SECURITIES SUBSCRIPTION AGREEMENT
Exhibit 10.01
SECURITIES SUBSCRIPTION AGREEMENT (the “Agreement”), dated as of December 29, 2005 by and
among INSIGNIA SOLUTIONS PLC, a public limited company incorporated under the laws of England and
Wales (registered number: 1961960) (the “Company”), INSIGNIA SOLUTIONS INC. a company incorporated
under the laws of Delaware (the “Issuer”), and the Buyers identified on the signature page hereto
(the “Buyers”). The Issuer is a wholly owned subsidiary of the Company. Capitalized terms used
herein and not otherwise defined herein are defined in Section 10 hereof.
WHEREAS:
Subject to the terms and conditions set forth in this Agreement, the Issuer wishes to sell to
the Buyers, and the Buyers wish to subscribe for an aggregate of up to 21,145 shares of Series B
Preferred Stock, stated value of $100 per share, of the Issuer (the “Preferred Stock”). Each share
of Preferred Stock shall be exchangeable as described herein for American depository shares (each
an “ADS” and collectively, the “ADSs”), each ADS representing one ordinary share of the Company
(the “Ordinary Shares”). The purchase price per share to be paid by the Buyers shall be One Hundred
Dollars ($100). The number of shares of Preferred Stock to be purchased by a Buyer shall be set
forth on Buyer’s signature page hereto.
NOW THEREFORE, the Issuer, the Company and the Buyer hereby agree as follows:
1. PURCHASE OF PREFERRED STOCK; EXCHANGE FOR ADSs.
(a) Closing. Subject to the terms and conditions set forth herein, the Issuer hereby
agrees to issue to the Buyer, and the Buyers hereby each agree to subscribe for, the number of
shares of Preferred Stock set forth with respect to such Buyer on Schedule 1 hereto. The issuance
of and subscription for the shares of Preferred Stock hereunder shall occur (the “Closing”) within
two (2) Trading Days following the date of satisfaction of the conditions to the Closing set forth
in Sections 6 and 7 below, the date of such Closing, the “Closing Date”). The terms and conditions
of the Preferred Stock shall be as set forth in Exhibit A attached hereto. All payments
made under this Agreement shall be made in lawful money of the United States of America by check or
wire transfer of immediately available funds to such account as the Company or the Issuer may from
time to time designate by written notice in accordance with the provisions of this Agreement.
Whenever any amount expressed to be due by the terms of this Agreement is due on any day that is
not a Trading Day, the same shall instead be due on the next succeeding day which is a Trading Day.
(b) Exchange of Preferred Stock for ADSs.
(i) Subject to Section 1(b)(ii), the shares of Preferred Stock shall be exchangeable for
Exchange Shares at the Exchange Rate, as such ratio may be adjusted from time to time to reflect
stock dividends, combinations, splits or similar events as provided in Section 1(b)(iv) hereof,
under the following circumstances:
(1) At any time following the date of this Agreement and from time to time, each Buyer
shall have the right to exchange any or all or its shares of Preferred Stock for Exchange
Shares at the Exchange Rate; and
(2) In the event that at any time following the date of this Agreement and the date
that the Registration Statement (as defined in Section 4(a) hereof) is declared effective by
the SEC (the “Effective Date”), the Sale Price of the ADSs on the Principal Market shall be
greater than $0.80 (as such amount may be adjusted from time to time to reflect stock
dividends, combinations, splits or similar events) for a period of twenty (20) consecutive
Trading Days, and provided that no event of default (as defined in Section 2.4 of Article V
of the Issuer’s Restated Certificate of Incorporation) shall have occurred and be
continuing, any and all remaining outstanding shares of Preferred Stock will, upon written
notice from the Company to the Buyers, be exchanged for Exchange Shares at the Exchange Rate
so long as the Registration Statement remains available for use by the Buyers and the
Exchange Shares can be issued without any restrictive transfer legend.
(ii) A Buyer shall not have the right to exchange shares of Preferred Stock for Exchange
Shares pursuant to Section 1(b)(i)(1), nor shall shares of Preferred Stock be automatically
exchanged for Exchange Shares pursuant to Sections 1(b)(i)(2) or 1(b)(i)(3), to the extent that
after giving effect to such exchange, such Buyer together with its affiliates would beneficially
own in excess of 4.9% of the Company’s issued and outstanding Ordinary Shares following such
exchange. For purposes hereof, the number of Ordinary Shares beneficially owned by such Buyer and
its affiliates or acquired by such Buyer and its affiliates, as the case may be, shall include the
number of Exchange Shares issuable in connection with an exchange under this Agreement with respect
to which the determination is being made, but shall exclude the number of ADSs which would be
issuable upon exercise or conversion of the unexercised or unconverted portion of any other
securities of the Company (including, without limitation, any other Preferred Shares, notes or
warrants) subject to a limitation on conversion or exercise analogous to the limitation contained
herein beneficially owned by such Buyer and its affiliates. For purposes of this Section 2(b), in
determining the number of issued and outstanding Ordinary Shares, the Buyers may rely on the number
of issued and outstanding Ordinary Shares as reflected in (1) the Company’s most recent Form 10-Q
or Form 10-K, as the case may be, (2) a more recent public announcement by the Company or (3) any
other written communication by the Company or its Transfer Agent setting forth the number of
Ordinary Shares issued and outstanding. Upon the reasonable written or oral request of a Buyer, the
Company shall promptly confirm orally and in writing to such Buyer the number of Ordinary Shares
then issued and outstanding. In any case, the number of issued and outstanding Ordinary Shares
shall be determined after giving effect to the subscription under this Agreement by the Buyers
since the date as of which such number of issued and outstanding Ordinary Shares was reported.
Except as otherwise set forth herein, for purposes of this Section, beneficial ownership shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.
(iii) All rights incident to a share of Preferred Stock (excluding rights to any dividend
declared prior to exchange but unpaid as of the exchange) will terminate automatically upon any
exchange of such share for Exchange Shares in accordance with the terms hereof.
(iv) In case the Company shall at any time after the date of this Agreement (A) declare a
dividend or make a distribution on the Ordinary Shares payable in Ordinary Shares, (B) subdivide or
split the outstanding Ordinary Shares, (C) consolidate or reclassify the outstanding Ordinary
Shares into a smaller number of shares, (D) issue any shares of its authorized share capital in a
reclassification of Ordinary Shares (including any such reclassification in connection with a
consolidation, amalgamation or merger in which the Company is the continuing corporation), or (E)
consolidate with, or merge with or into, any other Person, the Exchange Rate in effect at the time
of the record date for such dividend or distribution or of the effective date of such subdivision,
split, combination, consolidation, amalgamation, merger or reclassification shall be
proportionately adjusted so that the exchange of the Preferred Stock after such time shall entitle
the Buyer to receive the aggregate number of Exchange Shares or other securities of the Company (or
shares of any security into which the Ordinary Shares have been combined, consolidated, merged or
reclassified) which, if the Preferred Stock had been exchanged immediately
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prior to such time, the Buyer would have owned upon such exchange and been entitled to receive
by virtue of such dividend, distribution, subdivision, split, combination, consolidation,
amalgamation, merger or reclassification, assuming the Buyer (x) is not a Person with which the
Company consolidated or into which the Company merged or which merged into the Company or to which
such recapitalization, sale or transfer was made, as the case may be (a “constituent person”), or
an affiliate of a constituent person and (y) failed to exercise any rights of election as to the
kind or amount of securities, cash and other property receivable upon such reclassification,
change, consolidation, amalgamation, merger, recapitalization, sale or transfer (provided, that if
the kind or amount of securities, cash and other property receivable upon such reclassification,
change, consolidation, amalgamation, merger, recapitalization, sale or transfer is not the same for
each Ordinary Share held immediately prior to such reclassification, change, consolidation,
amalgamation, merger, recapitalization, sale or transfer by other than a constituent person or an
affiliate thereof and in respect of which such rights of election shall not have been exercised
(“non-electing share”), then for the purpose of this Section the kind and amount of securities,
cash and other property receivable upon such reclassification, change, consolidation, amalgamation,
merger, recapitalization, sale or transfer by each non-electing share shall be deemed to be the
kind and amount so receivable per share by a plurality of the non-electing shares). Such
adjustment shall be made successively whenever any event listed above shall occur. In the event
that, at any time as a result of the provisions of this Section 1(b)(iv), the Buyers upon
subsequent exchange shall become entitled to receive any shares in the authorized share capital of
the Company other than the Exchange Shares, the number of such other shares so receivable upon
exchange of the Preferred Stock shall thereafter be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions contained herein. The
Company shall promptly notify the Buyers of all adjustments pursuant to this Section 1(b)(iv) and
such notice shall be accompanied by a schedule of computations of the adjustments.
(v) In order to exercise its right to exchange shares of Preferred Stock for Exchange Shares
pursuant to Section 1(b), a Buyer shall surrender the certificate or certificates representing the
Preferred Stock it wants to exchange for Exchange Shares, and deliver a duly signed irrevocable
exchange notice (an “Exchange Notice”), stating that such Buyer elects to exchange such shares of
Preferred Stock to the Company. Subject to Section 1(b)(ii) hereof, in the event that shares of
Preferred Stock are to be automatically exchanged for Exchange Shares pursuant to Sections
1(b)(i)(2) or 1(b)(i)(3), the Buyer shall promptly surrender the certificate or certificates
representing the Preferred Stock to be automatically exchanged for Exchange Shares to the Company.
