Document:

exv4w09

 

EXHIBIT 4.09

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: November 4, 2005

(Reissued March 15, 2006)

     This Warrant (“Warrant”) is issued in connection with and pursuant to that
certain Note Purchase Agreement (the “Note Agreement”) dated as of November 4, 2005, by
and between INSIGNIA SOLUTIONS PLC, a company incorporated under the laws of England and
Wales (the “Company”) and FUSION CAPITAL FUND II, LLC (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, 562,500 (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, 20 UK pence per share nominal value, 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. The right to purchase shares of Warrant Shares represented
by this Warrant shall be immediately exercisable, and shall expire at 5:00 p.m., Chicago
local time, November 3, 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 per share of Warrant Shares
shall be at US $0.35 (subject to adjustment as hereinafter provided). Notwithstanding any
provision hereof to the contrary (and in particular any provision relating to adjustment to
the Warrant Exercise Price), the Company shall not be required or permitted to issue any
Ordinary Shares under this Warrant (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.

 

 

     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 retain
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,
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, but shall exclude ADSs or Ordinary Shares
which would be issuable upon (i) exercise of the remaining, unexercised Warrants
beneficially owned by the Holder and (ii) exercise or conversion of the unexercised or
unconverted portion of any other securities of the Company beneficially owned by the Holder
subject to a limitation on conversion or exercise analogous to the limitation contained
herein. 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.

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     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 of 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.

     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):

     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 shares 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 shares 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).

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     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.

     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,

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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.

     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 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 . If the
registration statement contemplated in the Note Agreement is not effective at the time of
any issuance and the Warrant Shares are not exempt from registration under Rule 144, the
Warrant Shares shall be issued in certificated form and shall bear the following
restrictive legend:

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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.

     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 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.

6

 

     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:
	 	 	Fusion Capital Fund II, LLC
	 	 	222 Merchandise Mart Plaza, Suite 9-112
	 	 	Chicago, IL 60654
	 

	 	Telephone:
	 	312-644-6644
	 

	 	Facsimile:
	 	312-644-6244
	 

	 	Attention:
	 	Steven G. Martin
	 
	 	 	 	 
	 	 	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:
	 	Tom Abbott

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

7

 

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 Illinois, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Illinois or any other
jurisdictions) that would cause the application of the laws of any jurisdictions other than
the State of Illinois. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in the City of Chicago, 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.

     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.

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     8.10 Headings. The headings used herein are used for convenience only and are not to
be considered in construing or interpreting this Warrant.

	 	 	 
	 

	 	INSIGNIA SOLUTIONS PLC
	 
	 	 
	 

	 	By: /s/ Mark McMillan
	 

	 	Name: Mark McMillan
	 

	 	Title: CEO

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WARRANT EXERCISE FORM

Date:                    

INSIGNIA SOLUTIONS PLC

                    

                    

Attention:                                         

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 FUSION CAPITAL FUND II, LLC, 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.
FUSION CAPITAL FUND II, LLC
BY: FUSION CAPITAL PARTNERS, LLC

By:                                        

Name:

Title:

Fusion Capital Fund II, LLC

222 Merchandise Mart Plaza, Suite 9-112

Chicago, IL 60654

10exv4w10

 

EXHIBIT 4.10

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.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE HELD BY AN AFFILIATE OF THE COMPANY. NO SALE OR
DISPOSITION OF THESE SHARES MAY BE EFFECTED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION RELATED
THERETO OR IN COMPLIANCE WITH RULE 144 OR ITS SUCCESSOR OR PURSUANT TO AN OPINION OF COUNSEL THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.

	 	 	 
	Warrant No.       

