EXHIBIT 10.52
EXECUTION COPY
SUBSCRIPTION AGREEMENT
Insignia Solutions plc
00000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
The undersigned ("SUBSCRIBER") hereby tenders this Subscription Agreement
("AGREEMENT") in accordance with and subject to the terms and conditions set
forth herein and the Private Placement Memorandum, dated November 16, 2000,
including all exhibits and supplements thereto (the "MEMORANDUM").
1. SUBSCRIPTION.
1.1 The undersigned hereby irrevocably subscribes for (i) the number of
shares (the "SHARES") of American depositary shares (the "ADSS"), each ADS
representing one ordinary share, 20 xxxxx per share nominal value, of Insignia
Solutions plc (each an "ORDINARY SHARE"), a public limited company organized and
existing under the laws of England and Wales (the "COMPANY"), indicated on the
signature page attached hereto at a price of $5.00 per Share (the "ISSUE PRICE")
and (ii) warrants (the "WARRANTS") in the form of EXHIBIT A attached hereto to
subscribe for an additional number of ADSs set forth on the signature pages
attached hereto (such additional ADSs in the aggregate issuable from time to
time upon exercise of the Warrants, collectively the "WARRANT SHARES" and,
together with the Shares and the Warrants, the "SECURITIES"). At or prior to the
Closing Date (as defined below), the undersigned will make payment by wire
transfer of funds in accordance with instructions from the Company in the full
amount of the purchase price of the Shares for which the undersigned is
subscribing (the "PAYMENT").
1.2 The undersigned understands that it will not earn interest on any
funds held by the Company prior to the date of closing of the Offering (as
hereinafter defined). Xxxxxxxxx & Company, Inc. (the "PLACEMENT AGENT") and the
Company will hold the closing of the Offering (the "CLOSING") on November 24,
2000 or such other date as the Company and the Placement Agent shall agree (the
"CLOSING DATE"). Simultaneously with receipt by the Company of the requisite
payment for all Securities to be purchased by the subscribers whose
subscriptions are accepted (each, a "SUBSCRIBER") at the Closing and subject to
the satisfaction of certain conditions, the Securities so purchased will be
issued in the name of each such Subscriber or its custodian, if any, as
requested by such Subscriber.
1.3 The undersigned hereby agrees to be bound hereby upon (i) execution
and delivery to the Company, in care of the Placement Agent, of the signature
page to this Subscription Agreement and (ii) acceptance on the Closing Date by
the Company of the undersigned's subscription (the "SUBSCRIPTION").
2. OFFERING MATERIAL.
2.1 Subscriber represents and warrants that it is in receipt of, and
that it has carefully read and understands, the following items:
(a) the Memorandum;
(b) Annual Report to the Securities and Exchange Commission (the
"SEC") on Form 10-K of the Company for its fiscal year ended December 31, 1999
(the "FORM 10-K");
(c) Quarterly Report to the SEC on Form 10-Q of the Company for
the three-month period ended March 31, 2000 (the "MARCH FORM 10-Q");
(d) Quarterly Report to the SEC on Form 10-Q of the Company for
the three-month period ended June 30, 2000 (the "JUNE FORM 10-Q");
(e) Quarterly Report to the SEC on Form 10-Q of the Company for
the three-month period ended September 30, 2000 (the "SEPTEMBER FORM 10-Q"); and
(f) Proxy Statement on Schedule 14A, dated June 2, 2000, of the
Company for an Annual General Meeting held on July 18, 2000 (the "PROXY").
The Form 10-K, the March Form 10-Q, the June Form 10-Q, the September Form
10-Q and the Proxy are referred to herein collectively as the "PUBLIC REPORTS."
3. CONDITIONS TO SUBSCRIBER'S OBLIGATIONS.
3.1 The obligation of the Subscriber to close the transactions
contemplated by this Agreement (the "TRANSACTION") is subject to the
satisfaction on or prior to the date of the Closing (as hereinafter defined) of
the following conditions set forth in Sections 3.2 through 3.14 hereof.
3.2 The (i) representations and warranties made by the Company herein
shall be true in all material respects on and as of the Closing Date with the
same effect as if they had been made on and as of the Closing Date and (ii)
Company shall have performed in all material respects all obligations, covenants
and agreements and conditions required to be performed by it under this
Agreement at or prior to the Closing Date, and the Subscriber shall have
received a certificate of the Chief Executive Officer to the same effect.
3.3 All approvals and consents of or filings with governmental or
regulatory authorities and all approvals and consents of any persons required to
permit the consummation of all of the transactions contemplated by this
Agreement shall have been made or obtained, as the case may be, to the
reasonable satisfaction of the Subscriber.
3.4 All proceedings to be taken in connection with the Transaction are
to be consummated at or prior to the Closing, and all documents incidental
thereto shall be reasonably satisfactory in form and substance to the Subscriber
and its counsel, and the Subscriber and its counsel shall have received copies
of all documents and information which it may have reasonably requested in
connection with the transactions and of all corporate proceedings in connection
therewith, in form and substance reasonably satisfactory to Subscriber and its
counsel.
3.5 The Company shall have delivered to the Subscriber duly executed
American depositary receipts (in such denominations as the Subscriber shall
request) representing the Shares.
3.6 The Company shall have delivered to the Subscriber (or its
custodian) duly executed Warrants (in such denominations as the Subscriber shall
request), dated the Closing Date.
3.7 The Company shall have delivered (or cause to be delivered) opinions
of counsel to the Company addressed to the Subscriber and the Placement Agent in
form, scope and substance satisfactory to the Subscriber and the Placement
Agent.
3.8 The ADSs, including all Shares and Warrant Shares, are included for
quotation on the Nasdaq Stock Market, Inc. ("NASDAQ") and trading of the ADSs
shall not have been suspended by Nasdaq, the SEC, the National Association of
Securities Dealers, Inc. (the "NASD") or other regulatory authority, and, except
as set forth in the Memorandum, no de-listing or suspension shall be reasonably
likely for the foreseeable future.
3.9 No statute, rule, regulation, executive order, decree, ruling or
injunction shall have been enacted, entered into, promulgated or endorsed by any
court or governmental authority of competent jurisdiction or any self-regulatory
organization having authority over the matters contemplated hereby which
prohibits the consummation of any of the transactions contemplated by this
Agreement.
3.10 The Company shall have filed, if applicable, an Additional Listing
Application (and no additional time shall be required for the effectiveness
thereof) with respect to all Shares and Warrant Shares with the NASD and shall
have provided a copy thereof to the Subscriber.
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3.11 The Placement Agent shall have received the executed letters from
the persons listed in Section 4.26.
3.12 The Company shall have received duly executed subscription
agreements in the form of this Agreement subscribing for a minimum of $15.0
million ADSs.
3.13 The Company shall have obtained waivers in form, scope and substance
satisfactory to the Subscriber and the Placement Agent from the persons listed
in Section 4.33.
3.14 The Subscriber shall have received the officer's certificate
described in Section 4.4 dated as of the Closing Date and there shall be no
changes from the date of signing the Agreement to the date of Closing.
4. REPRESENTATIONS AND WARRANTIES; COVENANTS.
The Company represents and warrants that, at the date of this Agreement:
4.1 The Company is a public limited company, duly incorporated and
validly existing under the laws of England and Wales and registered in England
under the Companies Act of 1985 and has been in continuous existence since
incorporation. Each of the Company's subsidiaries is a corporation, limited
liability company or other entity duly organized, validly existing and, to the
extent applicable, in good standing under the laws of the jurisdiction of its
organization. The Company and each of its subsidiaries have full power and
authority to conduct their respective businesses as they are presently being
conducted and to own, lease and operate their respective properties and assets.
The Company and each of its subsidiaries are duly qualified to do business as
foreign entities and are in good standing in each jurisdiction in which the
character or location of the properties and assets owned or operated by them or
the nature of the businesses conducted by them makes such qualification
necessary.
4.2 The Memorandum and the exhibits thereto do not contain any untrue
statement of 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 under which they were made, not misleading.
4.3 (a) The Company has the requisite corporate power and authority (i)
to enter into and perform its obligations under this Agreement and any documents
related hereto and (ii) to issue and sell to Subscriber, and to perform its
obligations with respect to, the Securities in accordance with the terms hereof
and thereof, as applicable; (b) the execution, delivery and performance of this
Agreement and any documents related hereto by the Company and the consummation
by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action, and no further consent or
authorization of the Company, its board of directors, or its shareholders or any
other person, body or agency is required with respect to any of the transactions
contemplated hereby or thereby (whether under rules of Nasdaq, NASD or
otherwise) or the declaration or ordering of effectiveness by the SEC of the
registration statement or the statements as contemplated by this Agreement; (c)
this Agreement has been duly authorized, executed and delivered by the Company;
and (d) this Agreement constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms.
4.4 The capitalization of the Company as of the date of this Agreement,
including the authorized share capital, the number of shares issued and
outstanding, the number of shares reserved for issuance pursuant to the
Company's stock option plans and employee stock purchase plans, the number of
shares reserved for issuance pursuant to securities exercisable for, convertible
into or exchangeable for any shares and the number of Ordinary Shares
represented by ADSs, is set forth on SCHEDULE 4.4. All of the issued Ordinary
Shares have been duly and validly authorized and issued, are fully paid and were
not issued in violation of, or subject to, any preemptive, subscription or other
similar rights of any shareholders of the Company or any liens or encumbrances.
All of the outstanding ADSs have been duly and validly authorized and issued and
are entitled to the benefits specified in the corresponding American depositary
receipts ("ADRS") and in the Deposit Agreement (the "DEPOSIT AGREEMENT"), dated
November 17, 1995, as amended, between the Company and The Bank of New York, as
Depositary (the "DEPOSITARY"). Except as set forth on SCHEDULE 4.4, as of the
date of this Agreement, (i) there are no outstanding options, warrants, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exercisable or
exchangeable for, any shares in the Company or any of its
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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 Company or any of its subsidiaries, and (ii) there are
no agreements or arrangements under which the Company or any of its subsidiaries
is obligated to register the sale of any of its or their securities under the
Securities Act of 1933, as amended (the "SECURITIES ACT"). The Company has
furnished to Subscriber true, correct and complete copies of the Company's
Memorandum of Association as currently in effect ("MEMORANDUM OF ASSOCIATION"),
and the Company's Articles of Association as currently in effect (the "ARTICLES
OF ASSOCIATION"). The Company has set forth on SCHEDULE 4.4 all instruments and
agreements (other than the Memorandum of Association and Articles of
Association) governing securities convertible into or exercisable or
exchangeable for the Ordinary Shares (including in the form of ADSs) of the
Company (and the Company shall provide to the Subscriber copies thereof upon the
request of Subscriber). Except as set forth in the Public Reports and in the
ordinary course of business consistent with past practice subsequent to the date
of the Public Reports, the Company has no indebtedness for borrowed money and no
agreement providing for indebtedness for borrowed money. Except as set forth on
SCHEDULE 4.4, the Company has no share purchase agreements, rights plans or
agreements containing similar provisions and no agreements containing
anti-dilution provisions. Except as set forth on SCHEDULE 4.4 or that have been
waived prior to Closing, no anti-dilution provisions which have, individually or
in the aggregate, any dilutive effect on Subscriber's investment are triggered
as a result of any of the transactions contemplated hereby. The Company shall
provide Subscriber with a written update of this representation signed by the
Company's Chief Executive Officer or Chief Financial Officer on behalf of the
Company as of the date of the Closing and it shall be a condition to
Subscriber's obligations at Closing that there are no material changes in such
capitalization since the Company's representation on the date hereof. The
Company has no subsidiaries, except as provided on SCHEDULE 4.4. All such
subsidiaries included on SCHEDULE 4.4 are one hundred percent (100%) owned by
the Company. Except as provided in SCHEDULE 4.4, the Company has no investments,
either debt or equity, in any other entity.
