Document:

exv10w01

 

Exhibit 10.01

SECURITIES SUBSCRIPTION AGREEMENT

     SECURITIES SUBSCRIPTION AGREEMENT (the “Agreement”), dated as of June 30, 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”). The Issuer is a wholly
owned subsidiary of the Company. Capitalized terms used herein and not otherwise defined herein
are defined in Section 10 hereof.

WHEREAS:

     Subject
to the terms and conditions set forth in this Agreement, the Issuer wishes to sell tothe Buyer, and the Buyer wishes to subscribe for ___ shares of Series A Preferred Stock, stated
value of $100 per share, of the Issuer (the “Preferred Stock”). Each share of Preferred Stock
shall be exchangeable as described herein for American depository shares (each an “ADS” and
collectively, the “ADSs”), each ADS representing one ordinary share, 20 UK pence per share nominal
value, of the Company (the “Ordinary Shares”). The aggregate purchase price to be paid by the Buyer
shall be _____________ Dollars ($___,000).

     NOW THEREFORE, the Issuer, the Company and the Buyer hereby agree as follows:

	 	1.	 	PURCHASE OF SERIES A PREFERRED STOCK; EXCHANGE FOR ADSs.

     (a)       Closing. Subject to the terms and conditions set forth herein, the Issuer hereby
agrees to issue to the Buyer, and the Buyer hereby agrees to
subscribe for ___ shares of Preferred
Stock. The issuance of and subscription for the ___ shares of Preferred Stock hereunder shall
occur (the “Closing”) within two (2) Trading Days following the date of satisfaction of the
conditions to the Closing set forth in Sections 6 and 7 below, the date of such Closing, the
“Closing Date”). The terms and conditions of the Preferred Stock shall be as set forth in
Exhibit A attached hereto. All payments made under this Agreement shall be made in lawful
money of the United States of America by check or wire transfer of immediately available funds to
such account as the Company or the Issuer may from time to time designate by written notice in
accordance with the provisions of this Agreement. Whenever any amount expressed to be due by the
terms of this Agreement is due on any day that is not a Trading Day, the same shall instead be due
on the next succeeding day which is a Trading Day.

     (b)       Exchange of Preferred Stock for ADSs.

     (i)       Subject to Section 1(b)(ii), the shares of Preferred Stock shall be exchangeable for
Exchange Shares at the Exchange Rate, as such ratio may be adjusted from time to time to reflect
stock dividends, combinations, splits or similar events as provided in Section 1(b)(iv) hereof,
under the following circumstances:

(1)       At any time following the date of this Agreement and from time to time, the Buyer
shall have the right to exchange any or all or its shares of Preferred Stock for Exchange
Shares at the Exchange Rate;

(2)       In the event that at any time following the date of this Agreement and the date
that the Registration Statement (as defined in Section 4(a) hereof) is declared effective by
the SEC (the “Effective Date”), the Sale Price of the ADSs on the Principal Market shall be
greater

 

 

than $1.50 (as such amount may be adjusted from time to time to reflect stock
dividends, combinations, splits or similar events) for a period of ten (10) consecutive
Trading Days, any and all remaining outstanding shares of Preferred Stock will, upon written
notice from the Company to the Buyer, be exchanged for Exchange Shares at the Exchange Rate
so long as the Registration Statement remains available for use by the Buyer and the
Exchange Shares can be issued without any restrictive transfer legend; and

(3)       To the extent any shares of the Preferred Stock have not been exchanged pursuant
hereto prior to June 30, 2007, any and all remaining outstanding shares of Preferred Stock
will automatically be exchanged (and the Buyer, the Issuer and the Company agree to take any
and all action needed to cause the shares of Preferred Stock to be exchanged) for Exchange
Shares at the Exchange Rate.

     (ii)       The Buyer shall not have the right to exchange shares of Preferred Stock for Exchange
Shares pursuant to Section 1(b)(i)(1), nor shall shares of Preferred Stock be automatically
exchanged for Exchange Shares pursuant to Sections 1(b)(i)(2) or 1(b)(i)(3), to the extent that
after giving effect to such exchange, the Buyer together with its affiliates would beneficially own
in excess of 9.9% of the Company’s issued and outstanding Ordinary Shares following such exchange.
For purposes hereof, the number of Ordinary Shares beneficially owned by the Buyer and its
affiliates or acquired by the Buyer and its affiliates, as the case may be, shall include the
number of Exchange Shares issuable in connection with an exchange under this Agreement with respect
to which the determination is being made, but shall exclude the number of ADSs which would be
issuable upon exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company (including, without limitation, any other Preferred Shares, notes or
warrants) subject to a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by the Buyer and its affiliates. For purposes of this Section 2(b), in
determining the number of issued and outstanding Ordinary Shares, the Buyer may rely on the number
of issued and outstanding Ordinary Shares as reflected in (1) the Company’s most recent Form 10-Q
or Form 10-K, as the case may be, (2) a more recent public announcement by the Company or (3) any
other written communication by the Company or its Transfer Agent setting forth the number of
Ordinary Shares issued and outstanding. Upon the reasonable written or oral request of the Buyer,
the Company shall promptly confirm orally and in writing to the Buyer the number of Ordinary Shares
then issued and outstanding. In any case, the number of issued and outstanding Ordinary Shares
shall be determined after giving effect to the subscription under this Agreement by the Buyer since
the date as of which such number of issued and outstanding Ordinary Shares was reported. Except as
otherwise set forth herein, for purposes of this Section, beneficial ownership shall be determined
in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.

     (iii)       All rights incident to a share of Preferred Stock (excluding rights to any dividend
declared prior to exchange but unpaid as of the exchange) will terminate automatically upon any
exchange of such share for Exchange Shares in accordance with the terms hereof.

