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SECURITIES PURCHASE AGREEMENT

Purchase and Sale Agreement

SECURITIES PURCHASE AGREEMENT | Document Parties: SOCKET MOBILE, INC You are currently viewing:
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SOCKET MOBILE, INC

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Title: SECURITIES PURCHASE AGREEMENT
Governing Law: California     Date: 5/20/2009
Industry: Computer Hardware     Law Firm: Wilson Sonsini     Sector: Technology

SECURITIES PURCHASE AGREEMENT, Parties: socket mobile  inc
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Exhibit 10.13

 

 

SECURITIES PURCHASE 

AGREEMENT 

 

 

Dated as of May 18, 2009 

 

 

among 

 

 

SOCKET MOBILE, INC. 

 

THE NON-MANAGEMENT PURCHASERS LISTED ON EXHIBIT A 

 

and 

 

THE MANAGEMENT PURCHASERS LISTED ON EXHIBIT A


TABLE OF CONTENTS

 

 

PAGE
NO.

 

 

ARTICLE I    Purchase and Sale of Common Stock and Warrants

1

 

 

Section 1.1 Purchase and Sale of Common Stock and Warrants

1

 

Section 1.2 Purchase Price and Closing

1

 

Section 1.3 Delivery

2

 

Section 1.4 Warrant Shares

2

 

 

 

ARTICLE II    Representations and Warranties

2

 

 

 

Section 2.1 Representations and Warranties of the Company

2

 

Section 2.2 Representations and Warranties of the Purchasers

5

 

 

ARTICLE III    Covenants

8

 

 

Section 3.1 Reservation of Shares

8

 

Section 3.2 Listing

8

 

Section 3.3 Disclosure of Transactions and Other Material Information

8

 

Section 3.4 Delivery of Share Certificates

8

 

 

ARTICLE IV    Conditions

8

 

 

 

Section 4.1 Conditions Precedent to the Obligation of the Company to Close and to Sell the Shares and Warrants

8

 

Section 4.2 Conditions Precedent to the Obligation of the Purchasers to Close and to Purchase the Shares and Warrants

9

 

 

ARTICLE V    Certificate Legend

11

 

 

 

Section 5.1 Legend

11

 

 

ARTICLE VI    Termination

12

 

 

 

Section 6.1 Termination by Mutual Consent

12

 

Section 6.2 Effect of Termination

12

 

 

ARTICLE VII    Miscellaneous

12

 

 

 

Section 7.1 Fees and Expenses

12

 

Section 7.2 Specific Enforcement; Consent to Jurisdiction

12

 

Section 7.3 Entire Agreement; Amendment

13

 

Section 7.4 Notices

13

 

Section 7.5 Waivers

14

 

Section 7.6 Headings

14

 

Section 7.7 Successors and Assigns

14

 

Section 7.8 No Third Party Beneficiaries

14

 

Section 7.9 Governing Law

14

 

Section 7.10 Survival

15

 

Section 7.11 Counterparts

15

 

Section 7.12 Publicity

15

 

Section 7.13 California Corporate Securities Law

15

 

Section 7.14 Severability

15

 

Section 7.15 Further Assurances

15

 

Section 7.16 Independent Nature of Purchasers' Obligations and Rights

15

 

 

 

 

EXHIBIT A    LIST OF PURCHASERS

A-1

 

 

EXHIBIT B    FORM OF WARRANT

B-1

 

 

EXHIBIT C    FORM OF REGISTRATION RIGHTS AGREEMENT

C-1

 

 

 

 

 

 



SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT this (" Agreement "), dated as of May 18, 2009, is made by and among Socket Mobile, Inc., a Delaware corporation (the " Company "), the entities listed on Exhibit A hereto as Non-Management Purchasers (each, a " Non-Management Purchaser " and collectively, the " Non-Management Purchasers "), and the entities and individuals listed on Exhibit A hereto as Management Purchasers (each, a " Management Purchaser " and collectively, the " Management Purchasers ", and together with the Non-Management Purchasers, the " Purchasers "), for the purchase and sale by the Purchasers of shares of the Company's Common Stock, par value $0.001 per share (the " Common Stock "), and warrants to purchase shares of the Common Stock.

The parties hereto agree as follows:

ARTICLE I

Purchase and Sale of Common Stock and Warrant


Section 1.1 Purchase and Sale of Common Stock and Warrants

(a) Non-Management Purchasers . Upon the following terms and conditions, the Company shall issue and sell to the Non-Management Purchasers, and each Non-Management Purchaser shall, severally but not jointly, purchase from the Company that number of shares of Common Stock (the " Shares ") and related warrants to purchase that number of shares of Common Stock equal to twenty percent (20%) of the number of Shares to be purchased by such Non-Management Purchaser, in substantially the form attached hereto as Exhibit B (the " Warrants "), at a price per Share (including related Warrants) equal to $1.80, in each case as set forth opposite such Non-Management Purchaser's name on Exhibit A hereto.


