WARRANT
Exhibit 10.02
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR
ANY STATE SECURITIES LAW. NEITHER THIS WARRANT NOR ANY WARRANT SHARES ISSUABLE UPON EXERCISE
HEREOF NOR ANY INTEREST OR PARTICIPATION HEREIN OR THEREIN MAY BE SOLD, ASSIGNED, OR TRANSFERRED
EXCEPT IN COMPLIANCE WITH THE ACT AND APPLICABLE STATE SECURITIES LAWS.
Original Issue Date: December 29, 2005
This Warrant (“Warrant”) is issued in connection with and pursuant to that certain Securities
Subscription Agreement (the “Subscription Agreement”) dated as of December 29, 2005, by and among
INSIGNIA SOLUTIONS PLC, a public limited company incorporated under the laws of England and Wales
(registered number: 1961960) (the “Company”), INSIGNIA SOLUTIONS INC. a company incorporated under
the laws of Delaware (the “Issuer”), and (the “Buyer”).
FOR VALUE RECEIVED, the Buyer, the registered holder hereof, or its permitted assigns (the
“Holder”), is entitled to purchase from the Company, during the period specified in this Warrant,
(subject to adjustment as hereinafter provided) fully paid and non-assessable
American depository shares (each an “ADS” and collectively, the “ADSs”) of the Company at the
purchase price per ADS provided in Section 1.2 of this Warrant (the “Warrant Exercise Price”), all
subject to the terms and conditions set forth in this Warrant. Each ADS represents one ordinary
share of the Company (the “Ordinary Shares”). The ADSs to be purchased as described above are
referred to herein as the “Warrant Shares.” All terms not otherwise defined herein shall have the
meaning ascribed to them in the Subscription Agreement.
Section 1. Period for Exercise and Exercise Price; Redemption.
1.1 Period for Exercise. This Warrant shall commence at 5:00 pm New York City local time, on
June 29, 2006, and shall expire at 5:00 p.m., New York City local time, December 29, 2010 (the
“Expiration Date”). From and after the Expiration Date this Warrant shall be null and void and of
no further force or effect whatsoever.
1.2 Warrant Exercise Price. The Warrant Exercise Price shall be US $0.37 (subject to
adjustment as hereinafter provided).
Section 2. Exercise of Warrant.
2.1 Manner of Exercise. The Holder may exercise this Warrant, in whole or in part,
immediately, but not after the Expiration Date, during normal business hours on any Trading Day by
surrendering this Warrant to the Company at the principal office of the Company, accompanied by a
Warrant Exercise Form in substantially the form annexed hereto duly executed by the Buyer and by
payment of the Warrant Exercise Price for the number of Warrant Shares for which this Warrant is
then exercisable, either (i) in immediately available funds, (ii) by delivery of an instrument
evidencing indebtedness owing by the Company to the Holder in the appropriate amount, (iii) by
authorizing the Company to refrain from issuing ADSs which would otherwise be issuable upon
exercise of this Warrant (subject to and in accordance with Section 2.4 hereof) or (iv) in a
combination of (i), (ii) or (iii) above,
provided, however, that in no event shall the Holder be entitled to exercise this Warrant for
a number of Warrant Shares in excess of that number of Warrant Shares which, upon giving effect to
such exercise, would cause the aggregate number of ADSs or Ordinary Shares beneficially owned by
the Holder to exceed 4.9% of the outstanding ADSs or Ordinary Shares following such exercise. For
purposes of the foregoing proviso, the aggregate number of ADSs or Ordinary Shares beneficially
owned by the Holder shall include the number of ADSs or Ordinary Shares issuable upon exercise of
this Warrant with respect to which determination of such proviso is being made. Except as set
forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall be
calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended.
The Holder may waive the foregoing limitation by written notice to the Company upon not less than
61 days prior written notice (with such waiver taking effect only upon the expiration of such 61
day notice period).
2.2 When Exercise Effective. Each exercise of this Warrant shall be deemed to have been
effected on the day on which all requirements of Section 2.1 shall have been met with respect to
such exercise. At such time the person in whose name any certificate for shares of Warrant Shares
shall be issuable upon such exercise shall be deemed for all corporate purposes to have become the
Holder of record of such shares, regardless of the actual delivery of certificates evidencing such
shares.
