Exhibit 10.87

INSIGNIA SOLUTIONS PLC

AMERICAN DEPOSITARY SHARES
PURCHASE AGREEMENT

October 18, 2004

 

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INSIGNIA SOLUTIONS PLC
AMERICAN DEPOSITARY SHARES
PURCHASE AGREEMENT

     This American Depositary Shares Purchase Agreement (the “Agreement”) is
entered into as of this 18th day of October, 2004 (the “Effective Date”) by and
between Insignia Solutions, plc, a public limited company incorporated under the
laws of England and Wales (registered number: 1961960) (the “Company”), and the
individuals and entities listed on Schedule A hereto (each a “Purchaser” and
collectively the “Purchasers”).

SECTION 1

Sale of American Depositary Shares and Warrants

     1.1 Sale of American Depositary Shares. Subject to the terms and conditions
hereof, on the Closing Date (as defined below), the Company will issue to each
Purchaser, and each Purchaser will subscribe to the Company for, that portion of
the Purchased Shares (as defined below) set forth opposite each such Purchaser’s
name on Schedule A attached hereto at the Stock Purchase Price (as defined
below). The term “Purchased Shares” shall mean an aggregate of 3,208,499
American depositary shares (“ADSs”), each ADS representing one ordinary share,
20 pence per share nominal value, of the Company (an “Ordinary Share”). The
aggregate Stock Purchase Price is $1,540,080.64. The Stock Purchase Price per
Purchased Share is seventy five percent (75%) of the average closing sale price
of the Company’s ADSs over the five trading day period ending on the trading day
prior to the Closing Date, as reported on the Nasdaq Market, provided however
that the Stock Purchase Price per Purchased Share shall be no greater than $0.48
per ADS (subject to adjustment for share subdivisions in the share capital of
the Company dividends and the like), and provided further that in no event shall
the Stock Purchase Price per Purchased Share shall be no less than the U.S.
Dollar equivalent of 20 pence per ADS.

     1.2 Issuance of Closing Date Warrants. Subject to the terms and conditions
hereof, on the Closing Date, the Company will issue warrants to purchase that
portion of the Warrant Shares (as defined below) of the Company (the “Closing
Date Warrants”), in substantially the form attached as Exhibit A hereto, to each
Purchaser as set forth opposite each such Purchaser’s name on Schedule A
attached hereto. The exercise price per Warrant Share under the Closing Date
Warrants shall be $1.06 (subject to adjustment for stock sub-divisions,
dividends and the like). The purchase price of the Closing Date Warrants shall
be $0.0001 per Warrant Share (the “Warrant Purchase Price” and together with the
Stock Purchase Price, the “Purchase Price”). The Purchased Shares and the
Warrant Shares are sometimes referred to herein as the “Securities.” The
aggregate number of shares issuable under the Closing Date Warrants is 802,127
ADSs of the Company (subject to adjustment for stock sub-divisions, dividends
and the like), which is equal to twenty five percent (25%) of the Purchased
Shares.

     1.3 Closing Date. The closing (the “Closing”) of the purchase and sale of
the Purchased Shares and the Closing Date Warrants shall be held at the offices
of Heller Ehrman/Venture Law Group, 2775 Sand Hill Road, Menlo Park, California
as soon as practical

 

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after the closing conditions in Sections 4 and 5 have been met or waived, but no
later than 1:45 p.m. on the second business day after the date of this Agreement
or as otherwise agreed between the Company and the Purchasers purchasing eighty
percent (80%) of the Purchased Shares (the date of the Closing is hereinafter
referred to as the “Closing Date”).

     1.4 Delivery. At the Closing, the Company will deliver to each Purchaser
(i) a binding and irrevocable instruction letter to the Company’s transfer agent
(Bank of New York) instructing the transfer agent to issue an American
Depositary Receipt to such Purchaser representing the Purchased Shares and (ii)
the Closing Date Warrant, against payment of the Purchase Price, by wire
transfer of immediately available funds.

     1.5 Legend. The certificate or certificates for the Securities (and any
securities issued in respect of or exchange for the Securities) shall be subject
to a legend or legends restricting transfer under the Securities Act of 1933, as
amended (the “Securities Act”) and referring to restrictions on transfer herein,
such legends to be substantially as follows:

          (a) Legend for Securities sold to Purchasers resident in the United
States:

     THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH
RULE 144 OR RULE 701 UNDER THE ACT, OR THE COMPANY RECEIVES AN OPINION OF
COUNSEL FOR THE COMPANY STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SUCH ACT.

          (b) Legend for Securities sold to Purchasers resident outside the
United States:

     THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, TRANSFERRED,
ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, THE SALE IS MADE IN ACCORDANCE WITH THE
PROVISIONS OF REGULATION S UNDER THE ACT OR ANOTHER EXEMPTION FROM REGISTRATION,
OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE COMPANY STATING THAT SUCH
SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT. HEDGING TRANSACTIONS INVOLVING
THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES
ACT.

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     The legends set forth above shall be removed and the Company shall issue a
certificate without such legends to the holder of any of the Securities upon
which it is stamped, if (a) the sale of such Security is registered under the
Securities Act, or (b) in connection with the resale of such Security, such
holder provides the Company with an opinion of counsel reasonably acceptable to
the Company, in form, substance and scope customary for opinions of counsel in
comparable transactions, to the effect that a public sale or transfer of such
Securities may be made without registration under the Securities Act, or (c) the
Security can be sold to the public pursuant to Rule 144 under the Securities Act
(“Rule 144”) and a registered broker-dealer provides to the Company a customary
broker’s Rule 144 letter, or (d) such holder provides the Company with
reasonable assurances that such Securities can be sold under Rule 144(k) of the
Securities Act. Each Purchaser agrees to sell all Securities, including those
represented by a certificate(s) from which the legends have been removed,
pursuant to an effective registration statement or under an exemption from the
registration requirements of the Securities Act.