(b) Management Purchasers . Upon the same terms and conditions, the Company shall issue and sell to the Management Purchasers, and each Management Purchaser shall, severally but not jointly, purchase from the Company that number of shares of Common Stock (the " Shares ") at a price per Share equal to $2.00, in each case as set forth opposite such Management Purchaser's name on Exhibit A hereto.


(c) Securities . The Company and the Purchasers are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration afforded by Section 4(2) of the U.S. Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the " Securities Act "), including Regulation D (" Regulation D "), and/or upon such other exemption from the registration requirements of the Securities Act as may be available with respect to any or all of the investments to be made hereunder. The aggregate number of Shares issued hereunder shall not exceed six hundred forty-five thousand nine hundred eighty-three (645,983).


Section 1.2 Purchase Price and Closing . The Company agrees to issue and sell to the Purchasers and, in consideration of and in express reliance upon the representations, warranties, covenants, terms and conditions of this Agreement, the Purchasers, severally but not jointly, agree to purchase the number of Shares and, with respect to the Non-Management Purchasers, the Warrants set forth opposite their respective names on Exhibit A. The closing of the purchase and sale of the Shares and Warrants to be acquired from the Company under this Agreement (the "Closing") shall take place at the offices of the Company located at 39700 Eureka Drive, Newark, California 94560 at 10:00 a.m., Pacific Time (i) on or before May 31, 2009, provided, that all of the conditions set forth in Article IV hereof and applicable to the Closing shall have been fulfilled or waived in accordance herewith, or (ii) at such other time and place or on such date as the Purchasers and the Company may agree upon (the "Closing Date"). The entire Purchase Price shall be paid by the Purchasers in cash, by wire transfer or in readily available funds.

 


 

Section 1.3 Delivery . At the Closing, the Company shall issue to each Purchaser (a) certificate(s) representing the Shares in such number as is set forth opposite such Purchaser's name on Exhibit A hereto, and (b) with respect to the Non-Management Purchasers, such number of Warrants to purchase shares of Common Stock as is set forth opposite such Purchaser's name on Exhibit A hereto. The Warrants shall be exercisable for five (5) years from the Closing Date and shall have an exercise price of $1.80 per Share (the " Exercise Price ").

Section 1.4 Warrant Shares . The Company has authorized and has reserved and covenants to continue to reserve, free of preemptive rights and other similar contractual rights of stockholders, a number of its authorized but unissued shares of Common Stock equal to the aggregate number of shares of Common Stock necessary to effect the exercise of the Warrants. Any shares of Common Stock issuable upon exercise of the Warrants (and such shares when issued) are herein referred to as the "Warrant Shares". The Shares, the Warrants and the Warrant Shares are sometimes collectively referred to herein as the " Securities ".

 

ARTICLE II

Representations and Warranties


Section 2.1 Representations and Warranties of the Company . In order to induce the Purchasers to enter into this Agreement and to purchase the Shares and the Warrants, the Company hereby makes the following representations and warranties to the Purchasers:

(a) Organization, Good Standing and Power . The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power to own, lease and operate its properties and assets and to conduct its business as it is now being conducted. The Company does not have any subsidiaries or own securities of any kind in any other entity. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except for any jurisdiction(s) (alone or in the aggregate) in which the failure to be so qualified will not have a Material Adverse Effect. For the purposes of this Agreement, " Material Adverse Effect " means any adverse effect on the business, operations, properties or financial condition of the Company which is material to the Company taken as a whole.

 

2




(b) Authorization; Enforcement . The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Registration Rights Agreement (in substantially the form attached hereto as Exhibit C , the " Registration Rights Agreement "), the Warrants, and the other agreements and documents contemplated hereby and thereby and executed by the Company or to which the Company is party (collectively, the " Transaction Documents "), and to issue and sell the Shares and the Warrants in accordance with the terms hereof. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action, and no further consent or authorization of the Company, its Board of Directors or its stockholders is required. This Agreement has been duly executed and delivered by the Company. The other Transaction Documents will have been duly executed and delivered by the Company at the Closing. Each of the Transaction Documents constitutes, or shall constitute when executed and delivered, a valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except (i) to the extent that the indemnification provisions contained in the Registration Rights Agreement may be limited by applicable law and principles of public policy, (ii) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, and (iii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies or by general principles of equity.