Shares of Preferred Stock shall be deemed to have been exchanged on the date the Exchange Notice is
given to the Company, provided that the Preferred Stock being exchanged is delivered to the Company
within three business days after Notice of Exchange is given to the Company, otherwise the exchange
will be deemed to occur immediately prior to the close of business on the day of surrender of such
shares of Preferred Stock for exchange in accordance with the foregoing provisions, and at the time
of the exchange, the rights of the Buyer as a holder of such shares of the Preferred Stock shall
cease. The Company shall, within two business days after the shares of Preferred Stock have been
deemed exchanged, allot the relevant Exchange Shares, whereupon such Buyer shall be treated for all
purposes as the record holder of the Exchange Shares issuable upon exchange, effective as of the
date of the Exchange Notice. As promptly as practicable on or after the date of allotment of the
relevant Exchange Shares (but in no event later than three business days thereafter), the Company
shall issue and deliver to such Buyer a certificate or certificates for the full number of Exchange
Shares issuable upon exchange. No fractional Exchange Shares shall be issued upon the exchange of
any shares of Preferred Stock and the total number of Exchange Shares issuable shall be rounded up
or down to the nearest whole Exchange Share.
(c) Taxes. The Issuer shall pay any and all transfer, stamp or similar taxes that may
be payable with respect to the issuance and delivery of any Preferred Shares to a Buyer made under
or in connection with this Agreement. The Company shall pay any and all transfer, stamp or similar
taxes that
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may be payable with respect to the issuance and delivery of any Ordinary Shares, ADSs or
Warrants to the Buyer made under or in connection with this Agreement.
(d) No Issuance below Nominal Value. Notwithstanding any provision hereof
to the contrary, the Company shall not effect any issuance of Ordinary Shares under this Agreement
(or have its transfer agent or depository issue any ADSs) and the Buyers shall not have the right
nor the obligation to subscribe for any ADSs under this Agreement where the Exchange Price for any
subscriptions of Exchange Shares would be less than the equivalent U.S. dollar amount of the then
nominal value of the Ordinary Shares calculated by reference to the Currency Conversion Rate
prevailing at the date the relevant Ordinary Shares are issued to the Buyer. “Currency Conversion
Rate” means on any given day the average currency conversion rate quoted by the Bank of America in
London as the price for Pounds Sterling purchased with U.S. Dollars. The Company agrees not to
cause the nominal value of the Ordinary Shares to exceed an amount in U.K currency that is the
equivalent of $0.05 (based on the Currency Conversion Rate in effect on the date of this
Agreement).
(e) Buy-In. In addition to any other rights available to the Buyers, if the
Company fails to deliver to a Buyer the Exchange Shares issuable upon exchange of Preferred Stock
by the date five (5) business days after the date on which the Company shall have received the
Exchange Notice (provided the certificate or certificates representing the Preferred Stock
exchanged for Exchange Shares is delivered to the Company within three business days of such date,
otherwise the date the Preferred Stock is actually received by the Company), together with a duly
signed and completed Exchange Notice (the “Delivery Date”), and if after five (5) business days
after the Delivery Date such Buyer purchases (in an open market transaction or otherwise) ADSs to
deliver in satisfaction of a sale by such Buyer of ADSs which the Buyer was entitled to receive
upon such conversion (a “Buy-In”), then the Company shall pay in cash to such Buyer (in addition to
any remedies available to or elected by such Buyer) the amount by which (A) the Buyer’s total
purchase price (including brokerage commissions, if any) for the ADSs so purchased exceeds (B) the
aggregate Exchange Amount for which such exchange was not timely honored, together with interest
thereon at a rate of 15% per annum, accruing until such amount and any accrued interest thereon is
paid in full (which amount shall be paid as liquidated damages and not as a penalty). For example,
if the Buyer purchases ADSs having a total purchase price of $11,000 to cover a Buy-In with respect
to an attempted conversion of $10,000 of Exchange Amount of Preferred Stock, the Company shall be
required to pay the Buyer $1,000, plus interest. The Buyer shall provide the Company written notice
indicating the amounts payable to the Buyer in respect of the Buy-In.
(f) Delivery Delay The Company understands that a delay in the delivery of
Exchange Shares upon exchange of Preferred Stock in the form required pursuant to this Agreement
after the Delivery Date could result in economic loss to the Buyer. As compensation to the Buyer
for such loss, the Company agrees to pay (as liquidated damages and not as a penalty) to the Buyer
for such late issuance of Exchange Shares upon exchange of the Series B Preferred Stock in the
amount of $100 per business day after the Delivery Date for each $10,000 of stated value of Series
B Preferred Stock being exchanged which is not timely delivered. The Company shall pay any
payments incurred under this Section in immediately available funds upon demand. Furthermore, in
addition to any other remedies which may be available to the Buyer, in the event that the Company
fails for any reason to effect delivery of the Exchange Shares by the Delivery Date, the Buyer will
be entitled to revoke all or part of the relevant Exchange Notice or rescind all by delivery of a
notice to such effect to the Company whereupon the Company and the Buyer shall each be restored to
their respective positions immediately prior to the delivery of such notice, except that the
liquidated damages described above shall be payable through the date notice of revocation is given
to the Company.
(g) Reclassification, Consolidation or Merger. If at any time, as a result
of a merger or consolidation of the Company with another corporation (whether or not the Company is
the surviving
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corporation), then the Exchange Shares issuable upon exchange of the Preferred Stock shall be
changed into or exchanged for the same or a different number of shares of any class or classes of
shares of the Company or any other corporation, or other securities convertible into such shares,
and as a part of such reorganization, reclassification, merger or consolidation, appropriate
adjustments shall be made in the terms of the Preferred Stock or this Agreement, so that the
holders of Preferred Stock or of such substitute securities shall thereafter be entitled to
receive, upon exchange of the Preferred Stock, the kind and amount of shares, other securities,
money and property which such holders would have received at the time of such capital
reorganization, reclassification, merger, or consolidation, if such holders had exchanged their
Preferred Stock immediately prior to such capital reorganization, reclassification, merger, or
consolidation.
(h) In the event a Buyer shall elect to convert any of the Preferred Stock, the
Company may not refuse conversion based on any claim that the Buyer or any one associated or
affiliated with the Buyer has been engaged in any violation of law, or for any other reason,
unless, an injunction from a court, on notice, restraining and or enjoining conversion of all or
part of such Preferred Stock shall have been sought and obtained by the Company and the Company has
posted a surety bond for the benefit of such Buyer in the amount of 120% of the amount of
the Preferred Stock which is sought to be subject to the injunction, which bond shall remain in
effect until the completion of arbitration/litigation of the dispute and the proceeds of which
shall be payable to such Buyer to the extent such Buyer obtains judgment.
2. BUYER’S REPRESENTATIONS AND WARRANTIES.
The Buyer represents and warrants to the Company and to the Issuer that as of the date hereof
and as of the Closing Date:
(a) Investment Purpose. The Buyer is entering into this Agreement and acquiring the
shares of Preferred Stock and the Warrants (as defined in Section 4(d) hereof) (such shares of
Preferred Stock and the Warrants are collectively referred to herein as the “Securities”), for its
own account for investment only and not with a view towards, or for resale in connection with, the
public sale or distribution thereof; provided however, by making the representations herein, the
Buyer does not agree to hold any of the Securities for any minimum or other specific term.
(b) Accredited Investor Status. The Buyer is an “accredited investor” as that term is
defined in Rule 501(a)(3) of Regulation D.
(c) Reliance on Exemptions. The Buyer understands that the Securities are being
offered and sold to it in reliance on specific exemptions from the registration requirements of
United States federal and state securities laws and that the Company and the Issuer are relying in
part upon the truth and accuracy of, and the Buyer’s compliance with, the representations,
warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order
to determine the availability of such exemptions and the eligibility of the Buyer to acquire the
Securities.
(d) Information. The Buyer has been furnished with all materials relating to the
business, finances and operations of the Company and the Issuer and materials relating to the offer
and issue of the Securities that have been reasonably requested by the Buyer, including, without
limitation, the SEC Documents (as defined in Section 3(f) hereof). The Buyer understands that its
investment in the Securities involves a high degree of risk. The Buyer (i) is able to bear the
economic risk of an investment in the Securities including a total loss, (ii) has such knowledge
and experience in financial and business matters that it is capable of evaluating the merits and
risks of the proposed investment in the Securities and (iii) has had an opportunity to ask
questions of and receive answers from the officers of
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the Company and the Issuer concerning the financial condition and business of the Company and
the Issuer and others matters related to an investment in the Securities. Neither such inquiries
nor any other due diligence investigations conducted by the Buyer or its representatives shall
modify, amend or affect the Buyer’s right to rely on the Company’s representations and warranties
contained in Section 3 below. The Buyer has sought such accounting, legal and tax advice as it has
considered necessary to make an informed investment decision with respect to its acquisition of the
Securities.