     (iv)       In case the Company shall at any time after the date of issue of the Preferred Stock (A)
declare a dividend or make a distribution on the Ordinary Shares payable in Ordinary Shares, (B)
subdivide or split the outstanding Ordinary Shares, (C) consolidate or reclassify the outstanding
Ordinary Shares into a smaller number of shares, (D) issue any shares of its authorized share
capital in a reclassification of Ordinary Shares (including any such reclassification in connection
with a consolidation, amalgamation or merger in which the Company is the continuing corporation), or (E) consolidate with, or merge
with or into, any other Person, the Exchange Rate in effect at the time of the record date for such
dividend or distribution or of the effective date of such subdivision, split, combination,
consolidation, amalgamation, merger or reclassification shall be proportionately adjusted so

Page 2

 

that
the exchange of the Preferred Stock after such time shall entitle the Buyer to receive the
aggregate number of Exchange Shares or other securities of the Company (or shares of any security
into which the Ordinary Shares have been combined, consolidated, merged or reclassified) which, if
the Preferred Stock had been exchanged immediately prior to such time, the Buyer would have owned
upon such exchange and been entitled to receive by virtue of such dividend, distribution,
subdivision, split, combination, consolidation, amalgamation, merger or reclassification, assuming
the Buyer (x) is not a Person with which the Company consolidated or into which the Company merged
or which merged into the Company or to which such recapitalization, sale or transfer was made, as
the case may be (a “constituent person”), or an affiliate of a constituent person and (y) failed to
exercise any rights of election as to the kind or amount of securities, cash and other property
receivable upon such reclassification, change, consolidation, amalgamation, merger,
recapitalization, sale or transfer (provided, that if the kind or amount of securities, cash and
other property receivable upon such reclassification, change, consolidation, amalgamation, merger,
recapitalization, sale or transfer is not the same for each Ordinary Share held immediately prior
to such reclassification, change, consolidation, amalgamation, merger, recapitalization, sale or
transfer by other than a constituent person or an affiliate thereof and in respect of which such
rights of election shall not have been exercised (“non-electing share”), then for the purpose of
this Section the kind and amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, amalgamation, merger, recapitalization, sale or transfer
by each non-electing share shall be deemed to be the kind and amount so receivable per share by a
plurality of the non-electing shares). Such adjustment shall be made successively whenever any
event listed above shall occur. In the event that, at any time as a result of the provisions of
this Section 1(b)(iv), the Buyer upon subsequent exchange shall become entitled to receive any
shares in the authorized share capital of the Company other than the Exchange Shares, the number of
such other shares so receivable upon exchange of the Preferred Stock shall thereafter be subject to
adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the
provisions contained herein. The Company shall notify the Buyer of all adjustments pursuant to
this Section 1(b)(iv) and such notice shall be accompanied by a schedule of computations of the
adjustments.

     (v)       In order to exercise its right to exchange shares of Preferred Stock for Exchange Shares
pursuant to Section 1(b), the Buyer shall surrender the certificate or certificates representing
the Preferred Stock it wants to exchange for Exchange Shares, together with a duly signed
irrevocable exchange notice (an “Exchange Notice”), stating that the Buyer elects to exchange such
shares of Preferred Stock to the Company. Subject to Section 1(b)(ii) hereof, in the event that
shares of Preferred Stock are to be automatically exchanged for Exchange Shares pursuant to
Sections 1(b)(i)(2) or 1(b)(i)(3), the Buyer shall promptly surrender the certificate or
certificates representing the Preferred Stock to be automatically exchanged for Exchange Shares to
the Company. Shares of Preferred Stock shall be deemed to have been exchanged immediately prior to
the close of business on the day of surrender of such shares of Preferred Stock for exchange in
accordance with the foregoing provisions, and at such time the rights of the Buyer as a holder of
such shares of the Preferred Stock shall cease. The Company shall, within three business days
after the shares of Preferred Stock have been deemed exchanged, allot the relevant Exchange Shares,
whereupon the Buyer shall be treated for all purposes as the record holder of the Exchange Shares
issuable upon exchange. As promptly as practicable on or after the date of allotment of the
relevant Exchange Shares (but in no event later than three business days thereafter), the Company
shall issue and deliver to the Buyer a certificate or certificates for the full number of Exchange
Shares issuable upon exchange. No fractional Exchange Shares shall be issued upon the exchange of
any shares of Preferred Stock and the total number of Exchange Shares issuable shall be rounded up or down to the nearest whole
Exchange Share.

     (c)       Taxes. The Issuer shall pay any and all transfer, stamp or similar taxes that may
be payable with respect to the issuance and delivery of any Preferred Shares to the Buyer made
under or in

Page 3

 

connection with this Agreement. The Company shall pay any and all transfer, stamp or
similar taxes that may be payable with respect to the issuance and delivery of any Ordinary Shares,
ADSs or Warrants to the Buyer made under or in connection with this Agreement.

     (d)       No Issuance below Nominal Value. Notwithstanding any provision hereof to the
contrary, the Company shall not effect any issuance of Ordinary Shares under this Agreement (or
have its transfer agent or depository issue any ADSs) and the Buyer shall not have the right nor
the obligation to subscribe for any ADSs under this Agreement where the Exchange Price for any
subscriptions of Exchange Shares would be less than the equivalent U.S. dollar amount of the then
nominal value of the Ordinary Shares calculated by reference to the Currency Conversion Rate
prevailing at the date the relevant Ordinary Shares are issued to the Buyer. “Currency Conversion
Rate” means on any given day the average currency conversion rate quoted by the Bank of America in
London as the price for Pounds Sterling purchased with U.S. Dollars. As of the date of this
Agreement, the nominal value of the Ordinary Shares is 20 UK pence. The Company shall give the
Buyer at least five (5) Trading Days prior written notice of any changes to the nominal value of
the Ordinary Shares.

	 	2.	 	BUYER’S REPRESENTATIONS AND WARRANTIES.

     The Buyer represents and warrants to the Company and to the Issuer that as of the date hereof
and as of the Closing Date:

     (a)       Investment Purpose. The Buyer is entering into this Agreement and acquiring the
___ shares of Preferred Stock and the Warrants (as
defined in Section 4(d) hereof) (the ___ shares of Preferred Stock and the Warrants are collectively referred to herein as the
“Securities”), for its own account for investment only and not with a view towards, or for resale
in connection with, the public sale or distribution thereof; provided however, by making the
representations herein, the Buyer does not agree to hold any of the Securities for any minimum or
other specific term.

     (b)       Accredited Investor Status. The Buyer is an “accredited investor” as that term is
defined in Rule 501(a)(3) of Regulation D.

     (c)       Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company and the Issuer are relying in
part upon the truth and accuracy of, and the Buyer’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order
to determine the availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.

     (d)       Information. The Buyer has been furnished with all materials relating to the
business, finances and operations of the Company and the Issuer and materials relating to the offer
and issue of the Securities that have been reasonably requested by the Buyer, including, without
limitation, the SEC Documents (as defined in Section 3(f) hereof). The Buyer understands that its
investment in the Securities involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the Securities including a total loss, (ii) has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks of the proposed investment
in the Securities and (iii) has had an opportunity to ask questions of and receive answers from the
officers of the Company and the Issuer concerning the financial condition and business of the
Company and the Issuer and others matters related to an investment in the Securities. Neither such
inquiries nor any other due diligence investigations conducted by the Buyer or its representatives
shall modify, amend or affect

Page 4

 

the Buyer’s right to rely on the Company’s representations and
warranties contained in Section 3 below. The Buyer has sought such accounting, legal and tax
advice as it has considered necessary to make an informed investment decision with respect to its
acquisition of the Securities.