4.5 (a) The Shares and the Ordinary Shares represented by such Shares
are duly authorized and reserved for issuance, and, upon issuance in accordance
with the terms hereof, will be validly issued, fully paid, non-assessable and
free and clear from all liens, claims and encumbrances, will not be subject to
any preemptive rights or other similar rights of shareholders of the Company and
the Subscriber will acquire good and marketable title to the Shares, free and
clear of all liens, claims and encumbrances. The holders of Ordinary Shares will
not, upon issuance, be subject to personal liability to contribute to the assets
or liabilities of the Company in their capacity as holders of such shares. No
personal liability attaches to the registered holders of Ordinary Shares by
reason of their being registered holders thereof. Upon issuance, the Shares are
entitled to the benefits specified in the corresponding ADRs and in the Deposit
Agreement. The Board of Directors of the Company has approved the issuance of
Shares pursuant to the terms hereof. No further corporate authorization or
approval is required under the rules of Nasdaq with respect to the transactions
contemplated by this Agreement, including, without limitation, the issuance of
the Shares and the inclusion thereof for trading on Nasdaq.
(b) Upon issue, the Subscriber will acquire good and marketable
title to the Warrants, free and clear of all liens, claims and encumbrances. The
Warrant Shares and the Ordinary Shares represented by such Warrant Shares are
duly authorized and reserved for issuance. Upon exercise of the Warrants, in
whole or, from time to time, in part, and upon payment of the exercise price
therefor, in accordance with the terms of the Warrants, the Subscriber will
acquire good and marketable title to the Warrant Shares, free and clear from all
liens, claims and encumbrances, will not be subject to any preemptive rights or
other similar rights of shareholders of the Company and the Warrant Shares will
be validly issued, fully paid and non-assessable. Upon issuance, the Warrant
Shares will be entitled to the benefits specified in the corresponding ADRs and
in the Deposit Agreement. The Board of Directors of the Company has approved the
issuance of the Warrants and the Warrant Shares pursuant to the terms hereof. No
further corporate authorization or approval is required under the rules of
Nasdaq with respect to the transactions contemplated by this Agreement,
including, without limitation, the issuance of the Warrants and the inclusion
thereof of the Warrant Shares for trading on Nasdaq.
4.6 The execution, delivery and performance of this Agreement by the
Company, and the consummation by the Company of the transactions contemplated
hereby (including, without limitation, the issuance and reservation for
issuance, as applicable, of the Shares and the Warrant Shares and the
Subscriber's purchase and acquisition of the Securities) do not and will not (a)
result in a violation of the Memorandum of Association and Articles of
Association, (b) 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
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cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party or (c) result in a violation of any law,
rule, regulation, order, judgment or decree (including, without limitation,
United States of America federal and state securities laws and regulations and
the laws of England and Wales) applicable to the Company or any of its
subsidiaries, or by which any property or asset of the Company or any of its
subsidiaries is bound or affected. Neither the Company nor any of its
subsidiaries is in violation of its Memorandum of Association, its Articles of
Association or other organizational documents, and neither the Company nor any
of its subsidiaries is in default (and no event has occurred which, with notice
or lapse of time or both, would put the Company or any of its subsidiaries in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party. The business of the Company and its
subsidiaries is not being conducted, and shall not be conducted so long as
Subscriber owns any of the Securities, in violation of any law, ordinance, rule,
regulation, order, judgment or decree of any governmental entity, court or
arbitration tribunal. Except as set forth on SCHEDULE 4.6, the Company 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 this Agreement or to perform its obligations in accordance
with the terms hereof. The purchase and acquisition of the Securities by the
Subscriber do not violate any law, rule, regulation, order, judgment or decree
applicable to the Company, or, require further filing by the Company or
Subscriber under such law, rule, regulation, order, judgment or decree, by
virtue of the Company's business or assets. Except as set forth in the
Memorandum, the Company is not in violation of the listing requirements of
Nasdaq and does not reasonably anticipate that the ADSs will be de-listed by
Nasdaq for the foreseeable future, and the Company has made all necessary
filings and notifications with, and obtained all necessary approvals from,
Nasdaq with respect to the transactions contemplated hereby, including, without
limitation, the issuance of the Shares and the Warrant Shares and the inclusion
for quotation of the Shares and the Warrant Shares on Nasdaq.
4.7 The Ordinary Shares are registered under Section 12 of the
Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and have
been so registered since November 13, 1995. Since December 31, 1996, the Company
has timely filed all reports, schedules, forms, statements and other documents
required to be filed by it with Companies House pursuant to the United Kingdom
Companies Xxx 0000 (collectively, and in each case including all exhibits and
schedules thereto and documents incorporated by reference therein, the "COMPANY
REPORTS") and 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 Exchange Act (all of the foregoing filed after
December 31, 1996, and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference therein, being
referred to herein as the "SEC DOCUMENTS" and such documents filed prior to the
date hereof, the "FILED SEC DOCUMENTS"), including for purposes of determining
the availability of Form S-3. The Company has delivered or made available to
Subscriber true and complete copies of the SEC Documents filed since December
31, 1996. As of their respective dates of filing, the Company Reports and the
SEC Documents complied in all material respects with the requirements of the
applicable law and the rules and regulations promulgated thereunder applicable
to such Company Reports and SEC Documents, and none of the Company Reports and
SEC Documents, at the time they were filed with the Companies House or SEC,
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. Except as set forth on SCHEDULE 4.7, none of the statements made in
any such SEC Document is, or, except pursuant to Filed SEC Documents has been,
required to be updated or amended under applicable law. Except as set forth on
SCHEDULE 4.7, the financial statements of the Company included in the SEC
Documents were prepared in accordance with United States of America generally
accepted accounting principles, consistently applied, and the rules and
regulations of the SEC 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 do not include
footnotes or are condensed or summary statements) and present accurately and
completely in all material respects the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, immaterial
year-end audit adjustments). Except as set forth in the financial statements of
the Company included in the Filed SEC Documents, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred subsequent to the
date of such financial statements in the ordinary course of business consistent
with past practice and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in such financial
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statements. The Filed SEC Documents contain a complete and accurate list of all
material undischarged written or oral contracts, agreements, leases or other
instruments to which the Company or any subsidiary is a party or by which the
Company or any subsidiary is bound or to which any of the properties or assets
of the Company or any subsidiary is subject (each a "CONTRACT"), except to the
extent not required to be filed pursuant to the applicable Rules and Regulations
of the SEC. None of the Company, its subsidiaries or any of the other parties
thereto, is in material breach or violation of any Contract. No event,
occurrence or condition exists which, with the lapse of time, the giving of
notice, or both, or the happening of any further event or condition, would
become a material breach or default by the Company or its subsidiaries under any
Contract.
4.8 Except as set forth in the Public Reports, since December 31, 1999,
there has been no material adverse change and no material adverse development in
the business, properties, operations, financial condition, results of operations
or prospects of the Company or any of its subsidiaries.
4.9 Except as set forth in the Filed SEC Documents and the Memorandum,
there is no action, suit, proceeding, inquiry or investigation before or by any
court, public board, governmental agency or authority, or self-regulatory
organization or body pending or threatened against or affecting the Company, any
of its subsidiaries, or any of their respective directors or officers in their
capacities as such, wherein an unfavorable decision, ruling or finding (i) would
adversely affect the transactions contemplated by this Agreement or any of the
documents contemplated hereby, (ii) would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents or (iii) would
adversely affect the business properties, operations and results of operations
or prospects of the Company or any of its subsidiaries. There are no facts
which, if known by a potential claimant or governmental agency or authority,
could give rise to a claim or proceeding.
4.10 No information relating to or concerning the Company or any of its
subsidiaries set forth in this Agreement or in the Memorandum contains an untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements made herein or therein, in light of the
circumstances under which they were made, not misleading. Except for the
execution and performance of this Agreement and the transactions contemplated
hereby, no material fact (within the meaning of the federal securities laws of
the United States of America) exists with respect to the Company or any of its
subsidiaries which has not been publicly disclosed, except to the extent not
required to be disclosed pursuant to the applicable Rules and Regulations of the
SEC.
4.11 The Company acknowledges and agrees that Subscriber is acting
independently and is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement or the
transactions contemplated hereby, that this Agreement and the transactions
contemplated hereby, and the relationship between Subscriber and the Company,
are "arm's-length", and that any statement made by Subscriber, or any of its
representatives or agents, in connection with this Agreement or the transactions
contemplated hereby is not advice or a recommendation, is merely incidental to
Subscriber's purchase of the Securities and has not been relied upon in any way
by the Company, its officers, directors or other representatives. The Company
further represents to Subscriber that the Company's decision to enter into this
Agreement and the transactions contemplated hereby has been based solely on an
independent evaluation by the Company and its representatives.
4.12 The Company is currently eligible to register the resale of the
Shares and the Warrant Shares by the Subscriber in a secondary offering under
General Instruction B3 and B4 of Form S-3 on a registration statement on Form
S-3 under the Securities Act.
4.13 Neither the Company nor any person acting on behalf of the Company
has conducted any "general solicitation," as described in Rule 502(c) under
Regulation D promulgated under the Securities Act ("REGULATION D"), with respect
to any of the Securities being offered hereby.
4.14 Neither the Company, nor any of its affiliates, nor any person
acting on their behalf, has directly or indirectly made any offers or sales of
any security or solicited any offers to buy any security under circumstances
that would prevent the parties hereto from consummating the transactions
contemplated hereby pursuant to an exemption from registration under the
Securities Act pursuant to the provisions of Regulation D. The transactions
contemplated hereby are exempt from the registration requirements of the
Securities Act, assuming the accuracy of the representations and warranties
herein contained of Subscriber to the extent relevant for such determination.
The
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issuance of the Securities to the Subscriber will not be integrated with any
other issuance of the Company's securities (past, current or future) which
requires shareholder approval under the rules of Nasdaq or which would result in
a violation of the Securities Act. The issuance of the Securities to the
Subscriber does not require shareholder approval, including, without limitation,
pursuant to the rules of Nasdaq.
4.15 The Company has taken no action which would give rise to any claim
by any person for brokerage commissions, finder's fees or similar payments by
Subscriber relating to this Agreement or the transactions contemplated hereby,
except for dealings with the Placement Agent (the fees of which shall be borne
solely by the Company).
4.16 The Company's executive officers and directors have studied and
fully understand the terms of this Agreement and the transactions contemplated
hereby and the nature of the securities being sold hereunder and recognize that
they have a potentially dilutive effect. The board of directors of the Company
has concluded in its good faith business judgment that the issuance of the
Securities as contemplated hereby is in the best interests of the Company.
4.17 Each of the Company and its subsidiaries owns or possesses adequate
and enforceable rights to use all patents, patent applications, trademarks,
trademark applications, trade names, service marks, copyrights, copyright
applications, licenses, know-how (including trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures) and other similar rights and proprietary knowledge (collectively,
"INTANGIBLES") used or necessary to conduct its business as now being conducted
and as previously described in the Form 10-K and any subsequently filed reports
on Form 10-Q and Form 8-K. Except as set forth in the Memorandum, to their
respective knowledge, neither the Company nor any subsidiary of the Company
infringes on or is in conflict with any right of any other person with respect
to any Intangibles nor is there any claim of infringement made or threatened by
a third party against or involving the Company or any of its subsidiaries.
4.18 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
subsidiary, has, in the course of his actions for, or on behalf of, the Company,
(i) used any corporate funds for any unlawful contribution, gift, entertainment
or other unlawful expenses relating to political activity, (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds, (iii) violated or is in violation of any
provision of the United States Foreign Corrupt Practices Act of 1977, as amended
or (iv) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment to any foreign or domestic government official or employee.
Without limiting the generality of the foregoing, the Company and its
subsidiaries have not directly or indirectly made or agreed to make (whether or
not said payment is lawful) any payment to obtain, or with respect to, sales
other than usual and regular compensation to its or their employees and sales
representatives with respect to such sales.
