Socket Mobile, Inc. Warrant for the Purchase of Shares of Common Stock, par value $0.001 per Share

Exhibit 10.16

THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES ISSUABLE UPON ITS EXERCISE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.

THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.

Socket Mobile, Inc.

Warrant for the Purchase of Shares of Common Stock,
par value $0.001 per Share

THIS CERTIFIES that, for value received, Securities Research Associates, Inc., with its principal office located at 80 East Sir Francis Drake Boulevard., Suite 3F, Larkspur, California 94939, or its registered assigns (the " Holder "), is entitled to subscribe for and purchase from Socket Mobile, Inc., a Delaware corporation (the " Company "), upon the terms and conditions set forth herein, ______ shares of the Company's Common Stock, par value $0.001 per share (" Common Stock "), at a price of $1.80 per share, subject to adjustment as provided herein (the " Exercise Price "). As used herein the term " this Warrant " shall mean and include this Warrant and any Common Stock or Warrants hereafter issued as a consequence of the exercise or transfer of this Warrant in whole or in part. This Warrant is being issued pursuant to that certain Engagement Letter, dated as of May 5, 2009, by and between the Company and Securities Research Associates, Inc (the " Engagement Letter ").

The number of shares of Common Stock issuable upon exercise of this Warrant (the " Warrant Shares ") and the Exercise Price may be adjusted from time to time as hereinafter set forth. The Warrant Shares are entitled to the benefits, and subject to the obligations, set forth in the Registration Rights Agreement, dated as of May 18, 2009, among the Company, the Holder and certain other parties (the " Registration Rights Agreement ").

1. Exercise Period . This Warrant may be exercised at any time or from time to time during the period commencing on the Issuance Date and ending at 5:00 P.M. Pacific time on May __, 2014 (the " Exercise Period ").

2. Procedure for Exercise; Effect of Exercise .

(a) Exercise . This Warrant may be exercised, in whole or in part, by the Holder during normal business hours on any business day during the Exercise Period by (i) the delivery to the Company of a duly executed Notice of Exercise (in the form attached to this Agreement) specifying the number of Warrant Shares to be purchased, (ii) delivery of payment to the Company of the Exercise Price for the number of Warrant Shares specified in the Notice of Exercise by cash, wire transfer of immediately available funds to a bank account specified by the Company, or by certified or bank cashier's check (the " Aggregate Exercise Price "), and (iii) delivery to the Company of this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction).

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(b) Net Exercise . In lieu of exercising this Warrant pursuant to Section 2(a), if the fair market value of one Warrant Share is greater than the Exercise Price (at the date of calculation as set forth below), the Holder may elect to receive a number of Warrant Shares equal to the value of this Warrant (or of any portion of this Warrant being canceled) by surrender of this Warrant at the principal office of the Company (or such other office or agency as the Company may designate) together with a properly completed and executed Notice of Exercise reflecting such election, in which event the Company shall issue to the Holder that number of Shares computed using the following formula:

X	=	Y (A - B)
		A

Where:

X	=	The number of Warrant Shares to be issued to the Holder
Y	=	The number of Warrant Shares purchasable under this Warrant or, if only a portion of the Warrant is being exercised, the portion of the Warrant being canceled (at the date of such calculation)
A	=	The fair market value of one Warrant Share (at the date of such calculation)
B	=	The Exercise Price (as adjusted to the date of such calculation)

 

For purposes of the calculation above, the fair market value of one Warrant Share shall be the average of the closing bid prices of the common stock or the closing price quoted on the national securities exchange on which the common stock is listed as published in the Wall Street Journal, as applicable, for the ten (10) trading day period ending five (5) trading days prior to the date of determination of fair market value; provided, however, that where no public market exists for the Company's common stock at the time of such exercise, the fair market value per Warrant Share shall be determined by the Board of Directors of the Company acting in good faith.

 

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(c) Effect of Exercise . Upon receipt by the Company of a Notice of Exercise, together with proper payment of the Aggregate Exercise Price and this Warrant (or an indemnification undertaking), as provided in this Section 2, such Warrant Shares shall be deemed to be issued to the Holder as of the close of business on such date on which the Notice of Exercise and this Warrant (or an indemnification undertaking) have been delivered and payment has been made for such Warrant Shares in accordance with this Warrant, and the Holder shall be deemed to be the holder of record of the Warrant Shares, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Warrant Shares shall not then be actually delivered to the Holder. As soon as practicable following the date on which the Company has received each of the Notice of Exercise, the Aggregate Exercise Price and this Warrant (or an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction), the Company shall (X) issue and deliver to the address as specified in the Notice of Exercise, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder is entitled pursuant to such exercise, or (Y) provided that the Company's transfer agent (the " Transfer Agent ") is participating in The Depository Trust Company (" DTC ") Fast Automated Securities Transfer Program, upon the request of the Holder, credit such aggregate number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder's or its designee's balance account with DTC through its Deposit Withdrawal Agent Commission system. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation (or the execution of an indemnification undertaking with respect to this Warrant in the case of its loss, theft or destruction), execute and deliver a new Warrant evidencing the right of the Holder to purchase the balance of the Warrant Shares subject to purchase hereunder as soon as practicable after receipt of the Warrant (or the undertaking).

