 8(b).

"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.

2. Registration. 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). 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 earliest to occur of: (x) the date on which all shares of Common Stock
sold pursuant to the Purchase Agreement may be sold under Rule 144, or (y) the
date on which all shares Common Stock sold pursuant to the Purchase Agreement
have been sold by the Purchasers who purchased such shares pursuant to the
Purchase Agreement (the "Effectiveness Period").

3. Registration Procedures; Company's Obligations.

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

 

 

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(a) Prepare and file with the Commission 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 reasonable efforts to cause the Registration
Statement to become effective on or before the Effectiveness Date 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
Investor 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 Investor 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 Investor 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 Investor 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.

 

 

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The Company shall promptly furnish to Investor 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 Investor 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 Investor 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 Investor 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 Investor 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.

(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 Investorl 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.

 

 

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(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 earning statements satisfying the provisions
of Section 11(a) of the Securities Act and Rule 158 not later than ninety (90)
days after the end of any twelve (12) month period 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 Investor 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:

 

 

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(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 Investor 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 consents or comfort letters or costs
associated with the delivery by independent public accountants of a consent or
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 Investor Counsel.

 

 

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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 that such untrue statements or omissions are based 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 Investor 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 made available, 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 that (i) such untrue
statement or omission is contained in or omitted from any information furnished
in writing by the Holder or Investor Counsel to the Company 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.

 

 

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(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 to the extent 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 6(c)) shall be paid to the Indemnified Party, as incurred, within ten
(10) Business Days of written notice thereof to the Indemnifying Party 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.

 

 

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(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 gross 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 6(d) 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
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.

 

 

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8. Miscellaneous.

(a) Remedies. Except as set forth in Section 8(b) hereof, the remedies provided
in this Agreement are cumulative and not exclusive of any remedies provided by
law, and 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) 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 California and the courts of the State of
California located in Alameda County for the purposes of any suit, action or
proceeding arising out of or relating to this Agreement or the 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(c) shall affect or limit any right to serve
process in any other manner permitted by law.

(c) 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 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.

 

 

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(d) Notices. Any notice, demand, request, waiver or other communication required
or permitted to be given hereunder shall be in writing and shall be effective
(a) upon hand delivery if delivered in person or upon transmission if sent by
telecopy or facsimile at the address or number designated below (if delivered on
a business day during normal business hours where such notice is to be
received), or the first business day following such delivery (if delivered other
than on a business day during normal business hours where such notice is to be
received), or (b) on the second business day following the date of mailing by
express courier service, fully prepaid, addressed to such address, or upon
actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:

(x)                                          if to the Company:

                                              Socket Mobile, Inc.
                                              39700 Eureka Drive
                                              Newark, California 94560
                                              Attention: David W. Dunlap, Chief
Financial Officer
                                              Telecopier: (510) 933-3104
                                              Telephone: (510) 933-3000

(y)                                          if to the Purchaser:

                                              AboCom Systems Inc.
                                              350 No. 77, Yu-Hih Road
                                              Chu-Nan Chen, Miao-Lih Hsuan
                                              Taiwan, R.O.C.
                                              Attention: Eric Oh-Yang
                                              Telecopier: +886 (37) 580-799
                                              Telephone: +886 (37) 580-077

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.

(e) Successors and Assigns. Subject to Section 8(g), 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 their successors and
assigns.

(f) 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 8(g), 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 and shall be for no less than 20% of the
Registrable Securities. 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(g), if requested by the Company, the Holder 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 Holder.

 

 

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(g) 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.

(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, 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.

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

(j) 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.

(k) 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.

 

 

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

 

COMPANY:   SOCKET MOBILE, INC.   By: /s/ David W. Dunlap Name: David W. Dunlap
Title: Chief Financial Officer     PURCHASER:   ABOCOM SYSTEMS INC.   By: /s/
Eric Oh-Yang Name: Eric Oh-Yang Title: President/CEO

 

 

 

 

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EXHIBIT A

PURCHASER

AboCom Systems Inc. 350 No. 77, Yu-Hih Road Chu-Nan Chen, Miao-Lih Hsuan Taiwan,
R.O.C.

