Document:

EXHIBIT 10.74

 

FORM OF

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of

             ,

2002, by and between INSIGNIA SOLUTIONS PLC, a company

incorporated under the laws of England and Wales (the “Company”), and FUSION

CAPITAL FUND II, LLC (together with it permitted assigns, the “Buyer”).  Capitalized terms used herein and not

otherwise defined herein shall have the respective meanings set forth in the

Securities Subscription Agreement by and between the parties hereto dated as of

October 17, 2002 (as amended, restated, supplemented or otherwise modified from

time to time, the “Purchase Agreement”).

 

WHEREAS:

 

A.            The Company has agreed, upon the

terms and subject to the conditions of the Purchase Agreement, to issue to the

Buyer (i) up to Six Million Dollars ($6,000,000) of the Company’s Ordinary

Shares, 20 pence per share nominal value, represented by American Depository

Shares (the “Common Stock”) (the “Purchase Shares”), and (ii) up to two

million shares of Common Stock issuable upon exercise of the Warrants (the “Commitment

Shares”); and

 

B.            To induce the Buyer to enter into

the Purchase Agreement, the Company has agreed to provide certain registration

rights under the Securities Act of 1933, as amended, and the rules and

regulations thereunder, or any similar successor statute (collectively, the “1933 Act”),

and applicable state securities laws.

 

NOW, THEREFORE, in consideration of the premises and the

mutual covenants contained herein and other good and valuable consideration,

the receipt and sufficiency of which are hereby acknowledged, the Company and

the Buyer hereby agree as follows:

 

1.             DEFINITIONS.

 

As used in this

Agreement, the following terms shall have the following meanings:

 

a.             “Investor”

means the Buyer, any transferee or assignee thereof to whom a Buyer assigns its

rights under this Agreement and who agrees to become bound by the provisions of

this Agreement in accordance with Section 9 and any transferee or assignee

thereof to whom a transferee or assignee assigns its rights under this

Agreement and who agrees to become bound by the provisions of this Agreement in

accordance with Section 9.

 

b.             “Person” means any person or

entity including any corporation, a limited liability company, an association,

a partnership, an organization, a business, an individual, a governmental or

political subdivision thereof or a governmental agency.

 

c.             “Register,” “registered,”

and “registration”

refer to a registration effected by preparing and filing one or more registration

statements of the Company in compliance with the 1933 Act and pursuant to Rule

415 under the 1933 Act or any successor rule providing for offering securities

on a continuous basis (“Rule 415”), and the declaration or ordering

of effectiveness of such registration statement(s) by the United States

Securities and Exchange Commission (the “SEC”).

 

 

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d.             “Registrable Securities” means

the Purchase Shares which have been, or which may from time to time be, issued

or issuable upon purchases of the Available Amount under the Purchase Agreement

(without regard to any limitation or restriction on purchases) and the

Commitment Shares issued or issuable to the Investor and any shares of capital

stock issued or issuable with respect to the Purchase Shares, the Commitment

Shares or the Purchase Agreement as a result of any subdivision of shares,

consolidation of shares, stock dividend, recapitalization, exchange or similar

event or otherwise, without regard to any limitation on purchases under the

Purchase Agreement.

 

e.             “Registration Statement” means

the registration statement of the Company which the Company has agreed to file

pursuant to Section 4(a) of the Purchase Agreement with respect to the sale of

the Registrable Securities.

 

2.             REGISTRATION.

 

a.             Mandatory Registration.  The Company shall use reasonable best

efforts to keep the Registration Statement effective pursuant to Rule 415

promulgated under the 1933 Act and available for sales of all of the Registrable

Securities at all times until the earlier of (i) the date as of which the

Investor may sell all of the Registrable Securities without restriction

pursuant to Rule 144(k) promulgated under the 1933 Act (or successor thereto)

or (ii) the date on which (A) the Investor shall have sold all the Registrable

Securities and no available amount remains under the Purchase Agreement (the “Registration

Period”).  The Registration

Statement (including any amendments or supplements thereto and prospectuses

contained therein) shall not contain any untrue statement of a material fact or

omit to state a material fact required to be stated therein, or necessary to

make the statements therein, in light of the circumstances in which they were

made, not misleading.

 

b.             Rule 424 Prospectus.  The Company shall, as required by applicable

securities regulations, from time to time file with the SEC, pursuant to Rule

424 promulgated under the 1933 Act, the prospectus and prospectus supplements,

if any, to be used in connection with sales of the Registrable Securities under

the Registration Statement.  The

Investor and its counsel shall have a reasonable opportunity to review and

comment upon such prospectus prior to its filing with the SEC. The Investor

shall use its reasonable best efforts to comment upon such prospectus within

one (1) Trading Day from the date the Investor receives the final version of

such prospectus.

 

c.             Sufficient Number of Shares

Registered.  In the event the number

of shares available under the Registration Statement is insufficient to cover

all of the Registrable Securities, the Company shall amend the Registration

Statement or file a new registration statement (a “New Registration Statement”),

so as to cover all of such Registrable Securities as soon as practicable, but

in any event not later than ten (10) Trading Days after the necessity therefor

arises.  The Company shall use it

reasonable best efforts to cause such amendment and/or New Registration

Statement to become effective as soon as practicable following the filing

thereof.

 

3.             RELATED

OBLIGATIONS.

 

With respect to

the Registration Statement and whenever any Registrable Securities are to be

registered pursuant to Section 2(b) including on any New Registration

Statement, the Company shall use its reasonable best efforts to effect the

registration of the Registrable Securities in accordance with the intended

method of disposition thereof and, pursuant thereto, the Company shall have the

following obligations:

 

 

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a.             The Company shall prepare and file

with the SEC such amendments (including post-effective amendments) and

supplements to any registration statement and the prospectus used in connection

with such registration statement, which prospectus is to be filed pursuant to

Rule 424 promulgated under the 1933 Act, as may be necessary to keep the

Registration Statement or any New Registration Statement effective at all times

during the Registration Period, and, during such period, comply with the

provisions of the 1933 Act with respect to the disposition of all Registrable

Securities of the Company covered by the Registration Statement or any New

Registration Statement until such time as all of such Registrable Securities

shall have been disposed of in accordance with the intended methods of

disposition by the seller or sellers thereof as set forth in such registration

statement.

