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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant
to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported: DECEMBER 10, 1999
INSIGNIA SOLUTIONS PLC
(Exact name of registrant as specified in this charter)
ENGLAND AND WALES
(State or Other Jurisdiction of Incorporation)
0-27012 NOT APPLICABLE
(Commission File Number) (I.R.S. Employer Identification Number)
41300 CHRISTY STREET, FREMONT, CALIFORNIA 94538 UNITED STATES OF AMERICA
THE MERCURY CENTRE, WYCOMBE LANE, HIGH WYCOMBE, BUCKS HP10 0HH UNITED KINGDOM
(Address of principal executive offices) (Zip Code)
(510) 360-3700
(44) 1628-539500
(Registrant's Telephone Numbers, Including Area Code)
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ITEM 5. OTHER EVENTS
On December 9, 1999, Insignia Solutions closed a private placement
under a Securities Purchase Agreement dated December 9, 1999 with Castle
Creek Technology Partners LLC and a Securities Purchase Agreement of the same
date with four other investors consisting of two members of the board of
directors and two other individuals. These five investors purchased, at a per
share price of $4.23, a total of 1,063,515 American Depositary Shares (ADSs),
each representing one ordinary share, 20 pence par value per share. Insignia
also issued warrants to the purchasers to purchase a total of 319,054 ADSs at
a price of $5.29 per share. The warrants expire on December 9, 2004. In
addition, Insignia will issue to the purchasers warrants to purchase
additional ADSs, at par value, if the market price of the ADSs on certain
dates within the twelve months following the closing is lower than the market
price of the ADSs on the date of the closing, which was December 9, 1999.
Insignia has also agreed to register the ADSs, including the ADSs
issuable upon exercise of the warrants, under the Securities Act of 1933 for
resale by the purchasers. The Registration Rights Agreement entered into
under the Securities Purchase Agreements provides that Insignia must file the
registration statement with the Securities and Exchange Commission by no
later than 30 days after the closing.
A copy of each Securities Purchase Agreement, Warrant and
Registration Rights Agreement is filed as an Exhibit to this Report. These
documents are incorporated herein by this reference.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits. The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<C> <S>
4.05 Registration Rights Agreement dated as of December 9, 1999,
between Insignia Solutions plc and Castle Creek Technology
Partners LLC.
4.06 ADSs Purchase Warrant issued to Castle Creek Technology
Partners LLC dated December 9, 1999.
4.07 ADSs Purchase Reset Warrant issued to Castle Creek
Technology Partners LLC dated December 9, 1999.
4.08 Registration Rights Agreement dated as of December 9, 1999,
between Insignia Solutions plc and the Purchasers named
therein.
4.09 ADSs Purchase Warrant issued to the Purchasers dated
December 9, 1999.
4.10 ADSs Purchase Reset Warrant issued to the Purchasers
dated December 9, 1999.
10.50 Securities Purchase Agreement dated as if December 9, 1999,
between Insignia Solutions plc and Castle Creek Technology
Partners LLC.
10.51 Securities Purchase Agreement dated as if December 9, 1999,
between Insignia Solutions plc and the Purchasers named
therein.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: December 15, 1999 Insignia Solutions plc
By: /s/ STEPHEN M. AMBLER
------------------------------
Stephen M. Ambler,
SeniorVice President and Chief
Financial Officer
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
<C> <S>
4.05 Registration Rights Agreement dated as of December 9, 1999,
between Insignia Solutions plc and Castle Creek Technology
Partners LLC.
4.06 ADSs Purchase Warrant issued to Castle Creek Technology
Partners LLC dated December 9, 1999.
4.07 ADSs Purchase Reset Warrant issued to Castle Creek
Technology Partners LLC dated December 9, 1999.
4.08 Registration Rights Agreement dated as of December 9, 1999,
between Insignia Solutions plc and the Purchasers named
therein.
4.09 ADSs Purchase Warrant issued to the Purchasers dated
December 9, 1999.
4.10 ADSs Purchase Reset Warrant issued to the Purchasers
dated December 9, 1999.
10.50 Securities Purchase Agreement dated as if December 9, 1999,
between Insignia Solutions plc and Castle Creek Technology
Partners LLC.
10.51 Securities Purchase Agreement dated as if December 9, 1999,
between Insignia Solutions plc and the Purchasers named
therein.
</TABLE>
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EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT ("AGREEMENT") is entered into as of
December 9, 1999, by and between Insignia Solutions plc, a company organized and
existing under the laws of England and Wales (the "COMPANY"), with headquarters
located at 41300 Christy Street, Fremont, California 94538, and Castle Creek
Technology Partners LLC, an Illinois limited liability company located at 77
West Wacker Drive, Suite 4040, Chicago, Illinois 60601 (the "INITIAL
PURCHASER").
RECITALS
A. In connection with the Securities Purchase Agreement dated of even
date herewith by and between the Company and Initial Purchaser (the "SECURITIES
PURCHASE AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to Initial Purchaser (i) the
Company's American Depository Shares (the "ADSs"), each ADS representing one
ordinary shares of 20p each nominal value of the Company (the "ORDINARY
SHARES"); (ii) a warrant exercisable for ADSs, in the form attached as EXHIBIT
A to the Securities Purchase Agreement (the "INITIAL WARRANT"); and (iii) a
warrant in the form of EXHIBIT C to the Securities Purchase Agreement ( the
"RESET WARRANT", and together with the Initial Warrant, the "WARRANTS"). ADSs
issued and purchased pursuant to the Securities Purchase Agreement are herein
referred to as "SHARES" and ADSs issued or issuable upon exercise of the
Warrants are herein referred to as "WARRANT SHARES".
B. To induce Initial Purchaser to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company, and Initial Purchaser
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "PURCHASERS" means Initial Purchaser and any
transferees or assignees who agree to become bound by the provisions of this
Agreement in accordance with Article IX hereof (each, a "PURCHASER").
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(b) "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(c) "REGISTRABLE SECURITIES" means the Shares and the
Warrant Shares issued or issuable with respect to the Warrants (without regard
to any limitations on exercise) and any shares of capital stock issued or
issuable, from time to time (with any adjustments), on or in exchange for or
otherwise with respect to the ADRs or any other Registrable Securities.
(d) "REGISTRATION STATEMENT" means a registration
statement of the Company under the Securities Act pursuant to the provisions of
this Agreement.
(e) "FUNDED AMOUNT" means Three Million Five Hundred
Thousand Dollars ($3,500,000).
1.2 CAPITALIZED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Securities Purchase Agreement.
ARTICLE II
REGISTRATION
2.1 MANDATORY REGISTRATION. The Company shall prepare and file as
soon as practicable but in any event on or prior to thirty (30) days after the
date of the Closing with the SEC a Registration Statement on Form S-3 (or, if
Form S-3 is not then available, on such form of Registration Statement as is
then available to effect a registration of all of the Registrable Securities
(without regard to any limitations on exercise of the Warrants), including those
issuable upon full exercise of the Warrants purchased and sold at the Closing.
The Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to and
(subject to the approval of (which approval shall be rendered within 3 business
days after receipt thereof and shall not be unreasonably withheld, delayed or
denied)) the Initial Purchaser and its counsel at least seven (7) business days
(or fewer to the extent provided herein) prior to its filing or other
submission. The Company shall also prepare and file such amendments to
registration statements and such additional registration statements as may from
time to time be required by this Agreement.
2.2 UNDERWRITTEN OFFERING. If any offering pursuant to a Registration
Statement filed pursuant to Section 2.1 hereof involves an underwritten
offering, the Purchasers who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent of Initial
Purchaser, shall have the right to select one legal counsel to represent them
and an investment banker or bankers and manager or managers to administer the
offering, which investment banker or
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bankers or manager or managers shall be reasonably satisfactory to the
Company, and all fees and expenses of which shall be paid by the Purchasers.
2.3 PAYMENTS BY THE COMPANY. The Company shall use its best efforts
to cause the Registration Statement filed pursuant to Section 2.1 hereof to
become effective as soon as practicable, but in no event later than the
ninetieth (90th) day (or the one hundred twentieth (120th) day if the SEC
reviews such Registration Statement) following the Closing Date (the
"REGISTRATION DEADLINE"). If any Registration Statement required to be filed
by the Company pursuant to Section 2.1 hereof is not declared effective by the
SEC on or before the applicable Registration Deadline (a "REGISTRATION
FAILURE"), or after such Registration Statement has been declared effective by
the SEC, sales of all the Registrable Securities cannot be made pursuant to the
Registration Statement (by reason of a stop order or the Company's failure to
update the Registration Statement or any other reason outside the control of
the Purchasers) (a "REGISTRATION SUSPENSION"), then the Company will make
payments to the Purchasers in such amounts and at such times as shall be
determined pursuant to this Section 2.3 as partial relief for the damages to
the Purchasers by reason of any such delay in or reduction of their ability to
sell the Registrable Securities (which remedy shall not be exclusive of any
other remedies available at law or in equity). In the event of a Registration
Failure, the Company shall pay to the Purchasers an amount equal to (A) the
Multiplier (as defined herein) times (B) the sum of the aggregate Funded Amount
plus the amount payable to the Company under the Warrants times (C) the number
of months (prorated per day for partial months) following the Registration
Deadline prior to the date the Registration Statement filed pursuant to Section
2.1 is declared effective by the SEC. In addition, in the event of a
Registration Suspension, the Company shall pay to the Purchasers an amount
equal to (D) the Multiplier times (E) the Funded Amount times (F) the number of
months (prorated per day for partial months) from (x) the date on which sales
of all the Registrable Securities first cannot be made to (y) the date on which
sales of all the Registrable Securities can again be made. Amounts to be paid
pursuant to this Section 2.3 shall be paid to Purchasers based upon the number
of Shares and Warrant Shares owned and Warrant Shares issuable upon full
conversion of the Warrants by each Purchaser, and shall be paid in cash. Such
payments shall be made within five (5) days after the end of each period that
gives rise to such obligation, provided that, if any such period extends for
more than thirty (30) days, payments shall be made for each such thirty (30)
day period within five (5) days after the end of such thirty (30) day period.
For any given date, the "MULTIPLIER" shall mean, (i) during the first thirty
days following the Registration Deadline during which there is a Registration
Failure or a Registration Suspension, 0.01, (ii) from the thirty-first day of a
Registration Failure or Registration Suspension until the sixtieth such day,
0.015 and (iii) after the sixtieth day of a Registration Failure or
Registration Suspension, 0.02. Notwithstanding the foregoing, a Registration
Suspension effected by the Company pursuant to a Permitted Blackout shall not
give rise to an obligation to make such payments. For purposes hereof,
"PERMITTED BLACKOUT" shall mean the suspension of the Registration Statement
after the effective date upon the good faith determination by the Company's
Board of Directors that a material financing, acquisition or other
extraordinary corporate transaction is in the best interest of the Company and
its shareholders, and that disclosure thereof to the public would have a
material adverse effect on the ability of the Company to consummate such
material financing, acquisition or other extraordinary corporate transaction,
all after receiving advice to such effect from
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a nationally recognized investment banking firm or, to the extent appropriate,
the Company's counsel which has been engaged by the Company in connection with
such financing, acquisition or other extraordinary corporate transaction;
PROVIDED, HOWEVER, that (i) no more than two (2) such Permitted Blackouts may
be imposed during any period of twelve (12) consecutive months and (ii) the
aggregate duration of all Permitted Blackouts during any period of twelve (12)
consecutive months shall be no more than fifteen (15) business days.
2.4 PIGGY-BACK REGISTRATIONS. If at any time prior to the expiration
of the Registration Period (as hereinafter defined) the Company shall file with
the SEC a Registration Statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents relating to
equity securities to be issued solely in connection with any acquisition of any
entity or business or equity securities issuable in connection with stock
option or other employee benefit plans), then the Company shall send to each
Purchaser who has a right to have Registrable Securities covered by a
Registration Statement pursuant to this Agreement written notice of such
determination and, if within fifteen (15) days after the date of such notice,
such Purchaser shall so request in writing, the Company shall include in such
Registration Statement all or any part of the Registrable Securities such
Purchaser requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of ADSs which
may be included in the Registration Statement because, in such underwriter(s)'
judgment, marketing or other factors dictate such limitation is necessary to
facilitate public distribution, then the Company shall be obligated to include
in such Registration Statement only such limited portion of the Registrable
Securities with respect to which such Purchaser has requested inclusion
hereunder as the underwriter shall permit. Any exclusion of Registrable
Securities shall be made pro rata among the Purchasers seeking to include
Registrable Securities, in proportion to the number of Registrable Securities
sought to be included by such Purchasers; provided, however, that the Company
shall not exclude any Registrable Securities unless the Company has first
excluded all outstanding securities, the holders of which are not entitled to
inclusion of such securities in such Registration Statement or are not entitled
to pro rata inclusion with the Registrable Securities; and provided, further,
however, that, after giving effect to the immediately preceding proviso, any
exclusion of Registrable Securities shall be made pro rata with holders of
other securities having the riht to include such securities in the Registration
Statement. No right to registration of Registrable Securities under this
Section 2.4 shall be construed to limit any registration required under Section
2.1 or 3.2 hereof. If an offering in connection with which a Purchaser is
entitled to registration under this Section 2.4 is an underwritten offering,
then each Purchaser whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement,
on the same terms and conditions as other ADSs included in such underwritten
offering. So long as a Registration Statement is effective and immediately
available for use so that all of the Registrable Securities may be sold in
reliance thereon, the provisions of this section shall not apply.
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2.5 ELIGIBILITY FOR FORM S-3. The Company represents and warrants
that it meets the requirements for the use of Form S-3 for registration of the
re-sale by Initial Purchaser and any other Purchasers of the Registrable
Securities and the Company shall file all reports required to be filed by the
Company with the SEC in a timely manner so as to maintain such eligibility for
the use of Form S-3.
ARTICLE III
OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations, including with respect to each
Registration Statement to be filed hereunder:
3.1 The Company shall prepare promptly and file with the SEC each
Registration Statement required by Section 2.1, and cause each such
Registration Statement relating to Registrable Securities to become effective
as soon as practicable after such filing, and keep the Registration Statement
effective pursuant to Rule 415 and available for use at all times until such
date as is the earlier of (i) the date on which all of the Registrable
Securities have been sold (and no further Registrable Securities may be issued
in the future) and (ii) the date on which all of the Registrable Securities (in
the reasonable opinion of counsel to Initial Purchaser) may be immediately sold
to the public without registration and without restriction as to the number of
Registrable Securities to be sold, whether pursuant to Rule 144 or otherwise
(the "REGISTRATION PERIOD"). Each such Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein and all
documents incorporated by reference therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein not misleading.
3.2 The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with each Registration
Statement as may be necessary to keep such Registration Statement effective and
available for use at all times during the Registration Period, and, during such
period, comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities of the Company covered by such
Registration Statement until the termination of the Registration Period or, if
earlier, such time as all of such Registrable Securities have been disposed of
in accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in such Registration Statement. In the event the number
of Shares available under a Registration Statement filed pursuant to this
Agreement is at any time insufficient to cover one hundred seventy five percent
(175%) of the ADSs issued or issuable pursuant to all of the then-issued
Warrants or the Securities Purchase Agreement (without regard to any
limitations on exercise contained therein), the Company shall amend, if
permissible, the Registration Statement, or file a new Registration Statement
(on the short form available therefor, if applicable), or both, so as to cover
two hundred percent (200%) of the Warrant Shares issued or issuable upon
exercise of the Warrants (without regard to any limitation on exercise
contained therein), in each case, as soon as
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practicable, but in any event within five (5) days. The Company shall cause
such amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
3.3 The Company shall furnish to each Purchaser whose Registrable
Securities are included in the Registration Statement and its legal counsel (a)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each
amendment or supplement thereto, and, in the case of the Registration Statement
referred to in Section 2.1, each letter written by or on behalf of the Company
to the SEC or the staff of the SEC, and each item of correspondence from the
SEC or the staff of the SEC, in each case relating to such Registration
Statement (other than any portion, if any, thereof which contains information
for which the Company has sought confidential treatment), and (b) such number
of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as such Purchaser
may reasonably request in order to facilitate the disposition of the
Registrable Securities owned (or to be owned) by such Purchaser.
3.4 The Company shall (a) register and qualify the Registrable
Securities covered by each Registration Statement under securities laws of such
jurisdictions in the United States as each Purchaser who holds (or has the
right to hold) Registrable Securities being offered reasonably requests, (b)
prepare and file in those jurisdictions such amendments (including
post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness and
availability for use thereof during the applicable Registration Period, (c)
take such other actions as may be necessary to maintain such registrations and
qualifications in effect at all times during the applicable Registration
Period, and (d) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (i) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3.4, (ii)
subject itself to general taxation in any such jurisdiction, (iii) file a
general consent to service of process in any such jurisdiction, (iv) provide
any undertakings that cause the Company material expense or burden, or (v) make
any change in its charter or by-laws, which in each case the board of directors
of the Company determines to be contrary to the best interests of the Company
and its shareholders.
3.5 In the event the Purchasers who hold a majority in interest of
the Registrable Securities being offered in an offering pursuant to a
Registration Statement or any amendment or supplement thereto under Section 2.1
or 3.2 hereof select underwriters for the offering, the Company shall enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters of such offering, but shall not
bear any costs or expenses of the underwriting.
3.6 As soon as practicable after becoming aware of such event, the
Company shall notify (by telephone and also by facsimile and reputable
overnight courier) each Purchaser of the happening of any event, of which the
Company has knowledge, as a result of which the prospectus included in
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the Registration Statement, as then in effect, includes an untrue statement of
a material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and use its
best efforts as soon as possible (but in any event within five (5) days) to
prepare a supplement or amendment to the Registration Statement (and make all
required filings with the SEC) to correct such untrue statement or omission,
and the Company shall simultaneously (and thereafter as requested) deliver such
number of copies of such supplement or amendment to each Purchaser (or other
applicable document) as such Purchaser may request in writing. Unless such an
event is publicly announced, the Company shall not, without the consent of the
Purchaser, give such Purchaser any material non-public information, but shall
inform the Purchasers that such prospectus includes an untrue statement of a
material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
3.7 The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration
Statement, and, if such an order is issued, to obtain the withdrawal of such
order at the earliest practicable time and the Company shall immediately notify
by facsimile each Purchaser (at the facsimile number for such Purchaser set
forth on the signature page hereto) who holds Registrable Securities (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance of such order and the resolution thereof.
3.8 The Company shall permit counsel designated by Initial Purchaser
to review the Registration Statement and all amendments and supplements thereto
a reasonable period of time prior to their filing with the SEC, and not file
any document in a form to which such counsel reasonably objects, provided such
objection shall be communicated to the Company within 3 business days after
receipt of such Registration Statement by Purchaser.
3.9 Intentionally deleted.
3.10 At the request of any Purchaser, the Company shall furnish, on
the date of effectiveness of the Registration Statement and thereafter from
time to time on such dates as a Purchaser may reasonably request (a) an
opinion, dated as of such applicable date, from counsel representing the
Company addressed to the Purchasers and in form, scope and substance as is
customarily given in an underwritten public offering and (b) a letter, dated as
of such applicable date, from the Company's independent certified public
accountants addressed to the Purchasers and in form, scope and substance as
customarily given to underwriters in an underwritten public offering.
3.11 The Company shall make available for inspection by (i) any
Purchaser, (ii) any underwriter participating in any disposition pursuant to
the Registration Statement, (iii) attorneys and accountants retained by any
Purchaser, and (iv) attorneys retained by such underwriters (collectively, the
"INSPECTORS") all pertinent financial and other records, and pertinent
corporate documents and properties of the Company (collectively, the
"RECORDS"), as shall be reasonably deemed necessary by each Inspector and cause
the Company's officers, directors and employees to supply all information which
any Inspector may reasonably request; provided, however, that each
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Inspector shall hold in confidence and shall not make any disclosure (except to
a Purchaser) of any Record or other information which the Company determines in
good faith to be confidential, and of which determination the Inspectors are so
notified in writing, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration Statement or is
otherwise required to be disclosed in such Registration Statement to permit
Purchaser to sell under such Registration Statement, (b) the release of such
Records is ordered pursuant to a subpoena or other order from a court or
government body of competent jurisdiction, or is otherwise required by
applicable law or legal process or (c) the information in such Records has been
made generally available to the public other than by disclosure in violation of
this or any other agreement (to the knowledge of the relevant Purchaser). The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered
into confidentiality agreements (in form and reasonable substance satisfactory
to the Company) with the Company with respect thereto, substantially in the
form of this Section 3.11. Each Purchaser agrees that it shall, upon learning
that disclosure of such Records is sought in or by a court or governmental body
of competent jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake appropriate action
to prevent disclosure of, or to obtain a protective order for, the Records
deemed confidential. Nothing herein shall be deemed to limit a Purchaser's
ability to sell Registrable Securities in a manner which is consistent with
applicable laws and regulations.
3.12 The Company shall hold in confidence and not make any disclosure
of information concerning a Purchaser provided to the Company excluding any
information provided by Purchaser for use in or in connection with a
Registration Statement unless (a) disclosure of such information is necessary
to comply with federal or state securities laws, (b) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (c) the release of such information is ordered pursuant
to a subpoena or other order from a court or governmental body of competent
jurisdiction or is otherwise required by applicable law or legal process, (d)
such information has been made generally available to the public other than by
disclosure in violation of this or any other agreement (to the knowledge of the
Company), or (e) such Purchaser consents to the form and content of any such
disclosure. The Company agrees that it shall, upon learning that disclosure of
such information concerning a Purchaser is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to such Purchaser prior to making such disclosure, and allow the
Purchaser, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
3.13 From and after each Closing, the Company shall cause the listing
and the continuation of listing of all the Registrable Securities related to
such Closing and required to be covered by a Registration Statement on the
Nasdaq National Market, the New York Stock Exchange or the American Stock
Exchange and cause the Registrable Securities to be quoted or listed on each
additional national securities exchange or quotation system upon which the ADRs
are then listed or quoted.
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3.14 The Company shall provide a transfer agent and Depositary, which
may be a single entity, for the Registrable Securities not later than the
effective date of the applicable Registration Statement.
3.15 The Company shall cooperate with the Purchasers who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Purchasers may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Purchasers may request, and, within two (2)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall cause legal
counsel selected by the Company to deliver, to the Depositary for the
Registrable Securities (with copies to the Purchasers whose Registrable
Securities are included in such Registration Statement) an opinion of such
counsel in the form attached hereto as EXHIBIT 1.
3.16 At the request of any Purchaser, the Company shall promptly
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with a Registration Statement filed pursuant hereto as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.
3.17 The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities covered by the
Registration Statement and all applicable rules and regulations of governmental
authorities in connection therewith (including, without limitation, the
Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission).
3.18 The Company shall take all such other actions as any Purchaser or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities, but shall not be required to
incur any costs or expenses in connection therewith not otherwise provided
herein to be borne by the Company.
3.19 From and after the date of this Agreement, the Company shall
not, and shall not agree to, allow the holders of any securities of the Company
(other than Purchasers with respect to Registrable Securities) to include any
of their securities in any Registration Statement or any amendment or
supplement thereto under Section 2.1 or 3.2 hereof without the consent of
Initial Purchaser and the holders of a majority of the Registrable Securities.
Without the consent of Initial Purchaser, until the effectiveness of the
Registration Statements contemplated by Section 2.1 hereof, the Company shall
not file any other Registration Statement for the sale of any securities,
whether for the account of the Company or any other person.
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3.20 The Registration Statement shall state that it covers such
indeterminate number of additional shares as may be issuable upon exercise of
the Warrants to prevent dilution resulting from stock splits, stock dividends
and other similar transactions.
ARTICLE IV
OBLIGATIONS OF THE PURCHASERS
In connection with the registration of the Registrable Securities, the
Purchasers shall have the following obligations:
4.1 Each Purchaser shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities. At least
five (5) business days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Purchaser of the
information the Company requires from each such Purchaser.
4.2 Each Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statements hereunder, unless such Purchaser has notified the Company in writing
of such Purchaser's election to exclude all of such Purchaser's Registrable
Securities from the Registration Statement.
4.3 Each Purchaser whose Registrable Securities are included in a
Registration Statement understands that the Securities Act may require delivery
of a prospectus relating thereto in connection with any sale thereof pursuant
to such Registration Statement, and each such Purchaser shall use its
reasonable efforts to comply with the applicable prospectus delivery
requirements of the Securities Act in connection with any such sale.
4.4 Intentionally omitted.
4.5 Each Purchaser agrees that, upon receipt of written notice from
the Company of the happening of any event of the kind described in Section 3.6,
such Purchaser will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Purchaser's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3.6 or advice that a supplement or
amendment is not required and, if so directed by the Company, such Purchaser
shall deliver to the Company (at the expense of the Company) or destroy (and
deliver to the Company a certificate of destruction) all copies in such
Purchaser's possession (other than a limited number of permanent file copies),
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. Purchaser's obligations under this paragraph shall in
no way limit the Company's obligations under this Agreement or Purchaser's
rights or remedies against the Company with respect to any breach or threatened
breach by the Company of any such obligations.
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4.6 Without limiting a Purchaser's rights under Section 2.1 or 3.2
hereof, no Purchaser may participate in any underwritten distribution
hereunder unless such Purchaser (a) agrees to sell such Purchaser's
Registrable Securities on the basis provided in any underwriting agreements
in usual and customary form entered into by the Company pursuant to Section
3.5 hereof, (b) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other
documents reasonably required under the terms of such underwriting
arrangements, and (c) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Article V. Without implication that the contrary would
otherwise be true, it is expressly understood and agreed that no Purchaser
shall be required to participate in any such underwritten distribution.
ARTICLE V
EXPENSES OF REGISTRATION
All expenses, other than underwriting discounts and commissions,
incurred in connection with registrations, filings or qualifications pursuant
to Articles II and III, including, without limitation, all registration,
listing and qualification fees, printers and accounting fees, the fees and
disbursements of counsel for the Company, shall be borne by the Company.
ARTICLE VI
INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1 To the extent permitted by law, the Company will indemnify,
hold harmless and defend (a) each Purchaser who holds such Registrable
Securities, (b) each underwriter of Registrable Securities and (c) the
directors, officers, partners, members, employees, agents and persons who
control any Purchaser within the meaning of Section 15 of the Securities Act
or Section 20 of the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), if any, (each, an "INDEMNIFIED PERSON"), against any losses,
claims, damages, liabilities or expenses (collectively, together with
actions, proceedings or inquiries whether or not in any court, before any
administrative body or by any regulatory or self-regulatory organization,
whether commenced or threatened, in respect thereof, "CLAIMS") to which any
of them may become subject insofar as such Claims arise out of or are based
upon: (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus
if used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the Company
files any amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which
the statements therein were made,
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not misleading, or (iii) any violation or alleged violation by the Company of
the Securities Act, the Exchange Act, any other law, including, without
limitation, any state securities law, or any rule or regulation thereunder
relating to the offer or sale of the Registrable Securities (the matters in
the foregoing clauses (i) through (iii) being, collectively, "VIOLATIONS").
The Company shall reimburse each such Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable legal fees
or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6.1: (x) shall not apply to an Indemnified Person with respect to a
Claim arising out of or based upon a Violation which occurs in reliance upon
and in conformity with information furnished in writing to the Company by
such Indemnified Person expressly for use in the Registration Statement or
any such amendment thereof or supplement thereto; (y) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (z) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person if the untrue
statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then amended
or supplemented, if such corrected prospectus was timely made available by
the Company pursuant to Section 3.3 hereof, and the Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior to the
use giving rise to a Violation and such Indemnified Person, notwithstanding
such advice, used it. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Indemnified
Person and shall survive the transfer of the Registrable Securities by a
Purchaser pursuant to Article IX.
6.2 In connection with any Registration Statement in which a
Purchaser is participating, to the extent permitted by law, each such
Purchaser agrees to indemnify, hold harmless and defend, to the same extent
and in the same manner set forth in Section 6.1, the Company, each of its
directors, each of its officers who signs the Registration Statement, its
employees, agents and persons, if any, who control the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act, and any other shareholder selling securities pursuant to the
Registration Statement, together with its directors, officers and members,
and any person who controls such shareholder or underwriter within the
meaning of the Securities Act or the Exchange Act (such an "INDEMNIFIED
PARTY"), against any Claim to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim arises
out of or is based upon any Violation, in each case to the extent (and only
to the extent) that such Violation occurs in reliance upon and in conformity
with written information furnished to the Company by such Purchaser expressly
for use in connection with such Registration Statement; and such Purchaser
will reimburse any legal or other expenses (promptly as such expenses are
incurred and are due and payable) reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6.2 shall not apply to amounts
paid in settlement of any Claim if such settlement is effected without the
prior written consent of such Purchaser, which consent shall not be
unreasonably withheld; provided, further, however, that a Purchaser shall be
liable under this Agreement (including this Section 6.2 and Article VII) for
only that amount as does not exceed the net proceeds actually received by
such Purchaser
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as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Purchasers pursuant to Article IX. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6.2
with respect to any preliminary prospectus shall not inure to the benefit of
any Indemnified Party if the untrue statement or omission of material fact
contained in the preliminary prospectus was corrected on a timely basis in
the prospectus, as then amended or supplemented, and the Indemnified Party
failed to utilize such corrected prospectus.
6.3 Promptly after receipt by an Indemnified Person or Indemnified
Party under this Article VI of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Article VI, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right (at its expense) to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume and continue control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that
such indemnifying party shall diligently pursue such defense and an
indemnifying party shall not be entitled to assume (or continue) such defense
if the representation by such counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential conflicts of interest between such Indemnified Person or
Indemnified Party and the indemnifying party, and any other party represented
by such counsel in such proceeding or the actual or potential defendants in,
or targets of, any such action include both the Indemnified Person or the
Indemnified Party and any such Indemnified Person or Indemnified Party
reasonably determines that there may be legal defenses available to such
Indemnified Person or Indemnified Party which are different from or in
addition to those available to such indemnifying party. Notwithstanding any
assumption of such defense and without limiting any indemnification
obligation provided for in Section 6.1 or 6.2, the Indemnified Party or
Indemnified Persons, as the case may be, shall be entitled to be represented
by counsel (at its own expense if the indemnifying party is permitted to
assume and continue control of the defense and otherwise at he expense of the
indemnifying party) and such counsel shall be entitled to participate in such
defense. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Article VI, except to the extent that the
indemnifying party is actually prejudiced in its ability to defend such
action. The indemnification required by this Article VI shall be made by
periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is
incurred and is due and payable.
ARTICLE VII
CONTRIBUTION
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To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise
be liable under Article VI to the fullest extent permitted by law; provided,
however, that (i) no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation, and (ii) contribution (together with any indemnification
or other obligations under this Agreement) by any Purchaser of Registrable
Securities shall be limited in amount to the net amount of proceeds received
by such Purchaser from the sale of its Registrable Securities.
ARTICLE VIII
REPORTS UNDER THE EXCHANGE ACT
With a view to making available to each Purchaser the benefits of Rule
144, the Company agrees that so long as a Purchaser holds Warrants, any
Registrable Securities, the Company shall:
8.1(a) Not terminate its status as an issuer required to file reports
under the Exchange Act even if the Exchange Act or the rules and regulations
thereunder would permit such termination.
8.1(b) File with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the filing and availability of
such reports and other documents is required for the applicable provisions of
Rule 144; and
8.2 Furnish to each Purchaser promptly upon written request, (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a
copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested to permit the Purchaser to sell
such securities pursuant to Rule 144 without registration.
ARTICLE IX
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Purchasers hereunder as to Registrable Securities
transferred by a Purchaser (or represented by Warrants transferred by a
Purchaser), including the right to have the Company register Registrable
Securities pursuant to this Agreement, shall be automatically assigned by
each Purchaser to any transferee of all or any portion of the Registrable
Securities if: (a) the Purchaser agrees in writing with the transferee or
assignee to assign such rights, and a copy of such agreement is furnished to
the Company within a reasonable time after such assignment, (b) the Company
is, within a reasonable time after such transfer or assignment, furnished
with written notice of (i) the
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name and address of such transferee or assignee, (ii) the securities with
respect to which such registration rights are being transferred or assigned
and (iii) the information specified in Section 3.12 to such transferee, (c)
following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities
Act or applicable state securities laws, and (d) at or before the time the
Company receives the written notice contemplated by clause (ii) of this
sentence, the transferee or assignee agrees in writing for the benefit of the
Company to be bound by all of the provisions contained herein. The rights of
a Purchaser hereunder with respect to any Registrable Securities not
transferred (and not represented by Warrants transferred) shall not be
assigned by virtue of the transfer of other Registrable Securities or
transferred Warrants representing other Registrable Securities.
ARTICLE X
AMENDMENT OF REGISTRATION RIGHTS
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company,
Initial Purchaser (so long as Initial Purchaser still beneficially owns
Registrable Securities) and Purchasers who hold a majority interest of the
Registrable Securities. Any amendment or waiver effected in accordance with
this Article X shall be binding upon each Purchaser and the Company.
Notwithstanding the foregoing, no amendment or waiver shall retroactively
affect any Purchaser without its consent or prospectively adversely affect
any Purchaser who no longer owns any Warrants, Registrable Securities without
its consent. No amendment or waiver may adversely affect one or more
Purchasers or group of Purchasers vis-a-vis any other Purchaser or group of
Purchasers. Neither Article VI nor Article VII hereof may be amended or
waived in a manner adverse to a Purchaser without its consent.
Notwithstanding anything to the contrary contained in this Article X, no
amendment or waiver shall be applicable to an Initial Purchaser who does not
consent in writing thereto.
ARTICLE XI
MISCELLANEOUS
11.1 A person or entity is deemed to be a holder (or a holder in
interest) of Registrable Securities whenever such person or entity owns of
record such Registrable Securities (or the Warrants which may be exercised
for Registrable Securities). If the Company receives conflicting
instructions, notices or elections from two or more persons or entities with
respect to the same Registrable Securities, the Company shall act upon the
basis of instructions, notice or election received from the registered owner
of such Registrable Securities (or Warrants, as the case may be).
11.2 Any notices herein required or permitted to be given shall be
in writing and may be personally served or delivered by courier or by
machine-generated confirmed telecopy, and shall be deemed delivered at the
time and date of receipt (which shall include telephone line facsimile
transmission). The addresses for such communications shall be:
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If to the Company:
Insignia Solutions plc
41300 Christy Street
Fremont, CA 94538
Telecopy: (510)360-3702
Attention: Stephen M. Ambler
with a copy to:
Ritchey Fisher Whitman & Klein PC
1717 Embarcadero Road
P. O. Box 51050
Palo Alto, California 94303
Telecopy: (650)857-1288
Attention: Peter A. Whitman, Esq.
and if to Initial Purchaser:
Castle Creek Technology Partners LLC
c/o Castle Creek Partners LLC
77 West Wacker Drive, Suite 4040
Chicago, Illinois 60601
Telecopy: (312) 499-6999
Attention: Portfolio Manager
with a copy to:
Altheimer & Gray
10 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Telecopy: (312) 715-4800
Attention: Peter H. Lieberman, Esq.
and if to any Purchaser, at such address as such Purchaser, shall have
provided in writing to the Company, or at such other address as each such
party furnishes by notice given in accordance with this Section 11.2.
11.3 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or
remedy, shall not operate as a waiver thereof.
16
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11.4 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The Company irrevocably consents to the
jurisdiction of the federal courts located in the state of New York and the
state courts of the State of New York located in the County of New York in
the State of New York in any suit or proceeding based on or arising under
this Agreement and irrevocably agrees that all claims in respect of such suit
or proceeding may be determined in such courts. The Company irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit
or proceeding. The parties hereto further agree that service of process upon
the parties hereto mailed by first class mail shall be deemed in every
respect effective service of process upon each such party in any such suit or
proceeding. Nothing herein shall affect either party's right to serve
process in any other manner permitted by law. The parties hereto agree that
a final non-appealable judgment in any such suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
11.5 This Agreement and the Securities Purchase Agreement (including
all schedules and exhibits thereto and all certificates and opinions required
thereby) constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred
to herein and therein. This Agreement and the Securities Purchase Agreement
supersede all prior agreements and understandings among the parties hereto
with respect to the subject matter hereof and thereof.
11.6 Subject to the requirements of Article IX hereof, this
Agreement shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties hereto. Notwithstanding anything to the
contrary contained herein, including, without limitation, Article IX (and
without compliance therewith), the rights of a Purchaser hereunder shall be
assignable to and exercisable by a bona fide pledgee of the Registrable
Securities in connection with a Purchaser's margin or brokerage accounts.
11.7 The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
11.8 This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original but all of which shall constitute
one and the same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto, by facsimile transmission of a copy of
this Agreement bearing the signature of the party so delivering this
Agreement.
11.9 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.
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11.10 Amounts set forth or provided for herein with respect to
payments, conversion and the like (and the computation thereof) shall be the
amounts to be received by each Purchaser and shall not, except as expressly
provided herein, be subject to any other obligation of the Company (or the
performance thereof). The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Purchasers and that
the remedy at law for any such breach may be inadequate.
11.11 The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable
Securities included thereon shall be allocated pro rata among the Purchasers
based on the number of Registrable Securities held by each Purchaser at the
time of such establishment or increase, as the case may be. In the event a
Purchaser shall sell or otherwise transfer any of such holder's Registrable
Securities, each transferee shall be allocated a pro rata portion of the
number of Registrable Securities included on a Registration Statement for
such transferor. Any ADSs included on a Registration Statement and which
remain allocated to any person or entity which does not hold any Registrable
Securities shall be allocated to the remaining Purchasers, pro rata based on
the number of shares of Registrable Securities then held by such Purchasers.
Without implication that the contrary would otherwise be true, for purposes
of this paragraph, all Warrants then outstanding shall be assumed exercised
for Registrable Securities (without giving effect to any limitations on
exercise contained therein).
11.12 PAYMENT OF CASH; DEFAULTS. Whenever the Company is required to
make any cash payment to a Purchaser under this Agreement, such cash payment
shall be due on the date (the "CASH DUE DATE") that such Purchaser delivers
written notice from the Purchaser to the Company. Such cash payment shall be
made to the Purchaser by the method (by certified or cashier's check or wire
transfer of immediately available funds) elected by such Holder. If such
payment is not delivered within two (2) days of the Cash Due Date, such
Purchaser shall thereafter be entitled to interest on the unpaid amount at a
per annum rate equal to the lower of eighteen percent (18%) and the highest
interest rate permitted by applicable law until such amount is paid in full
to the Holder.
11.13 If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement.
* * *
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
INSIGNIA SOLUTIONS PLC
By: s/ Richard M. Noling
Name: Richard M. Noling
Title: President and CEO
PURCHASER:
CASTLE CREEK TECHNOLOGY PARTNERS LLC
By: Castle Creek Partners, L.L.C.
Its: Investment Manager
By: s/John D. Ziegelman
Name: John D. Ziegelman
Title: Managing Member
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EXHIBIT 1
TO REGISTRATION
RIGHTS AGREEMENT
[Date]
[Name and address
of Depositary]
RE: INSIGNIA SOLUTIONS PLC
Ladies and Gentlemen:
We are counsel to Insignia Solutions plc, a company organized and
existing under the laws of England and Wales (the "COMPANY"), and we
understand that Castle Creek Technology Partners LLC (the "HOLDER") has
purchased from the Company American Depository Shares (the "ADSS") and
certain Warrants to purchase additional ADSs. The ADSs were purchased by the
Holder pursuant to a Securities Purchase Agreement, dated as of December __,
1999, by and among the Company and the Holder (the "AGREEMENT"). Pursuant
to a Registration Rights Agreement, dated as of December __, 1999, by and
among the Company and the Holder (the "REGISTRATION RIGHTS AGREEMENT"), the
Company agreed with the Holder, among other things, to register the
Registrable Securities (as that term is defined in the Registration Rights
Agreement) under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), upon the terms provided in the Registration Rights Agreement. In
connection with the Company's obligations under the Registration Rights
Agreement, on _______ __, 1999, the Company filed a Registration Statement on
Form S-3 (File No. 333- __________) (the "REGISTRATION STATEMENT") with the
Securities and Exchange Commission (the "SEC") relating to the Registrable
Securities, which names the Holder as a selling shareholder thereunder.