2.3 Delivery of Certificates. As soon as practicable after each exercise of this Warrant,
and in any event no later than 3 Trading Days after such exercise, the Company will issue Warrant
Shares for the number of Warrant Shares to which the Holder is entitled upon such Holder’s
submission of the applicable Warrant Exercise Form.
2.4 Cashless Exercise. The Holder may, by providing notice thereof to the Company along with
the Warrant Exercise Form, elect to exercise the Warrant for a number of Warrant Shares determined
in accordance with the following formula:
| X = Y(A-B) | ||
| A | ||
| Where: | ||
| X = The number of Warrant Shares to be issued to the Holder. | ||
| Y = The number of Warrant Shares purchasable under this Warrant (at the date of such exercise). | ||
| A = The fair market value of one ADS (or other security for which the Warrant is then exercisable at the date of such exercise). | ||
| B = Exercise Price (as adjusted to the date of such exercise). |
For purposes of this Section 2.4, the “fair market value” per share shall be the Closing Sale
Price for the ADSs for the Trading Day immediately prior to the notice of exercise of the Warrant.
Notwithstanding any provisions herein to the contrary, the “cashless exercise” of the Warrants
contemplated hereunder shall not be permitted to the extent that the Company is prohibited under
the corporate laws and regulations of England and Wales from effectuating such “cashless exercise”
of the Warrants. For purposes of this Warrant, the term “Closing Sale Price” means the closing
price for the ADSs on the Nasdaq Small Cap Market as reported by the Nasdaq Small Cap Market, or,
if the Nasdaq Small Cap Market is not the principal securities exchange or trading market for the
ADSs, the closing price of the ADSs on the principal securities exchange or trading market where
such security is listed or traded as reported thereby.
Section 3. Adjustment of Purchase Price and Number of Shares. The Warrant Exercise Price and
the kind of securities issuable upon exercise of the Warrant shall be adjusted from time to time
as follows (subject to Section 1.2):
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3.1 Subdivision or Consolidation of Shares (Share Splits). If the Company at any time
effects a subdivision or consolidation of the outstanding ADSs or Ordinary Shares (through a split
or otherwise), the number of Warrant Shares shall be increased, in the case of a subdivision, or
the number of Warrant Shares shall be decreased, in the case of a consolidation, in the same
proportions as the ADSs or Ordinary Shares are subdivided or consolidated, in each case effective
automatically upon, and simultaneously with, the effectiveness of the subdivision or consolidation
which gives rise to the adjustment.
3.2 Dividends. If the Company at any time pays a dividend, or makes any other distribution,
to holders of ADSs or Ordinary Shares payable in ADSs or Ordinary Shares, or fixes a record date
for the determination of holders of ADSs or Ordinary Shares entitled to receive a dividend or
other distribution payable in Ordinary Shares or ADSs, then the number of Warrant Shares in effect
immediately prior to such action shall be proportionately increased so that the Holder hereof may
receive upon exercise of the Warrant the aggregate number of ADSs which he or it would have owned
immediately following such action if the Warrant had been exercised immediately prior to such
action. The adjustment shall become effective immediately as of the date the Company shall take a
record of the holders of ADSs or Ordinary Shares for the purpose of receiving such dividend or
distribution (or if no such record is taken, as of the effectiveness of such dividend or
distribution).
3.3 Reclassification, Consolidation or Merger. If at any time, as a result of:
(a) a capital reorganization or reclassification (other than a subdivision, consolidation or
dividend provided for elsewhere in this Section 3), or
(b) a merger or consolidation of the Company with another corporation (whether or not the
Company is the surviving corporation),
the ADSs issuable upon exercise of the Warrants shall be changed into or exchanged for the same or
a different number of shares of any class or classes of shares of the Company or any other
corporation, or other securities convertible into such shares, then, as a part of such
reorganization, reclassification, merger or consolidation, appropriate adjustments shall be made
in the terms of the Warrants (or of any securities into which the Warrants are exercised or for
which the Warrants are exchanged), so that:
(y) the Holders of Warrants or of such substitute securities shall thereafter be entitled to
receive, upon exercise of the Warrants or of such substitute securities, the kind and amount of
shares, other securities, money and property which such Holders would have received at the time of
such capital reorganization, reclassification, merger, or consolidation, if such Holders had
exercised their Warrants immediately prior to such capital reorganization, reclassification,
merger, or consolidation, and
(z) the Warrants or such substitute securities shall thereafter be adjusted on terms as
nearly equivalent as may be practicable to the adjustments theretofore provided in this Section
3.3.
