Document:

exv10w02

 

Exhibit 10.02

WARRANT

THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
ANY STATE SECURITIES LAW. NEITHER THIS WARRANT NOR ANY WARRANT SHARES ISSUABLE UPON EXERCISE
HEREOF NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, OR TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE ACT AND APPLICABLE STATE SECURITIES LAWS.

INSIGNIA SOLUTIONS PLC

WARRANT

Original Issue Date: December 29, 2005

     This Warrant (“Warrant”) is issued in connection with and pursuant to that certain Securities
Subscription Agreement (the “Subscription Agreement”) dated as of December 29, 2005, by and among
INSIGNIA SOLUTIONS PLC, a public limited company incorporated under the laws of England and Wales
(registered number: 1961960) (the “Company”), INSIGNIA SOLUTIONS INC. a company incorporated under
the laws of Delaware (the “Issuer”), and                                          (the “Buyer”).

     FOR VALUE RECEIVED, the Buyer, the registered holder hereof, or its permitted assigns (the
“Holder”), is entitled to purchase from the Company, during the period specified in this Warrant,
                     (subject to adjustment as hereinafter provided) fully paid and non-assessable
American depository shares (each an “ADS” and collectively, the “ADSs”) of the Company at the
purchase price per ADS provided in Section 1.2 of this Warrant (the “Warrant Exercise Price”), all
subject to the terms and conditions set forth in this Warrant. Each ADS represents one ordinary
share of the Company (the “Ordinary Shares”). The ADSs to be purchased as described above are
referred to herein as the “Warrant Shares.” All terms not otherwise defined herein shall have the
meaning ascribed to them in the Subscription Agreement.

     Section 1. Period for Exercise and Exercise Price; Redemption.

     1.1 Period for Exercise. This Warrant shall commence at 5:00 pm New York City local time, on
June 29, 2006, and shall expire at 5:00 p.m., New York City local time, December 29, 2010 (the
“Expiration Date”). From and after the Expiration Date this Warrant shall be null and void and of
no further force or effect whatsoever.

     1.2 Warrant Exercise Price. The Warrant Exercise Price shall be US $0.37 (subject to
adjustment as hereinafter provided).

     Section 2. Exercise of Warrant.

     2.1 Manner of Exercise. The Holder may exercise this Warrant, in whole or in part,
immediately, but not after the Expiration Date, during normal business hours on any Trading Day by
surrendering this Warrant to the Company at the principal office of the Company, accompanied by a
Warrant Exercise Form in substantially the form annexed hereto duly executed by the Buyer and by
payment of the Warrant Exercise Price for the number of Warrant Shares for which this Warrant is
then exercisable, either (i) in immediately available funds, (ii) by delivery of an instrument
evidencing indebtedness owing by the Company to the Holder in the appropriate amount, (iii) by
authorizing the Company to refrain from issuing ADSs which would otherwise be issuable upon
exercise of this Warrant (subject to and in accordance with Section 2.4 hereof) or (iv) in a
combination of (i), (ii) or (iii) above,

 

 

provided, however, that in no event shall the Holder be entitled to exercise this Warrant for
a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to
such exercise, would cause the aggregate number of ADSs or Ordinary Shares beneficially owned by
the Holder to exceed 4.9% of the outstanding ADSs or Ordinary Shares following such exercise. For
purposes of the foregoing proviso, the aggregate number of ADSs or Ordinary Shares beneficially
owned by the Holder shall include the number of ADSs or Ordinary Shares issuable upon exercise of
this Warrant with respect to which determination of such proviso is being made. Except as set
forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.
The Holder may waive the foregoing limitation by written notice to the Company upon not less than
61 days prior written notice (with such waiver taking effect only upon the expiration of such 61
day notice period).

     2.2 When Exercise Effective. Each exercise of this Warrant shall be deemed to have been
effected on the day on which all requirements of Section 2.1 shall have been met with respect to
such exercise. At such time the person in whose name any certificate for shares of Warrant Shares
shall be issuable upon such exercise shall be deemed for all corporate purposes to have become the
Holder of record of such shares, regardless of the actual delivery of certificates evidencing such
shares.

     2.3 Delivery of Certificates. As soon as practicable after each exercise of this Warrant,
and in any event no later than 3 Trading Days after such exercise, the Company will issue Warrant
Shares for the number of Warrant Shares to which the Holder is entitled upon such Holder’s
submission of the applicable Warrant Exercise Form.

     2.4 Cashless Exercise. The Holder may, by providing notice thereof to the Company along with
the Warrant Exercise Form, elect to exercise the Warrant for a number of Warrant Shares determined
in accordance with the following formula:

	 	 	 
	 

	 	X = Y(A-B)
	 

	 	            A
	 

	 	Where:
	 

	 	X = The number of Warrant Shares to be issued to the Holder.
	 

	 	Y = The number of Warrant Shares
purchasable under this Warrant (at the date of such
exercise).
	 

	 	A = The fair market value of one ADS (or
other security for which the Warrant is then exercisable
at the date of such exercise).
	 

	 	B = Exercise Price (as adjusted to the
date of such exercise).

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

     Section 3. Adjustment of Purchase Price and Number of Shares. The Warrant Exercise Price and
the kind of securities issuable upon exercise of the Warrant shall be adjusted from time to time
as follows (subject to Section 1.2):

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     3.1 Subdivision or Consolidation of Shares (Share Splits). If the Company at any time
effects a subdivision or consolidation of the outstanding ADSs or Ordinary Shares (through a split
or otherwise), the number of Warrant Shares shall be increased, in the case of a subdivision, or
the number of Warrant Shares shall be decreased, in the case of a consolidation, in the same
proportions as the ADSs or Ordinary Shares are subdivided or consolidated, in each case effective
automatically upon, and simultaneously with, the effectiveness of the subdivision or consolidation
which gives rise to the adjustment.

     3.2 Dividends. If the Company at any time pays a dividend, or makes any other distribution,
to holders of ADSs or Ordinary Shares payable in ADSs or Ordinary Shares, or fixes a record date
for the determination of holders of ADSs or Ordinary Shares entitled to receive a dividend or
other distribution payable in Ordinary Shares or ADSs, then the number of Warrant Shares in effect
immediately prior to such action shall be proportionately increased so that the Holder hereof may
receive upon exercise of the Warrant the aggregate number of ADSs which he or it would have owned
immediately following such action if the Warrant had been exercised immediately prior to such
action. The adjustment shall become effective immediately as of the date the Company shall take a
record of the holders of ADSs or Ordinary Shares for the purpose of receiving such dividend or
distribution (or if no such record is taken, as of the effectiveness of such dividend or
distribution).