(e) No Governmental Review. The Buyer understands that no United States federal or
state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.
(f) Transfer or Resale. The Buyer understands that except as provided in the
Registration Rights Agreement (as defined in Section 4(a) hereof): (i) the Securities have not been
and are not being registered under the 1933 Act or any state securities laws, and may not be
offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder or
(B) an exemption exists permitting such Securities to be sold, assigned or transferred without such
registration; (ii) any sale of the Securities made in reliance on Rule 144 may be made only in
accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of the
Securities under circumstances in which the seller (or the person through whom the sale is made)
may be deemed to be an underwriter (as that term is defined in the 0000 Xxx) may require compliance
with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register the
Securities under the 1933 Act or any state securities laws or to comply with the terms and
conditions of any exemption thereunder.
(g) Validity; Enforcement. This Agreement has been duly and validly authorized,
executed and delivered on behalf of the Buyer and is a valid and binding agreement of the Buyer
enforceable against the Buyer in accordance with its terms, subject as to enforceability to general
principles of equity and to applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation and other similar laws relating to, or affecting generally, the enforcement of
applicable creditors’ rights and remedies.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE ISSUER.
Each of the Company and the Issuer jointly and severally represents and warrants to the Buyers
that as of the date hereof and as of the Closing Date:
(a) Organization and Qualification. The Issuer is a wholly owned subsidiary of the
Company. The Company and its “Subsidiaries” (which for purposes of this Agreement means any entity
in which the Company, directly or indirectly, owns 50% or more of the voting stock or capital stock
or other similar equity interests) are corporations duly organized and validly existing in good
standing under the laws of the jurisdiction in which they are incorporated, and have the requisite
corporate power and authority to own their properties and to carry on their business as now being
conducted. Each of the Company and its Subsidiaries is duly qualified as a foreign corporation to
do business and is in good standing in every jurisdiction in which its ownership of property or the
nature of the business conducted by it makes such qualification necessary, except to the extent
that the failure to be so qualified or be in good standing could not reasonably be expected to have
a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect” means any material
adverse effect on any of: (i) the business, properties, assets, operations, results of operations
or financial condition of the Company and its Subsidiaries, if any, taken as a whole, or (ii) the
authority or ability of the Company to perform its
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obligations under the Transaction Documents (as defined in Section 3(b) hereof). The Company
has no Subsidiaries except as set forth on Schedule 3(a).
(b) Authorization; Enforcement; Validity. (i) Each of the Company and the Issuer has
the requisite corporate power and authority to enter into and perform its obligations applicable to
it under this Agreement, the terms and conditions of the Preferred Stock as set forth in
Exhibit A attached hereto, the Registration Rights Agreement, the Warrants and each of the
other agreements entered into by the parties on the Closing Date and attached hereto as exhibits to
this Agreement (collectively, the “Transaction Documents”), and to issue the Securities in
accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction
Documents by the Company and the Issuer and the consummation by it of the transactions contemplated
hereby and thereby, including without limitation, the issuance of the Preferred Shares and the
Warrants and the reservation for issuance and the issuance of the Warrant Shares and Ordinary
Shares and ADSs issuable under the Transaction Documents, respectively, have been duly authorized
by the Company’s and the Issuer’s Board of Directors and no further consent or authorization is
required by the Company, the Issuer, its Board of Directors or its shareholders, (iii) this
Agreement has been, and each other Transaction Document shall be on the Closing Date, duly executed
and delivered by the Company and the Issuer and (iv) this Agreement constitutes, and each other
Transaction Document upon its execution on behalf of the Company and the Issuer, shall constitute,
the valid and binding obligations of the Company enforceable against the Company in accordance with
their terms, except as such enforceability may be limited by general principles of equity or
applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of creditors’ rights and remedies. The Board of
Directors of the Company has approved the resolutions (the “Company Signing Resolutions”)
substantially in the form as set forth as Exhibit B-1 attached hereto to authorize this
Agreement and the transactions contemplated hereby. The Company Signing Resolutions are valid, in
full force and effect and have not been modified or supplemented in any respect. The Board of
Directors of the Issuer has approved the resolutions (the “Issuer Signing Resolutions”)
substantially in the form as set forth as Exhibit B-2 attached hereto to authorize this
Agreement and the transactions contemplated hereby. The Issuer Signing Resolutions are valid, in
full force and effect and have not been modified or supplemented in any respect. The Company has
delivered to the Buyer a certificate of the Secretary of the Company certifying the adoption of the
Company Signing Resolutions by the members of the Board of Directors of the Company. No other
approvals or consents of the Company’s Board of Directors and/or shareholders is necessary under
applicable laws and the Company’s Articles of Association (the “Articles of Association”) and/or
Memorandum of Association (the “Memorandum of Association”) to authorize the execution and delivery
of the Transaction Documents or any of the transactions contemplated hereby or thereby, including,
but not limited to, the issuance of the Warrants, the reservation for issuance and the issuance of
the Warrant Shares upon exercise of the Warrants and the reservation for issuance and the issuance
of the ADSs on exchange of the Preferred Stock. The Issuer has delivered to the Buyer a certificate
of the Secretary of the Issuer certifying the adoption of the Issuer Signing Resolutions by the
members of the Board of Directors of the Issuer. No other approvals or consents of the Issuer’s
Board of Directors and/or stockholders is necessary under applicable laws and the Issuer’s
Certificate of Incorporation (the “Certificate of Incorporation”) and/or the Issuer’s By-Laws (the
“By-Laws”) to authorize the execution and delivery of the Transaction Documents or any of the
transactions contemplated hereby or thereby, including but not limited to the issuance of the
Preferred Stock.
(c) Capitalization. As of December 9, 2005, the authorized share capital of the
Company consists of (i) 75,000,000 Ordinary Shares (and at Closing, the authorized share capital
will consist of 110,000,000 Ordinary Shares), of which 42,503,025 Ordinary Shares are issued and
outstanding, none are held as treasury shares, 5,987,270 Ordinary Shares are reserved for issuance
pursuant to the Company’s stock option plans and employee stock purchase plans, of which only
approximately 4,546,923 Ordinary Shares remain available for future grants and 15,372,162 Ordinary
Shares are issuable and reserved for issuance pursuant to securities (other than stock options
issued pursuant to the
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Company’s stock option plans) exercisable or exchangeable for, or convertible into, Ordinary
Shares and (ii) 3,000,000 Preferred Shares, 20 UK xxxxx nominal value, of which as of the date
hereof no Preferred Shares are issued and outstanding. All of such issued and outstanding
Ordinary Shares have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(c), (i) no shares of the Company’s capital are
subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or
permitted by the Company, (ii) there are no outstanding debt securities, (iii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares in the capital of the
Company or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by
which the Company or any of its Subsidiaries is or may become bound to issue additional shares in
the capital of the Company or any of its Subsidiaries or options, warrants, scrip, rights to
subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights
convertible into, any shares in the capital of the Company or any of its Subsidiaries, (iv) there
are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated
to register the sale of any of their securities under the 1933 Act (except the Registration Rights
Agreement), (v) there are no outstanding securities or instruments of the Company or any of its
Subsidiaries which contain any redemption or similar provisions, and there are no contracts,
commitments, understandings or arrangements by which the Company or any of its Subsidiaries is or
may become bound to redeem a security of the Company or any of its Subsidiaries, (vi) there are no
securities or instruments containing anti-dilution or similar provisions that will be triggered by
the issuance of the Securities as described in this Agreement and (vii) the Company does not have
any stock appreciation rights or “phantom stock” plans or agreements or any similar plan or
agreement. The Company has furnished to the Buyer true and correct copies of the Articles of
Association, as amended and as in effect on the date hereof, and the Memorandum of Association, as
currently in effect on the date hereof, and summaries of the terms of all securities convertible
into or exercisable for Ordinary Shares or ADSs, if any, and copies of any documents containing the
material rights of the holders thereof in respect thereto. As of December 9, 2005 the authorized
capital stock of the Issuer consists of (i) 1,000 shares of common stock, of which as of the date
hereof, 1,000 shares are issued and outstanding, none are held as treasury shares, no shares are
reserved for issuance pursuant to the Issuer’s stock option plans and no shares are issuable and
reserved for issuance pursuant to securities exercisable or exchangeable for, or convertible into,
shares of common stock of the Issuer and (ii) 41,145 shares of preferred stock of the Issuer, with
a $100 per share liquidation preference, of which 20,000 are designated as Series A Preferred
Stock, no par value per share, and 21,145 are designated as Series B Preferred Stock, $0.001 par
value per share. As of the date hereof 14, 404 shares of Series A Preferred Stock are issued and
outstanding and no shares of Series B Preferred Stock are issued or outstanding. All of such
outstanding shares have been, or upon issuance will be, validly issued and are fully paid and
nonassessable. Except as disclosed in Schedule 3(c), (i) no shares of the Issuer’s capital stock
are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered
or permitted by the Issuer, (ii) there are no outstanding debt securities of the Issuer, (iii)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of
any character whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Issuer or any of its Subsidiaries, or contracts, commitments, understandings
or arrangements by which the Issuer or any of its Subsidiaries is or may become bound to issue
additional shares of capital stock of the Issuer or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of the Issuer or any of its
Subsidiaries, (iv) there are no agreements or arrangements under which the Issuer or any of its
Subsidiaries is obligated to register the sale of any of their securities under the 1933 Act
(except the Registration Rights Agreement), (v) there are no outstanding securities or instruments
of the Issuer or any of its Subsidiaries which contain any redemption or similar provisions, and
there are no contracts, commitments, understandings or arrangements by which the Issuer or any of
its Subsidiaries is or may become bound to redeem a security of the Issuer or any of its
Subsidiaries, (vi) there are no securities or instruments containing anti-dilution or similar
provisions that will be triggered by the issuance of the Securities as described in this Agreement
and (vii) the Company does not have any
Page 8
stock appreciation rights or “phantom stock” plans or agreements or any similar plan or
agreement. The Issuer has furnished to the Buyer true and correct copies of the Certificate of
Incorporation, as amended and as in effect on the date hereof and the By-laws, as amended and as in
effect on the date hereof, and summaries of the terms of all securities convertible into or
exercisable for its common stock, if any, and copies of any documents containing the material
rights of the holders thereof in respect thereto.