 

b.             The Company shall

permit the Investor to review and comment upon the Registration Statement or

any New Registration Statement and all amendments and supplements thereto at

least two (2) Trading Days prior to their filing with the SEC, and not file any

document in a form to which Investor reasonably objects.  The Investor shall use its reasonable best

efforts to comment upon the Registration Statement or any New Registration

Statement and any amendments or supplements thereto within two (2) Trading Days

from the date the Investor receives the final version  thereof.  The Company

shall furnish to the Investor, without charge 

any correspondence from the SEC or the staff of the SEC to the Company

or its representatives relating to the Registration Statement or any New

Registration Statement.

 

c.             Upon request of the

Investor, the Company shall furnish to the Investor, (i) promptly after the

same is prepared and filed with the SEC, at least one copy of such registration

statement and any amendment(s) thereto, including financial statements and

schedules, all documents incorporated therein by reference and all exhibits,

(ii) upon the effectiveness of any registration statement, ten (10) copies of

the prospectus included in such registration statement and all amendments and

supplements thereto (or such other number of copies as the Investor may

reasonably request) and (iii) such other documents, including copies of any

preliminary or final prospectus, as the Investor may reasonably request from

time to time in order to facilitate the disposition of the Registrable

Securities owned by the Investor.

 

d.             The Company shall

use reasonable best efforts to (i) register and qualify the Registrable

Securities covered by a registration statement under such other securities or

“blue sky” laws of such jurisdictions in the United States as the Investor

reasonably requests, (ii) prepare and file in those jurisdictions, such

amendments (including post-effective amendments) and supplements to such

registrations and qualifications as may be necessary to maintain the

effectiveness thereof during the Registration Period, (iii) take such other

actions as may be necessary to maintain such registrations and qualifications

in effect at all times during the Registration Period, and (iv) take all other

actions reasonably necessary or advisable to qualify the Registrable Securities

for sale in such jurisdictions; provided, however, that the Company shall not

be required in connection therewith or as a condition thereto to (x) qualify to

do business in any jurisdiction where it would not otherwise be required to

qualify but for this Section 3(d), (y) subject itself to general taxation in

any such jurisdiction, or (z) file a general consent to service of process in

any such jurisdiction.  The Company

shall promptly notify the Investor who holds Registrable Securities of the

receipt by the Company of any notification with respect to the suspension of

the registration or qualification of any of the Registrable Securities for sale

under the securities or “blue sky” laws of any jurisdiction in the United

States or its receipt of actual notice of the initiation or threatening of any

proceeding for such purpose.

 

e.             As promptly as practicable after

becoming aware of such event or facts, the Company shall notify the Investor in

writing of the happening of any event or existence of such facts as a result of

which the prospectus included in any registration statement, as then in effect,

includes an untrue 

 

 

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statement of a material

fact or omits to state a material fact required to be stated therein or

necessary to make the statements therein, in light of the circumstances under

which they were made, not misleading, and promptly prepare a supplement or

amendment to such registration statement to correct such untrue statement or

omission, and deliver ten (10) copies of such supplement or amendment to the

Investor (or such other number of copies as the Investor may reasonably

request).  The Company shall also

promptly notify the Investor in writing (i) when a prospectus or any prospectus

supplement or post-effective amendment has been filed, and when a registration

statement or any post-effective amendment has become effective (notification of

such effectiveness shall be delivered to the Investor by facsimile on the same

day of such effectiveness and by overnight mail), (ii) of any request by the

SEC for amendments or supplements to any registration statement or related

prospectus or related information, and (iii) of the Company’s reasonable

determination that a post-effective amendment to a registration statement would

be appropriate.

 

f.              The Company shall use its

reasonable best efforts to prevent the issuance of any stop order or other

suspension of effectiveness of any registration statement, or the suspension of

the qualification of any Registrable Securities for sale in any jurisdiction

and, if such an order or suspension is issued, to obtain the withdrawal of such

order or suspension at the earliest possible moment and to notify the Investor

of the issuance of such order and the resolution thereof or its receipt of

actual notice of the initiation or threat of any proceeding for such purpose.

 

g.             The Company shall

(i) cause all the Registrable Securities to be listed on each securities

exchange on which securities of the same class or series issued by the Company

are then listed, if any, if the listing of such Registrable Securities is then

permitted under the rules of such exchange, or (ii) secure designation and

quotation of all the Registrable Securities on the Nasdaq National Market or

SmallCap Market, as applicable. The Company shall pay all fees and expenses in

connection with satisfying its obligation under this Section.

 

h.             The Company shall cooperate with

the Investor to facilitate the timely preparation and delivery of certificates

(not bearing any restrictive legend) representing the Registrable Securities to

be offered pursuant to any registration statement and enable such certificates

to be in such denominations or amounts as the Investor may reasonably request

and registered in such names as the Investor may request.

 

i.              The Company shall at all times

provide a transfer agent and registrar with respect to its Common Stock.

 

j.              If reasonably requested by the

Investor, the Company shall (i) immediately incorporate in a prospectus

supplement or post-effective amendment such information as the Investor

believes should be included therein relating to the sale and distribution of

Registrable Securities, including, without limitation, information with respect

to the number of Registrable Securities being sold, the purchase price being paid

therefor and any other terms of the offering of the Registrable Securities;

(ii) make all required filings of such prospectus supplement or post-effective

amendment as soon as notified of the matters to be incorporated in such

prospectus supplement or post-effective amendment; and (iii) supplement or make

amendments to any registration statement.

 

k.             The Company shall use its

reasonable best efforts to cause the Registrable Securities covered by the any

registration statement to be registered with or approved by such other

governmental agencies or authorities as may be necessary to consummate the

disposition of such Registrable Securities.