     (e)       No Governmental Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.

     (f)       Transfer or Resale. The Buyer understands that except as provided in the
Registration Rights Agreement (as defined in Section 4(a) hereof): (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder or
(B) an exemption exists permitting such Securities to be sold, assigned or transferred without such
registration; (ii) any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register the
Securities under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.

     (g)       Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and binding agreement of the Buyer
enforceable against the Buyer in accordance with its terms, subject as to enforceability to general
principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.

     (h)       Residency. The Buyer is a resident of the State of ______.

     (i)        No Prior Short Selling. The Buyer represents and warrants to the Company that at
no time prior to the date of this Agreement has any of the Buyer, its agents, representatives or
affiliates engaged in or effected, in any manner whatsoever, directly or indirectly, any (i) “short
sale” (as such term is defined in Rule 3b-3 of the Securities Exchange Act of 1934, as amended (the
“1934 Act”)) of the Ordinary Shares or ADSs or (ii) hedging transaction, which establishes a net
short position with respect to the Ordinary Shares or ADSs.

	 	3.	 	REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE ISSUER.

     Each of the Company and the Issuer jointly and severally represents and warrants to the Buyer
that as of the date hereof and as of the Closing Date:

     (a)       Organization and Qualification. The Issuer is a wholly owned subsidiary of the
Company. The Company and its “Subsidiaries” (which for purposes of this Agreement means any entity
in which the Company, directly or indirectly, owns 50% or more of the voting stock or capital stock
or other similar equity interests) are corporations duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated, and have the requisite
corporate power and authority to own their properties and to carry on their business as now being
conducted. Each of the

Page 5

 

Company and its Subsidiaries is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification necessary, except to the extent
that the failure to be so qualified or be in good standing could not reasonably be expected to have
a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on any of: (i) the business, properties, assets, operations, results of operations
or financial condition of the Company and its Subsidiaries, if any, taken as a whole, or (ii) the
authority or ability of the Company to perform its obligations under the Transaction Documents (as
defined in Section 3(b) hereof). The Company has no Subsidiaries except as set forth on Schedule
3(a).

     (b)       Authorization; Enforcement; Validity. (i) Each of the Company and the Issuer has
the requisite corporate power and authority to enter into and perform its obligations applicable to
it under this Agreement, the terms and conditions of the Preferred Stock as set forth in
Exhibit A attached hereto, the Registration Rights Agreement, the Warrants and each of the
other agreements entered into by the parties on the Closing Date and attached hereto as exhibits to
this Agreement (collectively, the “Transaction Documents”), and to issue the Securities in
accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the Issuer and the consummation by it of the transactions contemplated
hereby and thereby, including without limitation, the issuance of the Preferred Shares and the
Warrants and the reservation for issuance and the issuance of the Warrant Shares and Ordinary
Shares and ADSs issuable under the Transaction Documents, respectively, have been duly authorized
by the Company’s and the Issuer’s Board of Directors and no further consent or authorization is
required by the Company, the Issuer, its Board of Directors or its shareholders, (iii) this
Agreement has been, and each other Transaction Document shall be on the Closing Date, duly executed
and delivered by the Company and the Issuer and (iv) this Agreement constitutes, and each other
Transaction Document upon its execution on behalf of the Company and the Issuer, shall constitute,
the valid and binding obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of creditors’ rights and remedies. The Board of
Directors of the Company has approved the resolutions (the “Company Signing Resolutions”)
substantially in the form as set forth as Exhibit B-1 attached hereto to authorize this
Agreement and the transactions contemplated hereby. The Company Signing Resolutions are valid, in
full force and effect and have not been modified or supplemented in any respect. The Board of
Directors of the Issuer has approved the resolutions (the “Issuer Signing Resolutions”)
substantially in the form as set forth as Exhibit B-2 attached hereto to authorize this
Agreement and the transactions contemplated hereby. The Issuer Signing Resolutions are valid, in
full force and effect and have not been modified or supplemented in any respect. The Company has
delivered to the Buyer a certificate of the Secretary of the Company certifying the adoption of the
Company Signing Resolutions by the members of the Board of Directors of the Company. No other
approvals or consents of the Company’s Board of Directors and/or shareholders is necessary under
applicable laws and the Company’s Articles of Association (the “Articles of Association”) and/or
Memorandum of Association (the “Memorandum of Association”) to authorize the execution and delivery
of the Transaction Documents or any of the transactions contemplated hereby or thereby, including,
but not limited to, the issuance of the Warrants, the reservation for issuance and the issuance of the Warrant Shares upon exercise of the Warrants
and the reservation for issuance and the issuance of the ADSs on exchange of the Preferred Stock.
The Issuer has delivered to the Buyer a certificate of the Secretary of the Issuer certifying the
adoption of the Issuer Signing Resolutions by the members of the Board of Directors of the Issuer.
No other approvals or consents of the Issuer’s Board of Directors and/or stockholders is necessary
under applicable laws and the Issuer’s Certificate of Incorporation (the “Certificate of
Incorporation”) and/or the Issuer’s By-Laws (the “By-Laws”) to authorize the execution

Page 6

 

and delivery
of the Transaction Documents or any of the transactions contemplated hereby or thereby, including
but not limited to the issuance of the Preferred Stock.