     3.3 Reclassification, Consolidation or Merger. If at any time, as a result of:

     (a) a capital reorganization or reclassification (other than a subdivision, consolidation or
dividend provided for elsewhere in this Section 3), or

     (b) a merger or consolidation of the Company with another corporation (whether or not the
Company is the surviving corporation),

the ADSs issuable upon exercise of the Warrants shall be changed into or exchanged for the same or
a different number of shares of any class or classes of shares of the Company or any other
corporation, or other securities convertible into such shares, then, as a part of such
reorganization, reclassification, merger or consolidation, appropriate adjustments shall be made
in the terms of the Warrants (or of any securities into which the Warrants are exercised or for
which the Warrants are exchanged), so that:

     (y) the Holders of Warrants or of such substitute securities shall thereafter be entitled to
receive, upon exercise of the Warrants or of such substitute securities, the kind and amount of
shares, other securities, money and property which such Holders would have received at the time of
such capital reorganization, reclassification, merger, or consolidation, if such Holders had
exercised their Warrants immediately prior to such capital reorganization, reclassification,
merger, or consolidation, and

     (z) the Warrants or such substitute securities shall thereafter be adjusted on terms as
nearly equivalent as may be practicable to the adjustments theretofore provided in this Section
3.3.

No consolidation or merger in which the Company is not the surviving corporation shall be
consummated unless the surviving corporation shall agree, in writing, to the provisions of this
Section 3.3. The provisions of this Section 3.3 shall similarly apply to successive capital
reorganizations, reclassifications, mergers and consolidations.

     3.4 Other Action Affecting ADSs or Ordinary Shares. If at any time the Company takes any
action affecting ADSs or Ordinary Shares, other than an action described in any of Sections 3.1 -
3.3 which could reasonably be expected to have an adverse effect upon the exercise rights of the
Warrants, the Warrant Exercise Price or the kind of securities issuable upon exercise of the
Warrants, or both, shall be adjusted in such manner to be equitable in the circumstances. No
adjustment to the Warrant Exercise Price or the kind of securities issuable upon exercise of the
Warrants shall be made in respect of

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Permitted Financings (as defined in the Securities Subscription Agreement dated as of
December 29, 2005 between Issuer and Buyer).

     3.5 Notice of Adjustment Events. Whenever the Company contemplates the occurrence of an
event which would give rise to adjustments under this Section 3, the Company shall mail to each
Warrant Holder, at least 5 days prior to the record date with respect to such event or, if no
record date shall be established, at least 5 days prior to such event, a notice specifying (i) the
nature of the contemplated event, and (ii) the date on which any such record is to be taken for
the purpose of such event, and (iii) the date on which such event is expected to become effective,
and (iv) the time, if any is to be fixed, when the holders of record shall be entitled to exchange
their ADSs or Ordinary Shares (or other securities) for securities or other property deliverable
in connection with such event.

     3.6 Notice of Adjustments. Whenever the kind or number of securities issuable upon exercise
of the Warrants, or both, shall be adjusted pursuant to Section 3, the Company shall deliver a
certificate signed by its Chief Executive Officer and by its Chief Financial Officer, setting
forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the basis of any
determination hereunder), and the Warrant Exercise Price and the kind of securities issuable upon
exercise of the Warrants after giving effect to such adjustment, and shall cause copies of such
certificate to be mailed (by first class mail postage prepaid) to each Warrant Holder promptly
after each adjustment.

     Section 4. Reservation. The Company covenants and agrees that it will at all times have
authorized, reserve and keep available, solely for issuance and delivery upon the exercise of this
Warrant, the number of Ordinary Shares represented by ADSs from time to time issuable upon the
exercise of this Warrant. The Company further covenants and agrees that this Warrant is, and any
Warrants issued in substitution for or replacement of this Warrant and all Warrant Shares, will
upon issuance be duly authorized and validly issued and, in the case of Ordinary Shares
represented by ADSs issuable hereunder, upon issuance will be fully paid and non-assessable and
free from all preemptive rights of any shareholder, and from all taxes, liens and charges with
respect to the issue thereof.

     Section 5. Ownership, Transfer and Substitution of Warrants.

     5.1 Ownership of Warrants. The Company may treat the person in whose name any Warrant is
registered on the register kept at the principal office of the Company as the owner and Holder
thereof for all purposes, notwithstanding any notice to the contrary, but in all events
recognizing any transfers made in accordance with the terms of this Warrant.

     5.2 Transfer and Exchange of Warrants. Upon the surrender of any Warrant, properly endorsed,
for registration of transfer or for exchange at the principal office of the Company, the Company
at its expense will execute and deliver to the Holder thereof, upon the order of such Holder, a
new Warrant or Warrants of like tenor, in the name of such Holder or as such Holder may direct,
for such number of ADSs with respect to each such Warrant, the aggregate number of ADSs in any
event not to exceed the number of ADSs for which the Warrant so surrendered had not been
exercised.

     5.3 REGISTRATION RIGHTS. THE HOLDER OF THIS WARRANT IS ENTITLED TO CERTAIN REGISTRATION
RIGHTS WITH RESPECT TO THE WARRANT SHARES ISSUABLE UPON EXERCISE THEREOF. SAID REGISTRATION RIGHTS
ARE SET FORTH IN A REGISTRATION RIGHTS AGREEMENT BY AND BETWEEN THE BUYER AND THE COMPANY.

     5.4 Exemption from Registration. If an opinion of counsel provides that registration is not
required for the proposed exercise or transfer of this Warrant or the proposed transfer of the
Warrant Shares and that the proposed exercise or transfer in the absence of registration would
require the Company to take any action including executing and filing forms or other documents
with the Securities

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and Exchange Commission (the “SEC”) or any state securities agency, or delivering to the
Holder any form or document in order to establish the right of the Holder to effectuate the
proposed exercise or transfer, the Company agrees promptly, at its expense, to take any such
action. At any time after the registration statement contemplated in Section 4(a) of the
Subscription Agreement is declared effective by the SEC, any Warrant Shares issued to the Holder
in connection with any exercise of this Warrant shall be issued in certificated form and shall
bear no restrictive legend. At any time before the registration statement contemplated in
Section 4(a) of the Subscription Agreement is declared effective by the SEC, any Warrant Shares
issued to the Holder in connection with any exercise of this Warrant shall be issued in
certificated form and shall bear the following restrictive legend:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.

On the Effective Date (as defined in the Subscription Agreement), the Company shall cause any
restrictive legend on any outstanding Warrant Shares to be removed.

     Section 6. No Rights or Liabilities as Shareholder. Nothing contained in this Warrant shall
be construed as conferring upon the Holder hereof any rights as a shareholder of the Company or as
imposing any liabilities on such holder to purchase any securities or as a shareholder of the
Company, whether such liabilities are asserted by the Company or by creditors of the Company.

     Section 7. Rule 144 Sales. At the request of any Holder who proposes to sell securities in
compliance with Rule 144 of the SEC, the Company will (i) forthwith furnish to such Holder a
written statement of compliance with the filing requirements of the SEC as set forth in Rule 144,
as such rules may be amended from time to time and (ii) make available to the public and such
Holder such information as will enable the Holder to make sales pursuant to Rule 144.

