Exhibit 10.02
WARRANT
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE “ACT”), OR ANY STATE SECURITIES LAW. NEITHER THIS WARRANT NOR ANY
WARRANT SHARES ISSUABLE UPON EXERCISE HEREOF NOR ANY INTEREST OR PARTICIPATION
HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, OR TRANSFERRED EXCEPT IN COMPLIANCE
WITH THE ACT AND APPLICABLE STATE SECURITIES LAWS.
INSIGNIA SOLUTIONS PLC
WARRANT
Original Issue Date: December 29, 2005
     This Warrant (“Warrant”) is issued in connection with and pursuant to that
certain Securities Subscription Agreement (the “Subscription Agreement”) dated
as of December 29, 2005, by and among INSIGNIA SOLUTIONS PLC, a public limited
company incorporated under the laws of England and Wales (registered number:
1961960) (the “Company”), INSIGNIA SOLUTIONS INC. a company incorporated under
the laws of Delaware (the “Issuer”), and
                                         (the “Buyer”).
     FOR VALUE RECEIVED, the Buyer, the registered holder hereof, or its
permitted assigns (the “Holder”), is entitled to purchase from the Company,
during the period specified in this Warrant,                      (subject to
adjustment as hereinafter provided) fully paid and non-assessable American
depository shares (each an “ADS” and collectively, the “ADSs”) of the Company at
the purchase price per ADS provided in Section 1.2 of this Warrant (the “Warrant
Exercise Price”), all subject to the terms and conditions set forth in this
Warrant. Each ADS represents one ordinary share of the Company (the “Ordinary
Shares”). The ADSs to be purchased as described above are referred to herein as
the “Warrant Shares.” All terms not otherwise defined herein shall have the
meaning ascribed to them in the Subscription Agreement.
     Section 1. Period for Exercise and Exercise Price; Redemption.
     1.1 Period for Exercise. This Warrant shall commence at 5:00 pm New York
City local time, on June 29, 2006, and shall expire at 5:00 p.m., New York City
local time, December 29, 2010 (the “Expiration Date”). From and after the
Expiration Date this Warrant shall be null and void and of no further force or
effect whatsoever.
     1.2 Warrant Exercise Price. The Warrant Exercise Price shall be US $0.37
(subject to adjustment as hereinafter provided).
     Section 2. Exercise of Warrant.
     2.1 Manner of Exercise. The Holder may exercise this Warrant, in whole or
in part, immediately, but not after the Expiration Date, during normal business
hours on any Trading Day by surrendering this Warrant to the Company at the
principal office of the Company, accompanied by a Warrant Exercise Form in
substantially the form annexed hereto duly executed by the Buyer and by payment
of the Warrant Exercise Price for the number of Warrant Shares for which this
Warrant is then exercisable, either (i) in immediately available funds, (ii) by
delivery of an instrument evidencing indebtedness owing by the Company to the
Holder in the appropriate amount, (iii) by authorizing the Company to refrain
from issuing ADSs which would otherwise be issuable upon exercise of this
Warrant (subject to and in accordance with Section 2.4 hereof) or (iv) in a
combination of (i), (ii) or (iii) above,

 

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provided, however, that in no event shall the Holder be entitled to exercise
this Warrant for a number of Warrant Shares in excess of that number of Warrant
Shares which, upon giving effect to such exercise, would cause the aggregate
number of ADSs or Ordinary Shares beneficially owned by the Holder to exceed
4.9% of the outstanding ADSs or Ordinary Shares following such exercise. For
purposes of the foregoing proviso, the aggregate number of ADSs or Ordinary
Shares beneficially owned by the Holder shall include the number of ADSs or
Ordinary Shares issuable upon exercise of this Warrant with respect to which
determination of such proviso is being made. Except as set forth in the
preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended. The Holder may waive the foregoing limitation by written
notice to the Company upon not less than 61 days prior written notice (with such
waiver taking effect only upon the expiration of such 61 day notice period).
     2.2 When Exercise Effective. Each exercise of this Warrant shall be deemed
to have been effected on the day on which all requirements of Section 2.1 shall
have been met with respect to such exercise. At such time the person in whose
name any certificate for shares of Warrant Shares shall be issuable upon such
exercise shall be deemed for all corporate purposes to have become the Holder of
record of such shares, regardless of the actual delivery of certificates
evidencing such shares.
     2.3 Delivery of Certificates. As soon as practicable after each exercise of
this Warrant, and in any event no later than 3 Trading Days after such exercise,
the Company will issue Warrant Shares for the number of Warrant Shares to which
the Holder is entitled upon such Holder’s submission of the applicable Warrant
Exercise Form.
     2.4 Cashless Exercise. The Holder may, by providing notice thereof to the
Company along with the Warrant Exercise Form, elect to exercise the Warrant for
a number of Warrant Shares determined in accordance with 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 (at the date
of such exercise).
 