4.19 Except for employees who perform purely administrative or custodial
functions, each employee of the Company has executed an agreement containing
non-disclosure, confidentiality and assignment of Intangibles provisions. Each
Key Employee (as defined below) is currently serving the Company in the capacity
disclosed in SCHEDULE 4.19. Except for employees who perform purely
administrative or custodial functions, no employee of the Company or its
subsidiaries is now, or is expected to be, in violation of any material term of
any employment contract, confidentiality, disclosure or proprietary information
agreement, non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each employee does not
subject the Company or any of its subsidiaries to any liability with respect to
any of the foregoing matters. Except for employees who perform purely
administrative or custodial functions, no employee has any intention to
terminate or limit his employment with, or services to, the Company or any of
its subsidiaries, nor is any such employee subject to any constraints (E.G.,
litigation) which would cause such employee to be unable to devote his full time
and attention to such employment or services. "KEY EMPLOYEES" means Xxxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxx X. XxXxxxxx, Xxxxxx Xxxxxx, Xxxxxxxx Xxxxxx,
Xxxxxx X. Xxxxxxx, and Xxxxxxx Xxxx and any individual who assumes or performs
any of the duties of a Key Employee.
4.20 The Company is not a Passive Foreign Investment Company ("PFIC")
within the meaning of Section 1297 of the United States Internal Revenue Code of
1986, as amended, and is not likely to become a PFIC.
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4.21 The Company is not and, after giving effect to the Offering and sale
of the Securities, will not be an "investment company," as such term is defined
in the Investment Company Act of 1940, as amended.
4.22 The Deposit Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid and legally binding agreement
of the Company, enforceable in accordance with its terms. Upon issuance by the
Depositary of the ADRs evidencing ADSs against deposit of the Shares and the
Warrant Shares in respect thereof in accordance with the provisions of the
Deposit Agreement, such ADRs will be duly and validly issued and the persons in
whose names the ADRs are registered will be entitled to the rights specified
therein and in the Deposit Agreement.
4.23 All dividends and other distributions declared and payable on the
shares of the capital stock of the Company may, under the current laws and
regulations of the United Kingdom, be paid to the Depositary in British Pound
Sterling that may be converted into foreign currency that may be freely
transferred out of the United Kingdom and all such dividends and other
distributions will not be subject to withholding or other taxes under the laws
and regulations of the United Kingdom and are otherwise free and clear of any
other tax, withholding or deduction in the United Kingdom and without the
necessity of obtaining any authorization in the United Kingdom.
4.24 Except for taxes and duties to be paid by the Company, no stamp or
other issuance of transfer taxes or duties and no capital gains, income,
withholding or other taxes are payable by or on behalf of the Subscriber to the
United Kingdom or any political subdivision or taxing authority thereof or
therein in connection with (i) the deposit with the Depositary of Shares and the
Warrant Shares by the Company against the issuance of the ADRs evidencing ADSs
or (ii) the sale and delivery by the Company of the Shares, the Warrant Shares
and ADSs to or for the account of the Subscriber.
4.25 Neither the Company nor any of its subsidiaries has taken, directly
or indirectly any action which was designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities and ADSs.
4.26 The Company shall obtain lock-up agreements in the form set forth in
EXHIBIT B hereto from each of Xxxxxxx X. Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxx
Xxxxxx, Xxxxx Xxx Xxxxxx, Xxxx X. XxXxxxxx, Xxxxxx X. Xxxxxxx, Xxxxxxx Xxxx,
Xxxxxxxx Viscount Bearsted, Xxxxx X. Xxxxxxxx, Xxxxxxx X. Xxxx and Xxxxxx X.
Xxxxx not to sell, offer to sell, contract to sell, hypothecate, grant any
option to sell or otherwise dispose of, directly or indirectly, any ADSs, ADRs,
Ordinary Shares or securities convertible into or unexchangeable or exercisable
for ADSs, ADRs or Ordinary Shares or warrants or other rights to purchase ADSs,
ADRs or Ordinary Shares for a period beginning on the Closing Date and ending on
the later of (i) 180 days from the Closing Date or (ii) the date the
registration statement registering the Shares and the Warrant Shares represented
by ADSs under the Securities Act is declared effective by the SEC.
4.27 Except as set forth in the financial statements included in the
Filed SEC Documents, each of the Company and its subsidiaries have timely filed
all requisite United States of America federal, state and other tax returns or
extension requests for all fiscal periods in which such filings were required to
be made. There are no examinations in progress or claims pending against the
Company or any of its subsidiaries for United States of America federal, state
and other taxes (including penalties and interest) for any period or periods
prior to and including December 31, 1999 and no notice of any claim for taxes,
whether pending or threatened, has been received. All taxes due from the Company
and its subsidiaries for any period ended before the date hereof, including
interest and penalties (whether or not shown on any tax return) has been paid.
The amounts shown as accruals for taxes on the financial statements included in
the Filed SEC Documents are sufficient for the payment of all taxes (including
penalties and interest) for all periods ended on or before that date. The
Company and its subsidiaries are not and have not during the last five (5) years
been a party to any tax sharing agreement or agreement of similar effect. The
Company is not and has not during the last five (5) years been a member of any
consolidated group. Except as set forth in the financial statements included in
the Filed SEC Documents, the Company and the subsidiaries have not received,
been denied, or applied for any private letter ruling during the last five (5)
years.
4.28 The Company and its subsidiaries have all Permits (as hereinafter
defined) required by law or governmental regulations from all applicable courts,
administrative agencies or commissions or other governmental
8
authorities or instrumentalities, whether in the United States of America
(federal, state or local) or outside of the United States of America that are
necessary to operate such businesses as presently conducted and all such Permits
are in full force and effect, except where the failure to have any such Permits
in full force and effect could not, individually or in the aggregate, reasonably
be expected to have a material adverse effect on the business, properties,
operations and results of operations or prospects of the Company or any of its
subsidiaries. Neither the Company nor any of its subsidiaries is in default
under, or in violation of or noncompliance with, any of such Permits, except for
any such default, violation of or noncompliance which could not, individually or
in the aggregate, reasonably be expected to have a material adverse effect on
the business, properties, operations and results of operations or prospects of
the Company or any of its subsidiaries. Upon consummation of the transactions
contemplated by this Agreement, each such Permit will remain in full force and
effect and will not create a right of any other person to terminate or revoke,
modify or condition such Permit based on such consummation. "Permit" means any
permit, certificate, consent, approval, authorization, order, license, variance,
franchise or other similar indicia of authority issued or granted by any court,
administrative agency or commission or other governmental authority or
instrumentality, whether in the United States of America (federal, state or
local) or outside of the United States of America.
4.29 Except for a certain restriction on beneficial ownership of the
Company's Ordinary Shares contained in a certain warrant issued to a Subscriber,
the Company is simultaneously, with the execution of this Agreement, entering
into one or more subscription agreements with other Subscribers with exactly the
same terms and conditions as this Agreement; and no Subscriber is subscribing
for any securities of the Company on the Closing Date with terms and conditions
different from the terms and conditions of this Agreement.
4.30 The Company agrees to file a Form 8-K disclosing this Agreement and
the transactions contemplated hereby with the SEC within three (3) business days
following the Closing Date. Such Form 8-K shall contain as an exhibit this
Agreement and the Warrants. Without limiting any of the Company's obligations
under this Agreement, from and after the Closing Date, neither the Company nor
any person acting on its behalf shall take any action which would adversely
affect any exemptions from registration under the Securities Act with respect to
the transactions contemplated hereby.
4.31 So long as the Subscriber remains a registered owner of any of the
Securities, the Company shall timely file all reports required to be filed with
the SEC pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.
4.32 For a period of beginning on the Closing Date and ending on the
third (3rd) anniversary of the Closing Date, the Company shall continue the
listing and trading of its ADSs on Nasdaq, the New York Stock Exchange or the
American Stock Exchange, secure and maintain the listing and trading of the
Shares and the Warrant Shares on such exchange or quotation system, and comply
in all respects with the Company's reporting, filing and other obligations under
the by-laws or rules of such exchange or quotation system.
4.33 The Company shall obtain a waiver from each of Castle Creek
Technology Partners LLC, Xxxxxxx and Xxxxxxxx Xxxx, Xxxxxxx X. and Xxxxxxx
Xxxxxx, Xxxxxx Xxxxx-Xxxxx and Avalon Panama S.A. waiving certain restrictions
for the issuance of securities by the Company and certain terms of warrants
beneficially owned by them in reasonable form, scope and substance to the
Placement Agent.
4.34 The Company shall file a Form D within 15 days of the Closing Date
with respect to the Securities with the SEC as required under Regulation D under
the Securities Act, and shall provide a copy thereof to the Subscriber.
4.35 The Company agrees to provide the following reports to the
Subscriber until the earlier of (i) the date on which the Subscriber transfers
to a non-affiliate of such Subscriber, assigns or sells all of its Securities or
(ii) the third (3rd) anniversary of the Closing Date: (a) a copy of its Annual
Report on Form 10-K within 90 days of the end of the Company's fiscal year, its
Quarterly Reports on Form 10-Q within 45 days of the end of each fiscal quarter,
any proxy statements and any Current Reports on Form 8-K as each becomes
available and (b) within two (2) days after release, copies of all press
releases issued by the Company or any of its subsidiaries. The Company further
agrees to promptly provide to the Subscriber any information with respect to the
Company, its properties, or
9
its business or the Subscriber's investment as the Subscriber may reasonably
request; PROVIDED, HOWEVER, that the Company shall not be required to provide
the Subscriber any material nonpublic information.
5. TRANSFER RESTRICTIONS AND REGISTRATION RIGHTS.
5.1 Subscriber acknowledges that it is acquiring the Securities for its
own account and for the purpose of investment and not with a view to any
distribution or resale thereof within the meaning of the Securities Act and any
applicable state or other securities laws ("STATE ACTS"). The Subscriber further
agrees that it will not sell, assign or transfer the Securities at any time in
violation of the Securities Act or State Acts and acknowledges that, in
acquiring Restricted Securities (as such term is defined under the Securities
Act), it must continue to bear the economic risk of its investment for an
indefinite period of time because of the fact that the Securities have not been
registered under the Securities Act or State Acts, and further acknowledges that
the Securities may not be sold unless subsequently registered under the
Securities Act and State Acts or an exemption from such registration is
available. The Subscriber further acknowledges that the Company is not assuming
any obligation to register the Securities under the Securities Act or State Acts
except as expressly set forth herein. The Subscriber also acknowledges that
appropriate legends reflecting the status of the Securities under the Securities
Act and State Acts may be placed on the certificates representing such
Securities at the time of their transfer and delivery to the holder thereof.
5.2 Except as provided hereafter with respect to registration of the
Shares and the Warrant Shares, it shall be a condition to any such transfer that
the Company shall be furnished with an opinion of counsel from the holder of
such Shares and Warrant Shares, reasonably satisfactory to the Company, to the
effect that the proposed transfer would be in compliance with the Securities Act
and State Acts.
5.3 (a) Within ten (10) days after the Closing Date, the Company shall
use its best efforts to prepare and file with the SEC on one occasion, a
registration statement and such other documents as may be necessary in the
opinion of counsel for the Company, and use its best efforts to have such
registration statement declared effective as soon as possible after the Closing
Date in order to comply with the provisions of the Securities Act so as to
permit the registered resale of the Shares and the Warrant Shares for a period
of three (3) years following the Closing Date by each and every holder of shares
sold in the Offering (the "OFFERING SHARES") who desires to register the resale
of their shares. Within five (5) days after the Closing Date, the Company shall
give each holder of Offering Shares notice at the address of such holder
appearing on the register and transfer records of Company of the Company's
intention to register the resale of such Offering Shares. The obligations of the
Company to give such notice shall be limited to the Subscriber and any entity
which at the time the Offering Shares may have been transferred, which entities,
together with the Subscriber and the Placement Agent, are hereafter referred to
as "OFFERING HOLDERS."