 

 

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l.              Within one (1) Trading Day after

any registration statement which includes the Registrable Securities is ordered

effective by the SEC, the Company shall deliver, and shall cause legal counsel

for the Company to deliver, to the transfer agent for such Registrable

Securities (with copies to the Investor) confirmation that such registration

statement has been declared effective by the SEC in the form attached hereto as

Exhibit A.

 

m.            The Company shall take all other

reasonable actions necessary to expedite and facilitate disposition by the

Investor of Registrable Securities pursuant to any registration statement.

 

4.             OBLIGATIONS

OF THE INVESTOR.

 

a.             The

Company shall notify the Investor in writing of the information the Company

reasonably requires from the Investor in connection with any registration

statement hereunder.  The Investor shall

furnish to the Company such information regarding itself, the Registrable

Securities held by it and the intended method of disposition of the Registrable

Securities held by it as shall be reasonably required to effect the registration

of such Registrable Securities and shall execute such documents in connection

with such registration as the Company may reasonably request.

 

b.             The Investor agrees to cooperate

with the Company as reasonably requested by the Company in connection with the

preparation and filing of any registration statement hereunder.

 

c.             The Investor agrees that, upon

receipt of any notice from the Company of the happening of any event or

existence of facts of the kind described in Section 3(f) or the first sentence

of 3(e), the Investor will immediately discontinue disposition of Registrable

Securities pursuant to any registration statement(s) covering such Registrable

Securities until the Investor’s receipt of the copies of the supplemented or

amended prospectus contemplated by Section 3(f) or the first sentence of 3(e).

Notwithstanding anything to the contrary, the Company shall cause its transfer

agent to promptly deliver shares of Common Stock without any restrictive legend

in accordance with the terms of the Purchase Agreement in connection with any

sale of Registrable Securities with respect to which an Investor has entered

into a contract for sale prior to the Investor’s receipt of a notice from the

Company of the happening of any event of the kind described in Section 3(f) or

the first sentence of 3(e) and for which the Investor has not yet settled.

 

5.             EXPENSES

OF REGISTRATION.

 

All reasonable

expenses, other than sales or brokerage commissions, incurred in connection

with registrations, filings or qualifications pursuant to Sections 2 and 3,

including, without limitation, all registration, listing and qualifications

fees, printers and accounting fees, and fees and disbursements of counsel for

the Company, shall be paid by the Company.

 

6.             INDEMNIFICATION.

 

a.             To the fullest

extent permitted by law, the Company will, and hereby does, indemnify, hold

harmless and defend the Investor, each Person, if any, who controls the

Investor, the members, the directors, officers, partners, employees, agents,

representatives of the Investor and each Person, if any, who controls the

Investor within the meaning of the 1933 Act or the Securities Exchange Act of

1934, as amended (the “1934 Act”) (each, an “Indemnified Person”), against

any losses, claims, damages, liabilities, judgments, fines, penalties, charges,

costs, attorneys’ fees, amounts paid in settlement or expenses, joint or

several, (collectively, “Claims”) incurred in investigating,

preparing or 

 

 

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defending any

action, claim, suit, inquiry, proceeding, investigation or appeal taken from

the foregoing by or before any court or governmental, administrative or other

regulatory agency, body or the SEC, whether pending or threatened, whether or

not an indemnified party is or may be a party thereto (“Indemnified Damages”), to

which any of them may become subject insofar as such Claims (or actions or

proceedings, whether commenced or threatened, in respect thereof) arise out of

or are based upon: (i) any untrue statement or alleged untrue statement of a

material fact in the Registration Statement, any New Registration Statement or

any post-effective amendment thereto or in any filing made in connection with

the qualification of the offering under the securities or other “blue sky” laws

of any jurisdiction in which Registrable Securities are offered (“Blue Sky

Filing”), or the omission or alleged omission to state a material

fact required to be stated therein or necessary to make the statements therein

not misleading, (ii) any untrue statement or alleged untrue statement of a

material fact contained in the final prospectus (as amended or supplemented, if

the Company files any amendment thereof or supplement thereto with the SEC) or

the omission or alleged omission to state therein any material fact necessary

to make the statements made therein, in light of the circumstances under which

the statements therein were made, not misleading, (iii) any violation or

alleged violation by the Company of the 1933 Act, the 1934 Act, any other law,

including, without limitation, any state securities law, or any rule or

regulation thereunder relating to the offer or sale of the Registrable

Securities pursuant to the Registration Statement or any New Registration

Statement  or (iv) any material violation

by the Company of this Agreement (the matters in the foregoing clauses (i)

through (iv) being, collectively, “Violations”).  The Company shall reimburse each Indemnified Person promptly as

such expenses are incurred and are due and payable, for any legal fees or other

reasonable expenses incurred by them in connection with investigating or

defending any such Claim. 

Notwithstanding anything to the contrary contained herein, the

indemnification agreement contained in this Section 6(a): (i) shall not apply

to a Claim by an Indemnified Person arising out of or based upon a Violation

which occurs in reliance upon and in conformity with information furnished in

writing to the Company by such Indemnified Person expressly for use in

connection with the preparation of the Registration Statement, any New

Registration Statement or any such amendment thereof or supplement thereto, if

such prospectus was timely made available by the Company pursuant to Section

3(c) or Section 3(e); (ii) with respect to any superceded prospectus, shall not

inure to the benefit of any such person from whom the person asserting any such

Claim purchased the Registrable Securities that are the subject thereof (or to

the benefit of any person controlling such person) if the untrue statement or

omission of material fact contained in the superceded prospectus was corrected

in the revised prospectus, as then amended or supplemented, if such revised

prospectus was timely made available by the Company pursuant to Section 3(c) or

Section 3(e), and the Indemnified Person was promptly advised in writing not to

use the incorrect prospectus prior to the use giving rise to a violation and

such Indemnified Person, notwithstanding such advice, used it; (iii) shall not

be available to the extent such Claim is based on a failure of the Investor to

deliver or to cause to be delivered the prospectus made available by the

Company, if such prospectus was timely made available by the Company pursuant

to Section 3(c) or Section 3(e); and (iv) shall not apply to amounts paid in

settlement of any Claim if such settlement is effected without the prior

written consent of the Company, which consent shall not be unreasonably

withheld.  Such indemnity shall remain

in full force and effect regardless of any investigation made by or on behalf

of the Indemnified Person and shall survive the transfer of the Registrable

Securities by the Investor pursuant to Section 9.