  A = The fair market value of one ADS (or other security for which the Warrant
is then exercisable at the date of such exercise).
 
  B = Exercise Price (as adjusted to the date of such exercise).

For purposes of this Section 2.4, the “fair market value” per share shall be the
Closing Sale Price for the ADSs for the Trading Day immediately prior to the
notice of exercise of the Warrant. Notwithstanding any provisions herein to the
contrary, the “cashless exercise” of the Warrants contemplated hereunder shall
not be permitted to the extent that the Company is prohibited under the
corporate laws and regulations of England and Wales from effectuating such
“cashless exercise” of the Warrants. For purposes of this Warrant, the term
“Closing Sale Price” means the closing price for the ADSs on the Nasdaq Small
Cap Market as reported by the Nasdaq Small Cap Market, or, if the Nasdaq Small
Cap Market is not the principal securities exchange or trading market for the
ADSs, the closing price of the ADSs on the principal securities exchange or
trading market where such security is listed or traded as reported thereby.
     Section 3. Adjustment of Purchase Price and Number of Shares. The Warrant
Exercise Price and the kind of securities issuable upon exercise of the Warrant
shall be adjusted from time to time as follows (subject to Section 1.2):

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     3.1 Subdivision or Consolidation of Shares (Share Splits). If the Company
at any time effects a subdivision or consolidation of the outstanding ADSs or
Ordinary Shares (through a split or otherwise), the number of Warrant Shares
shall be increased, in the case of a subdivision, or the number of Warrant
Shares shall be decreased, in the case of a consolidation, in the same
proportions as the ADSs or Ordinary Shares are subdivided or consolidated, in
each case effective automatically upon, and simultaneously with, the
effectiveness of the subdivision or consolidation which gives rise to the
adjustment.
     3.2 Dividends. If the Company at any time pays a dividend, or makes any
other distribution, to holders of ADSs or Ordinary Shares payable in ADSs or
Ordinary Shares, or fixes a record date for the determination of holders of ADSs
or Ordinary Shares entitled to receive a dividend or other distribution payable
in Ordinary Shares or ADSs, then the number of Warrant Shares in effect
immediately prior to such action shall be proportionately increased so that the
Holder hereof may receive upon exercise of the Warrant the aggregate number of
ADSs which he or it would have owned immediately following such action if the
Warrant had been exercised immediately prior to such action. The adjustment
shall become effective immediately as of the date the Company shall take a
record of the holders of ADSs or Ordinary Shares for the purpose of receiving
such dividend or distribution (or if no such record is taken, as of the
effectiveness of such dividend or distribution).
     3.3 Reclassification, Consolidation or Merger. If at any time, as a result
of:
     (a) a capital reorganization or reclassification (other than a subdivision,
consolidation or dividend provided for elsewhere in this Section 3), or
     (b) a merger or consolidation of the Company with another corporation
(whether or not the Company is the surviving corporation),
the ADSs issuable upon exercise of the Warrants shall be changed into or
exchanged for the same or a different number of shares of any class or classes
of shares of the Company or any other corporation, or other securities
convertible into such shares, then, as a part of such reorganization,
reclassification, merger or consolidation, appropriate adjustments shall be made
in the terms of the Warrants (or of any securities into which the Warrants are
exercised or for which the Warrants are exchanged), so that:
     (y) the Holders of Warrants or of such substitute securities shall
thereafter be entitled to receive, upon exercise of the Warrants or of such
substitute securities, the kind and amount of shares, other securities, money
and property which such Holders would have received at the time of such capital
reorganization, reclassification, merger, or consolidation, if such Holders had
exercised their Warrants immediately prior to such capital reorganization,
reclassification, merger, or consolidation, and
     (z) the Warrants or such substitute securities shall thereafter be adjusted
on terms as nearly equivalent as may be practicable to the adjustments
theretofore provided in this Section 3.3.
No consolidation or merger in which the Company is not the surviving corporation
shall be consummated unless the surviving corporation shall agree, in writing,
to the provisions of this Section 3.3. The provisions of this Section 3.3 shall
similarly apply to successive capital reorganizations, reclassifications,
mergers and consolidations.
     3.4 Other Action Affecting ADSs or Ordinary Shares. If at any time the
Company takes any action affecting ADSs or Ordinary Shares, other than an action
described in any of Sections 3.1 - 3.3 which could reasonably be expected to
have an adverse effect upon the exercise rights of the Warrants, the Warrant
Exercise Price or the kind of securities issuable upon exercise of the Warrants,
or both, shall be adjusted in such manner to be equitable in the circumstances.
No adjustment to the Warrant Exercise Price or the kind of securities issuable
upon exercise of the Warrants shall be made in respect of