[Other customary introductory and scope of examination language to be
inserted, in each case as reasonably acceptable to Holders.]
Based on the foregoing, we are of the opinion that the resale of
Registrable Securities have been registered under the Securities Act.
[Other appropriate customary language to be included, in each case as
reasonably acceptable to Holders.]
Very truly yours,
cc: Castle Creek Technology Partners LLC
<PAGE>
EXHIBIT A
VOID AFTER 5:00 P.M., CENTRAL TIME ON DECEMBER 9, 2004
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED
OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase 248,154 American Depository Shares
Date: December 9, 1999
INSIGNIA SOLUTIONS PLC
ADSS PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Castle Creek Technology
Partners LLC ("CASTLE CREEK"), or its registered assigns, is entitled to
purchase from Insignia Solutions plc, a company organized and existing under
the laws of England and Wales (the "COMPANY"), at any time or from time to
time during the period specified in Section 2 hereof, 248,154 fully paid
American Depository Shares (the "ADSS," or "SHARES"), each ADS representing
one ordinary share of 20p each nominal value of the Company (the "ORDINARY
SHARES"), at an exercise price of $5.29 per Share (the "EXERCISE PRICE").
This Warrant is being issued pursuant to that certain Securities Purchase
Agreement dated December 9, 1999 by and between the Company and Castle Creek
(the "SECURITIES PURCHASE AGREEMENT"). The number of ADSs purchasable
hereunder (the "WARRANT SHARES") and the Exercise Price are subject to
adjustment as provided in Section 4 hereof.
The term "CLOSING BID PRICE" means, for any security as of any date,
the closing bid price of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg Financial Markets or a comparable reporting service of national
reputation selected by the Company and reasonably acceptable to the holder
hereof (the "HOLDER") if Bloomberg Financial Markets is not then reporting
closing bid prices of such security (collectively, "BLOOMBERG"), or if the
foregoing does not apply, the last reported sale price of such security in
the over-the-counter market on the electronic bulletin board of such security
as reported
<PAGE>
by Bloomberg, or, if no sale price is reported for such security by
Bloomberg, the average of the bid prices of any market makers for such
security as reported in the "pink sheets" by the National Quotation Bureau,
Inc. If the Closing Bid Price cannot be calculated for such security on such
date on any of the foregoing bases, the Closing Bid Price of such security on
such date shall be the fair market value as reasonably determined by an
investment banking firm selected by the Company and reasonably acceptable to
the Holder with the costs of such appraisal to be borne by the Company.
This Warrant is subject to the following terms, provisions, and
conditions:
1. MECHANICS OF EXERCISE. Subject to the provisions hereof,
including, without limitation, the limitations contained in Section 8(f)
hereof, this Warrant may be exercised as follows:
(a) MANNER OF EXERCISE. This Warrant may be exercised by
the Holder, in whole or in part, by the surrender of this Warrant (or
evidence of loss, theft, destruction or mutilation thereof in accordance with
Section 8(c) hereof), together with a completed exercise agreement in the
Form of Exercise Agreement attached hereto as Exhibit 1 (the "EXERCISE
AGREEMENT"), to the Company at the Company's principal executive offices (or
such other office or agency of the Company as it may designate by notice to
the Holder), and upon payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company, of
the Exercise Price for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to
the Holder or Holder's designees, as the record owner of such Shares, as of
the date on which this Warrant shall have been surrendered, the completed
Exercise Agreement shall have been delivered, and payment shall have been
made for such Shares as set forth above.
(b) ISSUANCE OF CERTIFICATES. Subject to Section 1(c),
certificates for the Warrant Shares to be so purchased, representing the
aggregate number of Shares specified in the Exercise Agreement, shall be
delivered to the Holder within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised (the "DELIVERY
PERIOD"). The certificates to be so delivered shall be in such denominations
as may be requested by the Holder and shall be registered in the name of
Holder or such other name as shall be designated by such Holder. If this
Warrant shall have been exercised only in part, then, unless this Warrant has
expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Holder a new Warrant representing the number of
Shares with respect to which this Warrant shall not then have been exercised.
(c) EXERCISE DISPUTES. In the case of any dispute with
respect to an exercise, the Company shall promptly issue such number of ADSs
as are not disputed in accordance with this Section. If such dispute
involves the calculation of the Exercise Price, the Company shall submit the
disputed calculations to a nationally recognized independent accounting firm
(selected by the Company and reasonably acceptable to Holder) via facsimile
within three (3) business days of receipt of the Exercise Agreement. The
accounting firm shall audit the calculations and notify the Company and the
Holder of the results no later than two (2) business days from the date it
receives
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<PAGE>
the disputed calculations. The accounting firm's calculation shall be deemed
conclusive, absent manifest error. The Company shall then issue the
appropriate number of ADSs in accordance with this Section.
(d) FRACTIONAL SHARES. No fractional ADSs are to be issued upon the
exercise of this Warrant, but the Company shall pay a cash adjustment in
respect of any fractional Share which would otherwise be issuable in an
amount equal to the same fraction of the Exercise Price of an ADS (as
determined for exercise of this Warrant into whole ADSs); provided that in
the event that sufficient funds are not legally available for the payment of
such cash adjustment any fractional ADSs shall be rounded up to the next
whole number.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time
and from time to time on or after the date hereof and before 5:00 P.M.,
Central Standard Time on the fifth (5th) anniversary of the date hereof (the
"EXERCISE PERIOD").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby
covenants and agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares and
Ordinary Shares that are represented by such Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued,
fully paid and free from all taxes, liens, claims and encumbrances and shall
be entitled to the benefits specified in the corresponding American
Depositary Receipts ("ADRS") and in the Deposit Agreement (the "DEPOSIT
AGREEMENT") dated November 17, 1995 between the Company and The Bank of New
York (the "DEPOSITARY") relating to such ADSs.
(b) RESERVATION OF ORDINARY SHARES AND DEPOSIT OF ADSS.
During the Exercise Period, the Company shall at all times have authorized,
and reserved for the purpose of issuance upon exercise of this Warrant, a
sufficient number of Ordinary Shares, which are readily available for deposit
with the Depositary for the purpose of issuance in the form of ADSs upon
exercise of this Warrant, to provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing
of the ADSs issuable upon exercise of this Warrant on the Nasdaq National
Market System ("NNM"), as required by Section 4.10 of the Securities Purchase
Agreement and on each such national securities exchange or automated
quotation system, if any, on which ADSs are then listed or become listed and
shall maintain, so long as any other ADSs shall be so listed, such listing of
all ADSs from time to time issuable upon the exercise of this Warrant; and
the Company shall so list on each national securities exchange or automated
quotation system, as the case may be, and shall maintain such listing of any
other shares of capital stock of the Company issuable upon the exercise of
this Warrant so long as any shares of the same class shall be listed on such
national securities exchange or automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by
amendment of its Memorandum of Association and Articles of Association or
through any reorganization, transfer of
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<PAGE>
assets, consolidation, merger, dissolution, issue or sale of securities, or
any other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms to be observed or performed by it hereunder,
but will at all times in good faith assist in the carrying out of all the
provisions of this Warrant and in the taking of all such actions as may
reasonably be requested by the Holder of this Warrant in order to protect the
exercise privilege of the Holder of this Warrant, consistent with the tenor
and purpose of this Warrant. Without limiting the generality of the
foregoing, the Company (i) will not increase the par value of any Ordinary
Shares represented by ADSs receivable upon the exercise of this Warrant above
the Exercise Price then in effect, and (ii) will take all such actions as may
be necessary or appropriate in order that the Company may at all times
validly and legally issue fully paid ADSs upon the exercise of this Warrant.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the
Exercise Price and the number of Warrant Shares shall be subject to
adjustment from time to time as provided in this Section 4. In the event
that any adjustment of the Exercise Price as required herein results in a
fraction of a cent, such Exercise Price shall be rounded up or down to the
nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF ADSS UPON
ISSUANCE OF ORDINARY SHARES. Except as otherwise provided in Section 4(c)
and 4(e) hereof and other than pursuant to the Company's existing
obligations as disclosed in Schedule 3.3 of the Securities Purchase Agreement
or pursuant to the Reset Warrant or pursuant to the warrants issued to
Vincent Pino, Richard Zehner, Robert Waley-Cohen and Viscount Bearsted
("OTHER INVESTORS") at or prior to the Closing on terms substantially similar
to the terms of this Warrant and the Reset Warrant, if and whenever after the
initial issuance of this Warrant, the Company issues or sells, or in
accordance with Section 4(b) hereof is deemed to have issued or sold, any
Ordinary Shares (including in the form of ADSs) for no consideration or for
a consideration per share less than the then current Market Price (as herein
defined) on the date of issuance (a "DILUTIVE ISSUANCE"), then effective
immediately upon the Dilutive Issuance, the Exercise Price will be adjusted
in accordance with the following formula:
E' = (E) (O + P/M) / (OS)
<TABLE>
<CAPTION>
where:
<C> <S>
E' = the adjusted Exercise Price
E = the then current Exercise Price;
M = the greater of the then current Market Price and the
then current Exercise Price;
O = the number of Ordinary Shares in issue immediately
prior to the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth
in Section 4(b) hereof, received by the Company upon
such Dilutive Issuance; and
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<PAGE>
OS = the total number of Ordinary Shares Deemed In Issue
(as herein defined) immediately after the Dilutive
Issuance.
</TABLE>
Notwithstanding anything to the contrary in this Section 4, in no event shall
the Exercise Price be lower than the nominal value of the Ordinary Shares
calculated at the time of exercise.
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Exercise Price under Section 4(a)
hereof, the following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in
any manner issues or grants any warrants, rights or options, other than
pursuant to the Reset Warrant or any warrants issued to Other Investors at
or prior to the Closing on terms substantially similar to the terms of the
Warrants, whether or not immediately exercisable, to subscribe for or to
purchase Ordinary Shares (including in the form of ADSs) or other securities
exercisable, convertible into or exchangeable for Ordinary Shares (including
in the form of ADSs) ("CONVERTIBLE SECURITIES"), but not to include the grant
or exercise of any stock or options which may hereafter be granted or
exercised under any employee or Director benefit plan of the Company now
existing or to be implemented in the future, so long as the issuance of such
stock or options is approved by a majority of the non-employee members of the
Board of Directors of the Company or a majority of the members of a committee
of non-employee directors established for such purpose (such warrants, rights
and options to purchase Ordinary Shares or Convertible Securities are
hereinafter referred to as "OPTIONS"), and the price per share for which
Ordinary Shares are issuable upon the exercise of such Options is less than
the Market Price on the date of issuance ("BELOW MARKET OPTIONS"), then the
maximum total number of Ordinary Shares issuable upon the exercise of all
such Below Market Options (assuming full exercise, conversion or exchange of
Convertible Securities, if applicable) will, as of the date of the issuance
or grant of such Below Market Options, be deemed to be outstanding and to
have been issued and sold by the Company for such price per share. For
purposes of the preceding sentence, the price per share for which Ordinary
Shares are issuable upon the exercise of such Below Market Options is
determined by dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the issuance or granting of such Below
Market Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all such
Below Market Options, plus, in the case of Convertible Securities issuable
upon the exercise of such Below Market Options, the minimum aggregate amount
of additional consideration payable upon the exercise, conversion or exchange
thereof at the time such Convertible Securities first become exercisable,
convertible or exchangeable, by (ii) the maximum total number of Ordinary
Shares issuable upon the exercise of all such Below Market Options (assuming
full conversion of Convertible Securities, if applicable). No further
adjustment to the Exercise Price will be made upon the actual issuance of
such Ordinary Shares upon the exercise of such Below Market Options or upon
the exercise, conversion or exchange of Convertible Securities issuable upon
exercise of such Below Market Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES.
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<PAGE>
(A) If the Company in any manner issues or sells
any Convertible Securities, whether or not immediately convertible (other than
where the same are issuable upon the exercise of Options) and the price per
share for which Ordinary Shares are issuable upon such exercise, conversion or
exchange (as determined pursuant to Section 4(b)(ii)(B) if applicable) is less
than the Market Price on the date of issuance, then the maximum total number of
Ordinary Shares issuable upon the exercise, conversion or exchange of all such
Convertible Securities will, as of the date of the issuance of such Convertible
Securities, be deemed to be in issue and to have been issued and sold by the
Company for such price per share. For the purposes of the preceding sentence,
the price per share for which Ordinary Shares issuable upon such exercise,
conversion or exchange is determined by dividing (i) the total amount, if any,
received or receivable by the Company as consideration for the issuance or sale
of all such Convertible Securities, plus the minimum aggregate amount of
additional consideration, if any, payable to the Company upon the exercise,
conversion or exchange thereof at the time such Convertible Securities first
become exercisable, convertible or exchangeable, by (ii) the maximum total
number of Ordinary Shares issuable upon the exercise, conversion or exchange of
all such Convertible Securities. No further adjustment to the Exercise Price
will be made upon the actual issuances of such Ordinary Shares upon exercise,
conversion or exchange of such Convertible Securities.
(B) If the Company in any manner issues or
sells any Convertible Securities with a fluctuating conversion or exercise
price or exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then the
price per share for which Ordinary Shares are issuable upon such exercise,
conversion or exchange for purposes of the calculation contemplated by
Section 4(b)(ii)(A) shall be deemed to be the lowest price per share which
would be applicable assuming that (1) all holding period and other
conditions to any discounts contained in such Convertible Security have been
satisfied, and (2) the Market Price on the date of issuance of such
Convertible Security was 80% of the Market Price on such date (the "ASSUMED
VARIABLE MARKET PRICE").
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. Except
for the grant or exercise of any stock or options which may hereafter be
granted or exercised under any employee or Director benefit plan of the
Company now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors of the Company or a majority
of the members of a committee of non-employee directors established for such
purpose, if there is a change at any time in (i) the amount of additional
consideration payable to the Company upon the exercise of any Options; (ii)
the amount of additional consideration, if any, payable to the Company upon
the exercise, conversion or exchange or any Convertible Securities; or (iii)
the rate at which any Convertible Securities are convertible into or
exchangeable for Ordinary Shares (other than under or by reason of provisions
designed to protect against dilution), the Exercise Price in effect at the
time of such change will be readjusted to the Exercise Price which would have
been in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.
6
<PAGE>
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of Ordinary Shares
issuable upon exercise of any Options or upon exercise, conversion or
exchange of any Convertible Securities is not, in fact, issued and the rights
to exercise such option or to exercise, convert or exchange such Convertible
Securities shall have expired or terminated, the Exercise Price then in
effect will be readjusted to the Exercise Price which would have been in
effect at the time of such expiration or termination had such Options or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination (other than in respect of the actual number of
Ordinary Shares issued upon exercise or conversion thereof), never been
issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any
Ordinary Shares, Options or Convertible Securities are issued, granted or
sold for cash, the consideration received therefor for purposes of this
Warrant will be the amount received by the Company therefor, before deduction
of reasonable commissions, underwriting discounts or allowances or other
reasonable expenses paid or incurred by the Company in connection with such
issuance, grant or sale. In case any Ordinary Shares, Options or Convertible
Securities are issued or sold for a consideration part or all of which shall
be other than cash, the amount of the consideration other than cash received
by the Company will be the fair market value of such consideration except
where such consideration consists of freely-tradeable securities, in which
case the amount of consideration received by the Company will be the Market
Price thereof as of the date of receipt. In case any Ordinary Shares,
Options or Convertible Securities are issued in connection with any merger or
consolidation in which the Company is the surviving corporation, the amount
of consideration therefor will be deemed to be the fair market value of such
portion of the net assets and business of the non-surviving corporation as is
attributable to such Ordinary Shares, Options or Convertible Securities, as
the case may be. The fair market value of any consideration other than cash
or securities will be determined in the good faith reasonable business
judgment of the Board of Directors.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on the
date hereof in accordance with the terms of such securities as of such date;
(ii) upon the grant or exercise of any stock or options which may hereafter
be granted or exercised under any employee or Director benefit plan of the
Company now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors of the Company or a majority
of the members of a committee of non-employee directors established for such
purpose; (iii) upon the issuance of the Warrants in accordance with terms of
the Securities Purchase Agreement and upon the exercise of such Warrants; or
(v) upon the issuance of warrants to Other Investors at or prior to the
Closing on terms substantially similar to this Warrant and upon the exercise
of such warrants.
(c) SUBDIVISION OR COMBINATION OF ORDINARY SHARES. If the
Company, at any time after the initial issuance of this Warrant, subdivides
(by any stock split, stock dividend, recapitalization, reorganization,
reclassification or otherwise) its Ordinary Shares into a greater number of
shares, then, after the date of record for effecting such subdivision, the
Exercise Price in
7
<PAGE>
effect immediately prior to such subdivision will be proportionately reduced.
If the Company, at any time after the initial issuance of this Warrant,
combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) its shares of Ordinary Shares into a smaller
number of shares, then, after the date of record for effecting such
combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF ADSS. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 4 or Section 5,
the number of ADSs issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of ADSs issuable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
(e) MAJOR TRANSACTIONS. If the Company shall consolidate or
merge with any other corporation or entity (other than a consolidation or
merger in which the Company is the surviving or continuing entity and its
capital stock is unchanged and unissued in such transaction (except for
issuances which do not exceed fifty percent (50%) of the Ordinary Shares)) or
there shall occur any share exchange pursuant to which all of the Ordinary
Shares in issue, including those represented by ADSs, are converted into
other securities or property or any such other reclassification or change of
the Ordinary Shares in issue or the Company shall sell all or substantially
all of its assets (each of the foregoing being a "MAJOR TRANSACTION"), then
the holder of this Warrant may, at its option, either (a) in the event that
the Ordinary Shares remain in issue or holders of Ordinary Shares receive
any common stock or substantially similar equity interest, in each of the
foregoing cases the American Depository Shares representing which is publicly
traded, retain this Warrant and this Warrant shall continue to apply to such
ADSs or shall apply, as nearly as practicable, to the American depository
shares of such other common stock or equity interest, as the case may be, or
(b) regardless of whether (a) applies, receive consideration, in exchange for
this Warrant (without payment of any exercise price hereunder), equal to the
greater of, as determined in the sole discretion of such holder, (i) the
number of shares of stock or securities or property of the Company, or of the
entity resulting from such Major Transaction (the "MAJOR TRANSACTION
CONSIDERATION"), to which a holder of the number of Ordinary Shares
represented by the ADSs deliverable upon the exercise of this Warrant would
have been entitled upon such Major Transaction had such holder so exercised
this Warrant (without regard to any limitations on exercise herein or
elsewhere contained) on the trading date immediately preceding the public
announcement of the transaction resulting in such Major Transaction and had
such ADSs been issued and outstanding and had such Holder been the holder of
record of such ADSs at the time of the consummation of such Major
Transaction, and (ii) cash paid by the Company in immediately available funds
in an amount equal to the Black-Scholes Amount (as defined herein) times the
number of ADSs for which this Warrant was exercisable (without regard to any
limitations on exercise herein contained and assuming payment of the exercise
payment in cash hereunder), and the Company shall make lawful provision for
the foregoing as a part of such Major Transaction and shall cause the issuer
of any security in such transaction which constitutes Registrable Securities
under that certain Registration Rights Agreement dated December 9, 1999 by
and between the Company and Castle Creek
8
<PAGE>
(the "REGISTRATION RIGHTS AGREEMENT") to assume all of the Company's
obligations under the Registration Rights Agreement. In the event that the
Company shall consolidate or merge with any other corporation in a
transaction in which common stock of the surviving corporation or the parent
thereof (the "EXCHANGE SECURITIES") is issued to the holders of Ordinary
Shares in such transaction in exchange for all such Ordinary Shares, and (a)
the Exchange Securities are publicly traded and an American Depository
Receipt facility is established, (b) the average daily dollar trading volume
of the Exchange Securities during the one hundred eighty (180) day period
ending on the date on which such transaction is publicly disclosed is greater
than One Million Dollars ($1,000,000.00) per day as reported by Bloomberg,
(c) the historical one hundred (100) day volatility of the Exchange
Securities during the period ending on the date on which such transaction is
publicly disclosed is greater than fifty percent (50%), and (d) the market
capitalization of the issuer of the Exchange Securities is not less than One
hundred Million Dollars ($100,000,000.00) based on the last sale price of the
Exchange Securities on the date immediately before the date on which such
transaction is publicly disclosed (in each case, with respect to the
foregoing clauses (a) through (d), as reported by Bloomberg), then the
provisions of clause (b) of the preceding sentence shall not apply. In the
event that the Company shall, in a Major Transaction, consolidate or merge
with any other corporation in a transaction in which the Company is the
survivor (a "COMPANY TRANSACTION"), the provisions of clause (ii) of the
second preceding sentence shall not apply to the extent that each of the
following conditions remain true for the thirty (30) business days commencing
as of the date of the consummation of such transaction (the "MEASUREMENT
PERIOD"): (a) the ADS remains publicly traded during the period, (b) the
average daily dollar trading volume of the ADS is greater than One Million
Dollars ($1,000,000.00), (c) the historical thirty (30) day volatility of the
Company's ADS is greater than fifty percent (50%), and (d) the market
capitalization of the Company is not less than One Hundred Million Dollars
($1,000,000.00) on the last day of the period (in each case, with respect to
the foregoing clauses (a) through (d), as reported by Bloomberg). No sooner
than ten (10) business days nor later than five (5) business days prior to
the consummation of the Major Transaction, but not prior to the public
announcement of such Major Transaction, the Company shall deliver written
notice ("NOTICE OF MAJOR TRANSACTION") to the Holder of this Warrant, which
Notice of Major Transaction shall be deemed to have been delivered one (1)
business day after the Company's sending such notice by telecopy (provided
that the Company sends a confirming copy of such notice on the same day by
overnight courier) of such Notice of Major Transaction. Such Notice of Major
Transaction shall indicate the amount and type of the Major Transaction
consideration which the Holder of this Warrant would receive under this
Section. If the Major Transaction Consideration is cash and does not consist
entirely of United States currency, the Holder may elect to receive United
States currency in an amount equal to the value of the Major Transaction
Consideration in lieu of the Major Transaction Consideration by delivering
notice of such election to the Company within five (5) business days of such
holder's receipt of the Notice of Major Transaction.
The "BLACK-SCHOLES AMOUNT" shall be the amount determined by
calculating the "Black-Scholes" value of an option to purchase one ADS on the
applicable page on the Bloomberg online page, using the following variable
values: (i) the current market price of the ADSs equal to the closing trade
price on the last trading day before the date of the Notice of the Major
Transaction; (ii)
9
<PAGE>
volatility of the ADS equal to the volatility of the ADSs during the 100
trading day period preceding the date of the Notice of the Major Transaction;
(iii) a risk free rate equal to the interest rate on the United States
treasury bill or treasury note with a maturity corresponding to the remaining
term of this Warrant on the date of the Notice of the Major Transaction; and
(iv) an exercise price equal to the Exercise Price on the date of the Notice
of the Major Transaction. In the event such calculation function is no
longer available utilizing the Bloomberg online page, the Holder shall
calculate such amount in its sole discretion using the closest available
alternative mechanism and variable values to those available utilizing the
Bloomberg online page for such calculation function.
(f) DISTRIBUTION OF ASSETS. In case the Company shall
declare or make any distribution of its assets (or rights to acquire its
assets) to holders of its Ordinary Shares and ADSs as a partial liquidating
dividend, by way of return of capital or otherwise (including any dividend or
distribution to the Company's shareholders of cash or shares (or rights to
acquire shares) of capital stock of a subsidiary) (a "DISTRIBUTION"), at any
time after the initial issuance of this Warrant, then the Holder shall be
entitled upon exercise of this Warrant for the purchase of any or all of the
ADSs subject hereto, to receive the amount of such assets (or rights) which
would have been payable to the Holder had such Holder been the holder of such
ADSs on the record date for the determination of holders of Ordinary Shares
and ADSs entitled to such Distribution.
(g) SPECIAL ADJUSTMENT AND NOTICES OF ADJUSTMENT. Upon the
occurrence of any event which requires any adjustment of the Exercise Price,
then, and in each such case, the Company shall give notice thereof to the
Holder, which notice shall state the Exercise Price resulting from such
adjustment and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
Such calculation shall be certified by the chief financial officer of the
Company. If the Company takes any actions (including under or by virtue of
Section 4 of the Warrant) which would have a dilutive effect on the Holder or
which would materially and adversely affect the Holder with respect to its
investment in the Warrant, and if the provisions of Section 4 of the Warrant,
are not strictly applicable to such actions or, if applicable to such
actions, would not operate to equitably protect the Holder against such
actions, then the Company shall promptly upon notice from Holder appoint its
independent certified public accountants to determine as promptly as
practicable an appropriate adjustment to the terms hereof, including without
limitation adjustments to the Exercise Price, or another appropriate action
to so equitably protect such Holder and prevent any such dilution and any
such material adverse effect, as the case may be. Following such
determination, the Company shall forthwith make the adjustments or take the
other actions described therein.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of
the Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to not less than 1% of
such Exercise Price.
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<PAGE>
(i) Intentionally Omitted.
(j) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the
Ordinary Shares payable in shares of stock of any class or make any other
distribution to the holders of the Ordinary Shares and holders of ADSs;
(ii) the Company shall offer for subscription pro rata
to the holders of the Ordinary Shares and ADSs any additional shares of stock
of any class or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Ordinary Shares, or consolidation or
merger of the Company with or into, or sale of all or substantially all of
its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Holder (a) notice of
the date on which the books of the Company shall close or a record shall be
taken for determining the holders of Ordinary Shares and holders of ADSs
entitled to receive any such dividend, distribution, or subscription rights
or for determining the holders of Ordinary Shares entitled to vote and
holders of ADSs entitled to give voting instructions to the Depositary in
respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take
place. Such notice shall also specify the date on which the holders of
Ordinary Shares and holders of ADSs shall be entitled to receive such
dividend, distribution, or subscription rights or to exchange their Ordinary
Shares and ADSs for stock or other securities or property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least thirty (30) days prior to the record date or the date
on which the Company's books are closed in respect thereto, but in no event
earlier than public announcement of such proposed transaction or event.
Failure to give any such notice or any defect therein shall not affect the
validity of the proceedings referred to in clauses (i), (ii), (iii) and (iv)
above.
(k) CERTAIN DEFINITIONS.
(i) "ORDINARY SHARES DEEMED IN ISSUE" shall mean the
number of Ordinary Shares actually in issue (including Ordinary Shares
represented by issued and outstanding ADSs), plus (x) in case of any
adjustment required by Section 4(a) resulting from the issuance of any
Options, the maximum total number of Ordinary Shares (including in the form
of ADSs) issuable upon the exercise of the Options for which the adjustment
is required (including any Ordinary Shares
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(including in the form of ADSs) issuable upon the conversion of Convertible
Securities issuable upon the exercise of such Options), and (y) in the case
of any adjustment required by Section 4(a) resulting from the issuance of any
Convertible Securities, the maximum total number of Ordinary Shares
(including in the form of ADSs) issuable upon the exercise, conversion or
exchange of the Convertible Securities for which the adjustment is required,
as of the date of issuance of such Convertible Securities, if any.
(ii) "MARKET PRICE," as of any date, (i) means the
average of the Closing Bid Prices for the ADSs as reported to Nasdaq for the
ten (10) trading days immediately preceding such date, or (ii) if Nasdaq is
not the principal trading market for the ADSs, the average of the last
reported bid prices on the principal trading market for the ADSs during the
same period, or, if there is no bid price for such period, the last reported
sales price for such period, or (iii) if market value cannot be calculated as
of such date on any of the foregoing bases, the Market Price shall be the
average fair market value as reasonably determined by an investment banking
firm selected by the Company and reasonably acceptable to the Holder of this
Warrant, with the costs of the appraisal to be borne by the Company. The
manner of determining the Market Price of the ADSs set forth in the
foregoing definition shall apply with respect to any other security in
respect of which a determination as to market value must be made hereunder.
(iii) "ORDINARY SHARES," for purposes of this Section 4,
includes the Ordinary Shares and any additional class of stock of the
Company having no preference as to dividends or distributions on liquidation,
provided that the Ordinary Shares represented by the ADSs purchasable
pursuant to this Warrant shall include only Ordinary Shares in respect of
which this Warrant is exercisable, or shares resulting from any subdivision
or combination of such Ordinary Shares, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character referred to
in Section 4(e) hereof, the stock or other securities or property provided
for in such Section.
5. RESETS. If the Escrow Cure Date as defined in the Reset
Warrant does not occur within seven (7) months of Closing, the Exercise Price
of this Warrant will be adjusted to the Market Price on the seven-month
anniversary of the Closing Date; provided, however, that no adjustment shall
be made which would have the effect of increasing the Exercise Price.
6. ISSUE TAX. The issuance of certificates for Warrant Shares
upon the exercise of this Warrant shall be made without charge to the Holder
or such shares for any issuance tax or other costs in respect thereof,
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issuance and delivery of
any certificate in a name other than the Holder.
7. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall
not entitle the Holder to any voting rights or other rights as a holder of
the Company's Ordinary Shares or ADSs. No provision of this Warrant, in the
absence of affirmative action by the Holder to purchase Warrant Shares, and
no mere enumeration herein of the rights or privileges of the Holder, shall
give rise to
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any liability of the Holder for the Exercise Price or as a holder of the
Company's Ordinary Shares or ADSs, whether such liability is asserted by the
Company or by creditors of the Company.
8. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
a. RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the Holder are transferable, in whole or in part, upon surrender
of this Warrant, together with a properly executed assignment in the Form of
Assignment attached hereto as Exhibit 2, at the office or agency of the
Company referred to in Section 8(e) below, provided, however, that any
transfer or assignment shall be subject to the provisions of Section 5.1 and
5.2 of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat
the registered holder hereof as the owner and holder hereof for all purposes,
and the Company shall not be affected by any notice to the contrary.
Notwithstanding anything to the contrary contained herein, the registration
rights described in Section 9 hereof are assignable only in accordance with
the provisions of the Registration Rights Agreement.
b. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
office or agency of the Company referred to in Section 8(e) below, for new
Warrants, in the form hereof, of different denominations representing in the
aggregate the right to purchase the number of ADSs which may be purchased
hereunder, each of such new Warrants to represent the right to purchase such
number of ADSs as shall be designated by the Holder of at the time of such
surrender.
c. REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant or, in the case of any such loss, theft, or
destruction, upon delivery, of an indemnity agreement reasonably satisfactory
in form and amount to the Company, or, in the case of any such mutilation,
upon surrender and cancellation of this Warrant, the Company, at its expense,
will execute and deliver, in lieu thereof, a new Warrant, in the form hereof,
in such denominations as Holder may request.
d. CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender
of this Warrant in connection with any transfer, exchange, or replacement as
provided in this Section 8, this Warrant shall be promptly canceled by the
Company. The Company shall pay all issuance taxes (other than securities
transfer taxes) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 8.
e. WARRANT REGISTER. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as
it may designate by notice to the Holder), a register for this Warrant, in
which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
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f. ADDITIONAL RESTRICTION ON EXERCISE OR TRANSFER.
Notwithstanding anything to the contrary contained herein, the Warrant shall
not be exercisable by the Holder to the extent (but only to the extent)
that, if exercisable by Holder, Holder would beneficially own Ordinary Shares
and ADSs in excess of 9.9% (the "APPLICABLE PERCENTAGE") of the total
Ordinary Shares in issue. To the extent the above limitation applies, the
determination of whether the Warrant shall be exercisable (vis-a-vis other
securities owned by Holder which contain similar limitations on conversion)
and of which Warrants shall be exercisable (as among Warrants) shall be made
on the basis of the earliest submission of the Warrants (vis-a-vis other
securities owned by the Holder which contain similar limitations on
conversion and vis a vis other Warrants), in each case subject to such
aggregate percentage limitation. No prior inability to exercise Warrants
pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of
exercisability. For the purposes of this paragraph, beneficial ownership and
all determinations and calculations, including without limitation, with
respect to calculations of percentage ownership, shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13D and G thereunder. The provisions of this
paragraph may be implemented in a manner otherwise than in strict conformity
with the terms of this Section 8(f) with the approval of the Board of
Directors of the Company and the Holder: (i) with respect to any matter to
cure any ambiguity herein, to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Applicable
Percentage beneficial ownership limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such
Applicable Percentage limitation; and (ii) with respect to any other matter,
with the further consent of the holders of a majority of the then Ordinary
Shares in issue. For clarification, it is expressly a term of this security
that the limitations contained in this Section shall apply to each successor
Holder. The holders of Ordinary Shares of the Company shall be third-party
beneficiaries of this Section 8(f) and the Company may not waive this Section
8(f) without the consent of holders of a majority of its Ordinary Shares.
g. CAP AMOUNT. Prior to Shareholder Approval (as defined
in the Securities Purchase Agreement), unless otherwise permitted by The
Nasdaq National Market System or of the national securities exchange on which
the ADSs are listed, or unless the rules thereof no longer are applicable to
the Company, in no event shall the total number of ADSs issued to Purchaser
at the Closing and issuable upon exercise of the Warrants and the ADSs
issued to Other Investors at or prior to the Closing and issuable upon
exercise of the warrants issued to Other Investors at or prior to the Closing
on terms substantially similar to those of the Securities Purchase Agreement
and the Warrants exceed the maximum number of Ordinary Shares that the
Company can without shareholder approval so issue pursuant to Nasdaq Rule
4460(i) (or any successor rule) (the "CAP AMOUNT"), which, as of the date of
initial issuance of ADSs and Warrants to the Holders, is ____________ Shares.
In the event the Holder shall sell or otherwise transfer any of such
Holder's Warrants, each transferee shall be allocated a pro rata portion of
such Cap Amount along with Other Investors and their transferees.
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<PAGE>
9. REGISTRATION RIGHTS. The initial holder of this Warrant (and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in the Registration
Rights Agreement.
10. NOTICES. Any notice herein required or permitted to be given
shall be in writing and may be personally served or delivered by courier or
by confirmed telecopy, and shall be deemed delivered at the time and date of
receipt (which shall include telephone line facsimile transmission). The
addresses for such communications shall be:
If to the Company:
Insignia Solutions plc
41300 Christy Street
Fremont, California 94538-3115
Telecopy: (510)360-3702
Attention: Stephen M. Ambler
with a copy to:
Ritchey Fisher Whitman & Klein PC
1717 Embarcadero Road
P. O. Box 51050
Palo Alto, California 94303
Telecopy: (650)857-1288
Attention: Peter A. Whitman, Esq.
and if to the Holder, at such address as Holder shall have provided in
writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 10.
11 GOVERNING LAW; JURISDICTION. This Warrant shall be governed by
and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed in the State of New York. The Company
irrevocably consents to the jurisdiction of the United States federal courts
located in the State of New York in any suit or proceeding based on or
arising under this Warrant and irrevocably agrees that all claims in respect
of such suit or proceeding may be determined in such courts. The Company
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The Company agrees that a final nonappealable
judgment in any such suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
12 MISCELLANEOUS.
a AMENDMENTS. This Warrant and any provision hereof may
only be amended by an instrument in writing signed by the Company and the
Holder.
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b DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
c ASSIGNABILITY. This Warrant shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of
Holder and its successors and assigns. The Holder shall notify the Company
upon the assignment of this Warrant.
* * *
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed
by its duly authorized officer.
Insignia Solutions plc
By: s/Richard M. Noling
Name: Richard M. Noling
Title: President and CEO
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FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to purchase
____________ of the American Depositary Shares ("ADSS") of Insignia Solutions
plc, a company organized and existing under the laws of England and Wales
(the "COMPANY"), evidenced by the attached Warrant, and herewith makes
payment of the Exercise Price with respect to such ADSs in full, all in
accordance with the conditions and provisions of said Warrant.
(i) The undersigned agrees not to offer, sell, transfer or
otherwise dispose of any ADSs obtained on exercise of the Warrant, except
under circumstances that will not result in a violation of the Securities Act
of 1933, as amended, or any state securities laws.
(ii) The undersigned requests that the American Deposit Receipts
for such ADSs be issued, and a Warrant representing any unexercised portion
hereof be issued, pursuant to the Warrant in the name of the Holder (or such
other person or persons indicated below) and delivered to the undersigned (or
designee(s) at the address (or addresses) set forth below:
Date:_____________________________ ___________________________________
Signature of Holder
___________________________________
Name of Holder (Print)
Address:
___________________________________
___________________________________
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<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all rights of the undersigned under the within Warrant, with
respect to the number of ADSs covered thereby set forth hereinbelow, to:
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
and hereby irrevocably constitutes and appoints ____________ ___ as agent and
attorney-in-fact to transfer said Warrant on the books of the within-named
corporation, with full power of substitution in the premises.
Date:____________, _____,
In the presence of
Name:_______________________________________________
Signature:__________________________________________
Title of Signing Officer or Agent (if any):
____________________________________
Address: ____________________________________
____________________________________
Note: The above signature should correspond
exactly with the name on the face of
the within Warrant.
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EXHIBIT C
VOID AFTER 5:00 P.M., CENTRAL TIME ON DECEMBER 9, 2004
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED
OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase American Depository Shares
Date: December 9, 1999
INSIGNIA SOLUTIONS PLC
ADSS PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Castle Creek Technology
Partners LLC ("CASTLE CREEK"), or its registered assigns, is entitled to
purchase from Insignia Solutions plc, a company organized and existing under
the laws of England and Wales (the "COMPANY"), at any time or from time to
time during the period specified in Section 2 hereof, a number of fully paid
American Depository Shares (the "ADSS" or "SHARES"), each ADS representing
one ordinary share of 20p each nominal value of the Company ("ORDINARY
SHARES"), determined pursuant to Section 1 hereof, at the exercise price (the
"EXERCISE PRICE") defined below. This Warrant is being issued pursuant to
that certain Securities Purchase Agreement dated December 9, 1999 by and
between the Company and Castle Creek (the "SECURITIES PURCHASE AGREEMENT").
The number of ADSs purchasable hereunder (the "WARRANT SHARES") and the
Exercise Price are subject to further adjustment as provided in Section 4
hereof.
The term "CLOSING BID PRICE" means, for any security as of any date,
the closing bid price of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg Financial Markets or a comparable reporting service of national
reputation selected by the Company and reasonably acceptable to the holder
hereof (the "HOLDER") if Bloomberg Financial Markets is not then reporting
closing bid prices of such security (collectively, "BLOOMBERG"), or if the
foregoing does not apply, the last reported sale price of such
<PAGE>
security in the over-the-counter market on the electronic bulletin board of
such security as reported by Bloomberg, or, if no sale price is reported for
such security by Bloomberg, the average of the bid prices of any market
makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Closing Bid Price cannot be calculated for
such security on such date on any of the foregoing bases, the Closing Bid
Price of such security on such date shall be the fair market value as
reasonably determined by an investment banking firm selected by the Company
and reasonably acceptable to the Holder with the costs of such appraisal to
be borne by the Company.
The Exercise Price shall equal to 20 pence per share, converted into
US dollars at the daily exchange rate as reported in The Wall Street Journal
(Midwest Edition) on the business day immediately preceding the date of
exercise.