	 	Number of Shares:                   
	 

	 	(subject to adjustment)

Date of Issuance: July 18, 2005

INSIGNIA SOLUTIONS PLC

Warrant to Purchase American Depositary Shares

     Insignia Solutions plc (the “Company), for value received equal to $0.0001 per share of
Warrant Stock, hereby certifies that                      or his registered assigns (the “Registered
Holder”), is entitled, subject to the terms set forth below, to have issued to it by the Company,
at any time after the six month anniversary of the date hereof and on or before the Expiration Date
(as defined in Section 6 below),                      American depositary shares (“ADSs”) (as adjusted
from time to time pursuant to the provisions of this Warrant), with each ADS representing one
ordinary share, 20 pence per share nominal value of the Company, at a per share Exercise Price
equal to $1.11 per share (subject to adjustment as hereinafter provided), provided however that the
Exercise Price shall be at least 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 Warrant is
exercised. Notwithstanding any provision hereof to the contrary (and in particular any provision
relating to the adjustment of the Exercise Price), the Company shall not be required or permitted
to issue any ordinary shares under this Warrant (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. The shares to be issued upon exercise of this Warrant and the exercise price per share,
as adjusted from time to time pursuant to the provisions of this Warrant, are hereinafter referred
to as the “Warrant Stock” and the “Exercise Price,” respectively.

     This Warrant is issued pursuant to that certain American Depositary Shares Purchase Agreement
dated October 18, 2004 among the Company and certain individuals and entities listed on Exhibit A
thereof (the “Purchase Agreement”). Any capitalized terms used herein, but not defined herein,
shall carry those definitions ascribed to them in the Purchase Agreement.

     1. Fully Vested Shares on Six Month Anniversary. The shares of Warrant Stock will become
fully vested and exercisable as of the date that is six months after the date of this Warrant.

 

 

     2. Exercise.

          (a) Method of Exercise. This Warrant may be exercised by the Registered Holder, in whole or in
part, by surrendering this Warrant, with the exercise form appended hereto as Exhibit A duly
executed by such Registered Holder.

     Holder or by such Registered Holder’s duly authorized attorney, at the principal office of the
Company, or at such other office or agency as the Company may designate in writing prior to the
date of such exercise, accompanied by payment in full of the Exercise Price payable in respect of
the number of shares of Warrant Stock issued upon such exercise. The Exercise Price may be paid by
cash, check, wire transfer or by the surrender of promissory notes or other instruments
representing indebtedness of the Company to the Registered Holder.

          (b) Effective Time of Exercise. Each exercise of this Warrant shall be deemed to have been
effected immediately prior to the close of business on the day on which this Warrant shall have
been surrendered to the Company as provided in Section 2(a) above. At such time, the person or
persons in whose name or names any certificates for Warrant Stock shall be issuable upon such
exercise as provided in Section 2(c) below shall be deemed to have become the holder or holders of
record of the Warrant Stock represented by such certificates.

          (c) Delivery to Holder. As soon as practicable after the exercise of this Warrant in whole or
in part, and in any event within 10 days thereafter, the Company at its expense will cause to be
issued in the name of, and delivered to, the Registered Holder, or as such Registered Holder (upon
payment by such Registered Holder of any applicable transfer taxes) may direct:

               (i) an American Depositary Receipt representing such number of shares of Warrant Stock to
which such Registered Holder shall be entitled, and

               (ii) in case such exercise is in part only, a new warrant or warrants (dated the date hereof)
of like tenor, calling in the aggregate on the face or faces thereof for the number of shares of
Warrant Stock equal (giving effect to any adjustment therein) to the number of such shares called
for on the face of this Warrant minus the number of such shares issued to the Registered Holder
upon such exercise as provided in Section 2(a) above.

     3. Adjustments.

     The following provisions in relation to adjustments shall be subject to the provisions in the
opening clause of this Warrant relating to the minimum Exercise Price and to breaches of the United
Kingdom Companies Act 1985:

          (a) Share subdivision and Dividends. If the Company’s outstanding shares shall be subdivided
into a greater number of shares or a dividend in ordinary shares shall be paid in respect of the
ADSs, the Exercise Price in effect immediately prior to such subdivision or at the record date of
such dividend shall simultaneously with the effectiveness of such subdivision or immediately after
the record date of such dividend be proportionately reduced, subject to the proviso that the
Exercise Price shall never be less than the US Dollar equivalent to 20 pence on the date of
exercise. If outstanding shares shall be combined into a smaller number of shares, the Exercise
Price in effect immediately prior to such combination shall, simultaneously with the effectiveness
of such combination, be proportionately increased. When any adjustment is required to be made in
the Exercise Price, the number of shares of Warrant Stock to be issued upon the exercise of this
Warrant shall be changed to the number determined by dividing (i) an amount equal to the number of
shares issuable upon the exercise of this Warrant immediately prior to such adjustment, multiplied
by the Exercise Price in effect immediately prior to such adjustment, by (ii) the Exercise Price in
effect immediately after such adjustment.