(c) Capitalization . The authorized capital stock of the Company as of the date of this Agreement consists of 10,000,000 shares of Common Stock, $0.001 par value, of which 3,229,916 shares are issued and outstanding and 3,000,000 shares of Preferred Stock, $0.001 par value, none of which are issued and outstanding. All of the outstanding shares of the Company's Common Stock and any other security of the Company have been duly and validly authorized. No shares of Common Stock or any other security of the Company are entitled to preemptive rights. Except (i) options to purchase 1,266,887 shares of the Company's Common Stock issued pursuant to the Company's stock option plans and outstanding as of the date of this Agreement, (ii) an additional 65,182 shares of Common Stock reserved for issuance pursuant to the Company's stock option plans, and (iii) as set forth in the Transaction Documents, there are no outstanding options, warrants, scrip, rights to subscribe to, call or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company, and there are no contracts, commitments, understandings, or arrangements by which the Company is or may become bound to issue additional shares of the capital stock of the Company or options, securities or rights convertible into shares of capital stock of the Company. Except as set forth in the Transaction Documents, the Company is not a party to or bound by any agreement or understanding granting registration or anti-dilution rights to any person with respect to any of its equity or debt securities. The Company has furnished or made available to the Purchasers true and correct copies of the Company's Certificate of Incorporation as in effect on the date hereof (the " Certificate ") and the Company's Bylaws as in effect on the date hereof (the " Bylaws ").

(d) Issuance of Securities . The Shares and the Warrants to be issued at the Closing have been duly authorized by all necessary corporate action and, when paid for or issued in accordance with the terms hereof, the Shares shall be validly issued and outstanding, fully paid and nonassessable and free and clear of all liens, encumbrances and rights of refusal of any kind (other than those arising from the actions or inactions of the Purchasers themselves), and the holders shall be entitled to all rights accorded to a holder of Common Stock; provided , however , that the Shares and the Warrants may be subject to restriction or transfer under state and federal securities laws. When the Warrant Shares are issued and paid for in accordance with the terms of this Agreement and as set forth in the Warrants, such shares will be duly authorized by all necessary corporate action and validly issued and outstanding, fully paid and nonassessable, free and clear of all liens, encumbrances and rights of refusal of any kind (other than those arising from the actions or inactions of the Purchasers themselves) and the holders shall be entitled to all rights accorded to a holder of Common Stock; provided , however , that the Warrant Shares may be subject to restriction or transfer under state and federal securities laws.

 

3




(e) No Conflicts . The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby and thereby do not and will not (i) violate any provision of the Certificate or Bylaws, (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, mortgage, deed of trust, indenture, note, bond, license, lease agreement, instrument or obligation to which the Company is a party or by which the Company's properties or assets are bound, (iii) create or impose a lien, mortgage, security interest, charge or encumbrance of any nature on any property or asset of the Company under any agreement or any commitment to which the Company is a party or by which the Company is bound or by which any of its properties or assets are bound, or (iv) result in a violation of any federal, state, local or foreign statute, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations) applicable to the Company or by which any property or asset of the Company is bound or affected, except, in all cases other than violations pursuant to clause (i) above, for such conflicts, defaults, terminations, amendments, acceleration, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect.

(f) Commission Documents; Financial Statements . The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934, as amended (the " Exchange Act "), and the Company has timely filed all material reports, schedules, forms, statements and other documents required to be filed by it with the Securities and Exchange Commission (the " Commission ") pursuant to the reporting requirements of the Exchange Act, including material filed pursuant to Section 13(a) or 15(d) of the Exchange Act (all of the foregoing, including filings incorporated by reference therein, being referred to herein as the " Commission Documents "). The Company has not provided to the Purchasers any material non-public information or other information which, according to applicable federal securities law, rule or regulation, should have been disclosed publicly by the Company but which has not been so disclosed, other than with respect to the transactions contemplated by this Agreement. At the time of its filing, the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009 (the " Form 10-Q ") complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and the Form 10-Q did not contain any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. At the time of its filing, the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2008 (the " Form 10-K ") complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and, at the time of its filing, the Form 10-K did not contain any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the financial statements of the Company included in the Form 10-Q and Form 10-K complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the Commission or other applicable rules and regulations with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting principles (" GAAP ") applied on a consistent basis during the periods involved (except (i) as may be otherwise indicated in such financial statements or the notes thereto or (ii) in the case of unaudited interim statements, to the extent they may not include footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments).

 

4


 

(g) No Undisclosed Events or Circumstances . Since March 31, 2009, except as set forth in the Commission Documents, no event or circumstance has occurred or exists with respect to the Company or its businesses, properties, operations or financial condition, which, under applicable federal securities law, rule or regulation, requires public disclosure or announcement by the Company but which has not been publicly so announced or disclosed.