     Section 8. Miscellaneous.

     8.1 Amendment and Waiver. This Warrant may be amended with, and only with, the written
consent of the Company and the Holder. Any waiver of any term, covenant, agreement or condition
contained in this Warrant shall not be deemed a waiver of any other term, covenant, agreement or
condition, and any waiver of any default in any such term, covenant, agreement or condition shall
not be deemed a waiver of any later default thereof or of any default of any other term, covenant,
agreement or condition.

     8.2 Representations and Warranties to Survive Closing. All representations, warranties and
covenants contained herein shall survive the execution and delivery of this Warrant and the
issuance of any Warrant Shares upon the exercise hereof.

     8.3 Severability. In the event that any court or any governmental authority or agency
declares all or any part of any Section of this Warrant to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any other Section of this Warrant, and in
the event that only a

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portion of any Section is so declared to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate the balance of such Section.

     8.4 Binding Effect; No Third Party Beneficiaries. All provisions of this Warrant shall be
binding upon and inure to the benefit of the parties and their respective heirs, legatees,
executors, administrators, legal representatives, successors, and permitted transferees and
assigns. No person other than the holder of this Warrant and the Company shall have any legal or
equitable right, remedy or claim under or in respect of, this Warrant.

     8.5 Notices. Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Warrant must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on
file by the sending party); or (iii) one Trading Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:

If to the Company:

Insignia Solutions plc

41300 Christy Street

Fremont, CA 94538

Telephone: 510-360-3700

Facsimile: 510-360-3701

Attention: Chief Executive Officer

With a copy to:

Fenwick & West LLP

275 Battery St.

San Francisco, CA 94111

Telephone: 415-875-2455

Facsimile: 415-281-1350

Attention: David Michaels

If to the Holder:

[Name of Holder]

[Address]

Telephone:

Facsimile:

Attention:

With a copy to:

Grushko & Mittman, P.C.

551 5th Ave., Suite 1601

NY, NY 10176

Telephone: 212-697-9500

Facsimile: 212-697-3575

Attention: Barbara Mittman

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If to the Transfer Agent:

Bank of New York

ADR Department

620 Avenue of the Americas, 6th Floor

New York, NY 10011

Telephone: 212-815-4305

Facsimile: 212-571-3050

Attention: Administrator for Insignia Solutions plc

or at such other address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party three (3) Trading
Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time, date, and
recipient facsimile number or (C) provided by a nationally recognized overnight delivery service,
shall be rebuttable evidence of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with clause (i), (ii) or (iii)
above, respectively.

     8.6 Taxes, Costs and Expenses. The Company covenants and agrees that it will pay when due and
payable any and all United Kingdom, English, Welsh, federal, state and local taxes (other than
income taxes) and any other costs and expenses (including any and all transfer, stamp or similar
taxes) which may be payable in respect of the preparation, issuance, delivery, exercise, or
surrender of this Warrant pursuant to the terms of this Warrant or the issuance of any shares of
Warrant Shares as a result thereof. If any suit or action is instituted or attorneys employed to
enforce this Warrant or any part thereof, the Company promises and agrees to pay all costs and
expenses associated therewith, including reasonable attorneys’ fees and court costs. 

     8.7 Governing Law; Jurisdiction; Jury Trial. The corporate laws of England and Wales shall
govern all issues concerning the relative rights of the Company and its shareholders and the
powers and capacity of the Company. All other questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause the application of
the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New
York, for the adjudication of any dispute hereunder or under the other Transaction Documents or in
connection herewith or therewith, or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

     8.8 Loss of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnification from the Holder, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date.

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     8.9 Entire Agreement. This Warrant, the Subscription Agreement and the Registration Rights
Agreement of even date herewith represent the entire agreement and understanding between the parties concerning the subject matter hereof and supercede all
prior and contemporaneous agreements, understandings, representations and warranties with respect
thereto.

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

[Signature Page Follows]

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

	 	 	 	 	 	 	 
	 	 	INSIGNIA SOLUTIONS PLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Mark McMillan	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 

 

WARRANT EXERCISE FORM

Date:                                         

INSIGNIA SOLUTIONS PLC

41300 Christy Street

Fremont, CA 94538-3115

Attention: Chief Financial Officer

Ladies and Gentlemen:

The undersigned, being the registered holder of your Warrant for the purchase
of                      Warrant Shares issued                      accompanying this letter, hereby irrevocably exercises
such Warrant for                      Warrant Shares (as defined in said Warrant), and herewith makes
payment therefor [via “cash-less exercise”] in accordance with the Warrant, and requests that such
Warrant Shares be issued in the name of, and delivered to [Name of Holder] at the address shown
below the signature line hereof.

If said number of Warrant Shares shall not be all the Warrant Shares issuable upon exercise of the
attached Warrant, a new Warrant is to be issued in the name of the undersigned for the balance
remaining of such Warrant Shares.

[NAME OF HOLDER]

	 	 	 	 	 
	By:

	 	 	 	 
	 

	 	 	 	 
	Name:
	 	 	 	 
	 

	 	 	 	 
	Title:
	 	 	 	 
	 

	 	 	 	 

[Name of Holder]

[Address]exv10w03

 

Exhibit 10.03

REGISTRATION RIGHTS AGREEMENT

     REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of December 29, 2005, 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 Buyers identified on the signature pages
hereto (each a “Buyer” and collectively the “Buyers”). Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the Securities
Subscription Agreement by and among the parties hereto and INSIGNIA SOLUTIONS INC. a company
incorporated under the laws of Delaware (the “Issuer”), dated as of the date hereof (as amended,
restated, supplemented or otherwise modified from time to time, the “Subscription Agreement”).