          (b) Merger, Sale, Reclassification, Etc. In case of any (i) sale or other disposal of all or
substantially all of the Company’s assets or distribution of property to shareholders (other than
distributions payable out of distributable profits available for that purpose), (ii)
reclassification, change or conversion of the share capital of the Company or of any reorganization
of the Company (or any other company the shares or securities of which are at the time receivable
upon the exercise of this Warrant) or (iii) any similar corporate reorganization on or after the
date hereof, then and in each such case the holder of this Warrant, upon the exercise hereof at any
time thereafter shall be entitled to receive, in lieu of the shares or other securities and
property receivable upon the exercise hereof prior to such

2

 

sale or other disposal, reclassification, change, conversion or reorganization, the shares or
property to which such holder would have been entitled upon such consummation if such holder had
exercised this Warrant immediately prior thereto, all subject to further adjustment as provided in
Section 3(a) or 3(b); and in each such case, the terms of this Section 3 shall be applicable to the
shares or other securities properly receivable upon the exercise of this Warrant after such sale or
other disposal, reclassification, change, conversion or reorganization.

          (c) Adjustment Certificate. When any adjustment is required to be made in the Warrant Stock or
the Exercise Price pursuant to this Section 3, the Company shall promptly mail to the Registered
Holder a certificate setting forth (i) a brief statement of the facts requiring such adjustment,
(ii) the Exercise Price after such adjustment and (iii) the kind and amount of shares or other
securities or property into which this Warrant shall be exercisable after such adjustment.

     4. Transfers.

          (a) Unregistered Security. Each holder of this Warrant acknowledges that this Warrant and the
Warrant Stock have not been registered under the Securities Act of 1933, as amended (the
“Securities Act”), and agrees not to sell, pledge, distribute, offer for sale, transfer or
otherwise dispose of this Warrant or any Warrant Stock issued upon its exercise in the absence of
(i) an effective registration statement under the Securities Act as to this Warrant or such Warrant
Stock and registration or qualification of this Warrant or such Warrant Stock under any applicable
U.S. federal or state securities law then in effect or (ii) an opinion of counsel, reasonably
satisfactory to the Company, that such registration and qualification are not required. Each
certificate or other instrument for Warrant Stock issued upon the exercise of this Warrant shall
bear a legend substantially to the foregoing effect.

          (b) Transferability. Subject to the provisions of Section 4(a) hereof, this Warrant and all
rights hereunder are transferable, in whole or in part, to (i) any entity controlling, controlled
by or under common control of the Registered Holder that is not in the good faith determination of
the Company’s Board of Directors involved in a business that is competitive with the Company’s
business, or (ii) to any other proposed transferee of at least fifty percent (50%) of the Warrant
Shares by surrendering the Warrant with a properly executed assignment (in the form of Exhibit B
hereto) at the principal office of the Company.

          (c) Warrant Register. The Company will maintain a register containing the names and addresses
of the Registered Holders of this Warrant. Until any transfer of this Warrant is made in the
warrant register, the Company may treat the Registered Holder of this Warrant as the absolute owner
hereof for all purposes; provided, however, that if this Warrant is properly assigned in blank, the
Company may (but shall not be required to) treat the bearer hereof as the absolute owner hereof for
all purposes, notwithstanding any notice to the contrary. Any Registered Holder may change such
Registered Holder’s address as shown on the warrant register by written notice to the Company
requesting such change.