No consolidation or merger in which the Company is not the surviving corporation shall be
consummated unless the surviving corporation shall agree, in writing, to the provisions of this
Section 3.3. The provisions of this Section 3.3 shall similarly apply to successive capital
reorganizations, reclassifications, mergers and consolidations.
3.4 Other Action Affecting ADSs or Ordinary Shares. If at any time the Company takes any
action affecting ADSs or Ordinary Shares, other than an action described in any of Sections 3.1 -
3.3 which could reasonably be expected to have an adverse effect upon the exercise rights of the
Warrants, the Warrant Exercise Price or the kind of securities issuable upon exercise of the
Warrants, or both, shall be adjusted in such manner to be equitable in the circumstances. No
adjustment to the Warrant Exercise Price or the kind of securities issuable upon exercise of the
Warrants shall be made in respect of
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Permitted Financings (as defined in the Securities Subscription Agreement dated as of
December 29, 2005 between Issuer and Buyer).
3.5 Notice of Adjustment Events. Whenever the Company contemplates the occurrence of an
event which would give rise to adjustments under this Section 3, the Company shall mail to each
Warrant Holder, at least 5 days prior to the record date with respect to such event or, if no
record date shall be established, at least 5 days prior to such event, a notice specifying (i) the
nature of the contemplated event, and (ii) the date on which any such record is to be taken for
the purpose of such event, and (iii) the date on which such event is expected to become effective,
and (iv) the time, if any is to be fixed, when the holders of record shall be entitled to exchange
their ADSs or Ordinary Shares (or other securities) for securities or other property deliverable
in connection with such event.
3.6 Notice of Adjustments. Whenever the kind or number of securities issuable upon exercise
of the Warrants, or both, shall be adjusted pursuant to Section 3, the Company shall deliver a
certificate signed by its Chief Executive Officer and by its Chief Financial Officer, setting
forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the
method by which such adjustment was calculated (including a description of the basis of any
determination hereunder), and the Warrant Exercise Price and the kind of securities issuable upon
exercise of the Warrants after giving effect to such adjustment, and shall cause copies of such
certificate to be mailed (by first class mail postage prepaid) to each Warrant Holder promptly
after each adjustment.
Section 4. Reservation. The Company covenants and agrees that it will at all times have
authorized, reserve and keep available, solely for issuance and delivery upon the exercise of this
Warrant, the number of Ordinary Shares represented by ADSs from time to time issuable upon the
exercise of this Warrant. The Company further covenants and agrees that this Warrant is, and any
Warrants issued in substitution for or replacement of this Warrant and all Warrant Shares, will
upon issuance be duly authorized and validly issued and, in the case of Ordinary Shares
represented by ADSs issuable hereunder, upon issuance will be fully paid and non-assessable and
free from all preemptive rights of any shareholder, and from all taxes, liens and charges with
respect to the issue thereof.
Section 5. Ownership, Transfer and Substitution of Warrants.
5.1 Ownership of Warrants. The Company may treat the person in whose name any Warrant is
registered on the register kept at the principal office of the Company as the owner and Holder
thereof for all purposes, notwithstanding any notice to the contrary, but in all events
recognizing any transfers made in accordance with the terms of this Warrant.
5.2 Transfer and Exchange of Warrants. Upon the surrender of any Warrant, properly endorsed,
for registration of transfer or for exchange at the principal office of the Company, the Company
at its expense will execute and deliver to the Holder thereof, upon the order of such Holder, a
new Warrant or Warrants of like tenor, in the name of such Holder or as such Holder may direct,
for such number of ADSs with respect to each such Warrant, the aggregate number of ADSs in any
event not to exceed the number of ADSs for which the Warrant so surrendered had not been
exercised.