                                                                              
                                                                               
                        

 

 

 

 

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EXHIBIT B

 

PLAN OF DISTRIBUTION

We are registering shares of common stock on behalf of the selling stockholder.
The common stock may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market prices, at varying prices determined at the time of sale, or
at negotiated prices. These sales may be effected at various times in one or
more of the following transactions, or in other kinds of transactions:

 * transactions on the NASDAQ Stock Market or on any other national securities
   exchange or U.S. inter-dealer system of a registered national securities
   association on which our common stock may be listed or quoted at the time of
   sale;
   
   
 * in the over-the-counter market;
   
   
 * in private transactions and transactions otherwise than on these exchanges or
   systems or in the over-the-counter market;
   
   
 * in connection with short sales of shares of our common stock;
   
   
 * by pledge to secure or in payment of debt and other obligations;
   
   
 * through the writing of options, whether the options are listed on an options
   exchange or otherwise;
   
   
 * in connection with the writing of non-traded and exchange-traded call
   options, in hedge transactions and in settlement of other transactions in
   standardized or over-the-counter options; or
   
   
 * through a combination of any of the above transactions.

The selling stockholder and their successors, including their transferees,
pledgees or donees or their successors, may sell the common stock directly to
purchasers or through underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders or the purchasers. These discounts, concessions or
commissions as to any particular underwriter, broker-dealer or agent may be in
excess of those customary in the types of transactions involved.

In addition, any securities covered by this prospectus which qualify for sale
pursuant to Rule 144 of the Securities Act may be sold under Rule 144 rather
than pursuant to this prospectus.

 

 

B-1

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We entered into a registration rights agreement for the benefit of the selling
stockholder to register the common stock under applicable federal and state
securities laws. The registration rights agreement provides for
cross-indemnification of the selling stockholder and us and our respective
directors, officers and controlling persons against specific liabilities in
connection with the offer and sale of the common stock, including liabilities
under the Securities Act. We will pay substantially all of the expenses incurred
by the selling stockholders with respect to the registration of the offering and
sale of the common stock.

 

 

 

 

 

B-2

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EXHIBIT C

FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT

 

[Name and address of Transfer Agent]

_____________________________

_____________________________

_____________________________

Attn:_________________________

                                              Re: Socket Mobile, Inc.

Ladies and Gentlemen:

We are counsel to Socket Mobile, Inc., a Delaware corporation (the "Company"),
and have represented the Company in connection with that certain Securities
Purchase Agreement (the "Purchase Agreement"), dated as of [date], by and among
the Company and the purchaser (the "Purchaser" and the "Holders") named therein
pursuant to which the Company issued to the Purchaser shares (the "Shares") of
its Common Stock, $0.001 par value. Pursuant to the Purchase Agreement, the
Company has also entered into a Registration Rights Agreement with the Purchaser
(the "Registration Rights Agreement"), dated as of [date], pursuant to which the
Company agreed, among other things, to register the Registrable Securities (as
defined in the Registration Rights Agreement), including the Shares, under the
Securities Act of 1933, as amended (the "1933 Act"). In connection with the
Company's obligations under the Registration Rights Agreement, on [date], the
Company filed a Registration Statement on Form S-3 (File No. 333-________) (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") relating to the resale of the Registrable Securities which names the
Holders as selling stockholders thereunder.

In connection with the foregoing, we advise you that a member of the SEC's staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and, accordingly, the
Registrable Securities are available for resale under the 1933 Act in the manner
specified in, and pursuant to the terms of, the Registration Statement.

 

 
Very truly yours,
            cc:                 PURCHASER  
By:

 

 

 

C-1

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