     1.6 Independent Nature of Investors’ Obligations and Rights. The
obligations of each Purchaser under this Agreement are several and not joint
with the obligations of any other Purchaser, and no Purchaser shall be
responsible in any way for the performance of the obligations of any other
Purchaser hereunder. The decision of each Purchaser to purchase Securities
pursuant to this Agreement has been made by such Purchaser independently of any
other Purchaser. Nothing contained herein, and no action taken by any Purchaser
pursuant hereto, shall be deemed to constitute the Purchasers as a partnership,
an association, a joint venture or any other kind of entity, or create a
presumption that the Purchasers are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated hereby. Each
Purchaser acknowledges that no other Purchaser has acted as agent for such
Purchaser in connection with making its investment hereunder and that no
Purchaser will be acting as agent of such Purchaser in connection with
monitoring its investment in the Securities or enforcing its rights under this
Agreement. Each Purchaser shall be entitled to independently protect and enforce
its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary for any other Purchaser to be joined as
an additional party in any proceeding for such purpose.

SECTION 2

Representations and Warranties of the Company

     The Company hereby represents and warrants to each Purchaser that, except
as set forth on a Disclosure Schedule delivered to the Purchasers prior to the
date of this Agreement, as of the Effective Date, the following representations
are true and complete as of the Closing Date. For purposes of these
representations and warranties, the term the “Company” shall include the
following operating subsidiaries of the Company: Insignia Solutions Inc., a
Delaware corporation, Insignia Solutions International Limited., organized under
the laws of England and Wales and Insignia Solutions France SARL, organized
under the laws of France.

     2.1 Organization. The Company is a corporation duly organized and validly
existing under its jurisdiction of incorporation. The Company has the requisite
corporate power and authority to own its properties, and to carry on its
business as presently conducted. The

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Company is qualified to do business as a foreign corporation in each
jurisdiction in which the ownership of its property or the nature of its
business requires such qualification, except where failure to so qualify would
not have a materially adverse effect on the Company. Except as listed on the
Disclosure Schedule, the Company has no subsidiaries or equity interest in any
other entity. Each of the Company’s subsidiaries is wholly-owned by Insignia
Solutions, plc, duly organized and validly existing under the laws of the
jurisdiction of its incorporation, except where such failure does not have a
materially adverse effect on the Company.

     2.2 Share Capital. The authorized share capital of Insignia Solutions, plc
consists of: (i) 75,000,000 Ordinary Shares, of which at October 4, 2004,
29,403,396 shares are issued and outstanding, of which 28,575,189 shares are
represented by ADSs, and 828,207 shares are Ordinary Shares in certificated
form, and (ii) 3,000,000 Preferred Shares with an amount paid up per share
liquidation preference, of which as of the date hereof, no shares are issued and
outstanding. Of the unissued Ordinary Shares, 8,572,071shares are reserved for
issuance pursuant to the Company’s share option plans, of which approximately
4,370,113 shares are issuable pursuant to outstanding options and 3,026,966
remain available for future grants. In addition, 334,799 shares are available
for future grants pursuant to the Company’s 1995 Employee Share Purchase Plan.
Also, 1,151,394 shares are reserved for issuance pursuant to warrants, notes and
other convertible or exercisable securities (other than share options issued
pursuant to the Company’s share option plans). All issued shares have been
validly issued and are fully paid. Except as disclosed in the Disclosure
Schedule, there are no other options, warrants, conversion privileges or other
contractual rights presently outstanding to purchase or otherwise acquire any
shares of the Company’s share capital or other securities other than pursuant to
the Company’s stock plans. There are no preemptive rights or rights of first
refusal or similar rights with respect to the issuance and sale of the
Securities.

     2.3 Authorization. The Company has full corporate power and authority to
enter into and perform this Agreement, the Warrants and the Registration Rights
Agreement to be executed by it substantially in the form attached hereto as
Exhibit B (the “Registration Rights Agreement,” and collectively with this
Agreement and the Warrants (the “Transaction Documents”). The Transaction
Documents have been duly authorized, executed and delivered by the Company and
constitute legal, valid and binding obligations of the Company enforceable in
accordance with their respective terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of debtors and rules of law
governing specific performance, injunctive relief or other equitable remedies,
and to limitations of public policy and English law as they may apply to the
indemnification and contribution obligations pursuant to Section 1.7 of the
Registration Rights Agreement.

     2.4 Valid Issuance. The Purchased Shares, Warrants and Warrant Shares are
duly authorized, and when issued, in accordance with the terms of the
Transaction Documents: (i) will be duly and validly issued, fully paid and free
and clear of any taxes, liens, claims, preemptive or similar rights or
encumbrances imposed by or through the Company (except with respect to the
Company’s obligation to notify the Inland Revenue in the United Kingdom of the
issue of ADSs pursuant to section 68 of the United Kingdom Finance Act 1986);
(ii) based in part upon the representations of the Purchasers in this Agreement,
will be issued, sold and delivered in

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compliance with all applicable federal and state securities laws; and (iii) the
holders of the Purchased Shares (and upon payment of the aggregate Exercise
Price (as defined in the Warrants), the Warrant Shares) will be entitled to all
the rights, preferences and privileges of the Company’s ADSs. The Company has
sufficient authorized but unissued share capital out of which it will be able to
allot and issue the Warrant Shares at such time as the Warrants are exercised.