5.3 REGISTRATION RIGHTS. THE HOLDER OF THIS WARRANT IS ENTITLED TO CERTAIN REGISTRATION
RIGHTS WITH RESPECT TO THE WARRANT SHARES ISSUABLE UPON EXERCISE THEREOF. SAID REGISTRATION RIGHTS
ARE SET FORTH IN A REGISTRATION RIGHTS AGREEMENT BY AND BETWEEN THE BUYER AND THE COMPANY.
5.4 Exemption from Registration. If an opinion of counsel provides that registration is not
required for the proposed exercise or transfer of this Warrant or the proposed transfer of the
Warrant Shares and that the proposed exercise or transfer in the absence of registration would
require the Company to take any action including executing and filing forms or other documents
with the Securities
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and Exchange Commission (the “SEC”) or any state securities agency, or delivering to the
Holder any form or document in order to establish the right of the Holder to effectuate the
proposed exercise or transfer, the Company agrees promptly, at its expense, to take any such
action. At any time after the registration statement contemplated in Section 4(a) of the
Subscription Agreement is declared effective by the SEC, any Warrant Shares issued to the Holder
in connection with any exercise of this Warrant shall be issued in certificated form and shall
bear no restrictive legend. At any time before the registration statement contemplated in
Section 4(a) of the Subscription Agreement is declared effective by the SEC, any Warrant Shares
issued to the Holder in connection with any exercise of this Warrant shall be issued in
certificated form and shall bear the following restrictive legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR
THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS, OR AN OPINION OF COUNSEL, IN A FORM REASONABLY ACCEPTABLE TO THE
COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR APPLICABLE STATE
SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SAID ACT.
On the Effective Date (as defined in the Subscription Agreement), the Company shall cause any
restrictive legend on any outstanding Warrant Shares to be removed.
Section 6. No Rights or Liabilities as Shareholder. Nothing contained in this Warrant shall
be construed as conferring upon the Holder hereof any rights as a shareholder of the Company or as
imposing any liabilities on such holder to purchase any securities or as a shareholder of the
Company, whether such liabilities are asserted by the Company or by creditors of the Company.
Section 7. Rule 144 Sales. At the request of any Holder who proposes to sell securities in
compliance with Rule 144 of the SEC, the Company will (i) forthwith furnish to such Holder a
written statement of compliance with the filing requirements of the SEC as set forth in Rule 144,
as such rules may be amended from time to time and (ii) make available to the public and such
Holder such information as will enable the Holder to make sales pursuant to Rule 144.
Section 8. Miscellaneous.
8.1 Amendment and Waiver. This Warrant may be amended with, and only with, the written
consent of the Company and the Holder. Any waiver of any term, covenant, agreement or condition
contained in this Warrant shall not be deemed a waiver of any other term, covenant, agreement or
condition, and any waiver of any default in any such term, covenant, agreement or condition shall
not be deemed a waiver of any later default thereof or of any default of any other term, covenant,
agreement or condition.
8.2 Representations and Warranties to Survive Closing. All representations, warranties and
covenants contained herein shall survive the execution and delivery of this Warrant and the
issuance of any Warrant Shares upon the exercise hereof.
8.3 Severability. In the event that any court or any governmental authority or agency
declares all or any part of any Section of this Warrant to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate any other Section of this Warrant, and in
the event that only a
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portion of any Section is so declared to be unlawful or invalid, such unlawfulness or
invalidity shall not serve to invalidate the balance of such Section.
8.4 Binding Effect; No Third Party Beneficiaries. All provisions of this Warrant shall be
binding upon and inure to the benefit of the parties and their respective heirs, legatees,
executors, administrators, legal representatives, successors, and permitted transferees and
assigns. No person other than the holder of this Warrant and the Company shall have any legal or
equitable right, remedy or claim under or in respect of, this Warrant.