This Warrant is subject to the following terms, provisions, and
conditions:
1. (a) NUMBER OF SHARES INTO WHICH THIS WARRANT IS EXERCISABLE. On
any Reset Date (as defined herein), this Warrant shall become exercisable
into additional Shares. For purposes hereof, the number of additional Shares
into which this Warrant becomes exercisable on a Reset Date shall be
determined according to the following formula, where N represents such number:
P - M
[---------] * O
M
N = ---------------------
V
[1 -- ----]
M
where: P = the Market Price on the issuing date;
M = the Market Price on the applicable
Reset Date;
O = the number of ADSs purchased on the
Closing Date; and
V = 20 pence, converted into US dollars at
the daily exchange rate as reported in
The Wall Street Journal (Midwest
Edition) on the business day
immediately preceding the applicable
Reset Date.
Notwithstanding the foregoing, this Warrant shall not become exercisable for
additional Shares pursuant to this Section 1(a) if such reset would violate
NASDAQ Rule 4460(i) (or any successor rule). To the extent that the
immediately preceding sentence is applicable, the Company shall pay to the
Purchaser an amount equal to (x) "N" TIMES the Market Price on the Reset
Date. For any given date, the "MARKET PRICE" shall be the average of the
closing bid prices of the shares of ADSs for the ten (10) consecutive trading
days immediately prior to such date.
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<PAGE>
(b) RESET DATES. A "RESET DATE" shall mean:
(i) each of (A) the date on which the Registration Statement (as
defined in the Registration Rights Agreement) required to be filed by the
Company pursuant to Section 2.1 of the Registration Rights Agreement is
first declared effective (the "EFFECTIVE DATE"), (B) the date which is
four (4) months after the Effective Date and (C) the date which is eight
(8) months after the Effective Date, in each case where the Market Price
on such date is less than $4.23 (the Market Price on the Closing Date);
(ii) if the Registration Statement has not been declared effective by
the date which is five (5) months after the Closing Date (the
"EFFECTIVENESS TRIGGER DATE"), (A) the Effectiveness Trigger Date and (B)
each date which is one calendar month following the Effectiveness Trigger
Date on which the Registration Statement has not yet been declared
effective (in such circumstances, such date, also an "Effectiveness
Trigger Date"); and
(iii) if, by the date which is three (3) months after the Closing Date
(the "ESCROW TRIGGER DATE"), the Company does not have released to it at
least 4.75 million dollars ($4,750,000) (the "CURE AMOUNT") of the 6.25
million dollars ($6,250,000) held in escrow as of the Closing Date by
State Street Bank pursuant to that certain escrow agreement dated
February 5, 1998 by and between the Company and Citrix Systems Inc. (the
"ESCROW AGREEMENT"), (A) the Escrow Trigger Date and (B) each date which
is one calendar month following the Escrow Trigger Date, up to but
excluding the Escrow Cure Date (as defined herein).
The "ESCROW CURE DATE" shall mean the earlier of (a) the date on which
the Cure Amount has been released to the Company pursuant to the Escrow
Agreement and (b) the date which is twelve (12) months after the Effective
Date.
(c) PUBLIC OFFERING EXCEPTION. Notwithstanding anything to the
contrary contained in Section 1(b),
(i) the date described in Section 1(b) (i)(B) hereof shall not be a
Reset Date if, prior to the earlier of such date or the date which is
eight (8) months after the Closing Date, the Company has completed an
underwritten public offering with net proceeds to the Company of at least
twenty-five million dollars ($25,000,000) at a price per share of ADSs
greater than (x) 1.66 TIMES (y) the Market Price on the Closing Date (an
"OFFERING"); and
(ii) the date described in Section 1 (b) (i)(C) hereof shall not be a
Reset Date if, prior to the date which is twelve (12) months after the
Closing Date, the Company completes an Offering.
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2. MECHANICS AND PERIOD OF EXERCISE. Subject to the provisions
hereof, including, without limitation, the limitations contained in Section
8(f) hereof, this Warrant may be exercised as follows:
(a) MANNER OF EXERCISE. This Warrant may be exercised by
the Holder, in whole or in part, by the surrender of this Warrant (or
evidence of loss, theft, destruction or mutilation thereof in accordance with
Section 8(c) hereof), together with a completed exercise agreement in the
Form of Exercise Agreement attached hereto as Exhibit 1 (the "EXERCISE
AGREEMENT"), to the Company at the Company's principal executive offices (or
such other office or agency of the Company as it may designate by notice to
the Holder), and upon payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company, of
the Exercise Price for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to
the Holder or Holder's designees, as the record owner of such shares, as of
the date on which this Warrant shall have been surrendered, the completed
Exercise Agreement shall have been delivered, and payment shall have been
made for such shares as set forth above.
(b) ISSUANCE OF CERTIFICATES. Subject to Section 2(c),
certificates for the Warrant Shares so purchased, representing the aggregate
number of shares specified in the Exercise Agreement, shall be delivered to
the Holder within a reasonable time, not exceeding three (3) business days,
after this Warrant shall have been so exercised (the "DELIVERY PERIOD"). The
certificates so delivered shall be in such denominations as may be requested
by the Holder and shall be registered in the name of Holder or such other
name as shall be designated by such Holder. If this Warrant shall have been
exercised only in part, then, unless this Warrant has expired, the Company
shall, at its expense, at the time of delivery of such certificates, deliver
to the Holder a new Warrant representing the number of shares with respect to
which this Warrant shall not then have been exercised.
(c) EXERCISE DISPUTES. In the case of any dispute with
respect to an exercise, the Company shall promptly issue such number of ADSs
as are not disputed in accordance with this Section. If such dispute
involves the calculation of the Exercise Price, the Company shall submit the
disputed calculations to a nationally recognized independent accounting firm
(selected by the Company and reasonably acceptable to Holder) via facsimile
within three (3) business days of receipt of the Exercise Agreement. The
accounting firm shall audit the calculations and notify the Company and the
exercising Holder of the results no later than two (2) business days from the
date it receives the disputed calculations. The accounting firm's
calculation shall be deemed conclusive, absent manifest error. The Company
shall then issue the appropriate number of ADSs in accordance with this
Section.
(d) FRACTIONAL SHARES. No fractional ADSs are to be issued
upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Exercise Price of an
ADS (as determined for exercise of this Warrant into whole ADSs); provided
that in the event that
4
<PAGE>
sufficient funds are not legally available for the payment of such cash
adjustment any fractional ADSs shall be rounded up to the next whole number.
(e) PERIOD OF EXERCISE. This Warrant is exercisable at any
time and from time to time on or after the date hereof and before 5:00 P.M.,
Central Standard Time on the fifth (5th) anniversary of the date hereof (the
"EXERCISE PERIOD").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby
covenants and agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares and
Ordinary Shares that are represented by such Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued,
fully paid and free from all taxes, liens, claims and encumbrances.
(b) RESERVATION OF ORDINARY SHARES AND DEPOSIT OF ADSS.
During the Exercise Period, the Company shall at all times have authorized,
and reserved for the purpose of issuance upon exercise of this Warrant, a
sufficient number of Ordinary Shares, which are readily available for deposit
with the Depositary for the purpose of issuance in the form of ADSs upon
exercise of this Warrant, to provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing
of the ADSs issuable upon exercise of this Warrant on the Nasdaq National
Market as required by Section 4.10 of the Securities Purchase Agreement and
on each such national securities exchange or automated quotation system, if
any, on which ADSs are then listed or become listed and shall maintain, so
long as any other ADSs shall be so listed, such listing of all ADSs from time
to time issuable upon the exercise of this Warrant; and the Company shall so
list on each national securities exchange or automated quotation system, as
the case may be, and shall maintain such listing of any other shares of
capital stock of the Company issuable upon the exercise of this Warrant so
long as any shares of the same class shall be listed on such national
securities exchange or automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by
amendment of its Memorandum of Association and Articles of Association or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to
be observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such actions as may reasonably be requested by the Holder of
this Warrant in order to protect the exercise privilege of the Holder of this
Warrant, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase
the par value of any Ordinary Shares represented by ADSs receivable upon the
exercise of this Warrant above the Exercise Price then in effect, and (ii)
will take all such actions as may be necessary or appropriate in order that
the Company may at all times validly and legally issue fully paid ADSs and
Ordinary Shares upon the exercise of this Warrant.
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<PAGE>
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the
Exercise Price and the number of Warrant Shares shall be subject to
adjustment from time to time as provided in this Section 4. In the event
that any adjustment of the Exercise Price as required herein results in a
fraction of a cent, such Exercise Price shall be rounded up or down to the
nearest cent. Notwithstanding anything to the contrary in this Section 4, in
no event shall the Exercise Price be lower than the nominal value of the
Ordinary Shares calculated at the time of exercise.
(a) SUBDIVISION OR COMBINATION OF ORDINARY SHARES. If the
Company, at any time after the initial issuance of this Warrant, subdivides
(by any stock split, stock dividend, recapitalization, reorganization,
reclassification or otherwise) its Ordinary Shares into a greater number of
shares, then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company, at any time after the initial
issuance of this Warrant, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Ordinary Shares
into a smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
(b) ADJUSTMENT IN NUMBER OF ADSS. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 4, the number
of ADSs issuable upon exercise of this Warrant shall be adjusted by
multiplying a number equal to the Exercise Price in effect immediately prior
to such adjustment by the number of ADSs issuable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
(c) MAJOR TRANSACTIONS. If the Company shall consolidate or
merge with any other corporation or entity (other than a consolidation or
merger in which the Company is the surviving or continuing entity and its
capital stock is unchanged and unissued in such transaction (except for
issuances which do not exceed fifty percent (50%) of the Common Stock)) or
there shall occur any share exchange pursuant to which all of the Ordinary
Shares in issue, including those represented by ADSs, are converted into
other securities or property or any such other reclassification or change of
the Ordinary Shares in issue or the Company shall sell all or substantially
all of its assets (each of the foregoing being a "MAJOR TRANSACTION"), then
the holder of this Warrant may, at its option, either (a) in the event that
the Ordinary Shares remain in issue or holders of Ordinary Shares receive
any common stock or substantially similar equity interest, in each of the
foregoing cases the American Depository Shares representing which is publicly
traded, retain this Warrant and this Warrant shall continue to apply to such
ADSs or shall apply, as nearly as practicable, to the American depository
shares of such other common stock or equity interest, as the case may be, or
(b) regardless of whether (a) applies, receive consideration, in exchange for
this Warrant (without payment of any exercise price hereunder), equal to the
greater of, as determined in the sole discretion of such holder, (i) the
number of shares of stock or securities or property of the Company, or of the
entity resulting from such Major Transaction (the "MAJOR TRANSACTION
CONSIDERATION"), to which a holder of the number of Ordinary Shares
represented by the ADSs delivered upon the exercise of this Warrant (pursuant
to the cashless exercise feature hereof) would have been entitled upon such
Major Transaction had such holder so exercised this Warrant (without regard
to any limitations on exercise herein or elsewhere contained) on the trading
date immediately
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<PAGE>
preceding the public announcement of the transaction resulting in such Major
Transaction and had such ADSs been issued and outstanding and had such
Holder been the holder of record of such ADSs at the time of the consummation
of such Major Transaction, and (ii) cash paid by the Company in immediately
available funds in an amount equal to the Black-Scholes Amount (as defined
herein) times the number of ADSs for which this Warrant was exercisable
(without regard to any limitations on exercise herein contained and assuming
payment of the exercise payment in cash hereunder), and the Company shall
make lawful provision for the foregoing as a part of such Major Transaction
and shall cause the issuer of any security in such transaction which
constitutes Registrable Securities under that certain Registration Rights
Agreement dated December______, 1999 by and between the Company and Castle
Creek (the "REGISTRATION RIGHTS AGREEMENT") to assume all of the Company's
obligations under the Registration Rights Agreement. In the event that the
Company shall consolidate or merge with any other corporation in a
transaction in which common stock of the surviving corporation or the parent
thereof (the "Exchange Securities") is issued to the holders of Ordinary
Shares in such transaction in exchange for all such Ordinary Shares, and (a)
the Exchange Securities are publicly traded and an American Depository
Receipt facility is established, (b) the average daily dollar trading volume
of the Exchange Securities during the one hundred eighty (180) day period
ending on the date on which such transaction is publicly disclosed is greater
than One Million Dollars ($1,000,000.00) per day as reported by Bloomberg,
(c) the historical one hundred (100) day volatility of the Exchange
Securities during the period ending on the date on which such transaction is
publicly disclosed is greater than fifty percent (50%), and (d) the market
capitalization of the issuer of the Exchange Securities is not less than One
hundred Million Dollars ($100,000,000.00) based on the last sale price of the
Exchange Securities on the date immediately before the date on which such
transaction is publicly disclosed (in each case, with respect to the
foregoing clauses (a) through (d), as reported by Bloomberg), then the
provisions of clause (b) of the preceding sentence shall not apply. In the
event that the Company shall, in a Major Transaction, consolidate or merge
with any other corporation in a transaction in which the Company is the
survivor (a "COMPANY TRANSACTION"), the provisions of clause (ii) of the
second preceding sentence shall not apply to the extent that each of the
following conditions remain true for the thirty (30) business days commencing
as of the date of the consummation of such transaction (the "MEASUREMENT
PERIOD"): (a) the ADSs remains publicly traded during the period, (b) the
average daily dollar trading volume of the ADSs is greater than One Million
Dollars ($1,000,000.00), (c) the historical thirty (30) day volatility of the
Company's ADSs is greater than fifty percent (50%), and (d) the market
capitalization of the Company is not less than One Hundred Million Dollars
($1,000,000.00) on the last day of the period (in each case, with respect to
the foregoing clauses (a) through (d), as reported by Bloomberg). No sooner
than ten (10) business days nor later than five (5) business days prior to
the consummation of the Major Transaction, but not prior to the public
announcement of such Major Transaction, the Company shall deliver written
notice ("NOTICE OF MAJOR TRANSACTION") to the Holder of this Warrant, which
Notice of Major Transaction shall be deemed to have been delivered one (1)
business day after the Company's sending such notice by telecopy (provided
that the Company sends a confirming copy of such notice on the same day by
overnight courier) of such Notice of Major Transaction. Such Notice of Major
Transaction shall indicate the amount and type of the Major Transaction
consideration which the Holder of this Warrant would receive under this
Section. If the Major Transaction Consideration is cash and does
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<PAGE>
not consist entirely of United States currency, the Holder may elect to
receive United States currency in an amount equal to the value of the Major
Transaction Consideration in lieu of the Major Transaction Consideration by
delivering notice of such election to the Company within five (5) business
days of such holder's receipt of the Notice of Major Transaction.
The "BLACK-SCHOLES AMOUNT" shall be the amount determined by
calculating the "Black-Scholes" value of an option to purchase one ADS on the
applicable page on the Bloomberg online page, using the following variable
values: (i) the current market price of the ADSs equal to the closing trade
price on the last trading day before the date of the Notice of the Major
Transaction; (ii) volatility of the ADS equal to the volatility of the ADSs
during the 100 trading day period preceding the date of the Notice of the
Major Transaction; (iii) a risk free rate equal to the interest rate on the
United States treasury bill or treasury note with a maturity corresponding to
the remaining term of this Warrant on the date of the Notice of the Major
Transaction; and (iv) an exercise price equal to the Exercise Price on the
date of the Notice of the Major Transaction. In the event such calculation
function is no longer available utilizing the Bloomberg online page, the
Holder shall calculate such amount in its sole discretion using the closest
available alternative mechanism and variable values to those available
utilizing the Bloomberg online page for such calculation function.
(d) DISTRIBUTION OF ASSETS. In case the Company shall
declare or make any distribution of its assets (or rights to acquire its
assets) to holders of its Ordinary Shares and ADSs as a partial liquidating
dividend, by way of return of capital or otherwise (including any dividend or
distribution to the Company's shareholders of cash or shares (or rights to
acquire shares) of capital stock of a subsidiary) (a "DISTRIBUTION"), at any
time after the initial issuance of this Warrant, then the Holder shall be
entitled upon exercise of this Warrant for the purchase of any or all of the
ADSs subject hereto, to receive the amount of such assets (or rights) which
would have been payable to the Holder had such Holder been the holder of such
ADSs on the record date for the determination of holders of Ordinary Shares
and ADSs entitled to such Distribution.
(e) SPECIAL ADJUSTMENT AND NOTICES OF ADJUSTMENT. Upon the
occurrence of any event which requires any adjustment of the Exercise Price,
then, and in each such case, the Company shall give notice thereof to the
Holder, which notice shall state the Exercise Price resulting from such
adjustment and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
Such calculation shall be certified by the chief financial officer of the
Company. If the Company takes any actions (including under or by virtue of
Section 4 of the Warrant) which would have a dilutive effect on the Holder or
which would materially and adversely affect the Holder with respect to its
investment in the Warrant, and if the provisions of Section 4 of the Warrant,
are not strictly applicable to such actions or, if applicable to such
actions, would not operate to equitably protect the Holder against such
actions, then the Company shall promptly upon notice from Holder appoint its
independent certified public accountants to determine as promptly as
practicable an appropriate adjustment to the terms hereof, including without
limitation adjustments to the Exercise Price, or another appropriate action
to so equitably protect such Holder and prevent any such dilution and any
such material adverse effect, as the case may be. Following
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<PAGE>
such determination, the Company shall forthwith make the adjustments or take
the other actions described therein.
(f) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of
the Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which, together with
any adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(g) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the
Ordinary Shares payable in shares of stock of any class or make any other
distribution to the holders of the Ordinary Shares and holders of ADSs;
(ii) the Company shall offer for subscription pro rata
to the holders of the Ordinary Shares and ADSs any additional shares of stock
of any class or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Ordinary Shares, or consolidation or merger
of the Company with or into, or sale of all or substantially all of its assets
to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Holder (a) notice of the
date on which the books of the Company shall close or a record shall be taken
for determining the holders of Ordinary Shares and holders of ADSs entitled to
receive any such dividend, distribution, or subscription rights or for
determining the holders of Ordinary Shares entitled to vote and holders of ADSs
entitled to give voting instructions to the Depositary in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Ordinary Shares and
holders of ADSs shall be entitled to receive such dividend, distribution, or
subscription rights or to exchange their Ordinary Shares and ADSs for stock or
other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least thirty
(30) days prior to the record date or the date on which the Company's books are
closed in respect thereto, but in no event earlier than public announcement of
such proposed transaction or event. Failure to give any such notice or any
defect therein shall not affect the validity of the proceedings referred to in
clauses (i), (ii), (iii) and (iv) above.
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<PAGE>
(h) CERTAIN DEFINITIONS.
(i) "MARKET PRICE," as of any date, (i) means the
average of the Closing Bid Prices for the ADSs as reported to Nasdaq for the
ten (10) trading days immediately preceding such date, or (ii) if Nasdaq is not
the principal trading market for the ADSs, the average of the last reported bid
prices on the principal trading market for the ADSs during the same period,
or, if there is no bid price for such period, the last reported sales price for
such period, or (iii) if market value cannot be calculated as of such date on
any of the foregoing bases, the Market Price shall be the average fair market
value as reasonably determined by an investment banking firm selected by the
Company and reasonably acceptable to the Holder of this Warrant, with the
costs of the appraisal to be borne by the Company. The manner of determining
the Market Price of the ADSs set forth in the foregoing definition shall apply
with respect to any other security in respect of which a determination as to
market value must be made hereunder.
(ii) "ORDINARY SHARES," for purposes of this Section 4,
includes the Ordinary Shares and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation, provided
that the Ordinary Shares represented by the ADSs purchasable pursuant to this
Warrant shall include only Ordinary Shares in respect of which this Warrant is
exercisable, or shares resulting from any subdivision or combination of such
Ordinary Shares, or in the case of any reorganization, reclassification,
consolidation, merger, or sale of the character referred to in Section 4(e)
hereof, the stock or other securities or property provided for in such Section.
5. Intentionally Omitted.
6. ISSUE TAX. The issuance of certificates for Warrant Shares upon
the exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof, provided that
the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any
certificate in a name other than the Holder.
7. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall
not entitle the Holder to any voting rights or other rights as a holder of the
Company's Ordinary Shares or ADSs. No provision of this Warrant, in the
absence of affirmative action by the Holder to purchase Warrant Shares, and no
mere enumeration herein of the rights or privileges of the Holder, shall give
rise to any liability of the Holder for the Exercise Price or as a holder of
the Company's Ordinary Shares or ADSs, whether such liability is asserted by
the Company or by creditors of the Company.
8. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
a. RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the Holder are transferable, in whole or in part, upon surrender of
this Warrant, together with a properly
10
<PAGE>
executed assignment in the Form of Assignment attached hereto as Exhibit 2, at
the office or agency of the Company referred to in Section 8(e) below,
provided, however, that any transfer or assignment shall be subject to the
provisions of Section 5.1 and 5.2 of the Securities Purchase Agreement. Until
due presentment for registration of transfer on the books of the Company, the
Company may treat the registered holder hereof as the owner and holder hereof
for all purposes, and the Company shall not be affected by any notice to the
contrary. Notwithstanding anything to the contrary contained herein, the
registration rights described in Section 9 hereof are assignable only in
accordance with the provisions of the Registration Rights Agreement.
b. WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the office
or agency of the Company referred to in Section 8(e) below, for new Warrants,
in the form hereof, of different denominations representing in the aggregate
the right to purchase the number of ADSs which may be purchased hereunder, each
of such new Warrants to represent the right to purchase such number of ADSs as
shall be designated by the Holder of at the time of such surrender.
c. REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant or, in the case of any such loss, theft, or
destruction, upon delivery, of an indemnity agreement reasonably satisfactory
in form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant, in the form hereof, in
such denominations as Holder may request.
d. CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of
this Warrant in connection with any transfer, exchange, or replacement as
provided in this Section 8, this Warrant shall be promptly canceled by the
Company. The Company shall pay all issuance taxes (other than securities
transfer taxes) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 8.
e. WARRANT REGISTER. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as
it may designate by notice to the Holder), a register for this Warrant, in
which the Company shall record the name and address of the person in whose name
this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
f. ADDITIONAL RESTRICTION ON EXERCISE OR TRANSFER.
Notwithstanding anything to the contrary contained herein, the Warrant shall
not be exercisable by the Holder to the extent (but only to the extent) that,
if exercisable by Holder, Holder would beneficially own Ordinary Shares and
ADSs in excess of 9.9% (the "APPLICABLE PERCENTAGE") of the total Ordinary
Shares in issue. To the extent the above limitation applies, the determination
of whether the Warrant shall be exercisable (vis-a-vis other securities owned
by Holder which contain similar limitations on conversion) and of which
Warrants shall be exercisable (as among Warrants) shall be made on the basis of
the earliest submission of the Warrants (vis-a-vis other securities owned by
the Holder which contain similar
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<PAGE>
limitations on conversion and vis a vis other Warrants), in each case subject
to such aggregate percentage limitation. No prior inability to exercise
Warrants pursuant to this paragraph shall have any effect on the applicability
of the provisions of this paragraph with respect to any subsequent
determination of exercisability. For the purposes of this paragraph,
beneficial ownership and all determinations and calculations, including without
limitation, with respect to calculations of percentage ownership, shall be
determined in accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended, and Regulation 13D and G thereunder. The provisions of this
paragraph may be implemented in a manner otherwise than in strict conformity
with the terms of this Section 8(f) with the approval of the Board of Directors
of the Company and the Holder: (i) with respect to any matter to cure any
ambiguity herein, to correct this paragraph (or any portion hereof) which may
be defective or inconsistent with the intended Applicable Percentage beneficial
ownership limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such Applicable Percentage
limitation; and (ii) with respect to any other matter, with the further consent
of the holders of a majority of the then Ordinary Shares in issue. For
clarification, it is expressly a term of this security that the limitations
contained in this Section shall apply to each successor Holder. The holders of
Ordinary Shares of the Company shall be third-party beneficiaries of this
Section 8(f) and the Company may not waive this Section 8(f) without the
consent of holders of a majority of its Ordinary Shares.
To the extent the Holder is prohibited from exercising this Reset
Warrant as a result of the Applicable Percentage limitation, the Holder may, at
its option and in addition to its other rights under the Securities Purchase
Agreement and this Reset Warrant, retain this Warrant or to demand payment,
in cash, from the Company in immediately available funds in an amount equal to
the Black-Scholes Amount times the number of Shares for which this Warrant
was exercisable (without regard to any limitations on exercise herein contained
and assuming payment of the exercise payment in cash hereunder).
g. CAP AMOUNT Prior to Shareholder Approval (as defined
in the Securities Purchase Agreement), unless otherwise permitted by The Nasdaq
National Market or of the national securities exchange on which the ADSs are
listed, or unless the rules thereof no longer are applicable to the Company,
in no event shall the total number of ADSs issued to Purchaser at the Closing
and issuable upon exercise of the Warrants and the ADSs issued to Other
Investors (as defined below) at or prior to the Closing and issuable upon
exercise of warrants issued to Vincent Pino, Richard Zehner, Robert Waley-Cohen
and Viscount Bearsted ("OTHER INVESTORS") at or prior to the Closing on terms
substantially similar to those of the Securities Purchase Agreement and
Warrants exceed the maximum number of Ordinary Shares that the Company can
without shareholder approval so issue pursuant to Nasdaq Rule 4460(i) (or any
successor rule) (the "CAP AMOUNT"), which, as of the date of initial issuance
of ADSs and Warrants to the Holders, which amount is ____________ shares. In
the event the Holder shall sell or otherwise transfer any of the Holder's
Warrants, each transferee shall be allocated a pro rata portion of such Cap
Amount along with Other Investors and their transferees.
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<PAGE>
To the extent the Holder is prohibited from exercising this Warrant as a
result of the Cap Amount after the Shareholder Approval Date (as defined in the
Securities Purchase Agreement), the Company shall pay to the Holder, in cash,
in immediately available funds in an amount equal to the Black-Scholes Amount
times the number of Shares for which this Warrant was exercisable (without
regard to any limitations on exercise herein contained and assuming payment of
the exercise payment in cash hereunder).
9. REGISTRATION RIGHTS. The initial holder of this Warrant (and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in the Registration
Rights Agreement.
10. NOTICES. Any notice herein required or permitted to be given
shall be in writing and may be personally served or delivered by courier or by
confirmed telecopy, and shall be deemed delivered at the time and date of
receipt (which shall include telephone line facsimile transmission). The
addresses for such communications shall be:
If to the Company:
Insignia Solutions plc
41300 Christy Street
Fremont, California 94538-3115
Telecopy: (510)360-3702
Attention: Stephen M. Ambler
with a copy to:
Ritchey Fisher Whitman & Klein PC
1717 Embarcadero Road
P.O. Box 51050
Palo Alto, California 94303
Telecopy: (650)857-1288
Attention: Peter A. Whitman, Esq.
and if to the Holder, at such address as Holder shall have provided in writing
to the Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 10.
11. GOVERNING LAW; JURISDICTION. This Warrant shall be governed by
and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed in the State of New York. The Company
irrevocably consents to the jurisdiction of the United States federal courts
located in the State of New York in any suit or proceeding based on or arising
under this Warrant and irrevocably agrees that all claims in respect of such
suit or proceeding may be determined in such courts. The Company irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The Company agrees that a final nonappealable
13
<PAGE>
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
12. MISCELLANEOUS.
a. AMENDMENTS. This Warrant and any provision hereof may
only be amended by an instrument in writing signed by the Company and the
Holder.
b. DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
c. ASSIGNABILITY. This Warrant shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of Holder
and its successors and assigns. The Holder shall notify the Company upon the
assignment of this Warrant.
* * *
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Insignia Solutions plc
By: s/Richard M. Noling
Name: Richard M. Noling
Title: President and CEO
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<PAGE>
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to purchase
____________ of the American Depositary Shares ("ADSS") of Insignia Solutions
plc, a company organized and existing under the laws of England and Wales (the
"COMPANY"), evidenced by the attached Warrant, and herewith makes payment of
the Exercise Price with respect to such ADSs in full, all in accordance with
the conditions and provisions of said Warrant.
(i) The undersigned agrees not to offer, sell, transfer or otherwise
dispose of any ADSs obtained on exercise of the Warrant, except under
circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws.
(ii) The undersigned requests that the American Deposit Receipts for
such ADSs be issued, and a Warrant representing any unexercised portion hereof
be issued, pursuant to the Warrant in the name of the Holder (or such other
person or persons indicated below) and delivered to the undersigned (or
designee(s) at the address (or addresses) set forth below:
Date:__________________________ ______________________________
Signature of Holder
______________________________
Name of Holder (Print)
Address:
______________________________
______________________________
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<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all rights of the undersigned under the within Warrant, with respect to the
number of ADSs covered thereby set forth hereinbelow, to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
- ---------------- ------- -------------
<S> <C> <C>
</TABLE>
and hereby irrevocably constitutes and appoints _______________ as agent and
attorney-in-fact to transfer said Warrant on the books of the within-named
corporation, with full power of substitution in the premises.
Date:____________, _____,
In the presence of
Name:____________________________________________
Signature:_______________________________________
Title of Signing Officer or Agent (if any):
______________________________________
Address: _______________________________
_______________________________
Note: The above signature should
correspond exactly with the
name on the face of the within
Warrant.
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<PAGE>
EXHIBIT B
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT ("Agreement") is entered into as of
December 9, 1999, by and between Insignia Solutions plc, a company organized and
existing under the laws of England and Wales (the "Company"), with headquarters
located at 41300 Christy Street, Fremont, California 94538, and the persons
listed on Schedule A to this Agreement (the "Initial Purchasers").
RECITALS
A. In connection with the Securities Purchase Agreement dated of even
date herewith by and between the Company and Initial Purchasers (the "SECURITIES
PURCHASE AGREEMENT"), the Company has agreed, upon the terms and subject to the
conditions contained therein, to issue and sell to Initial Purchasers (i) the
Company's American Depository Shares (the "ADSS"), each ADS representing one
ordinary shares of 20p each nominal value of the Company (the "ORDINARY
SHARES"); (ii) a warrant exercisable for ADSs, in the form attached as EXHIBIT A
to the Securities Purchase Agreement (the "INITIAL WARRANT"); and (iii) a
warrant in the form of EXHIBIT C to the Securities Purchase Agreement ( the
"RESET WARRANT", and together with the Initial Warrant, the "WARRANTS"). ADSs
issued and purchased pursuant to the Securities Purchase Agreement are herein
referred to as "SHARES" and ADSs issued or issuable upon exercise of the
Warrants are herein referred to as "WARRANT SHARES".
B. To induce Initial Purchasers to execute and deliver the Securities
Purchase Agreement, the Company has agreed to provide certain registration
rights under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), and applicable state securities laws.
AGREEMENTS
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company, and
Initial Purchasers hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1 DEFINITIONS. As used in this Agreement, the following terms shall
have the following meanings:
(a) "PURCHASERS" means Initial Purchasers and any transferees
or assignees who agree to become bound by the provisions of this Agreement in
accordance with Article 9 hereof.
<PAGE>
(b) "REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("Rule 415"), and the declaration or ordering of effectiveness
of such Registration Statement by the United States Securities and Exchange
Commission (the "SEC").
(c) "REGISTRABLE SECURITIES" means the Shares and the Warrant
Shares issued or issuable with respect to the Warrants (without regard to any
limitations on exercise) and any shares of capital stock issued or issuable,
from time to time (with any adjustments), on or in exchange for or otherwise
with respect to the ADRs or any other Registrable Securities.
(d) "REGISTRATION STATEMENT" means a registration statement of
the Company under the Securities Act pursuant to the provisions of this
Agreement.
(e) "FUNDED AMOUNT" means one million dollars ($1,000,000).
1.2 CAPITALIZED TERMS. Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings set forth in the
Securities Purchase Agreement.
ARTICLE 2
REGISTRATION
2.1 MANDATORY REGISTRATION. The Company shall prepare and file as
soon as practicable but in any event on or prior to thirty (30) days after the
date of the Closing with the SEC a Registration Statement on Form S-3 (or, if
Form S-3 is not then available, on such form of Registration Statement as is
then available to effect a registration of all of the Registrable Securities
(without regard to any limitations on exercise of the Warrants), including those
issuable upon full exercise of the Warrants purchased and sold at the Closing.
The Registration Statement (and each amendment or supplement thereto, and each
request for acceleration of effectiveness thereof) shall be provided to and
(subject to the approval of (which approval shall be rendered within 3 business
days after receipt thereof and shall not be unreasonably withheld, delayed or
denied)) the Initial Purchasers and its counsel at least seven (7) business days
(or fewer to the extent provided herein) prior to its filing or other
submission. The Company shall also prepare and file such amendments to
registration statements and such additional registration statements as may from
time to time be required by this Agreement.
2.2 UNDERWRITTEN OFFERING. If any offering pursuant to a Registration
Statement filed pursuant to Section 2.1 hereof involves an underwritten
offering, the Purchasers who hold a majority in interest of the Registrable
Securities subject to such underwritten offering, with the consent of Initial
Purchasers, shall have the right to select one legal counsel to represent them
and an investment banker or bankers and manager or managers to administer the
offering, which investment banker or bankers or manager or managers shall be
reasonably satisfactory to the Company, and all fees and expenses of which shall
be paid by the Purchasers.
2.3 PAYMENTS BY THE COMPANY. The Company shall use its best efforts
to cause the Registration Statement filed pursuant to Section 2.1 hereof to
become effective as soon as practicable, but in no event later than the
ninetieth (90th) day (or the one hundred twentieth
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(120th) day if the SEC reviews such Registration Statement) following the
Closing Date (the "REGISTRATION DEADLINE"). If any Registration Statement
required to be filed by the Company pursuant to Section 2.1 hereof is not
declared effective by the SEC on or before the applicable Registration
Deadline (a "REGISTRATION FAILURE"), or after such Registration Statement has
been declared effective by the SEC, sales of all the Registrable Securities
cannot be made pursuant to the Registration Statement (by reason of a stop
order or the Company's failure to update the Registration Statement or any
other reason outside the control of the Purchasers) (a "REGISTRATION
SUSPENSION"), then the Company will make payments to the Purchasers in such
amounts and at such times as shall be determined pursuant to this Section 2.3
as partial relief for the damages to the Purchasers by reason of any such
delay in or reduction of their ability to sell the Registrable Securities
(which remedy shall not be exclusive of any other remedies available at law
or in equity). In the event of a Registration Failure, the Company shall pay
to the Purchasers an amount equal to (A) the Multiplier (as defined herein)
times (B) the sum of the aggregate Funded Amount plus the amount payable to
the Company under the Warrants times (C) the number of months (prorated per
day for partial months) following the Registration Deadline prior to the date
the Registration Statement filed pursuant to Section 2.1 is declared
effective by the SEC. In addition, in the event of a Registration
Suspension, the Company shall pay to the Purchasers an amount equal to (D)
the Multiplier times (E) the Funded Amount times (F) the number of months
(prorated per day for partial months) from (x) the date on which sales of all
the Registrable Securities first cannot be made to (y) the date on which
sales of all the Registrable Securities can again be made. Amounts to be
paid pursuant to this Section 2.3 shall be paid to Purchasers based upon the
number of Shares and Warrant Shares owned and Warrant Shares issuable upon
full conversion of the Warrants by each Purchaser, and shall be paid in cash.
Such payments shall be made within five (5) days after the end of each
period that gives rise to such obligation, provided that, if any such period
extends for more than thirty (30) days, payments shall be made for each such
thirty (30) day period within five (5) days after the end of such thirty (30)
day period. For any given date, the "MULTIPLIER" shall mean, (i) during the
first thirty days following the Registration Deadline during which there is a
Registration Failure or a Registration Suspension, 0.01, (ii) from the
thirty-first day of a Registration Failure or Registration Suspension until
the sixtieth such day, 0.015 and (iii) after the sixtieth day of a
Registration Failure or Registration Suspension, 0.02. Notwithstanding the
foregoing, a Registration Suspension effected by the Company pursuant to a
Permitted Blackout shall not give rise to an obligation to make such
payments. For purposes hereof, "PERMITTED BLACKOUT" shall mean the
suspension of the Registration Statement after the effective date upon the
good faith determination by the Company's Board of Directors that a material
financing, acquisition or other extraordinary corporate transaction is in the
best interest of the Company and its stockholders, and that disclosure
thereof to the public would have a material adverse effect on the ability of
the Company to consummate such material financing, acquisition or other
extraordinary corporate transaction, all after receiving advice to such
effect from a nationally recognized investment banking firm or, to the extent
appropriate, the Company's counsel which has been engaged by the Company in
connection with such financing, acquisition or other extraordinary corporate
transaction; PROVIDED, HOWEVER, that (i) no more than two (2) such Permitted
Blackouts may be imposed during any period of twelve (12) consecutive months
and (ii) the aggregate duration of all Permitted Blackouts during any period
of twelve (12) consecutive months shall be no more than fifteen (15) business
days.
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2.4 PIGGY-BACK REGISTRATIONS. If at any time prior to the expiration
of the Registration Period (as hereinafter defined) the Company shall file with
the SEC a Registration Statement relating to an offering for its own account or
the account of others under the Securities Act of any of its equity securities
(other than on Form S-4 or Form S-8 or their then equivalents relating to equity
securities to be issued solely in connection with any acquisition of any entity
or business or equity securities issuable in connection with stock option or
other employee benefit plans), then the Company shall send to each Purchaser who
has a right to have Registrable Securities covered by a Registration Statement
pursuant to this Agreement written notice of such determination and, if within
fifteen (15) days after the date of such notice, such Purchaser shall so request
in writing, the Company shall include in such Registration Statement all or any
part of the Registrable Securities such Purchaser requests to be registered,
except that if, in connection with any underwritten public offering for the
account of the Company the managing underwriter(s) thereof shall impose a
limitation on the number of ADSs which may be included in the Registration
Statement because, in such underwriter(s)' judgment, marketing or other factors
dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such
limited portion of the Registrable Securities with respect to which such
Purchaser has requested inclusion hereunder as the underwriter shall permit.
Any exclusion of Registrable Securities shall be made pro rata among the
Purchasers seeking to include Registrable Securities, in proportion to the
number of Registrable Securities sought to be included by such Purchasers;
provided, however, that the Company shall not exclude any Registrable Securities
unless the Company has first excluded all outstanding securities, the holders of
which are not entitled to inclusion of such securities in such Registration
Statement or are not entitled to pro rata inclusion with the Registrable
Securities; and provided, further, however, that, after giving effect to the
immediately preceding proviso, any exclusion of Registrable Securities shall be
made pro rata with holders of other securities having the right to include such
securities in the Registration Statement. No right to registration of
Registrable Securities under this Section 2.4 shall be construed to limit any
registration required under Section 2.1 or 3.2 hereof. If an offering in
connection with which a Purchaser is entitled to registration under this
Section 2.4 is an underwritten offering, then each Purchaser whose Registrable
Securities are included in such Registration Statement shall, unless otherwise
agreed by the Company, offer and sell such Registrable Securities in an
underwritten offering using the same underwriter or underwriters and, subject to
the provisions of this Agreement, on the same terms and conditions as other ADSs
included in such underwritten offering. So long as a Registration Statement is
effective and immediately available for use so that all of the Registrable
Securities may be sold in reliance thereon, the provisions of this section shall
not apply.
2.5 ELIGIBILITY FOR FORM S-3. The Company represents and warrants
that it meets the requirements for the use of Form S-3 for registration of the
re-sale by Initial Purchasers and any other Purchasers of the Registrable
Securities and the Company shall file all reports required to be filed by the
Company with the SEC in a timely manner so as to maintain such eligibility for
the use of Form S-3.