     2.5 No Conflict. Except as disclosed in the Disclosure Schedule, the
execution and delivery of the Transaction Documents do not, and the consummation
of the transactions contemplated hereby and thereby will not, conflict with, or
result in any violation of, breach or default (with or without notice or lapse
of time, or both), or give rise to a right of termination, cancellation or
acceleration of any obligation or to a loss of a material benefit, under, any
provision of the Articles of Association or the Memorandum of Association or any
material agreement attached as an exhibit to the Company’s SEC Documents (as
defined below), or any judgment, order, decree, statute, law, or ordinance
applicable to the Company, its properties or assets, which conflict, violation,
default or right would have a material adverse effect on the business,
properties, prospects, financial condition or operations of the Company.

     2.6 SEC Documents. Except as disclosed in the Disclosure Schedule, the
Company has filed with the Securities and Exchange Commission (the “SEC”): (i)
the Company’s Annual Report on Form 10-K for the year ended December 31, 2003,
(ii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 2004 and
June 30, 2004, (iii) the Company’s Proxy Statement for the 2004 Annual Meeting
of Stockholders, and (iv) all Current Reports on Form 8-K required to be filed
by the Company with the Commission since December 31, 2003, copies of which have
been made available to the Purchasers (the “SEC Documents”). The SEC Documents
have been timely filed, were in substantial compliance with the requirements of
their respective forms when filed, were complete and correct in all material
respects as of the dates at which the information was furnished, and contained
(as of such dates) no untrue statement of a material fact nor omitted to state a
material fact necessary in order to make the statements made therein in light of
the circumstances in which made not misleading; provided however that any
information set forth in any SEC Document that is a forward-looking statement as
defined in Rule 175(c) promulgated by the SEC under the Securities Act shall not
be deemed to contain an untrue statement of material fact as long as such
forward-looking statement was made at the time with a reasonable basis and in
good faith. Any statements made in any such SEC Documents that are or were
required to be updated or amended under applicable law have been so updated or
amended.

     2.7 Governmental Consents, etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Company is required in connection with the valid execution and delivery
of the Transaction Documents, or the consummation of any other transaction
contemplated hereby and thereby, except (i) such filings as may be required for
purposes of effecting compliance with the securities and blue sky laws in the
states in which the Securities are offered and/or sold (which compliance will be
effected in accordance with such laws), and (ii) the Company’s obligation to
notify the Inland Revenue in the United Kingdom of the issue of the ADSs
pursuant to Section 68 of the United Kingdom Act 1986.

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     2.8 Litigation. Other than as set forth in the SEC Documents, there is no
action, suit, proceeding, claim, arbitration or investigation pending or as to
which the Company has received any notice of assertion against the Company,
which could reasonably be expected to result in a material adverse effect on the
business, properties, prospects, financial condition or operations of the
Company.

     2.9 No Material Change. Except as disclosed on the Disclosure Schedule,
since June 30, 2004, the Company has not incurred any material liabilities or
obligations, direct or contingent, nor has the Company bought back any of its
share capital, nor paid or declared any dividends or entered into any
transactions not in the ordinary course of business; and there has been no
change in the capital stock or consolidated long term debt or short term
obligations (other than in the ordinary course) of the Company or a material
adverse change in the business, properties, prospects, financial condition or
operations of the Company; provided, however that changes in the ordinary course
of business consistent with past practices, including but not limited to the use
of cash, variances in revenue and increases in liabilities in the ordinary
course of business consistent with past practices, shall not be deemed to be a
material adverse change.

     2.10 No Material Default. The Company (a) is not in violation of or default
under any provision of its Articles of Association or Memorandum of Association,
and (b) is not in violation of or default in any material respect under any
provision of (i) any federal or state judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to the Company, or (ii) any material
agreement attached as an exhibit to the SEC Documents, except such violations or
defaults as would not alone or in the aggregate have a material adverse effect
on the business, properties, prospects, financial condition or operations of the
Company.

     2.11 Disclosure. No representation or warranty of the Company contained in
this Agreement, the exhibits attached hereto or the SEC Documents, as updated by
the Disclosure Schedule dated concurrently herewith (when read together and
taken as a whole), contains any untrue statement of a material fact or omits to
state a material fact necessary in order to make the statements contained herein
or therein in light of the circumstances under which they were made not
misleading.

     2.12 Solicitation. Neither the Company nor any of its subsidiaries or
affiliates, nor any person acting on its or their behalf, (i) has engaged in any
form of general solicitation or general advertising (within the meaning of
Regulation D) in connection with the offer or sale of the Securities or (ii)
has, directly or indirectly, made any offers or sales of any security or
solicited any offers to buy any security, under any circumstances that would
require registration of the Securities under the Securities Act.

     2.13 Intellectual Property Rights. The Company owns or possesses adequate
rights or licenses to use all material trademarks, trade names, service marks,
service mark registrations, service names, patents, patent rights, copyrights,
inventions, licenses, trade secrets and other intellectual property rights
necessary to conduct its business as now conducted (the “Intellectual Property
Rights”). Except as set forth in the Disclosure Schedule, none of the Company’s
Intellectual Property Rights have expired or been terminated. The Company does
not have any knowledge of any infringement by the Company of any material
Intellectual Property Rights of

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others, and, except as set forth on the Disclosure Schedule, there is no claim,
action or proceeding being made or brought against, or to the Company’s
knowledge, being threatened against, the Company regarding any third party
Intellectual Property Rights, which could reasonably be expected to have a
material adverse effect on the business, properties, prospects, financial
condition or operations of the Company. Each employee, consultant and officer of
the Company has executed an agreement with the Company regarding confidentiality
and proprietary information substantially in the form or forms delivered to the
counsel for the Purchasers, which the Company believes contains provisions that
are sufficient to protect the confidentiality of all technical information
developed by and belonging to the Company. The Company is not aware that any of
its employees or consultants is in violation thereof. The Company is not aware
that any of its employees is obligated under any contract (including licenses,
covenants or commitments of any nature) or other agreement, or subject to any
judgment, decree or order of any court or administrative agency, that would
interfere with the use of such employee’s best efforts to promote the interest
of the Company or that would conflict with the Company’s business.