(d) Issuance of Securities. The Preferred Stock has been duly authorized and, upon
issuance in accordance with the terms of the Transaction Documents shall be (i) validly issued,
fully paid and non-assessable and (ii) free from all taxes, liens and charges with respect to the
issue thereof. At the Closing Warrants will have been duly authorized and, upon issuance in
accordance with the terms hereof and the Warrants, the Warrant Shares and the Ordinary Shares
represented by such Warrant Shares shall be (i) validly issued, fully paid and non-assessable and
(ii) free from all taxes, liens and charges with respect to the issue thereof. 9,092,350 ADSs and
9,092,350 Ordinary Shares represented by such ADSs will have been duly authorized and reserved for
issuance as Exchange Shares upon exchange of the Preferred Stock. 9,726,700 ADSs and 9,726,700
Ordinary Shares represented by such ADSs will have been duly authorized and reserved for issuance
upon exercise of the Warrants. Upon issuance in accordance with the terms and conditions of the
Transaction Documents, the Exchange Shares and the Ordinary Shares represented by such Exchange
Shares shall be validly issued, fully paid and nonassessable and free from all taxes, liens and
charges with respect to the issue thereof, with the holders being entitled to all rights accorded
to a holder of Ordinary Shares.
(e) No Conflicts. Except as disclosed in Schedule 3(e), the execution, delivery and
performance of the Transaction Documents by the Company and the Issuer and the consummation by the
Company and the Issuer of the transactions contemplated hereby and thereby (including, without
limitation, the issuance of the Preferred Stock by the Issuer and the issuance of the Warrants, and
the reservation for issuance and issuance of the Warrant Shares and the ADSs and the Ordinary
Shares represented by such ADSs) by the Company will not (i) result in a violation of the Articles
of Association, the Memorandum of Association, the Certificate of Incorporation or By-Laws or (ii)
conflict with, or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of, any agreement, indenture or instrument to which the Company, the Issuer or any
of their Subsidiaries is a party, or result in a violation of any law, rule, regulation, order,
judgment or decree (including federal and state securities laws and regulations and the rules and
regulations of the Principal Market applicable to the Company, the Issuer or any of their
Subsidiaries) or by which any property or asset of the Company, the Issuer or any of their
Subsidiaries is bound or affected, except in the case of conflicts, defaults and violations under
clause (ii), which could not reasonably be expected to result in a Material Adverse Effect. Except
as disclosed in Schedule 3(e), neither the Company, the issuer nor any of their Subsidiaries is in
violation of any term of or in default under its Articles of Association, Memorandum of
Association, Certificate of Incorporation, By-Laws or their organizational charter or by-laws,
respectively. Except as disclosed in Schedule 3(e), neither the Company, the Issuer nor any of
their Subsidiaries is in violation of any term of or is in default under any material contract,
agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute,
rule or regulation applicable to the Company, the Issuer or their Subsidiaries, except for possible
conflicts, defaults, terminations or amendments which could not reasonably be expected to have a
Material Adverse Effect. The business of the Company and its Subsidiaries is not being conducted,
and shall not be conducted, in violation of any law, ordinance, regulation of any governmental
entity, except for possible violations, the sanctions for which either individually or in the
aggregate could not reasonably be expected to have a Material Adverse Effect. Except as
specifically contemplated by this Agreement and as required under the 1933 Act or applicable state
securities laws, the Company or the Issuer is not required to obtain any consent, authorization or
order of, or make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents in
Page 9
accordance with the terms hereof or thereof. Except as disclosed in Schedule 3(e), all
consents, authorizations, orders, filings and registrations which the Company or the issuer is
required to obtain pursuant to the preceding sentence shall be obtained or effected on or prior to
the Closing Date. Except as listed in Schedule 3(e), since June 30, 2005, the Company has not
received nor delivered any notices or correspondence from or to the Principal Market. The
Principal Market has not commenced any delisting proceedings against the Company.
(f) SEC Documents; Financial Statements. Except as disclosed in Schedule 3(f), since
December 31, 2003, the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting requirements of the
1934 Act (all of the foregoing filed prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents incorporated by reference therein being
hereinafter referred to as the “SEC Documents”). As of their respective dates (except as they have
been properly amended), the SEC Documents complied in all material respects with the requirements
of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC (except as
they may have been properly amended), contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading. As of their
respective dates (except as they have been properly amended), the financial statements of the
Company included in the SEC Documents complied as to form in all material respects with applicable
accounting requirements and the published rules and regulations of the SEC with respect thereto.
Such financial statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may exclude footnotes or may be condensed or summary
statements) and fairly present in all material respects the financial position of the Company as of
the dates thereof and the results of its operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as
listed in Schedule 3(f), the Company has received no notices or correspondence from the SEC since
June 30, 2005. The SEC has not commenced any enforcement proceedings against the Company or any of
its subsidiaries.
(g) Absence of Certain Changes. Except as disclosed in Schedule 3(g), since January
1, 2005, there has been no material adverse change in the business, properties, operations,
financial condition or results of operations of the Company or its Subsidiaries. The Company or
the Issuer has not taken any steps, and does not currently expect to take any steps, to seek
protection pursuant to any Bankruptcy Law nor does the Company or the Issuer or any of their
Subsidiaries have any knowledge or reason to believe that its creditors intend to initiate
involuntary bankruptcy or insolvency proceedings. The Company is financially solvent and is
generally able to pay its debts as they become due.
(h) Absence of Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court, public board, government agency, self-regulatory organization
or body pending or, to the knowledge of the Company or the Issuer or any of its Subsidiaries,
threatened against or affecting the Company, the Issuer,, the Preferred Stock, the Ordinary Shares
or ADSs or any of the Company’s Subsidiaries or any of the Company’s or the Company’s Subsidiaries’
officers or directors in their capacities as such, which could reasonably be expected to have a
Material Adverse Effect. A description of each action, suit, proceeding, inquiry or investigation
before or by any court, public board, government agency, self-regulatory organization or body
which, as of the date of this Agreement, is pending or threatened in writing against or affecting
the Company, the Issuer, the Preferred Stock, the Ordinary Shares or ADSs or any of the Company’s
Subsidiaries or any of the Company’s or the Company’s Subsidiaries’ officers or directors in their
capacities as such, is set forth in Schedule 3(h).
Page 10
(i) Acknowledgment Regarding Buyer’s Status. Each of the Company and the Issuer
acknowledge and agree that the Buyer is acting solely in the capacity of arm’s length purchaser
with respect to the Transaction Documents and the transactions contemplated hereby and thereby.
Each of the Company and the Issuer further acknowledges that the Buyer is not acting as a
financial advisor or fiduciary of the Company or the Issuer (or in any similar capacity) with
respect to the Transaction Documents and the transactions contemplated hereby and thereby and any
advice given by the Buyer or any of its representatives or agents in connection with the
Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to
the Buyer’s subscription for the Securities. Each of the Company and the Issuer further represents
to the Buyer that the Company’s and the Issuer’s decision to enter into the Transaction Documents
has been based solely on the independent evaluation by the Company, the Issuer and their
representatives and advisors.
(j) No General Solicitation. Neither the Company, the Issuer, or any of their
affiliates, or any person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D under the 0000 Xxx) in
connection with the offer or sale of the Securities.
(k) Intellectual Property Rights. The Company and its Subsidiaries own or possess
adequate rights or licenses to use all material trademarks, trade names, service marks, service
xxxx registrations, service names, patents, patent rights, copyrights, inventions, licenses,
approvals, governmental authorizations, trade secrets and rights necessary to conduct their
respective businesses as now conducted. Except as set forth on Schedule 3(k), none of the
Company’s material trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals, government
authorizations, trade secrets or other intellectual property rights have expired or terminated, or,
by the terms and conditions thereof, could expire or terminate within two years from the date of
this Agreement. The Company and its Subsidiaries do not have any knowledge of any infringement by
the Company or its Subsidiaries of any material trademark, trade name rights, patents, patent
rights, copyrights, inventions, licenses, service names, service marks, service xxxx registrations,
trade secret or other similar rights of others, or of any such development of similar or identical
trade secrets or technical information by others and, except as set forth on Schedule 3(k), there
is no claim, action or proceeding being made or brought against, or to the Company’s knowledge,
being threatened against, the Company or its Subsidiaries regarding trademark, trade name, patents,
patent rights, invention, copyright, license, service names, service marks, service xxxx
registrations, trade secret or other infringement, which could reasonably be expected to have a
Material Adverse Effect.