(b) If the registration statement referred to in Section 5.3(a)
above has not been declared effective by the SEC on or before February 22, 2001,
the Company shall promptly issue to the Subscriber .07 ADS for every ADS
purchased in the Offering. In addition, if the registration statement referred
to in Section 5.3(a) is not declared effective by the SEC on or before the last
day of each month thereafter, the Company shall promptly, in each respective
month (and prorated for partial months), issue to the Subscriber .02 ADS for
every ADS purchased in the Offering until the registration statement is declared
effective by the SEC (rounded up to the nearest share after aggregating all
shares held by such Offering Holder). In the event of an issue of further ADSs
pursuant to this Section 5.3(b), the Subscriber shall pay the nominal value of
each Ordinary Share represented by each ADS it receives. The foregoing payment
shall constitute the sole monetary remedy available to the Subscriber in the
event that the Company does not comply with the deadlines set forth in this
Section 5.3(b) with respect to the effectiveness of the registration statement
referred to therein.
5.4 Notwithstanding the foregoing provisions of this Section 5, the
Company may voluntarily suspend the effectiveness of any such registration
statement for a limited time, which in no event shall be longer than 60
consecutive or non-consecutive days in any 12-month period, if the Company has
been advised in writing by counsel or underwriters to the Company that the
offering of any Offering Shares pursuant to the registration statement would
materially adversely affect, or would be improper in view of (or improper
without disclosure in a prospectus), a proposed financing, a reorganization,
recapitalization, merger, consolidation, or similar transaction involving the
Company. If any event occurs that would cause the registration statement to
contain a material misstatement or omission or not to be effective and usable
during the period that such registration statement is
10
required to be effective and usable, the Company shall promptly file an
amendment to the registration statement and use its best efforts to cause such
amendment to be declared effective as soon as practicable thereafter. The
Offering Holders shall furnish to the Company such information regarding their
holdings and the proposed manner of distribution thereof as the Company may
reasonably request and as shall be required in connection with any such
registration statement. Notwithstanding any provision contained herein to the
contrary, the Company's obligation to include, or continue to include, Offering
Shares in any such registration statement under this Section 5 shall terminate
to the extent such shares are eligible for resale under Rule 144(k) promulgated
under the Securities Act. If the registration statement registering the Shares
and the Warrant Shares for resale is suspended more than 60 consecutive or
non-consecutive days in any 12-month period, the Company shall promptly issue to
the Subscriber .07 ADS for every ADS purchased in the Offering. In addition, if
such suspension or stop order is not lifted on or before the last day of each
month thereafter, the Company shall promptly, in each respective month (and
prorated for partial months), issue to the Subscriber .02 ADS for every ADS
purchased in the Offering until the registration statement is declared effective
by the SEC (rounded up to the nearest share after aggregating all shares held by
such Offering Holder). In the event of an issue of further ADSs pursuant to this
Section 5.4, the Subscriber shall pay the nominal value of each Ordinary Share
represented by each ADS it receives.
5.5 If and whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of the Offering
Shares under the Securities Act for the account of an Offering Holder, the
Company will, as promptly as possible:
(a) prepare and file with the SEC a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to comply
with the requirements of the Securities Act and the rules and regulations
promulgated by the SEC thereunder relating to the sale or other disposition of
the securities covered by such registration statement;
(c) furnish to each Offering Holder such numbers of copies of a
prospectus complying with the requirements of the Securities Act, and such other
documents as such Offering Holder may reasonably request in order to facilitate
the public sale or other disposition of the Offering Shares owned by such
Offering Holder, but such Offering Holder shall not be entitled to use any
selling materials other than a prospectus;
(d) use its best efforts to register or qualify the securities
covered by such registration statement under the State Acts as any Offering
Holder shall reasonably request, and do any and all such other acts and things
as may be necessary or advisable to enable such Offering Holder to consummate
the public sale or other disposition of the Offering Shares owned by such
Offering Holder in such states; PROVIDED, HOWEVER, that the Company shall not be
obligated to register or qualify such securities in any jurisdiction in which
such registration or qualification would require the Company to qualify as a
foreign corporation or file any general consent to service of process where it
is not then so qualified or has not theretofore so consented; and
(e) provide a transfer agent and Depositary, which may be a single
entity, for the Shares and the Warrant Shares not later than the effective date
of the applicable registration statement.
5.6 Except as provided below in this Section 5, the expenses incurred by
the Company in connection with action taken by the Company to comply with this
Section 5, including, without limitation, all registration and filing fees,
printing and delivery expenses, accounting fees, fees and disbursements of
counsel to the Company, consultant and expert fees, premiums for liability
insurance, if applicable, obtained in connection with a registration statement
filed to effect such compliance, if applicable, and all expenses, including
counsel fees, for complying with State Acts, shall be paid by the Company. All
fees and disbursements of any counsel, experts, or consultants employed by any
Offering Holder shall be borne by such Offering Holder. The Company shall not be
obligated in any way in connection with any registration pursuant to this
Section 5, for any selling commissions or discounts payable to any underwriter
or broker for securities to be sold by such Offering Holder. It shall be a
condition precedent to the obligation of the Company to take any action pursuant
to this Section 5 that the Company shall have received an undertaking
satisfactory to it from each Offering Holder to pay all expenses required to be
borne by such Offering Holder and to furnish or cause to be furnished to the
Company, specifically for use in the preparation of the
11
registration statement and prospectus, written information concerning (i) the
securities held by such Offering Holder and any underwriter of such securities,
(ii) the intended method of disposition thereof and (iii) any additional
information or documentation as the Company shall reasonably request and as may
be required by administrators of the Securities Act or State Acts in connection
with the action to be taken by the Company hereunder pursuant to such
registration.
5.7 The Company will (to the extent it is lawful for it to do so)
indemnify and hold harmless each Offering Holder, its officers, directors and
each underwriter of such securities, and any person who controls such Offering
Holder or underwriter within the meaning of Section 15 of the Securities Act,
against all claims, actions, losses, damages, liabilities and expenses, joint or
several, to which any of such persons may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages, liabilities or
actions arise out of or are based upon (i) any untrue statement of any material
fact contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or arise
out of or are based upon the omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(ii) any violation of United States of America state or federal securities laws
but only to the extent, with respect to this subsection (ii), that the Offering
Holder suffers losses, damages and liabilities with respect to the Securities
such Offering Holder beneficially owns as of the date of such violation
including any Securities sold on the day of such violation; (iii) any failure by
the Company to fulfill and perform any agreement, covenant or undertaking herein
or (iv) any failure or breach of the representations and warranties of the
Company set forth in Section 4 to be accurate as of the Closing, and will (to
the extent it is lawful for it to do so) promptly reimburse such Offering
Holder, its officers, directors and each underwriter of such securities, and
each such controlling person or entity for any legal and any other expenses
reasonably incurred by such Offering Holder, such underwriter, or such
controlling person or entity in connection with investigating or defending any
such loss, action, claim, damage, liability or action; PROVIDED, HOWEVER, that
the Company will not be liable in any such case to the extent that any such
loss, claim, damage, liability or action arises directly out of or is based
primarily upon an untrue statement or omission made in said registration
statement, said preliminary prospectus or said prospectus, or said amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Offering Holder or such underwriter specifically for use
in the preparation thereof, and PROVIDED FURTHER, HOWEVER, that the Company will
not be liable in any such case to the extent that any such loss, claim, damage
or liability or action arises directly out of or is based primarily upon an
untrue statement or omission made in any preliminary prospectus or final
prospectus if (i) such Offering Holder failed to send or deliver a copy of the
final prospectus or prospectus supplement with or prior to the delivery of
written confirmation of the sale of the Offering Shares and (ii) the final
prospectus or prospectus supplement would have corrected such untrue statement
or omission.
5.8 In the event of any registration of any securities under the
Securities Act pursuant to this Section 5, each Offering Holder will (to the
extent it is lawful to do so), or will furnish the written undertaking of such
other person or entity as shall be acceptable to the Company to, indemnify and
hold harmless the Company, its officers, directors and any person who controls
the Company within the meaning of Section 15 of the Securities Act, against any
losses, claims, damages, liabilities, or actions, joint or several, to which the
Company, its officers, directors, or such controlling person or entity may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities, or actions arise out of or are based upon any
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent and only to the
extent that any such loss, claim, damage, liability, or action arises out of or
is based upon an untrue statement or omission made in said registration
statement, said preliminary prospectus or said prospectus or said amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Offering Holder or any underwriter of such Offering
Holder's securities specifically for use in the preparation thereof, and will
(to the extent it is lawful to do so) promptly reimburse the Company, its
officers, directors and any person who controls the Company within the meaning
of Section 15 of the Securities Act in connection with investigating or
defending any such loss, action, claim, damage, liability or action; PROVIDED,
HOWEVER, that the aggregate amount which any such Offering Holder shall be
required to pay pursuant to this Section 5.8 shall be limited to the dollar
amount of the net proceeds received by such Offering Holder upon the sale of the
Securities pursuant to the registration statement giving rise to such claim.
Such indemnity shall remain in full force and effect regardless of any
investigation made
12
by or on behalf of the Company, its officers, directors and any person who
controls the Company within the meaning of Section 15 of the Securities Act, and
shall survive the transfer of the Securities by such Offering Holder.
5.9 At any time when a prospectus relating to the Offering is required
to be delivered under the Securities Act, the Company will promptly notify the
Offering Holder of the happening of any event, upon the notification or
awareness of such event by an executive officer of the Company, as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue statement of material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing.
5.10 Any party entitled to indemnification hereunder will (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party will not
be subject to any liability for any settlement made by the indemnified party
without its consent (which consent may not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim will not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim.
5.11 With a view to making available to the Offering Holder the benefits
of Rule 144 promulgated under the Securities Act, the Company agrees that it
will use its best efforts to maintain registration of its Ordinary Shares
represented by ADSs under Section 12 or 15 of the Exchange Act and to file with
the SEC in a timely manner all reports and other documents required to be filed
by an issuer of securities registered under the Exchange Act so as to maintain
the availability of Rule 144 promulgated under the Securities Act. Upon the
request of any record owner, the Company will deliver to such owner a written
statement as to whether it has complied with the reporting requirements of Rule
144 promulgated under the Securities Act.
6. SUBSCRIBER REPRESENTATIONS. The undersigned Subscriber hereby represents,
warrants and acknowledges and agrees with the Company and the Placement Agent as
follows:
6.1 The undersigned has been furnished with and has carefully read the
Memorandum and is familiar with and understands the terms of the offering
described in the Memorandum (the "OFFERING").
6.2 The undersigned and/or the undersigned's advisor(s) has/have had a
reasonable opportunity to ask questions of and receive answers from a person or
persons acting on behalf of the Company concerning the Offering and all such
questions have been answered to the full satisfaction of the undersigned.
6.3 The undersigned is not subscribing for the Securities as a result of
or subsequent to any advertisement, article, notice or other communication
published in any newspaper, magazine or similar media or broadcast over
television or radio or presented at any seminar or meeting.
6.4 The undersigned is an "accredited investor" within the meaning of
Rule 501(a) of Regulation D under the Securities Act.
6.5 The undersigned acknowledges that the Securities herein subscribed
for have not been registered under the Securities Act and State Acts. The
undersigned will not sell, transfer or otherwise dispose of the Securities,
unless they are registered under the Securities Act and any State Acts or
pursuant to available exemptions from such registration, provided that the
seller delivers to the Company an opinion of counsel satisfactory to the Company
confirming the availability of such exemption. The undersigned represents that
the undersigned is purchasing the Securities for the undersigned's own account,
for investment and not with a view to resale or distribution except in
compliance with the Securities Act and the restrictions contained in the
immediately preceding sentence. The undersigned has not offered or sold any
portion of the Securities being acquired, nor does the
13
undersigned have any present intention of selling, distributing or otherwise
disposing of the Securities, either currently or after the passage of a fixed or
determinable period of time or upon the occurrence or nonoccurrence of any
predetermined event or circumstance, in violation of the Securities Act.
6.6 The undersigned recognizes that investment in the Securities
involves substantial risks, including loss of the entire amount of such
investment. Further, the undersigned has carefully read and considered the
matters set forth in the Memorandum under the caption "Risk Factors" and has
taken full cognizance of and understands all of the risks related to a purchase
of the Securities.