     2.14 Eligibility to Use Form S-3. The Company is currently eligible to use
Form S-3 for the registration of the Securities.

     2.15 Company not an “Investment Company”. The Company is not, and
immediately after receipt of payment for the Shares will not be, an “investment
company” or an entity “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940.

     2.16 NASDAQ Compliance. The Company’s ADSs are listed on The Nasdaq
SmallCap Market (the “Nasdaq SmallCap Market”). Except as disclosed in the
Disclosure Schedule, the Company is currently in material compliance with the
listing and maintenance requirements for continued listing of the ADSs on the
Nasdaq SmallCap Market

     2.17 Questionable Payments. Neither the Company nor, to the knowledge of
the Company, any of its current or former directors or officers, has on behalf
of the Company or in connection with its business: (a) used any corporate funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity; (b) made any direct or indirect unlawful
payments to any governmental officials or employees from corporate funds; (c)
made any fictitious entries on the books and records of the Company; or (d) made
any unlawful bribe, rebate, payoff, influence payment, kickback or other
unlawful payment of any nature.

     2.18 Registration Rights. Except as may be described in, or filed as
exhibits to, the SEC Documents, the Company has not granted or agreed to grant
to any person any rights (including “piggy-back” registration rights) to have
any securities of the Company registered with the SEC or any other governmental
authority which have not be satisfied.

     2.19 Insurance. The Company maintains insurance with financially sound and
reputable insurers in such amounts and covering such risks as is reasonably
adequate and consistent with industry practice for the conduct of its business
and the value of its property, all

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of which insurance is in full force and effect. The Company has not received
notice from any insurer that has issued any insurance policy to the Company that
such insurer intends to deny coverage under or cancel, discontinue or not renew
any insurance policy presently in force.

     2.20 No Additional Agreements. The Company does not have any agreement or
understanding with any Purchaser with respect to the transactions contemplated
by this Agreement other than as specified in this Agreement.

     2.21 Governmental Authorizations. The Company has all permits, licenses and
other authorizations of governmental authorities that are required for the
conduct of its business and operations as presently conducted, the lack of which
could materially and adversely affect the assets, financial condition, business
prospects or operations of the Company. The Company is in material compliance
with the provisions of its material permits, licenses and other governmental
authorizations.

SECTION 3

Representations and Warranties of the Purchasers

     Each Purchaser hereby represents and warrants to the Company as follows as
of the Effective Date:

     3.1 Investment. The Purchaser is acquiring the Securities and the Warrant
for its own account, not as a nominee or agent and with no present intention of
selling or otherwise distributing any of the Securities. Purchaser understands
that, except as provided in the Registration Rights Agreement, the Securities
purchased by the Purchaser from the Company pursuant to this Agreement have not
been, and will not be, registered under the Securities Act by reason of a
specific exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the Purchaser’s
investment intent and the accuracy of the Purchaser’s representations as
expressed herein. Notwithstanding the foregoing, the Company acknowledges that
Purchaser does not commit to hold the Securities or the Warrant for any minimum
period of time, and that sales of such Securities or Warrant may be made any at
time pursuant to valid registration or exemption under the Securities Act.

     3.2 Accredited Investor. The Purchaser is an “accredited investor” as
defined by Rule 501(a) of the Securities Act. The SEC Documents have been made
available to the Purchaser. The Purchaser has such business and financial
experience as is required to give it the capacity to protect its own interests
in connection with the purchase of the Securities.

     3.3 Financial Services and Markets Act 2000 (Financial Promotion) Order
2001 (S12001/1335), as amended, (“FPO”). To the extent that the Purchaser is a
resident of the United Kingdom or would otherwise be subject to the Financial
Services and Markets Act 2000, the Purchaser is either a person of a kind
described in Article 19 (Investment Professionals), Article 49 (High Net Worth
Companies, Unincorporated Association etc) and/or Article 50 (Sophisticated
Investors) of FPO, as presently in effect.

     3.4 Authority. The Transaction Documents have been duly executed and
delivered

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by the Purchaser and constitute legal, valid and binding obligations of the
Purchaser, enforceable in accordance with their respective terms, subject to
laws of general application relating to bankruptcy, insolvency and the relief of
debtors and rules of law governing specific performance, injunctive relief or
other equitable remedies, and to limitations of public policy. The execution and
delivery of the Transaction Documents do not, and the consummation of the
transactions contemplated hereby and thereby will not, conflict with or result
in any violation of any obligation under any judgment, order, decree, statute,
law, ordinance, rule or regulation applicable to the Purchaser.

     3.5 Government Consents, etc. No consent, approval or authorization of or
designation, declaration or filing with any governmental authority on the part
of the Purchaser is required in connection with the valid execution and delivery
of this Agreement, or the offer, sale or issuance of the Securities, or the
consummation of any other transaction contemplated hereby other than those
filings required the Exchange Act.

     3.6 Investigation. The Purchaser has had a reasonable opportunity to
discuss the Company’s business, management and financial affairs with the
Company’s management.

     3.7 Stock Ownership. Except as disclosed in a letter attesting to the
number of shares held by such Purchaser, which letter shall be signed by such
Purchaser and delivered to the Company prior to the Closing, neither the
Purchaser nor any group of which it is a member or to which it is related or
with which it is affiliated, beneficially owns (including the right to acquire
or vote) any securities of the Company as of the date hereof.