(l) Environmental Laws. The Company and its Subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants (“Environmental Laws”), (ii) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct their respective
businesses and (iii) are in compliance with all terms and conditions of any such permit, license or
approval, except where, in each of the three foregoing clauses, the failure to so comply could not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.
(m) Title. The Company and its Subsidiaries have good and marketable title in fee
simple to all real property and good and marketable title to all personal property owned by them
which is material to the business of the Company and its Subsidiaries, in each case free and clear
of all liens, encumbrances and defects except such as are described in Schedule 3(m) or such as do
not materially affect the value of such property and do not interfere with the use made and
proposed to be made of such property by the Company and any of its Subsidiaries. Any real property
and facilities held under lease by the Company and any of its Subsidiaries are held by them under
valid, subsisting and enforceable leases
Page 11
with such exceptions as are not material and do not interfere with the use made and proposed
to be made of such property and buildings by the Company and its Subsidiaries.
(n) Insurance. The Company and each of its Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such amounts as management
of the Company believes to be prudent and customary in the businesses in which the Company and its
Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any
insurance coverage sought or applied for and neither the Company nor any such Subsidiary has any
reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not materially and adversely affect the condition,
financial or otherwise, or the earnings, business or operations of the Company and its
Subsidiaries, taken as a whole.
(o) Regulatory Permits. The Company and its Subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, and neither the Company
nor any such Subsidiary has received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
(p) Tax Status. The Company and each of its Subsidiaries has made or filed all
federal and state income and all other material tax returns, reports and declarations required by
any jurisdiction to which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all
unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges
that are material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and has set aside on its books provision
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which
such returns, reports or declarations apply. There are no unpaid taxes in any material amount
claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know
of no basis for any such claim.
(q) Transactions With Affiliates. Except as set forth on Schedule 3(q) and other than
the grant or exercise of stock options disclosed on Schedule 3(c), none of the officers, directors,
or employees of the Company is presently a party to any transaction with the Company or any of its
Subsidiaries (other than for services as employees, officers and directors), including any
contract, agreement or other arrangement providing for the furnishing of services to or by,
providing for rental of real or personal property to or from, or otherwise requiring payments to or
from any officer, director or such employee or, to the knowledge of the Company, any corporation,
partnership, trust or other entity in which any officer, director, or any such employee has an
interest or is an officer, director, trustee or partner.
(r) Application of Takeover Protections. The Company and its board of directors have
taken or will take prior to the Closing Date all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision under the
Certificate of Incorporation or the laws of the state of its incorporation which is or could become
applicable to the Buyer as a result of the transactions contemplated by this Agreement, including,
without limitation, the Company’s issuance of the Securities and the Buyer’s ownership of the
Securities.
(s) Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor
any director, officer, agent, employee or other person acting on behalf of the Company or any of
its Subsidiaries has, in the course of its actions for, or on behalf of, the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity;
Page 12
made any direct or indirect unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended; or made any unlawful bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic government official or
employee.
4. COVENANTS.
(a) Filing of Form 8-K and Registration Statement. The Company agrees that it shall,
within the time required under the 1934 Act file a Report on Form 8-K disclosing this Agreement and
the transaction contemplated hereby. The Company shall also file on or before January 15, 2006 a
new registration statement covering the sale of the Warrant Shares and Exchange Shares in
accordance with the terms of the Registration Rights Agreement between the Company and the Buyer,
dated as of the date hereof (“Registration Rights Agreement”).
(b) Blue Sky. The Company and the Issuer shall take such action, if any, as is
reasonably necessary in order to obtain an exemption for or to qualify (i) the issuance of the
Warrants, the Warrant Shares, the shares of Preferred Stock and the ADSs to be issued to the Buyer
under the Transaction Documents and (ii) any subsequent sale of such securities by the Buyer, in
each case, under applicable securities or “Blue Sky” laws of the states of the United States in
such states as is reasonably requested by the Buyer from time to time, and shall provide evidence
of any such action so taken to the Buyer.
(c) Listing. The Company shall promptly secure the listing of all of the Exchange
Shares and Warrant Shares which may be issued to the Buyer under the Transaction Documents upon
each national securities exchange and automated quotation system, if any, upon which the ADSs are
then listed (subject to official notice of issuance) and shall maintain, so long as any ADSs shall
be outstanding, such listing of all ADSs from time to time issuable under the terms of the
Transaction Documents. The Company shall use its best efforts to maintain the ADSs’ authorization
for quotation on the Principal Market. Neither the Company nor any of its Subsidiaries shall take
any action that would be reasonably expected to result in the delisting or suspension of the ADSs
on the Principal Market. The Company shall pay all fees and expenses in connection with
satisfying its obligations under this Section.
(d) Issuance of Warrants. Upon the Closing under this Agreement, the Company shall
deliver to each Buyer warrants in the form attached hereto as Exhibit C to purchase ADSs
representing (i) 460 Ordinary Shares for each share of Preferred Stock purchased by such Buyer
hereunder, at an exercise price of US $0.40 (the “Warrants” and the ADSs representing Ordinary
Shares issuable upon exercise of the Warrants, the “Warrant Shares”).
(e) Maintenance of the Status of the Issuer. So long as any of the Preferred Stock is
outstanding, neither the Company nor the Issuer shall take any action or do anything whatsoever
that could cause: (1) the Issuer to be cease to be a wholly-owned subsidiary of the Company, (2)
the termination or impairment of the separate corporate existence of the Issuer, or (3) a
liquidation, dissolution or winding up of the Issuer.
(f) Disclosure of Material Information. Each of the Company and the Issuer covenant
and agree that neither it nor any other person acting on its behalf has provided or will provide
any Buyer or its agents or counsel with any information that the Company or Issuer believe
constitutes material non-public information, unless prior thereto such Buyer shall have executed a
written agreement regarding the confidentiality and use of such information. The Company and the
Issuer understand and confirm that the Buyer shall be relying on the foregoing representations in
effecting transactions in securities of the Company.
Page 13
(g) Right of First Offer. Prior to offering (or accepting any offer) to issue or sell
to any third party (a “Subsequent Financing”), (i) securities related to any additional equity or
equity-related financing (including debt financing with an equity component) or (ii) Ordinary
Shares or ADSs or any securities convertible, exercisable or exchangeable into Ordinary Shares or
ADSs, including convertible debt securities (clauses (i) and (ii) are collectively referred to
herein as the “Financing Securities”), and subject to the maximum amount permitted to be acquired
by Buyer pursuant to Section 1(b)(ii), the Company covenants and agrees to offer in writing (a
"Rights Notice”) to the Buyers the right to purchase (on a pro rata basis among the Buyers in
accordance with their percentage of securities purchased hereunder) all (but not less than all) of
the securities to be offered in such Subsequent Financing, on terms and conditions no less
favorable to the Buyers as the terms to be offered in the Subsequent Financing. If a Buyer elects
to exercise its First Offer Rights, it shall do so in written notice of exercise signed by such
Buyer and delivered to the Company during the seven business days beginning on the date of
delivery of the Rights Notice (the “Option Period”), which written notice shall also indicate
whether such Buyer is electing to purchase any Financing Securities, (and if so, the aggregate
dollar value thereof) otherwise offered to any other Buyers and as to which such other Buyers do
not exercise their First Offer Rights. Any such written notice of exercise shall represent an
irrevocable and binding commitment by the Buyer to purchase such Financing Securities as to which
the applicable Buyer is exercising its First Offer Rights, plus any additional Financing Securities
pursuant to the preceding sentence, and shall represent a commitment by the Company to sell such
Financing Securities on a closing date no later than ten (10) Trading Days after the delivery of
such notice of exercise. The First Offer Rights will expire upon the earlier of (i) such time as
the Buyers own in the aggregate less than 50% of the Preferred Stock sold hereunder (and Exchange
Shares issued on exchange thereof), or (ii) the purchase by the Buyers of an aggregate of two
million dollars purchase price ($2,000,000) of Financing Securities. If the Company does not
receive notice of exercise of a Rights Option from any of the Buyers within the Option Period, the
Company shall have the right to negotiate and close any Subsequent Financing with any third party.