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Permitted Financings (as defined in the Securities Subscription Agreement dated
as of December 29, 2005 between Issuer and Buyer).
     3.5 Notice of Adjustment Events. Whenever the Company contemplates the
occurrence of an event which would give rise to adjustments under this
Section 3, the Company shall mail to each Warrant Holder, at least 5 days prior
to the record date with respect to such event or, if no record date shall be
established, at least 5 days prior to such event, a notice specifying (i) the
nature of the contemplated event, and (ii) the date on which any such record is
to be taken for the purpose of such event, and (iii) the date on which such
event is expected to become effective, and (iv) the time, if any is to be fixed,
when the holders of record shall be entitled to exchange their ADSs or Ordinary
Shares (or other securities) for securities or other property deliverable in
connection with such event.
     3.6 Notice of Adjustments. Whenever the kind or number of securities
issuable upon exercise of the Warrants, or both, shall be adjusted pursuant to
Section 3, the Company shall deliver a certificate signed by its Chief Executive
Officer and by its Chief Financial Officer, setting forth, in reasonable detail,
the event requiring the adjustment, the amount of the adjustment, the method by
which such adjustment was calculated (including a description of the basis of
any determination hereunder), and the Warrant Exercise Price and the kind of
securities issuable upon exercise of the Warrants after giving effect to such
adjustment, and shall cause copies of such certificate to be mailed (by first
class mail postage prepaid) to each Warrant Holder promptly after each
adjustment.
     Section 4. Reservation. The Company covenants and agrees that it will at
all times have authorized, reserve and keep available, solely for issuance and
delivery upon the exercise of this Warrant, the number of Ordinary Shares
represented by ADSs from time to time issuable upon the exercise of this
Warrant. The Company further covenants and agrees that this Warrant is, and any
Warrants issued in substitution for or replacement of this Warrant and all
Warrant Shares, will upon issuance be duly authorized and validly issued and, in
the case of Ordinary Shares represented by ADSs issuable hereunder, upon
issuance will be fully paid and non-assessable and free from all preemptive
rights of any shareholder, and from all taxes, liens and charges with respect to
the issue thereof.
     Section 5. Ownership, Transfer and Substitution of Warrants.
     5.1 Ownership of Warrants. The Company may treat the person in whose name
any Warrant is registered on the register kept at the principal office of the
Company as the owner and Holder thereof for all purposes, notwithstanding any
notice to the contrary, but in all events recognizing any transfers made in
accordance with the terms of this Warrant.
     5.2 Transfer and Exchange of Warrants. Upon the surrender of any Warrant,
properly endorsed, for registration of transfer or for exchange at the principal
office of the Company, the Company at its expense will execute and deliver to
the Holder thereof, upon the order of such Holder, a new Warrant or Warrants of
like tenor, in the name of such Holder or as such Holder may direct, for such
number of ADSs with respect to each such Warrant, the aggregate number of ADSs
in any event not to exceed the number of ADSs for which the Warrant so
surrendered had not been exercised.
     5.3 REGISTRATION RIGHTS. THE HOLDER OF THIS WARRANT IS ENTITLED TO CERTAIN
REGISTRATION RIGHTS WITH RESPECT TO THE WARRANT SHARES ISSUABLE UPON EXERCISE
THEREOF. SAID REGISTRATION RIGHTS ARE SET FORTH IN A REGISTRATION RIGHTS
AGREEMENT BY AND BETWEEN THE BUYER AND THE COMPANY.
     5.4 Exemption from Registration. If an opinion of counsel provides that
registration is not required for the proposed exercise or transfer of this
Warrant or the proposed transfer of the Warrant Shares and that the proposed
exercise or transfer in the absence of registration would require the Company to
take any action including executing and filing forms or other documents with the
Securities