     3.8 Consent to Disclosure. Purchaser understands that the name and address
of such Purchaser as provided to Nash Fitzwilliams Ltd (“NFL”) will be included
on the Schedule of Purchasers attached as Schedule A hereto, and will be
publicly filed with the Securities and Exchange Commission. Such information
will also be publicly filed in connection with the Registration Statement, as
defined in the Registration Rights Agreement. To the extent such Purchaser is a
resident of the European Community, such Purchaser hereby consents to such
disclosure and processing in accordance with the Data Protection Act of 1998 of
the United Kingdom of England and Wales: (A) in connection with (i) its purchase
of Shares and Warrants; (ii) the issuance of a certificate representing the
Shares and Warrants in the name of such Purchaser and (iii) the Company’s
obligation to deliver to such Purchaser any notices and other communications
that may be required by the terms of this Agreement or otherwise; (B) as may be
required by law or other regulatory body.

     3.9 Regulation S Representations. If the Purchaser’s address as listed on
Schedule A hereto is an address outside of the United States, such Purchaser
(i) represents that such Purchaser is not a “U.S. person,” as defined under
Regulation S of the Securities Act (a “U.S. Person”), and is not acquiring the
Securities or the Warrant (or the shares issuable on exercise of the Warrant)
for the account or benefit of a U.S. Person, (ii) agrees to resell the
Securities and the shares issuable on exercise of the Warrant only (a) in
accordance with the provisions of Regulation S, (b) pursuant to registration
under the Securities Act, or (c) pursuant to an available exemption from
registration, and (iii) agrees not to engage in hedging transactions with regard
to

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the Securities and the shares issuable on exercise of the Warrant unless in
compliance with the Securities Act.

SECTION 4

Conditions to Obligations of the Purchasers

     The obligations of each Purchaser to the Company under this Agreement are
subject to the fulfillment, on or before the Closing, of each of the following
conditions, unless otherwise waived by such Purchaser:

     4.1 Representations and Warranties Correct. The representations and
warranties made by the Company in Section 2 shall be true and correct in all
material respects when made and on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
the Closing Date.

     4.2 Covenants. All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with in all material respects.

     4.3 No Action, Etc. Pending. There shall not at Closing be in effect any
action, order, or other proceeding, preventing, enjoining or otherwise
restraining the transactions contemplated by this Agreement.

     4.4 Compliance Certificate. The Company shall have delivered to the
Purchasers a certificate substantially in the form attached hereto as Exhibit C
executed by a duly authorized officer, dated the Closing Date, certifying to the
fulfillment of the conditions specified in Sections 4.1 and 4.2 and certifying
that, since the date of the Company’s most recent filing with the SEC, there has
not been any material adverse change in the business, properties, prospects,
financial condition or operations of the Company; provided, however that changes
in the ordinary course of business consistent with past practices, including but
not limited to the use of cash, variance in revenues, and increases in
liabilities in the ordinary course of business consistent with past practices,
shall not be deemed to be a material adverse change.

     4.5 Related Agreements. On or before the Closing, the Company and the
Purchasers shall have executed and delivered counterparts of the Registration
Rights Agreement in the form attached hereto as Exhibit B.

     4.6 Legal Opinion. The Purchasers shall have received a legal opinion from
Heller Ehrman White & McAuliffe LLP, counsel to the Company, in substantially
the form attached as Exhibit 4.6.

     4.7 Minimum Investment. The Company shall receive a minimum of $ 1,000,000
of aggregate purchase price in connection with the Closing (excluding
commissions, fees and expenses payable in connection with the Closing).

-10-

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     4.8 Listing. Promptly after the Closing, the Company shall file a Notice of
Listing Additional Shares with respect to the listing of the Shares on the
Nasdaq SmallCap Market.

SECTION 5

Conditions to Obligations of the Company

     The obligations of the Company under this Agreement are subject to the
fulfillment on or prior to the Closing of each of the following conditions,
unless otherwise waived by the Company:

     5.1 Representations and Warranties Correct. The representations and
warranties made by the Purchasers in Section 3 hereof shall be true and correct
in all material respects when made and on and as of the Closing Date with the
same effect as though such representations and warranties had been made on and
as of the Closing Date.

     5.2 Performance. All covenants, agreements and conditions contained in this
Agreement to be performed by the Purchaser on or prior to the Closing Date shall
have been performed or complied with in all material respects.

     5.3 No Action, Etc. Pending. There shall not at Closing be in effect any
action, order or other proceeding, preventing, enjoining or otherwise
restraining the transactions contemplated by this Agreement.

     5.4 Counterpart Signatures. All parties to the Transaction Documents other
than the Company shall have executed and delivered their signature pages to the
Transaction Documents to the Company.

SECTION 6

Post-Closing Covenants of the Company

     6.1 Monthly Penalty Warrants. If the Registration Statement on Form S-3
(the “Registration Statement”) contemplated in the Registration Rights Agreement
has not been declared effective by the Securities and Exchange Agreement before
the date that is ninety (90) days after the Closing Date (the “Effectiveness
Deadline”), the Company will issue on the Effectiveness Deadline to each of the
Purchasers a warrant (a “Monthly Penalty Warrant”) to purchase ADSs equal to 1%
of the shares purchased by such Purchaser at the Closing pursuant to
Section 1.1, as set forth on Schedule A hereto. If the Registration Statement
has not been declared effective before the one month anniversary of the
Effectiveness Deadline, the Company will issue on the monthly anniversary of the
Effectiveness Deadline to each Purchaser an additional Monthly Penalty Warrant
to purchase ADSs equal to 1% of the shares purchased by such Purchaser at the
Closing pursuant to Section 1.1, as set forth on Schedule A hereto, and provided
further that the Company will issue an additional Monthly Penalty Warrant to
each Purchaser on each subsequent monthly anniversary of the Effectiveness
Deadline, if the Registration Statement has not been declared effective before
such monthly anniversary of the Effectiveness Deadline. The exercise price for
the shares underlying each Monthly Penalty