Subject to the requirements set forth in the first sentence of this Section 4.12, notwithstanding
the Company has received notice of exercise of a Rights Option from a Buyer, it will be permitted
to negotiate and close a Subsequent Financing if the Company requires additional financing. For
purposes of this Agreement, a Permitted Financing (as defined hereinafter) shall not be considered
a Subsequent Financing. A “Permitted Financing” shall mean (1) shares of capital stock or other
Financing Securities issued in connection with a strategic relationship, joint venture or
investment in the Company (so long as (i) the main purpose of which is not to raise equity capital
and (ii) the Company’s board of directors approves such issuance for strategic purposes); (2)
shares of capital stock or other Financing Securities issued in connection with a strategic merger
or acquisition, (3) ADSs issued to Fusion Capital pursuant to the Securities Subscription Agreement
dated as of February 10, 2005 (the “Fusion Subscription Agreement”); (4) shares of capital stock or
the issuance of options to purchase shares of Common Stock to employees, officers, directors,
consultants providing bona fide services to the Company that are not related to financing or
capital raising activities and vendors in accordance with the Company’s equity incentive policies;
(5) shares of capital stock to be issued in a public underwritten offering; (6) the conversion or
exercise of convertible or exercisable securities issued or outstanding prior to the date hereof
and (7) the issuance of additional shares of Preferred Stock and Warrants pursuant to an amendment
to this Agreement.
(h) Dilutive Financings. For such time as there shall be at least 20% of the number of
shares of Preferred Stock purchased under this Agreement outstanding, the Company shall not,
without the consent of holders of 70% of the then-outstanding shares of Preferred Stock, (i) sell
Ordinary Shares or ADSs (or securities convertible into Ordinary Shares or ADSs) in a Subsequent
Financing for less than $0.25 per share or ADS (or having a value of less than $0.25, taking into
account any warrants or dividends that exceed the amounts provided for in the transaction
contemplated hereby, including but not limited to a higher dividend rate or higher Warrant
coverage), (ii) sell Ordinary Shares or ADSs (or securities convertible into Ordinary Shares or
ADSs)for a period of six months after the Effective Date
Page 14
except for (1) shares of capital stock or other Financing Securities issued in connection
with a strategic merger or acquisition; (2) shares of capital stock or the issuance of options to
purchase shares of Common Stock to employees, officers and directors, providing bona fide services
to the Company that are not related to financing or capital raising activities and vendors in
accordance with the Company’s equity incentive policies; (3) the conversion or exercise of
convertible or exercisable securities issued or outstanding prior to the date hereof (and in
accordance with their terms on the date hereof) and (4) the issuance of additional shares of
Preferred Stock and Warrants pursuant to an amendment to this Agreement (for an aggregate purchase
price for all such Preferred Stock not to exceed $2.0 million) (transactions described in
clauses (1)-(4) being referred to as “Dilutive Exceptions”); (iii) sell ADSs or Ordinary Shares
under the Fusion Subscription Agreement at a price of less than $0.55 per ADS or (iv) sell
Ordinary Shares or ADSs (or securities convertible into Ordinary Shares or ADSs), except in a
Dilutive Exception, if the dividend rate or interest rate thereon exceeds the dividend rate
applicable to the Preferred Stock, or if such securities shall have greater warrant coverage than
is provided to the Buyers under this Agreement, or if any such warrants shall have an exercise
price of less than $.50 per share. The restrictions set forth in clauses (ii), (iii) and (iv)
shall not apply to sales under the Fusion Subscription Agreement after March 31, 2006 and before
December 31, 2006 to raise equity capital to the extent necessary to satisfy minimum net worth
requirements of the Nasdaq SmallCap Market, provided that (a) the Company shall have given Buyers’
5 Trading Days prior written notice of such issuance and an opportunity to invest on terms
comparable to those available under the Fusion Subscription Agreement, (b) the Company shall not
be permitted to raise more than $1,200,000.00 per quarter pursuant to this exception, (c) no Event
of Default shall have occurred, (d) the Registration Statement shall have been declared effective
and shall be available for use by the Buyers, (e) such sale to Fusion shall be effected in the last
month of the applicable fiscal quarter, and (f) such sale to Fusion Capital shall be effected at a
price per ADS share of no less than $0.33.
(i) Reasonable Best Efforts. The parties hereto shall use their reasonable best
efforts to satisfy the conditions to closing set forth in Sections 6 and 7, as applicable.
5. TRANSFER AGENT INSTRUCTIONS.
On or after the Effective Date, the Company shall promptly cause any restrictive legend on any
outstanding Exchange Shares or Warrant Shares to be removed and all of the Exchange Shares and
Warrant Shares to be issued under the Transaction Documents thereafter shall be issued without any
restrictive legend unless the Buyer expressly consents otherwise. The Company shall issue
irrevocable instructions to the Transfer Agent, and any subsequent transfer agent, to issue
Exchange Shares in the name of the Buyer and to issue Warrant Shares in the name of the Buyer upon
exercise of the Warrants (the “Irrevocable Transfer Agent Instructions”). The Company warrants to
the Buyer that no instruction other than the Irrevocable Transfer Agent Instructions referred to in
this Section 5, will be given by the Company to the Transfer Agent with respect to the Exchange
Shares and the Warrant Shares and that the Warrant Shares and the Exchange Shares shall otherwise
be freely transferable on the books and records of the Company as and to the extent provided in
this Agreement and the Registration Rights Agreement. At any time before the Effective
Date, any Exchange Shares or Warrant Shares issued to the Buyer in connection herewith shall be
issued in certificated form and shall bear the following restrictive legend and no other legend:
| THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER |
Page 15
| THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT. |
6. CONDITIONS TO THE COMPANY’S AND THE ISSUER’S OBLIGATION TO CLOSE
The obligation of the Company and the Issuer hereunder to consummate the transactions
contemplated hereby is irrevocable, subject to the satisfaction of each of the following conditions
on or before the Closing Date; provided that these conditions are for the Company’s and the
Issuer’s sole benefit and may be waived by the Company and the Issuer at any time in their sole
discretion by providing the Buyer with prior written notice thereof:
(a) The Buyers shall have executed each of the Transaction Documents and delivered the same to
the Company and the Issuer.
(b) The Buyers shall have paid a purchase price of $100 per share to the Issuer for the
Preferred Stock as full and complete payment for the shares of Preferred Stock and the Warrants to
be issued by the Company.
(c) The representations and warranties of the Buyers shall be true and correct in
all material respects as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a
specific date), and the Buyers shall have performed, satisfied and complied in all
material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Buyers at or prior to the
Closing Date.
(d) The Company shall have completed the reduction of the nominal value of its
Ordinary Shares from 20 xxxxx to 1 xxxxx, and such reduction shall have become
effective.
7. CONDITIONS TO THE BUYERS’ OBLIGATION TO CLOSE.
The obligation of the Buyers to complete the subscription shares of Preferred Stock and the
other transactions as contemplated in the Transaction Documents is subject to the satisfaction of
each of the following conditions on or before the Closing Date (it being understood that Buyers
shall have no obligation to complete the subscription for the Preferred Stock if the Closing Date
has not occurred on or before January 15, 2006); provided that these conditions are for the Buyers’
sole benefit and may be waived by the Buyers at any time in their sole discretion by providing the
Company and the Issuer with prior written notice thereof:
(a) The Company and the Issuer shall have executed each of the Transaction Documents
applicable to it and delivered the same to the Buyers.
(b) The Company shall have issued to the Buyers the Warrants and shares of Preferred Stock set
forth with respect to such Buyer on Schedule A.
(c) The Company shall have either (a) obtained confirmation from Nasdaq that the
issuance of the Preferred Stock does not require approval by the shareholders of
the Company pursuant to Rule
Page 16
4350(i) of Nasdaq’s Marketplace Rules, or
obtained an exemption from such requirement, or (b) obtained approval of its
shareholders meeting the requirements of Rule 4350(i) of Nasdaq’s
Marketplace Rules.
(d) The Company shall have completed the reduction of the nominal value of its
Ordinary Shares from 20 xxxxx to 1 xxxxx, and such reduction shall have become
effective, and the increase in the Company’s authorized share capital to 110,000,000
shares shall have become effective.
(e) The ADSs shall be authorized for quotation on the Principal Market, trading in
the ADSs shall not have been within the last 365 days suspended by the SEC or the
Principal Market and the ADSs and the Warrant Shares shall be approved for listing upon
the Principal Market.
(f) The representations and warranties of the Company and the Issuer shall be true and correct
in all material respects (except to the extent that any of such representations and warranties is
already qualified as to materiality in Section 3 above, in which case, such representations and
warranties shall be true and correct without further qualification) as of the date when made and as
of the Closing Date as though made at that time (except for representations and warranties that
speak as of a specific date) and the Company or Issuer shall have performed, satisfied and complied
with the covenants, agreements and conditions required by the Transaction Documents to be
performed, satisfied or complied with by the Company or the Issuer at or prior to the Closing Date.
The Buyer shall have received a certificate, executed by the CEO, President or CFO of the Company,
dated as of the Closing Date, to the foregoing effect in the form attached hereto as Exhibit
D-1. The Buyer shall have received a certificate, executed by the CEO, President or CFO of the
Issuer, dated as of the Closing Date, to the foregoing effect in the form attached hereto as
Exhibit D-2.
(g) The Board of Directors of the Company shall have adopted resolutions in the form attached
hereto as Exhibit B-1 which shall be in full force and effect without any amendment or
supplement thereto as of the Closing Date. The Board of Directors of the Issuer shall have adopted
resolutions in the form attached hereto as Exhibit B-2 which shall be in full force and
effect without any amendment or supplement thereto as of the Closing Date.