 

b.             In connection with the Registration

Statement or any New Registration Statement, the Investor agrees to severally

and not jointly indemnify, hold harmless and defend, to the same extent and in

the same manner as is set forth in Section 6(a), the Company, each of its

directors, each of its officers who signs the Registration Statement or any New

Registration Statement, each Person, if any, who controls the Company within

the meaning of the 1933 Act or the 1934 Act (collectively and together with an

Indemnified Person, an “Indemnified Party”), against any Claim or 

 

 

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Indemnified Damages to

which any of them may become subject, under the 1933 Act, the 1934 Act or

otherwise, insofar as such Claim or Indemnified Damages arise out of or are

based upon any Violation, in each case to the extent, and only to the extent,

that such Violation occurs in reliance upon and in conformity with written

information about the Investor set forth on Exhibit B attached hereto

and furnished to the Company by the Investor expressly for use in connection

with such registration statement; and, subject to Section 6(d), the Investor

will reimburse any legal or other expenses reasonably incurred by them in

connection with investigating or defending any such Claim; provided, however,

that the indemnity agreement contained in this Section 6(b) and the agreement

with respect to contribution contained in Section 7 shall not apply to amounts

paid in settlement of any Claim if such settlement is effected without the

prior written consent of the Investor, which consent shall not be unreasonably

withheld; provided, further, however, that the Investor shall be liable under

this Section 6(b) for only that amount of a Claim or Indemnified Damages as

does not exceed the net proceeds to the Investor as a result of the sale of

Registrable Securities pursuant to such registration statement.  Such indemnity shall remain in full force

and effect regardless of any investigation made by or on behalf of such

Indemnified Party and shall survive the transfer of the Registrable Securities

by the Investor pursuant to Section 9.

 

c.             Promptly after receipt by an

Indemnified Person or Indemnified Party under this Section 6 of notice of the

commencement of any action or proceeding (including any governmental action or

proceeding) involving a Claim, such Indemnified Person or Indemnified Party

shall, if a Claim in respect thereof is to be made against any indemnifying

party under this Section 6, deliver to the indemnifying party a written notice

of the commencement thereof, and the indemnifying party shall have the right to

participate in, and, to the extent the indemnifying party so desires, jointly

with any other indemnifying party similarly noticed, to assume control of the

defense thereof with counsel mutually satisfactory to the indemnifying party

and the Indemnified Person or the Indemnified Party, as the case may be;

provided, however, that an Indemnified Person or Indemnified Party shall have

the right to retain its own counsel with the fees and expenses to be paid by

the indemnifying party, if, in the reasonable opinion of counsel retained by

the indemnifying party, the representation by such counsel of the Indemnified

Person or Indemnified Party and the indemnifying party would be inappropriate

due to actual or potential differing interests between such Indemnified Person

or Indemnified Party and any other party represented by such counsel in such

proceeding. The Indemnified Party or Indemnified Person shall cooperate fully

with the indemnifying party in connection with any negotiation or defense of

any such action or claim by the indemnifying party and shall furnish to the

indemnifying party all information reasonably available to the Indemnified

Party or Indemnified Person which relates to such action or claim.  The indemnifying party shall keep the

Indemnified Party or Indemnified Person fully apprised at all times as to the

status of the defense or any settlement negotiations with respect thereto.  No indemnifying party shall be liable for

any settlement of any action, claim or proceeding effected without its written consent,

provided, however, that the indemnifying party shall not unreasonably withhold,

delay or condition its consent.  No

indemnifying party shall, without the consent of the Indemnified Party or

Indemnified Person, consent to entry of any judgment or enter into any

settlement or other compromise which does not include as an unconditional term

thereof the giving by the claimant or plaintiff to such Indemnified Party or

Indemnified Person of a release from all liability in respect to such claim or

litigation.  Following indemnification

as provided for hereunder, the indemnifying party shall be subrogated to all

rights of the Indemnified Party or Indemnified Person with respect to all third

parties, firms or corporations relating to the matter for which indemnification

has been made.  The failure to deliver

written notice to the indemnifying party within a reasonable time of the

commencement of any such action shall not relieve such indemnifying party of

any liability to the Indemnified Person or Indemnified Party under this Section

6, except to the extent that the indemnifying party is prejudiced in its

ability to defend such action.

 

 

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d.             The indemnification required by

this Section 6 shall be made by periodic payments of the amount thereof during

the course of the investigation or defense, as and when bills are received or

Indemnified Damages are incurred.

 

e.             The indemnity agreements contained

herein shall be in addition to (i) any cause of action or similar right of the

Indemnified Party or Indemnified Person against the indemnifying party or

others, and (ii) any liabilities the indemnifying party may be subject to

pursuant to the law.

 

7.             CONTRIBUTION.

 

To the extent any

indemnification by an indemnifying party is prohibited or limited by law, the

indemnifying party agrees to make the maximum contribution with respect to any

amounts for which it would otherwise be liable under Section 6 to the fullest

extent permitted by law; provided, however, that: (i) no seller of Registrable

Securities guilty of fraudulent misrepresentation (within the meaning of

Section 11(f) of the 1933 Act) shall be entitled to contribution from any

seller of Registrable Securities who was not guilty of fraudulent

misrepresentation; and (ii) contribution by any seller of Registrable

Securities shall be limited in amount to the net amount of proceeds received by

such seller from the sale of such Registrable Securities.

 

8.             REPORTS AND DISCLOSURE UNDER THE

SECURITIES ACTS.