     5. No Impairment. The Company will not, by amendment of its memorandum and articles of
association or through reorganization, dissolution, sale of assets or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will
(subject to Section 14 below) at all times in good faith assist in the carrying out of all such
terms and in the taking of all such action as may be necessary or appropriate in order to protect
the rights of the holder of this Warrant against impairment.

     6. Termination. This Warrant (and the right to purchase securities upon exercise hereof)
shall terminate on the earlier of: (i) April 18, 2010 or (ii) the closing of any sale of all or
substantially all of the assets of the Company, or any transaction or series of related
transactions in which the Company’s shareholders (which shall include, for the avoidance of doubt,
indirect shareholders who hold ADSs through the depositary) immediately prior thereto own less than
a majority of the voting shares of the Company (or its successor or parent) immediately thereafter
(an “Acquisition”) (the “Expiration Date”).

     7. Notices of Certain Transactions. In case:

          (a) the Company shall take a record of the holders of its Ordinary Shares (including ADSs) (or
other stock or securities at the time deliverable upon the exercise of this Warrant) for the
purpose of entitling or enabling them to receive any dividend or other distribution, or to receive
any right to subscribe for or purchase any

3

 

shares of any class or any other securities, or to receive any other right, to subscribe for
or purchase any shares of stock of any class or any other securities, or to receive any other
right, or

          (b) of any capital reorganization of the Company, any reclassification of the share capital of
the Company, or

          (c) of the voluntary or involuntary dissolution, liquidation or winding-up of the Company,
then, and in each such case, the Company will mail or cause to be mailed to the Registered Holder
of this Warrant a notice specifying, as the case may be, (i) the date on which a record is to be
taken for the purpose of such dividend, distribution or right, and stating the amount and character
of such dividend, distribution or right, or (ii) the effective date on which such reorganization,
reclassification, transfer, dissolution, liquidation or winding-up is to take place, and the time,
if any is to be fixed, as of which the holders of record of Ordinary Shares (including ADSs) (or
such other securities at the time deliverable upon such reorganization, reclassification, transfer,
dissolution, liquidation or winding-up) are to be determined.

     8. Reservation of Shares. The Company shall ensure that it will have sufficient authorized
but unissued share capital out of which it can allot and issue such shares of Warrant Stock as may
need to be issued to the Registered Holder upon the exercise of this Warrant.

     9. Exchange of Warrants. Upon the surrender by the Registered Holder of any Warrant or
Warrants, properly endorsed, to the Company at the principal office of the Company, the Company
will, subject to the provisions of Section 4 hereof, issue and deliver to or upon the order of
such Holder, at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of such
Registered Holder or as such Registered Holder (upon payment by such Registered Holder of any
applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for
the number of shares of ADSs called for on the face or faces of the Warrant or Warrants so
surrendered.

     10. Replacement of Warrants. Upon receipt of evidence reasonably satisfactory to the Company
of the loss, theft, destruction or mutilation of this Warrant and (in the case of loss, theft or
destruction) upon delivery of an indemnity agreement (with surety if reasonably required) in an
amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and
cancellation of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.

     11. Notices. Any notice required or permitted by this Warrant shall be in writing and shall
be deemed duly given upon receipt, when delivered personally or by courier, overnight delivery
service or confirmed facsimile, or 48 hours after being deposited in the regular mail as certified
or registered mail (airmail if sent internationally) with postage prepaid, addressed (a) if to the
Registered Holder, to the address of the Registered Holder most recently furnished in writing to
the Company and (b) if to the Company, to the address set forth on the signature page of this
Warrant or as subsequently modified by written notice to the Registered Holder.

     12. No Rights as Shareholder. Until the exercise of this Warrant, the Registered Holder of
this Warrant shall not have or exercise any rights by virtue hereof as a shareholder of the
Company.