     (c)       Capitalization. As of June 24, 2005, 2005, the authorized share capital of the
Company consists of (i) 75,000,000 Ordinary Shares, of which 42,433,025 Ordinary Shares are issued
and outstanding, none are held as treasury shares, 41,604,818 Ordinary Shares are represented by
ADSs, 9,772,071 Ordinary Shares are reserved for issuance pursuant to the Company’s stock option
plans and employee stock purchase plans, of which only approximately 2,115,742 Ordinary Shares
remain available for future grants and 6,108,183 Ordinary Shares are issuable and reserved for
issuance pursuant to securities (other than stock options issued pursuant to the Company’s stock
option plans) exercisable or exchangeable for, or convertible into, Ordinary Shares and (ii)
3,000,000 Preferred Shares, 20 UK pence nominal value, of which as of the date hereof no Preferred
Shares are issued and outstanding. All of such issued and outstanding Ordinary Shares have been,
or upon issuance will be, validly issued and are fully paid and nonassessable. Except as disclosed
in Schedule 3(c), (i) no shares of the Company’s capital are subject to preemptive rights or any
other similar rights or any liens or encumbrances suffered or permitted by the Company, (ii) there
are no outstanding debt securities, (iii) there are no outstanding options, warrants, scrip, rights
to subscribe to, calls or commitments of any character whatsoever relating to, or securities or
rights convertible into, any shares in the capital of the Company or any of its Subsidiaries, or
contracts, commitments, understandings or arrangements by which the Company or any of its
Subsidiaries is or may become bound to issue additional shares in the capital of the Company or any
of its Subsidiaries or options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into, any shares in the
capital of the Company or any of its Subsidiaries, (iv) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the sale of any of
their securities under the 1933 Act (except the Registration Rights Agreement), (v) there are no
outstanding securities or instruments of the Company or any of its Subsidiaries which contain any
redemption or similar provisions, and there are no contracts, commitments, understandings or
arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a
security of the Company or any of its Subsidiaries, (vi) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the issuance of the
Securities as described in this Agreement and (vii) the Company does not have any stock
appreciation rights or “phantom stock” plans or agreements or any similar plan or agreement. The
Company has furnished to the Buyer true and correct copies of the Articles of Association, as
amended and as in effect on the date hereof, and the Memorandum of Association, as currently in
effect on the date hereof, and summaries of the terms of all securities convertible into or
exercisable for Ordinary Shares or ADSs, if any, and copies of any documents containing the
material rights of the holders thereof in respect thereto. As of June 30, 2005 the authorized
capital stock of the Issuer consists of (i) 1,000 shares of common stock, of which as of the date
hereof, 1,000 shares are issued and outstanding, none are held as treasury shares, no shares are
reserved for issuance pursuant to the Issuer’s stock option plans and no shares are issuable and
reserved for issuance pursuant to securities exercisable or exchangeable for, or convertible into,
shares of common stock of the Issuer and (ii) 20,000 shares of preferred stock of the Issuer, no
par value with a $100 per share liquidation preference, of which as of the date hereof 10,000
shares are issued and outstanding. All of such outstanding shares have been, or upon issuance will
be, validly issued and are fully paid and nonassessable. Except as disclosed in Schedule 3(c), (i) no shares of the
Issuer’s capital stock are subject to preemptive rights or any other similar rights or any liens or
encumbrances suffered or permitted by the Issuer, (ii) there are no outstanding debt securities of
the Issuer, (iii) there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments of any character whatsoever relating to, or securities or rights convertible into,
any shares of capital stock of the Issuer or any of its Subsidiaries, or contracts, commitments,
understandings or arrangements by which the Issuer or any of its Subsidiaries is or may become
bound to issue additional shares of capital stock of the Issuer or any of its Subsidiaries or

Page 7

 

options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, any shares of capital stock of the Issuer or
any of its Subsidiaries, (iv) there are no agreements or arrangements under which the Issuer or any
of its Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement), (v) there are no outstanding securities or instruments
of the Issuer or any of its Subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the Issuer or any of
its Subsidiaries is or may become bound to redeem a security of the Issuer or any of its
Subsidiaries, (vi) there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities as described in this Agreement
and (vii) the Company does not have any stock appreciation rights or “phantom stock” plans or
agreements or any similar plan or agreement. The Issuer has furnished to the Buyer true and
correct copies of the Certificate of Incorporation, as amended and as in effect on the date hereof
and the By-laws, as amended and as in effect on the date hereof, and summaries of the terms of all
securities convertible into or exercisable for its common stock, if any, and copies of any
documents containing the material rights of the holders thereof in respect thereto.

     (d)       Issuance of Securities. The Preferred Stock has been duly authorized and, upon
issuance in accordance with the terms of the Transaction Documents shall be (i) validly issued,
fully paid and non-assessable and (ii) free from all taxes, liens and charges with respect to the
issue thereof. The Warrants have been duly authorized and, upon issuance in accordance with the
terms hereof and the Warrants, the Warrant Shares and the Ordinary Shares represented by such
Warrant Shares shall be (i) validly issued, fully paid and non-assessable and (ii) free from all
taxes, liens and charges with respect to the issue thereof. ________ ADSs and ________ Ordinary
Shares represented by such ADSs have been duly authorized and reserved for issuance as Exchange
Shares upon exchange of the Preferred Stock. ________ ADSs and ________ Ordinary Shares
represented by such ADSs have been duly authorized and reserved for issuance upon exercise of the
Warrants. Upon issuance in accordance with the terms and conditions of the Transaction Documents,
the Exchange Shares and the Ordinary Shares represented by such Exchange Shares shall be validly
issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof, with the holders being entitled to all rights accorded to a holder of Ordinary
Shares.

     (e)       No Conflicts. Except as disclosed in Schedule 3(e), the execution, delivery and
performance of the Transaction Documents by the Company and the Issuer and the consummation by the
Company and the Issuer of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Preferred Stock by the Issuer and the issuance of the Warrants, and
the reservation for issuance and issuance of the Warrant Shares and the ADSs and the Ordinary
Shares represented by such ADSs) by the Company will not (i) result in a violation of the Articles
of Association, the Memorandum of Association, the Certificate of Incorporation or By-Laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which the Company, the Issuer or any
of their Subsidiaries is a party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the Principal Market applicable to the Company, the Issuer or any
of their Subsidiaries) or by which any property or asset of the Company, the Issuer or any of their
Subsidiaries is bound or affected, except in the case of conflicts, defaults and violations under
clause (ii), which could not reasonably be expected to result in a Material Adverse Effect. Except
as disclosed in Schedule 3(e), neither the Company, the issuer nor any of their Subsidiaries is in
violation of any term of or in default under its Articles of Association, Memorandum of
Association, Certificate of Incorporation, By-Laws or their organizational charter or by-laws,
respectively. Except as disclosed in Schedule 3(e), neither the Company, the Issuer nor any of
their

Page 8

 

Subsidiaries is in violation of any term of or is in default under any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company, the Issuer or their Subsidiaries, except for possible
conflicts, defaults, terminations or amendments which could not reasonably be expected to have a
Material Adverse Effect. The business of the Company and its Subsidiaries is not being conducted,
and shall not be conducted, in violation of any law, ordinance, regulation of any governmental
entity, except for possible violations, the sanctions for which either individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the 1933 Act or applicable state
securities laws, the Company or the Issuer is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in accordance with the terms hereof
or thereof. Except as disclosed in Schedule 3(e), all consents, authorizations, orders, filings
and registrations which the Company or the issuer is required to obtain pursuant to the preceding
sentence shall be obtained or effected on or prior to the Closing Date. Except as listed in
Schedule 3(e), since June 30, 2004, the Company has not received nor delivered any notices or
correspondence from or to the Principal Market. The Principal Market has not commenced any
delisting proceedings against the Company.