 

With a view to

making available to the Investor the benefits of Rule 144 promulgated under the

1933 Act or any other similar rule or regulation of the SEC that may at any

time permit the Investor to sell securities of the Company to the public

without registration (“Rule 144”), the Company agrees to:

 

a.             make and keep public information

available, as those terms are understood and defined in Rule 144;

 

b.             file with the SEC

in a timely manner all reports and other documents required of the Company

under the 1933 Act and the 1934 Act so long as the Company remains subject to

such requirements and the filing of such reports and other documents is

required for the applicable provisions of Rule 144; and

 

c.             furnish to the

Investor so long as the Investor owns Registrable Securities, promptly upon

request, (i) a written statement by the Company that it has complied with the

reporting and or disclosure provisions of Rule 144, the 1933 Act and the 1934

Act, (ii) a copy of the most recent annual or quarterly report of the Company

and such other reports and documents so filed by the Company, and (iii) such

other information as may be reasonably requested to permit the Investor to sell

such securities pursuant to Rule 144 without registration.

 

9.                                       ASSIGNMENT OF REGISTRATION RIGHTS.

 

The Company shall

not assign this Agreement or any rights or obligations hereunder without the

prior written consent of the Investor, including by merger or

consolidation.  The Investor may not

assign its rights under this Agreement without the written consent of the

Company, other than to an affiliate of the Investor controlled by Steven G.

Martin or Joshua B. Scheinfeld.

 

 

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10.           AMENDMENT

OF REGISTRATION RIGHTS.

 

Provisions of this

Agreement may be amended and the observance thereof may be waived (either

generally or in a particular instance and either retroactively or

prospectively), only with the written consent of the Company and the Investor.

 

11.           MISCELLANEOUS.

 

a.             A Person is deemed

to be a holder of Registrable Securities whenever such Person owns or is deemed

to own of record such Registrable Securities. 

If the Company receives conflicting instructions, notices or elections

from two or more Persons with respect to the same Registrable Securities, the

Company shall act upon the basis of instructions, notice or election received

from the registered owner of such Registrable Securities.

 

b.             Any notices,

consents, waivers or other communications required or permitted to be given

under the terms of this Agreement must be in writing and will be deemed to have

been delivered:  (i) upon receipt, when

delivered personally; (ii) upon receipt, when sent by facsimile (provided

confirmation of transmission is mechanically or electronically generated and

kept on file by the sending party); or (iii) one (1) Trading Day after deposit

with a nationally recognized overnight delivery 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:              Richard

M. Noling

 

With a copy to:

Venture

Law Group

2775

Sand Hill Road

Menlo

Park, CA 94025

Telephone:            650-854-4488

Facsimile:                                            650-233-8386

Attention:              Mark A. Medearis

 

If to the Investor:

Fusion Capital Fund II, LLC

222 Merchandise Mart Plaza, Suite 9-112

Chicago, IL 60654

Telephone:            312-644-6644

Facsimile:                                            312-644-6244

Attention:              Steven

G.  Martin

 

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 

 

 

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sender’s facsimile

machine containing the time, date, recipient facsimile number and an image of

the first page of such transmission or (C) provided by a nationally recognized

overnight delivery service, shall be rebuttable evidence of personal service,

receipt by facsimile or receipt from a nationally recognized overnight delivery

service in accordance with clause (i), (ii) or (iii) above, respectively.

 

c.             Failure of any party to exercise

any right or remedy under this Agreement or otherwise, or delay by a party in

exercising such right or remedy, shall not operate as a waiver thereof.

 

d.             The corporate laws

of England and Wales shall govern all issues concerning the relative rights of

the Company and its shareholders.  All

other questions concerning the construction, validity, enforcement and interpretation

of this Agreement shall be governed by the internal laws of the State of

Illinois, without giving effect to any choice of law or conflict of law

provision or rule (whether of the State of Illinois or any other jurisdictions)

that would cause the application of the laws of any jurisdictions other than

the State of Illinois.   Each party

hereby irrevocably submits to the exclusive jurisdiction of the state and

federal courts sitting the City of Chicago, for the adjudication of any dispute

hereunder or in connection herewith or with any transaction contemplated hereby

or discussed herein, and hereby irrevocably waives, and agrees not to assert in

any suit, action or proceeding, any claim that it is not personally subject to

the jurisdiction of any such court, that such suit, action or proceeding is

brought in an inconvenient forum or that the venue of such suit, action or

proceeding is improper.  Each party

hereby irrevocably waives personal service of process and consents to process

being served in any such suit, action or proceeding by mailing a copy thereof

to such party at the address for such notices to it under this Agreement and

agrees that such service shall constitute good and sufficient service of

process and notice thereof.  Nothing

contained herein shall be deemed to limit in any way any right to serve process

in any manner permitted by law.  If any

provision of this Agreement shall be invalid or unenforceable in any

jurisdiction, such invalidity or unenforceability shall not affect the validity

or enforceability of the remainder of this Agreement in that jurisdiction or

the validity or enforceability of any provision of this Agreement in any other

jurisdiction.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY

RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION

OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS

AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

 

e.             This Agreement, and

the Purchase  Agreement constitute the

entire agreement among the parties hereto with respect to the subject matter

hereof and thereof.  There are no

restrictions, promises, warranties or undertakings, other than those set forth

or referred to herein and therein.  This

Agreement and the Purchase Agreement supersede all prior agreements and

understandings among the parties hereto with respect to the subject matter

hereof and thereof.

 

f.              Subject to the

requirements of Section 9, this Agreement shall inure to the benefit of and be

binding upon the permitted successors and assigns of each of the parties

hereto.

 

g.             The headings in this Agreement are

for convenience of reference only and shall not limit or otherwise affect the

meaning hereof.

 

h.             This Agreement may be executed in

identical counterparts, each of which shall be deemed an original but all of

which shall constitute one and the same agreement.  This Agreement, once executed by a party, may be delivered to the

other party hereto by facsimile transmission of a copy of this Agreement bearing

the signature of the party so delivering this Agreement.

 

 

10

 

i.              Each party shall do and perform,

or cause to be done and performed, all such further acts and things, and shall

execute and deliver all such other agreements, certificates, instruments and

documents, as the other party may reasonably request in order to carry out the

intent and accomplish the purposes of this Agreement and the consummation of

the transactions contemplated hereby.