     13. No Fractional Shares. No fractional shares of ADSs will be issued in connection with any
exercise hereunder.

     14. Amendment or Waiver. Any term of this Warrant may be amended or waived upon written
consent of the Company and the registered holders of at least 80% of the ADSs issuable upon
exercise of the outstanding warrants purchased pursuant to the Purchase Agreement. By acceptance
hereof, the Registered Holder acknowledges that in the event the required consent is obtained, any
term of this Warrant may be amended or waived with or without the consent of the Registered Holder;
provided, however, that any amendment hereof that would materially adversely affect the Registered
Holder in a manner different from the holders of the remaining warrants issued pursuant to the
Purchase Agreement shall also require the consent of Registered Holder.

     15. Headings. The headings in this Warrant are for purposes of reference only and shall not
limit or otherwise affect the meaning of any provision of this Warrant.

4

 

     16 Governing Law. This Warrant 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 CaliforniaEngland,without giving effect to principles of conflicts
of law.

     17. Registration Rights. The Warrant Shares are subject to the re-sale registration rights
described in the Registration Rights Agreement by and between the Company and the Registered Holder
and dated October 18, 2004.

     18. Representations and Covenants of the Holder. This Warrant has been entered into by the
Company in reliance upon the following representations and covenants of the Registered Holder:

          (a) Investment Purpose. The Registered Holder is acquiring the Warrant and the ADSs issuable
upon exercise of the Warrant for its own account, not as a nominee or agent and with no present
intention of selling or otherwise distributing any part thereof.

          (b) Private Issue. The Registered Holder understands, except as provided in the Registration
Rights Agreement, (i) that neither the Warrant nor the ADSs issuable upon exercise of this Warrant
is, nor will be, registered under the Securities Act or qualified under applicable state securities
laws on the ground that the issuance contemplated by this Warrant will be exempt from the
registration and qualifications requirements thereof pursuant to Section 4(2) of the Securities Act
and any applicable state securities laws, and (ii) that the Company’s reliance on such exemption is
predicated on the representations set forth in this Section 18.

          (c) Disposition of Holder’s Rights. In no event will the Registered Holder make a disposition
of the Warrant or the ADSs issuable upon exercise of the Warrant in the absence of (i) an effective
registration statement under the Securities Act as to this Warrant or such Warrant Stock and
registration or qualification of this Warrant or such Warrant Stock under any applicable U.S.
federal or state securities law then in effect or (ii) an opinion of counsel, reasonably
satisfactory to the Company, that such registration and qualification are not required.
Notwithstanding the foregoing, the restrictions imposed upon the transferability of any of its
rights to acquire ADSs do not apply to transfers from the beneficial owner of any of the
aforementioned securities to its nominee or from such nominee to its beneficial owner, and shall
terminate as to any particular ADS when (1) such security shall have been effectively registered
under the Securities Act and sold by the holder thereof in accordance with such registration or (2)
such security shall have been sold without registration in compliance with Rule 144 under the
Securities Act, or (3) a letter shall have been issued to the Registered Holder at its request by
the staff of the Securities and Exchange Commission (the “SEC”) or a ruling shall have been issued
to the Registered Holder at its request by the SEC stating that no action shall be recommended by
such staff or taken by SEC, as the case may be, if such security is transferred without
registration under the Securities Act in accordance with the conditions set forth in such letter or
ruling and such letter or ruling specifies that no subsequent restrictions on transfer are
required. Whenever the restrictions imposed hereunder shall terminate, as hereinabove provided, the
Registered Holder or holder of an ADS then outstanding as to which such restrictions have
terminated shall be entitled to receive from the Company, without expense to such holder, one or
more new certificates for the Warrant or for such ADSs not bearing any restrictive legend.

          (d) Financial Risk. The Registered Holder has such business and financial experience as is
required to give it the capacity to protect its own interests in connection with its investment.

          (e) Accredited Investor. The Registered Holder is an “accredited investor” as defined by Rule
501 of Regulation D under the Securities Act, as presently in effect.