     (f)       SEC Documents; Financial Statements. Except as disclosed in Schedule 3(f), since
January 1, 2004, the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting requirements of the
1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). As of their respective dates (except as they have
been correctly amended), the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC (except as
they may have been properly amended), contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading. As of their
respective dates (except as they have been properly amended), the financial statements of the
Company included in the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position of the Company as of
the dates thereof and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as
listed in Schedule 3(f), the Company has received no notices or correspondence from the SEC since
June 30, 2004. The SEC has not commenced any enforcement proceedings against the Company or any of
its subsidiaries.

     (g)       Absence of Certain Changes. Except as disclosed in Schedule 3(g), since January
1, 2005, there has been no material adverse change in the business, properties, operations,
financial condition or results of operations of the Company or its Subsidiaries. The Company or
the Issuer has not taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any Bankruptcy Law nor does the Company or the Issuer or any of their
Subsidiaries have any knowledge or

Page 9

 

reason to believe that its creditors intend to initiate
involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.

     (h)       Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company or the Issuer or any of its Subsidiaries,
threatened against or affecting the Company, the Issuer,, the Preferred Stock, the Ordinary Shares
or ADSs or any of the Company’s Subsidiaries or any of the Company’s or the Company’s Subsidiaries’
officers or directors in their capacities as such, which could reasonably be expected to have a
Material Adverse Effect. A description of each action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory organization or body
which, as of the date of this Agreement, is pending or threatened in writing against or affecting
the Company, the Issuer, the Preferred Stock, the Ordinary Shares or ADSs or any of the Company’s
Subsidiaries or any of the Company’s or the Company’s Subsidiaries’ officers or directors in their
capacities as such, is set forth in Schedule 3(h).

     (i)       Acknowledgment Regarding Buyer’s Status. Each of the Company and the Issuer
acknowledge and agree that the Buyer is acting solely in the capacity of arm’s length purchaser
with respect to the Transaction Documents and the transactions contemplated hereby and thereby.
Each of the Company and the Issuer further acknowledges that the Buyer is not acting as a
financial advisor or fiduciary of the Company or the Issuer (or in any similar capacity) with
respect to the Transaction Documents and the transactions contemplated hereby and thereby and any
advice given by the Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to
the Buyer’s subscription for the Securities. Each of the Company and the Issuer further represents
to the Buyer that the Company’s and the Issuer’s decision to enter into the Transaction Documents
has been based solely on the independent evaluation by the Company, the Issuer and their
representatives and advisors.

     (j)       No General Solicitation. Neither the Company, the Issuer, or any of their
affiliates, or any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under the 1933 Act) in
connection with the offer or sale of the Securities.

     (k)       Intellectual Property Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all material trademarks, trade names, service marks, service
mark registrations, service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted. Except as set forth on Schedule 3(k), none of the
Company’s material trademarks, trade names, service marks, service mark registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals, government
authorizations, trade secrets or other intellectual property rights have expired or terminated, or,
by the terms and conditions thereof, could expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of any infringement by
the Company or its Subsidiaries of any material trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service mark registrations,
trade secret or other similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on Schedule 3(k), there is no claim, action or
proceeding being made or brought against, or to the Company’s knowledge, being threatened against,
the Company or its Subsidiaries regarding trademark, trade name, patents, patent rights, invention,
copyright, license, service names, service marks, service mark registrations, trade secret or other
infringement, which could reasonably be expected to have a Material Adverse Effect.

Page 10

 

     (l)       Environmental Laws. The Company and its Subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any such permit, license or
approval, except where, in each of the three foregoing clauses, the failure to so comply could not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

     (m)       Title. The Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each case free and clear
of all liens, encumbrances and defects except such as are described in Schedule 3(m) or such as do
not materially affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its Subsidiaries. Any real property
and facilities held under lease by the Company and any of its Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and buildings by the Company
and its Subsidiaries.

     (n)       Insurance. The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company and its
Subsidiaries, taken as a whole.

     (o)       Regulatory Permits. The Company and its Subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and neither the Company
nor any such Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.

     (p)       Tax Status. The Company and each of its Subsidiaries has made or filed all
federal and state income and all other material tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim.

     (q)       Transactions With Affiliates. Except as set forth on Schedule 3(q) and other than
the grant or exercise of stock options disclosed on Schedule 3(c), none of the officers, directors,
or employees of the Company is presently a party to any transaction with the Company or any of its

Page 11

 

Subsidiaries (other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such employee has an
interest or is an officer, director, trustee or partner.

     (r)       Application of Takeover Protections. The Company and its board of directors have
taken or will take prior to the Closing Date all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which is or could become
applicable to the Buyer as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company’s issuance of the Securities and the Buyer’s ownership of the
Securities.

     (s)       Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor
any director, officer, agent, employee or other person acting on behalf of the Company or any of
its Subsidiaries has, in the course of its actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; violated or is in violation of any
provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended; or made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or
domestic government official or employee.

	 	4.	 	COVENANTS.

     (a)       Filing of Form 8-K and Registration Statement. The Company agrees that it shall,
within the time required under the 1934 Act file a Report on Form 8-K disclosing this Agreement and
the transaction contemplated hereby. The Company shall also file on or before August 31, 2005 a
new registration statement covering the sale of the ________ Warrant Shares and ________ Exchange
Shares in accordance with the terms of the Registration Rights Agreement between the Company and
the Buyer, dated as of the date hereof (“Registration Rights Agreement”).

     (b)       Blue Sky. The Company and the Issuer shall take such action, if any, as is
reasonably necessary in order to obtain an exemption for or to qualify (i) the issuance of the
Warrants, the Warrant Shares, the shares of Preferred Stock and the ADSs to be issued to the Buyer
under the Transaction Documents and (ii) any subsequent sale of such securities by the Buyer, in
each case, under applicable securities or “Blue Sky” laws of the states of the United States in
such states as is reasonably requested by the Buyer from time to time, and shall provide evidence
of any such action so taken to the Buyer.

     (c)       Listing. The Company shall promptly secure the listing of all of the Exchange
Shares and Warrant Shares which may be issued to the Buyer under the Transaction Documents upon
each national securities exchange and automated quotation system, if any, upon which the ADSs are
then listed (subject to official notice of issuance) and shall maintain, so long as any ADSs shall be so listed,
such listing of all ADSs from time to time issuable under the terms of the Transaction Documents.
The Company shall use its best efforts to maintain the ADSs authorization for quotation on the
Principal Market. Neither the Company nor any of its Subsidiaries shall take any action that would
be reasonably expected to result in the delisting or suspension of the ADSs on the Principal
Market. The Company shall pay all fees and expenses in connection with satisfying its
obligations under this Section.