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and Exchange Commission (the “SEC”) or any state securities agency, or
delivering to the Holder any form or document in order to establish the right of
the Holder to effectuate the proposed exercise or transfer, the Company agrees
promptly, at its expense, to take any such action. At any time after the
registration statement contemplated in Section 4(a) of the Subscription
Agreement is declared effective by the SEC, any Warrant Shares issued to the
Holder in connection with any exercise of this Warrant shall be issued in
certificated form and shall bear no restrictive legend. At any time before the
registration statement contemplated in Section 4(a) of the Subscription
Agreement is declared effective by the SEC, any Warrant Shares issued to the
Holder in connection with any exercise of this Warrant shall be issued in
certificated form and shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY
ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID
ACT.
On the Effective Date (as defined in the Subscription Agreement), the Company
shall cause any restrictive legend on any outstanding Warrant Shares to be
removed.
     Section 6. No Rights or Liabilities as Shareholder. Nothing contained in
this Warrant shall be construed as conferring upon the Holder hereof any rights
as a shareholder of the Company or as imposing any liabilities on such holder to
purchase any securities or as a shareholder of the Company, whether such
liabilities are asserted by the Company or by creditors of the Company.
     Section 7. Rule 144 Sales. At the request of any Holder who proposes to
sell securities in compliance with Rule 144 of the SEC, the Company will
(i) forthwith furnish to such Holder a written statement of compliance with the
filing requirements of the SEC as set forth in Rule 144, as such rules may be
amended from time to time and (ii) make available to the public and such Holder
such information as will enable the Holder to make sales pursuant to Rule 144.
     Section 8. Miscellaneous.
     8.1 Amendment and Waiver. This Warrant may be amended with, and only with,
the written consent of the Company and the Holder. Any waiver of any term,
covenant, agreement or condition contained in this Warrant shall not be deemed a
waiver of any other term, covenant, agreement or condition, and any waiver of
any default in any such term, covenant, agreement or condition shall not be
deemed a waiver of any later default thereof or of any default of any other
term, covenant, agreement or condition.
     8.2 Representations and Warranties to Survive Closing. All representations,
warranties and covenants contained herein shall survive the execution and
delivery of this Warrant and the issuance of any Warrant Shares upon the
exercise hereof.
     8.3 Severability. In the event that any court or any governmental authority
or agency declares all or any part of any Section of this Warrant to be unlawful
or invalid, such unlawfulness or invalidity shall not serve to invalidate any
other Section of this Warrant, and in the event that only a

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portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
     8.4 Binding Effect; No Third Party Beneficiaries. All provisions of this
Warrant shall be binding upon and inure to the benefit of the parties and their
respective heirs, legatees, executors, administrators, legal representatives,
successors, and permitted transferees and assigns. No person other than the
holder of this Warrant and the Company shall have any legal or equitable right,
remedy or claim under or in respect of, this Warrant.
     8.5 Notices. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Trading Day after deposit with
a nationally recognized overnight delivery service, in each case properly
addressed to the party to receive the same. The addresses and facsimile numbers
for such communications shall be:
If to the Company:
Insignia Solutions plc
41300 Christy Street
Fremont, CA 94538
Telephone: 510-360-3700
Facsimile: 510-360-3701
Attention: Chief Executive Officer
With a copy to:
Fenwick & West LLP
275 Battery St.
San Francisco, CA 94111
Telephone: 415-875-2455
Facsimile: 415-281-1350
Attention: David Michaels
If to the Holder:
[Name of Holder]
[Address]
Telephone:
Facsimile:
Attention:
With a copy to:
Grushko & Mittman, P.C.
551 5th Ave., Suite 1601
NY, NY 10176
Telephone: 212-697-9500
Facsimile: 212-697-3575
Attention: Barbara Mittman