(h) As of the Closing Date, the Company shall have reserved out of its authorized and unissued
Ordinary Shares, solely for the purpose of effecting issuances of ADSs upon exchange of the
Preferred Stock under the Transaction Documents Ordinary Shares in an amount sufficient for
issuance upon exchange of the Preferred Stock and exercise of the Warrants.
(i) The Issuer shall have delivered to the Buyers a certified copy of the Certificate of
Incorporation as certified by the Secretary of State of the State of Delaware within five (5)
Trading Days prior to the Closing Date evidencing the terms and conditions of the Preferred Stock
as set forth in Exhibit A attached hereto.
(j) The Company shall have delivered to the Buyers a secretary’s certificate executed by the
Secretary of the Company, dated as of the Closing Date, in the form attached hereto as Exhibit
E-1. The Issuer shall have delivered to the Buyers a secretary’s certificate executed by the
Secretary of the Issuer, dated as of the Closing Date, in the form attached hereto as Exhibit
E-2.
(k) The Company shall have delivered to the Buyers, opinions of counsel in form reasonably
acceptable to the Buyers.
(l) The Company and the Issuer shall have provided the Buyers with the information requested
by the Buyers in connection with their due diligence requests made prior to, or in connection with,
the Closing.
Page 17
8. INDEMNIFICATION.
In consideration of the Buyers’ execution and delivery of the Transaction Documents and
acquiring the Securities hereunder and in addition to all of the Company’s and the Issuer’s other
obligations under the Transaction Documents, to the fullest extent permitted by law, the Company
and the Issuer shall jointly and severally defend, protect, indemnify and hold harmless the Buyers
and all of their affiliates, shareholders, officers, directors, employees and direct or indirect
investors and any of the foregoing person’s agents or other representatives (including, without
limitation, those retained in connection with the transactions contemplated by this Agreement or
any other Transaction Document) (collectively, the “Indemnitees”) from and against any and all
actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the
action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and
disbursements (the “Indemnified Liabilities”), incurred by any Indemnitee as a result of, or
arising out of, or relating to (a) any misrepresentation or breach of any representation or
warranty made by the Company or the Issuer in the Transaction Documents or any other certificate,
instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or
obligation of the Company or the Issuer contained in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, or (c) any cause of action,
suit or claim brought or made against such Indemnitee and arising out of or resulting from the
execution, delivery, performance or enforcement of the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, other than with respect to
Indemnified Liabilities which directly and primarily result from the gross negligence or willful
misconduct of the Indemnitee. To the extent that the foregoing undertaking by the Company and the
Issuer may be unenforceable for any reason, the Company and the Issuer shall make the maximum
contribution to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law. Promptly after receipt by an Indemnitee of notice of the
commencement of any action or proceeding (including any governmental action or proceeding) for
which indemnification may be sought hereunder, such Indemnitee shall, deliver to the Company a
written notice of the commencement thereof, and the Company shall have the right to participate
in, and, to the extent the Company so desires, to assume control of the defense thereof with
counsel mutually satisfactory to the Company and the Indemnitee, as the case may be; provided,
however, that an Indemnitee shall have the right to retain its own counsel with the fees and
expenses to be paid by the Company, if, in the reasonable opinion of counsel retained by the
Indemnitee, the representation by such counsel of the Indemnitee and the Company or the Issuer
would be inappropriate due to actual or potential differing interests between such Indemnitee and
any other party represented by such counsel in such proceeding. The Indemnitee shall cooperate
fully with the Company and the Issuer in connection with any negotiation or defense of any such
action or claim by the Company or the Issuer and shall furnish to the Company and to the Issuer all
information reasonably available to the Indemnitee which relates to such action or claim. The
Company and the Issuer shall keep the Indemnitee fully apprised at all times as to the status of
the defense or any settlement negotiations with respect thereto. The Company or the Issuer shall
not be liable for any settlement of any action, claim or proceeding effected without its written
consent, provided, however, that the Company or the Issuer shall not unreasonably withhold, delay
or condition its consent. The Company or the Issuer shall not, without the consent of the
Indemnitee, consent to entry of any judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnitee of a release from all liability in respect to such claim or litigation. Following
indemnification as provided for hereunder, the Company or the Issuer shall be subrogated to all
rights of the Indemnitee with respect to all third parties, firms or corporations relating to the
matter for which indemnification has been made. The failure to deliver written notice to the
Company or the Issuer within a reasonable time of the commencement of any such action shall not relieve the Company or the
Issuer of any liability to the Indemnitee under this Section 8, except to the extent that the
Company or the Issuer is prejudiced in its ability to defend such action.
Page 18
9. [Intentionally Omitted.]
10. CERTAIN DEFINED TERMS.
For purposes of this Agreement, the following terms shall have the following meanings:
(a) “1933 Act” means the Securities Act of 1933, as amended.
(b) “Bankruptcy Law” means Title 11, U.S. Code, the United Kingdom Insolvency Xxx 0000 or any
similar United Kingdom, United States federal or state law for the relief of debtors.
(c) “Custodian” means any receiver, trustee, assignee, liquidator or similar official under
any Bankruptcy Law.
(d) “Exchange Amount” means the sum of (i) the Stated Value, plus (ii) the amount of any
accrued but unpaid or undeclared dividends on a share of the Preferred Stock for the shorter of (A)
the one year period following the Closing Date and (B) the period from the Closing Date through the
date of the Exchange Notice.
(e) “Exchange Price” means US $0.25.
(f) “Exchange Rate” means the number of Exchange Shares issuable upon exchange of the Exchange
Amount of any Preferred Stock pursuant to Section 1(b) hereof which shall be determined according
to the following formula: Exchange Amount / Exchange Price, as such ratio may be adjusted from time
to time to reflect stock dividends, combinations, splits or similar events as provided in Section
1(b)(iv) hereof.
(g) “Exchange Shares” means the ADSs issued or issuable when shares of Preferred Stock are
submitted for exchange or are automatically exchangeable into ADSs pursuant to Section 1(b)(i)
hereof.
(h) “Person” means an individual or entity including any limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof.
(i) “Principal Market” means the Nasdaq SmallCap Market; provided however, that in the event
the ADSs are ever listed or traded on the Nasdaq National Market, the Nasdaq OTC Bulletin Board,
the New York Stock Exchange or the American Stock Exchange, then the “Principal Market” shall mean
such other market or exchange on which the ADSs are then listed or traded.
(j) “Sale Price” means, for the ADSs as of any date, the closing price for the ADSs on the
Principal Market as reported by the Principal Market, or, if the Principal Market is not the
principal securities exchange or trading market for the ADSs, the closing price of the ADSs on the
principal securities exchange or trading market where such security is listed or traded as reported
thereby.
(k) “SEC” means the United States Securities and Exchange Commission.
(l) “Stated Value” means $100.00 per share of Preferred Stock.
Page 19
(m) “Transfer Agent” means the transfer agent of the Company as set forth in Section 11(f)
hereof or such other person who is then serving as the transfer agent for the Company in respect of
the ADSs.
(n) “Trading Day” means any day on which the Principal Market is open for trading including
any day on which the Principal Market is open for trading for a period of time less than the
customary time.
11. MISCELLANEOUS.
(a) Governing Law; Jurisdiction; Jury Trial. The corporate laws of England and Wales
shall govern all issues concerning the relative rights of the Company and its shareholders and the
powers and capacity of the Company. The corporate laws of the State of Delaware shall govern all
issues concerning the relative rights of the Issuer and its shareholders and the powers and
capacity of the Issuer. All other questions concerning the construction, validity, enforcement and
interpretation of this Agreement and the other Transaction Documents shall be governed by the
internal laws of the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts
sitting in the City of New York, for the adjudication of any dispute hereunder or under the other
Transaction Documents or in connection herewith or therewith, or with any transaction contemplated
hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the jurisdiction of any such
court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue
of such suit, action or proceeding is improper. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND
AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION
HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
(b) Counterparts. This Agreement may be executed in two or more identical
counterparts, all of which shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the other party;
provided that a facsimile signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an original, not a
facsimile signature.
(c) Headings. The headings of this Agreement are for convenience of reference and
shall not form part of, or affect the interpretation of, this Agreement.
(d) Severability. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity
or enforceability of any provision of this Agreement in any other jurisdiction.
(e) Entire Agreement; Amendments. This Agreement supersedes all other prior oral or
written agreements between the Buyers, the Company, the Issuer, their affiliates and persons acting
on their behalf with respect to the matters discussed herein, and this Agreement, the other
Transaction
Page 20
Documents and the instruments referenced herein contain the entire understanding of the
parties with respect to the matters covered herein and therein and, except as specifically set
forth herein or therein, neither the Company, the Issuer nor the Buyers make any representation,
warranty, covenant or undertaking with respect to such matters. Any provision of this Agreement
may be amended or modified by mutual agreement of the Company, the Issuer and Buyers representing
70% in interest of the Preferred Shares, and any provision hereof may be waived only by the party
against whom enforcement is sought. Notwithstanding the foregoing, the Company shall be entitled to
amend this Agreement without the consent of the Buyers to provide for subsequent Closings after the
initial Closing, and to add additional Buyers as parties hereto in connection with additional
issuances of Preferred Stock, provided that no such amendment shall modify the rights of the Buyers
set forth in this Agreement, and provided further that the Company shall not issue more than an
aggregate of 21,145 shares of Preferred Stock pursuant to this Agreement as so amended. The
Company, the Issuer and Buyers each acknowledge and agree that it is has not relied on, in any
manner whatsoever, any representations or statements, written or oral, other than as expressly set
forth in the Transaction Documents.