3. Registration of Warrants; Transfer of Warrants . This Warrant and any Warrants issued upon the transfer or exercise in part of this Warrant shall be numbered and shall be registered in a register containing the name and address of the Holder (the " Warrant Register ") as they are issued. The Company shall be entitled to treat the registered holder of any Warrant on the Warrant Register as the owner in fact thereof for all purposes and shall not be bound to recognize any equitable or other claim to or interest in such Warrant on the part of any other person, and shall not be liable for any registration or transfer of Warrants which are registered or to be registered in the name of a fiduciary or the nominee of a fiduciary unless made with the actual knowledge that a fiduciary or nominee is committing a breach of trust in requesting such registration or transfer, or with the knowledge of such facts that its participation therein amounts to bad faith. This Warrant shall be transferable only on the books of the Company upon delivery thereof duly endorsed by the Holder or by its duly authorized attorney or representative, or accompanied by proper evidence of succession, assignment, or authority to transfer. In all cases of transfer by an attorney, executor, administrator, guardian, or other legal representative, duly authenticated evidence of his or its authority shall be produced. Upon any registration of transfer, the Company shall deliver a new Warrant or Warrants to the person entitled thereto. This Warrant may be exchanged, at the option of the Holder thereof, for another Warrant, or other Warrants of different denominations, of like tenor and representing in the aggregate the right to purchase a like number of Warrant Shares, upon surrender to the Company or its duly authorized agent.

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4. Restrictions on Transfer . (a) The Holder, as of the Issuance Date, represents to the Company that such Holder is acquiring the Warrants for its own account and not with a view towards the distribution thereof or of the Warrant Shares. Upon exercise of this Warrant, the Holder shall, if so requested by the Company, confirm in writing, in a form satisfactory to the Company, that the Warrant Shares are being acquired for such Holder's own account and not with a view towards distribution or resale. Notwithstanding any provisions contained in this Warrant to the contrary, this Warrant and the related Warrant Shares shall not be transferable except upon the conditions specified in this Section 4, which conditions are intended, among other things, to insure compliance with the provisions of the Securities Act of 1933, as amended (the " Securities Act "), and applicable state law in respect of the transfer of this Warrant or such Warrant Shares. The Holder, by acceptance of this Warrant, agrees that the Holder will not transfer this Warrant or the related Warrant Shares (i) prior to delivery to the Company of an opinion of the Holder's counsel (as such opinion and such counsel are described in Section 4(b) hereof) and any other information requested by the Company, (ii) with respect to the Warrant Shares only, until registration of such Warrant Shares under the Securities Act has become effective, or (iii) after a sale of such Warrant or Warrant Shares has been consummated pursuant to Rule 144 or Rule 144A under the Securities Act.

(b) The Holder, by its acceptance hereof, agrees that prior to any transfer of this Warrant or of the related Warrant Shares (other than as permitted by Section 4(a) hereof or, with respect to the Warrant Shares only, pursuant to a registration under the Securities Act), the Holder will give written notice to the Company of its intention to effect such transfer, together with an opinion of such counsel for the Holder as shall be reasonably acceptable to the Company and/or any other information requested by the Company, to the effect that the proposed transfer of this Warrant and/or such Warrant Shares may be effected without registration or qualification under the Securities Act as then in effect or any federal or state securities law then in effect. Upon receiving such written notice and reasonably satisfactory opinion or other information, if so requested, the Company, as promptly as practicable, shall notify such Holder that such Holder may sell or otherwise dispose of this Warrant and/or such Warrant Shares, all in accordance with the terms of the notice delivered to the Company. If a determination has been made pursuant to this Section 4(b) that the opinion of counsel for the Holder or other information is not reasonably satisfactory to the Company, the Company shall so notify the Holder promptly with details thereof after such determination has been made.

(c) Each stock certificate representing Warrant Shares issued upon exercise or exchange of this Warrant shall bear the following legend unless the opinion of counsel referred to in Section 4(b) states such legend is not required:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."

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The Holder understands that the Company may place, and may instruct any transfer agent or depository for the Warrant Shares to place, a stop transfer notation in the securities records in respect of the Warrant Shares. The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of the Warrant Shares upon which it is stamped if, unless otherwise required by state securities laws, (i) while such Warrant Shares are registered for resale under the Securities Act, (ii) in connection with a sale, assignment or other transfer, such holder