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ARTICLE 3
OBLIGATIONS OF THE COMPANY
In connection with the registration of the Registrable Securities, the
Company shall have the following obligations, including with respect to each
Registration Statement to be filed hereunder:
3.1 The Company shall prepare promptly and file with the SEC each
Registration Statement required by Section 2.1, and cause each such Registration
Statement relating to Registrable Securities to become effective as soon as
practicable after such filing, and keep the Registration Statement effective
pursuant to Rule 415 and available for use at all times until such date as is
the earlier of (i) the date on which all of the Registrable Securities have been
sold (and no further Registrable Securities may be issued in the future) and
(ii) the date on which all of the Registrable Securities (in the reasonable
opinion of counsel to Initial Purchasers) may be immediately sold to the public
without registration and without restriction as to the number of Registrable
Securities to be sold, whether pursuant to Rule 144 or otherwise (the
"REGISTRATION PERIOD"). Each such Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein and all
documents incorporated by reference therein) shall not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein, or necessary to make the statements therein not misleading.
3.2 The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with each Registration Statement
as may be necessary to keep such Registration Statement effective and available
for use at all times during the Registration Period, and, during such period,
comply with the provisions of the Securities Act with respect to the disposition
of all Registrable Securities of the Company covered by such Registration
Statement until the termination of the Registration Period or, if earlier, such
time as all of such Registrable Securities have been disposed of in accordance
with the intended methods of disposition by the seller or sellers thereof as set
forth in such Registration Statement. In the event the number of Shares
available under a Registration Statement filed pursuant to this Agreement is at
any time insufficient to cover one hundred seventy five percent (175%) of the
ADSs issued or issuable pursuant to all of the then-issued Warrants or the
Securities Purchase Agreement (without regard to any limitations on exercise
contained therein), the Company shall amend, if permissible, the Registration
Statement, or file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover two hundred percent (200%) of
the Warrant Shares issued or issuable upon exercise of the Warrants (without
regard to any limitation on exercise contained therein), in each case, as soon
as practicable, but in any event within five (5) days. The Company shall cause
such amendment and/or new Registration Statement to become effective as soon as
practicable following the filing thereof.
3.3 The Company shall furnish to each Purchaser whose Registrable
Securities are included in the Registration Statement and its legal counsel
(a) promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one copy of the Registration Statement and any
amendment thereto, each preliminary prospectus and prospectus and each amendment
or supplement thereto, and, in the case of the Registration Statement referred
to in Section 2.1, each letter written by or on behalf of the Company to the
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SEC or the staff of the SEC, and each item of correspondence from the SEC or
the staff of the SEC, in each case relating to such Registration Statement
(other than any portion, if any, thereof which contains information for which
the Company has sought confidential treatment), and (b) such number of copies
of a prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and such other documents as such Purchaser may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned (or to be owned) by such Purchaser.
3.4 The Company shall (a) register and qualify the Registrable
Securities covered by each Registration Statement under securities laws of such
jurisdictions in the United States as each Purchaser who holds (or has the right
to hold) Registrable Securities being offered reasonably requests, (b) prepare
and file in those jurisdictions such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness and availability for use thereof during
the applicable Registration Period, (c) take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all
times during the applicable Registration Period, and (d) take all other actions
reasonably necessary or advisable to qualify the Registrable Securities for sale
in such jurisdictions; provided, however, that the Company shall not be required
in connection therewith or as a condition thereto to (i) qualify to do business
in any jurisdiction where it would not otherwise be required to qualify but for
this Section 3.4, (ii) subject itself to general taxation in any such
jurisdiction, (iii) file a general consent to service of process in any such
jurisdiction, (iv) provide any undertakings that cause the Company material
expense or burden, or (v) make any change in its charter or by-laws, which in
each case the board of directors of the Company determines to be contrary to the
best interests of the Company and its stockholders.
3.5 In the event the Purchasers who hold a majority in interest of the
Registrable Securities being offered in an offering pursuant to a Registration
Statement or any amendment or supplement thereto under Section 2.1 or 3.2 hereof
select underwriters for the offering, the Company shall enter into and perform
its obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the underwriters of such offering, but shall not bear any
costs or expenses of the underwriting.
3.6 As soon as practicable after becoming aware of such event, the
Company shall notify (by telephone and also by facsimile and reputable overnight
courier) each Purchaser of the happening of any event, of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and use its best efforts as soon as
possible (but in any event within five (5) days) to prepare a supplement or
amendment to the Registration Statement (and make all required filings with the
SEC) to correct such untrue statement or omission, and the Company shall
simultaneously (and thereafter as requested) deliver such number of copies of
such supplement or amendment to each Purchaser (or other applicable document) as
such Purchaser may request in writing. Unless such an event is publicly
announced, the Company shall not, without the consent of the Purchaser, give
such Purchaser any material non-public information, but shall inform the
Purchasers that such prospectus
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includes an untrue statement of a material fact or omission to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
3.7 The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of a Registration Statement,
and, if such an order is issued, to obtain the withdrawal of such order at the
earliest practicable time and the Company shall immediately notify by facsimile
each Purchaser (at the facsimile number for such Purchaser set forth on the
signature page hereto) who holds Registrable Securities (or, in the event of an
underwritten offering, the managing underwriters) of the issuance of such order
and the resolution thereof.
3.8 The Company shall permit counsel designated by the Initial
Purchasers to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects, provided such objection shall be communicated to the Company within 3
business days after receipt of such Registration Statement by Purchaser.
3.9 [Intentionally deleted].
3.10 At the request of any Purchaser, the Company shall furnish, on the
date of effectiveness of the Registration Statement and thereafter from time to
time on such dates as a Purchaser may reasonably request (a) an opinion, dated
as of such applicable date, from counsel representing the Company addressed to
the Purchasers and in form, scope and substance as is customarily given in an
underwritten public offering and (b) a letter, dated as of such applicable date,
from the Company's independent certified public accountants addressed to the
Purchasers and in form, scope and substance as customarily given to underwriters
in an underwritten public offering.
3.11 The Company shall make available for inspection by (i) any
Purchaser, (ii) any underwriter participating in any disposition pursuant to the
Registration Statement, (iii) attorneys and accountants retained by any
Purchaser, and (iv) attorneys retained by such underwriters (collectively, the
"INSPECTORS") all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the "RECORDS"), as shall
be reasonably deemed necessary by each Inspector and cause the Company's
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall hold in
confidence and shall not make any disclosure (except to a Purchaser) of any
Record or other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so notified in
writing, unless (a) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in any Registration Statement or is otherwise
required to be disclosed in such Registration Statement to permit Purchaser to
sell under such Registration Statement, (b) the release of such Records is
ordered pursuant to a subpoena or other order from a court or government body of
competent jurisdiction, or is otherwise required by applicable law or legal
process or (c) the information in such Records has been made generally available
to the public other than by disclosure in violation of this or any other
agreement (to the knowledge of the relevant Purchaser). The Company shall not
be required to disclose any confidential information in such Records to any
Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in
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form and reasonable substance satisfactory to the Company) with the Company
with respect thereto, substantially in the form of this Section 3.11. Each
Purchaser agrees that it shall, upon learning that disclosure of such Records
is sought in or by a court or governmental body of competent jurisdiction or
through other means, give prompt notice to the Company and allow the Company,
at its expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, the Records deemed confidential. Nothing
herein shall be deemed to limit a Purchaser's ability to sell Registrable
Securities in a manner which is consistent with applicable laws and
regulations.
3.12 The Company shall hold in confidence and not make any disclosure
of information concerning a Purchaser provided to the Company excluding any
information provided by Purchaser for use in or in connection with a
Registration Statement unless (a) disclosure of such information is necessary to
comply with federal or state securities laws, (b) the disclosure of such
information is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (c) the release of such information is ordered pursuant
to a subpoena or other order from a court or governmental body of competent
jurisdiction or is otherwise required by applicable law or legal process,
(d) such information has been made generally available to the public other than
by disclosure in violation of this or any other agreement (to the knowledge of
the Company), or (e) such Purchaser consents to the form and content of any such
disclosure. The Company agrees that it shall, upon learning that disclosure of
such information concerning a Purchaser is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
notice to such Purchaser prior to making such disclosure, and allow the
Purchaser, at its expense, to undertake appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.
3.13 From and after each Closing, the Company shall cause the listing
and the continuation of listing of all the Registrable Securities related to
such Closing and required to be covered by a Registration Statement on the
Nasdaq National Market, the New York Stock Exchange or the American Stock
Exchange and cause the Registrable Securities to be quoted or listed on each
additional national securities exchange or quotation system upon which the ADRs
are then listed or quoted.
3.14 The Company shall provide a transfer agent and depositary, which
may be a single entity, for the Registrable Securities not later than the
effective date of the applicable Registration Statement.
3.15 The Company shall cooperate with the Purchasers who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to the Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Purchasers may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Purchasers may request, and, within two (2)
business days after a Registration Statement which includes Registrable
Securities is ordered effective by the SEC, the Company shall cause legal
counsel selected by the Company to deliver, to the transfer agent for the
Registrable Securities (with copies to the
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Purchasers whose Registrable Securities are included in such Registration
Statement) an opinion of such counsel in the form attached hereto as EXHIBIT
1.
3.16 At the request of any Purchaser, the Company shall promptly
prepare and file with the SEC such amendments (including post-effective
amendments) and supplements to a Registration Statement and the prospectus used
in connection with a Registration Statement filed pursuant hereto as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.
3.17 The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities covered by the
Registration Statement and all applicable rules and regulations of governmental
authorities in connection therewith (including, without limitation, the
Securities Act and the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated by the Commission).
3.18 The Company shall take all such other actions as any Purchaser or
the underwriters, if any, reasonably request in order to expedite or facilitate
the disposition of such Registrable Securities, but shall not be required to
incur any costs or expenses in connection therewith not otherwise provided
herein to be borne by the Company.
3.19 From and after the date of this Agreement, the Company shall not,
and shall not agree to, allow the holders of any securities of the Company
(other than Purchasers with respect to Registrable Securities) to include any of
their securities in any Registration Statement or any amendment or supplement
thereto under Section 2.1 or 3.2 hereof without the consent of Initial Purchaser
and the holders of a majority of the Registrable Securities. Without the
consent of Initial Purchaser, until the effectiveness of the Registration
Statements contemplated by Section 2.1 hereof, the Company shall not file any
other Registration Statement for the sale of any securities, whether for the
account of the Company or any other person.
3.20 The Registration Statement shall state that it covers such
indeterminate number of additional shares as may be issuable upon exercise of
the Warrants to prevent dilution resulting from stock splits, stock dividends
and other similar transactions.
ARTICLE 4
OBLIGATIONS OF THE PURCHASERS
In connection with the registration of the Registrable Securities, the
Purchasers shall have the following obligations:
4.1 Each Purchaser shall furnish to the Company such information
regarding itself, the Registrable Securities held by it and the intended method
of disposition of the Registrable Securities held by it as shall be reasonably
required to effect the registration of such Registrable Securities. At least
five (5) business days prior to the first anticipated filing date of the
Registration Statement, the Company shall notify each Purchaser of the
information the Company requires from each such Purchaser.
4.2 Each Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection
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with the preparation and filing of the Registration Statements hereunder,
unless such Purchaser has notified the Company in writing of such Purchaser's
election to exclude all of such Purchaser's Registrable Securities from the
Registration Statement.
4.3 Each Purchaser whose Registrable Securities are included in a
Registration Statement understands that the Securities Act may require delivery
of a prospectus relating thereto in connection with any sale thereof pursuant to
such Registration Statement, and each such Purchaser shall use its reasonable
efforts to comply with the applicable prospectus delivery requirements of the
Securities Act in connection with any such sale.
4.4 [Intentionally omitted]
4.5 Each Purchaser agrees that, upon receipt of written notice from
the Company of the happening of any event of the kind described in Section 3.6,
such Purchaser will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Purchaser's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3.6 or advice that a supplement or
amendment is not required and, if so directed by the Company, such Purchaser
shall deliver to the Company (at the expense of the Company) or destroy (and
deliver to the Company a certificate of destruction) all copies in such
Purchaser's possession (other than a limited number of permanent file copies),
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. Purchaser's obligations under this paragraph shall in
no way limit the Company's obligations under this Agreement or Purchaser's
rights or remedies against the Company with respect to any breach or threatened
breach by the Company of any such obligations.
4.6 Without limiting a Purchaser's rights under Section 2.1 or 3.2
hereof, no Purchaser may participate in any underwritten distribution hereunder
unless such Purchaser (a) agrees to sell such Purchaser's Registrable Securities
on the basis provided in any underwriting agreements in usual and customary form
entered into by the Company pursuant to Section 3.5 hereof, (b) completes and
executes all questionnaires, powers of attorney, custody agreements,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (c) agrees to pay its pro
rata share of all underwriting discounts and commissions and any expenses in
excess of those payable by the Company pursuant to Article 5. Without
implication that the contrary would otherwise be true, it is expressly
understood and agreed that no Purchaser shall be required to participate in any
such underwritten distribution.
ARTICLE 5
EXPENSES OF REGISTRATION
All expenses, other than underwriting discounts and commissions, incurred
in connection with registrations, filings or qualifications pursuant to
Articles 2 and 3, including, without limitation, all registration, listing and
qualification fees, printers and accounting fees, the fees and disbursements of
counsel for the Company and the fees and disbursements of one firm of attorneys
for the Purchasers, shall be borne by the Company.
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ARTICLE 6
INDEMNIFICATION
In the event any Registrable Securities are included in a Registration
Statement under this Agreement:
6.1 To the extent permitted by law, the Company will indemnify, hold
harmless and defend (a) each Purchaser who holds such Registrable Securities,
(b) each underwriter of Registrable Securities and (c) the directors, officers,
partners, members, employees, agents and persons who control any Purchaser
within the meaning of Section 15 of the Securities Act or Section 20 of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), if any, (each,
an "INDEMNIFIED PERSON"), against any losses, claims, damages, liabilities or
expenses (collectively, together with actions, proceedings or inquiries whether
or not in any court, before any administrative body or by any regulatory or
self-regulatory organization, whether commenced or threatened, in respect
thereof, "CLAIMS") to which any of them may become subject insofar as such
Claims arise out of or are based upon: (i) any untrue statement or alleged
untrue statement of a material fact in a Registration Statement or the omission
or alleged omission to state therein a material fact required to be stated or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such Registration
Statement, or contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities (the matters in the foregoing clauses (i) through (iii) being,
collectively, "VIOLATIONS"). The Company shall reimburse each such Indemnified
Person, promptly as such expenses are incurred and are due and payable, for any
reasonable legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6.1: (x) shall not apply to an Indemnified Person
with respect to a Claim arising out of or based upon a Violation which occurs in
reliance upon and in conformity with information furnished in writing to the
Company by such Indemnified Person expressly for use in the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (z) with respect to any preliminary prospectus, shall
not inure to the benefit of any Indemnified Person if the untrue statement or
omission of material fact contained in the preliminary prospectus was corrected
on a timely basis in the prospectus, as then amended or supplemented, if such
corrected prospectus was timely made available by the Company pursuant to
Section 3.3 hereof, and the Indemnified Person was promptly advised in writing
not to use the incorrect prospectus prior to the use giving rise to a Violation
and such Indemnified Person, notwithstanding such advice, used it. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by a Purchaser pursuant to Article 9.
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6.2 In connection with any Registration Statement in which a Purchaser
is participating, to the extent permitted by law, each such Purchaser agrees to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6.1, the Company, each of its directors, each of its
officers who signs the Registration Statement, its employees, agents and
persons, if any, who control the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement, together with its
directors, officers and members, and any person who controls such stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act (such
an "INDEMNIFIED PARTY"), against any Claim to which any of them may become
subject, under the Securities Act, the Exchange Act or otherwise, insofar as
such Claim arises out of or is based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished to the Company by such
Purchaser expressly for use in connection with such Registration Statement; and
such Purchaser will reimburse any legal or other expenses (promptly as such
expenses are incurred and are due and payable) reasonably incurred by them in
connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6.2 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Purchaser, which consent shall not be
unreasonably withheld; provided, further, however, that a Purchaser shall be
liable under this Agreement (including this Section 6.2 and Article 7) for only
that amount as does not exceed the net proceeds actually received by such
Purchaser as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by the Purchasers
pursuant to Article 9. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 6.2 with respect
to any preliminary prospectus shall not inure to the benefit of any Indemnified
Party if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented, and the Indemnified Party failed to utilize such
corrected prospectus.
6.3 Promptly after receipt by an Indemnified Person or Indemnified
Party under this Article 6 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Article 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right (at its expense) to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume and continue control of the defense thereof with
counsel mutually satisfactory to the indemnifying party and the Indemnified
Person or the Indemnified Party, as the case may be; provided, however, that
such indemnifying party shall diligently pursue such defense and an indemnifying
party shall not be entitled to assume (or continue) such defense if the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
conflicts of interest between such Indemnified Person or Indemnified Party and
the indemnifying party, and any other party represented by such counsel in such
proceeding or the actual or potential defendants in, or targets of, any such
action include both the Indemnified Person or the Indemnified Party and any such
Indemnified Person or Indemnified Party reasonably determines
-12-
<PAGE>
that there may be legal defenses available to such Indemnified Person or
Indemnified Party which are different from or in addition to those available
to such indemnifying party. Notwithstanding any assumption of such defense
and without limiting any indemnification obligation provided for in Section
6.1 or 6.2, the Indemnified Party or Indemnified Persons, as the case may be,
shall be entitled to be represented by counsel (at its own expense if the
indemnifying party is permitted to assume and continue control of the defense
and otherwise at the expense of the indemnifying party) and such counsel
shall be entitled to participate in such defense. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of
any liability to the Indemnified Person or Indemnified Party under this
Article 6, except to the extent that the indemnifying party is actually
prejudiced in its ability to defend such action. The indemnification
required by this Article 6 shall be made by periodic payments of the amount
thereof during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
ARTICLE 7
CONTRIBUTION
To the extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Article 6 to the fullest extent permitted by law; provided, however, that
(i) no person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation, and
(ii) contribution (together with any indemnification or other obligations under
this Agreement) by any Purchaser of Registrable Securities shall be limited in
amount to the net amount of proceeds received by such Purchaser from the sale of
its Registrable Securities.
ARTICLE 8
REPORTS UNDER THE EXCHANGE ACT
With a view to making available to each Purchaser the benefits of
Rule 144, the Company agrees that so long as any Purchaser holds Warrants, any
Registrable Securities, the Company shall:
8.1 (a) Not terminate its status as an issuer required to file
reports under the Exchange Act even if the Exchange Act or the rules and
regulations thereunder would permit such termination.
(b) File with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the filing and availability of
such reports and other documents is required for the applicable provisions of
Rule 144; and
8.2 Furnish to each Purchaser promptly upon written request, (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144, the Securities Act and the Exchange Act, (ii) a copy
of the most recent annual or quarterly report of the
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<PAGE>
Company and such other reports and documents so filed by the Company, and
(iii) such other information as may be reasonably requested to permit the
Purchaser to sell such securities pursuant to Rule 144 without registration.
ARTICLE 9
ASSIGNMENT OF REGISTRATION RIGHTS
The rights of the Purchasers hereunder as to Registrable Securities
transferred by a Purchaser (or represented by Warrants transferred by a
Purchaser), including the right to have the Company register Registrable
Securities pursuant to this Agreement, shall be automatically assigned by each
Purchaser to any transferee of all or any portion of the Registrable Securities
if: (a) the Purchaser agrees in writing with the transferee or assignee to
assign such rights, and a copy of such agreement is furnished to the Company
within a reasonable time after such assignment, (b) the Company is, within a
reasonable time after such transfer or assignment, furnished with written notice
of (i) the name and address of such transferee or assignee, (ii) the securities
with respect to which such registration rights are being transferred or assigned
and (iii) the information specified in Section 3.12 to such transferee,
(c) following such transfer or assignment, the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act
or applicable state securities laws, and (d) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence, the
transferee or assignee agrees in writing for the benefit of the Company to be
bound by all of the provisions contained herein. The rights of a Purchaser
hereunder with respect to any Registrable Securities not transferred (and not
represented by Warrants transferred) shall not be assigned by virtue of the
transfer of other Registrable Securities or transferred Warrants representing
other Registrable Securities.
ARTICLE 10
AMENDMENT OF REGISTRATION RIGHTS
Provisions of this Agreement may be amended and the observance thereof
may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with written consent of the Company,
Initial Purchasers (so long as Initial Purchasers still beneficially owns
Registrable Securities) and Purchasers who hold a majority interest of the
Registrable Securities. Any amendment or waiver effected in accordance with
this Article 10 shall be binding upon each Purchaser and the Company.
Notwithstanding the foregoing, no amendment or waiver shall retroactively affect
any Purchaser without its consent or prospectively adversely affect any
Purchaser who no longer owns any Warrants, Registrable Securities without its
consent. No amendment or waiver may adversely affect one or more Purchasers or
group of Purchasers vis-a-vis any other Purchaser or group of Purchasers.
Neither Article 6 nor Article 7 hereof may be amended or waived in a manner
adverse to a Purchaser without its consent. Notwithstanding anything to the
contrary contained in this Article 10, no amendment or waiver shall be
applicable to an Initial Purchaser who does not consent in writing thereto.
-14-
<PAGE>
ARTICLE 11
MISCELLANEOUS
11.1 A person or entity is deemed to be a holder (or a holder in
interest) of Registrable Securities whenever such person or entity owns of
record such Registrable Securities (or the Warrants which may be exercised for
Registrable Securities). If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities (or Warrants, as the case may be).
11.2 Any notices herein required or permitted to be given shall be in
writing and may be personally served or delivered by courier or by
machine-generated confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
Insignia Solutions plc
41300 Christy Street
Fremont, CA 94538
Telecopy: (510)360-3702
Attention: Stephen M. Ambler
with a copy to:
Ritchey Fisher Whitman & Klein PC
1717 Embarcadero Road
P.O. Box 51050
Palo Alto, California 94303
Telecopy: (650)857-1288
Attention: Peter A. Whitman, Esq.
and if to Initial Purchasers:
To the names and addresses set forth on Schedule A hereto.
with a copy to:
Irell & Manella, LLP
333 South Hope Street
Los Angeles, CA 90071
Telecopy: (213) 229-0515
Attention: Anthony T. Iler, Esq.
-15-
<PAGE>
and if to any Purchaser, at such address as such Purchaser, shall have
provided in writing to the Company, or at such other address as each such
party furnishes by notice given in accordance with this Section 11.2.
11.3 Failure of any party to exercise any right or remedy under this
Agreement or otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.
11.4 This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed in the State of New York. The Company irrevocably consents to the
jurisdiction of the federal courts located in the state of New York and the
state courts of the State of New York located in the County of New York in the
State of New York in any suit or proceeding based on or arising under this
Agreement and irrevocably agrees that all claims in respect of such suit or
proceeding may be determined in such courts. The Company irrevocably waives the
defense of an inconvenient forum to the maintenance of such suit or proceeding.
The parties hereto further agree that service of process upon the parties hereto
mailed by first class mail shall be deemed in every respect effective service of
process upon each such party in any such suit or proceeding. Nothing herein
shall affect either party's right to serve process in any other manner permitted
by law. The parties hereto agree that a final non-appealable judgment in any
such suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
11.5 This Agreement and the Securities Purchase Agreement (including
all schedules and exhibits thereto and all certificates and opinions required
thereby) constitute the entire agreement among the parties hereto with respect
to the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement and the Securities Purchase Agreement supersede all
prior agreements and understandings among the parties hereto with respect to the
subject matter hereof and thereof.
11.6 Subject to the requirements of Article 9 hereof, this Agreement
shall inure to the benefit of and be binding upon the successors and assigns of
each of the parties hereto. Notwithstanding anything to the contrary contained
herein, including, without limitation, Article 9 (and without compliance
therewith), the rights of a Purchaser hereunder shall be assignable to and
exercisable by a bona fide pledgee of the Registrable Securities in connection
with a Purchaser's margin or brokerage accounts.
11.7 The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof.
11.8 This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto, by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement.
-16-
<PAGE>
11.9 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.
11.10 Amounts set forth or provided for herein with respect to payments,
conversion and the like (and the computation thereof) shall be the amounts to be
received by each Purchaser and shall not, except as expressly provided herein,
be subject to any other obligation of the Company (or the performance thereof).
The Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Purchasers and that the remedy at law for any such
breach may be inadequate.
11.11 The initial number of Registrable Securities included on any
Registration Statement and each increase to the number of Registrable Securities
included thereon shall be allocated pro rata among the Purchasers based on the
number of Registrable Securities held by each Purchaser at the time of such
establishment or increase, as the case may be. In the event a Purchaser shall
sell or otherwise transfer any of such holder's Registrable Securities, each
transferee shall be allocated a pro rata portion of the number of Registrable
Securities included on a Registration Statement for such transferor. Any ADSs
included on a Registration Statement and which remain allocated to any person or
entity which does not hold any Registrable Securities shall be allocated to the
remaining Purchasers, pro rata based on the number of shares of Registrable
Securities then held by such Purchasers. Without implication that the contrary
would otherwise be true, for purposes of this paragraph, all Warrants then
outstanding shall be assumed exercised for Registrable Securities (without
giving effect to any limitations on exercise contained therein).
11.12 Whenever the Company is required to make any cash payment to a
Purchaser under this Agreement, such cash payment shall be due on the date (the
"CASH DUE DATE") that such Purchaser delivers written notice from the Purchaser
to the Company. Such cash payment shall be made to the Purchaser by the method
(by certified or cashier's check or wire transfer of immediately available
funds) elected by such Holder. If such payment is not delivered within two (2)
days of the Cash Due Date, such Purchaser shall thereafter be entitled to
interest on the unpaid amount at a per annum rate equal to the lower of eighteen
percent (18%) and the highest interest rate permitted by applicable law until
such amount is paid in full to the Holder.
11.13 If any provision of this Agreement shall be invalid or
unenforceable, such invalidity or unenforceability shall not affect the validity
or enforceability of the remainder of this Agreement.
* * *
-17-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
COMPANY:
INSIGNIA SOLUTIONS PLC
By: s/Richard M. Noling
Name: Richard M. Noling
Title: President and CEO
-18-
<PAGE>
REGISTRATION RIGHTS AGREEMENT
(continued)
PURCHASERS:
VINCENT S. and ROSEMARY PINO
By s/Vincent S. Pino
VINCENT S. PINO
By s/Rosemary Pino
ROSEMARY PINO
RICHARD N. and BARBARA ZEHNER
By s/Richard N. Zehner
RICHARD N. ZEHNER
By s/Barbara Zehner
BARBARA ZEHNER
By s/Robert Waley Cohen
ROBERT WALEY-COHEN
AVALON PANAMA S.A.
By s/Avalon Panama S.A.
-19-
<PAGE>
EXHIBIT 1
TO REGISTRATION
RIGHTS AGREEMENT
[Date]
[Name and address
of transfer agent]
RE: INSIGNIA SOLUTIONS PLC
Ladies and Gentlemen:
We are counsel to Insignia Solutions plc, a company organized and
existing under the laws of England and Wales (the "COMPANY"), and we understand
that ______________________ (the "HOLDER") has purchased from the Company
American Depository Shares (the "ADSS") and certain Warrants to purchase
additional ADSs. The ADSs were purchased by the Holder pursuant to a Securities
Purchase Agreement, dated as of December __, 1999, by and among the Company and
the Holder (the "AGREEMENT"). Pursuant to a Registration Rights Agreement,
dated as of December __, 1999, by and among the Company and the Holder (the
"REGISTRATION RIGHTS AGREEMENT"), the Company agreed with the Holder, among
other things, to register the Registrable Securities (as that term is defined in
the Registration Rights Agreement) under the Securities Act of 1933, as amended
(the "SECURITIES ACT"), upon the terms provided in the Registration Rights
Agreement. In connection with the Company's obligations under the Registration
Rights Agreement, on December __, 1999, the Company filed a Registration
Statement on Form S-3 (File No. 333- __________) (the "REGISTRATION STATEMENT")
with the Securities and Exchange Commission (the "SEC") relating to the
Registrable Securities, which names the Holder as a selling stockholder
thereunder.
[Other customary introductory and scope of examination language to be
inserted, in each case as reasonably acceptable to Holders.]
Based on the foregoing, we are of the opinion that the resale of
Registrable Securities have been registered under the Securities Act.
[Other appropriate customary language to be included, in each case as
reasonably acceptable to Holders.]
Very truly yours,
-20-
<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Name, Address and Purchase Shares Warrants
Telecopy Number of Purchaser Price Purchased Purchased
- ----------------------------- -------- --------- ---------
<S> <C> <C> <C>
Vincent S. and Rosemary Pino $250,000 59,084 17,725
Richard N. and Barbara Zehner $250,000 59,084 17,725
Robert Waley-Cohen $250,000 59,084 17,725
Avalon Panama S.A. $250,000 59,084 17,725
</TABLE>
-21-
<PAGE>
EXHIBIT A
VOID AFTER 5:00 P.M., CENTRAL TIME ON DECEMBER 9, 2004
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED
OR SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THOSE LAWS.
Right to Purchase 70,900 American Depository Shares
Date: December 9, 1999
INSIGNIA SOLUTIONS PLC
ADSS PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Initial Purchasers or its
registered assigns, is entitled to purchase from Insignia Solutions plc, a
company organized and existing under the laws of England and Wales (the
"COMPANY"), at any time or from time to time during the period specified in
Section 2 hereof, 70,900 fully paid and nonassessable American Depository
Shares (the "ADSS," or "SHARES"), each ADS representing one ordinary share of
20p each nominal value of the Company (the "ORDINARY SHARES"), at an exercise
price of $5.29 per share (the "EXERCISE PRICE"). This Warrant is being
issued pursuant to that certain Securities Purchase Agreement dated December
9, 1999 by and between the Company and the Purchasers listed on Schedule A to
that Agreement (the "PURCHASERS") (the "SECURITIES PURCHASE AGREEMENT"). The
number of ADSs purchasable hereunder (the "WARRANT SHARES") and the Exercise
Price are subject to adjustment as provided in Section 4 hereof.
The term "CLOSING BID PRICE" means, for any security as of any date,
the closing bid price of such security on the principal securities exchange
or trading market where such security is listed or traded as reported by
Bloomberg Financial Markets or a comparable reporting service of national
reputation selected by the Company and reasonably acceptable to the holder
hereof (the "HOLDER") if Bloomberg Financial Markets is not then reporting
closing bid prices of such security (collectively, "BLOOMBERG"), or if the
foregoing does not apply, the last reported sale price of such security in
the over-the-counter market on the electronic bulletin board of such security
as reported by Bloomberg, or, if no sale price is reported for such security
by Bloomberg, the average of the bid prices of any market makers for such
security as reported in
<PAGE>
the "PINK SHEETS" by the National Quotation Bureau, Inc. If the Closing Bid
Price cannot be calculated for such security on such date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall be
the fair market value as reasonably determined by an investment banking firm
selected by the Company and reasonably acceptable to the Holder with the
costs of such appraisal to be borne by the Company.
This Warrant is subject to the following terms, provisions, and
conditions:
1. MECHANICS OF EXERCISE. Subject to the provisions hereof,
including, without limitation, the limitations contained in Section 8(f)
hereof, this Warrant may be exercised as follows:
(a) MANNER OF EXERCISE. This Warrant may be exercised by
the Holder, in whole or in part, by the surrender of this Warrant (or
evidence of loss, theft, destruction or mutilation thereof in accordance with
Section 8(c) hereof), together with a completed exercise agreement in the
Form of Exercise Agreement attached hereto as Exhibit 1 (the "EXERCISE
AGREEMENT"), to the Company at the Company's principal executive offices (or
such other office or agency of the Company as it may designate by notice to
the Holder), and upon payment to the Company in cash, by certified or
official bank check or by wire transfer for the account of the Company, of
the Exercise Price for the Warrant Shares specified in the Exercise
Agreement. The Warrant Shares so purchased shall be deemed to be issued to
the Holder or Holder's designees, as the record owner of such shares, as of
the date on which this Warrant shall have been surrendered, the completed
Exercise Agreement shall have been delivered, and payment shall have been
made for such shares as set forth above.
(b) ISSUANCE OF CERTIFICATES. Subject to Section 1(c),
certificates for the Warrant Shares to be so purchased, representing the
aggregate number of shares specified in the Exercise Agreement, shall be
delivered to the Holder within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised (the "DELIVERY
PERIOD"). The certificates to be so delivered shall be in such denominations
as may be requested by the Holder and shall be registered in the name of
Holder or such other name as shall be designated by such Holder. If this
Warrant shall have been exercised only in part, then, unless this Warrant has
expired, the Company shall, at its expense, at the time of delivery of such
certificates, deliver to the Holder a new Warrant representing the number of
shares with respect to which this Warrant shall not then have been exercised.
(c) EXERCISE DISPUTES. In the case of any dispute with
respect to an exercise, the Company shall promptly issue such number of ADSs
as are not disputed in accordance with this Section. If such dispute
involves the calculation of the Exercise Price, the Company shall submit the
disputed calculations to a nationally recognized independent accounting firm
(selected by the Company and reasonably acceptable to Holder) via facsimile
within three (3) business days of receipt of the Exercise Agreement. The
accounting firm shall audit the calculations and notify the Company and the
Holder of the results no later than two (2) business days from the date it
receives the disputed calculations. The accounting firm's calculation shall
be deemed conclusive, absent manifest error. The Company shall then issue
the appropriate number of ADSs in accordance with this Section.
-2-
<PAGE>
(d) FRACTIONAL SHARES. No fractional ADSs are to be issued
upon the exercise of this Warrant, but the Company shall pay a cash
adjustment in respect of any fractional share which would otherwise be
issuable in an amount equal to the same fraction of the Exercise Price of an
ADS (as determined for exercise of this Warrant into whole ADSs); provided
that in the event that sufficient funds are not legally available for the
payment of such cash adjustment any fractional ADSs shall be rounded up to
the next whole number.
2. PERIOD OF EXERCISE. This Warrant is exercisable at any time
and from time to time on or after the date hereof and before 5:00 P.M.,
Central Standard Time on the fifth (5th) anniversary of the date hereof (the
"EXERCISE PERIOD").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby
covenants and agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares and
Ordinary Shares that are represented by such Warrant Shares will, upon
issuance in accordance with the terms of this Warrant, be validly issued,
fully paid, and non-assessable and free from all taxes, liens, claims and
encumbrances and shall be entitled to the benefits specified in the
corresponding American Depositary Receipts ("ADRS") and in the Deposit
Agreement dated November 17, 1995 between the Company and The Bank of New
York relating to such ADSs.
(b) RESERVATION OF ORDINARY SHARES AND DEPOSIT OF ADSS.
During the Exercise Period, the Company shall at all times have authorized,
and reserved for the purpose of issuance upon exercise of this Warrant, a
sufficient number of Ordinary Shares, which are readily available for deposit
with the Depositary for the purpose of issuance in the form of ADSs upon
exercise of this Warrant, to provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing
of the ADSs issuable upon exercise of this Warrant on the Nasdaq National
Market System ("NNM"), as required by Section 4.9 of the Securities Purchase
Agreement and on each such national securities exchange or automated
quotation system, if any, on which ADSs are then listed or become listed and
shall maintain, so long as any other ADSs shall be so listed, such listing of
all ADSs from time to time issuable upon the exercise of this Warrant; and
the Company shall so list on each national securities exchange or automated
quotation system, as the case may be, and shall maintain such listing of any
other shares of capital stock of the Company issuable upon the exercise of
this Warrant so long as any shares of the same class shall be listed on such
national securities exchange or automated quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by
amendment of its Memorandum of Association and Articles of Association or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to
be observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such actions as may reasonably be requested by the Holder of
this Warrant in order to protect the exercise privilege of the Holder of this
Warrant, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase
the par value of any Ordinary Shares
-3-
<PAGE>
represented by ADSs receivable upon the exercise of this Warrant above the
Exercise Price then in effect, and (ii) will take all such actions as may be
necessary or appropriate in order that the Company may at all times validly
and legally issue fully paid and nonassessable ADSs upon the exercise of this
Warrant.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the
Exercise Price and the number of Warrant Shares shall be subject to
adjustment from time to time as provided in this Section 4. In the event
that any adjustment of the Exercise Price as required herein results in a
fraction of a cent, such Exercise Price shall be rounded up or down to the
nearest cent.
(a) ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF ADSS UPON
ISSUANCE OF ORDINARY SHARES. Except as otherwise provided in Section 4(c)
and 4(e) hereof and other than pursuant to the Company's existing obligations
as disclosed in Schedule 3.3 of the Securities Purchase Agreement or pursuant
to the Reset Warrant, or pursuant to the warrants issued to Castle Creek
Technology Partners LLC at or prior to the Closing on terms substantially
similar to the terms of this Warrant and the Reset Warrant, if and whenever
after the initial issuance of this Warrant, the Company issues or sells, or
in accordance with Section 4(b) hereof is deemed to have issued or sold, any
Ordinary Shares (including in the form of ADSs) for no consideration or for a
consideration per share less than the then current Market Price (as herein
defined) on the date of issuance (a "DILUTIVE ISSUANCE"), then effective
immediately upon the Dilutive Issuance, the Exercise Price will be adjusted
in accordance with the following formula:
E' = (E) (O + P/M) / (OS)
<TABLE>
<CAPTION>
where:
<C> <S>
E' = the adjusted Exercise Price
E = the then current Exercise Price;
M = the greater of the then current Market Price and the then
current Exercise Price;
O = the number of Ordinary Shares in issue immediately prior to
the Dilutive Issuance;
P = the aggregate consideration, calculated as set forth in
Section 4(b) hereof, received by the Company upon such
Dilutive Issuance; and
OS = the total number of Ordinary Shares Deemed In Issue (as
herein defined) immediately after the Dilutive Issuance.
</TABLE>
(b) EFFECT ON EXERCISE PRICE OF CERTAIN EVENTS. For
purposes of determining the adjusted Exercise Price under Section 4(a)
hereof, the following will be applicable:
(i) ISSUANCE OF RIGHTS OR OPTIONS. If the Company in
any manner issues or grants any warrants, rights or options, other than
pursuant to the Reset Warrant, whether or not immediately exercisable, to
subscribe for or to purchase Ordinary Shares (including in the form of ADSs)
or other securities exercisable, convertible into or exchangeable for
Ordinary Shares (including in the form of ADSs) ("CONVERTIBLE SECURITIES"),
but not to include the grant or exercise of any stock or options which may
hereafter be granted or exercised
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under any employee or Director benefit plan of the Company now existing or to
be implemented in the future, so long as the issuance of such stock or
options is approved by a majority of the non-employee members of the Board of
Directors of the Company or a majority of the members of a committee of
non-employee directors established for such purpose (such warrants, rights
and options to purchase Ordinary Shares or Convertible Securities are
hereinafter referred to as "OPTIONS"), and the price per share for which
Ordinary Shares are issuable upon the exercise of such Options is less than
the Market Price on the date of issuance ("BELOW MARKET OPTIONS"), then the
maximum total number of Ordinary Shares issuable upon the exercise of all
such Below Market Options (assuming full exercise, conversion or exchange of
Convertible Securities, if applicable) will, as of the date of the issuance
or grant of such Below Market Options, be deemed to be outstanding and to
have been issued and sold by the Company for such price per share. For
purposes of the preceding sentence, the price per share for which Ordinary
Shares are issuable upon the exercise of such Below Market Options is
determined by dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the issuance or granting of such Below
Market Options, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise of all such
Below Market Options, plus, in the case of Convertible Securities issuable
upon the exercise of such Below Market Options, the minimum aggregate amount
of additional consideration payable upon the exercise, conversion or exchange
thereof at the time such Convertible Securities first become exercisable,
convertible or exchangeable, by (ii) the maximum total number of Ordinary
Shares issuable upon the exercise of all such Below Market Options (assuming
full conversion of Convertible Securities, if applicable). No further
adjustment to the Exercise Price will be made upon the actual issuance of
such Ordinary Shares upon the exercise of such Below Market Options or upon
the exercise, conversion or exchange of Convertible Securities issuable upon
exercise of such Below Market Options.