8.5 Notices. Any notices, consents, waivers or other communications required or permitted to
be given under the terms of this Warrant must be in writing and will be deemed to have been
delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on
file by the sending party); or (iii) one Trading Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be:
If to the Company:
Insignia Solutions plc
00000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Chief Executive Officer
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
Fenwick & West LLP
000 Xxxxxxx Xx.
Xxx Xxxxxxxxx, XX 00000
Telephone: 000-000-0000
Facsimile: 415-281-1350
Attention: Xxxxx Xxxxxxxx
If to the Holder:
[Name of Holder]
[Address]
Telephone:
Facsimile:
Attention:
[Name of Holder]
[Address]
Telephone:
Facsimile:
Attention:
With a copy to:
Grushko & Xxxxxxx, P.C.
000 0xx Xxx., Xxxxx 0000
XX, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxxx
Grushko & Xxxxxxx, P.C.
000 0xx Xxx., Xxxxx 0000
XX, XX 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxxxx Xxxxxxx
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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
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.
8.6 Taxes, Costs and Expenses. The Company covenants and agrees that it will pay when due and
payable any and all United Kingdom, English, Welsh, federal, state and local taxes (other than
income taxes) and any other costs and expenses (including any and all transfer, stamp or similar
taxes) which may be payable in respect of the preparation, issuance, delivery, exercise, or
surrender of this Warrant pursuant to the terms of this Warrant or the issuance of any shares of
Warrant Shares as a result thereof. If any suit or action is instituted or attorneys employed to
enforce this Warrant or any part thereof, the Company promises and agrees to pay all costs and
expenses associated therewith, including reasonable attorneys’ fees and court costs.
8.7 Governing Law; Jurisdiction; Jury Trial. The corporate laws of England and Wales shall
govern all issues concerning the relative rights of the Company and its shareholders and the
powers and capacity of the Company. All other questions concerning the construction, validity,
enforcement and interpretation of this Warrant shall be governed by the internal laws of the State
of New York, without giving effect to any choice of law or conflict of law provision or rule
(whether of the State of New York or any other jurisdictions) that would cause the application of
the laws of any jurisdictions other than the State of New York. Each party hereby irrevocably
submits to the exclusive jurisdiction of the state and federal courts sitting in the City of New
York, for the adjudication of any dispute hereunder or under the other Transaction Documents or in
connection herewith or therewith, or with any transaction contemplated hereby or discussed herein,
and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of any such court, that such suit,
action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or proceeding by mailing a copy thereof
to such party at the address for such notices to it under this Agreement and agrees that such
service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any manner
permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.
8.8 Loss of Warrant. Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or
destruction) of indemnification from the Holder, and upon surrender and cancellation of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date.
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8.9 Entire Agreement. This Warrant, the Subscription Agreement and the Registration Rights
Agreement of even date herewith represent the entire agreement and understanding between the parties concerning the subject matter hereof and supercede all
prior and contemporaneous agreements, understandings, representations and warranties with respect
thereto.
8.10 Headings. The headings used herein are used for convenience only and are not to be
considered in construing or interpreting this Warrant.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first set above.
| INSIGNIA SOLUTIONS PLC | ||||||
| By: | ||||||
| Name: | Xxxx XxXxxxxx | |||||
| Title: | President and Chief Executive Officer | |||||
WARRANT EXERCISE FORM
Date:
INSIGNIA SOLUTIONS PLC
00000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
00000 Xxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Chief Financial Officer
Ladies and Gentlemen:
The undersigned, being the registered holder of your Warrant for the purchase
of Warrant Shares issued accompanying this letter, hereby irrevocably exercises
such Warrant for Warrant Shares (as defined in said Warrant), and herewith makes
payment therefor [via “cash-less exercise”] in accordance with the Warrant, and requests that such
Warrant Shares be issued in the name of, and delivered to [Name of Holder] at the address shown
below the signature line hereof.
If said number of Warrant Shares shall not be all the Warrant Shares issuable upon exercise of the
attached Warrant, a new Warrant is to be issued in the name of the undersigned for the balance
remaining of such Warrant Shares.
[NAME OF HOLDER]
By:
|
||||
Name: |
||||
Title: |
||||
[Name of Holder]
[Address]
[Address]