6.7 The undersigned acknowledges that each certificate representing the
Securities shall be stamped or otherwise imprinted with a legend substantially
in the following form:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR
UNDER APPLICABLE STATE SECURITIES LAWS AND MAY
NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF
UNLESS REGISTERED UNDER THE SECURITIES ACT AND ANY
APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO
AVAILABLE EXEMPTIONS FROM SUCH REGISTRATION.
NOTWITHSTANDING THE FOREGOING, THIS SECURITY MAY
BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN
ACCOUNT.
6.8 If this Subscription Agreement is executed and delivered on behalf
of a partnership, corporation, trust or estate: (i) such partnership,
corporation, trust or estate has the full legal right and power and all
authority and approval required (a) to execute and deliver, or authorize
execution and delivery of, this Subscription Agreement and all other instruments
executed and delivered by or on behalf of such partnership, corporation, trust
or estate in connection with the purchase of the Securities, (b) to delegate
authority pursuant to a power of attorney and (c) to purchase and hold such
Securities; (ii) the signature of the party signing on behalf of such
partnership, corporation, trust or estate is binding upon such partnership,
corporation, trust or estate; and (iii) such partnership, corporation or trust
has not been formed for the specific purpose of acquiring the Securities, unless
each beneficial owner of such entity is qualified as an "accredited investor"
within the meaning of Rule 501(a) of Regulation D under the Securities Act and
has submitted information substantiating such individual qualification.
6.9 Except with respect to short sales or other hedging transactions
against warrants, options or other rights to acquire ADSs and Ordinary Shares
beneficially owned by the undersigned (whether presently exercisable or not) at
September 30, 2000, the undersigned agrees that for a period beginning from the
Closing Date and ending on the earlier of (i) 90 days from the Closing Date and
(ii) the day the registration statement filed pursuant to Section 5 hereof is
declared effective, the undersigned will not sell any equity security of the
Company if the undersigned does not then own the security sold, nor will the
undersigned sell any security which the undersigned does not deliver against
such sale within 20 days, or within five (5) days after such sale, deposit it in
the mails or other usual channels of distribution.
7. UNDERSTANDINGS.
The undersigned Subscriber understands, acknowledges and agrees with the
Company and the Placement Agent as follows:
7.1 This Subscription may be rejected, in whole or in part, by the
Company, in its sole and absolute discretion, at any time before the Closing
Date notwithstanding prior receipt by the undersigned of notice of acceptance of
the undersigned's Subscription.
7.2 Except as set forth in paragraph 7.1 above, the undersigned hereby
acknowledges and agrees that the Subscription hereunder is irrevocable by the
undersigned, that, except as required by law, the undersigned is not entitled to
cancel, terminate or revoke this Subscription Agreement or any agreements of the
undersigned hereunder and that this Subscription Agreement and such other
agreements shall survive the death or disability of the
14
undersigned and shall be binding upon and inure to the benefit of the parties
and their heirs, executors, administrators, successors, legal representatives
and permitted assigns. If the undersigned is more than one person, the
obligations of the undersigned hereunder shall be joint and several and the
agreements, representations, warranties and acknowledgments herein contained
shall be deemed to be made by and be binding upon each such person and his/her
heirs, executors, administrators, successors, legal representatives and
permitted assigns.
7.3 No United States of America federal or state agency or foreign
authority has made any findings or determination as to the fairness of the terms
of this Offering for investment nor any recommendations or endorsement of the
Securities.
7.4 The Offering is intended to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act and the
provisions of Regulation D thereunder, which is in part dependent upon the
truth, completeness and accuracy of the statements made by the undersigned
herein and in the Investor Questionnaire.
7.5 There can be no assurance that the undersigned will be able to sell
or dispose of the Securities. It is understood that in order not to jeopardize
the Offering's exempt status under Section 4(2) of the Securities Act and
Regulation D, any transferee may, at a minimum, be required to fulfill the
investor suitability requirements thereunder.
7.6 The Placement Agent will receive cash compensation equal to (i) six
percent (6%) of the gross proceeds received by the Company and (ii) five-year
warrants to subscribe for 12,500 ADSs for every $1.0 million of gross proceeds
received by the Company in connection with the Offering but is not guaranteeing
or assuming responsibility for the operation or possible liability of the
Company, including, without limitation, compliance by the Company with the
agreements entered into in connection with the Offering, and the Placement Agent
will not supervise or participate in the operation or management of the Company.
7.7 The undersigned acknowledges that the information furnished by the
Company or the Placement Agent to the undersigned or its advisers in connection
with the Offering is confidential and nonpublic and agrees that all such
information shall be kept in confidence by the undersigned and neither used by
the undersigned for the undersigned's personal benefit (other than in connection
with this Subscription), nor disclosed to any third party for any reason;
PROVIDED, HOWEVER, that this obligation shall not apply to any such information
that (i) is part of the public knowledge or literature and readily accessible as
of date hereof, (ii) becomes a part of the public knowledge or literature and
readily accessible by publication (except as a result of a breach of this
provision) or (iii) is received from third parties (except third parties who
disclose such information in violation of any confidentiality agreements or
obligations, including, without limitation, any Subscription Agreement entered
into with the Company).
7.8 The representations, warranties and agreements of the undersigned
contained herein and in any other writing delivered in connection with the
transactions contemplated hereby shall be true and correct in all respects on
and as of the date of the sale of the Securities as if made on and as of such
date and shall survive the execution and delivery of this Subscription Agreement
and the purchase of the Securities.
7.9 IN MAKING AN INVESTMENT DECISION, SUBSCRIBERS MUST RELY ON THEIR OWN
EXAMINATION OF THE COMPANY AND THE TERMS OF THE OFFERING, INCLUDING THE MERITS
AND RISKS INVOLVED. THE ADSS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE
SECURITIES COMMISSION ON REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING
AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THE
MEMORANDUM OR THIS DOCUMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
7.10 The offering and sale of the Securities is intended to be exempt
from registration under the securities laws of certain states of the United
States of America. Subscribers residing in the United States shall note the
language set forth below. Subscribers must note that there are restrictions on
transfer of the Securities.
15
THE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE
SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND SOLD IN RELIANCE ON
EXEMPTIONS FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
SUCH LAWS. THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, ANY STATE SECURITIES COMMISSION OR
OTHER REGULATORY AUTHORITY, NOR HAVE ANY OF THE FOREGOING AUTHORITIES
PASSED UPON OR ENDORSED THE MERITS OF THIS OFFERING OR THE ACCURACY OR
ADEQUACY OF THE MEMORANDUM. ANY REPRESENTATION TO THE CONTRARY IS
UNLAWFUL.
THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT, AND APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY
MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN
INDEFINITE PERIOD OF TIME.
8. MISCELLANEOUS.
8.1 Except as set forth elsewhere herein, any notice or demand to be
given or served in connection herewith shall be deemed to be sufficiently given
or served for all purposes by being sent as registered or certified mail, return
receipt requested, postage prepaid, in the case of the Company, addressed to it
at the address set forth above and directed to the following:
Attention: Xx. Xxxxxxx X. Xxxxxx
President and Chief Executive Officer
Insignia Solutions plc
00000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax No. (000) 000-0000
and in the case of Subscriber to the address for correspondence set forth on the
Investor Questionnaire.
8.2 This Subscription Agreement shall be enforced, governed and
construed in all respects in accordance with the laws of the State of New York,
as such laws are applied by New York courts to agreements entered into and to be
performed in New York by and between residents of New York, and shall be binding
upon the undersigned, the undersigned's heirs, estate, legal representatives,
successors and assigns and shall inure to the benefit of the Company, the
Placement Agent, and their respective successors and assigns. If any provision
of this Subscription Agreement is invalid or unenforceable under any applicable
statute or rule of law, then such provision shall be deemed inoperative to the
extent that it may conflict therewith and shall be deemed to be modified to
conform with such statute or rule of law. Any provision hereof that may prove
invalid or unenforceable under any law shall not affect the validity or
enforceability of any other provision hereof.
8.3 Except as provided in Section 8.4, this Agreement shall be binding
upon and inure to the benefit of the Company and Subscriber and their respective
successors and assigns.
8.4 The rights provided under Section 5 are not assignable except to a
party who is defined in Section 5 as an "Offering Holder" or any lawful
purchaser of the Securities purchased hereby.
8.5 In any action, proceeding or counterclaim brought to enforce any of
the provisions of this Agreement or to recover damages, costs and expenses in
connection with any breach of the Agreement, the prevailing party shall be
entitled to be reimbursed by the opposing party for all of the prevailing
party's attorneys' fees, costs and other out-of-pocket expenses incurred in
connection with such action, proceeding or counterclaim.
16
8.6 Neither the Company nor the Subscriber shall issue any press release
or make any public announcement relating to this Agreement without the prior
written approval of the other party; PROVIDED, HOWEVER, that the Company or the
Subscriber may make any public disclosure it believes in good faith is required
by applicable law or any listing or trading agreement concerning its
publicly-trading securities, if any (in which case the disclosing party will
advise the party prior to making the disclosure); and, PROVIDED FURTHER,
HOWEVER, that this obligation shall not apply to any such information that (i)
is part of the public knowledge or literature and readily accessible as of date
hereof, (ii) becomes a part of the public knowledge or literature and readily
accessible by publication (except as a result of a breach of this provision) or
(iii) is received from third parties (except third parties who disclose such
information in violation of any confidentiality agreements or obligations,
including, without limitation, any Subscription Agreement entered into with the
Company).
8.7 This agreement is intended for the benefit of the parties hereto and
their respective permitted successors and assigns and not for the benefit of,
nor may any provision hereof be enforced by, any other person; PROVIDED,
HOWEVER, that notwithstanding the foregoing, the Placement Agreement may rely on
Sections 2, 3, 4, 5, 6, 7 and 8 as though it was a party to this Agreement.
17
SUBSCRIPTION AGREEMENT SIGNATURE PAGE
PLEASE PRINT OR TYPE. USE BLACK INK ONLY.
(ALL PARTIES MUST SIGN)
The undersigned investor hereby certifies that it (i) has received and
relied solely upon the Memorandum and the SEC Documents, (ii) agrees to all the
terms and conditions of this Subscription Agreement, (iii) meets the suitability
standards set forth in this Subscription Agreement and (iv) is a resident of the
state or foreign jurisdiction indicated below.
The undersigned investor hereby subscribes for (i) ________ shares of
ADSs of Insignia Solutions plc at a price of $5.00 per ADS and (ii) ________
Warrants exercisable for ________________ ADSs.
Type of subscriber entity:
---------------------------------------------------------
Name of Subscriber (Print) [X] Trust
--------------------------------------------------------- [X] Limited Liability Company
[X] Limited Partnership
--------------------------------------------------------- [X] General Partnership
Name of Signatory (Print) [X] Corporation
---------------------------------------------------------
[X] Individual
[X] Other
--------------------------------------------------------- ------------------------------------
Capacity of Signatory (if applicable)
%
--------------------------------------------------------
Signature
Backup Withholding:
--------------------------------------------------------- [X] Please check this box only if the investor is subject to
Subscriber's Taxpayer Identification Number backup withholding
Foreign Person:
--------------------------------------------------------- [X] Please check this box only if the investor is a nonresident
Subscriber's Principal Address alien, foreign corporation, foreign partnership, foreign trust
or foreign estate.
---------------------------------------------------------
City State Zip
( ) ( )
---------------------- ---------------------
Phone Number Fax Number
The investor agrees to the terms of this Subscription Agreement and, as required
by the Regulations pursuant to the Internal Revenue Code, certifies under
penalty of perjury that (1) the Taxpayer Identification Number and address
provided above is correct, (2) the investor is not subject to backup withholding
(unless the Backup Withholding Statement box is checked) either because it has
not been notified that it is subject to backup withholding as a result of a
failure to report all interest or dividends or because the Internal Revenue
Service has notified the investor that it is no longer subject to backup
withholding and (3) the investor (unless the Foreign Person box above is
checked) is not a nonresident alien, foreign partnership, foreign trust or
foreign estate.