WHEREAS:

     A. The Issuer has agreed to sell to the Buyers shares of its Series B Preferred Stock, stated
value of $100 per share (the “Preferred Stock”). Each share of Preferred Stock is exchangeable for
American depository shares (each an “ADS” and collectively, the “ADSs”), each ADS representing one
ordinary share of the Company (the “Ordinary Shares”). The Issuer is a wholly owned subsidiary of
the Company. Accordingly, the Company has agreed, upon the terms and subject to the conditions of
the Subscription Agreement, to issue (i) ADSs (the “Exchange Shares”) to the Buyers upon the
Buyers’ exchange of the Preferred Stock, and (ii) ADSs issuable upon exercise of the Warrants (the
“Warrant Shares”); and

     B. To induce the Buyers to enter into the Subscription Agreement, the Company has agreed to
provide certain registration rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the “1933 Act”), and
applicable state securities laws.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein and
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Company and the Buyers hereby agree as follows:

     1. DEFINITIONS.

          As used in this Agreement, the following terms shall have the following meanings:

          a. “Investor” means a Buyer, any transferee or assignee thereof to whom a Buyer assigns its
rights under this Agreement and who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 and any transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement and who agrees to become bound by the provisions of this
Agreement in accordance with Section 9.

          b. “Person” means any person or entity including any corporation, a limited liability company,
an association, a partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.

          c. “Register,” “registered,” and “registration” refer to a registration effected by preparing
and filing one or more registration statements of the Company in compliance with the 1933 Act

 

 

and pursuant to Rule 415 under the 1933 Act or any successor rule providing for offering securities on
a continuous basis (“Rule 415”), and the declaration or ordering of effectiveness of such
registration statement(s) by the United States Securities and Exchange Commission (the “SEC”).

          d. “Registrable Securities” means the Exchange Shares which have been, or which may from time
to time be, issued or issuable upon exchange of the Preferred Stock under the Subscription
Agreement (without regard to any limitation or restriction on purchases), the Warrant Shares
issuable upon exercise of the Warrants and any shares in the capital of the Company issued or
issuable with respect to the Exchange Shares, the Warrant Shares or the Subscription Agreement as a
result of any subdivision of shares, consolidation of share capital, dividend, recapitalization,
exchange or similar event or otherwise, without regard to any limitation on purchases under the
Subscription Agreement. Registerable Securities shall be allocated pro rata among the Buyers.

          e. “Registration Statement” means the registration statement of the Company covering only the
sale of the Registrable Securities.

     2. REGISTRATION.

          a. Mandatory Registration. The Company shall on or before January 15, 2006 (the
“Filing Date”) file with the SEC the Registration Statement. Each Investor shall furnish all
information reasonably requested by the Company for inclusion therein. The Company shall use its
reasonable best efforts to have the Registration Statement or amendment declared effective by the
SEC at the earliest possible date but not later than April 15, 2006 (the “Effective Date”). The
Company shall use reasonable best efforts to keep the Registration Statement effective pursuant to
Rule 415 promulgated under the 1933 Act and available for sales of all of the Registrable
Securities at all times until the earlier of (i) the date as of which each Investor may sell all of
the Registrable Securities without restriction pursuant to Rule 144(k) promulgated under the 1933
Act (or successor thereto) or (ii) the date on which each Investor shall have sold all the
Registrable Securities (the “Registration Period”). The Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which they were made,
not misleading.

          b. Rule 424 Prospectus. The Company shall, as required by applicable securities
regulations, from time to time file with the SEC, pursuant to Rule 424 promulgated under the 1933
Act, the prospectus and prospectus supplements, if any, to be used in connection with sales of the
Registrable Securities under the Registration Statement. The Investors and their respective
counsel shall have a reasonable opportunity to review and comment upon such prospectus prior to its
filing with the SEC. The Investors shall use their reasonable best efforts to comment upon such
prospectus within one (1) Trading Day from the date the Investors receive the final version of such
prospectus.

          c. Sufficient Number of Shares Registered. In the event the number of shares
available under the Registration Statement is insufficient to cover all of the Registrable
Securities, the Company shall amend the Registration Statement or file a new registration statement
(a “New Registration Statement”), so as to cover all of such Registrable Securities as soon as
practicable, but in any event not later than ten (10) Trading Days after the necessity therefor
arises. The Company shall use it reasonable best efforts to cause such amendment and/or New
Registration Statement to become effective as soon as practicable following the filing thereof.

          d. Piggy-Back Registrations. If at any time prior to the expiration of the
Registration Period, the Company shall determine to file with the SEC a Registration Statement for

2

 

purposes of effecting a public offering of securities of the Company under the 1933 Act (including
registration statements relating to secondary offerings of securities of the Company, but excluding
registration statements on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee benefit plans), the
Company shall send to each Investor who is entitled to registration rights under this Section 2(d)
written notice of such determination and, if within ten (10) calendar days after the effective date
of such notice, such Investor shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities such Investor requests to be
registered, except that if, in connection with any underwritten public offering for the account of
the Company the managing underwriter(s) thereof shall impose a limitation on the number of shares
of Common Stock which may be included in the Registration Statement because, in such
underwriter(s)’ judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to include in such Registration
Statement only such limited portion of the Registrable Securities with respect to which such
Investor has requested inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Investors seeking to include Registrable
Securities in proportion to the number of Registrable Securities sought to be included by such
Investors; provided, however, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities, the holders of which
are not entitled by contract to inclusion of such securities in such Registration Statement or are
not entitled to pro rata inclusion with the Registrable Securities. No right to registration of
Registrable Securities under this Section 2(d) shall be construed to limit any registration
required under Section 2(a) hereof. If an offering in connection with which an Investor is
entitled to registration under this Section 2(d) is an underwritten offering, then each Investor
whose Registrable Securities are included in such Registration Statement shall offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or underwriters and,
subject to the provisions of this Agreement, on the same terms and conditions as other ADSs
included in such underwritten offering and shall enter into an underwriting agreement in customary
form.

          e. Monthly Liquidated Damages. If the Registration Statement required to be filed
pursuant to Section 2(a) of this Agreement (i) has not been filed with the SEC on or prior to the
Filing Date, (ii) has not been declared effective by the SEC on or prior to the Effective Date or
(iii) is not available for resales of Registrable Securities at any time during the Registration
Period, the Company will make pro rata payments to each Investor, as liquidated damages and not as
a penalty, in an amount equal to 2.0% of the sum of (1) the aggregate purchase price paid by the
Investors for the outstanding Preferred Stock, Exchange Shares and Warrant Shares then held by the
Investors and (2) the aggregate exercise price of the Warrant Shares then issuable upon exercise of
outstanding Warrants then held by the Investors, for each monthly anniversary following the date by
which such Registration Statement should have been filed or have been declared effective by the
SEC, as applicable. Such pro rata payments shall cease to accrue immediately at such time as the
Registration Statement is filed with the SEC for purposes of payments due under clause (i) of the
immediately preceding sentence or is declared effective by the SEC with respect to payments due
under clause (ii) of the immediately preceding sentence, as applicable. Such payments shall
constitute the Investors’ sole monetary remedy for such events.