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If to the Transfer Agent:
Bank of New York
ADR Department
620 Avenue of the Americas, 6th Floor
New York, NY 10011
Telephone: 212-815-4305
Facsimile: 212-571-3050
Attention: Administrator for Insignia Solutions plc
or at such other address and/or facsimile number and/or to the attention of such
other person as the recipient party has specified by written notice given to
each other party three (3) Trading Days prior to the effectiveness of such
change. Written confirmation of receipt (A) given by the recipient of such
notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time,
date, and recipient facsimile number or (C) provided by a nationally recognized
overnight delivery service, shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery
service in accordance with clause (i), (ii) or (iii) above, respectively.
     8.6 Taxes, Costs and Expenses. The Company covenants and agrees that it
will pay when due and payable any and all United Kingdom, English, Welsh,
federal, state and local taxes (other than income taxes) and any other costs and
expenses (including any and all transfer, stamp or similar taxes) which may be
payable in respect of the preparation, issuance, delivery, exercise, or
surrender of this Warrant pursuant to the terms of this Warrant or the issuance
of any shares of Warrant Shares as a result thereof. If any suit or action is
instituted or attorneys employed to enforce this Warrant or any part thereof,
the Company promises and agrees to pay all costs and expenses associated
therewith, including reasonable attorneys’ fees and court costs.
     8.7 Governing Law; Jurisdiction; Jury Trial. The corporate laws of England
and Wales shall govern all issues concerning the relative rights of the Company
and its shareholders and the powers and capacity of the Company. All other
questions concerning the construction, validity, enforcement and interpretation
of this Warrant shall be governed by the internal laws of the State of New York,
without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause
the application of the laws of any jurisdictions other than the State of New
York. Each party hereby irrevocably submits to the exclusive jurisdiction of the
state and federal courts sitting in the City of New York, for the adjudication
of any dispute hereunder or under the other Transaction Documents or in
connection herewith or therewith, or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to assert in any
suit, action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY.
     8.8 Loss of Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of this
Warrant, and (in the case of loss, theft or destruction) of indemnification from
the Holder, and upon surrender and cancellation of this Warrant, if mutilated,
the Company shall execute and deliver a new Warrant of like tenor and date.

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     8.9 Entire Agreement. This Warrant, the Subscription Agreement and the
Registration Rights Agreement of even date herewith represent the entire
agreement and understanding between the parties concerning the subject matter
hereof and supercede all prior and contemporaneous agreements, understandings,
representations and warranties with respect thereto.
     8.10 Headings. The headings used herein are used for convenience only and
are not to be considered in construing or interpreting this Warrant.
[Signature Page Follows]

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     IN WITNESS WHEREOF, the Company has executed this Warrant as of the date
first set above.

                  INSIGNIA SOLUTIONS PLC    
 
           
 
  By:        
 
           
 
  Name:   Mark McMillan    
 
  Title:   President and Chief Executive Officer    

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WARRANT EXERCISE FORM
Date:                                         
INSIGNIA SOLUTIONS PLC
41300 Christy Street
Fremont, CA 94538-3115
Attention: Chief Financial Officer
Ladies and Gentlemen:
The undersigned, being the registered holder of your Warrant for the purchase of
                     Warrant Shares issued                      accompanying
this letter, hereby irrevocably exercises such Warrant for                     
Warrant Shares (as defined in said Warrant), and herewith makes payment therefor
[via “cash-less exercise”] in accordance with the Warrant, and requests that
such Warrant Shares be issued in the name of, and delivered to [Name of Holder]
at the address shown below the signature line hereof.
If said number of Warrant Shares shall not be all the Warrant Shares issuable
upon exercise of the attached Warrant, a new Warrant is to be issued in the name
of the undersigned for the balance remaining of such Warrant Shares.

[NAME OF HOLDER]

         
By:
       
 
       
Name:
       
 
       
Title:
       
 
       

[Name of Holder]
[Address]