 

j.              The language used in this

Agreement will be deemed to be the language chosen by the parties to express

their mutual intent and no rules of strict construction will be applied against

any party.

 

k.             This Agreement is intended for the

benefit of the parties hereto and their respective permitted successors and

assigns, and is not for the benefit of, nor may any provision hereof be

enforced by, any other Person.

 

 

 

* * * *

* *

 

 

11

 

IN WITNESS WHEREOF, the parties have caused this

Registration Rights Agreement to be duly executed as of day and year first

above written.

 

 

 

	

  THE COMPANY:

  
	

   

  
	

  INSIGNIA SOLUTIONS plc

  
	

   

  
	

  By:

  	

   

  
	

  Name:

  
	

  Title:

  
	

   

  
	

  BUYER:

  
	

   

  
	

  FUSION CAPITAL FUND II, LLC

  
	

  BY: FUSION CAPITAL

  PARTNERS, LLC

  
	

  BY: SGM HOLDINGS CORP.

  
	

   

  
	

  By:

  	

   

  
	

  Name: Steven G. Martin

  
	

  Title: President

  

 

 

12

 

EXHIBIT A

 

TO REGISTRATION RIGHTS AGREEMENT

 

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

[Date]

 

	

  [TRANSFER AGENT]

  
	

   

  
	

   

  

 

Re:

[                         ]

 

Ladies and Gentlemen:

 

We are counsel to INSIGNIA

SOLUTIONS plc, a company incorporated under the laws of England and

Wales (the “Company”), and have represented the Company in connection

with that certain Common Stock Purchase Agreement, dated as of

                     ,

2002 (the “Purchase

Agreement”), entered into by and between the Company and Fusion

Capital Fund II, LLC (the “Buyer”) pursuant to which the Company has

agreed to issue to the Holder Ordinary Shares, 20 pence nominal value per

share, of the Company represented by American Depository Shares (the “Common Stock”),

in an amount up to Six Million Dollars ($6,000,000) (the “Purchase Shares”), in

accordance with the terms of the Purchase Agreement.  In addition, pursuant to the Stock Purchase Agreement, the Company

issued to the Buyer warrants to purchase up to 2,000,000 shares of Common Stock  (the “Commitment

Shares”).  Pursuant

to the Purchase Agreement, the Company also has entered into a Registration

Rights Agreement, dated as of

                     ,

2002, with the Buyer (the “Registration Rights Agreement”) pursuant

to which the Company agreed, among other things, to register the Purchase

Shares, and the Commitment Shares under the Securities Act of 1933, as amended

(the “1933

Act”).  In connection with the

Company’s obligations under the Purchase Agreement and the Registration Rights

Agreement, on

                     ,

2002, the Company filed a Registration Statement (File No.

333-             )

(the “Registration

Statement”) with the Securities and Exchange Commission (the “SEC”)

relating to the sale of the Purchase Shares, and the Commitment Shares.

 

In connection with the

foregoing, we advise you that a member of the SEC’s staff has advised us by

telephone that the SEC has entered an order declaring the Registration

Statement effective under the 1933 Act at 5:00 P.M. on

                     ,

2002 and we have no knowledge, after telephonic inquiry of a member of the

SEC’s staff, that any stop order suspending its effectiveness has been issued

or that any proceedings for that purpose are pending before, or threatened by,

the SEC and the Purchase Shares, and the Commitment  Shares are available for sale under the 1933 Act pursuant to the

Registration Statement.

 

The Buyer has

confirmed  it shall comply with all

securities laws and regulations applicable to it including applicable

prospectus delivery requirements upon sale of the Purchase Shares, and the

Commitment  Shares.

 

	

  Very truly yours,

  
	

  [Company Counsel]

  
	

  By:

  	

   

  	

   

  

 

CC:            Fusion Capital Fund II, LLC

 

 

13

 

EXHIBIT B

 

TO REGISTRATION RIGHTS AGREEMENT

 

Information

About The Investor Furnished To The Company By The Investor

Expressly For Use In Connection With The Registration

Statement

 

 

14EXHIBIT 10.75

 

REDEEMABLE 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

REDEEMABLE WARRANT

 

Original Issue Date:

October 17, 2002

 

This Redeemable Warrant (“Warrant”) is issued in

connection with and pursuant to that certain Securities Subscription Agreement

(the “Subscription

Agreement”) dated as of October 17, 2002, by and between INSIGNIA

SOLUTIONS PLC, a company incorporated under the laws of England and

Wales (the “Company”) and FUSION CAPITAL FUND II, LLC (the “Buyer”).

 

FOR VALUE RECEIVED, the Buyer, the registered holder hereof, or its

permitted assigns (the “Holder”), is entitled to purchase from the Company,

during the period specified in this Warrant, 1,000,000 (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 pence per share nominal value, of the Company (the “Ordinary

Shares”).  The ADSs to be purchased as

described above are referred to herein as the “Warrant Shares.”  All terms not otherwise defined herein shall

have the meaning ascribed to them in the Subscription Agreement.

 

 

Section 1.              Period

for Exercise and Exercise Price; Redemption.

 

1.1          Period for

Exercise.  The right to purchase shares of Warrant

Shares represented by this Warrant shall be immediately exercisable, and shall

expire at 5:00 p.m., Chicago local time, September 30, 2007  (the “Expiration Date”).  From and after the Expiration Date this

Warrant shall be null and void and of no further force or effect whatsoever.

 

1.2          Warrant

Exercise Price.  The Warrant Exercise Price per share of

Warrant Shares shall be the U.S. Dollar equivalent of 20.5 pence per ADS

(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 

 

 

1

 

(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.