     3. RELATED OBLIGATIONS.

     With respect to the Registration Statement and whenever any Registrable Securities are to be
registered pursuant to Section 2(b) including on any New Registration Statement, the Company shall
use its reasonable best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant thereto, the Company shall
have the following obligations:

3

 

          a. The Company shall prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to any registration statement and the prospectus used in connection
with such registration statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the 1933 Act, as may be necessary to keep the Registration Statement or any New Registration
Statement effective at all times during the Registration Period, and, during such period, comply
with the provisions of the 1933 Act with respect to the disposition of all Registrable Securities
of the Company covered by the Registration Statement or any New Registration Statement until such
time as all of such Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in such registration
statement.

          b. The Company shall permit each Investor to review and comment upon the Registration
Statement or any New Registration Statement and all amendments and supplements thereto at least two
(2) Trading Days prior to their filing with the SEC, and not file any document in a form to which
an Investor reasonably objects. Each Investor shall use its reasonable best efforts to comment
upon the Registration Statement or any New Registration Statement and any amendments or supplements
thereto within two (2) Trading Days from the date such Investor receives the final version thereof.
The Company shall furnish to the Investors, without charge any correspondence from the SEC or the
staff of the SEC to the Company or its representatives relating to the Registration Statement or
any New Registration Statement.

          c. Upon request of an Investor, the Company shall furnish to such Investor, (i) promptly after
the same is prepared and filed with the SEC, at least one copy of such registration statement and
any amendment(s) thereto, including financial statements and schedules, all documents incorporated
therein by reference and all exhibits, (ii) upon the effectiveness of any registration statement, a
copy of the prospectus included in such registration statement and all amendments and supplements
thereto (or such other number of copies as such Investor may reasonably request) and (iii) such
other documents, including copies of any preliminary or final prospectus, as such Investor may
reasonably request from time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor.

          d. The Company shall use reasonable best efforts to (i) register and qualify the Registrable
Securities covered by a registration statement under such other securities or “blue sky” laws of
such jurisdictions in the United States as the Investors reasonably request, (ii) prepare and file
in those jurisdictions, such amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to maintain the effectiveness thereof
during the Registration Period, (iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration Period, and (iv)
take all other actions reasonably necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company shall not be required in connection
therewith or as a condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3(d), (y) subject itself to general
taxation in any such jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify the Investors who hold Registrable Securities of
the receipt by the Company of any notification with respect to the suspension of the registration
or qualification of any of the Registrable Securities for sale under the securities or “blue sky” laws of any jurisdiction in the United States or its receipt of
actual notice of the initiation or threatening of any proceeding for such purpose.

          e. As promptly as practicable after becoming aware of such event or facts (and in any event on
the same business day), the Company shall notify the Investors in writing of the happening of any
event or existence of such facts as a result of which the prospectus included in any registration
statement, as then in effect, includes an untrue statement of a material fact or omits to state a
material

4

 

fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading, and promptly prepare a supplement
or amendment to such registration statement to correct such untrue statement or omission, and
deliver a copy of such supplement or amendment to the Investors (or such other number of copies as
the Investors may reasonably request). The Company shall also promptly notify the Investors in
writing (i) when a prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a registration statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to the Investors by facsimile on the same
day of such effectiveness and by overnight mail and shall be delivered to all Investors at
substantially the same time), (ii) of any request by the SEC for amendments or supplements to any
registration statement or related prospectus or related information, and (iii) of the Company’s
reasonable determination that a post-effective amendment to a registration statement would be
appropriate;

          f. The Company shall use its reasonable best efforts to prevent the issuance of any stop order
or other suspension of effectiveness of any registration statement, or the suspension of the
qualification of any Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at the earliest possible
moment and to notify the Investors of the issuance of such order and the resolution thereof or its
receipt of actual notice of the initiation or threat of any proceeding for such purpose.

          g. The Company shall (i) cause all the Registrable Securities to be listed on each securities
exchange on which securities of the same class or series issued by the Company are then listed, if
any, if the listing of such Registrable Securities is then permitted under the rules of such
exchange, or (ii) secure designation and quotation of all the Registrable Securities on the
Principal Market. The Company shall pay all fees and expenses in connection with satisfying its
obligation under this Section.

          h. The Company shall cooperate with the Investors to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the Registrable
Securities to be offered pursuant to any registration statement and enable such certificates to be
in such denominations or amounts as the Investors may reasonably request and registered in such
names as the Investors may request.

          i. The Company shall at all times provide a transfer agent and registrar with respect to its
ADSs.

          j. If reasonably requested by an Investor, the Company shall (i) immediately incorporate in a
prospectus supplement or post-effective amendment such information as such Investor believes should
be included therein relating to the sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of Registrable Securities being sold,
the purchase price being paid therefor and any other terms of the offering of the Registrable
Securities; (ii) make all required filings of such prospectus supplement or post-effective
amendment as soon as notified of the matters to be incorporated in such prospectus supplement or
post-effective amendment; and (iii) supplement or make amendments to any registration statement.

          k. The Company shall use its reasonable best efforts to cause the Registrable Securities
covered by the any registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to consummate the disposition of such
Registrable Securities.

          l. Within one (1) Trading Day after any registration statement which includes the Registrable
Securities is ordered effective by the SEC, the Company shall deliver, and shall cause legal
counsel for the Company to deliver, to the transfer agent for such Registrable Securities (with
copies to

5

 

the Investors) confirmation that such registration statement has been declared effective
by the SEC in the form attached hereto as Exhibit A. Thereafter, if requested by a Buyer
at any time, the Company shall require its counsel to deliver to such Buyer a written confirmation
whether or not the effectiveness of such registration statement has lapsed at any time for any
reason (including, without limitation, the issuance of a stop order) and whether or not the
registration statement is current and available to the Buyer for sale of all of the Registrable
Securities.

          m. The Company shall take all other reasonable actions necessary to expedite and facilitate
disposition by the Investors of Registrable Securities pursuant to any registration statement.

     4. OBLIGATIONS OF THE INVESTORS.

          a. The Company shall notify the Investors in writing of the information the Company reasonably
requires from the Investors in connection with any registration statement hereunder. Each Investor
shall furnish to the Company such information regarding itself, the Registrable Securities held by
them and the intended method of disposition of the Registrable Securities held by it as shall be
reasonably required to effect the registration of such Registrable Securities and shall execute
such documents in connection with such registration as the Company may reasonably request. At
least ten (10) business days prior to the first anticipated filing date of any registration
statement hereunder, the Company shall notify each Investor of the information the Company requires
from such Investor if such Investor elects to have any of the Registrable Securities included in
such registration statement. An Investor shall provide such information to the Company at least
two (2) business days prior to the first anticipated filing date of such registration statement if
such Investor elects to have any of the Registrable Securities included in the Registration
Statement.

          b. Each Investor, by its acceptance of the Registrable Securities, agrees to cooperate with
the Company as reasonably requested by the Company in connection with the preparation and filing of
any registration statement hereunder.

          c. Each Investor agrees that, upon receipt of any notice from the Company of the happening of
any event or existence of facts of the kind described in Section 3(f) or the first sentence of
3(e), the Investor will immediately discontinue disposition of Registrable Securities pursuant to
any registration statement(s) covering such Registrable Securities until the Investor’s receipt of
the copies of the supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e). Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to promptly deliver ADSs without any restrictive legend in accordance with the terms of the
Subscription Agreement in connection with any sale of Registrable Securities with respect to which
an Investor has entered into a contract for sale prior to the Investor’s receipt of a notice from
the Company of the happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e) and for which the Investor has not yet settled.

          d. Each Investor covenants to the Company that such Investor will complete the information
requested by the selling holder’s questionnaire in the form provided by the Company (the
“Questionnaire”), and further covenants to the Company that all information provided by such
Investor in the Questionnaire will be true, accurate and complete as of the date provided. Each
Investor understands that the written information in the Questionnaire by the Investor, the other
information provided by the Investor pursuant to Section 4, and all written representations made by
the Investor in this Agreement are being provided to the Company specifically for use in, or in
connection with, any registration statement and/or prospectus described in this Agreement, and has
executed this Agreement with such knowledge.