          (f) 4.99% Maximum Share Holding. Notwithstanding anything to the contrary contained herein,
the Holder shall not exercise this Warrant to the extent (but only to the extent) that such Holder
would be the beneficial owner of more then 4.99% of the shares of the Company’s common stock
outstanding thereafter. For purposes of this paragraph, beneficial ownership and all determinations
and calculations shall be determined and calculated in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended, and all applicable rules and regulations thereunder.
It is expressly a term of this Warrant that the limitations set forth herein shall apply to each
successive holder of any of this Warrant. The foregoing restriction may not be altered, amended,
deleted or changed in any manner whatsoever unless the holders of a majority of the Company’s
outstanding shares of common stock and the Holder (or any successive holder) approve such
alteration, amendment, deletion or change.

5

 

          (g) 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.

     19. Representations and Warranties of the Company. This Warrant has been entered into by the
Registered Holder in reliance upon the following representations and covenants of the Company:

          (a) Authorization. The Warrant has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company enforceable in accordance with its
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.

          (b) Valid Issuance. The Warrant Stock is duly authorized and reserved for issuance, and when
issued, sold and delivered in accordance with the terms of this Warrant will be duly and validly
issued and fully paid.

          (c) No Conflict. The execution and delivery of this Warrant do not, and the consummation of
the transactions contemplated hereby 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 memorandum and articles of association of the Company or any material
agreement attached as an exhibit to the Company’s SEC Documents (as defined in the Purchase
Agreement), or any judgment, order, decree, statute, law, ordinance, rule, listing requirement or
regulation 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.

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

Signature Pages Follow

6

 

     IN WITNESS WHEREOF, the parties have executed this Warrant to Purchase American Depositary
Shares as of the date first above written.

INSIGNIA SOLUTIONS PLC

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	Name: Roger Friedberger	 	 
	 
	 	 	 	 
	Title: Company Secretary	 	 

Address:

41300 Christy Street

Fremont, CA 94538-3115

Attention: Company Secretary

Fax Number: (510) 360-3701

AGREED TO AND ACCEPTED BY:

[Warrantholder]

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	(print)	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 

Address:

c/o Abstract Securities Ltd.

Queens House

34 Wellington Street

Leeds, UK

LS1 2DE

Tel: +44783 181 2812

	 	 	 	 	 
	Fax Number:
	 	 	 	 
	 

	 	 

	 	 

SIGNATURE PAGE TO WARRANT TO PURCHASE

AMERICAN DEPOSITARY SHARES

7

 

EXHIBIT A

PURCHASE/EXERCISE FORM

To: Insignia Solutions plc

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 

     The undersigned, pursuant to the provisions set forth in the attached Warrant No. 2 , hereby
irrevocably elects to purchase                      American Depositary Shares covered by such Warrant
and herewith makes payment of $                    , representing the full purchase price for such shares
at the price per share provided for in such Warrant.

     The undersigned acknowledges that it has reviewed the representations and warranties contained
in Section 18 of the Warrant, including subsection (f) with regard to the number of shares held by
the undersigned, and by its signature below hereby makes such representations and warranties to the
Company. The undersigned has delivered currently herewith a representation letter, signed by the
undersigned, stating the number of shares of the Company held by the undersigned immediately prior
to the exercise of this Warrant and representing that the exercise of the Warrant (or portion
hereof) would not violate the provision of Section 18(f). Defined terms contained in such
representations and warranties shall have the meanings assigned to them in the Warrant.

	 	 	 	 	 
	Signature:
	 	 	 	 
	 

	 	 

	 	 
	Name (print):
	 	 	 	 
	 

	 	 

	 	 
	Title (if applicable):
	 	 	 	 
	 

	 	 

	 	 
	Company (if applicable):
	 	 	 	 
	 

	 	 

	 	 

8

 

EXHIBIT B

ASSIGNMENT FORM

     FOR VALUE RECEIVED,                                          hereby sells, assigns and transfers all of the rights
of the undersigned under the attached Warrant with respect to the number of American Depositary
Shares covered thereby set forth below, unto:

	 	 	 	 	 	 	 	 	 
	Name of Assignee	 	Address/Fax Number	 	 	No. of Shares	 

	 	 	 	 	 
	Dated:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Signature:
	 	 	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	Witness:
	 	 	 	 
	 

	 	 

	 	 

9

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