(h) Securities Act of 1933 . The Company has complied and will comply with all applicable federal and state securities laws in connection with the offer, issuance and sale of the Shares, the Warrants and the Warrant Shares hereunder. Neither the Company nor anyone acting on its behalf, directly or indirectly, has or will sell, offer to sell or solicit offers to buy any of the Securities, or similar securities to, or solicit offers with respect thereto from, or enter into any preliminary conversations or negotiations relating thereto with, any person, or has taken or will take any action such that the issuance and sale of any of the Securities are not exempt from the registration provisions of the Securities Act and applicable state securities laws. Neither the Company nor any of its affiliates, nor any person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with the offer or sale of any of the Securities.

(i) Governmental Approvals . Except for the filing of any notice prior or subsequent to the Closing that may be required under applicable state and/or federal securities laws (which if required, shall be filed on a timely basis), no authorization, consent, approval, license, exemption of, filing or registration with any court or governmental department, commission, board, bureau, agency or instrumentality located in the United States is or will be necessary for, or in connection with, the issuance or delivery of the Shares and the Warrants, or for the performance by the Company of its obligations under the Transaction Documents.

Section 2.2 Representations and Warranties of the Purchasers . Each of the Purchasers hereby makes the following representations and warranties to the Company with respect solely to itself and not with respect to any other Purchaser:

(a) Organization and Standing of the Purchasers . If such Purchaser is an entity, such Purchaser is a corporation, limited liability company or partnership duly incorporated or organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization.

 

5




(b) Authorization and Power . Such Purchaser has all requisite power and authority to execute and deliver the Transaction Documents, to purchase the Shares and, if applicable, the Warrants being sold to it hereunder, and to carry out and perform its obligations under the terms of the Transaction Documents. All action on the part of such Purchaser necessary for the authorization, execution, delivery and performance of the Transaction Documents, and the performance of all such Purchaser's obligations under the Transaction Documents, has been taken or will be taken prior to the Closing. The Transaction Documents constitute, or shall constitute when executed and delivered, valid and legally binding obligations of such Purchaser enforceable against such Purchaser in accordance with their terms, except: (i) to the extent that the indemnification provisions contained in the Registration Rights Agreement may be limited by applicable law and principles of public policy, (ii) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors' rights generally, and (iii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies or by general principles of equity. No consent, approval, authorization, order, filing, registration or qualification of or with any court, governmental authority or third person is required to be obtained by such Purchaser in connection with the execution and delivery of the Transaction Documents by such Purchaser or the performance of such Purchaser's obligations hereunder or thereunder.

(c) Acquisition for Investment . Such Purchaser is purchasing the Shares and, if applicable, acquiring the Warrants solely for its own account, not as a nominee or agent, and for the purpose of investment and not with a view to or for resale in connection with the distribution thereof. Such Purchaser does not have a present intention to sell any of the Securities, nor a present arrangement (whether or not legally binding) or intention to effect any distribution of any of the Securities to or through any person or entity. Such Purchaser acknowledges that it (i) has such knowledge and experience in financial and business matters such that such Purchaser is capable of evaluating the merits and risks of its investment in the Company and (ii) is able to bear the financial risks associated with an investment in the Company.

(d) Rule 144 . Such Purchaser understands that the Securities must be held indefinitely unless such Securities are registered under the Securities Act or an exemption from registration is available. Such Purchaser acknowledges that it is familiar with the provisions of Rule 144 promulgated pursuant to the Securities Act (" Rule 144 "), which permit resale of shares purchased in a private placement subject to the satisfaction of certain conditions, which may include, among other things, the availability of certain current public information about the Company; the resale occurring not less than a specified period after a party has purchased and paid for the security to be sold; the number of shares being sold during any three-month period not exceeding specified limitations; the sale being effected through a "brokers' transaction," a transaction directly with a "market maker" or a "riskless principal transaction" (as those terms are defined in the Securities Act or the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder); and the filing of a Form 144 notice, if applicable, and that such Purchaser has been advised that Rule 144 permits resales only under certain circumstances. Such Purchaser understands that to the extent that Rule 144 is not available, such Purchaser will be unable to sell any Securities without either registration under the Securities Act or the existence of another exemption from such registration requirement. Such Purchaser understands that, although Rule 144 is not exclusive, the Commission has expressed its opinion that persons proposing to sell restricted securities received in a private offering, other than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and the brokers who participate in the transactions do so at their own risk.

 

6




(e) General . Such Purchaser understands that the Securities are being offered and sold in reliance on a transactional exem


 
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