-11-

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Warrant shall be the greater of: (i) 110% of the 5-day average closing sale
price ending on the day prior to the Closing Date or (ii) 110% of the 5-day
average closing sale price ending on the day prior to the issuance date of the
applicable Monthly Penalty Warrant, provided however that the exercise price for
the shares underlying the Monthly Penalty Warrants shall never be less than the
U.S. Dollar equivalent of 20 pence per ADS, calculated by reference to the
average currency conversion rate quoted by the Bank of America in London as the
price for Pounds Sterling purchased with U.S. Dollars prevailing at the date the
Monthly Penalty Warrant is exercised. Notwithstanding any provision hereof to
the contrary, the Company shall not be required or permitted to issue any
ordinary shares as part of the Monthly Penalty Warrants (or have its transfer
agent or depositary issue any ADSs), if such issuance would breach the Company’s
obligations under the United Kingdom Companies Act 1985. Furthermore, the number
of ADS and/or underlying shares to be issued upon exercise of all or any of the
Monthly Penalty Warrants shall not exceed in the aggregate 192,522 shares.

     6.2 Securities Law Disclosure; Publicity. The Company shall, (a) at or
prior to 8:30 a.m., Eastern Standard Time, on the first day following the
Closing Date on which trading occurs on the Nasdaq SmallCap Market (a “trading
day”), issue a press release reasonably acceptable to Purchasers, disclosing the
transactions contemplated hereby, and (b) on or before the second trading day
following the Closing file a Current Report on Form 8-K with the SEC (the “8-K
Filing”) describing the transactions contemplated hereby and including this
Agreement and the form of Warrant as exhibits thereto, in the form required by
the Exchange Act. Notwithstanding the foregoing, the Company shall not publicly
disclose the name of any Purchaser, or include the name of any Purchaser in any
filing with the SEC (other than pursuant to the Registration Statement and
exhibits to the 8-K Filing and other periodic filings made by the Company under
the Exchange Act) or the NASD (other than pursuant to an application for the
listing of the Shares on the Nasdaq SmallCap Market), without the prior written
consent of such Purchaser, except to the extent such disclosure is required by
law or NASD regulations, in which case the Company shall provide the Purchasers
with prior notice of such disclosure.

     6.3 Right of First Offer. If during the six months after the closing of
this Agreement (the “Restricted Period”) the Company proposes to offer any
shares other than (1) in connection with any future grant of options, warrants
or the issuance of additional securities to employees, officers, directors or
consultants of the Company pursuant to a stock option plan or stock purchase
plan duly adopted by the Company’s board of directors and in effect on the date
hereof, or in respect of the issuance of the Company’s Common Stock upon
exercise of any such securities, (2) in connection with the exercise of warrants
or other convertible securities that are outstanding as of the date of this
Agreement, (3) in connection with a bona fide joint venture or development
agreement or strategic partnership, the primary purpose of which is not to raise
equity capital, (4) in connection with bona fide acquisitions, mergers or
similar transactions, the terms of which are approved by the Board of Directors
of the Corporation, or (5) pursuant to that certain Securities Subscription
Agreement between the Company and Fusion Capital Fund II, LLC, as may be
amended(“RFO Shares”) the Company shall first make an offering of such RFO
Shares to each Purchaser in accordance with the following provisions:

          (a) The Company shall deliver a notice (the “RFO Notice”) to the
Purchasers stating (i) its bona fide intention to offer such RFO Shares, (ii)
the number of such RFO Shares

-12-

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to be offered, and (iii) the price and terms, if any, upon which it proposes to
offer such RFO Shares.

          (b) Within 5 calendar days after delivery of the RFO Notice, the
Purchaser may elect to purchase for cash, at the price and on the terms
specified in the RFO Notice, up to that portion of such RFO Shares which equals
the product of: 1) the number of Purchased Shares purchased and then held by
such Purchaser divided by the total number of Purchased Shares, multiplied by 2)
the aggregate Stock Purchase Price divided by the proposed aggregate purchase
price of the RFO Shares. Such purchase shall be completed at the same closing as
that of any third party purchasers or at an additional closing thereunder.

          (c) The Company may, following the expiration of the period provided
in subsection 6.3(b) hereof, offer the remaining unsubscribed portion of the RFO
Shares to any person or persons at a price not less than, and upon terms no more
favorable to the offeree than those specified in the RFO Notice.

     6.4 Price Protection. If during the Restricted Period the Company closes a
sale of RFO Shares, in which the per share purchase price of the RFO Shares is
less than the Stock Purchase Price per Purchased Share, then, subject to and
contingent upon the Company’s receipt of the requisite shareholder approval
needed in order to ensure that the shares issued under this Section 6.4 do not
result in a violation of Nasdaq Rule 4350(i)(1)(D) or of the Companies Act 1985
and the Company’s Articles of Association, the Company will issue each Purchaser
credited as fully paid up at par by capitalization of the Company’s share
premium account that number of Ordinary Shares in the capital of the Company,
represented by ADSs (the “Price Protection Shares”) such that the quotient of
(i) such Purchaser’s aggregate Purchase Price for Purchased Shares as listed on
Exhibit A hereto divided by (ii) the sum of such Purchaser’s Purchased Shares as
listed on Exhibit A hereto plus such Purchaser’s additional Price Protection
Shares, equals the purchase price per share of the RFO Shares.

     6.5 Use of Proceeds. The proceeds of the sale of the Common Shares and the
Warrants hereunder shall be used by the Company for working capital and general
corporate purposes.

SECTION 7

Miscellaneous

     7.1 Governing Law. This Agreement and all acts and transactions pursuant
hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.