(ii) ISSUANCE OF CONVERTIBLE SECURITIES.
(A) If the Company in any manner issues or
sells any Convertible Securities, whether or not immediately convertible
(other than where the same are issuable upon the exercise of Options) and the
price per share for which Ordinary Shares are issuable upon such exercise,
conversion or exchange (as determined pursuant to Section 4(b)(ii)(B) if
applicable) is less than the Market Price on the date of issuance, then the
maximum total number of Ordinary Shares issuable upon the exercise,
conversion or exchange of all such Convertible Securities will, as of the
date of the issuance of such Convertible Securities, be deemed to be in issue
and to have been issued and sold by the Company for such price per share.
For the purposes of the preceding sentence, the price per share for which
Ordinary Shares issuable upon such exercise, conversion or exchange is
determined by dividing (i) the total amount, if any, received or receivable
by the Company as consideration for the issuance or sale of all such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the exercise, conversion
or exchange thereof at the time such Convertible Securities first become
exercisable, convertible or exchangeable, by (ii) the maximum total number of
Ordinary Shares issuable upon the exercise, conversion or exchange of all
such Convertible Securities. No further adjustment to the Exercise Price
will be made upon the actual issuances of such Ordinary Shares upon exercise,
conversion or exchange of such Convertible Securities.
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(B) If the Company in any manner issues or sells
any Convertible Securities with a fluctuating conversion or exercise price or
exchange ratio (a "VARIABLE RATE CONVERTIBLE SECURITY"), then the price per
share for which Ordinary Shares are issuable upon such exercise, conversion or
exchange for purposes of the calculation contemplated by Section 4(b)(ii)(A)
shall be deemed to be the lowest price per share which would be applicable
assuming that (1) all holding period and other conditions to any discounts
contained in such Convertible Security have been satisfied, and (2) the Market
Price on the date of issuance of such Convertible Security was 80% of the Market
Price on such date (the "ASSUMED VARIABLE MARKET PRICE").
(iii) CHANGE IN OPTION PRICE OR CONVERSION RATE. Except
for the grant or exercise of any stock or options which may hereafter be
granted or exercised under any employee or Director benefit plan of the
Company now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors of the Company or a majority
of the members of a committee of non-employee directors established for such
purpose, if there is a change at any time in (i) the amount of additional
consideration payable to the Company upon the exercise of any Options; (ii)
the amount of additional consideration, if any, payable to the Company upon
the exercise, conversion or exchange or any Convertible Securities; or (iii)
the rate at which any Convertible Securities are convertible into or
exchangeable for Ordinary Shares (other than under or by reason of provisions
designed to protect against dilution), the Exercise Price in effect at the
time of such change will be readjusted to the Exercise Price which would have
been in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed additional consideration or changed
conversion rate, as the case may be, at the time initially granted, issued or
sold.
(iv) TREATMENT OF EXPIRED OPTIONS AND UNEXERCISED
CONVERTIBLE SECURITIES. If, in any case, the total number of Ordinary Shares
issuable upon exercise of any Options or upon exercise, conversion or
exchange of any Convertible Securities is not, in fact, issued and the rights
to exercise such option or to exercise, convert or exchange such Convertible
Securities shall have expired or terminated, the Exercise Price then in
effect will be readjusted to the Exercise Price which would have been in
effect at the time of such expiration or termination had such Options or
Convertible Securities, to the extent outstanding immediately prior to such
expiration or termination (other than in respect of the actual number of
Ordinary Shares issued upon exercise or conversion thereof), never been
issued.
(v) CALCULATION OF CONSIDERATION RECEIVED. If any
Ordinary Shares, Options or Convertible Securities are issued, granted or
sold for cash, the consideration received therefor for purposes of this
Warrant will be the amount received by the Company therefor, before deduction
of reasonable commissions, underwriting discounts or allowances or other
reasonable expenses paid or incurred by the Company in connection with such
issuance, grant or sale. In case any Ordinary Shares, Options or Convertible
Securities are issued or sold for a consideration part or all of which shall
be other than cash, the amount of the consideration other than cash received
by the Company will be the fair market value of such consideration except
where such consideration consists of freely-tradeable securities, in which
case the amount of consideration received by the Company will be the Market
Price thereof as of the date of receipt. In case any Ordinary Shares,
Options or Convertible Securities are issued in connection with any
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<PAGE>
merger or consolidation in which the Company is the surviving corporation,
the amount of consideration therefor will be deemed to be the fair market
value of such portion of the net assets and business of the non-surviving
corporation as is attributable to such Ordinary Shares, Options or
Convertible Securities, as the case may be. The fair market value of any
consideration other than cash or securities will be determined in the good
faith reasonable business judgment of the Board of Directors.
(vi) EXCEPTIONS TO ADJUSTMENT OF EXERCISE PRICE. No
adjustment to the Exercise Price will be made (i) upon the exercise of any
warrants, options or convertible securities issued and outstanding on the
date hereof in accordance with the terms of such securities as of such date;
(ii) upon the grant or exercise of any stock or options which may hereafter
be granted or exercised under any employee or Director benefit plan of the
Company now existing or to be implemented in the future, so long as the
issuance of such stock or options is approved by a majority of the
non-employee members of the Board of Directors of the Company or a majority
of the members of a committee of non-employee directors established for such
purpose; (iii) upon the issuance of the Warrant in accordance with terms of
the Securities Purchase Agreement; or (iv) upon the exercise of this Warrant.
(c) SUBDIVISION OR COMBINATION OF ORDINARY SHARES. If the
Company, at any time after the initial issuance of this Warrant, subdivides
(by any stock split, stock dividend, recapitalization, reorganization,
reclassification or otherwise) its Ordinary Shares into a greater number of
shares, then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company, at any time after the initial
issuance of this Warrant, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Ordinary Shares
into a smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
(d) ADJUSTMENT IN NUMBER OF ADSS. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 4 or Section 5,
the number of ADSs issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect immediately
prior to such adjustment by the number of ADSs issuable upon exercise of this
Warrant immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
(e) MAJOR TRANSACTIONS. If the Company shall consolidate or
merge with any other corporation or entity (other than a consolidation or
merger in which the Company is the surviving or continuing entity and its
capital stock is unchanged and unissued in such transaction (except for
issuances which do not exceed fifty percent (50%) of the Ordinary Shares)) or
there shall occur any share exchange pursuant to which all of the Ordinary
Shares in issue, including those represented by ADSs, are converted into
other securities or property or any such other reclassification or change of
the Ordinary Shares in issue or the Company shall sell all or substantially
all of its assets (each of the foregoing being a "MAJOR TRANSACTION"), then
the holder of this Warrant may, at its option, either (a) in the event that
the Ordinary Shares remain in issue or holders of Ordinary Shares receive any
common stock or substantially similar equity interest, in each of the
foregoing cases the American Depository Shares representing which is publicly
traded, retain this Warrant and this Warrant shall continue to apply to such
ADSs or shall apply,
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<PAGE>
as nearly as practicable, to the American depository shares of such other
common stock or equity interest, as the case may be, or (b) regardless of
whether (a) applies, receive consideration, in exchange for this Warrant
(without payment of any exercise price hereunder), equal to the greater of,
as determined in the sole discretion of such holder, (i) the number of shares
of stock or securities or property of the Company, or of the entity resulting
from such Major Transaction (the "MAJOR TRANSACTION CONSIDERATION"), to which
a holder of the number of Ordinary Shares represented by the ADSs deliverable
upon the exercise of this Warrant would have been entitled upon such Major
Transaction had such holder so exercised this Warrant (without regard to any
limitations on exercise herein or elsewhere contained) on the trading date
immediately preceding the public announcement of the transaction resulting in
such Major Transaction and had such ADSs been issued and outstanding and had
such Holder been the holder of record of such ADSs at the time of the
consummation of such Major Transaction, and (ii) cash paid by the Company in
immediately available funds in an amount equal to the Black-Scholes Amount
(as defined herein) times the number of ADSs for which this Warrant was
exercisable (without regard to any limitations on exercise herein contained
and assuming payment of the exercise payment in cash hereunder), and the
Company shall make lawful provision for the foregoing as a part of such Major
Transaction and shall cause the issuer of any security in such transaction
which constitutes Registrable Securities under that certain Registration
Rights Agreement dated December 9, 1999 by and between the Company and the
Purchasers (the "REGISTRATION RIGHTS AGREEMENT") to assume all of the
Company's obligations under the Registration Rights Agreement. In the event
that the Company shall consolidate or merge with any other corporation in a
transaction in which common stock of the surviving corporation or the parent
thereof (the "EXCHANGE SECURITIES") is issued to the holders of Ordinary
Shares in such transaction in exchange for all such Ordinary Shares, and (a)
the Exchange Securities are publicly traded and an American Depository
Receipt facility is established, (b) the average daily dollar trading volume
of the Exchange Securities during the one hundred eighty (180) day period
ending on the date on which such transaction is publicly disclosed is greater
than One Million Dollars ($1,000,000.00) per day as reported by Bloomberg,
(c) the historical one hundred (100) day volatility of the Exchange
Securities during the period ending on the date on which such transaction is
publicly disclosed is greater than fifty percent (50%), and (d) the market
capitalization of the issuer of the Exchange Securities is not less than One
hundred Million Dollars ($100,000,000.00) based on the last sale price of the
Exchange Securities on the date immediately before the date on which such
transaction is publicly disclosed (in each case, with respect to the
foregoing clauses (a) through (d), as reported by Bloomberg), then the
provisions of clause (b) of the preceding sentence shall not apply. In the
event that the Company shall, in a Major Transaction, consolidate or merge
with any other corporation in a transaction in which the Company is the
survivor (a "COMPANY TRANSACTION"), the provisions of clause (ii) of the
second preceding sentence shall not apply to the extent that each of the
following conditions remain true for the thirty (30) business days commencing
as of the date of the consummation of such transaction (the "MEASUREMENT
PERIOD"): (a) the ADS remains publicly traded during the period, (b) the
average daily dollar trading volume of the ADS is greater than One Million
Dollars ($1,000,000.00), (c) the historical thirty (30) day volatility of the
Company's ADS is greater than fifty percent (50%), and (d) the market
capitalization of the Company is not less than One Hundred Million Dollars
($1,000,000.00) on the last day of the period (in each case, with respect to
the foregoing clauses (a) through (d), as reported by Bloomberg). No sooner
than ten (10) business days nor later than five (5) business days prior to
the consummation of the Major Transaction, but not prior to the public
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<PAGE>
announcement of such Major Transaction, the Company shall deliver written
notice ("NOTICE OF MAJOR TRANSACTION") to the Holder of this Warrant, which
Notice of Major Transaction shall be deemed to have been delivered one (1)
business day after the Company's sending such notice by telecopy (provided
that the Company sends a confirming copy of such notice on the same day by
overnight courier) of such Notice of Major Transaction. Such Notice of Major
Transaction shall indicate the amount and type of the Major Transaction
consideration which the Holder of this Warrant would receive under this
Section. If the Major Transaction Consideration is cash and does not consist
entirely of United States currency, the Holder may elect to receive United
States currency in an amount equal to the value of the Major Transaction
Consideration in lieu of the Major Transaction Consideration by delivering
notice of such election to the Company within five (5) business days of such
holder's receipt of the Notice of Major Transaction.
The "BLACK-SCHOLES AMOUNT" shall be the amount
determined by calculating the "Black-Scholes" value of an option to purchase
one ADS on the applicable page on the Bloomberg online page, using the
following variable values: (i) the current market price of the ADSs equal to
the closing trade price on the last trading day before the date of the Notice
of the Major Transaction; (ii) volatility of the ADS equal to the volatility
of the ADSs during the 100 trading day period preceding the date of the
Notice of the Major Transaction; (iii) a risk free rate equal to the interest
rate on the United States treasury bill or treasury note with a maturity
corresponding to the remaining term of this Warrant on the date of the Notice
of the Major Transaction; and (iv) an exercise price equal to the Exercise
Price on the date of the Notice of the Major Transaction. In the event such
calculation function is no longer available utilizing the Bloomberg online
page, the Holder shall calculate such amount in its sole discretion using the
closest available alternative mechanism and variable values to those
available utilizing the Bloomberg online page for such calculation function.
(f) DISTRIBUTION OF ASSETS. In case the Company shall
declare or make any distribution of its assets (or rights to acquire its
assets) to holders of its Ordinary Shares and ADSs as a partial liquidating
dividend, by way of return of capital or otherwise (including any dividend or
distribution to the Company's shareholders of cash or shares (or rights to
acquire shares) of capital stock of a subsidiary) (a "DISTRIBUTION"), at any
time after the initial issuance of this Warrant, then the Holder shall be
entitled upon exercise of this Warrant for the purchase of any or all of the
ADSs subject hereto, to receive the amount of such assets (or rights) which
would have been payable to the Holder had such Holder been the holder of such
ADSs on the record date for the determination of holders of Ordinary Shares
and ADSs entitled to such Distribution.
(g) SPECIAL ADJUSTMENT AND NOTICES OF ADJUSTMENT. Upon the
occurrence of any event which requires any adjustment of the Exercise Price,
then, and in each such case, the Company shall give notice thereof to the
Holder, which notice shall state the Exercise Price resulting from such
adjustment and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable detail
the method of calculation and the facts upon which such calculation is based.
Such calculation shall be certified by the chief financial officer of the
Company. If the Company takes any actions (including under or by virtue of
Section 4 of the Warrant) which would have a dilutive effect on the Holder or
which would materially and adversely affect the Holder with respect to its
investment in the Warrant, and if the provisions of Section 4 of the Warrant,
are not strictly
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<PAGE>
applicable to such actions or, if applicable to such actions, would not
operate to equitably protect the Holder against such actions, then the
Company shall promptly upon notice from Holder appoint its independent
certified public accountants to determine as promptly as practicable an
appropriate adjustment to the terms hereof, including without limitation
adjustments to the Exercise Price, or another appropriate action to so
equitably protect such Holder and prevent any such dilution and any such
material adverse effect, as the case may be. Following such determination,
the Company shall forthwith make the adjustments or take the other actions
described therein.
(h) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of
the Exercise Price shall be made in an amount of less than 1% of the Exercise
Price in effect at the time such adjustment is otherwise required to be made,
but any such lesser adjustment shall be carried forward and shall be made at
the time and together with the next subsequent adjustment which, together
with any adjustments so carried forward, shall amount to not less than 1% of
such Exercise Price.
(i) [Intentionally Omitted]
(j) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the
Ordinary Shares payable in shares of stock of any class or make any other
distribution to the holders of the Ordinary Shares and holders of ADSs;
(ii) the Company shall offer for subscription pro rata
to the holders of the Ordinary Shares and ADSs any additional shares of stock
of any class or other rights;
(iii) there shall be any capital reorganization of the
Company, or reclassification of the Ordinary Shares, or consolidation or
merger of the Company with or into, or sale of all or substantially all of
its assets to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Holder (a) notice of
the date on which the books of the Company shall close or a record shall be
taken for determining the holders of Ordinary Shares and holders of ADSs
entitled to receive any such dividend, distribution, or subscription rights
or for determining the holders of Ordinary Shares entitled to vote and
holders of ADSs entitled to give voting instructions to the Depositary in
respect of any such reorganization, reclassification, consolidation, merger,
sale, dissolution, liquidation or winding-up and (b) in the case of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up, notice of the date (or, if not then known, a
reasonable approximation thereof by the Company) when the same shall take
place. Such notice shall also specify the date on which the holders of
Ordinary Shares and holders of ADSs shall be entitled to receive such
dividend, distribution, or subscription rights or to exchange their Ordinary
Shares and ADSs for stock or other securities or property deliverable upon
such reorganization, reclassification, consolidation, merger, sale,
dissolution, liquidation, or winding-up, as the case may be. Such notice
shall be given at least thirty (30) days prior to the
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record date or the date on which the Company's books are closed in respect
thereto, but in no event earlier than public announcement of such proposed
transaction or event. Failure to give any such notice or any defect therein
shall not affect the validity of the proceedings referred to in clauses (i),
(ii), (iii) and (iv) above.
(k) CERTAIN DEFINITIONS.
(i) "ORDINARY SHARES DEEMED IN ISSUE" shall mean the
number of Ordinary Shares actually in issue (including Ordinary Shares
represented by issued and outstanding ADSs but not including Ordinary Shares
held in the treasury of the Company), plus (x) in case of any adjustment
required by Section 4(a) resulting from the issuance of any Options, the
maximum total number of Ordinary Shares (including in the form of ADSs)
issuable upon the exercise of the Options for which the adjustment is
required (including any Ordinary Shares (including in the form of ADSs)
issuable upon the conversion of Convertible Securities issuable upon the
exercise of such Options), and (y) in the case of any adjustment required by
Section 4(a) resulting from the issuance of any Convertible Securities, the
maximum total number of Ordinary Shares (including in the form of ADSs)
issuable upon the exercise, conversion or exchange of the Convertible
Securities for which the adjustment is required, as of the date of issuance
of such Convertible Securities, if any.
(ii) "MARKET PRICE," as of any date, (i) means the
average of the Closing Bid Prices for the ADSs as reported to Nasdaq for the
ten (10) trading days immediately preceding such date, or (ii) if Nasdaq is
not the principal trading market for the ADSs, the average of the last
reported bid prices on the principal trading market for the ADSs during the
same period, or, if there is no bid price for such period, the last reported
sales price for such period, or (iii) if market value cannot be calculated as
of such date on any of the foregoing bases, the Market Price shall be the
average fair market value as reasonably determined by an investment banking
firm selected by the Company and reasonably acceptable to the Holder of this
Warrant, with the costs of the appraisal to be borne by the Company. The
manner of determining the Market Price of the ADSs set forth in the foregoing
definition shall apply with respect to any other security in respect of which
a determination as to market value must be made hereunder.
(iii) "ORDINARY SHARES," for purposes of this Section
4, includes the Ordinary Shares and any additional class of stock of the
Company having no preference as to dividends or distributions on liquidation,
provided that the Ordinary Shares represented by the ADSs purchasable
pursuant to this Warrant shall include only Ordinary Shares in respect of
which this Warrant is exercisable, or shares resulting from any subdivision
or combination of such Ordinary Shares, or in the case of any reorganization,
reclassification, consolidation, merger, or sale of the character referred to
in Section 4(e) hereof, the stock or other securities or property provided
for in such Section.
5. RESETS. If the Escrow Cure Date as defined in the Securities
Purchase Agreement does not occur within seven (7) months of Closing, the
Exercise Price of this Warrant will be adjusted to the Market Price on the
seven-month anniversary of the Closing Date; provided, however, that no
adjustment shall be made which would have the effect of increasing the
Exercise Price.
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6. ISSUE TAX. The issuance of certificates for Warrant Shares upon
the exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than the Holder.
7. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the Holder to any voting rights or other rights as a holder of the
Company's Ordinary Shares or ADSs. No provision of this Warrant, in the absence
of affirmative action by the Holder to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the Holder, shall give rise to
any liability of the Holder for the Exercise Price or as a holder of the
Company's Ordinary Shares or ADSs, whether such liability is asserted by the
Company or by creditors of the Company.
8. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the Holder are transferable, in whole or in part, upon surrender
of this Warrant, together with a properly executed assignment in the Form of
Assignment attached hereto as Exhibit 2, at the office or agency of the
Company referred to in Section 8(e) below, provided, however, that any
transfer or assignment shall be subject to the provisions of Section 5.1 and
5.2 of the Securities Purchase Agreement. Until due presentment for
registration of transfer on the books of the Company, the Company may treat
the registered holder hereof as the owner and holder hereof for all purposes,
and the Company shall not be affected by any notice to the contrary.
Notwithstanding anything to the contrary contained herein, the registration
rights described in Section 9 hereof are assignable only in accordance with
the provisions of the Registration Rights Agreement.
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the
office or agency of the Company referred to in Section 8(e) below, for new
Warrants, in the form hereof, of different denominations representing in the
aggregate the right to purchase the number of ADSs which may be purchased
hereunder, each of such new Warrants to represent the right to purchase such
number of ADSs as shall be designated by the Holder of at the time of such
surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant or, in the case of any such loss, theft, or
destruction, upon delivery, of an indemnity agreement reasonably satisfactory
in form and amount to the Company, or, in the case of any such mutilation,
upon surrender and cancellation of this Warrant, the Company, at its expense,
will execute and deliver, in lieu thereof, a new Warrant, in the form hereof,
in such denominations as Holder may request.
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender
of this Warrant in connection with any transfer, exchange, or replacement as
provided in this Section 8, this Warrant shall be promptly canceled by the
Company. The Company shall pay all issuance taxes (other than securities
transfer taxes) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 8.
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(e) WARRANT REGISTER. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as
it may designate by notice to the Holder), a register for this Warrant, in
which the Company shall record the name and address of the person in whose
name this Warrant has been issued, as well as the name and address of each
transferee and each prior owner of this Warrant.
(f) ADDITIONAL RESTRICTION ON EXERCISE OR TRANSFER.
Notwithstanding anything to the contrary contained herein, the Warrant shall
not be exercisable by the Holder to the extent (but only to the extent) that,
if exercisable by Holder, Holder would beneficially own Ordinary Shares and
ADSs in excess of 9.9% (the "APPLICABLE PERCENTAGE") of the total Ordinary
Shares in issue. To the extent the above limitation applies, the
determination of whether the Warrant shall be exercisable (vis-a-vis other
securities owned by Holder which contain similar limitations on conversion)
and of which Warrants shall be exercisable (as among Warrants) shall be made
on the basis of the earliest submission of the Warrants (vis-a-vis other
securities owned by the Holder which contain similar limitations on
conversion and vis a vis other Warrants), in each case subject to such
aggregate percentage limitation. No prior inability to exercise Warrants
pursuant to this paragraph shall have any effect on the applicability of the
provisions of this paragraph with respect to any subsequent determination of
exercisability. For the purposes of this paragraph, beneficial ownership and
all determinations and calculations, including without limitation, with
respect to calculations of percentage ownership, shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13D and G thereunder. The provisions of this
paragraph may be implemented in a manner otherwise than in strict conformity
with the terms of this Section 8(f) with the approval of the Board of
Directors of the Company and the Holder: (i) with respect to any matter to
cure any ambiguity herein, to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Applicable
Percentage beneficial ownership limitation herein contained or to make
changes or supplements necessary or desirable to properly give effect to such
Applicable Percentage limitation; and (ii) with respect to any other matter,
with the further consent of the holders of a majority of the then Ordinary
Shares in issue. For clarification, it is expressly a term of this security
that the limitations contained in this Section shall apply to each successor
Holder. The holders of Ordinary Shares of the Company shall be third-party
beneficiaries of this Section 8(f) and the Company may not waive this Section
8(f) without the consent of holders of a majority of its Ordinary Shares.
(g) CAP AMOUNT. Prior to Shareholder Approval (as defined
in the Securities Purchase Agreement), unless otherwise permitted by The
Nasdaq National Market System or of the national securities exchange on which
the ADSs are listed, or unless the rules thereof no longer are applicable to
the Company, in no event shall the total number of ADSs issued at the Closing
under the Securities Purchase Agreement and upon exercise of the Warrants,
when aggregated with the total number of ADSs issued under that certain
Securities Purchase Agreement of even date herewith between the Company and
Castle Creek Technology Partners LLC (the "Castle Creek Agreement") and upon
exercise of the warrants pursuant to the Castle Creek Agreement, exceed the
maximum number of shares of Common Stock that the Company can without
stockholder approval so issue pursuant to Nasdaq Rule 4460(i) (or any
successor rule) (the "CAP AMOUNT") upon Closing under the Securities Purchase
Agreement and the exercise of the Warrants, which, as of the date of initial
issuance of ADSs and Warrants to the Holders, is ____________ Shares. In the
event the Holder shall sell or otherwise transfer any of
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<PAGE>
such Holder's Warrants, each transferee shall be allocated a pro rata portion
of such Cap Amount.
9. REGISTRATION RIGHTS. The initial holder of this Warrant (and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in the Registration
Rights Agreement.
10. NOTICES. Any notice herein required or permitted to be given
shall be in writing and may be personally served or delivered by courier or
by confirmed telecopy, and shall be deemed delivered at the time and date of
receipt (which shall include telephone line facsimile transmission). The
addresses for such communications shall be:
If to the Company:
Insignia Solutions plc
41300 Christy Street
Fremont, California 94538-3115
Telecopy: (510)360-3702
Attention: Stephen M. Ambler
with a copy to:
Ritchey Fisher Whitman & Klein PC
1717 Embarcadero Road
P. O. Box 51050
Palo Alto, California 94303
Telecopy: (650)857-1288
Attention: Peter A. Whitman, Esq.
and if to the Holder, at such address as Holder shall have provided in
writing to the Company, or at such other address as each such party furnishes
by notice given in accordance with this Section 10.
11. GOVERNING LAW; JURISDICTION. This Warrant shall be governed by
and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed in the State of New York. The Company
irrevocably consents to the jurisdiction of the United States federal courts
located in the State of New York in any suit or proceeding based on or
arising under this Warrant and irrevocably agrees that all claims in respect
of such suit or proceeding may be determined in such courts. The Company
irrevocably waives the defense of an inconvenient forum to the maintenance of
such suit or proceeding. The Company agrees that a final nonappealable
judgment in any such suit or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
12. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may
only be amended by an instrument in writing signed by the Company and the
Holder.
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<PAGE>
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
(c) ASSIGNABILITY. This Warrant shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of
Holder and its successors and assigns. The Holder shall notify the Company
upon the assignment of this Warrant.
* * *
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Insignia Solutions plc
By: s/Richard M. Noling
Name: Richard M. Noling
Title: President and CEO
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<PAGE>
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to purchase
____________ of the American Depositary Shares ("ADSS") of Insignia Solutions
plc, a company organized and existing under the laws of England and Wales
(the "COMPANY"), evidenced by the attached Warrant, and herewith makes
payment of the Exercise Price with respect to such ADSs in full, all in
accordance with the conditions and provisions of said Warrant.
(i) The undersigned agrees not to offer, sell, transfer or
otherwise dispose of any ADSs obtained on exercise of the Warrant, except
under circumstances that will not result in a violation of the Securities Act
of 1933, as amended, or any state securities laws.
(ii) The undersigned requests that the American Deposit Receipts for
such ADSs be issued, and a Warrant representing any unexercised portion
hereof be issued, pursuant to the Warrant in the name of the Holder (or such
other person or persons indicated below) and delivered to the undersigned (or
designee(s) at the address (or addresses) set forth below:
Date: ________________________
________________________________________
Signature of Holder
________________________________________
Name of Holder (Print)
Address:
________________________________________
________________________________________
-17-
<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and
transfers all rights of the undersigned under the within Warrant, with
respect to the number of ADSs covered thereby set forth hereinbelow, to:
<TABLE>
<CAPTION>
NAME OF ASSIGNEE ADDRESS NO. OF SHARES
<S> <C> <C>
</TABLE>
and hereby irrevocably constitutes and appoints ____________ ___ as agent and
attorney-in-fact to transfer said Warrant on the books of the within-named
corporation, with full power of substitution in the premises.
Date: _________, ____
In the presence of
Name:
________________________________________
Signature:______________________________
Title of Signing Officer or
Agent (if any):
__________________________________
Address: ________________________
_______________________
Note: The above signature should
correspond exactly with the
name on the face of the
within Warrant.
-18-
<PAGE>
EXHIBIT C
VOID AFTER 5:00 P.M., CENTRAL TIME ON DECEMBER 9, 2004
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES. THE SECURITIES REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD
OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS, OR UNLESS OFFERED, SOLD OR
TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THOSE LAWS.
Right to Purchase American Depository Shares
Date: December 9, 1999
INSIGNIA SOLUTIONS PLC
ADSs PURCHASE WARRANT
THIS CERTIFIES THAT, for value received, Initial Purchaser, or its
registered assigns, is entitled to purchase from Insignia Solutions plc, a
company organized and existing under the laws of England and Wales (the
"Company"), at any time or from time to time during the period specified in
Section 2 hereof, a number of fully paid and nonassessable American Depository
Shares (the "ADSs" or "Shares"), each ADS representing one ordinary share of 20p
each nominal value of the Company ("Ordinary Shares"), determined pursuant to
Section 1 hereof, at the exercise price (the "Exercise Price") defined below.
This Warrant is being issued pursuant to that certain Securities Purchase
Agreement dated December 9, 1999 by and between the Company and the Purchasers
listed on Schedule A to that Agreement (the "Purchasers") (the "SECURITIES
PURCHASE AGREEMENT"). The number of ADSs purchasable hereunder (the "Warrant
Shares") and the Exercise Price are subject to further adjustment as provided in
Section 4 hereof.
The term "Closing Bid Price" means, for any security as of any date, the
closing bid price of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg
Financial Markets or a comparable reporting service of national reputation
selected by the Company and reasonably acceptable to the holder hereof (the
"Holder") if Bloomberg Financial Markets is not then reporting closing bid
prices of such security (collectively, "Bloomberg"), or if the foregoing does
not apply, the last reported sale price of such security in the over-the-counter
market on the electronic bulletin board of such security as reported by
Bloomberg, or, if no sale price is reported for such security by Bloomberg, the
average of the bid prices of any market makers for such security as reported in
<PAGE>
the "pink sheets" by the National Quotation Bureau, Inc. If the Closing Bid
Price cannot be calculated for such security on such date on any of the
foregoing bases, the Closing Bid Price of such security on such date shall be
the fair market value as reasonably determined by an investment banking firm
selected by the Company and reasonably acceptable to the Holder with the costs
of such appraisal to be borne by the Company.
The Exercise Price shall equal to 20 pence per share, converted into US
dollars at the daily exchange rate as reported in The Wall Street Journal
(Midwest Edition) on the business day immediately preceding the date of
exercise.
This Warrant is subject to the following terms, provisions, and
conditions:
1. (a) NUMBER OF SHARES INTO WHICH THIS WARRANT IS EXERCISABLE. On
any Reset Date (as defined herein), this Warrant shall become exercisable into
additional Shares. For purposes hereof, the number of additional Shares into
which this Warrant becomes exercisable on a Reset Date shall be determined
according to the following formula, where N represents such number:
P - M
[--------] * O
M
N = ---------------------
[1 - V/M]
where: P = the Market Price on the issuing date;
M = the Market Price on the applicable Reset Date;
O = the number of ADSs purchased on the Closing
Date; and
V = 20 pence, converted into US dollars at the daily
exchange rate as reported in The Wall Street Journal
(Midwest Edition) on the business day immediately
preceding the applicable Reset Date.
Notwithstanding the foregoing, this Warrant shall not become exercisable for
additional Shares pursuant to this Section 1(a) if such reset would violate
NASDAQ Rule 4460(i) (or any successor rule). To the extent that the immediately
preceding sentence is applicable, the Company shall pay to the Purchaser an
amount equal to (x) "N" times the Market Price on the Reset Date. For any given
date, the "Market Price" shall be the average of the closing bid prices of the
shares of ADSs for the ten (10) consecutive trading days immediately prior to
such date.
(b) RESET DATES. A "RESET DATE" shall mean:
(i) each of (A) the date on which the Registration
Statement (as defined in the Registration Rights Agreement) required to be filed
by the Company pursuant to
-2-
<PAGE>
Section 2.1 of the Registration Rights Agreement is first declared effective
(the "EFFECTIVE DATE"), (B) the date which is four (4) months after the
Effective Date and (C) the date which is eight (8) months after the Effective
Date, in each case where the Market Price on such date is less than $4.23
(the Market Price on the Closing Date);
(ii) if the Registration Statement has not been declared
effective by the date which is five (5) months after the Closing Date (the
"EFFECTIVENESS TRIGGER DATE"), (A) the Effectiveness Trigger Date and (B) each
date which is one calendar month following the Effectiveness Trigger Date on
which the Registration Statement has not yet been declared effective (in such
circumstances, such date, also an "Effectiveness Trigger Date"); and
(iii) if, by the date which is three (3) months after the
Closing Date (the "ESCROW TRIGGER DATE"), the Company does not have released to
it at least 4.75 million dollars ($4,750,000) (the "CURE AMOUNT") of the 6.25
million dollars ($6,250,000) held in escrow as of the Closing Date by State
Street Bank pursuant to that certain escrow agreement dated February 5, 1998 by
and between the Company and Citrix Systems Inc. (the "ESCROW AGREEMENT"),
(A) the Escrow Trigger Date and (B) each date which is one calendar month
following the Escrow Trigger Date, up to but excluding the Escrow Cure Date (as
defined herein).
The "ESCROW CURE DATE" shall mean the earlier of (a) the date on which the Cure
Amount has been released to the Company pursuant to the Escrow Agreement and
(b) the date which is twelve (12) months after the Effective Date.
(c) PUBLIC OFFERING EXCEPTION. Notwithstanding anything to the
contrary contained in Section 1(b),
(i) the date described in Section 1(b) (i)(B) hereof
shall not be a Reset Date if, prior to the earlier of such date or the date
which is eight (8) months after the Closing Date, the Company has completed an
underwritten public offering with net proceeds to the Company of at least
twenty-five million dollars ($25,000,000) at a price per share of ADSs greater
than (x) 1.66 TIMES (y) the Market Price on the Closing Date (an "OFFERING");
and
(ii) the date described in Section 1 (b) (i)(C) hereof
shall not be a Reset Date if, prior to the date which is twelve (12) months
after the Closing Date, the Company completes an Offering.
2. MECHANICS AND PERIOD OF EXERCISE. Subject to the provisions
hereof, including, without limitation, the limitations contained in Section 8(f)
hereof, this Warrant may be exercised as follows:
(a) MANNER OF EXERCISE. This Warrant may be exercised by the
Holder, in whole or in part, by the surrender of this Warrant (or evidence of
loss, theft, destruction or mutilation thereof in accordance with Section 8(c)
hereof), together with a completed exercise agreement in the Form of Exercise
Agreement attached hereto as Exhibit 1 (the "EXERCISE AGREEMENT"), to the
Company at the Company's principal executive offices (or such other office or
agency of the Company as it may designate by notice to the Holder), and upon
payment to the Company in cash, by certified or official bank check or by wire
transfer for the account of the
-3-
<PAGE>
Company, of the Exercise Price for the Warrant Shares specified in the
Exercise Agreement. The Warrant Shares so purchased shall be deemed to be
issued to the Holder or Holder's designees, as the record owner of such
shares, as of the date on which this Warrant shall have been surrendered, the
completed Exercise Agreement shall have been delivered, and payment shall
have been made for such shares as set forth above.
(b) ISSUANCE OF CERTIFICATES. Subject to Section 2(c),
certificates for the Warrant Shares so purchased, representing the aggregate
number of shares specified in the Exercise Agreement, shall be delivered to the
Holder within a reasonable time, not exceeding three (3) business days, after
this Warrant shall have been so exercised (the "DELIVERY PERIOD"). The
certificates so delivered shall be in such denominations as may be requested by
the Holder and shall be registered in the name of Holder or such other name as
shall be designated by such Holder. If this Warrant shall have been exercised
only in part, then, unless this Warrant has expired, the Company shall, at its
expense, at the time of delivery of such certificates, deliver to the Holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.
(c) EXERCISE DISPUTES. In the case of any dispute with respect
to an exercise, the Company shall promptly issue such number of ADSs as are not
disputed in accordance with this Section. If such dispute involves the
calculation of the Exercise Price, the Company shall submit the disputed
calculations to a nationally recognized independent accounting firm (selected by
the Company and reasonably acceptable to Holder) via facsimile within three (3)
business days of receipt of the Exercise Agreement. The accounting firm shall
audit the calculations and notify the Company and the exercising Holder of the
results no later than two (2) business days from the date it receives the
disputed calculations. The accounting firm's calculation shall be deemed
conclusive, absent manifest error. The Company shall then issue the appropriate
number of ADSs in accordance with this Section.
(d) FRACTIONAL SHARES. No fractional ADSs are to be issued
upon the exercise of this Warrant, but the Company shall pay a cash adjustment
in respect of any fractional share which would otherwise be issuable in an
amount equal to the same fraction of the Exercise Price of an ADS (as determined
for exercise of this Warrant into whole ADSs); provided that in the event that
sufficient funds are not legally available for the payment of such cash
adjustment any fractional ADSs shall be rounded up to the next whole number.
(e) PERIOD OF EXERCISE. This Warrant is exercisable at any
time and from time to time on or after the date hereof and before 5:00 P.M.,
Central Standard Time on the fifth (5th) anniversary of the date hereof (the
"EXERCISE PERIOD").
3. CERTAIN AGREEMENTS OF THE COMPANY. The Company hereby covenants
and agrees as follows:
(a) SHARES TO BE FULLY PAID. All Warrant Shares and Ordinary
Shares that are represented by such Warrant Shares will, upon issuance in
accordance with the terms of this Warrant, be validly issued, fully paid, and
non-assessable and free from all taxes, liens, claims and encumbrances.
-4-
<PAGE>
(b) RESERVATION OF ORDINARY SHARES AND DEPOSIT OF ADSs. During
the Exercise Period, the Company shall at all times have authorized, and
reserved for the purpose of issuance upon exercise of this Warrant, a sufficient
number of Ordinary Shares, which are readily available for deposit with the
Depositary for the purpose of issuance in the form of ADSs upon exercise of this
Warrant, to provide for the exercise of this Warrant.
(c) LISTING. The Company shall promptly secure the listing of
the ADSs issuable upon exercise of this Warrant on the Nasdaq National Market
System ("NNM") as required by Section 4.9 of the Securities Purchase Agreement
and on each such national securities exchange or automated quotation system, if
any, on which ADSs are then listed or become listed and shall maintain, so long
as any other ADSs shall be so listed, such listing of all ADSs from time to time
issuable upon the exercise of this Warrant; and the Company shall so list on
each national securities exchange or automated quotation system, as the case may
be, and shall maintain such listing of any other shares of capital stock of the
Company issuable upon the exercise of this Warrant so long as any shares of the
same class shall be listed on such national securities exchange or automated
quotation system.
(d) CERTAIN ACTIONS PROHIBITED. The Company will not, by
amendment of its Memorandum of Association and Articles of Association or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms to be
observed or performed by it hereunder, but will at all times in good faith
assist in the carrying out of all the provisions of this Warrant and in the
taking of all such actions as may reasonably be requested by the Holder of this
Warrant in order to protect the exercise privilege of the Holder of this
Warrant, consistent with the tenor and purpose of this Warrant. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any Ordinary Shares represented by ADSs receivable upon the
exercise of this Warrant above the Exercise Price then in effect, and (ii) will
take all such actions as may be necessary or appropriate in order that the
Company may at all times validly and legally issue fully paid and nonassessable
ADSs and Ordinary Shares upon the exercise of this Warrant.
4. ANTIDILUTION PROVISIONS. During the Exercise Period, the Exercise
Price and the number of Warrant Shares shall be subject to adjustment from time
to time as provided in this Section 4. In the event that any adjustment of the
Exercise Price as required herein results in a fraction of a cent, such Exercise
Price shall be rounded up or down to the nearest cent.