 

1.3          Redemption. 

At any time on or before June 30, 2003, the Company shall have the

unconditional right to redeem this Warrant (in whole but not in part) from the

Holder for an aggregate Redemption Price of U.S.$200,000 (the “Redemption

Price”).  The Company’s

redemption rights hereunder shall be exercisable even if the Holder has

surrendered this Warrant for exercise in whole or in part, so long as the

Company gives written notice to the Holder of the Company’s exercise of its

redemption rights hereunder within 2 Trading Days after the Holder has

surrendered this Warrant for exercise in whole or in part.  If the Holder has surrendered this Warrant

for exercise in whole or in part and the Company has not given written notice

to the Holder of the Company’s exercise of its redemption rights hereunder

within 2 Trading Days after the Holder has surrendered this Warrant for exercise

in whole or in part, then the Company shall have no redemption rights

hereunder.  The Company’s redemption

rights hereunder shall be exercisable by delivering written notice thereof to

the Holder.  The Redemption Price shall

be payable in cash within 10 Trading Days after the written notice to the

Holder regarding redemption of this Warrant. 

In such case, if for any reason or for no reason the Redemption Price is

not paid to the Holder within such 10 Trading Days, then the redemption shall

be null and void and the Company shall have no future redemption rights

hereunder.   Immediately upon receipt of

the Redemption Price, the Holder shall surrender this Warrant to the

Company.  Upon receipt hereof, the

Company shall then immediately cancel this Warrant.

 

 

Section 2.              Exercise

of Warrant.

 

2.1          Manner

of Exercise.   The Holder may exercise this Warrant, in

whole or in part, immediately, but not after the Expiration Date, during normal

business hours on any Trading Day by surrendering this Warrant to the Company

at the principal office of the Company, accompanied by a Warrant Exercise Form

in substantially the form annexed hereto duly executed by the Buyer and by

payment of the Warrant Exercise Price for the number of Warrant Shares for

which this Warrant is then exercisable, either (i) in immediately available

funds, (ii) by delivery of an instrument evidencing indebtedness owing by the

Company to the Holder in the appropriate amount, (iii) by authorizing the

Company to retain ADSs which would otherwise be issuable upon exercise of this

Warrant (subject to and in accordance with Section 2.4 hereof) or (iv) in a

combination of (i), (ii) or (iii) above, provided, however, that in no event

shall the Holder be entitled to exercise this Warrant for a number of Warrant

Shares in excess of that number of Warrant Shares which, upon giving effect to

such exercise, would cause the aggregate number of ADSs or Ordinary Shares

beneficially owned by the Holder to exceed 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 

 

 

2

 

notice to the Company

upon not less than 61 days prior written notice (with such waiver taking effect

only upon the expiration of such 61 day notice period).

 

2.2          When

Exercise Effective.  Each exercise of this Warrant shall be

deemed to have been effected on the day on which all requirements of Section

2.1 shall have been met with respect to such exercise.  At such time the person in whose name any

certificate for shares of Warrant Shares shall be issuable upon such exercise

shall be deemed for all corporate purposes to have become the Holder of record

of such shares, regardless of the actual delivery of certificates evidencing

such shares.

 

2.3          Delivery of

Certificates.  As soon as practicable after each exercise

of this Warrant, and in any event no later than 3 Trading Days after such

exercise, the Company will issue Warrant Shares for the number of Warrant

Shares to which the Holder is entitled upon such Holder’s submission of the

applicable Warrant Exercise Form.

 

2.4          Cashless

Exercise.  The Holder may, by providing notice thereof

to the Company along with the Warrant Exercise Form, elect to exercise the

Warrant for a number of Warrant Shares determined in accordance with the

following formula:

 

	

  X = 

  	

  Y(A–B)

  
	

   

  	

  A

  

 

Where:

 

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

Holder.

Y = The number of Warrant Shares purchasable under

this Warrant (at the date of such exercise).

A = The fair market value of one ADS (or other

security for which the Warrant is then exercisable at the date of such

exercise).

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

exercise).

 

For purposes of this Section 2.4, the “fair market

value” per share shall be the Closing Sale Price of the ADSs for the Trading

Day immediately prior to the notice of exercise of the Warrant.  Notwithstanding any provisions herein to the

contrary, the “cashless exercise” of the Warrants contemplated hereunder shall

not be permitted to the extent that the Company is prohibited under the

corporate laws and regulations of England and Wales from effectuating such

“cashless exercise” of the Warrants.

 

 

Section 3.              Adjustment

of Purchase Price and Number of Shares.  The Warrant

Exercise Price and the kind of securities issuable upon exercise of the Warrant

shall be adjusted from time to time as follows (subject to Section 1.2):

 

3.1          Subdivision

or Consolidation of Shares (Share Splits).  If the

Company at any time effects a subdivision or consolidation of the outstanding

ADSs or Ordinary Shares (through a split or otherwise), the number of Warrant

Shares shall be increased, in the case of a subdivision, or the number of

shares of Warrant Shares shall be decreased, in the case of a consolidation, in

the same proportions as the ADSs or Ordinary Shares are subdivided or 

 

 

3

 

consolidated, in each case effective automatically upon, and

simultaneously with, the effectiveness of the subdivision or consolidation

which gives rise to the adjustment.

 

3.2          Dividends. 

If the Company at any time pays a dividend, or makes any other

distribution, to holders of ADSs or Ordinary Shares payable in ADSs or Ordinary

Shares, or fixes a record date for the determination of holders of ADSs or

Ordinary Shares entitled to receive a dividend or other distribution payable in

Ordinary Shares or ADSs, then the number of shares of Warrant Shares in effect

immediately prior to such action shall be proportionately increased so that the

Holder hereof may receive upon exercise of the Warrant the aggregate number of

ADSs which he or it would have owned immediately following such action if the

Warrant had been exercised immediately prior to such action.  The adjustment shall become effective

immediately as of the date the Company shall take a record of the holders of

ADSs or Ordinary Shares for the purpose of receiving such dividend or

distribution (or if no such record is taken, as of the effectiveness of such

dividend or distribution).

 

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 

 

 

4

 

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, 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

 

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 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 Commencement 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 

 

 

6

 

forth in Rule 144, as such rules may be amended from time to time and

(ii) make available to the public and such Holder such information as will

enable the Holder to make sales pursuant to Rule 144.