THE SUBSCRIPTION FOR (i) ______________________ SHARES OF ADSs OF INSIGNIA
SOLUTIONS plc AT A PRICE OF $5.00 PER ADS and (ii) ______________________
WARRANTS TO SUBSCRIBE FOR ADSs BY THE ABOVE NAMED SUBSCRIBER IS ACCEPTED THIS
_______ DAY OF __________________, 2000.
INSIGNIA SOLUTIONS plc
By:
----------------------------------------
Name:
Title:
EXHIBIT A
VOID AFTER 5:00 P.M., EASTERN STANDARD TIME ON NOVEMBER __, 2003
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED
OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Subscribe for ______ American Depositary Shares
Date: November __, 2000 Warrant No.: ______
INSIGNIA SOLUTIONS PLC
ADSS PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, ______________________
("_______"), or its registered assigns, is entitled to subscribe for from
Insignia Solutions plc, a company organized and existing under the laws of
England and Wales (the "COMPANY"), at any time or from time to time during the
period specified in Section 2 hereof, _______ fully paid American depositary
shares (the "ADSS" or "SHARES"), each ADS representing one ordinary share of 20
xxxxx each nominal value of the Company (the "ORDINARY SHARES"), at an exercise
price equal to the lower of (i) $6.00 per ADS (the "$6.00 EXERCISE PRICE") and
(ii) a ten percent (10%) discount to the average of the Closing Sale Price per
ADS for the ten (10) days preceding the day the holder hereof (the "HOLDER")
informs the Company of its intent to exercise this Warrant (the "MARKET EXERCISE
PRICE" and, together with the $6.00 EXERCISE PRICE, the "EXERCISE PRICE") by
delivering to the Company a form of Exercise Agreement (as hereinafter defined)
in the form of EXHIBIT A hereto; PROVIDED, that in no event shall the Exercise
Price be less than the nominal value of each Ordinary Share. This Warrant is
being issued pursuant to that certain Subscription Agreement, dated November
___, 2000 (the "SUBSCRIPTION AGREEMENT"), by and between the Company and
___________. The number of ADSs purchasable hereunder (the "WARRANT SHARES") and
the Exercise Price are subject to adjustment as provided herein.
The term "CLOSING SALE PRICE" means, for any security as of any date,
the last closing trade price for such security on the principal market as
reported by Bloomberg Financial Markets ("BLOOMBERG"), or if the principal
market begins to operate on an extended hours basis, and does not designate the
closing trade price, then the last trade price at 4:00 p.m. Eastern Standard
Time as reported by Bloomberg, or, if the foregoing do not apply, the last
closing trade price of such security in the over-the-counter market on the
electronic bulletin board for such security as
A-1
EXHIBIT A
reported by Bloomberg, or, if no last closing trade price is reported for such
security by Bloomberg, the last closing ask price of such security as reported
by Bloomberg, or, if no last closing ask price is reported for such security by
Bloomberg, the average of the lowest ask price and lowest bid price of any
market makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Closing Sale Price cannot be calculated as of such
date on any of the foregoing bases, the Closing Sale Price shall be the average
fair market value as reasonably determined by an investment banking firm
selected by the Company and reasonably acceptable to the Holder of this Warrant,
with the costs of the appraisal to be borne by the Company. All such
determinations to be appropriately adjusted for any share dividend, share split
or other similar transaction during such period.
This Warrant is subject to the following terms, provisions, and
conditions:
1. MECHANICS OF EXERCISE. Subject to the provisions hereof, including,
without limitation, this Warrant may be exercised as follows:
(a) MANNER OF EXERCISE. This Warrant may be exercised by the
Holder, in whole or in part, from time to time, by the surrender of this Warrant
(within three business days of delivering the Exercise Agreement and Exercise
Price) (or evidence of loss, theft, destruction or mutilation thereof in
accordance with Section 7(c) hereof), together with a completed exercise
agreement in the Form of Exercise Agreement attached hereto as EXHIBIT A (the
"EXERCISE AGREEMENT"), to the Company at the Company's principal executive
offices (or such other office or agency of the Company as it may designate by
notice to the Holder), and upon payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company, of the
Exercise Price for the Warrant Shares specified in the Exercise Agreement.
(b) ISSUANCE OF CERTIFICATES. Subject to Section 1(c),
certificates for the Warrant Shares to be so purchased, representing the
aggregate number of Shares specified in the Exercise Agreement, shall be
delivered to the Holder within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised (the "DELIVERY
PERIOD"). The certificates to be so delivered shall be in such denominations as
may be requested by the Holder and shall be registered in the name of Holder. If
this Warrant shall have been exercised only in part, then, unless this Warrant
has expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Holder a new Warrant representing the number of
Shares with respect to which this Warrant shall not then have been exercised.
Upon delivery of this Warrant (within three business days of delivering the
Exercise Agreement and Exercise Price), the Exercise Agreement and Exercise
Price referred to in Section 1(a), the Holder of this Warrant shall be deemed
for all corporate purposes to have become the holder of record of the Warrant
Shares with respect to which this Warrant has been exercised, irrespective of
the date of delivery of this Warrant or the certificates evidencing such Warrant
Shares.
(c) EXERCISE DISPUTES. In the case of any dispute with respect to
an exercise, the Company shall promptly issue such number of ADSs as are not
disputed in accordance with this Section. If such dispute involves the
calculation of the $6.00 Exercise Price, the Company shall submit the disputed
calculations to a nationally recognized independent accounting firm (selected by
the Company and reasonably acceptable to Holder) via facsimile within three (3)
business days of receipt of the Exercise Agreement. The accounting firm shall
audit the
A-2
EXHIBIT A
calculations and notify the Company and the Holder of the results no later than
two (2) business days from the date it receives the disputed calculations. The
accounting firm's calculation shall be deemed conclusive, absent manifest error.
The Company shall then issue the appropriate number of ADSs in accordance with
this Section. The Company shall bear all reasonable expenses incurred pursuant
to this Section 1(c).
(d) FRACTIONAL SHARES. No fractional ADSs are to be issued upon
the exercise of this Warrant, but the Company shall pay a cash adjustment in
respect of any fractional Share which would otherwise be issuable in an amount
equal to the same fraction of the Exercise Price of an ADS (as determined for
exercise of this Warrant into whole ADSs); PROVIDED, that in the event that
sufficient funds are not legally available for the payment of such cash
adjustment any fractional ADSs shall be rounded up to the next whole number.
(e) RIGHT OF CANCELLATION. In connection with Section 5 of the
Subscription Agreement, during any thirty (30) consecutive trading days
following the effectiveness of the registration statement referred to in Section
5.3(a) of the Subscription Agreement (the "MEASUREMENT PERIOD"), the Closing
Sale Price of the ADSs exceeds $9.00, the Company may cancel the Warrant upon 60
days (the "NOTICE PERIOD") prior written notice (the "CANCELLATION NOTICE") to
the Holder in the form of EXHIBIT B hereto; PROVIDED, THAT on the date the
Company delivers the Cancellation Notice and during the Notice Period and the
Measurement Period (i) the registration statement covering the Warrant Shares is
effective and remains effective continuously during the Notice Period, (ii) the
ADSs are included for quotation on the Nasdaq National Market System ("NNM") or
listed for trading on a national securities exchange, (iii) the Warrant Shares
are included for quotation on NNM or listed for trading on a national securities
exchange, (iv) the exercise of all the warrants subject to the Cancellation
Notice does not, and will not, violate the rules of NNM or, if not then included
for quotation on NNM, the national securities exchange upon which the ADSs are
then listed and trading and (v) the Company has not failed to fulfill and
perform any agreement, covenant or undertaking pursuant to the Subscription
Agreement and this Warrant.
2. PERIOD OF EXERCISE. Subject to cancellation under Section 1(e),
this Warrant is exercisable at any time and from time to time on or after the
date hereof and before 5:00 P.M., Eastern Standard Time on the third (3rd)
anniversary of the date hereof (the "EXERCISE PERIOD").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants and
agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares and Ordinary
Shares that are represented by such Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid and
free from all taxes, liens, claims and encumbrances and shall be entitled to the
benefits specified in the corresponding American depositary receipts ("ADRS")
and in the Deposit Agreement, dated November 17, 1995 (the "DEPOSIT AGREEMENT"),
as amended, between the Company and The Bank of New York (the "DEPOSITARY")
relating to such ADSs.
A-3
EXHIBIT A
(b) RESERVATION OF ORDINARY SHARES AND DEPOSIT OF ADSS. During the
Exercise Period, the Company shall at all times have authorized, and reserved
for the purpose of issuance upon exercise of this Warrant, a sufficient number
of Ordinary Shares, which are readily available for deposit with the Depositary
for the purpose of issuance in the form of ADSs upon exercise of this Warrant,
to provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing of the
ADSs issuable upon exercise of this Warrant on the NNM, as required by Section
3.8 and Section 4.32 of the Subscription Agreement and on each such national
securities exchange or automated quotation system, if any, on which ADSs are
then listed or become listed and shall maintain, so long as any other ADSs shall
be so listed, such listing of all ADSs from time to time issuable upon the
exercise of this Warrant; and the Company shall so list on each national
securities exchange or automated quotation system, as the case may be, and shall
maintain such listing of any other shares of capital stock of the Company
issuable upon the exercise of this Warrant so long as any shares of the same
class shall be listed on such national securities exchange or automated
quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by amendment
of its Memorandum of Association and Articles of Association or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such actions as may
reasonably be requested by the Holder of this Warrant in order to protect the
exercise privilege of the Holder of this Warrant, consistent with the tenor and
purpose of this Warrant. Without limiting the generality of the foregoing, the
Company (i) will not increase the nominal value of any Ordinary Shares
represented by ADSs receivable upon the exercise of this Warrant above the
Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may at all times validly and
legally issue fully paid ADSs upon the exercise of this Warrant.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Section 4. In the event that any adjustment of the
Exercise Price as required herein results in a fraction of a cent, such Exercise
Price shall be rounded up or down to the nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE UPON ISSUANCE OF ORDINARY SHARES.
Except as otherwise provided in Section 4(c) and 4(e) hereof, if and whenever
after the initial issuance of this Warrant, the Company issues or sells, or in
accordance with Section 4(b) hereof is deemed to have issued or sold, any
Ordinary Shares (including in the form of ADSs) for no consideration or for a
consideration per share less than the then current Market Price (as herein
defined) on the date of issuance (a "DILUTIVE ISSUANCE"), then effective
immediately upon the Dilutive Issuance, the Exercise Price will be adjusted in
accordance with the following formula:
E' = (E)(O+P/M)/(OS)
A-4
EXHIBIT A
where:
E' = the adjusted Exercise Price;
E = the then current Exercise Price;
M = the greater of the then current Market Price and the then
current Exercise Price;
O = the number of Ordinary Shares in issue immediately prior to
the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in
Section 4(b) hereof, received by the Company upon such
Dilutive Issuance; and
OS = the total number of Ordinary Shares Deemed In Issue (as herein
defined) immediately after the Dilutive Issuance.