     7.2 Filings. The parties shall consult and fully cooperate with and provide
assistance to each other in preparing and filing as soon as practicable all
consents, approvals and authorizations reasonably necessary or advisable to be
made or obtained from any third-party or governmental agency in order to
consummate the transactions contemplated hereby.

-13-

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     7.3 Successors and Assigns. Neither party may assign its rights or
obligations under this Agreement, except with the prior written consent of the
other party. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their permitted successors and assigns. The provisions
hereof shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties to this Agreement.

     7.4 Entire Agreement; Amendment. This Agreement, the Warrants, the
Registration Rights Agreement and the other documents delivered pursuant hereto
or contemplated hereby constitute the full and entire understanding and
agreement between the parties with regard to the subject matter hereof and
thereof and supersede all prior agreements and understandings among the parties
relating to the subject matter hereof. Any term of this Agreement may be amended
or waived only with the written consent of the Company and the Purchasers
holding 80% of the Purchased Shares. Any amendment or waiver effected in
accordance with this Section 7.4 shall be binding upon the Purchasers and each
transferee of the Securities, each future holder of all such Securities, and the
Company.

     7.5 Notices and Dates. Unless otherwise provided herein, any notice
required or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier and
addressed to the party to be notified at such party’s address as set forth
below, or to the Company at its address specified on its signature page hereto,
or as subsequently modified by written notice. In the event that any date
provided for in this Agreement falls on a Saturday, Sunday or legal holiday,
such date shall be deemed extended to the next business day.

                  If to the Company:    
 
                    Insignia Solutions plc
41300 Christy Street
Fremont, CA 94538

      Telephone:   510-360-3700

      Facsimile:   510-360-3702

      Attention:   Chief Financial Officer
 
                With a copy to:    
 
                    Heller Ehrman/Venture Law Group
2775 Sand Hill Road
Menlo Park, CA 94025

      Telephone:   650-854-4488

      Facsimile:   650-324 0638

      Attention:   Laurel Finch
 
                If to Purchasers:   to the address listed on Schedule A for each
Purchaser
 
                And with a copy to:   Nash Fitzwilliams, Ltd.

          31 Old Burlington Street

          London, W1S 3AS

-14-

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  Tel: 011(44)(0)20 7851 7303

  Fax: 011(44)(0)20 7851 7301

     7.7 Brokers.

          (a) Other than Nash Fitzwilliams Ltd. (“Nash Fitzwilliams”) the
Company has not engaged, consented to or authorized any broker, finder or
intermediary to act on its behalf, directly or indirectly, as a broker, finder
or intermediary in connection with the transactions contemplated by this
Agreement. The Company hereby agrees to indemnify and hold harmless the
Purchasers from and against all fees, commissions or other payments owing to any
party acting on behalf of the Company hereunder other than Nash Fitzwilliams.

          (b) No Purchaser has engaged, consented to or authorized any broker,
finder or intermediary to act on its behalf, directly or indirectly, as a
broker, finder or intermediary in connection with the transactions contemplated
by this Agreement. Each Purchaser hereby agrees to indemnify and hold harmless
the Company from and against all fees, commissions or other payments owing to
any party acting on behalf of the Purchaser hereunder.

     7.8 Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

     7.9 Costs and Expenses. Each party hereto shall pay its own costs and
expenses incurred in connection herewith, including the fees of its counsel,
auditors and other representatives, whether or not the transactions contemplated
herein are consummated.

     7.10 No Third Party Rights. Nothing in this Agreement shall create or be
deemed to create any rights in any person or entity not a party to this
Agreement.

     7.11 Publicity. The Purchasers and the Company shall not issue any public
statement concerning the transactions contemplated by this Agreement and naming
the parties therein without the reasonable prior written consent of the parties
named in such public statement; provided, however, that the parties may disclose
the transaction or the terms hereof or thereof from time to time without the
approval of the party whose name is disclosed if (i) such approval has been
requested and not received and such party concludes (after consulting with
counsel) that it is required by law to disclose the transaction or the terms
thereof or (ii) to the extent that similar disclosure has been previously
approved pursuant to this Section 7.11.

     7.12 Captions and Headings. The captions and headings used herein are for
convenience and ease of reference only and are not intended to be a part of or
to affect the meaning or interpretation of this Agreement.

     7.13 Counterparts. This Agreement may be executed in counterparts, and each
such counterpart shall be deemed an original for all purposes.

[Signature Pages Follow]

-15-

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

              INSIGNIA SOLUTIONS, PLC
 
       

  By:    

     

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  Its:    

     

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SIGNATURE PAGE TO AMERICAN DEPOSITARY SHARES PURCHASE AGREEMENT

 

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

                 

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  By:                

--------------------------------------------------------------------------------

      Name:    

         

--------------------------------------------------------------------------------

      Title:    

         

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SIGNATURE PAGE TO AMERICAN DEPOSITARY SHARES PURCHASE AGREEMENT

 

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SCHEDULE A
SCHEDULE OF PURCHASERS

                                                              Monthly Penalty
Name and Address of Purchaser

--------------------------------------------------------------------------------

  Purchase Price

--------------------------------------------------------------------------------

  Purchased Shares

--------------------------------------------------------------------------------

  Closing Date Warrant Shares

--------------------------------------------------------------------------------

  Warrant Shares

--------------------------------------------------------------------------------

Hare & Co.
  $ 100,000       208,333       52,083       2,083  
C/O Finsbury Technology Trust
                               
Close Finsbury Asset Management
                               
10 Crown Place
                               
London EC2A 4BT
                               
UK
                               
Mark Glatman
  $ 45,000       93,750       23,438       938  
c/o Abstract Securities Ltd. Queens House 34 Wellington Street
                               
Leeds LS1 2DE UK
                               
John Kirkland
  $ 45,000       93,750       23,438       938  
c/o Bowmer & Kirkland
                               