6

 

          e. Each Investor agrees to sell or distribute the Registrable Securities in accordance with
the plan of distribution attached hereto as Exhibit C.

     5. EXPENSES OF REGISTRATION.

          All reasonable expenses, other than sales or brokerage commissions, incurred in connection
with registrations, filings or qualifications pursuant to Sections 2 and 3, including, without
limitation, all registration, listing and qualifications fees, printers and accounting fees, and
fees and disbursements of counsel for the Company, shall be paid by the Company.

     6. INDEMNIFICATION.

          a. To the fullest extent permitted by law, the Company will, and hereby does, indemnify, hold
harmless and defend each Investor, each Person, if any, who controls such Investor, the members,
the directors, officers, partners, employees, agents, representatives of such Investor and each
Person, if any, who controls such Investor within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the “1934 Act”) (each, an “Indemnified Person”), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges, costs, attorneys’ fees,
amounts paid in settlement or expenses, joint or several, (collectively, “Claims”) incurred in
investigating, preparing or defending any action, claim, suit, inquiry, proceeding, investigation
or appeal taken from the foregoing by or before any court or governmental, administrative or other
regulatory agency, body or the SEC, whether pending or threatened, whether or not an indemnified
party is or may be a party thereto (“Indemnified Damages”), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether commenced or threatened, in respect
thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement of a
material fact in the Registration Statement, any New Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of the offering under
the securities or other “blue sky” laws of any jurisdiction in which Registrable Securities are
offered (“Blue Sky Filing”), or the omission or alleged omission to state a material fact required
to be stated therein or necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or supplement thereto with the
SEC) or the omission or alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the statements therein were
made, not misleading, (iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable Securities pursuant to the
Registration Statement or any New Registration Statement or (iv) any material violation by the
Company of this Agreement (the matters in the foregoing clauses (i) through (iv) being,
collectively, “Violations”). The Company shall reimburse each Indemnified Person promptly as such
expenses are incurred and are due and payable, for any legal fees or other reasonable expenses
incurred by them in connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement contained in this Section
6(a): (i) shall not apply to a Claim by an Indemnified Person arising out of or based upon a
Violation which occurs in reliance upon and in conformity with information furnished in writing to
the Company by such Indemnified Person expressly for use in connection with the preparation of the Registration Statement, any New Registration
Statement or any such amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3(c) or Section 3(e); (ii) with respect to any
superceded prospectus, shall not inure to the benefit of any such person from whom the person
asserting any such Claim purchased the Registrable Securities that are the subject thereof (or to
the benefit of any person controlling such person) if the untrue statement or omission of material
fact contained in the superceded prospectus was corrected in the revised prospectus, as then
amended or supplemented, if such revised prospectus was timely made available by the Company
pursuant to Section 3(c) or Section 3(e), and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a violation and such
Indemnified Person, notwithstanding such advice, used it; (iii) shall not be available to the
extent such Claim is based on a failure of such Investor to deliver or to cause to be delivered the
prospectus made available by the Company, if such prospectus was timely made

7

 

available by the Company pursuant to Section 3(c) or Section 3(e); and (iv) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the prior written consent of the
Company, which consent shall not be unreasonably withheld. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the Indemnified Person and
shall survive the transfer of the Registrable Securities by such Investor pursuant to Section 9.

          b. In connection with the Registration Statement or any New Registration Statement, each
Investor agrees to severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each of its directors,
each of its officers who signs the Registration Statement or any New Registration Statement, each
Person, if any, who controls the Company within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, an “Indemnified Party”), against any Claim
or Indemnified Damages to which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are based upon any
Violation, in each case to the extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information about such Investor set forth on
Exhibit B attached hereto or set forth in any other information furnished in writing by
such Investor to the Company expressly for use in connection with such registration statement; and,
subject to Section 6(d), such Investor will reimburse any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6(b) and the agreement with respect to
contribution contained in Section 7 shall not apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of such Investor, which consent shall
not be unreasonably withheld; provided, further, however, that such Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable Securities pursuant to such
registration statement. Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by such Investor pursuant to Section 9.

          c. Promptly after receipt by an Indemnified Person or Indemnified Party under this Section 6
of notice of the commencement of any action or proceeding (including any governmental action or
proceeding) involving a Claim, such Indemnified Person or Indemnified Party shall, if a Claim in
respect thereof is to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified Person or the
Indemnified Party, as the case may be; provided, however, that an Indemnified Person or Indemnified
Party shall have the right to retain its own counsel with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the indemnifying party,
the representation by such counsel of the Indemnified Person or Indemnified Party and the indemnifying party would be inappropriate
due to actual or potential differing interests between such Indemnified Person or Indemnified Party
and any other party represented by such counsel in such proceeding. The Indemnified Party or
Indemnified Person shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or claim by the indemnifying party and shall furnish to
the indemnifying party all information reasonably available to the Indemnified Party or Indemnified
Person which relates to such action or claim. The indemnifying party shall keep the Indemnified
Party or Indemnified Person fully

8

 

apprised at all times as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for any
settlement of any action, claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in respect to such claim or
litigation. Following indemnification as provided for hereunder, the indemnifying party shall be
subrogated to all rights of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification has been made. The
failure to deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action.

          d. The indemnification required by this Section 6 shall be made by periodic payments of the
amount thereof during the course of the investigation or defense, as and when bills are received or
Indemnified Damages are incurred.

          e. The indemnity agreements contained herein shall be in addition to (i) any cause of action
or similar right of the Indemnified Party or Indemnified Person against the indemnifying party or
others, and (ii) any liabilities the indemnifying party may be subject to pursuant to the law.

     7. CONTRIBUTION.

          To the extent any indemnification by an indemnifying party is prohibited or limited by law,
the indemnifying party agrees to make the maximum contribution with respect to any amounts for
which it would otherwise be liable under Section 6 to the fullest extent permitted by law;
provided, however, that: (i) no seller of Registrable Securities guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933 Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale of such Registrable
Securities.