Notwithstanding anything to the contrary in this Section 4, in no event shall
the Exercise Price be lower than the nominal value of the Ordinary Shares
calculated at the time of exercise.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For purposes of
determining the adjusted Exercise Price under Section 4(a) hereof, the following
will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in any
manner issues or grants any warrants, rights or options, whether or not
immediately exercisable, to subscribe for or to purchase Ordinary Shares
(including in the form of ADSs) or other securities exercisable, convertible
into or exchangeable for Ordinary Shares (including in the form of ADSs)
("CONVERTIBLE SECURITIES"), but not to include the grant or exercise of any
stock or options which may hereafter be granted or exercised under any employee
or Director benefit plan of the Company now existing or to be implemented in the
future, so long as the issuance of such stock or options is approved by a
majority of the non-employee members of the Board of Directors of the Company or
a majority of the members of a committee of non-employee directors established
for such purpose (such warrants, rights and options to purchase Ordinary Shares
or Convertible Securities are hereinafter referred to as "OPTIONS"), and the
price per share for which Ordinary Shares are issuable upon the exercise of such
Options is less than the Market Price on the date of issuance ("BELOW MARKET
OPTIONS"), then the maximum total number of Ordinary Shares issuable upon the
exercise of all such Below Market Options (assuming full exercise, conversion or
exchange of Convertible Securities, if applicable) will, as of the date of the
issuance or grant of such Below Market Options, be deemed to be outstanding and
to have been issued and sold by the Company for such price per share. For
purposes of the preceding sentence, the price per share for which Ordinary
Shares are issuable upon the exercise of such Below Market Options is determined
by dividing (i) the total amount, if any, received or receivable by the Company
as consideration for the issuance or granting of such Below Market Options, plus
the minimum aggregate amount of additional consideration, if any, payable to the
Company upon the exercise of all such Below Market Options, plus, in the case of
Convertible Securities issuable upon the exercise of such Below Market Options,
the minimum aggregate amount of additional consideration payable upon the
exercise, conversion or exchange thereof at the time such Convertible
A-5
EXHIBIT A
Securities first become exercisable, convertible or exchangeable, by (ii) the
maximum total number of Ordinary Shares issuable upon the exercise of all such
Below Market Options (assuming full conversion of Convertible Securities, if
applicable). No further adjustment to the Exercise Price will be made upon the
actual issuance of such Ordinary Shares upon the exercise of such Below Market
Options or upon the exercise, conversion or exchange of Convertible Securities
issuable upon exercise of such Below Market Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES.
(A) If the Company in any manner issues or sells any
Convertible Securities, whether or not immediately convertible (other than where
the same are issuable upon the exercise of Options) and the price per share for
which Ordinary Shares are issuable upon such exercise, conversion or exchange
(as determined pursuant to Section 4(b)(ii)(B) if applicable) is less than the
Market Price on the date of issuance, then the maximum total number of Ordinary
Shares issuable upon the exercise, conversion or exchange of all such
Convertible Securities will, as of the date of the issuance of such Convertible
Securities, be deemed to be in issue and to have been issued and sold by the
Company for such price per share. For the purposes of the preceding sentence,
the price per share for which Ordinary Shares issuable upon such exercise,
conversion or exchange is determined by dividing (x) the total amount, if any,
received or receivable by the Company as consideration for the issuance or sale
of all such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange thereof at the time such Convertible Securities first
become exercisable, convertible or exchangeable, by (y) the maximum total number
of Ordinary Shares issuable upon the exercise, conversion or exchange of all
such Convertible Securities. No further adjustment to the Exercise Price will be
made upon the actual issuances of such Ordinary Shares upon exercise, conversion
or exchange of such Convertible Securities.
(B) If the Company in any manner issues or sells any
Convertible Securities with a fluctuating conversion or exercise price or
exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then the price per
share for which Ordinary Shares are issuable upon such exercise, conversion or
exchange for purposes of the calculation contemplated by Section 4(b)(ii)(A)
shall be deemed to be the lowest price per share which would be applicable
assuming that (i) all holding period and other conditions to any discounts
contained in such Convertible Security have been satisfied and (ii) the issue
price on the date of issuance of such Convertible Security was 80% of the Market
Price on such date.
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. Except for
the grant or exercise of any shares or options which may hereafter be granted or
exercised under any employee or Director benefit plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
shares or options is approved by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose, if
A-6
EXHIBIT A
there is a change at any time in (i) the amount of additional consideration
payable to the Company upon the exercise of any Options; (ii) the amount of
additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange or any Convertible Securities; or (iii) the rate at which
any Convertible Securities are convertible into or exchangeable for Ordinary
Shares (other than under or by reason of provisions designed to protect against
dilution), the Exercise Price in effect at the time of such change will be
readjusted to the Exercise Price which would have been in effect at such time
had such Options or Convertible Securities still outstanding provided for such
changed additional consideration or changed conversion rate, as the case may be,
at the time initially granted, issued or sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of Ordinary Shares
issuable upon exercise of any Options or upon exercise, conversion or exchange
of any Convertible Securities is not, in fact, issued and the rights to exercise
such option or to exercise, convert or exchange such Convertible Securities
shall have expired or terminated, the Exercise Price then in effect will be
readjusted to the Exercise Price which would have been in effect at the time of
such expiration or termination had such Options or Convertible Securities, to
the extent outstanding immediately prior to such expiration or termination
(other than in respect of the actual number of Ordinary Shares issued upon
exercise or conversion thereof), never been issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any Ordinary
Shares, Options or Convertible Securities are issued, granted or sold for cash,
the consideration received therefor for purposes of this Warrant will be the
amount received by the Company therefor, before deduction of reasonable
commissions, underwriting discounts or allowances or other reasonable expenses
paid or incurred by the Company in connection with such issuance, grant or sale.
In case any Ordinary Shares, Options or Convertible Securities are issued or
sold for a consideration part or all of which shall be other than cash, the
amount of the consideration other than cash received by the Company will be the
fair market value of such consideration except where such consideration consists
of freely-tradeable securities, in which case the amount of consideration
received by the Company will be the Market Price thereof as of the date of
receipt. In case any Ordinary Shares, Options or Convertible Securities are
issued in connection with any merger or consolidation in which the Company is
the surviving corporation, the amount of consideration therefor will be deemed
to be the fair market value of such portion of the net assets and business of
the non-surviving corporation as is attributable to such Ordinary Shares,
Options or Convertible Securities, as the case may be. The fair market value of
any consideration other than cash or securities will be determined in the good
faith reasonable business judgment of the non-employee Board of Directors.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on the date
hereof in accordance with the terms of such securities as of such date; (ii)
upon the grant or exercise of any shares or options which
A-7
EXHIBIT A
may hereafter be granted or exercised under any employee or Director benefit
plan of the Company now existing or to be implemented in the future, so long as
the issuance of such shares or options is approved by a majority of the
non-employee members of the Board of Directors of the Company or a majority of
the members of a committee of non-employee directors established for such
purpose; (iii) upon the issuance of the Warrants in accordance with terms of the
Subscription Agreement and upon the exercise of such Warrants; and (iv) upon the
sale and issuance of ADSs, Ordinary Shares, Convertible Securities or Variable
Rate Convertible Securities for less than the Market Price to a strategic
investor (the "STRATEGIC INVESTOR"), PROVIDED, THAT such sale satisfies each of
the following conditions: (A) the Strategic Investor operates in a line of
business similar to the Company; (B) such sale occurs within 90 days of
November __, 2000; (C) the sale of such securities was approved by the
non-employee members of the Board of Directors of the Company and, in the good
faith reasonable business judgment of the non-employee members of the Board of
Directors of the Company, such sale of the Company's securities to the Strategic
Investor will further the operational business interests of the Company; (D) the
primary purpose of such sale is other than a financing arrangement; (E) the
terms and conditions of the securities to be issued to such Strategic Investor
are not more favorable than the securities purchased pursuant to the
Subscription Agreement; and (F) the aggregate purchase price of the securities
issued to the Strategic Investor is less than $4.0 million.
(c) SUBDIVISION OR PURCHASE PRICE OF SHARES. If the Company, at
any time after the initial issuance of this Warrant, subdivides (by any share
split, share dividend, recapitalization, reorganization, reclassification or
otherwise) its Ordinary Shares into a greater number of shares, then, after the
date of record for effecting such subdivision, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced. If the
Company, at any time after the initial issuance of this Warrant, combines (by
reverse share split, recapitalization, reorganization, reclassification or
otherwise) its shares of Ordinary Shares into a smaller number of shares, then,
after the date of record for effecting such combination, the Exercise Price in
effect immediately prior to such combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF ADSS. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 4, the number of ADSs
issuable upon exercise of this Warrant shall be adjusted by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of ADSs issuable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product so obtained by the adjusted Exercise
Price.
(e) REORGANIZATION, RECLASSIFICATION, CONSOLIDATION, MERGER OR
SALE. Any recapitalization, reorganization, reclassification, consolidation,
merger, sale of all or substantially all of the Company's assets to another
person or other transaction in each case which is effected in such a way that
holders of ADSs and Ordinary Shares are entitled to receive (either directly or
upon subsequent liquidation) shares, securities or assets with respect to or in
exchange for ADSs and Ordinary Shares is referred to herein as an "ORGANIC
CHANGE." Prior to the consummation of any (i) sale of all or substantially all
of the Company's assets to an acquiring person or (ii) other Organic Change
following which the Company is not a surviving entity, the Company will secure
from the person purchasing such assets or the successor resulting from such
Organic
A-8
EXHIBIT A
Change prior to such Organic Change effective provisions so that each holder
of an ADS Warrant then outstanding shall have the right, by exercising such
Warrant, to purchase the kind and number of shares or other securities or
property receivable upon an occurrence of an Organic Change.
(f) DISTRIBUTION OF ASSETS. In case the Company shall declare or
make any distribution of its assets (or rights to acquire its assets) to holders
of its Ordinary Shares and ADSs as a dividend, by way of return of capital or
otherwise (including any dividend or distribution to the Company's shareholders
of cash or shares (or rights to acquire shares) of capital stock of a
subsidiary) (a "DISTRIBUTION"), at any time after the initial issuance of this
Warrant, then the Holder shall be entitled upon exercise of this Warrant for the
purchase of any or all of the ADSs subject hereto, to receive the amount of such
assets (or rights) which would have been payable to the Holder had such Holder
been the holder of such ADSs on the record date for the determination of holders
of Ordinary Shares and ADSs entitled to such Distribution.
(g) CERTAIN EVENTS. If any event occurs of the type contemplated
by the provisions of this Section 4 but not expressly provided for by such
provisions (including, without limitation, the granting of share appreciation
rights, phantom share rights or other rights with equity features), then the
Company's Board of Directors will make an appropriate adjustment in the Exercise
Price and the number of ADSs and Ordinary Shares obtainable upon exercise of
this Warrant so as to protect the rights of the holders of the Warrants;
PROVIDED, THAT no such adjustment pursuant to this Section 4(g) will increase
the Exercise Price or decrease the number of ADSs obtainable as otherwise
determined pursuant to this Section 4.
(h) SPECIAL ADJUSTMENT AND NOTICES OF ADJUSTMENT. Upon the
occurrence of any event which requires any adjustment of the Exercise Price,
then, and in each such case, the Company shall give notice thereof to the
Holder, which notice shall state the Exercise Price resulting from such
adjustment and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. Such
calculation shall be certified by the chief financial officer of the Company.
(i) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(j) CERTAIN DEFINITIONS.
(i) "ORDINARY SHARES DEEMED IN ISSUE" shall mean the number
of Ordinary Shares actually in issue (including Ordinary Shares represented by
issued and outstanding ADSs), plus (x) in case of any adjustment required by
Section 4(a) resulting from the issuance of any Options, the maximum total
number of Ordinary Shares (including in the form of ADSs) issuable upon the
exercise of the Options for which the adjustment is required (including any
Ordinary Shares (including in the form of ADSs)
A-9
EXHIBIT A
issuable upon the conversion of Convertible Securities issuable upon the
exercise of such Options), and (y) in the case of any adjustment required by
Section 4(a) resulting from the issuance of any Convertible Securities, the
maximum total number of Ordinary Shares (including in the form of ADSs) issuable
upon the exercise, conversion or exchange of the Convertible Securities for
which the adjustment is required, as of the date of issuance of such Convertible
Securities, if any.
(ii) "MARKET PRICE," as of any date, (i) means the average
of the Closing Sale Prices for the ADSs as reported to NNM for the ten (10)
consecutive trading days immediately preceding such date, or (ii) if NNM is not
the principal trading market for the ADSs, the average of the last reported
closing trade prices on the principal trading market for the ADSs during the
same period, or, if there is no closing trade price for such period, the last
reported sales price for such period, or (iii) if market value cannot be
calculated as of such date on any of the foregoing bases, the Market Price shall
be the average fair market value as reasonably determined by an investment
banking firm selected by the Company and reasonably acceptable to the Holder of
this Warrant, with the costs of the appraisal to be borne by the Company. The
manner of determining the Market Price of the ADSs set forth in the foregoing
definition shall apply with respect to any other security in respect of which a
determination as to market value must be made hereunder.