(f) Notices. Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and will be deemed to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile on a Trading Day, or on the next Trading Day when sent on a day that is not a Trading Day
(provided confirmation of transmission is mechanically or electronically generated and kept on file
by the sending party); or (iii) one Trading Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
| If to the Company: | ||||||
| Insignia Solutions plc | ||||||
| 00000 Xxxxxxx Xxxxxx | ||||||
| Xxxxxxx, XX 00000 | ||||||
| Telephone: 000-000-0000 | ||||||
| Facsimile: | 000-000-0000 | |||||
| Attention: | Chief Executive Officer | |||||
| With a copy to: | ||||||
| Fenwick & West LLP | ||||||
| 000 Xxxxxxx Xx. | ||||||
| Xxx Xxxxxxxxx, XX 00000 | ||||||
| Telephone: | 000-000-0000 | |||||
| Facsimile: | 415-281-1350 | |||||
| Attention: | Xxxxx Xxxxxxxx | |||||
Page 21
| If to the Issuer: | ||||||
| Insignia Solutions Inc. | ||||||
| 00000 Xxxxxxx Xxxxxx | ||||||
| Xxxxxxx, XX 00000 | ||||||
| Telephone: | 000-000-0000 | |||||
| Facsimile: | 000-000-0000 | |||||
| Attention: | Chief Executive Officer | |||||
| With a copy to: | ||||||
| Fenwick & West LLP | ||||||
| 000 Xxxxxxx Xx. | ||||||
| Xxx Xxxxxxxxx, XX 00000 | ||||||
| Telephone: | 000-000-0000 | |||||
| Facsimile: | 415-281-1350 | |||||
| Attention: | Xxxxx Xxxxxxxx | |||||
| If to the Buyers, at the addresses set forth for each Buyer on Schedule 1. | ||||||
| With a copy to: | ||||||
| Grushko & Xxxxxxx, P.C. | ||||||
| 000 0xx Xxxxxx, Xxxxx 0000 | ||||||
| Xxx Xxxx, XX 00000 | ||||||
| Telephone: | 000-000-0000 | |||||
| Facsimile: | 000-000-0000 | |||||
| Attention: | Xxxxxxx Xxxxxxx | |||||
| If to the Transfer Agent: | ||||||
| Bank of New York | ||||||
| ADR Department | ||||||
| 000 Xxxxxx xx xxx Xxxxxxxx, 0xx Xxxxx | ||||||
| Xxx Xxxx, XX 00000 | ||||||
| Telephone: | 000-000-0000 | |||||
| Facsimile: | 212-571-3050 | |||||
| Attention: | Administrator for Insignia Solutions plc | |||||
or at such other address and/or facsimile number and/or to the attention of such other person as
the recipient party has specified by written notice given to each other party three (3) Trading
Days prior to the effectiveness of such change. Written confirmation of receipt (A) given by the
recipient of such notice, consent, waiver or other communication, (B) mechanically or
electronically generated by the sender’s facsimile machine containing the time, date, and recipient
facsimile number or (C) provided by a nationally recognized overnight delivery service, shall be
rebuttable evidence of personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or (iii) above,
respectively.
(g) Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns. The Company and the Issuer
shall not assign this Agreement or any rights or obligations hereunder without the prior written
consent of the Buyer, including by merger or consolidation.
Page 22
(h) No Third Party Beneficiaries. This Agreement is intended for the benefit of the
parties hereto and their respective permitted successors and assigns, and is not for the benefit
of, nor may any provision hereof be enforced by, any other person.
(i) Publicity. The Buyers shall have the right to approve before issuance any press
release, SEC filing or any other public disclosure made by or on behalf of the Company or the
Issuer whatsoever with respect to, in any manner, the Buyers, their purchase hereunder or any
aspect of this Agreement or the transactions contemplated hereby or by the other Transaction
Documents; provided, however, that the Company shall be entitled, without the prior approval of the
Buyers, to make any press release or other public disclosure (including any filings with the SEC)
with respect to such transactions as is required by applicable law and regulations; provided
however, the Company and its counsel must consult with the Buyer in connection with any such press
release or other public disclosure at least one (1) Trading Day prior to its release. The Buyers
must be provided with a copy thereof at least one (1) Trading Day prior to any release or use by
the Company thereof. The Company and the Issuer each agree and acknowledge that its failure to
fully comply with this provision constitutes a material adverse effect on its ability to perform
its obligations under this Agreement.
(j) Further Assurances. Each party shall do and perform, or cause to be done and
performed, all such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may reasonably request in
order to carry out the intent and accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.
(k) No Financial Advisor, Placement Agent, Broker or Finder. Each Buyer represents
and warrants to the Company and the Issuer that it has not engaged any financial advisor, placement
agent, broker or finder in connection with the transactions contemplated hereby, the fees of whom
would be payable by the Company or the Issuer. The Issuer and the Company represents and warrants
to the Buyers that neither of them have engaged any financial advisor, placement agent, broker or
finder in connection with the transactions contemplated hereby, the fees of whom would be payable
by the Buyers.
(l) No Strict Construction. The language used in this Agreement will be deemed to be
the language chosen by the parties to express their mutual intent, and no rules of strict
construction will be applied against any party.
(m) Remedies, Other Obligations, Breaches and Injunctive Relief. The Buyers remedies
provided in this Agreement shall be cumulative and in addition to all other remedies available to
the Buyers under this Agreement, at law or in equity (including a decree of specific performance
and/or other injunctive relief), no remedy of the Buyers contained herein shall be deemed a waiver
of compliance with the provisions giving rise to such remedy and nothing herein shall limit the
Buyers’ right to pursue actual damages for any failure by the Company or the Issuer to comply with
the terms of this Agreement or any Transaction Document. The Company and the Issuer acknowledge
that a breach by it of its obligations hereunder will cause irreparable harm to the Buyers and that
the remedy at law for any such breach may be inadequate. The Company and the Issuer therefore
agree that, in the event of any such breach or threatened breach, the Buyers shall be entitled, in
addition to all other available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being required.
(n) Changes to the Terms of this Agreement. This Agreement and any provision hereof
may only be amended by an instrument in writing signed by the Company, the Issuer and the affected
Buyers. The term “Agreement” and all reference thereto, as used throughout this instrument, shall
mean this instrument as originally executed, or if later amended or supplemented, then as so
amended or supplemented.
Page 23
(o) Enforcement Costs. If: (i) this Agreement is placed by any Buyer in the hands of
an attorney for enforcement or is enforced by the Buyer through any legal proceeding in which such
Buyer shall prevail; or (ii) an attorney is retained to represent the Buyer in any bankruptcy,
reorganization, receivership or other proceedings affecting creditors’ rights and involving a claim under this
Agreement; or (iii) an attorney is retained to represent a Buyer in any other proceedings
whatsoever in connection with this Agreement, then if such Buyer shall prevail in such proceeding,
the Company and the Issuer shall pay to the Buyer, as incurred by the Buyer, all reasonable costs
and expenses including attorneys’ fees incurred in connection therewith, in addition to all other
amounts due hereunder.
(p) Failure or Indulgence Not Waiver. No failure or delay in the exercise of any
power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further exercise thereof
or of any other right, power or privilege.
(q) Stock Splits, etc. If the Company at any time effects a subdivision or
consolidation of the outstanding ADSs or Ordinary Shares (through a split or otherwise), the share
numbers and dollar or xxxxx amounts contained in this Agreement shall be equitably adjusted to
reflect such subdivision or consolidation.
* * * * *
Page 24
IN WITNESS WHEREOF, the Company, the Issuer and the Buyer have caused this Securities
Subscription Agreement to be duly executed as of the date first written above.
| THE COMPANY: | ||||
| INSIGNIA SOLUTIONS PLC | ||||
| By: | /s/ Xxxx XxXxxxxx | |||
| Name: | Xxxx XxXxxxxx | |||
| Title: | President and Chief Executive Officer | |||
| THE ISSUER: | ||||
| INSIGNIA SOLUTIONS INC. | ||||
| By: | /s/ Xxxx XxXxxxxx | |||
| Name: | Xxxx XxXxxxxx | |||
| Title: | President and Chief Executive Officer | |||
[Signature Page to Securities Subscription Agreement]
| BUYER: | ||
| Name of Investor (Print) |
| By: |
| Name: |
| Title: |
| Address: | ||||
| Telephone: |
| Facsimile: |
| Number of Shares to be Purchased by Buyer: |
| Aggregate Purchase Price: $ |
[Signature Page to Securities Subscription Agreement]
SCHEDULES
[Intentionally Omitted.]
EXHIBITS
[Intentionally Omitted.]