(a) SUBDIVISION OR COMBINATION OF ORDINARY SHARES. If the
Company, at any time after the initial issuance of this Warrant, subdivides (by
any stock split, stock dividend, recapitalization, reorganization,
reclassification or otherwise) its Ordinary Shares into a greater number of
shares, then, after the date of record for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company, at any time after the initial issuance
of this Warrant, combines (by reverse stock split, recapitalization,
reorganization, reclassification or otherwise) its shares of Ordinary Shares
into a smaller number of shares, then, after the date of record for effecting
such combination, the Exercise Price in effect immediately prior to such
combination will be proportionately increased.
-5-
<PAGE>
(b) ADJUSTMENT IN NUMBER OF ADSs. Upon each adjustment of the
Exercise Price pursuant to the provisions of this Section 4, the number of ADSs
issuable upon exercise of this Warrant shall be adjusted by multiplying a number
equal to the Exercise Price in effect immediately prior to such adjustment by
the number of ADSs issuable upon exercise of this Warrant immediately prior to
such adjustment and dividing the product so obtained by the adjusted Exercise
Price.
(c) MAJOR TRANSACTIONS. If the Company shall consolidate or
merge with any other corporation or entity (other than a consolidation or merger
in which the Company is the surviving or continuing entity and its capital stock
is unchanged and unissued in such transaction (except for issuances which do not
exceed fifty percent (50%) of the Common Stock)) or there shall occur any share
exchange pursuant to which all of the Ordinary Shares in issue, including those
represented by ADSs, are converted into other securities or property or any such
other reclassification or change of the Ordinary Shares in issue or the Company
shall sell all or substantially all of its assets (each of the foregoing being a
"MAJOR TRANSACTION"), then the holder of this Warrant may, at its option, either
(a) in the event that the Ordinary Shares remain in issue or holders of Ordinary
Shares receive any common stock or substantially similar equity interest, in
each of the foregoing cases the American Depository Shares representing which is
publicly traded, retain this Warrant and this Warrant shall continue to apply to
such ADSs or shall apply, as nearly as practicable, to the American depository
shares of such other common stock or equity interest, as the case may be, or
(b) regardless of whether (a) applies, receive consideration, in exchange for
this Warrant (without payment of any exercise price hereunder), equal to the
greater of, as determined in the sole discretion of such holder, (i) the number
of shares of stock or securities or property of the Company, or of the entity
resulting from such Major Transaction (the "MAJOR TRANSACTION CONSIDERATION"),
to which a holder of the number of Ordinary Shares represented by the ADSs
delivered upon the exercise of this Warrant (pursuant to the cashless exercise
feature hereof) would have been entitled upon such Major Transaction had such
holder so exercised this Warrant (without regard to any limitations on exercise
herein or elsewhere contained) on the trading date immediately preceding the
public announcement of the transaction resulting in such Major Transaction and
had such ADSs been issued and outstanding and had such Holder been the holder of
record of such ADSs at the time of the consummation of such Major Transaction,
and (ii) cash paid by the Company in immediately available funds in an amount
equal to the Black-Scholes Amount (as defined herein) times the number of ADSs
for which this Warrant was exercisable (without regard to any limitations on
exercise herein contained and assuming payment of the exercise payment in cash
hereunder), and the Company shall make lawful provision for the foregoing as a
part of such Major Transaction and shall cause the issuer of any security in
such transaction which constitutes Registrable Securities under that certain
Registration Rights Agreement dated December 9, 1999 by and between the Company
and the Purchasers (the "REGISTRATION RIGHTS AGREEMENT") to assume all of the
Company's obligations under the Registration Rights Agreement. In the event that
the Company shall consolidate or merge with any other corporation in a
transaction in which common stock of the surviving corporation or the parent
thereof (the "EXCHANGE SECURITIES") is issued to the holders of Ordinary Shares
in such transaction in exchange for all such Ordinary Shares, and (a) the
Exchange Securities are publicly traded and an American Depository Receipt
facility is established, (b) the average daily dollar trading volume of the
Exchange Securities during the one hundred eighty (180) day period ending on the
date on which such transaction is publicly
-6-
<PAGE>
disclosed is greater than One Million Dollars ($1,000,000.00) per day as
reported by Bloomberg, (c) the historical one hundred (100) day volatility of
the Exchange Securities during the period ending on the date on which such
transaction is publicly disclosed is greater than fifty percent (50%), and
(d) the market capitalization of the issuer of the Exchange Securities is not
less than One hundred Million Dollars ($100,000,000.00) based on the last
sale price of the Exchange Securities on the date immediately before the date
on which such transaction is publicly disclosed (in each case, with respect
to the foregoing clauses (a) through (d), as reported by Bloomberg), then the
provisions of clause (b) of the preceding sentence shall not apply. In the
event that the Company shall, in a Major Transaction, consolidate or merge
with any other corporation in a transaction in which the Company is the
survivor (a "COMPANY TRANSACTION"), the provisions of clause (ii) of the
second preceding sentence shall not apply to the extent that each of the
following conditions remain true for the thirty (30) business days commencing
as of the date of the consummation of such transaction (the "MEASUREMENT
PERIOD"): (a) the Common Stock remains publicly traded during the period,
(b) the average daily dollar trading volume of the Common Stock is greater
than One Million Dollars ($1,000,000.00), (c) the historical thirty (30) day
volatility of the Company's Common Stock is greater than fifty percent (50%),
and (d) the market capitalization of the Company is not less than One Hundred
Million Dollars ($1,000,000.00) on the last day of the period (in each case,
with respect to the foregoing clauses (a) through (d), as reported by
Bloomberg). No sooner than ten (10) business days nor later than five (5)
business days prior to the consummation of the Major Transaction, but not
prior to the public announcement of such Major Transaction, the Company shall
deliver written notice ("NOTICE OF MAJOR TRANSACTION") to the Holder of this
Warrant, which Notice of Major Transaction shall be deemed to have been
delivered one (1) business day after the Company's sending such notice by
telecopy (provided that the Company sends a confirming copy of such notice on
the same day by overnight courier) of such Notice of Major Transaction. Such
Notice of Major Transaction shall indicate the amount and type of the Major
Transaction consideration which the Holder of this Warrant would receive
under this Section. If the Major Transaction Consideration is cash and does
not consist entirely of United States currency, the Holder may elect to
receive United States currency in an amount equal to the value of the Major
Transaction Consideration in lieu of the Major Transaction Consideration by
delivering notice of such election to the Company within five (5) business
days of such holder's receipt of the Notice of Major Transaction.
The "BLACK-SCHOLES AMOUNT" shall be the amount determined
by calculating the "Black-Scholes" value of an option to purchase one ADS on the
applicable page on the Bloomberg online page, using the following variable
values: (i) the current market price of the ADSs equal to the closing trade
price on the last trading day before the date of the Notice of the Major
Transaction; (ii) volatility of the ADS equal to the volatility of the ADSs
during the 100 trading day period preceding the date of the Notice of the Major
Transaction; (iii) a risk free rate equal to the interest rate on the United
States treasury bill or treasury note with a maturity corresponding to the
remaining term of this Warrant on the date of the Notice of the Major
Transaction; and (iv) an exercise price equal to the Exercise Price on the date
of the Notice of the Major Transaction. In the event such calculation function
is no longer available utilizing the Bloomberg online page, the Holder shall
calculate such amount in its sole discretion using the closest available
alternative mechanism and variable values to those available utilizing the
Bloomberg online page for such calculation function.
-7-
<PAGE>
(d) DISTRIBUTION OF ASSETS. In case the Company shall declare
or make any distribution of its assets (or rights to acquire its assets) to
holders of its Ordinary Shares and ADSs as a partial liquidating dividend, by
way of return of capital or otherwise (including any dividend or distribution to
the Company's shareholders of cash or shares (or rights to acquire shares) of
capital stock of a subsidiary) (a "DISTRIBUTION"), at any time after the initial
issuance of this Warrant, then the Holder shall be entitled upon exercise of
this Warrant for the purchase of any or all of the ADSs subject hereto, to
receive the amount of such assets (or rights) which would have been payable to
the Holder had such Holder been the holder of such ADSs on the record date for
the determination of holders of Ordinary Shares and ADSs entitled to such
Distribution.
(e) SPECIAL ADJUSTMENT AND NOTICES OF ADJUSTMENT. Upon the
occurrence of any event which requires any adjustment of the Exercise Price,
then, and in each such case, the Company shall give notice thereof to the
Holder, which notice shall state the Exercise Price resulting from such
adjustment and the increase or decrease in the number of Warrant Shares
purchasable at such price upon exercise, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based. Such
calculation shall be certified by the chief financial officer of the Company.
If the Company takes any actions (including under or by virtue of Section 4 of
the Warrant) which would have a dilutive effect on the Holder or which would
materially and adversely affect the Holder with respect to its investment in the
Warrant, and if the provisions of Section 4 of the Warrant, are not strictly
applicable to such actions or, if applicable to such actions, would not operate
to equitably protect the Holder against such actions, then the Company shall
promptly upon notice from Holder appoint its independent certified public
accountants to determine as promptly as practicable an appropriate adjustment to
the terms hereof, including without limitation adjustments to the Exercise
Price, or another appropriate action to so equitably protect such Holder and
prevent any such dilution and any such material adverse effect, as the case may
be. Following such determination, the Company shall forthwith make the
adjustments or take the other actions described therein.
(f) MINIMUM ADJUSTMENT OF EXERCISE PRICE. No adjustment of the
Exercise Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise required to be made, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment which, together with any
adjustments so carried forward, shall amount to not less than 1% of such
Exercise Price.
(g) OTHER NOTICES. In case at any time:
(i) the Company shall declare any dividend upon the
Ordinary Shares payable in shares of stock of any class or make any other
distribution to the holders of the Ordinary Shares and holders of ADSs;
(ii) the Company shall offer for subscription pro rata to
the holders of the Ordinary Shares and ADSs any additional shares of stock of
any class or other rights;
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(iii) there shall be any capital reorganization of the
Company, or reclassification of the Ordinary Shares, or consolidation or merger
of the Company with or into, or sale of all or substantially all of its assets
to, another corporation or entity; or
(iv) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company;
then, in each such case, the Company shall give to the Holder (a) notice of the
date on which the books of the Company shall close or a record shall be taken
for determining the holders of Ordinary Shares and holders of ADSs entitled to
receive any such dividend, distribution, or subscription rights or for
determining the holders of Ordinary Shares entitled to vote and holders of ADSs
entitled to give voting instructions to the Depositary in respect of any such
reorganization, reclassification, consolidation, merger, sale, dissolution,
liquidation or winding-up and (b) in the case of any such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding-up, notice of the date (or, if not then known, a reasonable
approximation thereof by the Company) when the same shall take place. Such
notice shall also specify the date on which the holders of Ordinary Shares and
holders of ADSs shall be entitled to receive such dividend, distribution, or
subscription rights or to exchange their Ordinary Shares and ADSs for stock or
other securities or property deliverable upon such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation, or
winding-up, as the case may be. Such notice shall be given at least thirty (30)
days prior to the record date or the date on which the Company's books are
closed in respect thereto, but in no event earlier than public announcement of
such proposed transaction or event. Failure to give any such notice or any
defect therein shall not affect the validity of the proceedings referred to in
clauses (i), (ii), (iii) and (iv) above.
(h) CERTAIN DEFINITIONS.
(i) "MARKET PRICE," as of any date, (i) means the
average of the Closing Bid Prices for the ADSs as reported to Nasdaq for the ten
(10) trading days immediately preceding such date, or (ii) if Nasdaq is not the
principal trading market for the ADSs, the average of the last reported bid
prices on the principal trading market for the ADSs during the same period, or,
if there is no bid price for such period, the last reported sales price for such
period, or (iii) if market value cannot be calculated as of such date on any of
the foregoing bases, the Market Price shall be the average fair market value as
reasonably determined by an investment banking firm selected by the Company and
reasonably acceptable to the Holder of this Warrant, with the costs of the
appraisal to be borne by the Company. The manner of determining the Market
Price of the ADSs set forth in the foregoing definition shall apply with respect
to any other security in respect of which a determination as to market value
must be made hereunder.
(ii) "ORDINARY SHARES," for purposes of this Section 4,
includes the Ordinary Shares and any additional class of stock of the Company
having no preference as to dividends or distributions on liquidation, provided
that the Ordinary Shares represented by the ADSs purchasable pursuant to this
Warrant shall include only Ordinary Shares in respect of which this Warrant is
exercisable, or shares resulting from any subdivision or combination of such
Ordinary Shares, or in the case of any reorganization, reclassification,
consolidation,
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<PAGE>
merger, or sale of the character referred to in Section 4(e) hereof, the
stock or other securities or property provided for in such Section.
5. INTENTIONALLY OMITTED.
6. ISSUE TAX. The issuance of certificates for Warrant Shares upon
the exercise of this Warrant shall be made without charge to the Holder or such
shares for any issuance tax or other costs in respect thereof, provided that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any certificate in a name
other than the Holder.
7. NO RIGHTS OR LIABILITIES AS A SHAREHOLDER. This Warrant shall not
entitle the Holder to any voting rights or other rights as a holder of the
Company's Ordinary Shares or ADSs. No provision of this Warrant, in the absence
of affirmative action by the Holder to purchase Warrant Shares, and no mere
enumeration herein of the rights or privileges of the Holder, shall give rise to
any liability of the Holder for the Exercise Price or as a holder of the
Company's Ordinary Shares or ADSs, whether such liability is asserted by the
Company or by creditors of the Company.
8. TRANSFER, EXCHANGE, AND REPLACEMENT OF WARRANT.
(a) RESTRICTION ON TRANSFER. This Warrant and the rights
granted to the Holder are transferable, in whole or in part, upon surrender of
this Warrant, together with a properly executed assignment in the Form of
Assignment attached hereto as Exhibit 2, at the office or agency of the Company
referred to in Section 8(e) below, provided, however, that any transfer or
assignment shall be subject to the provisions of Section 5.1 and 5.2 of the
Securities Purchase Agreement. Until due presentment for registration of
transfer on the books of the Company, the Company may treat the registered
holder hereof as the owner and holder hereof for all purposes, and the Company
shall not be affected by any notice to the contrary. Notwithstanding anything
to the contrary contained herein, the registration rights described in Section 9
hereof are assignable only in accordance with the provisions of the Registration
Rights Agreement.
(b) WARRANT EXCHANGEABLE FOR DIFFERENT DENOMINATIONS. This
Warrant is exchangeable, upon the surrender hereof by the Holder at the office
or agency of the Company referred to in Section 8(e) below, for new Warrants, in
the form hereof, of different denominations representing in the aggregate the
right to purchase the number of ADSs which may be purchased hereunder, each of
such new Warrants to represent the right to purchase such number of ADSs as
shall be designated by the Holder of at the time of such surrender.
(c) REPLACEMENT OF WARRANT. Upon receipt of evidence
reasonably satisfactory to the Company of the loss, theft, destruction, or
mutilation of this Warrant or, in the case of any such loss, theft, or
destruction, upon delivery, of an indemnity agreement reasonably satisfactory in
form and amount to the Company, or, in the case of any such mutilation, upon
surrender and cancellation of this Warrant, the Company, at its expense, will
execute and deliver, in lieu thereof, a new Warrant, in the form hereof, in such
denominations as Holder may request.
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<PAGE>
(d) CANCELLATION; PAYMENT OF EXPENSES. Upon the surrender of
this Warrant in connection with any transfer, exchange, or replacement as
provided in this Section 8, this Warrant shall be promptly canceled by the
Company. The Company shall pay all issuance taxes (other than securities
transfer taxes) and charges payable in connection with the preparation,
execution, and delivery of Warrants pursuant to this Section 8.
(e) WARRANT REGISTER. The Company shall maintain, at its
principal executive offices (or such other office or agency of the Company as it
may designate by notice to the Holder), a register for this Warrant, in which
the Company shall record the name and address of the person in whose name this
Warrant has been issued, as well as the name and address of each transferee and
each prior owner of this Warrant.
(f) ADDITIONAL RESTRICTION ON EXERCISE OR TRANSFER.
Notwithstanding anything to the contrary contained herein, the Warrant shall not
be exercisable by the Holder to the extent (but only to the extent) that, if
exercisable by Holder, Holder would beneficially own Ordinary Shares and ADSs in
excess of 9.9% (the "APPLICABLE PERCENTAGE") of the total Ordinary Shares in
issue. To the extent the above limitation applies, the determination of whether
the Warrant shall be exercisable (vis-a-vis other securities owned by Holder
which contain similar limitations on conversion) and of which Warrants shall be
exercisable (as among Warrants) shall be made on the basis of the earliest
submission of the Warrants (vis-a-vis other securities owned by the Holder which
contain similar limitations on conversion and vis a vis other Warrants), in each
case subject to such aggregate percentage limitation. No prior inability to
exercise Warrants pursuant to this paragraph shall have any effect on the
applicability of the provisions of this paragraph with respect to any subsequent
determination of exercisability. For the purposes of this paragraph, beneficial
ownership and all determinations and calculations, including without limitation,
with respect to calculations of percentage ownership, shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as
amended, and Regulation 13D and G thereunder. The provisions of this paragraph
may be implemented in a manner otherwise than in strict conformity with the
terms of this Section 8(f) with the approval of the Board of Directors of the
Company and the Holder: (i) with respect to any matter to cure any ambiguity
herein, to correct this paragraph (or any portion hereof) which may be defective
or inconsistent with the intended Applicable Percentage beneficial ownership
limitation herein contained or to make changes or supplements necessary or
desirable to properly give effect to such Applicable Percentage limitation; and
(ii) with respect to any other matter, with the further consent of the holders
of a majority of the then Ordinary Shares in issue. For clarification, it is
expressly a term of this security that the limitations contained in this
Section shall apply to each successor Holder. The holders of Ordinary Shares of
the Company shall be third-party beneficiaries of this Section 8(f) and the
Company may not waive this Section 8(f) without the consent of holders of a
majority of its Ordinary Shares.
To the extent the Holder is prohibited from exercising this
Reset Warrant as a result of the Applicable Percentage limitation, the Holder
may, at its option and in addition to its other rights under the Securities
Purchase Agreement and this Reset Warrant, retain this Warrant or to demand
payment, in cash, from the Company in immediately available funds in an amount
equal to the Black-Scholes Amount times the number of Shares for which this
Warrant was exercisable (without regard to any limitations on exercise herein
contained and assuming payment of the exercise payment in cash hereunder).
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<PAGE>
(g) CAP AMOUNT. Prior to Shareholder Approval (as defined in
the Securities Purchase Agreement), unless otherwise permitted by The Nasdaq
National Market or of the national securities exchange on which the ADSs are
listed, or unless the rules thereof no longer are applicable to the Company, in
no event shall the total number of ADSs issued at the Closing under the
Securities Purchase Agreement and upon exercise of the Warrants, when aggregated
with the total number of ADSs issued under that certain Securities Purchase
Agreement of even date herewith between the Company and Castle Creek Technology
Partners LLC (the "Castle Creek Agreement") and upon exercise of the warrants
pursuant to the Castle Creek Agreement, exceed the maximum number of shares of
Common Stock that the Company can without stockholder approval so issue pursuant
to Nasdaq Rule 4460(i) (or any successor rule) (the "Cap Amount") upon Closing
under the Securities Purchase Agreement and the exercise of the Warrants, which,
as of the date of initial issuance of ADSs and Warrants to the Holders, which
amount is ____________ shares. In the event the Holder shall sell or otherwise
transfer any of the Holder's Warrants, each transferee shall be allocated a pro
rata portion of such Cap Amount.
To the extent the Holder is prohibited from exercising
this Warrant as a result of the Cap Amount after the Shareholder Approval
Date (as defined in the Securities Purchase Agreement), the Company shall pay
to the Holder, in cash, in immediately available funds in an amount equal to
the Black-Scholes Amount times the number of Shares for which this Warrant
was exercisable (without regard to any limitations on exercise herein
contained and assuming payment of the exercise payment in cash hereunder).
9. REGISTRATION RIGHTS. The initial holder of this Warrant (and
certain assignees thereof) is entitled to the benefit of such registration
rights in respect of the Warrant Shares as are set forth in the Registration
Rights Agreement.
10. NOTICES. Any notice herein required or permitted to be given
shall be in writing and may be personally served or delivered by courier or by
confirmed telecopy, and shall be deemed delivered at the time and date of
receipt (which shall include telephone line facsimile transmission). The
addresses for such communications shall be:
If to the Company:
Insignia Solutions plc
41300 Christy Street
Fremont, California 94538-3115
Telecopy: (510)360-3702
Attention: Stephen M. Ambler
with a copy to:
Ritchey Fisher Whitman & Klein PC
1717 Embarcadero Road
P.O. Box 51050
Palo Alto, California 94303
Telecopy: (650)857-1288
Attention: Peter A. Whitman, Esq.
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<PAGE>
and if to the Holder, at such address as Holder shall have provided in writing
to the Company, or at such other address as each such party furnishes by notice
given in accordance with this Section 10.
11. GOVERNING LAW; JURISDICTION. This Warrant shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The Company
irrevocably consents to the jurisdiction of the United States federal courts
located in the State of New York in any suit or proceeding based on or arising
under this Warrant and irrevocably agrees that all claims in respect of such
suit or proceeding may be determined in such courts. The Company irrevocably
waives the defense of an inconvenient forum to the maintenance of such suit or
proceeding. The Company agrees that a final nonappealable judgment in any such
suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on such judgment or in any other lawful manner.
12. MISCELLANEOUS.
(a) AMENDMENTS. This Warrant and any provision hereof may only
be amended by an instrument in writing signed by the Company and the Holder.
(b) DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Warrant are inserted for purposes of reference only,
and shall not affect the meaning or construction of any of the provisions
hereof.
(c) ASSIGNABILITY. This Warrant shall be binding upon the
Company and its successors and assigns and shall inure to the benefit of Holder
and its successors and assigns. The Holder shall notify the Company upon the
assignment of this Warrant.
* * *
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officer.
Insignia Solutions plc
By: s/Richard M. Noling
Name: Richard M. Noling
Title: President and CEO
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<PAGE>
FORM OF EXERCISE AGREEMENT
(To be Executed by the Holder in order to Exercise the Warrant)
The undersigned hereby irrevocably exercises the right to purchase
____________ of the American Depositary Shares ("ADSs") of Insignia Solutions
plc, a company organized and existing under the laws of England and Wales (the
"COMPANY"), evidenced by the attached Warrant, and herewith makes payment of the
Exercise Price with respect to such ADSs in full, all in accordance with the
conditions and provisions of said Warrant.
(i) The undersigned agrees not to offer, sell, transfer
or otherwise dispose of any ADSs obtained on exercise of the Warrant, except
under circumstances that will not result in a violation of the Securities Act of
1933, as amended, or any state securities laws.
(ii) The undersigned requests that the American Deposit
Receipts for such ADSs be issued, and a Warrant representing any unexercised
portion hereof be issued, pursuant to the Warrant in the name of the Holder (or
such other person or persons indicated below) and delivered to the undersigned
(or designee(s) at the address (or addresses) set forth below:
Date:
-------------------- -------------------------------------
Signature of Holder
-------------------------------------
Name of Holder (Print)
Address:
-------------------------------------
-------------------------------------
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<PAGE>
FORM OF ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns, and transfers
all rights of the undersigned under the within Warrant, with respect to the
number of ADSs covered thereby set forth hereinbelow, to:
Name of Assignee Address No. of Shares
and hereby irrevocably constitutes and appoints ____________ ___ as agent and
attorney-in-fact to transfer said Warrant on the books of the within-named
corporation, with full power of substitution in the premises.
Date: ,
--------- ----
In the presence of
Name:
---------------------------------------------
Signature:
----------------------------------------
Title of Signing Officer or Agent (if any):
-------------------------------------------
Address:
-----------------------------------
-----------------------------------
Note: The above signature should
correspond exactly with the name
on the face of the within Warrant.
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EXHIBIT 10.50
SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "AGREEMENT") is entered into as
of December 9, 1999, by and between Insignia Solutions plc, a public limited
company organized and existing under the laws of England and Wales (the
"COMPANY"), with headquarters located at 41300 Christy Street, Fremont,
California 94538, and Castle Creek Technology Partners LLC, an Illinois
limited liability company located at 77 West Wacker Drive Ste. 4040, Chicago,
Illinois 60601 (THE "PURCHASER").
RECITALS
A. The Company and Purchaser are executing and delivering this
Agreement in reliance upon the exemption from securities registration
afforded by the provisions of Regulation D ("Regulation D"), as promulgated
by the United States Securities and Exchange Commission (the "SEC") under the
Securities Act of 1933, as amended (the "SECURITIES ACT").
B. Purchaser desires to purchase, upon the terms and conditions
stated in this Agreement, (i) the Company's American Depository Shares (the
"ADSs"), each ADS representing one ordinary share of 20p each nominal value
of the Company ( the "ORDINARY SHARES"); (ii) a Warrant in the form of
EXHIBIT A hereto (the "INITIAL WARRANT") entitling the holder thereof to
purchase certain number of the Company's ADSs; and (iii) a Warrant in the
form of EXHIBIT C hereto ( the "RESET WARRANT", and together with the Initial
Warrant, the "WARRANTS") entitling the holder thereof to purchase additional
ADSs from the Company upon the occurrence of certain events as defined
therein. The ADSs being purchased hereunder are referred to herein as the
"SHARES" and the ADSs issuable upon exercise of any Warrant (including the
Reset Warrant) are referred to herein as the "WARRANT SHARES". The Shares,
the Warrants and the Warrant Shares are collectively referred to herein as
the "SECURITIES."
C. Contemporaneous with the execution and delivery of this
Agreement, the parties hereto are executing and delivering a Registration
Rights Agreement in the form attached hereto as EXHIBIT B (the "REGISTRATION
RIGHTS AGREEMENT"), pursuant to which the Company has agreed to provide certain
registration rights in relation to the Securities under the Securities Act, the
rules and regulations promulgated thereunder and applicable state securities
laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained
herein and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Company and Purchaser hereby agree as
follows:
<PAGE>
ARTICLE I
PURCHASE AND SALE OF SECURITIES
I.1 PURCHASE OF ADSs AND WARRANTS. On the Closing Date (as defined
herein), subject to the terms and the satisfaction (or waiver) of the
conditions set forth in Articles VI and VII, the Company shall issue and sell
to Purchaser, and Purchaser shall purchase from the Company (i) 827,179
(_________) Shares, (ii) a Warrant entitling the holder thereof to purchase
248,154 Warrant Shares, and (iii) the Reset Warrant, for an aggregate
consideration of Three Million Five Hundred Thousand Dollars ($3,500,000.00)
(the "PURCHASE PRICE").
I.2 FORM OF PAYMENT. At the Closing, the Purchaser shall pay the
Purchase Price for the Shares and Warrants by wire transfer to the Company, in
accordance with the Company's written wiring instructions, against delivery of
the Shares and duly executed Warrants, and the Company shall deliver to the
Purchaser such Shares and such executed Warrants against delivery of such
Purchase Price from the Purchaser.
I.3 CLOSING DATE. Subject to the satisfaction (or waiver) of the
conditions set forth in Articles VI and VII below, the date and time of the
issuance, sale and purchase of the Securities pursuant to this Agreement shall
be December 9, 1999 (the"Closing Date"). The Closing shall occur at 10:00 a.m.
Chicago time, at the offices of Altheimer & Gray, 10 S. Wacker Drive, Chicago,
IL 60606.
I.4 LIMITATION ON SALES. Notwithstanding anything to the contrary
contained in this Agreement, the Company may not sell and Purchaser may not
purchase any Shares pursuant to this Agreement and the transactions
contemplated hereby to the extent that such sale and purchase would result in
Purchaser beneficially owning in excess of 9.9% of the Company's total Ordinary
Shares in issue at the time of such purchase. For the purposes of this
paragraph, beneficial ownership and all determinations and calculations,
including without limitation, with respect to calculations of percentage
ownership, shall be determined in accordance with Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
Regulation 13D and G thereunder. This Section 1.4 may not be waived by
Purchaser unless such waiver has been voted upon and approved by an ordinary
resolution of the Company's shareholders.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
The Purchaser represents and warrants to the Company as set forth in
this Article II. The Purchaser makes no other representations or warranties,
express or implied, to the Company in connection with the transactions
contemplated hereby and any and all prior representations and warranties, if
any, which may have been made by the Purchaser to the Company in connection
with the transactions contemplated hereby shall be deemed to have been merged
in this Agreement and
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<PAGE>
any such prior representations and warranties, if any, shall not survive the
execution and delivery of this Agreement.
II.1 INVESTMENT PURPOSE. Purchaser is purchasing the Shares and
Warrants for Purchaser's own account for investment only and not with a view
toward or in connection with the public re-sale or distribution thereof,
except pursuant to sales that are exempt from the registration requirements
of the Securities Act and/or sales registered under the Securities Act.
Purchaser will not resell any of the Securities except pursuant to sales that
are exempt from the registration requirements of the Securities Act and/or
sales registered under the Securities Act. Purchaser understands that
Purchaser must bear the economic risk of this investment indefinitely, unless
the applicable Securities are registered pursuant to the Securities Act and
any applicable state securities laws or an exemption from such registration
is available, and that the Company has no present intention of registering
any such Securities other than as contemplated by the Registration Rights
Agreement. By making the representations in this Section 2.1, the Purchaser
does not agree to hold any Securities for any minimum or other specific term
and reserves the right to dispose of any or all of the Securities at any time
in accordance with or pursuant to a registration statement or an applicable
exemption from registration under the Securities Act.
II.2 ACCREDITED INVESTOR STATUS. Purchaser is an "accredited
investor" as that term is defined in Rule 501(a) of Regulation D.
II.3 RELIANCE ON EXEMPTIONS. Purchaser understands that the Shares
and Warrants are being offered and sold to Purchaser in reliance upon specific
exemptions from the registration requirements of the United States federal and
state securities laws and that the Company is relying upon the truth and
accuracy of the representations and warranties of Purchaser set forth herein in
order to determine the availability of such exemptions and the eligibility of
Purchaser to acquire the Securities.
II.4 INFORMATION. Purchaser and its counsel have been furnished all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Shares and Warrants which have
been specifically requested by Purchaser. Purchaser has been afforded the
opportunity to ask questions of the Company, and its officers, directors,
employees and agents,and has received what Purchaser believes to be complete
and satisfactory answers to any such inquiries. Neither such inquiries nor any
other due diligence investigation conducted by Purchaser or any of its
representations and warranties shall modify, amend or affect Purchaser's right
to rely on the Company's representations and warranties contained in Article
III. Purchaser understands that Purchaser's investment in the Securities
involves a high degree of risk.
II.5 GOVERNMENTAL REVIEW. Purchaser understands that no United
States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities or
an investment therein.
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<PAGE>
II.6 TRANSFER OR RESALE. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless subsequently registered thereunder or an
exemption from such registration is available (which exemption the Company
expressly agrees may be established as contemplated in clauses (b) and (c) of
Section 5.1 hereof); (ii) any sale of such Securities made in reliance on Rule
144 under the Securities Act (or a successor rule) ("RULE 144") may be made
only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities without registration under the
Securities Act may require compliance with some other exemption under the
Securities 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
such Securities under the Securities Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder (in each case,
other than pursuant to this Agreement or the Registration Rights Agreement).
II.7 LEGENDS. Purchaser understands that, subject to Article V
hereof, the certificate for the Warrants, and until such time as the Shares and
the Warrant Shares, as applicable, have been registered under the Securities
Act as contemplated by the Registration Rights Agreement or otherwise may be
sold by Purchaser pursuant to Rule 144, the certificates for the Shares and
Warrant Shares will bear a restrictive legend (the "LEGEND") in the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THE SECURITIES
REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
FOR THE SECURITIES UNDER APPLICABLE SECURITIES LAWS OR UNLESS
OFFERED, SOLD OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
II.8 AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their terms.
II.9 RESIDENCY. Purchaser is a resident of the State of Illinois.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser that:
III.1 ORGANIZATION AND QUALIFICATION. The Company is a public limited
company duly incorporated and validly existing under the laws of England and
Wales and registered in England under the Companies Act of 1985. Each of the
Company's subsidiaries is a corporation, limited liability company or other
entity duly organized, validly existing and, to the extent applicable, in good
standing under the laws of the jurisdiction of its organization, except where
the failure to be so organized, existing or in good standing that would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect. The Company and each of its subsidiaries have full power and
authority to conduct their respective businesses as they are presently being
conducted and to own, lease and operate their respective properties and assets,
except, in the case of any subsidiary only, where the failure to have such
power or authority would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect. The Company and each of its
subsidiaries are duly qualified to do business as foreign entities and are in
good standing in each jurisdiction in which the character or location of the
properties and assets owned or operated by them or the nature of the businesses
conducted by them makes such qualification necessary, except where the failure
to be so qualified or in good standing, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect. "MATERIAL
ADVERSE EFFECT" means any material adverse effect on (i) the business,
operations, properties, financial condition, operating results or prospects of
the Company and its subsidiaries, taken as a whole on a consolidated basis,
(ii) the transactions contemplated hereby, (iii) the ability of the Company to
perform its obligations under this Agreement, the Warrants or the Registration
Rights Agreement (collectively, the "TRANSACTION DOCUMENTS") or (iv) the
Purchaser's interest in the Securities.
III.2 AUTHORIZATION; ENFORCEMENT. Except as disclosed in Schedule
3.2, (a) the Company has the requisite corporate power and authority (i) to
enter into and perform its obligations under each of the Transaction Documents,
(ii) to issue and sell to Purchaser, and to perform its obligations with
respect to, the Shares and the Warrants in accordance with the terms hereof and
thereof, as applicable, (iii) issue the Warrant Shares in accordance with the
terms of the Warrants; (b) the execution, delivery and performance of each of
the Transaction Documents by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation the
issuance of the Warrants and the reservation for issuance and the issuance of
the Shares and the Warrant Shares) have been duly authorized by all necessary
corporate action and no further consent or authorization of the Company, its
board of directors, or its shareholders or any other person, body or agency is
required with respect to any of the transactions contemplated hereby or thereby
(whether under rules of The Nasdaq National Market ("NASDAQ"), the National
Association of Securities Dealers or otherwise), other than the Nasdaq
Authorizations (as herein defined) and the declaration or ordering of
effectiveness by the SEC of the Registration Statement or Statements as
contemplated by the Registration Rights Agreement (collectively, the
"CONSENTS"); (c) this Agreement, the Registration Rights Agreement and the
Warrants have been duly executed
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and delivered by the Company; and (d) each of the Transaction Documents
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
III.3 CAPITALIZATION. The capitalization of the Company as of the
date of this Agreement, including the authorized share capital, the number of
shares in issue, the number of shares reserved for issuance pursuant to the
Company's stock option plans and employee stock purchase plans, the number of
shares reserved for issuance pursuant to securities (other than the Warrants)
exercisable for, or convertible into or exchangeable for any share, the number
of Ordinary Shares represented by ADSs, the number of shares to be initially
reserved for issuance in the form of ADSs upon exercise of the Warrants is set
forth on Schedule 3.3. All of the issued Ordinary Shares have been duly and
validly authorized and validly issued and are fully paid and were not issued in
violation of, or subject to, any preemptive, subscription or other similar
rights of any shareholders of the Company or any liens or encumbrance. All of
the outstanding ADSs have been duly and validly authorized and validly issued
and are entitled to the benefits specified in the corresponding American
Depositary Receipts ("ADRs") and in the Deposit Agreement (the "DEPOSIT
AGREEMENT") dated November 17, 1995 between the Company and The Bank of New
York, as Depositary (the "DEPOSITARY"). Except as disclosed in Schedule 3.3,
as of the date of this Agreement, (i) there are no outstanding options,
warrants, scrip, rights to subscribe for, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exercisable
or exchangeable for, any shares of capital stock 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 of capital stock of the Company or any of its subsidiaries,
and (ii) there are no agreements or arrangements under which the Company or any
of its subsidiaries is obligated to register the sale of any of its or their
securities under the Securities Act (except the Registration Rights Agreement).
The Company has furnished to Purchaser true, correct and complete copies of the
Company's Memorandum of Association as currently in effect ("MEMORANDUM OF
ASSOCIATION"), and the Company's Articles of Association as currently in effect
(the "ARTICLES OF ASSOCIATION"). The Company has set forth on SCHEDULE 3.3 all
instruments and agreements (other than the Memorandum and Articles of
Association) governing securities convertible into or exercisable or
exchangeable for the Ordinary Shares (including in the form of ADSs) of the
Company (and the Company shall provide to Purchaser copies thereof upon the
request of Purchaser). Except as disclosed in SCHEDULE 3.3, the Company has no
indebtedness for borrowed money and no agreement providing for indebtedness for
borrowed money. Except as disclosed in Schedule 3.3 and this Agreement, the
Company has no share purchase agreements, rights plans or agreements containing
similar provisions and no agreements containing anti-dilution provisions. No
anti-dilution provisions which have, individually or in the aggregate, any
dilutive effect on Purchaser's investment are triggered as a result of any of
the transactions contemplated hereby, including exercise of the Warrants. The
Company shall provide Purchaser with a written update of this representation
signed by the Company's Chief Executive Officer or Chief Financial Officer on
behalf of the Company as of the date of the Closing and it shall be a condition
to Purchaser's obligations at Closing that there are no material changes in
such capitalization since the Company's representation on the date hereof. The
Company has no subsidiaries, except as provided on Schedule
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3.3. All such subsidiaries included on Schedule 3.3. are one hundred percent
(100%) owned by the Company. Except as provided on Schedule 3.3, the Company
has no investments, either debt or equity, in any other entity.
III.4 ISSUANCE OF SECURITIES. The Shares and the Warrant Shares and
the Ordinary Shares represented by such Shares and Warrant Shares are duly
authorized and reserved for issuance, and, upon issuance in accordance with the
terms hereof and exercise of the Warrants in accordance with the terms thereof,
as applicable, will be validly issued, fully paid and free from all liens,
claims and encumbrances and will not be subject to any preemptive rights or
other similar rights of shareholders of the Company. Upon issuance, the Shares
are, and the Warrant Shares will be, entitled to the benefits specified in the
corresponding American Depositary Receipts ("ADRs) and in the Deposit
Agreement. The Warrants are duly and validly authorized and are validly
issued, fully paid, and free from all liens, claims and encumbrances and are
not and will not be subject to any preemptive rights or other similar rights of
shareholders of the Company. The Board of Directors of the Company has
unanimously approved the issuance of Shares and the Warrants pursuant to the
terms hereof and of Warrant Shares issuable upon full exercise of the Warrants
pursuant to the terms thereof (without giving effect to any limitations on
exercise contained therein, including for purposes of Nasdaq Rule 4460(i) and
Nasdaq Rule 4310(c)(25)(H)(1)(b)) (the "NASDAQ AUTHORIZATIONS"), has
unanimously recommended to the shareholders of the Company the approval of the
Nasdaq Authorizations and will seek Shareholder Approval (as defined in
Section 4.13) at the Company's next annual meeting, which is currently
scheduled for July, 2000. No further corporate authorization or approval (other
than the Shareholder Approval) is required under the rules of the Nasdaq with
respect to the transactions contemplated by this Agreement, including, without
limitation, the issuance of the Shares and Warrant Shares and the inclusion
thereof for trading on the Nasdaq.