Page 12

 

     (d)       Issuance of Warrants. Upon the execution of this Agreement, the Company shall
deliver to the Buyer warrants in the form attached hereto as Exhibit C to purchase ADSs
representing (i) ________ Ordinary Shares at an exercise price of the greater of the U.S. Dollar
equivalent of 20.5 UK pence or US $0.50 (the “Warrants” and the ADSs representing Ordinary Shares
issuable upon exercise of the Warrants, the “Warrant Shares”).

     (e)       Maintenance of the Status of the Issuer. So long as any of the Preferred Stock is
outstanding, neither the Company nor the Issuer shall take any action or do anything whatsoever
that could cause: (1) the Issuer to be cease to be a wholly-owned subsidiary of the Company, (2)
the termination or impairment of the separate corporate existence of the Issuer, or (3) a
liquidation, dissolution or winding up of the Issuer.

	 	5.	 	TRANSFER AGENT INSTRUCTIONS.

     On or after the Effective Date, the Company shall promptly cause any restrictive legend on any
outstanding Exchange Shares or Warrant Shares to be removed and all of the Exchange Shares and
Warrant Shares to be issued under the Transaction Documents thereafter shall be issued without any
restrictive legend unless the Buyer expressly consents otherwise. The Company shall issue
irrevocable instructions to the Transfer Agent, and any subsequent transfer agent, to issue
Exchange Shares in the name of the Buyer and to issue Warrant Shares in the name of the Buyer upon
exercise of the Warrants (the “Irrevocable Transfer Agent Instructions”). The Company warrants to
the Buyer that no instruction other than the Irrevocable Transfer Agent Instructions referred to in
this Section 5, will be given by the Company to the Transfer Agent with respect to the Exchange
Shares and the Warrant Shares and that the Warrant Shares and the Exchange Shares shall otherwise
be freely transferable on the books and records of the Company as and to the extent provided in
this Agreement and the Registration Rights Agreement. At any time before the Effective
Date, any Exchange Shares or Warrant Shares issued to the Buyer in connection herewith shall be
issued in certificated form and shall bear the following restrictive legend and no other 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.

Page 13

 

	 	6.	 	CONDITIONS TO THE COMPANY’S AND THE ISSUER’S OBLIGATION TO CLOSE

     The obligation of the Company and the Issuer hereunder to consummate the transactions
contemplated hereby is subject to the satisfaction of each of the following conditions on or before
the Closing Date; provided that these conditions are for the Company’s and the Issuer’s sole
benefit and may be waived by the Company and the Issuer at any time in their sole discretion by
providing the Buyer with prior written notice thereof:

     (a)       The Buyer shall have executed each of the Transaction Documents and delivered the same to
the Company and the Issuer.

     (b)       The Buyer shall have paid $________ to the Issuer for the Preferred Stock as full and
complete payment for the ___ shares of Preferred Stock and the Warrants to be issued by the
Company.

     (c)       The representations and warranties of the Buyer shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though made at that time (except
for representations and warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants, agreements and
conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at
or prior to the Closing Date.

	 	7.	 	CONDITIONS TO THE BUYER’S OBLIGATION TO CLOSE.

     The
obligation of the Buyer to complete the subscription for ___ shares of Preferred Stock
and the other transactions as contemplated in the Transaction Documents is subject to the
satisfaction of each of the following conditions on or before the Closing Date; provided that these
conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole
discretion by providing the Company and the Issuer with prior written notice thereof:

     (a)       The Company and the Issuer shall have executed each of the Transaction Documents
applicable to it and delivered the same to the Buyer.

     (b)       The Company shall have issued to the Buyer the Warrants. The Issuer shall have issued to
the Buyer ___ shares of Preferred Stock.

     (c)       The ADSs shall be authorized for quotation on the Principal Market, trading in the ADSs
shall not have been within the last 365 days suspended by the SEC or the Principal Market and the
ADSs and the Warrant Shares shall be approved for listing upon the Principal Market.

     (d)       The Buyer shall have received the opinions of the Company’s and the Issuer’s legal
counsels dated as of the Closing Date in customary form.

     (e)       The representations and warranties of the Company and the Issuer shall be true and correct
in all material respects (except to the extent that any of such representations and warranties is
already qualified as to materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as of the date when made and as
of the Closing Date as though made at that time (except for representations and warranties that speak as of a
specific date) and the Company or Issuer shall have performed, satisfied and complied with the
covenants, agreements and conditions required by the Transaction Documents to be performed,
satisfied or complied

Page 14

 

with by the Company or the Issuer at or prior to the Closing Date. The Buyer
shall have received a certificate, executed by the CEO, President or CFO of the Company, dated as
of the Closing Date, to the foregoing effect in the form attached hereto as Exhibit D-1.
The Buyer shall have received a certificate, executed by the CEO, President or CFO of the Issuer,
dated as of the Closing Date, to the foregoing effect in the form attached hereto as Exhibit
D-2.

     (f)       The Board of Directors of the Company shall have adopted resolutions in the form attached
hereto as Exhibit B-1 which shall be in full force and effect without any amendment or
supplement thereto as of the Closing Date. The Board of Directors of the Issuer shall have adopted
resolutions in the form attached hereto as Exhibit B-2 which shall be in full force and
effect without any amendment or supplement thereto as of the Closing Date.

     (g)       As of the Closing Date, the Company shall have reserved out of its authorized and unissued
Ordinary Shares, (A) solely for the purpose of effecting issuances of ADSs upon exchange of the
Preferred Stock under the Transaction Documents, at least ________ Ordinary Shares and (B) ________
Ordinary Shares for issuance upon exercise of the Warrants.

     (h)       The Irrevocable Transfer Agent Instructions, in form acceptable to the Buyer shall have
been delivered to and acknowledged in writing by the Company and the Company’s Transfer Agent.

     (i)       The Company shall have delivered to the Buyer a certificate evidencing the existence of
the Company under the laws of England and Wales issued by the appropriate authorities as of a date
within ten (10) Trading Days of the Closing Date. The Issuer shall have delivered to the Buyer a
certificate evidencing the existence and good standing of the Issuer under the laws of the State of
Delaware issued by the appropriate authorities as of a date within ten (10) Trading Days of the
Closing Date.

     (j)       The Issuer shall have delivered to the Buyer a certified copy of the Certificate of
Incorporation as certified by the Secretary of State of the State of Delaware within ten (10)
Trading Days of the Closing Date evidencing the terms and conditions of the Preferred Stock as set
forth in Exhibit A attached hereto.