     8. REPORTS AND DISCLOSURE UNDER THE SECURITIES ACTS.

          With a view to making available to the Investors the benefits of Rule 144 promulgated under
the 1933 Act or any other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration (“Rule 144”), the
Company agrees, at the Company’s sole expense, to:

          a. make and keep public information available, as those terms are understood and defined in
Rule 144;

          b. file with the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains subject to such
requirements and the filing of such reports and other documents is required for the applicable
provisions of Rule 144; and

9

 

          c. furnish to an Investor so long as such Investor owns Registrable Securities, promptly upon
request, (i) a written statement by the Company that it has complied with the reporting and or
disclosure provisions of Rule 144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to permit such Investor to
sell such securities pursuant to Rule 144 without registration.

          d. take such additional action as is requested by an Investor to enable such Investor to sell
the Registrable Securities pursuant to Rule 144, including, without limitation, delivering all such
legal opinions, consents, certificates, resolutions and instructions to the Company’s Transfer
Agent as may be requested from time to time by such Investor and otherwise fully cooperate with
such Investor and such Investor’s broker to effect such sale of securities pursuant to Rule 144.

The Company agrees that damages may be an inadequate remedy for any breach of the terms and
provisions of this Section 8 and that each Investor shall, whether or not it is pursuing any
remedies at law, be entitled to equitable relief in the form of a preliminary or permanent
injunctions, without having to post any bond or other security, upon any breach or threatened
breach of any such terms or provisions.

     9. ASSIGNMENT OF REGISTRATION RIGHTS.

          The Company shall not assign this Agreement or any rights or obligations hereunder without the
prior written consent of the Investors holding 70% of the Registrable Securities then outstanding,
including by merger or consolidation. No Investor may assign its rights under this Agreement
without the written consent of the Company, other than to an affiliate of the Investor or, upon
prior notice to the Company in writing, in connection with a private transfer or sale of
Registrable Securities made pursuant to an exemption from registration under the 1933 Act (other
than Rule 144 thereunder) and in compliance with this Agreement and the Subscription Agreement.

     10. AMENDMENT OF REGISTRATION RIGHTS.

          Provisions of this Agreement may be amended and the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors holding 70% of the Registrable Securities then
outstanding. Notwithstanding the foregoing, the Company shall be entitled to amend this Agreement
without the consent of the Investors to add additional Investors as parties hereto in connection
with additional permitted issuances of Preferred Stock.

     11. MISCELLANEOUS.

          a. A Person is deemed to be a holder of Registrable Securities whenever such Person owns or is
deemed to own of record such Registrable Securities. If the Company receives conflicting
instructions, notices or elections from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions, notice or election received from
the registered owner of such Registrable Securities.

          b. Any notices, consents, waivers or other communications required or permitted to be given
under the terms of this Agreement 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 (1) Trading Day after deposit with a nationally recognized overnight
delivery

10

 

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 Investors, to the address and facsimile number set forth on such Investor’s
signature page hereto.

	 	 	 	 	 	 	 
	 	 	With a copy to:  
	 

	 	 	 	Grushko & Mittman, P.C.	 	 
	 

	 	 	 	551 5th Ave., Suite 1601	 	 
	 

	 	 	 	NY, NY 10176
	 	 
	 

	 	 	 	Telephone: 212-697-9500	 	 
	 

	 	 	 	Facsimile: 212/697-3575	 	 
	 

	 	 	 	Attention: Barbara Mittman	 	 

     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, recipient
facsimile number and an image of the first page of such transmission or (C) provided by a
nationally recognized overnight delivery service, shall be rebuttable evidence of personal service,
receipt by facsimile or receipt from a nationally recognized overnight delivery service in
accordance with clause (i), (ii) or (iii) above, respectively.

c. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay
by a party in exercising such right or remedy, shall not operate as a waiver thereof. The parties
hereto agree that irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof .

          d. The corporate laws of England and Wales shall govern all issues concerning the relative
rights of the Company and its stockholders. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by the internal laws
of the State of New York, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New York or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of New York. Each party hereby
irrevocably submits to the

11

 

exclusive jurisdiction of the state and federal courts sitting the City of New York, for the adjudication of any dispute hereunder or in connection herewith 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. If any provision of this Agreement
shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction
or the validity or enforceability of any provision of this Agreement in any other jurisdiction.
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.

          e. This Agreement and the Subscription Agreement constitute the entire agreement among the
parties hereto with respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to herein and therein.
This Agreement and the Subscription Agreement supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

          f. Subject to the requirements of Section 9, this Agreement shall inure to the benefit of and
be binding upon the permitted successors and assigns of each of the parties hereto.

          g. The headings in this Agreement are for convenience of reference only and shall not limit or
otherwise affect the meaning hereof.

          h. This Agreement may be executed in identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement. This Agreement, once
executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy
of this Agreement bearing the signature of the party so delivering this Agreement.

          i. Each party shall do and perform, or cause to be done and performed, all such further acts
and things, and shall execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.

          j. The language used in this Agreement will be deemed to be the language chosen by the parties
to express their mutual intent and no rules of strict construction will be applied against any
party.

          k. This Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be
enforced by, any other Person.

[Signature Pages Follow]

12

 

     IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly
executed as of day and year first above written.

	 	 	 	 	 	 	 
	 	 	THE COMPANY:	 	 
	 

	 	 	 	 	 	 
	 	 	INSIGNIA SOLUTIONS PLC	 	 
	 

	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark McMillan	 	 
	 

	 	 	 	 

	 	 
	 

	 	Name:
	 	Mark McMillan	 	 
	 

	 	Title:
	 	President and Chief Executive Officer	 	 

13

 

     IN WITNESS WHEREOF, the parties have caused this Registration Rights Agreement to be duly
executed as of day and year first above written.

BUYER:

[NAME]

By:                                                            

Name:                                                            

Title:                                                            

Address:                                                            

                                                                                

                                                                                

14

 

EXHIBIT A

TO REGISTRATION RIGHTS AGREEMENT

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

[Date]

[TRANSFER AGENT]

                                        

                                        

Re: [                    ]

Ladies and Gentlemen:

     We are counsel to INSIGNIA SOLUTIONS plc, a company incorporated under the laws of England and
Wales (the “Company”), and have represented the Company in connection with that certain Securities
Subscription Agreement, dated as of December 29, 2005 (the “Subscription Agreement”), entered into
by and among the Company, INSIGNIA SOLUTIONS INC. a company incorporated under the laws of Delaware
(the “Issuer”), and                     ,                      and                      (collectively the “Buyers”) pursuant to which
the Company has agreed to issue to the Buyers up to an aggregate                      of the Company’s Ordinary
Shares represented by American depository shares (“ADSs”), (the “Exchange Shares”) in accordance
with the terms of the Subscription Agreement. In addition, pursuant to the Subscription Agreement,
the Company issued to the Buyers warrants to purchase up to an aggregate of                      ADSs (the
“Warrant Shares”). Pursuant to the Subscription Agreement, the Company also has entered into a
Registration Rights Agreement, dated as of December 29, 2005, with the Buyers (the “Registration
Rights Agreement”) pursuant to which the Company agreed, among other things, to register the
Exchange Shares and the Warrant Shares under the Securities Act of 1933, as amended (the “1933
Act”). In connection with the Company’s obligations under the Subscription Agreement and the
Registration Rights Agreement, on                     , 200_, the Company filed a Registration Statement (File
No. 333-                    ) (the “Registration Statement”) with the Securities and Exchange Commission (the
“SEC”) relating to the sale of the Exchange Shares and the Warrant Shares.