III.5 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the Warrants and the Registration Rights Agreement by the Company,
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and reservation for
issuance, as applicable, of the Shares, the Warrants and Warrant Shares and the
Purchaser's purchase and acquisition of the Shares, the Warrants and the
Warrant Shares) do not and will not (a) result in a violation of the Memorandum
of Association and Articles of Association, (b) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any of its subsidiaries is a party (except for such
conflicts, defaults, terminations, amendments, accelerations, and cancellations
as would not, individually or in the aggregate, have a Material Adverse
Effect), or (c) result in a violation of any law, rule, regulation, order,
judgment or decree (including, without limitation, U.S. federal and state
securities laws and regulations and the laws of England and Wales) applicable
to the Company or any of its subsidiaries, or by which any property or asset of
the Company or any of its subsidiaries, is bound or affected. Neither the
Company nor any of its subsidiaries is in violation of its Memorandum of
Association, its Articles of Association, or other organizational documents,
and neither the Company nor any of its subsidiaries is in default (and no event
has occurred which, with notice or lapse of time or both, would put the Company
or
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any of its subsidiaries in default) under, nor has there occurred any event
giving others (with notice or lapse of time or both) any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture or
instrument to which the Company or any of its subsidiaries is a party, except
fr possible defaults or rights as would not, individually or in the aggregate,
have a Material Adverse Effect. The business of the Company and its
subsidiaries is not being conducted, and shall not be conducted so long as
Purchaser owns any of the Securities, in violation of any law, ordinance, rule,
regulation, order, judgment or decree of any governmental entity, court or
arbitration tribunal except for possible violations the sanctions for which
either singly or in the aggregate would not have a Material Adverse Effect. The
Company is not required to obtain any consent, authorization or order of, or
make any filing or registration with, any court or governmental agency or any
regulatory or self-regulatory agency in order for it to execute, deliver or
perform any of its obligations under this Agreement, the Warrants or the
Registration Rights Agreement or to perform its obligations in accordance with
the terms hereof or thereof, other than the Consents. The purchase and
acquisition of the Securities by the Purchaser do not violate any law, rule,
regulation, order, judgment or decree applicable to the Company, or require
further filing by the Company or Purchaser under such law, rule, regulation,
order, judgment or decree, by virtue of the Company's business or assets, other
than the Consents as described in Section 3.2. The Company is not in violation
of the listing requirements of Nasdaq and does not reasonably anticipate that
the ADSs will be de-listed by Nasdaq for the foreseeable future, and the
Company has made all necessary filings and notifications with, and obtained all
necessary approvals from, Nasdaq with respect to the transactions contemplated
hereby, including, without limitation, the issuance of the Securities and the
listing of the Shares and the Warrant Shares on the Nasdaq.
III.6 REGISTRATION AND SEC DOCUMENTS. The Ordinary Shares are
registered under Section 12 of the Exchange Act and have been so registered
since __________. Except as disclosed in SCHEDULE 3.6, since December 31,
1996, the Company has timely filed all reports, schedules, forms, statements
and other documents required to be filed by it with Companies House pursuant to
the U.K. Companies Act 1985 (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "COMPANY REPORTS") and has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Exchange Act (all of the foregoing filed
after December 31, 1996, and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein, being referred to herein as the "SEC DOCUMENTS" and such documents
filed prior to the date hereof, the "FILED SEC DOCUMENTS"), including for
purposes of determining the availability of Form S-3. The Company has
delivered to Purchaser true and complete copies of the SEC Documents filed
since December 31, 1996. As of their respective dates of filing, the Company
Reports and the SEC Documents complied in all material respects with the
requirements of the applicable law and the rules and regulations promulgated
thereunder applicable to such Company Reports and SEC Documents, and none of
the Company Reports and SEC Documents, at the time they were filed with the
Companies House or SEC, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. None of the statements made in any such SEC
Document is, or, except
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pursuant to Filed SEC Documents has been, required to be updated or amended
under applicable law. The financial statements of the Company included in the
SEC Documents were prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, and the rules and regulations of
the SEC during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they do not include footnotes or are condensed
or summary statements) and present accurately and completely the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal, immaterial year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the Filed SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred subsequent to the date of such financial statements in the ordinary
course of business consistent with past practice and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in such
financial statements, in each case of clause (i) and (ii) next above which,
individually or in the aggregate, are not material to the financial condition,
business, operations, properties, operating results or prospects of the Company
and its subsidiaries taken on a whole. The Filed SEC Documents, as supplemented
by SCHEDULE 3.6 hereto, contain a complete and accurate list of all material
undischarged written or oral contracts, agreements, leases or other instruments
to which the Company or any subsidiary is a party or by which the Company or any
subsidiary is bound or to which any of the properties or assets of the Company
or any subsidiary is subject (each a "CONTRACT"), except to the extent not
required to be filed pursuant to the applicable Rules and Regulations of the
SEC. None of the Company, its subsidiaries or, to the best knowledge of the
Company, any of the other parties thereto, is in breach or violation of any
Contract, which breach or violation relates to indebtedness for borrowed money,
is with respect to an obligation in excess of one hundred thousand dollars
($100,000) or would have a Material Adverse Effect. No event, occurrence or
condition exists which, with the lapse of time, the giving of notice, or both,
or the happening of any further event or condition, would become a breach or
default by the Company or its subsidiaries under any Contract which breach or
default would have a Material Adverse Effect.
III.7 ABSENCE OF CERTAIN CHANGES. Since December 31, 1998, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of operations or
prospects of the Company.
III.8 ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, governmental
agency or authority, or self-regulatory organization or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company, any of its subsidiaries, or any of their respective
directors or officers in their capacities as such, wherein an unfavorable
decision, ruling or finding could reasonably be expected to have a Material
Adverse Effect or would adversely affect the transactions contemplated by this
Agreement or any of the documents contemplated hereby or which would adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement or any of such other
documents. To the Company's
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knowledge, there are no facts which, if known by a potential claimant or
governmental agency or authority, could give rise to a claim or proceeding
which, if asserted or conducted with results unfavorable to the Company or
any of its subsidiaries, could reasonably be expected to have a Material
Adverse Effect.
III.9 DISCLOSURE. No information relating to or concerning the Company
set forth in this Agreement or provided to Purchaser in connection with the
transactions contemplated hereby contains an untrue statement of a material fact
or omits to state a material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not
misleading. Except for the execution and performance of this Agreement and the
transactions contemplated hereby, no material fact (within the meaning of the
federal securities laws of the United States) exists with respect to the Company
or any of its subsidiaries which has not been publicly disclosed.
III.10 ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF THE
SECURITIES. The Company acknowledges and agrees that Purchaser is acting
independently and is not acting as a financial advisor or fiduciary of the
Company (or in any similar capacity) with respect to this Agreement or the
transactions contemplated hereby, that this Agreement and the transaction
contemplated hereby, and the relationship between Purchaser and the Company,
are "arms-length", and that any statement made by Purchaser, or any of its
representatives or agents, in connection with this Agreement or the
transactions contemplated hereby is not advice or a recommendation, is merely
incidental to Purchaser's purchase of the Securities and has not been relied
upon in any way by the Company, its officers, directors or other
representatives. The Company further represents to Purchaser that the
Company's decision to enter into this Agreement and the transactions
contemplated hereby has been based solely on an independent evaluation by the
Company and its representatives.
III.11 CURRENT PUBLIC INFORMATION. The Company is currently eligible
to register the resale of the Shares and the Warrant Shares by the Purchaser in
a secondary offering under General Instruction B3 and B4 of Form S-3 on a
registration statement on Form S-3 under the Securities Act, all as contemplated
by Section 2.1 of the Registration Rights Agreement.
III.12 NO GENERAL SOLICITATION. Neither the Company nor any person
acting on behalf of the Company has conducted any "general solicitation," as
described in Rule 502(c) under Regulation D, with respect to any of the
Securities being offered hereby.
III.13 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on their behalf, has directly or indirectly
made any offers or sales of any security or solicited any offers to buy any
security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the Securities Act pursuant to the provisions of Regulation
D. The transactions contemplated hereby are exempt from the registration
requirements of the Securities Act, assuming the accuracy of the representations
and warranties herein contained of Purchaser to the extent relevant for such
determination.
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III.14 NO BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by Purchaser relating to this Agreement or the transactions
contemplated hereby, except for dealings with Allied Capital International, Inc.
(the fees of which shall be paid in full by the Company). The Company will
indemnify Purchaser from and against any fees and expenses sought or other
claims made by Allied Capital International, Inc.
III.15 ACKNOWLEDGMENT OF DILUTION. The number of Warrant Shares
issuable upon exercise each of the Warrants may increase substantially in
certain circumstances. The Company's executive officers and directors have
studied and fully understand the terms of this Agreement and the transactions
contemplated hereby and the nature of the securities being sold hereunder and
recognize that they have a potentially dilutive effect. The board of directors
of the Company has unanimously concluded in its good faith business judgment
that the issuance of the Shares, the Warrants and the Warrant Shares as
contemplated hereby is in the best interests of the Company. The Company
acknowledges that its obligation to issue Warrant Shares upon exercise of the
Warrants is binding upon it and enforceable regardless of the dilution that such
issuance may have on the ownership interests of other shareholders.
III.16 INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "INTANGIBLES") used or necessary for the conduct of its
business as now being conducted and as previously described in the Company's
Annual Report on Form 10-K most recently filed and any subsequently filed
reports on Form 10-Q and Form 8-K. Neither the Company nor any subsidiary of
the Company infringes on or is in conflict with any right of any other person
with respect to any Intangibles nor is there any claim of infringement made by a
third party against or involving the Company or any of its subsidiaries, which
infringement, conflict or claim, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect.
III.17 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 subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or is
in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977,
as amended; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment to any foreign or domestic government official or
employee. Without limiting the generality of the foregoing, the Company and its
subsidiaries have not directly or indirectly made or agreed to make (whether or
not said payment is lawful) any payment to obtain,
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or with respect to, sales other than usual and regular compensation to its or
their employees and sales representatives with respect to such sales.
III.18 KEY EMPLOYEES. Each Key Employee (as defined below) is
currently serving the Company in the capacity disclosed in SCHEDULE 3.18.
No Key Employee, to the best of the knowledge of the Company and its
subsidiaries, is, or is now expected to be, in violation of any material term
of any employment contract, confidentiality, disclosure or proprietary
information agreement, non-competition agreement, or any other contract or
agreement or any restrictive covenant, and the continued employment of each
Key Employee does not subject the Company or any of its subsidiaries to any
liability with respect to any of the foregoing matters. No Key Employee has,
to the best of the knowledge of the Company and its subsidiaries, any
intention to terminate or limit his employment with, or services to, the
Company or any of its subsidiaries, nor is any such Key Employee subject to
any constraints (e.g., litigation) which would cause such employee to be
unable to devote his full time and attention to such employment or services.
"Key Employees" means Rick Noling, Stephen Ambler, Mark McMillan, George
Buchan, John Hoskin, Ron Workman and Marshall Kwait and any individual who
assumes or performs any of the duties of a Key Employee.
3.19 YEAR 2000 COMPLIANCE. The information set forth in the Filed
SEC Documents with respect to Year 2000-related compliance by the Company does
not contain any untrue statement of a material fact or omit any material fact
necessary to make the statements contained therein not misleading. The Company's
testing compliance program and contingency plan, in each case regarding
Year 2000-related matters, are adequate to prevent a Material Adverse Effect and
such Year 2000-related matters will not cause a Material Adverse Effect.
ARTICLE IV
COVENANTS
IV.1 BEST EFFORTS. The parties shall use their best efforts timely to
satisfy each of the conditions described in Articles VI and VII of this
Agreement.
IV.2 SECURITIES LAWS. The Company agrees to file a Form D with
respect to the Securities with the SEC as required under Regulation D and to
provide a copy thereof to Purchaser on or prior to the date of Closing. The
Company agrees to file a Form 8-K disclosing this Agreement and the transactions
contemplated hereby with the SEC within three (3) days following the Closing
Date. Such Form 8-K shall contain as exhibits this Agreement, the Warrants and
the Registration Rights Agreement. The Company shall, on or prior to the
Closing Date, take such action as is necessary to sell the Securities to
Purchaser in accordance with applicable U.S. federal and state securities laws
and regulations and the applicable laws of England and Wales, and shall provide
evidence of any such action so taken to Purchaser on or prior to the date of the
Closing. Without limiting any of the Company's obligations under this
Agreement, the Registration Rights Agreement or the Warrants, from and after the
Closing Date, neither the Company nor any person acting on its behalf shall take
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any action which would adversely affect any exemptions from registration under
the Securities Act with respect to the transactions contemplated hereby.
IV.3 REPORTING STATUS. So long as Purchaser beneficially owns any of
the Securities, the Company shall timely file all reports required to be filed
with the SEC pursuant to the Exchange Act, and the Company shall not terminate
its status as an issuer required to file reports under the Exchange Act even if
the Exchange Act or the rules and regulations thereunder would permit such
termination.
IV.4 USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Securities hereunder for general working capital purposes.
IV.5 RESTRICTION ON BELOW MARKET ISSUANCE OF SECURITIES.
(i) During the period beginning on the Closing Date and ending on
the later of (x) the date which is three (3) months after the Effective Date
and (y) the date which is six (6) months following the Closing Date (such
period, the "FINANCING PERIOD"), the Company shall not issue or agree to
issue (except (A) the issuance of ADSs pursuant to this Agreement and the
issuance of ADSs to Vincent Pino, Richard Zehner, Robert Waley-Cohen and
Viscount Bearsted ("OTHER INVESTORS") pursuant to an agreement reached at or
prior to the Closing for an aggregate amount of One Million Dollars
($1,000,000) on terms substantially similar to this Agreement, (B) pursuant
to investments from industry participants, in which there is a significant
purpose other than raising equity capital, (C) in connection with the
acquisition of another company, (D) in an underwritten public offering or (E)
on conversion of the Convertible Promissory Notes issued in favor of Quantum
Corporation dated October 20, 1999) any equity securities or any equity-like
or equity-linked securities of the Company (or any security convertible into
or exercisable or exchangeable, directly or indirectly, for equity,
equity-like or equity-linked securities of the Company) if such securities
are issued at a price (or in the case of securities convertible into or
exercisable or exchangeable, directly or indirectly, for Ordinary Shares or
ADSs such securities provide for a conversion, exercise or exchange price)
which may be less than the then current market price for Ordinary Shares or
ADSs on the date of issuance (in the case of Ordinary Shares or ADSs) or the
date of conversion, exercise or exchange (in the case of securities
convertible into or exercisable or exchangeable, directly or indirectly, for
Ordinary Shares or ADSs), or if such securities are variable-priced or
contain provisions for price resetting (any such securities, the "RESTRICTED
SECURITIES").
(ii) During the six-month period beginning on the date immediately
following the final day of the Financing Period, the Company will not issue or
agree to issue any Restricted Securities unless the Company has satisfied all
of the following requirements with respect to such issuance:
(I) The Company shall have delivered notice to Purchaser (the
"TRANSFER NOTICE"), which notice shall include (A) the terms and number
of units of the security and the consideration per unit which the Company
desires to receive for the securities (which, in the case where the
Company shall have received an offer to purchase such securities other
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than from Purchaser (a "THIRD PARTY OFFER"), shall be the consideration
set forth in such offer) and (B) all of the material terms and
conditions, including the terms and conditions of payment, upon which the
Company proposes to transfer said securities (which, in the case of a
Third Party Offer, shall be the terms and conditions set forth in the
Third Party Offer).
(II) Upon the delivery of the Transfer Notice, the Purchaser
shall have an option to purchase any or all of the securities described
therein. Such option shall be exercisable by Purchaser by service of
written notice upon the Company within five (5) days of receipt of the
Transfer Notice.
(III) If the options created in clause (II) hereof are not
exercised by Purchaser within five (5) days of service of the Transfer
Notice, or if such options are exercised only in part, then, within a
period of thirty (30) days beginning on the day following the date of
expiration of the option period, the Company may issue some or all of the
securities sought to be issued as to which such options were not
exercised, at a price which is not less than one hundred percent (100%)
of the price specified in the Transfer Notice and on terms and conditions
not less favorable to the Company than those specified in the Transfer
Notice.
IV.6 FURTHER RESTRICTION ON ISSUANCE OF SECURITIES. While Purchaser
holds any Shares, any Warrants or Warrant Shares, the Company and each of its
subsidiaries shall not issue, or authorize for issuance, or otherwise transfer
or enter into any commitment to issue or otherwise transfer, any debt or equity
security, bond, note or other security of any of the Company's subsidiaries,
provided that Purchaser shall keep the Company current on its such
Shareholdings.
IV.7 EXPENSES.
(i) The Company shall pay to Purchaser at the Closing reimbursement
for the expenses incurred by it and its affiliates and advisors in connection
with the negotiation, preparation, execution, and delivery of this Agreement and
the other agreements and documents to be executed in connection herewith,
including, without limitation, due diligence and attorneys' fees and expenses
(the "EXPENSES"). In addition, from time to time thereafter, upon Purchaser's
written request, the Company shall pay to Purchaser such Expenses, if any, not
so paid at Closing and/or covered by such payment, in each case to the extent
incurred by Purchaser. The Company shall not be required to reimburse Expenses
to the extent such Expenses exceed Forty Thousand Dollars ($40,000) in the
aggregate.
(ii) The Company shall pay all UK documentary, stamp, transfer or
similar taxes, plus any fees of the Depositary for the ADSs, attributable to the
exercise of the Warrants and the issuance or delivery of Ordinary Shares or ADSs
representing the Ordinary Shares.
IV.8 INFORMATION. The Company agrees to send the following reports to
Purchaser until the earlier of (i) Purchaser transfers, assigns or sells all of
its Securities; or (ii) the second (2nd) anniversary of the Closing Date: (a)
within three (3) days after the filing with the SEC, a copy of
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its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, any proxy
statements and any Current Reports on Form 8-K; and (b) within two (2) days
after release, copies of all press releases issued by the Company or any of
its subsidiaries. The Company further agrees to promptly provide to
Purchaser any information with respect to the Company, its properties, or its
business or Purchaser's investment as Purchaser may reasonably request;
provided, however, that the Company shall not be required to give Purchaser
any material nonpublic information. If any information requested by
Purchaser from the Company contains material nonpublic information, the
Company shall inform Purchaser in writing that the information requested
contains material nonpublic information and shall in no event provide such
information to Purchaser without the express prior written consent of
Purchaser after being so informed.
IV.9 AVAILABILITY OF SHARES. From and after the Closing Date,
the Company shall:
a. at all times have sufficient authorized share capital
available for allotment and issue to permit the exercise of the Warrants into
Warrant Shares.
b issue and cause its Depositary to issue and deliver such ADSs
as required upon exercise of the Warrants and take all actions necessary to
ensure that all such Warrant Shares shall, when issued and paid for, be duly and
validly issued, fully paid and be entitled to the benefits specified in the
corresponding ADRs and in the Deposit Agreement; and
c If, and so long as, any ADSs are listed or quoted on any
securities exchange or market, the Company shall, if permitted by the rules of
such securities exchange or market, list and keep listed or quoted on such
securities exchange or market, upon official notice of issuance, all Warrant
Shares issuable upon exercise of the Warrants.
IV.10 LISTING. For a period of beginning on the Closing Date and
ending on the third (3rd) anniversary of the Closing Date, the Company shall
continue the listing and trading of its ADSs on The Nasdaq National Market, the
New York Stock Exchange or the American Stock Exchange, secure and maintain
listing and trading of the Shares and Warrant Shares on such exchange, and
comply in all respects with the Company's reporting, filing and other
obligations under the by-laws or rules of such exchange. If the Company fails to
maintain the listing or trading of the ADSs as required by this Section 4.10,
then beginning on the tenth (10th) business day following such failure, if the
ADSs are still not listed or traded, then the Company shall pay to Purchaser an
amount equal to one percent (1%) of the fair market value of the Shares and
Warrant Shares then held by Purchaser per day that such failure continues. For
purposes hereof, the number of Warrant Shares held by Purchaser shall be
calculated as though the Warrants held by Purchaser were fully exercised,
without regard to any limitations on the exercise thereof.
IV.11 PROSPECTUS DELIVERY REQUIREMENT. Purchaser understands that the
Securities Act may require delivery of a prospectus relating to the ADSs in
connection with any sale thereof pursuant to a registration statement under the
Securities Act covering the resale by Purchaser of the ADSs being sold
hereunder.
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IV.12 INTENTIONAL ACTS OR OMISSIONS. Neither the Company nor Purchaser
shall intentionally perform any act which if performed, or intentionally omit
to perform any act which, if omitted to be performed, would prevent or excuse
the performance of this Agreement or any of the transactions contemplated
hereby.
IV.13 SHARE AUTHORIZATION. The Company covenants and agrees that it
shall (i) solicit by proxy the Shareholder Approval (as defined below) and
(ii) use its best efforts to obtain the Shareholder Approval at its next
annual shareholder meeting, which shall be held no later than July 31, 2000
("SHAREHOLDER APPROVAL DATE"). For purposes hereof, "SHAREHOLDER APPROVAL"
means authorization by the shareholders of the Company for the issuance of
ADSs to Purchaser at the Closing and upon the exercise of the Warrants
pursuant to the terms thereof and the issuance of ADSs at or prior to the
Closing to Other Investors and upon the exercise of the warrants issued to
the Other Investors at or prior to the Closing on substantially similar terms
in the aggregate in excess of twenty percent (20%) of the total Ordinary
Shares then in issue and, if necessary, the elimination of any prohibitions
under the rules or regulations of any stock exchange, interdealer quotation
system or other self-regulatory organization with jurisdiction over the
Company or any of its securities on the Company's ability to issue ADSs in
excess of twenty percent (20%). In addition, the Company shall, unless
otherwise consented to by Purchaser, have a definitive proxy statement mailed
to each shareholder of the Company at least twenty (20) days prior to the
Approval Date. The Company shall deliver one copy of any SEC comments it
receives with respect to its proxy statement to the Purchaser and will not
file such proxy statement (or any amendments thereto), whether such proxy
statement is in preliminary or definitive form, without the approval of the
Purchaser, which approval shall not be unreasonably withheld or delayed.
ARTICLE V
LEGEND REMOVAL AND TRANSFER INSTRUCTIONS
V.1 REMOVAL OF LEGEND. The Legend shall be removed and the Company
shall issue or cause its Depositary to issue a certificate without any legend to
the holder of any Security upon which such Legend is stamped, and a certificate
for a Security shall be originally issued without any legend, if, unless
otherwise required by applicable state securities laws, (a) the sale of such
Security is registered under the Securities Act, (b) such holder provides the
Company with an opinion of counsel, in form, substance and scope customary for
opinions of counsel in comparable transactions, and reasonably satisfactory to
the Company (the cost of which shall be borne by the holder), to the effect
that a public sale or transfer of such Security may be made without registration
under the Securities Act or (c) such Security can be sold pursuant to Rule 144.
Purchaser agrees to sell all Securities, including those represented by a
certificate(s) from which the Legend has been removed, or which were originally
issued without the Legend, (i) pursuant to an effective registration statement
and to deliver a prospectus in connection with such sale or (ii) in compliance
with an exemption from the registration requirements of the Securities Act. In
the event the Legend is removed from any Security or any Security is issued
without the Legend and thereafter the effectiveness of a registration statement
covering the resale of such Security is suspended or a
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supplement or amendment thereto is required by applicable securities laws,
then upon reasonable advance notice to Purchaser holding such Security, the
Company may require that the Legend be placed on any such Security that
cannot then be sold pursuant to an effective registration statement or Rule
144 or with respect to which the opinion referred to in clause (b) next above
has not been rendered, which Legend shall be removed when such Security may
be sold pursuant to an effective registration statement or Rule 144 or such
holder provides the opinion with respect thereto described in clause (b) next
aboe. Except for the Legend required pursuant to this Section 5.1, the
Securities shall bear no legend.
V.2 DEPOSITARY INSTRUCTIONS. The Company shall instruct its
Depositary to issue certificates, registered in the name of Purchaser or its
nominee, for the Shares and Warrant Shares in such amounts as specified from
time to time by Purchaser to the Company and the Depositary. Such certificates
shall bear a legend only in the form of the Legend and only to the extent
permitted by Section 5.1 above. The Company warrants that no instruction other
than such instructions referred to in this Article V, and no stop transfer
instructions other than stop transfer instructions to give effect to Section 2.6
hereof in the case of the Shares and Warrant Shares prior to registration
thereof under the Securities Act, will be given by the Company to its Depositary
and that the Securities shall otherwise be freely transferable on the books and
records of the Company. Nothing in this Section shall affect in any way
Purchaser's obligations and agreement set forth in Section 5.1 hereof to resell
the Securities pursuant to an effective registration statement and to deliver a
prospectus in connection with such sale or in compliance with an exemption from
the registration requirements of applicable securities laws. Without limiting
any other rights of Purchaser or obligations of the Company, if (a) Purchaser
provides the Company with an opinion of counsel, which opinion of counsel shall
be in form, substance and scope customary for opinions of counsel in comparable
transactions (the reasonable cost of which shall be borne by the Company), to
the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from registration or (b) Purchaser
transfers Securities pursuant to Rule 144, the Company shall permit the
transfer, and promptly instruct its Depositary and take all actions necessary to
cause its Depositary to issue one or more certificates in such name and in such
denomination as specified by Purchaser in order to effect such a transfer or
sale. The Company acknowledges that a breach by it of its obligations hereunder
will cause irreparable harm to Purchaser by vitiating the intent and purpose of
the transaction contemplated hereby. Accordingly, the Company acknowledges that
the remedy at law for a breach of its obligations under this Article V will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Article V, that Purchaser shall be entitled,
in addition to all other available remedies, to an injunction restraining any
breach and requiring immediate issuance and transfer, without the necessity of
showing economic loss and without any bond or other security being required.
V.3 FAILURE TO REMOVE LEGEND. If the Company fails to remove any
legend as required by this Article V (a "LEGEND REMOVAL FAILURE"), then
beginning on the tenth (10th) day following such failure, if the Company
continues to fail to remove such legend, the Company shall pay to Purchaser
holding shares subject to a Legend Removal Failure an amount equal to one
percent (1%) of the fair market value of the Shares and Warrant Shares then held
by Purchaser per day that such
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failure continues. For purposes hereof, the number of Warrant Shares held by
Purchaser shall be calculated as though the Warrants held by Purchaser were
fully exercised, without regard to any limitations on the exercise thereof.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
VI.1 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to issue and sell the Shares and Warrants to Purchaser at
the Closing is subject to the satisfaction, as of the date of the Closing and
with respect to Purchaser, of each of the following conditions thereto, provided
that these conditions are for the Company's sole benefit and may be waived by
the Company at any time in its sole discretion:
(i) Purchaser shall have executed the signature page to this
Agreement and the Registration Rights Agreement and delivered the same to
the Company.
(ii) Purchaser shall deliver the applicable Purchase Price for
the Shares and the Warrants purchased at the Closing.
(iii) The representations and warranties of Purchaser shall be
true and correct as of the date when made and as of the Closing as though
made at that time, and Purchaser shall have performed, satisfied and
complied in all material respects with the covenants and agreements
required by this Agreement to be performed or complied with by Purchaser
at or prior to the Closing. The Company shall have received an Officer's
Certificate from Purchaser dated the Closing Date to the foregoing
effect and as to such other matters as may be reasonably requested by the
Company.
(iv) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which restricts or prohibits the consummation of any
of the transactions contemplated by this Agreement.
ARTICLE VII
CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
VII.1 CONDITIONS TO THE CLOSING. The obligation of Purchaser hereunder
to purchase the Shares and Warrants to be purchased by it on the Closing Date is
subject to the satisfaction of each of the following conditions, provided that
these conditions are for Purchaser's sole benefit and may be waived by Purchaser
at any time in Purchaser's sole discretion:
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(i) The Company shall have executed the signature page to this
Agreement and the Registration Rights Agreement and delivered the same to
Purchaser.
(ii) The Company shall have delivered duly executed certificates
for the Shares (in such denominations as Purchaser shall reasonably
request) and Warrants being so purchased by Purchaser at the Closing.
(iii) At or prior to the Closing, Other Investors shall have
purchased from the Company Shares and warrants for an aggregate
consideration of One Million Dollars ($1,000,000) on terms substantially
similar to terms contained herein.
(iv) The ADSs, including all Shares and Warrant Shares, shall be
listed on the Nasdaq and trading in the ADSs shall not have been
suspended by the Nasdaq, the SEC or other regulatory authority and no
de-listing or suspension shall be reasonably likely for the foreseeable
future.
(v) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing as though
made at that time and the Company shall have performed, satisfied and
complied with the covenants and agreements required by this Agreement to
be performed or complied with by the Company at or prior to the Closing.
Purchaser shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer of the Company, dated as of
the Closing to the foregoing effect and as to such other matters as may
be reasonably requested by Purchaser.
(vi) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(vii) Purchaser shall have received the officer's certificate
described in Section 3.3, dated as of the Closing and there shall be no
material changes from the date of signing of this Agreement to the date
of the Closing other than as a result of issuance of ADSs pursuant to
options, warrants and other obligations disclosed on Schedule 3.3 as of
the date of this Agreement.
(viii) Purchaser shall have received opinions of the
Company's counsel, dated as of the Closing, in the form attached hereto
as EXHIBIT D.
(ix) Intentionally Omitted.
(x) The Company has filed a Form D with respect to the
Securities with the SEC as required under Regulation D and has provided a
copy thereof to Purchaser.
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(xi) The Company has filed an Additional Listing Application
(and no additional time is required for the effectiveness thereof) with
respect to all Shares and Warrant Shares with the National Association of
Securities Dealers and has provided a copy thereof to Purchaser.
ARTICLE VIII
GOVERNING LAW; MISCELLANEOUS
VIII.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The parties hereto
irrevocably consent to the jurisdiction of the United States federal courts
located in the State of New York and the state courts located in the County of
New York in the State of New York in any suit or proceeding based on or arising
under this Agreement or the transactions contemplated hereby and irrevocably
agree that all claims in respect of such suit or proceeding may be determined in
such courts. The Company irrevocably waives the defense of an inconvenient
forum to the maintenance of such suit or proceeding. The Company further agrees
that service of process upon the Company mailed by the first class mail shall be
deemed in every respect effective service of process upon the Company in any
suit or proceeding arising hereunder. Nothing herein shall affect Purchaser's
right to serve process in any other manner permitted by law. The parties hereto
agree that a final non-appealable judgment in any such suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on such
judgment or in any other lawful manner.
VIII.2 OFFICER AND DIRECTOR TRANSACTIONS. If any executive officer or
director of the Company, directly or indirectly, including through family
members, trusts or other entities related to such executive officer or
director, disposes or provides or files any public notice, including pursuant
to Rule 144 of the Securities Act, of a bona fide intent to dispose, of any
Ordinary Shares or ADSs beneficially owned by him during the period beginning
on the Closing Date and ending on the date which is six (6) months after the
Effective Date, the Company shall pay to Purchaser an amount equal to (x) the
number of Shares and Warrant Shares (without giving effect to any exercise or
limitation on exercise thereof) then held by Purchaser TIMES (y) the
difference between (m) the closing bid price of the ADSs on the trading day
immediately preceding the day on which such disposal was publicly announced
(the "ANNOUNCEMENT DATE") and (n) the lowest closing bid price of the ADSs
during the thirty (30) trading day period beginning on the Announcement Date;
PROVIDED, HOWEVER, that any individual executive officer or director may
transfer up to ten percent (10%) of the Ordinary Shares and/or ADSs
beneficially owned by such executive officer or director (which includes ADSs
and Ordinary Shares to be received upon exercise of existing options) after
the Effective Date without triggering the Company's payment obligations
pursuant to this Section 8.2.
VIII.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts shall be considered one and the same agreement and shall
become effective when counterparts have been
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signed by each party and delivered to the other party. In the event any
signature page is delivered by facsimile transmission, the party using such
means of delivery shall cause additional original executed signature pages to
be promptly delivered to the other parties.
VIII.4 HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
VIII.5 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 or the validity or enforceability of this Agreement
in any other jurisdiction.
VIII.6 SCOPE OF AGREEMENT; AMENDMENTS. This Agreement and the documents
and 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, no Purchaser makes any representation,
warranty, covenant or undertaking with respect the transactions contemplated
hereby. No provision of this Agreement may be waived other than by an
instrument in writing signed by the party to be charged with enforcement and no
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and Purchaser.
VIII.7 NOTICE. Any notice herein required or permitted to be given
shall be in writing and may be personally served or delivered by courier or by
facsimile-machine confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
Insignia Solutions plc
41300 Christy Street
Fremont, CA 94538
Telecopy: (510)360-3702
Attention: Stephen M. Ambler
with a copy to:
Ritchey Fisher Whitman & Klein PC
1717 Embarcadero Road
P. O. Box 51050
Palo Alto, California 94303
Telecopy: (650)857-1288
Attention: Peter A. Whitman, Esq.
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If to the Purchaser:
Castle Creek Technology Partners LLC
c/o Castle Creek Partners LLC
77 West Wacker Drive, Suite 4040
Chicago, Illinois 60601
Telecopy: (312) 499-6999
Attention: Portfolio Manager
with a copy to:
Altheimer & Gray
10 South Wacker Drive, Suite 4000
Chicago, Illinois 60606
Telecopy: (312) 715-4800
Attention: Peter H. Lieberman, Esq.
VIII.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor Purchaser shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, Purchaser may assign its rights and obligations
hereunder and may transfer any or all of its Securities to any of its
"affiliates," as that term is defined under the Exchange Act, without the
consent of the Company so long as such affiliate is an accredited investor.
This provision shall not limit Purchaser's right to transfer the Securities
pursuant to the terms of this Agreement. In addition, and notwithstanding
anything to the contrary contained in this Agreement, the Warrants or the
Registration Rights Agreement, the Securities may be pledged, and all rights of
Purchaser under this Agreement or any other agreement or document related to the
transaction contemplated hereby may be assigned, without further consent of the
Company, to a bona fide pledgee in connection with Purchaser's margin or
brokerage accounts.
VIII.9 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.
VIII.10 SURVIVAL. The representations, warranties, covenants and
agreements of the Company in this Agreement shall survive each and every Closing
hereunder notwithstanding any due diligence investigation conducted by or on
behalf of Purchaser. The Company agrees to indemnify and hold harmless Purchaser
and each of Purchaser's officers, directors, employees, partners, agents and
affiliates for loss or damage to the extent arising as a result of or related to
(a) any breach by the Company of any of its representations or covenants set
forth herein or (b) any cause of action, suit or claim brought or made against
such indemnitee (other than by the Company solely for breach of this Agreement,
the Warrants or the Registration Rights Agreement by the indemnitee or by
governmental or regulatory authorities) and arising out of or resulting from the
execution, delivery,
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performance or enforcement of this Agreement or any other instrument,
document or agreement executed pursuant hereto or contemplated hereby, any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of the issuance of the Securities or the status
of Purchaser as an investor in the Company, except to the extent that such
actual loss or damage arises out of or results from a breach by such
indemnitee of this Agreement, the Warrants or the Registration Rights
Agreement or from Purchaser's violation of law. The right to indemnification
shall include the right to advancement of expenses as they are incurred.
VIII.11 PUBLIC FILINGS; PUBLICITY. Immediately following execution of
this Agreement, the Company shall issue a press release with respect to the
transactions contemplated hereby. Prior to the issuance, filing or other
submission of any press releases (including the foregoing press release), SEC
or other filings, or any other public statements, with respect to the
transactions contemplated hereby, the Company shall provide such press releases,
filings or statements to Purchaser and its counsel for comment and approval,
provided, however, that the such approval shall be rendered within 48 hours
after receipt thereof by Purchaser and shall not be unreasonably withheld or
delayed and the Company shall be entitled, without the prior approval of
Purchaser, to make any press release or SEC, Nasdaq, NASD or exchange filings
with respect to such transactions as is required by applicable law and
regulations (although Purchaser shall (to the extent time permits) be consulted
by the Company in connection with any such press release prior to its release
and shall be provided with a copy thereof).
VIII.12 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, including, without limitation, the filing of
all appropriate documentation and notifications with Nasdaq with respect to the
Warrant Shares immediately following each of any applicable Shareholder
Approval, any applicable Nasdaq Approval and any applicable Second Nasdaq
Approval.
VIII.13 REMEDIES. No provision of this Agreement providing for any
remedy to Purchaser shall limit any remedy which would otherwise be available to
Purchaser at law or in equity. Nothing in this Agreement shall limit any rights
Purchaser may have with any applicable federal or state securities laws with
respect to the investment contemplated hereby.
VIII.14 DIRECTLY OR INDIRECTLY. Where any provision in this Agreement
refers to action to be taken by any person or entity, or which such person or
entity is prohibited from taking, such provision shall be applicable whether the
action in question is taken directly or indirectly by such person or entity.
VIII.15 REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Agreement shall be cumulative
and in addition to all other remedies available under this Agreement, at law or
in equity (including a decree of specific performance
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and/or other injunctive relief), no remedy contained herein shall be deemed a
waiver of compliance with the provisions giving rise to such remedy and
nothing herein shall limit Purchaser's right to actual damages for any
failure by the Company to comply with the terms of this Agreement. The
Company covenants to Purchaser that there shall be no characterization
concerning this instrument other than as expressly provided herein. Amounts
set forth or provided for herein with respect to payments and the like (and
the computation thereof) shall be the amounts to be received by Purchaser and
shall not, except as expressly provided herein, be subject to any other
obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Purchaser and that the remedy at law for any such
breach may be inadequate. The Company therefore agrees that, in the event of
any such breach or threatened breach, the Purchaser 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.
VIII.16 PAYMENT OF CASH; DEFAULTS. Whenever the Company is required to
make any cash payment to Purchaser under this Agreement, such cash payment shall
be due on the date (the "CASH DUE DATE") that Purchaser delivers written notice
from the Purchaser to the Company. Such cash payment shall be made to the
Purchaser by the method (by certified or cashier's check or wire transfer of
immediately available funds) elected by such Holder. If such payment is not
delivered within two (2) days of the Cash Due Date, Purchaser shall thereafter
be entitled to interest on the unpaid amount at a per annum rate equal to the
lower of eighteen percent (18%) and the highest interest rate permitted by
applicable law until such amount is paid in full to the Holder.
VIII.17 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the
part of Purchaser 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.
VIII.18 TERMINATION. In the event that the Closing shall not have
occurred on or before two (2) business days after the date of this agreement,
unless the parties agree otherwise, this Agreement shall terminate at the close
of business on such date.
* * *
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IN WITNESS WHEREOF, the undersigned Purchaser and the Company have caused
this Agreement to be duly executed as of the date first above written.
PURCHASER:
CASTLE CREEK TECHNOLOGY PARTNERS LLC
BY: Castle Creek Partners, L.L.C.
ITS: Investment Manager
BY: s/John D. Ziegelman
NAME: John D. Ziegelman
TITLE: Managing Member
COMPANY
INSIGNIA SOLUTIONS PLC
By: s/Richard M. Noling
Name: Richard M. Noling
Title: President and CEO
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SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (the "Agreement") is entered into as
of December 9, 1999, by and between Insignia Solutions plc, a public limited
company organized and existing under the laws of England and Wales (the
"Company"), with headquarters located at 41300 Christy Street, Fremont,
California 94538, and the Investors listed on Schedule A attached hereto (each a
"Purchaser" and together, the "Purchasers").
RECITALS
A. The Company and Purchasers are executing and delivering this
Agreement in reliance upon the exemption from securities registration afforded
by the provisions of Regulation D ("Regulation D"), as promulgated by the United
States Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
B. Purchasers desire to purchase, upon the terms and conditions
stated in this Agreement, (i) the Company's American Depository Shares (the
"ADSs"), each ADS representing one ordinary share of 20p each nominal value of
the Company ( the "Ordinary Shares"); (ii) a Warrant in the form of Exhibit A
hereto (the "Initial Warrant") entitling the holder thereof to purchase certain
number of the Company's ADSs; and (iii) a Warrant in the form of Exhibit C
hereto ( the "Reset Warrant", and together with the Initial Warrant, the
"Warrants") entitling the holder thereof to purchase additional ADSs from the
Company upon the occurrence of certain events as defined therein. The ADSs
being purchased hereunder are referred to herein as the "Shares" and the ADSs
issuable upon exercise of any Warrant (including the Reset Warrant) are referred
to herein as the "Warrant Shares". The Shares, the Warrants and the Warrant
Shares are collectively referred to herein as the "Securities."