(iii) "ORDINARY SHARES," for purposes of this Section 4,
includes the Ordinary Shares and any additional class of shares of the Company
having no preference as to dividends or distributions on liquidation, provided
that the Ordinary Shares represented by the ADSs purchasable pursuant to this
Warrant shall include only Ordinary Shares in respect of which this Warrant is
exercisable, or shares resulting from any subdivision or combination of such
Ordinary Shares, or in the case of any reorganization, reclassification,
consolidation, merger, or sale of the character referred to in Section 4(e)
hereof, the shares or other securities or property provided for in such Section.
(k) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the
Ordinary Shares payable in shares of any class or make any other distribution to
the holders of the Ordinary Shares and holders of ADSs;
(ii) the Company shall offer for subscription pro rata to
the holders of the Ordinary Shares and ADSs any additional shares of any class
or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Ordinary Shares, or consolidation or merger
of the Company with or into, or sale of all or substantially all of its assets
to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
A-10
EXHIBIT A
then, in each such case, the Company shall give to the Holder (a) notice of the
date on which the books of the Company shall close or a record shall be taken
for determining the holders of Ordinary Shares and holders of ADSs entitled to
receive any such dividend, distribution, or subscription rights or for
determining the holders of Ordinary Shares entitled to vote and holders of ADSs
entitled to give voting instructions to the Depositary in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Ordinary Shares and
holders of ADSs shall be entitled to receive such dividend, distribution, or
subscription rights or to exchange their Ordinary Shares and ADSs for stock or
other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least thirty (30)
days prior to the record date or the date on which the Company's books are
closed in respect thereto, but in no event earlier than public announcement of
such proposed transaction or event. Failure to give any such notice or any
defect therein shall not affect the validity of the proceedings referred to in
clauses (i), (ii), (iii) and (iv) above.
5. ISSUE TAX. The issuance of certificates for Warrant Shares upon the
exercise of this Warrant shall be made without charge to the Holder or such
shares for any tax in respect of such issue or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the Holder.
6. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the Holder to any voting rights or other rights as a holder of the
Company's Ordinary Shares or ADSs. No provision of this Warrant, in the absence
of affirmative action by the Holder to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the Holder, shall give rise to
any liability of the Holder for the Exercise Price or as a holder of the
Company's Ordinary Shares or ADSs, whether such liability is asserted by the
Company or by creditors of the Company.
7. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights granted
to the Holder are transferable, subject to compliance with all applicable
federal and state securities laws, in whole or in part, upon surrender of this
Warrant, together with a properly executed assignment in the Form of Assignment
attached hereto as EXHIBIT C, at the office or agency of the Company referred to
in Section 9. Until due presentment for registration of transfer on the books of
the Company, the Company may treat the registered holder hereof as the owner and
holder hereof for all purposes, and the Company shall not be affected by any
notice to the contrary. Notwithstanding anything to the contrary contained
herein, the registration rights described in Section 8 hereof are assignable
only in accordance with the provisions of the Subscription Agreement.
A-11
EXHIBIT A
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This Warrant
is exchangeable, upon the surrender hereof by the Holder at the office or agency
of the Company referred to in Section 9 below, for new Warrants, in the form
hereof, of different denominations representing in the aggregate the right to
purchase the number of ADSs which may be purchased hereunder, each of such new
Warrants to represent the right to purchase such number of ADSs as shall be
designated by the Holder of at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction, or mutilation of
this Warrant or, in the case of any such loss, theft, or destruction, upon
delivery, of an indemnity agreement reasonably satisfactory in form and amount
to the Company, or, in the case of any such mutilation, upon surrender and
cancellation of this Warrant, the Company, at its expense, will execute and
deliver, in lieu thereof, a new Warrant, in the form hereof, in such
denominations as Holder may request.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of this
Warrant in connection with any transfer, exchange, or replacement as provided in
this Section 7, this Warrant shall be promptly canceled by the Company. The
Company shall pay all issuance taxes (other than securities transfer taxes) and
charges payable in connection with the preparation, execution, and delivery of
Warrants pursuant to this Section 7.
(e) WARRANT REGISTER. The Company shall maintain, at its principal
executive offices (or such other office or agency of the Company as it may
designate by notice to the Holder), a register for this Warrant, in which the
Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
8. REGISTRATION RIGHTS. The initial holder of this Warrant (and
assignees thereof) is entitled to the benefit of such registration rights in
respect of the Warrant Shares as are set forth in the Subscription Agreement.
9. NOTICES. All notices, requests, demands and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given (i) on the day of service if served personally on the party to whom notice
is to be given; (ii) on the day of transmission if sent via facsimile
transmission to the facsimile number given below or at the facsimile number
provided by the Holder, and telephonic confirmation of receipt is obtained
promptly after completion of transmission, provided, that a copy shall be sent
via certified mail, return receipt requested, simultaneously with any such
facsimile; (iii) on the business day after delivery to Federal Express or
similar overnight courier or the Express Mail service maintained by the United
States Postal Service; or (iv) on the fifth day after mailing, if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid and properly addressed, to the party as follows:
If to the Company:
A-12
EXHIBIT A
Insignia Solutions plc
00000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Telecopier: (000) 000-0000
Attention: Xx. Xxxxxxx X. Xxxxxx
with a copy to:
Xxxxx & XxXxxxxx
000 Xxxxxx Xxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Telecopier: (000) 000-0000
Attention: Xxxxxxx Xxxx, Esq.
and if to the Holder, at such address as Holder shall have provided in writing
to the Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 9.
10. GOVERNING LAW; JURISDICTION. This Warrant shall be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The Company
irrevocably consents to the jurisdiction of the United States federal courts
located in the State of New York in any suit or proceeding based on or arising
under this Warrant and irrevocably agrees that all claims in respect of such
suit or proceeding may be determined in such courts. The Company irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The Company agrees that a final nonappealable judgment in any such
suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
11. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only be
amended by an instrument in writing signed by the Company and the Holder.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the several
Sections of this Warrant are inserted for purposes of reference only, and shall
not affect the meaning or construction of any of the provisions hereof.
(c) ASSIGNABILITY. This Warrant shall be binding upon the Company
and its successors and assigns and shall inure to the benefit of Holder and its
successors and assigns. The Holder shall notify the Company upon the assignment
of this Warrant.
* * *
A-13
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly
authorized officer.
INSIGNIA SOLUTIONS plc
By:
---------------------------------------
Name:
Title:
EXHIBIT A TO WARRANT
--------------------
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to subscribe for
____________ of the American Depositary Shares ("ADSS") of Insignia Solutions
plc, a company organized and existing under the laws of England and Wales (the
"COMPANY"), evidenced by the attached Warrant, and herewith makes payment of the
Exercise Price with respect to such ADSs in full, all in accordance with the
conditions and provisions of said Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any ADSs obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of 1933,
as amended, or any state securities laws.
(ii) The undersigned requests that the American depositary receipts
for such ADSs be issued, and a Warrant representing any unexercised portion
hereof be issued, pursuant to the Warrant in the name of the Holder (or such
other person or persons indicated below) and delivered to the undersigned (or
designee(s) at the address (or addresses) set forth below:
Date:
----------------- --------------------------------------------
Signature of Holder
--------------------------------------------
Name of Holder (Print)
Address:
--------------------------------------------
--------------------------------------------
EXHIBIT B TO WARRANT
--------------------
FORM OF CANCELLATION NOTICE
[Letterhead of Insignia Solutions plc]
______________ _____, 200__
[Insert Name of Holder]
[Insert Address of Holder]
Via [Federal Express] [Express Mail]
[Facsimile and Certified Mail] [First Class Mail] [Registered Mail]
[Certified Mail]
Dear_____________:
Pursuant to Section 1(e) of the Warrant, the Company hereby
notifies you that Warrant No. ___ will be canceled at 5:00 p.m. Eastern Standard
Time on _________ ____, 200__. 1/ The Company represents and warrants that all
of the terms and conditions set forth in Section 1(e) of the Warrant have been
complied with prior to and at the deliverance of this Cancellation Notice.
INSIGNIA SOLUTIONS plc
By:
-----------------------------
Name:
Title:
--------------
1/ Insert Date that is 60 days from the date notice is deemed received
pursuant to Section 9 of the Warrant.
EXHIBIT C TO WARRANT
--------------------
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all rights of the undersigned under the within Warrant, with respect
to the number of ADSs covered thereby set forth hereinbelow, to:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
---------------- ------- -------------
and hereby irrevocably constitutes and appoints _______________ as agent and
attorney-in-fact to transfer said Warrant on the books of the within-named
corporation, with full power of substitution in the premises.
Date:
------------ ----,
In the presence of
----------------------------
Name:
-------------------------------------
Signature:
--------------------------------
------------------------------------------
TITLE OF SIGNING OFFICER OR AGENT (IF ANY)
Address:
------------------------------------------
------------------------------------------
EXHIBIT B
INSIGNIA SOLUTIONS PLC
LOCK-UP AGREEMENT
November __, 2000
Jefferies & Company, Inc.
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
In consideration of the benefits gained by the undersigned in connection
with the private placement (the "PRIVATE PLACEMENT"), with Jefferies & Company,
Inc. ("JEFFERIES") acting as placement agent (the "PLACEMENT AGENT") of the
American depositary shares (the "ADSS"), each ADS representing one ordinary
share of the 20 xxxxx each nominal value (the "ORDINARY SHARES") of Insignia
Solutions plc, a public limited company organized and existing under the laws of
England and Wales (the "COMPANY") on the date hereof, and for other good and
valuable consideration, receipt of which is hereby acknowledged, the undersigned
hereby agrees, for a period beginning on the date hereof and ending on the date
which is the later to occur of (x) 180 days after the closing of the Private
Placement or (y) the date the Securities and Exchange Commission declares the
registration statement filed by the Company as required pursuant to certain
registration rights granted to the Investors to register ADSs purchased in the
Private Placement effective (the "LOCK-UP PERIOD"), not to sell, offer to sell,
solicit an offer to buy, contract to sell, exercise, encumber, distribute,
pledge, grant any option for the sale of, or otherwise transfer or dispose of,
directly or indirectly, in one or a series of transactions (collectively, a
"DISPOSITION"), any ADSs, American depositary receipts ("ADRS") or Ordinary
Shares, any options or warrants to purchase any ADSs, ADRs or Ordinary Shares or
any securities convertible or exercisable into or exchangeable for ADSs, ADRs or
Ordinary Shares (collectively, "SECURITIES"), not owned or hereafter acquired by
the undersigned or with respect to which the undersigned has acquired or
hereafter acquires the power of disposition, without the prior written consent
of Jefferies. Notwithstanding the foregoing, however, the undersigned may make a
Disposition in connection with a bona fide tender offer by a non-affiliated
third party of the Company or the undersigned (the "OFFEROR") for at least 50%
of the equity securities of the Company by tendering the undersigned's
beneficially owned securities to the Offeror.
The undersigned acknowledges and agrees that the restrictions above are
expressly agreed to preclude the holder of the Securities from engaging in any
hedging or other transaction which is designed to or reasonably expected to lead
to or result in a Disposition of Securities (or the economic equivalent thereof)
during the Lock-Up Period even if such Securities would be disposed of by
someone other than the undersigned. Such prohibited hedging or other
transactions would include, without limitation, any short sale (whether or not
against the box) or
EXHIBIT B
any purchase, sale or grant of any right (including without limitation, any put
or call option) with respect to any Securities or with respect to any security
(other than a broad-based marked basket or index) that includes, relates to or
derives any significant part of its value from the Securities.
The undersigned hereby also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent against the transfer of
the Securities held by the undersigned except in compliance with this Lock-Up
Agreement.
The undersigned hereby represents and warrants as of the date hereof to
the Placement Agent and the Company that this Lock-Up Agreement has been duly
executed and delivered, and this Lock-Up Agreement constitutes a valid and
binding obligation of the undersigned, enforceable in accordance with its terms.
This Lock-Up Agreement shall be governed by and construed in accordance
with the laws of the State of New York (without giving effect to its conflict of
laws provisions).
Very truly yours,
Name:
B-2