High Edge Court
                               
Heage Belper
                               
Derbyshire DE56 2BW
                               
UK
                               
Willbro Nominees
  $ 10,000       20,833       5,208       208  
C/o William de Broe
                               
6 Broadgate
                               
London EC2M 2RP
                               
UK
                               
Attention: Terry Davis
                               
Intercontinental Services Limited
  $ 25,000       52,083       13,021       521  
c/o Pinnacle Trustees
                               
1 Britannia Place
                               
Bath St
                               
St Helier
                               
Jersey, JE2 4SU
                               
UK
                               
Attn: Jodie Gray
                               
Paul Ensor
  $ 10,000       20,833       5,208       208  
1 Hampstead Hill Mansions
                               
Downshire Hill
                               
London, NW3 1NY
                               
UK
                               

 

--------------------------------------------------------------------------------

 

                                                              Monthly Penalty
Name and Address of Purchaser

--------------------------------------------------------------------------------

  Purchase Price

--------------------------------------------------------------------------------

  Purchased Shares

--------------------------------------------------------------------------------

  Closing Date Warrant Shares

--------------------------------------------------------------------------------

  Warrant Shares

--------------------------------------------------------------------------------

Mrs. Katherine Meadows
  $ 300,000       625,000       156,250       6,250  
Stanford Wood
                               
Tutts Clump
                               
Bradfield
                               
Berks RG7 6JU
                               
UK
                               
Tony Fitzgerald
  $ 25,000       52,083       13,021       521  
91 Myrtle Avenue
                               
Millburn, New Jersey 07041
                               
USA
                               
Tameen Auchi
  $ 20,000       41,667       10,417       417  
Dijla
                               
Coombe Park
                               
Kingston upon Thames
                               
Surrey KT2 7JB
                               
UK
                               
Boston Fidelity Corporation
  $ 100,000       208,333       52,083       2,083  
3rd Floor, Windsor House
                               
55 St. James Street
                               
London SW1A 1LA
                               
UK
                               
Attention: Lindsay Sanford
                               
Vince and Rosemary Pino
  $ 100,000       208,333       52,083       2,083  
31441 Island Drive
                               
Evergreen, CO 80439
                               
USA
                               
Michael Pino
  $ 50,000.16       104,167       26,042       1,042  
31441 Island Drive
                               
Evergreen, CO 80439
                               
USA
                               
Tiffany Pino
  $ 50,000.16       104,167       26,042       1,042  
31441 Island Drive
                               
Evergreen, CO 80439
                               
USA
                               
Richard Zehner,Barbara Zehner
  $ 225,000       468,750       117,188       4,688  
co-trustee, Zehner
                               
Family Trust dated
                               
01/15/99
                               
2 Oceancrest
                               
Newport Coast , CA 92657
                               
USA
                               
Mark McMillan
  $ 25,000       52,083       13,021       521  
23496 Belaire Court
                               
Los Gatos, CA 95033
                               
USA
                               

-2-

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                                                              Monthly Penalty
Name and Address of Purchaser

--------------------------------------------------------------------------------

  Purchase Price

--------------------------------------------------------------------------------

  Purchased Shares

--------------------------------------------------------------------------------

  Closing Date Warrant Shares

--------------------------------------------------------------------------------

  Warrant Shares

--------------------------------------------------------------------------------

Robert Waley Cohen
  $ 50,000.16       104,167       26,042       1,042  
18 Gilston Road
London SW10 9SR
UK
                               
Christopher Harding
  $ 5,040       10,500       2,625       105  
C/O Nomura International plc
Nomuras House
1 St Martin’s- le-Grande
London, EC1A 4 NP
UK
                               
Novelstack Ltd
  $ 5,040       10,500       2,625       105  
C/O W H Ireland Limited
24 Bennetts Hill
Birmingham B25 DP
UK
                               
Basso Multi-Strategy Holding Fund Ltd
  $ 115,500       240,625       60,156       2,406  
1266 East Main Street
Stamford, CT 06902
USA
                               
Basso Equity Opportunity Holding Fund Ltd
  $ 34,500       71,875       17,969       719  
1266 East Main Street
Stamford, CT 06902
USA
                               
SRG Capital, LLC
  $ 150,000       312,500       78,125       3,125  
120 Broadway
40th Floor
New York, New York 10003
USA
                               
Marcus Edwards-Jones
  $ 50,000.16       104,167       26,042       1,042  
C.S.S.P. Dame 63 Aiola
52044 Cortona
Italy
                               
Total
  $ 1,540,080.64       3,208,499       802,127       32,087  

-3-

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EXHIBIT A

CLOSING DATE WARRANT

-4-

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EXHIBIT B

REGISTRATION RIGHTS AGREEMENT

-5-

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EXHIBIT C

INSIGNIA SOLUTIONS, PLC

COMPLIANCE CERTIFICATE

     The undersigned, Mark McMillan, hereby certifies as follows:

     1. The undersigned is the duly elected President and Chief Executive
Officer of Insignia Solutions, plc., a public limited company incorporated under
the laws of England and Wales (registered number: 1961960) (the “Company”).

     2. The representations and warranties of the Company set forth in Section 2
of the American Depositary Shares Purchase Agreement dated October 18, 2004 (the
“Agreement”) are true and correct in all material respects as though made on and
as of the date hereof.

     3. The Company has performed and complied with all covenants, agreements,
obligations and conditions contained in the Agreement to be performed by the
Company on or prior to the Closing Date.

     The undersigned has executed this Certificate this 18th day of October,
2004.

     

  /s/ Mark McMillan

--------------------------------------------------------------------------------

Mark McMillan
President and Chief Executive Officer

 

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EXHIBIT 4.6

LEGAL OPINION

Exhibit omitted.