 

 

Section 8.              Miscellaneous.

 

8.1          Amendment

and Waiver.  This Warrant may be amended with, and only

with, the written consent of the Company and the Holder.  Any waiver of any term, covenant, agreement

or condition contained in this Warrant shall not be deemed a waiver of any

other term, covenant, agreement or condition, and any waiver of any default in

any such term, covenant, agreement or condition shall not be deemed a waiver of

any later default thereof or of any default of any other term, covenant,

agreement or condition.

 

8.2          Representations

and Warranties to Survive Closing.  All representations, warranties and

covenants contained herein shall survive the execution and delivery of this

Warrant and the issuance of any Warrant Shares upon the exercise hereof.

 

8.3          Severability. 

In the event that any court or any governmental authority or agency

declares all or any part of any Section of this Warrant to be unlawful or

invalid, such unlawfulness or invalidity shall not serve to invalidate any

other Section of this Warrant, and in the event that only a portion of any

Section is so declared to be unlawful or invalid, such unlawfulness or

invalidity shall not serve to invalidate the balance of such Section.

 

8.4          Binding

Effect; No Third Party Beneficiaries.  All provisions of this Warrant shall be

binding upon and inure to the benefit of the parties and their respective

heirs, legatees, executors, administrators, legal representatives, successors,

and permitted transferees and assigns. 

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

Financial Officer

 

 

7

 

With a copy to:

Venture Law Group

2800 Sand Hill Road

Menlo Park, CA  94025

Telephone:            650-854-4488

Facsimile:                                            650-233-8386

Attention:              Mark A. Medearis

 

If to the Holder:

Fusion

Capital Fund II, LLC

222

Merchandise Mart Plaza, Suite 9-112

Chicago,

IL 60654

Telephone:            312-644-6644

Facsimile:                                            312-644-6244

Attention:              Steven G. Martin

 

If to the Transfer Agent:

Bank of New York

ADR Department

620 Avenue of the

Americas, 6th Floor

New York, NY 10011

Telephone:            212-815-4305

Facsimile:                                            212-571-3050

Attention:              Tom Abbott

 

 

or at such other address and/or facsimile number and/or to the

attention of such other person as the recipient party has specified by written

notice given to each other party three (3) Trading Days prior to the

effectiveness of such change.  Written

confirmation of receipt (A) given by the recipient of such notice, consent,

waiver or other communication, (B) mechanically or electronically generated by

the sender’s facsimile machine containing the time, date, and recipient

facsimile number or (C) provided by a nationally recognized overnight delivery

service, shall be 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 

 

 

8

 

the

State of Illinois, without giving effect to any choice of law or conflict of

law provision or rule (whether of the State of Illinois or any other

jurisdictions) that would cause the application of the laws of any

jurisdictions other than the State of Illinois.  Each party hereby irrevocably submits to the exclusive

jurisdiction of the state and federal courts sitting in the City of Chicago,

for the adjudication of any dispute hereunder or under the other Transaction

Documents or in connection herewith or therewith, or with any transaction

contemplated hereby or discussed herein, and hereby irrevocably waives, and

agrees not to assert in any suit, action or proceeding, any claim that it is

not personally subject to the jurisdiction of any such court, that such suit,

action or proceeding is brought in an inconvenient forum or that the venue of

such suit, action or proceeding is improper. 

Each party hereby irrevocably waives personal service of process and

consents to process being served in any such suit, action or proceeding by

mailing a copy thereof to such party at the address for such notices to it

under this Agreement and agrees that such service shall constitute good and

sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any

right to serve process in any manner permitted by law.  EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY

HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY

DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR

ANY TRANSACTION CONTEMPLATED HEREBY.

 

8.8          Loss of

Warrant.  Upon receipt by the Company of evidence

reasonably satisfactory to it of the loss, theft, destruction or mutilation of

this Warrant, and (in the case of loss, theft or destruction) of

indemnification from the Holder, and upon surrender and cancellation of this

Warrant, if mutilated, the Company shall execute and deliver a new Warrant of

like tenor and date.

 

8.9          Entire

Agreement. This

Warrant, the Subscription Agreement and the Registration Rights Agreement of

even date herewith represent the entire agreement and understanding between the

parties concerning the subject matter hereof and supercede all prior and

contemporaneous agreements, understandings, representations and warranties with

respect thereto.

 

8.10        Headings. The headings used herein are used for

convenience only and are not to be considered in construing or interpreting

this Warrant.

 

 

 

	

  INSIGNIA SOLUTIONS PLC

  
	

   

  
	

  By: 

  	

  /s/ Richard M. Noling

  
	

  Name: Richard M. Noling

  
	

  Title: Chief Executive Officer

  

 

 

9

 

REDEEMABLE WARRANT EXERCISE FORM

 

 

 

Date:

 

 

	

  INSIGNIA SOLUTIONS PLC

  
	

   

  
	

   

  

 

Attention: 

 

Ladies and Gentlemen:

 

The undersigned, being the registered holder of your Redeemable Warrant

for the purchase of 1,000,000 Warrant Shares issued October 17, 2002

accompanying this letter, hereby irrevocably exercises such Redeemable Warrant

for

                             Warrant

Shares (as defined in said Redeemable Warrant), and herewith makes payment

therefor [via “cash-less exercise”] in accordance with the Redeemable Warrant,

and requests that such Warrant Shares be issued in the name of, and delivered

to FUSION

CAPITAL FUND II, LLC, at the address shown below the signature

line hereof.

 

If said number of Warrant Shares shall not be all the Warrant Shares

issuable upon exercise of the attached Redeemable Warrant, a new Redeemable

Warrant is to be issued in the name of the undersigned for the balance

remaining of such Warrant Shares.

FUSION CAPITAL FUND II, LLC

 

BY:

FUSION CAPITAL PARTNERS, LLC

 

	

  By:

  	

   

  
	

  Name:

  
	

  Title:

  

 

Fusion

Capital Fund II, LLC

222

Merchandise Mart Plaza, Suite 9-112

Chicago,

IL 60654

 

 

10

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