     (k)       The Company shall have delivered to the Buyer a secretary’s certificate executed by the
Secretary of the Company, dated as of the Closing Date, in the form attached hereto as Exhibit
E-1. The Issuer shall have delivered to the Buyer a secretary’s certificate executed by the
Secretary of the Issuer, dated as of the Closing Date, in the form attached hereto as Exhibit
E-2.

     (l)       The Company and the Issuer shall have provided the Buyer with the information requested by
the Buyer in connection with its due diligence requests made prior to, or in connection with, the
Closing.

	 	8.	 	INDEMNIFICATION.

     In consideration of the Buyer’s execution and delivery of the Transaction Documents and
acquiring the Securities hereunder and in addition to all of the Company’s and the Issuer’s other
obligations under the Transaction Documents, to the fullest extent permitted by law, the Company
and the Issuer shall jointly and severally defend, protect, indemnify and hold harmless the Buyer and all of its affiliates,
shareholders, officers, directors, employees and direct or indirect investors and any of the

Page 15

 

foregoing person’s agents or other representatives (including, without limitation, those retained
in connection with the transactions contemplated by this Agreement or any other Transaction
Document) (collectively, the “Indemnitees”) from and against any and all actions, causes of action,
suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection
therewith (irrespective of whether any such Indemnitee is a party to the action for which
indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements
(the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or
relating to (a) any misrepresentation or breach of any representation or warranty made by the
Company or the Issuer in the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of the
Company or the Issuer contained in the Transaction Documents or any other certificate, instrument
or document contemplated hereby or thereby, or (c) any cause of action, suit or claim brought or
made against such Indemnitee and arising out of or resulting from the execution, delivery,
performance or enforcement of the Transaction Documents or any other certificate, instrument or
document contemplated hereby or thereby, other than with respect to Indemnified Liabilities which
directly and primarily result from the gross negligence or willful misconduct of the Indemnitee.
To the extent that the foregoing undertaking by the Company and the Issuer may be unenforceable for
any reason, the Company and the Issuer shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under applicable law.
Promptly after receipt by an Indemnitee of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) for which indemnification may be sought
hereunder, such Indemnitee shall, deliver to the Company a written notice of the commencement
thereof, and the Company shall have the right to participate in, and, to the extent the Company so
desires, to assume control of the defense thereof with counsel mutually satisfactory to the Company
and the Indemnitee, as the case may be; provided, however, that an Indemnitee shall have the right
to retain its own counsel with the fees and expenses to be paid by the Company, if, in the
reasonable opinion of counsel retained by the Indemnitee, the representation by such counsel of
the Indemnitee and the Company or the Issuer would be inappropriate due to actual or potential
differing interests between such Indemnitee and any other party represented by such counsel in such
proceeding. The Indemnitee shall cooperate fully with the Company and the Issuer in connection with
any negotiation or defense of any such action or claim by the Company or the Issuer and shall
furnish to the Company and to the Issuer all information reasonably available to the Indemnitee
which relates to such action or claim. The Company and the Issuer shall keep the Indemnitee fully
apprised at all times as to the status of the defense or any settlement negotiations with respect
thereto. The Company or the Issuer shall not be liable for any settlement of any action, claim or
proceeding effected without its written consent, provided, however, that the Company or the Issuer
shall not unreasonably withhold, delay or condition its consent. The Company or the Issuer shall
not, without the consent of the Indemnitee, 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 Indemnitee of a release from all liability in respect to such
claim or litigation. Following indemnification as provided for hereunder, the Company or the
Issuer shall be subrogated to all rights of the Indemnitee 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 Company or the Issuer within a reasonable time of the commencement of
any such action shall not relieve the Company or the Issuer of any liability to the Indemnitee
under this Section 8, except to the extent that the Company or the Issuer is prejudiced in its
ability to defend such action.

	 	9.	 	[Intentionally Omitted.]

Page 16

 

	 	10.	 	CERTAIN DEFINED TERMS.

     For purposes of this Agreement, the following terms shall have the following meanings:

     (a)       “1933 Act” means the Securities Act of 1933, as amended.

     (b)       “Bankruptcy Law” means Title 11, U.S. Code, the United Kingdom Insolvency Act 1986 or any
similar United Kingdom, United States federal or state law for the relief of debtors.

     (c)       “Custodian” means any receiver, trustee, assignee, liquidator or similar official under
any Bankruptcy Law.

     (d)       “Exchange Amount” means the Stated Value plus accrued and unpaid dividends which shall
accrue at a rate of 15% per year compounded annually through the date of exchange on any shares of
Preferred Stock submitted for exchange into Exchange Shares pursuant to Section 1(b) hereof.

     (e)       “Exchange Price” means the greater of the US Dollar equivalent of 20.5 UK pence or US
$0.40.

     (f)       “Exchange Rate” means the number of Exchange Shares issuable upon exchange of the Exchange
Amount of any Preferred Stock pursuant to Section 1(b) hereof which shall be determined according
to the following formula: Exchange Amount / Exchange Price, as such ratio may be adjusted from time
to time to reflect stock dividends, combinations, splits or similar events as provided in Section
1(b)(iv) hereof.

     (g)       “Exchange Shares” means the ADSs issued or issuable when shares of Preferred Stock are
submitted for exchange into ADSs pursuant to Section 1(b)(i) hereof.

     (h)       “Person” means an individual or entity including any limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.

     (i)       “Principal Market” means the Nasdaq SmallCap Market; provided however, that in the event
the ADSs are ever listed or traded on the Nasdaq National Market, the Nasdaq OTC Bulletin Board,
the New York Stock Exchange or the American Stock Exchange, than the “Principal Market” shall mean
such other market or exchange on which the ADSs are then listed or traded.

     (j)       “Sale Price” means, for the ADSs as of any date, any trade price for an ADSs on the
Principal Market as reported by the Principal Market, or, if the Principal Market is not the
principal securities exchange or trading market for the ADSs, the trade price of the ADSs on the
principal securities exchange or trading market where such security is listed or traded as reported
thereby.

     (k)       “SEC” means the United States Securities and Exchange Commission.

     (l)       “Stated Value” means $100.00 per share of Preferred Stock.

     (m)       “Transfer Agent” means the transfer agent of the Company as set forth in Section 11(f)
hereof or such other person who is then serving as the transfer agent for the Company in respect of
the ADSs.

Page 17

 

     (n)       “Trading Day” means any day on which the Principal Market is open for trading including
any day on which the Principal Market is open for trading for a period of time less than the
customary time.

	 	11.	 	MISCELLANEOUS.

     (a)       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. The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Issuer and its shareholders and the powers and
capacity of the Issuer. All other questions concerning the construction, validity, enforcement and
interpretation of this Agreement and the other Transaction Documents shall be governed by the
internal laws of the State of ________, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of ________ or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of ________. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of _______, 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.