     In connection with the foregoing, we advise you that a member of the SEC’s staff has advised
us by telephone that the SEC has entered an order declaring the Registration Statement effective
under the 1933 Act at 5:00 P.M. on                     , 200___and we have no knowledge, after telephonic
inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness has been
issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and
the Exchange Shares, and the Warrant Shares are available for sale under the 1933 Act pursuant to
the Registration Statement.

     The Buyers have confirmed that they shall comply with all securities laws and regulations
applicable to it including applicable prospectus delivery requirements upon sale of the Exchange
Shares, and the Warrant Shares.

Very truly yours,

[Company Counsel]

By:                                                            

 

 

EXHIBIT B

TO REGISTRATION RIGHTS AGREEMENT

Information About The Investor Furnished To The Company By The Investor

Expressly For Use In Connection With The Registration Statement

     As of the date of the Subscription Agreement,                      beneficially owned                      ADSs of the
Company.                      and                     , the principals of                     , are deemed to be beneficial
owners of all of the ADSs owned by                     . Messrs.                      and                      have shared voting
and investment power over the ADSs being offered under the prospectus filed with the SEC in
connection with the transactions contemplated under the Subscription Agreement.

 

 

EXHIBIT C

TO REGISTRATION RIGHTS AGREEMENT

PLAN OF DISTRIBUTION

     The shares offered by this prospectus are being offered by the selling
shareholders. The shares may be sold or distributed from time to time by the selling shareholders
directly to one or more purchasers or through brokers, dealers, or underwriters who may act solely
as agents at market prices prevailing at the time of sale, at prices related to the prevailing
market prices, at negotiated prices, or at fixed prices, which may be changed. The sale of the
shares offered by this prospectus may be effected in one or more of the following methods:

	 	•	 	ordinary brokers’ transactions;
	 
	 	•	 	transactions involving cross or block trades;
	 
	 	•	 	through brokers, dealers, or underwriters who may act solely as agents;
	 
	 	•	 	“at the market” into an existing market for the shares;
	 
	 	•	 	in other ways not involving market makers or established trading markets, including direct sales to purchasers or sales
effected through agents;
	 
	 	•	 	in privately negotiated transactions;
	 
	 	•	 	through put or call options transactions relating to the
shares, or through short sales of shares; or
	 
	 	•	 	any combination of the foregoing.

     In order to comply with the securities laws of certain states, if applicable, the shares may
be sold only through registered or licensed brokers or dealers. In addition, in certain states, the
shares may not be sold unless they have been registered or qualified for sale in the state or an
exemption from the registration or qualification requirement is available and complied with.

          Brokers, dealers, underwriters, or agents participating in the distribution of the shares as
agents may receive compensation in the form of commissions, discounts, or concessions from the
selling shareholder and/ or purchasers of the shares for whom the broker-dealers may act as agent.
The compensation paid to a particular broker-dealer may be less than or in excess of customary
commissions.

          Selling shareholders may be deemed to be “underwriters” within the meaning of the Securities
Act of 1933, as amended with respect to the shares included in this prospectus. Accordingly, any
commission received by them and any profit on the resale of the shares of ADSs as principal might
be deemed to be underwriting discounts and commissions under the Securities Act.

     None of the selling shareholders nor we can presently estimate the amount of compensation that
any agent will receive. We know of no existing arrangements between any selling shareholder, any
other shareholder, broker, dealer, underwriter, or agent relating to the sale or distribution of
the shares offered by this prospectus. At the time a particular offer of shares is made, a
prospectus supplement, if required, will be distributed that will set forth the names of any
agents, underwriters, or dealers and any compensation from the selling shareholder and any other
required information.

     We will pay all of the expenses incident to the registration, offering, and sale of the shares
to the public other than commissions or discounts of underwriters, broker-dealers, or agents. We
have also

 

 

agreed to indemnify the selling shareholders and related persons against specified liabilities,
including liabilities under the Securities Act.

     Insofar as indemnification for liabilities arising under the Securities Act may be permitted
to our directors, officers, and controlling persons, we have been advised that in the opinion of
the SEC this indemnification is against public policy as expressed in the Securities Act and is
therefore, unenforceable.

     The selling shareholders will act independently of us in making decisions with respect to the
timing, manner and size of each sale.

     In connection with distributions of the shares or otherwise, the selling shareholders may
enter into hedging transactions with broker-dealers or other financial institutions. In connection
with those transactions, broker-dealers or other financial institutions may engage in short sales
of the ADSs in the course of hedging the positions they assume with the selling shareholders. After
the date of this prospectus, the selling shareholders also may sell the ADSs short and redeliver
the shares to close out those short positions. The selling shareholders also may enter into option
or other transactions or the creation of one or more derivative securities with broker-dealers or
other financial institutions that require the delivery to the broker-dealer or other financial
institution of shares offered by this prospectus, which shares the broker-dealer or other financial
institution may resell pursuant to this prospectus (as supplemented or amended to reflect those
transactions). The selling shareholders also may pledge or hypothecate shares to a broker-dealer or
other financial institution, and, upon a default, that broker-dealer or other financial institution
may effect sales of the pledged shares pursuant to this prospectus (as supplemented or amended to
reflect that transaction). In effecting sales, broker-dealers or agents engaged by the selling
shareholders may arrange for other broker-dealers to participate.

     We have advised the selling shareholders that the anti-manipulation rules under the Securities
Exchange Act of 1934 (the “Exchange Act”) may apply to sales of the shares offered under this
prospectus in the market, and to their own activities and those of their affiliates. With respect
to the shares issued in connection with the October 2004 private placement, the selling
shareholders have advised us that during the time they are engaged in attempting to sell the shares
offered under this prospectus, they will:

	 	•	 	not engage in any stabilization activity in connection with any of our securities;
	 
	 	•	 	provide a copy of the final prospectus to each person to whom shares may be offered, and to each broker-dealer, if any,
through which any shares may be offered;
	 
	 	•	 	not bid for or purchase any of our securities or any rights to acquire our securities, or attempt to induce any person to
purchase any of our securities or any rights to acquire our securities other than as permitted under the Exchange Act; and
	 
	 	•	 	not effect any sale or distribution of the shares until after the prospectus has been appropriately amended or
supplemented, if required.

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