     (b)       Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an original, not a
facsimile signature.

     (c)       Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.

     (d)       Severability. 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.

     (e)       Entire Agreement; Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyer, the Company, the Issuer, their affiliates and persons acting
on their behalf with respect to the matters discussed herein, and this Agreement, the other
Transaction Documents and the instruments referenced herein contain the entire understanding of the
parties with

Page 18

 

respect to the matters covered herein and therein and, except as specifically set
forth herein or therein, neither the Company, the Issuer nor the Buyer makes any representation,
warranty, covenant or undertaking with respect to such matters. Any provision of this Agreement
may be amended or modified by mutual agreement of the Company, the Issuer and the Buyer, and any
provision hereof may be waived only by the party against whom enforcement is sought. The Company,
the Issuer and Buyer each acknowledge and agree that it is has not relied on, in any manner
whatsoever, any representations or statements, written or oral, other than as expressly set forth
in the Transaction Documents.

     (f)       Notices. 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 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 Issuer:

Insignia Solutions Inc.

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

Page 19

 

     If to the Buyer:

[Name of Buyer]

[Address]

Telephone:

Facsimile:

Attention:

     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.

     (g)       Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns. The Company and the Issuer
shall not assign this Agreement or any rights or obligations hereunder without the prior written
consent of the Buyer, including by merger or consolidation.

     (h)       No Third Party Beneficiaries. 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.

     (i)       Publicity. The Buyer shall have the right to approve before issuance any press
release, SEC filing or any other public disclosure made by or on behalf of the Company or the
Issuer whatsoever with respect to, in any manner, the Buyer, its purchase hereunder or any aspect
of this Agreement or the transactions contemplated hereby or by the other Transaction Documents;
provided, however, that the Company shall be entitled, without the prior approval of the Buyer, to
make any press release or other public disclosure (including any filings with the SEC) with respect
to such transactions as is required by applicable law and regulations; provided however, the
Company and its counsel must consult with the Buyer in connection with any such press release or
other public disclosure at least one (1) Trading Day prior to its release. The Buyer must be
provided with a copy thereof at least one (1) Trading Day prior to any release or use by the
Company thereof. The Company and the Issuer each agree and acknowledge that its failure to fully comply with this provision constitutes a material adverse effect on its
ability to perform its obligations under this Agreement.

     (j)       Further Assurances. 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,

Page 20

 

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.

     (k)       No Financial Advisor, Placement Agent, Broker or Finder. The Buyer represents and
warrants to the Company and the Issuer that it has not engaged any financial advisor, placement
agent, broker or finder in connection with the transactions contemplated hereby, the fees of whom
would be payable by the Company or the Issuer. The Issuer and the Company represents and warrants
to the Buyer that neither of them have engaged any financial advisor, placement agent, broker or
finder in connection with the transactions contemplated hereby, the fees of whom would be payable
by the Buyer.

     (l)       No Strict Construction. 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.

     (m)       Remedies, Other Obligations, Breaches and Injunctive Relief. The Buyer’s remedies
provided in this Agreement shall be cumulative and in addition to all other remedies available to
the Buyer under this Agreement, at law or in equity (including a decree of specific performance
and/or other injunctive relief), no remedy of the Buyer contained herein shall be deemed a waiver
of compliance with the provisions giving rise to such remedy and nothing herein shall limit the
Buyer’s right to pursue actual damages for any failure by the Company or the Issuer to comply with
the terms of this Agreement or any Transaction Document. The Company and the Issuer acknowledge
that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer and that
the remedy at law for any such breach may be inadequate. The Company and the Issuer therefore
agree that, in the event of any such breach or threatened breach, the Buyer shall be entitled, in
addition to all other available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being required.

     (n)       Changes to the Terms of this Agreement. This Agreement and any provision hereof
may only be amended by an instrument in writing signed by the Company, the Issuer and the Buyer.
The term “Agreement” and all reference thereto, as used throughout this instrument, shall mean this
instrument as originally executed, or if later amended or supplemented, then as so amended or
supplemented.

     (o)       Enforcement Costs. If: (i) this Agreement is placed by the Buyer in the hands of
an attorney for enforcement or is enforced by the Buyer through any legal proceeding; or (ii) an
attorney is retained to represent the Buyer in any bankruptcy, reorganization, receivership or
other proceedings affecting creditors’ rights and involving a claim under this Agreement; or (iii)
an attorney is retained to represent the Buyer in any other proceedings whatsoever in connection
with this Agreement, then the Company and the Issuer shall pay to the Buyer, as incurred by the
Buyer, all reasonable costs and expenses including attorneys’ fees incurred in connection
therewith, in addition to all other amounts due hereunder.

     (p)       Failure or Indulgence Not Waiver. No failure or delay in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further exercise thereof
or of any other right, power or privilege.

*     *     *     *     *

Page 21

 

     IN WITNESS WHEREOF, the Company, the Issuer and the Buyer have caused this Securities
Subscription Agreement to be duly executed as of the date first written above.

	 	 	 	 	 
	 	THE COMPANY:

INSIGNIA SOLUTIONS PLC

 	 
	 	By:  	 	 
	 	Name:  Mark McMillan 	 
	 	Title:  President and Chief Executive Officer 	 
	 
	 	THE ISSUER:

INSIGNIA SOLUTIONS INC.

 	 
	 	By:  	 	 
	 	Name:  Mark McMillan 	 
	 	Title:  President and Chief Executive Officer 	 
	 
	 	BUYER:

[NAME OF BUYER]

 	 
	 	By:  	 	 
	 	Name:  	 
	 	Title:  	 
	 

 

 

SCHEDULES

[Intentionally Omitted.]

EXHIBITS

[Intentionally Omitted.]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: June 30, 2005

     This Warrant (“Warrant”) is issued in connection with and pursuant to that certain
Securities Subscription Agreement (the “Subscription Agreement”) dated as of June 30, 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, 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 Warrant Shares represented by this
Warrant shall be immediately exercisable, and shall expire at 5:00 p.m., Chicago local
time, June 30, 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 the greater of the US
Dollar equivalent of 20.5 UK pence or US $0.50 (subject to adjustment as hereinafter
provided), 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 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
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 9.9% 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.

2

 

     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 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

 

     3.3     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,

4

 

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 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

5

 

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

6

 

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. 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]

[Address]

Telephone:

Facsimile:

Attention:

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

7

 

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

 

     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.

	 	 	 	 	 
	 	INSIGNIA SOLUTIONS PLC

 	 
	 	By:  	 	 
	 	 	Name:  	Mark McMillan 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

9

 

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 __________________, 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]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00087-of-00352.parquet"}]]