C. Contemporaneous with the execution and delivery of this Agreement,
the parties hereto are executing and delivering a Registration Rights Agreement
in the form attached hereto as Exhibit B (the "Registration Rights Agreement"),
pursuant to which the Company has agreed to provide certain registration rights
in relation to the Securities under the Securities Act, the rules and
regulations promulgated thereunder and applicable state securities laws.
AGREEMENTS
NOW, THEREFORE, in consideration of their respective promises contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and Purchaser hereby agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SECURITIES
1.1 PURCHASE OF ADSS AND WARRANTS. On the Closing Date (as defined
herein), subject to the terms and the satisfaction (or waiver) of the conditions
set forth in Articles 6 and 7, the
<PAGE>
Company shall issue and sell to the Purchasers, and each Purchaser, severally
and not jointly, shall purchase from the Company (i) that number of Shares
set forth opposite the Purchaser's name on Schedule A, (ii) a Warrant
entitling the holder thereof to purchase that number of Warrant Shares set
forth opposite the Purchaser's name on Schedule A, and (iii) the Reset
Warrant, for an aggregate consideration of One Million Dollars
($1,000,000.00) (the "Purchase Price").
1.2 FORM OF PAYMENT. At the Closing, the Purchasers, severally and
not jointly, shall pay the Purchase Price for the Shares and Warrants by wire
transfer to the Company, in accordance with the Company's written wiring
instructions, against delivery of the Shares and duly executed Warrants, and the
Company shall deliver to the Purchasers such Shares and such executed Warrants
against delivery of such Purchase Price from the Purchasers.
1.3 CLOSING DATE. Subject to the satisfaction (or waiver) of the
conditions set forth in Articles 6 and 7 below, the date and time of the
issuance, sale and purchase of the Securities pursuant to this Agreement shall
be December 9, 1999 (the "Closing Date"). The Closing shall occur at 8:00 a.m.
PST, at the offices of Ritchey Fisher Whitman & Klein, 1717 Embarcadero Road,
Palo Alto, California 94303.
1.4 LIMITATION ON SALES. Notwithstanding anything to the contrary
contained in this Agreement, the Company may not sell and Purchaser may not
purchase any Shares pursuant to this Agreement and the transactions contemplated
hereby to the extent that such sale and purchase would result in any Purchaser
beneficially owning in excess of 9.9% of the Company's Ordinary Shares in issue
at the time of such purchase. For the purposes of this paragraph, beneficial
ownership and all determinations and calculations, including without limitation,
with respect to calculations of percentage ownership, shall be determined in
accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and Regulation 13D and G thereunder. This Section 1.4 may
not be waived by Purchaser unless such waiver has been voted upon and approved
by a majority of the holders of the Company's Ordinary Shares.
ARTICLE 2
PURCHASERS' REPRESENTATIONS AND WARRANTIES
Each Purchaser, severally and not jointly, represents and warrants to the
Company as set forth in this Article 2. Each Purchaser makes no other
representations or warranties, express or implied, to the Company in connection
with the transactions contemplated hereby and any and all prior representations
and warranties, if any, which may have been made by each Purchaser to the
Company in connection with the transactions contemplated hereby shall be deemed
to have been merged in this Agreement and any such prior representations and
warranties, if any, shall not survive the execution and delivery of this
Agreement.
2.1 INVESTMENT PURPOSE. Purchaser is purchasing the Shares and
Warrants for Purchaser's own account for investment only and not with a view
toward or in connection with the public re-sale or distribution thereof, except
pursuant to sales that are exempt from the
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registration requirements of the Securities Act and/or sales registered under
the Securities Act. Purchaser will not resell any of the Securities except
pursuant to sales that are exempt from the registration requirements of the
Securities Act and/or sales registered under the Securities Act. Purchaser
understands that Purchaser must bear the economic risk of this investment
indefinitely, unless the applicable Securities are registered pursuant to the
Securities Act and any applicable state securities laws or an exemption from
such registration is available, and that the Company has no present intention
of registering any such Securities other than as contemplated by the
Registration Rights Agreement. By making the representations in this Section
2.1, the Purchaser does not agree to hold any Securities for any minimum or
other specific term and reserves the right to dispose of any or all of the
Securities at any time in accordance with or pursuant to a registration
statement or an applicable exemption from registration under the Securities
Act.
2.2 ACCREDITED INVESTOR STATUS. Purchaser is an "accredited investor"
as that term is defined in Rule 501(a) of Regulation D.
2.3 RELIANCE ON EXEMPTIONS. Purchaser understands that the Shares and
Warrants are being offered and sold to Purchaser in reliance upon specific
exemptions from the registration requirements of the United States federal and
state securities laws and that the Company is relying upon the truth and
accuracy of the representations and warranties of Purchaser set forth herein in
order to determine the availability of such exemptions and the eligibility of
Purchaser to acquire the Securities.
2.4 INFORMATION. Purchaser and its counsel have been furnished all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Shares and Warrants which have
been specifically requested by Purchaser. Purchaser has been afforded the
opportunity to ask questions of the Company, and its officers, directors,
employees and agents, and has received what Purchaser believes to be complete
and satisfactory answers to any such inquiries. Neither such inquiries nor any
other due diligence investigation conducted by Purchaser or any of its
representations and warranties shall modify, amend or affect Purchaser's right
to rely on the Company's representations and warranties contained in Article 3.
Purchaser understands that Purchaser's investment in the Securities involves a
high degree of risk.
2.5 GOVERNMENTAL REVIEW. Purchaser understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.
2.6 TRANSFER OR RESALE. Purchaser understands that (i) except as
provided in the Registration Rights Agreement, the Securities have not been and
are not being registered under the Securities Act or any state securities laws,
and may not be transferred unless subsequently registered thereunder or an
exemption from such registration is available (which exemption the Company
expressly agrees may be established as contemplated in clauses (b) and (c) of
Section 5.1 hereof); (ii) any sale of such Securities made in reliance on
Rule 144 under the Securities Act (or a successor rule) ("Rule 144") may be made
only in accordance with the terms of said Rule and further, if said Rule is not
applicable, any resale of such Securities without registration under the
Securities Act may require compliance with some other exemption under the
Securities Act or the rules and regulations of the SEC thereunder; and
(iii) neither the
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Company nor any other person is under any obligation to register such
Securities under the Securities Act or any state securities laws or to comply
with the terms and conditions of any exemption thereunder (in each case,
other than pursuant to this Agreement or the Registration Rights Agreement).
2.7 LEGENDS. Purchaser understands that, subject to Article 5 hereof,
the certificate for the Warrants, and until such time as the Shares and the
Warrant Shares, as applicable, have been registered under the Securities Act as
contemplated by the Registration Rights Agreement or otherwise may be sold by
Purchaser pursuant to Rule 144, the certificates for the Shares and Warrant
Shares will bear a restrictive legend (the "Legend") in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES. THE SECURITIES
REPRESENTED HEREBY MAY NOT BE OFFERED OR SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER
APPLICABLE SECURITIES LAWS OR UNLESS OFFERED, SOLD
OR TRANSFERRED PURSUANT TO AN AVAILABLE EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THOSE LAWS.
2.8 AUTHORIZATION; ENFORCEMENT. This Agreement and the Registration
Rights Agreement have been duly and validly authorized, executed and delivered
on behalf of Purchaser and are valid and binding agreements of Purchaser
enforceable against Purchaser in accordance with their terms.
2.9 RESIDENCY. Purchasers are residents of the State of Colorado (Mr.
and Mrs. Pino), State of California (Mr. and Mrs. Zehner), and England
(Mr. Waley-Cohen); and Avalon Panama S.A. is a company incorporated in Panama.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Purchaser that:
3.1 ORGANIZATION AND QUALIFICATION. The Company is a public limited
company duly incorporated and validly existing under the laws of England and
Wales. Each of the Company's subsidiaries is a corporation, limited liability
company or other entity duly organized, validly existing and, to the extent
applicable, in good standing under the laws of the jurisdiction of its
organization, except where the failure to be so organized, existing or in good
standing that would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect. The Company and each of its
subsidiaries have full power and authority to conduct their
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respective businesses as they are presently being conducted and to own, lease
and operate their respective properties and assets, except, in the case of
any subsidiary only, where the failure to have such power or authority would
not, individually or in the aggregate, be reasonably expected to have a
Material Adverse Effect. The Company and each of its subsidiaries are duly
qualified to do business as foreign entities and are in good standing in each
jurisdiction in which the character or location of the properties and assets
owned or operated by them or the nature of the businesses conducted by them
makes such qualification necessary, except where the failure to be so
qualified or in good standing, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect. "Material Adverse
Effect" means any material adverse effect on (i) the business, operations,
properties, financial condition, operating results or prospects of the
Company and its subsidiaries, taken as a whole on a consolidated basis, (ii)
the transactions contemplated hereby, (iii) the ability of the Company to
perform its obligations under this Agreement, the Warrants or the
Registration Rights Agreement (collectively, the "Transaction Documents") or
(iv) the Purchaser's interest in the Securities.
3.2 AUTHORIZATION; ENFORCEMENT. (a) The Company has the requisite
corporate power and authority (i) to enter into and perform its obligations
under each of the Transaction Documents, (ii) to issue and sell to Purchaser,
and to perform its obligations with respect to, the Shares and the Warrants in
accordance with the terms hereof and thereof, as applicable, (iii) issue the
Warrant Shares in accordance with the terms of the Warrants; (b) the execution,
delivery and performance of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated hereby and thereby
(including without limitation the issuance of the Warrants and the reservation
for issuance and the issuance of the Shares and the Warrant Shares) have been
duly authorized by all necessary corporate action and no further consent or
authorization of the Company, its board of directors, or its stockholders or any
other person, body or agency is required with respect to any of the transactions
contemplated hereby or thereby (whether under rules of The Nasdaq National
Market ("Nasdaq"), the National Association of Securities Dealers or otherwise),
other than the Nasdaq Authorizations (as herein defined) and the declaration or
ordering of effectiveness by the SEC of the Registration Statement or Statements
as contemplated by the Registration Rights Agreement (collectively, the
"Consents"); (c) this Agreement, the Registration Rights Agreement and the
Warrants have been duly executed and delivered by the Company; and (d) each of
the Transaction Documents constitutes a legal, valid and binding obligation of
the Company enforceable against the Company in accordance with its terms.
3.3 CAPITALIZATION. The capitalization of the Company as of the date
of this Agreement, including the authorized share capital, the number of shares
in issue, the number of shares reserved for issuance pursuant to the Company's
stock option plans and employee stock purchase plans, the number of shares
reserved for issuance pursuant to securities (other than the Warrants)
exercisable for, or convertible into or exchangeable for any share, the number
of Ordinary Shares represented by ADSs, the number of shares to be initially
reserved for issuance in the form of ADSs upon exercise of the Warrants is set
forth on Schedule 3.3. All of the issued Ordinary Shares have been duly and
validly authorized and validly issued and are fully paid and nonassessable and
were not issued in violation of, or subject to, any preemptive, subscription or
other similar rights of any stockholders of the Company or any liens or
encumbrance. All of the outstanding ADSs have been duly and validly authorized
and validly issued and are entitled to the benefits specified in the
corresponding American Depositary Receipts ("ADRs") and in the
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Deposit Agreement dated November 17, 1995 between the Company and The Bank of
New York, as Depositary. Except as disclosed in Schedule 3.3, as of the date
of this Agreement, (i) there are no outstanding options, warrants, scrip,
rights to subscribe for, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock 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 of capital stock of the Company or any of its subsidiaries,
and (ii) there are no agreements or arrangements under which the Company or
any of its subsidiaries is obligated to register the sale of any of its or
their securities under the Securities Act (except the Registration Rights
Agreement). The Company has furnished to Purchaser true, correct and
complete copies of the Company's Memorandum of Association as currently in
effect ("Memorandum of Association"), and the Company's Articles of
Association as currently in effect (the "Articles of Association"). The
Company has set forth on Schedule 3.3 all instruments and agreements (other
than the Memorandum and Articles of Association) governing securities
convertible into or exercisable or exchangeable for the Ordinary Shares
(including in the form of ADSs) of the Company (and the Company shall provide
to Purchaser copies thereof upon the request of Purchaser). Except as
disclosed in Schedule 3.3, the Company has no indebtedness for borrowed money
and no agreement providing for indebtedness for borrowed money. Except as
disclosed in Schedule 3.3 and this Agreement, the Company has no share
purchase agreements, rights plans or agreements containing similar provisions
and no agreements containing anti-dilution provisions. No anti-dilution
provisions which have, individually or in the aggregate, any dilutive effect
on Purchaser's investment are triggered as a result of any of the
transactions contemplated hereby, including exercise of the Warrants. The
Company shall provide Purchaser with a written update of this representation
signed by the Company's Chief Executive Officer or Chief Financial Officer on
behalf of the Company as of the date of the Closing and it shall be a
condition to Purchaser's obligations at Closing that there are no material
changes in such capitalization since the Company's representation on the date
hereof. The Company has no subsidiaries, except as provided on Schedule 3.3.
All such subsidiaries included on Schedule 3.3. are one hundred percent
(100%) owned by the Company. Except as provided on Schedule 3.3, the Company
has no investments, either debt or equity, in any other entity.
3.4 ISSUANCE OF SECURITIES. The Shares and the Warrant Shares and the
Ordinary Shares represented by such Shares and Warrant Shares are duly
authorized and reserved for issuance, and, upon issuance in accordance with the
terms hereof and exercise of the Warrants in accordance with the terms thereof,
as applicable, will be validly issued, fully paid and non-assessable, and free
from all liens, claims and encumbrances and will not be subject to any
preemptive rights or other similar rights of stockholders of the Company. Upon
issuance, the Shares are, and the Warrant Shares will be, entitled to the
benefits specified in the corresponding American Depositary Receipts ("ADRs) and
in the Deposit Agreement relating to such ADSs. The Warrants are duly and
validly authorized and are validly issued, fully paid and non-assessable, and
free from all liens, claims and encumbrances and are not and will not be subject
to any preemptive rights or other similar rights of stockholders of the Company.
The Board of Directors of the Company has unanimously approved the issuance of
Shares and the Warrants pursuant to the terms hereof and of Warrant Shares
issuable upon full exercise of the Warrants pursuant to the terms thereof
(without giving effect to any limitations on exercise contained
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therein, including for purposes of Nasdaq Rule 4460(i) and Nasdaq Rule
4310(c)(25)(H)(1)(b)) (the "Nasdaq Authorizations"), has unanimously
recommended to the stockholders of the Company the approval of the Nasdaq
Authorizations and will seek Shareholder Approval (as defined in Section
4.13) at the Company's next annual meeting, which is currently scheduled for
May, 2000. No further corporate authorization or approval (other than the
Shareholder Approval) is required under the rules of the Nasdaq with respect
to the transactions contemplated by this Agreement, including, without
limitation, the issuance of the Shares and Warrant Shares and the inclusion
thereof for trading on the Nasdaq.
3.5 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the Warrants and the Registration Rights Agreement by the Company,
and the consummation by the Company of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and reservation for
issuance, as applicable, of the Shares, the Warrants and Warrant Shares and the
Purchaser's purchase and acquisition of the Shares, the Warrants and the Warrant
Shares) do not and will not (a) result in a violation of the Memorandum of
Association and Articles of Association, (b) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which
the Company or any of its subsidiaries is a party (except for such conflicts,
defaults, terminations, amendments, accelerations, and cancellations as would
not, individually or in the aggregate, have a Material Adverse Effect), or
(c) result in a violation of any law, rule, regulation, order, judgment or
decree (including, without limitation, U.S. federal and state securities laws
and regulations and the laws of England and Wales) applicable to the Company or
any of its subsidiaries, or by which any property or asset of the Company or any
of its subsidiaries, is bound or affected. Neither the Company nor any of its
subsidiaries is in violation of its Memorandum of Association, its Articles of
Association, or other organizational documents, and neither the Company nor any
of its subsidiaries is in default (and no event has occurred which, with notice
or lapse of time or both, would put the Company or any of its subsidiaries in
default) under, nor has there occurred any event giving others (with notice or
lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which the Company or
any of its subsidiaries is a party, except for possible defaults or rights as
would not, individually or in the aggregate, have a Material Adverse Effect.
The business of the Company and its subsidiaries is not being conducted, and
shall not be conducted so long as Purchaser owns any of the Securities, in
violation of any law, ordinance, rule, regulation, order, judgment or decree of
any governmental entity, court or arbitration tribunal except for possible
violations the sanctions for which either singly or in the aggregate would not
have a Material Adverse Effect. The Company is not required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self-regulatory agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement, the Warrants or the Registration Rights Agreement or to perform its
obligations in accordance with the terms hereof or thereof, other than the
Consents. The purchase and acquisition of the Securities by the Purchaser do
not violate any law, rule, regulation, order, judgment or decree applicable to
the Company, or require further filing by the Company or Purchaser under such
law, rule, regulation, order, judgment or decree, by virtue of the Company's
business or assets, other than the Consents as described in Section 3.2. The
Company is not in violation of the listing requirements of Nasdaq and does not
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reasonably anticipate that the ADSs will be de-listed by Nasdaq for the
foreseeable future, and the Company has made all necessary filings and
notifications with, and obtained all necessary approvals from, Nasdaq with
respect to the transactions contemplated hereby, including, without limitation,
the issuance of the Securities and the listing of the Shares and the Warrant
Shares on the Nasdaq.
3.6 REGISTRATION AND SEC DOCUMENTS. The Ordinary Shares are
registered under Section 12 of the Exchange Act and have been so registered
since __________. Except as disclosed in Schedule 3.6, since December 31, 1996,
the Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with Companies House pursuant to the U.K.
Companies Act 1985 and 1989 (collectively, and in each case including all
exhibits and schedules thereto and documents incorporated by reference therein,
the "Company Reports") and has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Exchange Act (all of the foregoing filed
after December 31, 1996, and all exhibits included therein and financial
statements and schedules thereto and documents incorporated by reference
therein, being referred to herein as the "SEC Documents" and such documents
filed prior to the date hereof, the "Filed SEC Documents"), including for
purposes of determining the availability of Form S-3. The Company has delivered
to Purchaser true and complete copies of the SEC Documents filed since December
31, 1996. As of their respective dates of filing, the Company Reports and the
SEC Documents complied in all material respects with the requirements of the
applicable law and the rules and regulations promulgated thereunder applicable
to such Company Reports and SEC Documents, and none of the Company Reports and
SEC Documents, at the time they were filed with the Companies House or SEC,
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of the statements made in any such SEC Document is, or, except
pursuant to Filed SEC Documents has been, required to be updated or amended
under applicable law. The financial statements of the Company included in the
SEC Documents were prepared in accordance with U.S. generally accepted
accounting principles, consistently applied, and the rules and regulations of
the SEC during the periods involved (except (i) as may be otherwise indicated in
such financial statements or the notes thereto, or (ii) in the case of unaudited
interim statements, to the extent they do not include footnotes or are condensed
or summary statements) and present accurately and completely the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal, immaterial year-end audit adjustments). Except as set forth in the
financial statements of the Company included in the Filed SEC Documents, the
Company has no liabilities, contingent or otherwise, other than (i) liabilities
incurred subsequent to the date of such financial statements in the ordinary
course of business consistent with past practice and (ii) obligations under
contracts and commitments incurred in the ordinary course of business and not
required under generally accepted accounting principles to be reflected in such
financial statements, in each case of clause (i) and (ii) next above which,
individually or in the aggregate, are not material to the financial condition,
business, operations, properties, operating results or prospects of the Company
and its subsidiaries taken on a whole. The Filed SEC Documents, as supplemented
by Schedule 3.6 hereto, contain a complete and accurate list of all material
undischarged written or
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oral contracts, agreements, leases or other instruments to which the Company or
any subsidiary is a party or by which the Company or any subsidiary is bound or
to which any of the properties or assets of the Company or any subsidiary is
subject (each a "Contract"), except to the extent not required to be filed
pursuant to the applicable Rules and Regulations of the SEC. None of the
Company, its subsidiaries or, to the best knowledge of the Company, any of the
other parties thereto, is in breach or violation of any Contract, which breach
or violation relates to indebtedness for borrowed money, is with respect to an
obligation in excess of one hundred thousand dollars ($100,000) or would have a
Material Adverse Effect. No event, occurrence or condition exists which, with
the lapse of time, the giving of notice, or both, or the happening of any
further event or condition, would become a breach or default by the Company or
its subsidiaries under any Contract which breach or default would have a
Material Adverse Effect.
3.7 ABSENCE OF CERTAIN CHANGES. Since December 31, 1998, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, results of operations or
prospects of the Company.
3.8 ABSENCE OF LITIGATION. There is no action, suit, proceeding,
inquiry or investigation before or by any court, public board, governmental
agency or authority, or self-regulatory organization or body pending or, to the
knowledge of the Company or any of its subsidiaries, threatened against or
affecting the Company, any of its subsidiaries, or any of their respective
directors or officers in their capacities as such, wherein an unfavorable
decision, ruling or finding could reasonably be expected to have a Material
Adverse Effect or would adversely affect the transactions contemplated by this
Agreement or any of the documents contemplated hereby or which would adversely
affect the validity or enforceability of, or the authority or ability of the
Company to perform its obligations under, this Agreement or any of such other
documents. To the Company's knowledge, there are no facts which, if known by a
potential claimant or governmental agency or authority, could give rise to a
claim or proceeding which, if asserted or conducted with results unfavorable to
the Company or any of its subsidiaries, could reasonably be expected to have a
Material Adverse Effect.
3.9 DISCLOSURE. No information relating to or concerning the Company
set forth in this Agreement or provided to Purchaser in connection with the
transactions contemplated hereby contains an untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements made herein or therein, in light of the circumstances under which
they were made, not misleading. Except for the execution and performance of
this Agreement and the transactions contemplated hereby, no material fact
(within the meaning of the federal securities laws of the United States) exists
with respect to the Company or any of its subsidiaries which has not been
publicly disclosed.
3.10 ACKNOWLEDGMENT REGARDING PURCHASER'S PURCHASE OF THE SECURITIES.
The Company acknowledges and agrees the Purchaser is acting independently and
is not acting as a financial advisor or fiduciary of the Company (or in any
similar capacity) with respect to this Agreement or the transactions
contemplated hereby, that this Agreement and the transaction contemplated
hereby, and the relationship between the Purchaser and the Company, are
"arms-length", and that any statement made by the Purchaser, or any of its
representatives or agents, in connection with this Agreement or the
transactions contemplated hereby is not advice or a recommendation, is merely
incidental to Purchaser's purchase of the Securities and has not been
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relied upon in any way by the Company, its officers, directors or other
representatives. The Company further represents to the Purchaser that the
Company's decision to enter into this Agreement and the transactions
contemplated hereby has been based solely on an independent evaluation by the
Company and its representatives.
3.11 CURRENT PUBLIC INFORMATION. The Company is currently eligible to
register the resale of the Shares and the Warrant Shares by the Purchaser in a
secondary offering under General Instruction B3 and B4 of Form S-3 on a
registration statement on Form S-3 under the Securities Act, all as
contemplated by Section 2.1 of the Registration Rights Agreement.
3.12 NO GENERAL SOLICITATION. Neither the Company nor any person
acting on behalf of the Company has conducted any "general solicitation," as
described in Rule 502(c) under Regulation D, with respect to any of the
Securities being offered hereby.
3.13 NO INTEGRATED OFFERING. Neither the Company, nor any of its
affiliates, nor any person acting on their behalf, has directly or indirectly
made any offers or sales of any security or solicited any offers to buy any
security under circumstances that would prevent the parties hereto from
consummating the transactions contemplated hereby pursuant to an exemption from
registration under the Securities Act pursuant to the provisions of Regulation
D. The transactions contemplated hereby are exempt from the registration
requirements of the Securities Act, assuming the accuracy of the
representations and warranties herein contained of Purchaser to the extent
relevant for such determination.
3.14 NO BROKERS. The Company has taken no action which would give
rise to any claim by any person for brokerage commissions, finder's fees or
similar payments by any Purchaser relating to this Agreement or the
transactions contemplated hereby, except for dealings with Allied Capital
International, Inc. (the fees of which shall be paid in full by the Company).
The Company will indemnify each Purchaser from and against any fees and
expenses sought or other claims made by Allied Capital International, Inc.
3.15 ACKNOWLEDGMENT OF DILUTION. The number of Warrant Shares
issuable upon exercise each of the Warrants may increase substantially in
certain circumstances. The Company's executive officers and directors have
studied and fully understand the terms of this Agreement and the transactions
contemplated hereby and the nature of the securities being sold hereunder and
recognize that they have a potentially dilutive effect. The board of directors
of the Company has unanimously concluded in its good faith business judgment
that the issuance of the Shares, the Warrants and the Warrant Shares as
contemplated hereby is in the best interests of the Company. The Company
acknowledges that its obligation to issue Warrant Shares upon exercise of the
Warrants is binding upon it and enforceable regardless of the dilution that
such issuance may have on the ownership interests of other stockholders.
3.16 INTELLECTUAL PROPERTY. Each of the Company and its subsidiaries
owns or possesses adequate and enforceable rights to use all patents, patent
applications, trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, know-how (including trade secrets
and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) and other similar rights and proprietary
knowledge (collectively, "Intangibles") used or necessary for the conduct of
its business as now
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being conducted and as previously described in the Company's Annual Report on
Form 10-K most recently filed and any subsequently filed reports on Form 10-Q
and Form 8-K. Neither the Company nor any subsidiary of the Company infringes
on or is in conflict with any right of any other person with respect to any
Intangibles nor is there any claim of infringement made by a third party
against or involving the Company or any of its subsidiaries, which
infringement, conflict or claim, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a Material
Adverse Effect.
3.17 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 subsidiary has, in the course of his actions
for, or on behalf of, the Company, used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expenses relating to
political activity; made any direct or indirect unlawful payment to any foreign
or domestic government official or employee from corporate funds; violated or
is in violation of any provision of the U.S. Foreign Corrupt Practices Act of
1977, as amended; or made any bribe, rebate, payoff, influence payment,
kickback or other unlawful payment to any foreign or domestic government
official or employee. Without limiting the generality of the foregoing, the
Company and its subsidiaries have not directly or indirectly made or agreed to
make (whether or not said payment is lawful) any payment to obtain, or with
respect to, sales other than usual and regular compensation to its or their
employees and sales representatives with respect to such sales.
3.18 KEY EMPLOYEES. Each Key Employee (as defined below) is currently
serving the Company in the capacity disclosed in Schedule 3.18. No Key
Employee, to the best of the knowledge of the Company and its subsidiaries, is,
or is now expected to be, in violation of any material term of any employment
contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each Key Employee does
not subject the Company or any of its subsidiaries to any liability with
respect to any of the foregoing matters. No Key Employee has, to the best of
the knowledge of the Company and its subsidiaries, any intention to terminate
or limit his employment with, or services to, the Company or any of its
subsidiaries, nor is any such Key Employee subject to any constraints (e.g.,
litigation) which would cause such employee to be unable to devote his full
time and attention to such employment or services. "Key Employees" means
Richard Noling, Stephen Ambler, Mark McMillan, George Buchan, John Hoskin,
Ronald Workman and Marshall Kwait.
3.19 YEAR 2000 COMPLIANCE. The information set forth in the Filed SEC
Documents with respect to Year 2000-related compliance by the Company does not
contain any untrue statement of a material fact or omit any material fact
necessary to make the statements contained therein not misleading. The
Company's testing compliance program and contingency plan, in each case
regarding Year 2000-related matters, are adequate to prevent a Material Adverse
Effect and such Year 2000-related matters will not cause a Material Adverse
Effect.
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ARTICLE 4
COVENANTS
4.1 BEST EFFORTS. The parties shall use their best efforts timely to
satisfy each of the conditions described in Articles 6 and 7 of this Agreement.
4.2 SECURITIES LAWS. The Company agrees to file a Form D with
respect to the Securities with the SEC as required under Regulation D and to
provide a copy thereof to the Purchaser on or prior to the date of Closing.
The Company agrees to file a Form 8-K disclosing this Agreement and the
transactions contemplated hereby with the SEC within three (3) days following
the Closing Date. Such Form 8-K shall contain as exhibits this Agreement, the
Warrants and the Registration Rights Agreement. The Company shall, on or prior
to the Closing Date, take such action as is necessary to sell the Securities to
Purchaser in accordance with applicable U.S. federal and state securities laws
and regulations and the applicable laws of England and Wales, and shall provide
evidence of any such action so taken to each Purchaser on or prior to the date
of the Closing. Without limiting any of the Company's obligations under this
Agreement, the Registration Rights Agreement or the Warrants, from and after
the Closing Date, neither the Company nor any person acting on its behalf shall
take any action which would adversely affect any exemptions from registration
under the Securities Act with respect to the transactions contemplated hereby.
4.3 REPORTING STATUS. So long as any Purchaser beneficially owns any
of the Securities, the Company shall timely file all reports required to be
filed with the SEC pursuant to the Exchange Act, and the Company shall not
terminate its status as an issuer required to file reports under the Exchange
Act even if the Exchange Act or the rules and regulations thereunder would
permit such termination.
4.4 USE OF PROCEEDS. The Company shall use the proceeds from the
sale of the Securities hereunder for general working capital purposes.
4.5 RESTRICTION ON BELOW MARKET ISSUANCE OF SECURITIES.
(i) During the period beginning on the Closing Date and ending on the
later of (x) the date which is three (3) months after the Effective Date and
(y) the date which is six (6) months following the Closing Date (such period,
the "Financing Period"), the Company shall not issue or agree to issue (except
(A) the ADSs pursuant to this Agreement and the issuance of the ADSs to Castle
Creek Technology Partners LLC at or prior to the Closing for an aggregate
amount of Three Million Five Hundred Thousand Dollars ($3,500,000) on terms
substantially similar to this Agreement, (B) pursuant to investments from
industry participants, in which there is a significant purpose other than
raising equity capital, (C) in connection with the acquisition of another
company, (D) in an underwritten public offering or (E) on conversion of the
Convertible Promissory Notes issued in favor of Quantum Corporation dated
October 20, 1999) any equity securities or any equity-like or equity-linked
securities of the Company (or any security convertible into or exercisable or
exchangeable, directly or indirectly, for equity, equity-like or equity-linked
securities of the Company) if such securities are issued at a price (or in the
case of securities convertible into or exercisable or exchangeable, directly or
indirectly, for Ordinary Shares or ADSs such securities provide for a
conversion, exercise or exchange price) which may
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be less than the then current market price for Ordinary Shares or ADSs on the
date of issuance (in the case of Ordinary Shares or ADSs) or the date of
conversion, exercise or exchange (in the case of securities convertible into or
exercisable or exchangeable, directly or indirectly, for Ordinary Shares or
ADSs), or if such securities are variable-priced or contain provisions for
price resetting (any such securities, the "Restricted Securities").
(ii) During the six-month period beginning on the date immediately
following the final day of the Financing Period, the Company will not issue or
agree to issue any Restricted Securities unless the Company has satisfied all
of the following requirements with respect to such issuance:
(I) The Company shall have delivered notice to the Purchasers
(the "Transfer Notice"), which notice shall include (A) the terms and number of
units of the security and the consideration per unit which the Company desires
to receive for the securities (which, in the case where the Company shall have
received an offer to purchase such securities other than from the Purchasers (a
"Third Party Offer"), shall be the consideration set forth in such offer) and
(B) all of the material terms and conditions, including the terms and
conditions of payment, upon which the Company proposes to transfer said
securities (which, in the case of a Third Party Offer, shall be the terms and
conditions set forth in the Third Party Offer).
(II) Upon the delivery of the Transfer Notice, the Purchasers
shall have an option to purchase any or all of the securities described
therein. Such option shall be exercisable by the Purchasers by service of
written notice upon the Company within five (5) days of receipt of the Transfer
Notice.
(III) If the options created in clause (II) hereof are not
exercised by the Purchasers within five (5) days of service of the Transfer
Notice, or if such options are exercised only in part, then, within a period of
thirty (30) days beginning on the day following the date of expiration of the
option period, the Company may issue some or all of the securities sought to be
issued as to which such options were not exercised, at a price which is not
less than one hundred percent (100%) of the price specified in the Transfer
Notice and on terms and conditions not less favorable to the Company than those
specified in the Transfer Notice.
(IV) Each Purchaser shall have the option pursuant to clause
(II) hereof to purchase that percentage of the securities specified in the
transfer notice equal to the purchase price set forth opposite that Purchaser's
name on Schedule A hereto divided by Four Million Five Hundred Thousand Dollars
($4,500,000). In the event that any Purchaser declines to exercise the option
created in clause (II) hereof, such option may be exercised by the remaining
Purchasers, pro rata to the purchase price set forth opposite the name of each
said remaining Purchaser on Schedule A hereto.
4.6 FURTHER RESTRICTION ON ISSUANCE OF SECURITIES. While any
Purchaser holds any Shares, any Warrants or Warrant Shares, the Company and
each of its subsidiaries shall not issue, or authorize for issuance, or
otherwise transfer or enter into any commitment to issue or otherwise transfer,
any debt or equity security, bond, note or other security of any of the
Company's subsidiaries, provided that Purchaser shall keep the Company current
on its such Shareholdings.
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4.7 EXPENSES. The Company shall pay to the Purchasers at the Closing
reimbursement for the expenses incurred by it and its affiliates and advisors
in connection with the negotiation, preparation, execution, and delivery of
this Agreement and the other agreements and documents to be executed in
connection herewith, including, without limitation, due diligence and
attorneys' fees and expenses (the "Expenses"). In addition, from time to time
thereafter, upon any Purchaser's written request, the Company shall pay to the
Purchaser such Expenses, if any, not so paid at Closing and/or covered by such
payment, in each case to the extent incurred by the Purchaser. The Company
shall not be required to reimburse Expenses to the extent such Expenses exceed
Ten Thousand Dollars ($10,000) in the aggregate.
4.8 INFORMATION. The Company agrees to send the following reports to
each Purchaser until the earlier of (i) the Purchaser transfers, assigns or
sells all of its Securities; or (ii) the second (2nd) anniversary of the
Closing Date: (a) within three (3) days after the filing with the SEC, a copy
of its Annual Report on Form 10-K, its Quarterly Reports on Form 10-Q, any
proxy statements and any Current Reports on Form 8-K; and (b) within two (2)
days after release, copies of all press releases issued by the Company or any
of its subsidiaries. The Company further agrees to promptly provide to each
Purchaser any information with respect to the Company, its properties, or its
business or such Purchaser's investment as such Purchaser may reasonably
request; provided, however, that the Company shall not be required to give the
Purchaser any material nonpublic information. If any information requested by
any Purchaser from the Company contains material nonpublic information, the
Company shall inform such Purchaser in writing that the information requested
contains material nonpublic information and shall in no event provide such
information to such Purchaser without the express prior written consent of such
Purchaser after being so informed.
4.9 AVAILABILITY OF SHARES. From and after the Closing Date, the
Company shall:
a. at all times have sufficient authorized share capital
available for allotment and issue to permit the exercise of the Warrants into
Warrant Shares.
b. issue and cause the transfer agent and Depositary to
deliver such ADSs as required upon exercise of the Warrants and take all
actions necessary to ensure that all such Warrant Shares shall, when issued and
paid for, be duly and validly issued, fully paid and nonassessable and be
entitled to the benefits specified in the corresponding ADRs and in the Deposit
Agreement relating to such ADSs; and
c. If, and so long as, any ADSs are listed or quoted on any
securities exchange or market, the Company shall, if permitted by the rules of
such securities exchange or market, list and keep listed or quoted on such
securities exchange or market, upon official notice of issuance, all Warrant
Shares issuable upon exercise of the Warrants.
4.10 LISTING. For a period of beginning on the Closing Date and
ending on the third (3rd) anniversary of the Closing Date, the Company shall
continue the listing and trading of its ADSs on The Nasdaq National Market, the
New York Stock Exchange or the American Stock Exchange, secure and maintain
listing and trading of the Shares and Warrant Shares on such exchange, and
comply in all respects with the Company's reporting, filing and other
obligations under the by-laws or rules of such exchange. If the Company fails
to maintain the listing or
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trading of the ADSs as required by this Section 4.10, then beginning on the
tenth (10th) business day following such failure, if the ADSs are still not
listed or traded, then the Company shall pay to the Purchasers an amount equal
to one percent (1%) of the fair market value of the Shares and Warrant Shares
then held by the Purchasers per day that such failure continues. For purposes
hereof, the number of Warrant Shares held by Purchaser shall be calculated as
though the Warrants held by the Purchasers were fully exercised, without regard
to any limitations on the exercise thereof.
4.11 PROSPECTUS DELIVERY REQUIREMENT. The Purchasers understand that
the Securities Act may require delivery of a prospectus relating to the ADSs in
connection with any sale thereof pursuant to a registration statement under the
Securities Act covering the resale by the Purchasers of the ADSs being sold
hereunder.
4.12 INTENTIONAL ACTS OR OMISSIONS. Neither the Company nor the
Purchasers shall intentionally perform any act which if performed, or
intentionally omit to perform any act which, if omitted to be performed, would
prevent or excuse the performance of this Agreement or any of the transactions
contemplated hereby.
4.13 SHARE AUTHORIZATION. The Company covenants and agrees that it
shall (i) solicit by proxy the Shareholder Approval (as defined below) and (ii)
use its best efforts to obtain the Shareholder Approval at its next annual
stockholder meeting, which shall not be held later than [July 31, 2000]
("Shareholder Approval Date"). For purposes hereof, "Stockholder Approval"
means authorization by the stockholders of the Company for the issuance of ADSs
upon the exercise of the Warrants pursuant to the terms thereof in the
aggregate in excess of twenty percent (20%) of the issued and outstanding ADSs
and, if necessary, the elimination of any prohibitions under the rules or
regulations of any stock exchange, interdealer quotation system or other
self-regulatory organization with jurisdiction over the Company or any of its
securities on the Company's ability to issue ADSs in excess of twenty percent
(20%). In addition, the Company shall, unless otherwise consented to by a
majority in interest of the Purchasers, have a definitive proxy statement
mailed to each stockholder of the Company at least twenty (20) days prior to
the Approval Date. The Company shall deliver one copy of any SEC comments it
receives with respect to its proxy statement to the Purchasers and will not
file such proxy statement (or any amendments thereto), whether such proxy
statement is in preliminary or definitive form, without the approval of a
majority in interest of the Purchasers, which approval shall not be
unreasonably withheld or delayed.
ARTICLE 5
LEGEND REMOVAL AND TRANSFER INSTRUCTIONS
5.1 REMOVAL OF LEGEND. The Legend shall be removed and the Company
shall issue a certificate without any legend to the holder of any Security upon
which such Legend is stamped, and a certificate for a Security shall be
originally issued without any legend, if, unless otherwise required by
applicable state securities laws, (a) the sale of such Security is registered
under the Securities Act, (b) such holder provides the Company with an opinion
of counsel, in form, substance and scope customary for opinions of counsel in
comparable transactions, and
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reasonably satisfactory to the Company (the cost of which shall be borne by the
Holder), to the effect that a public sale or transfer of such Security may be
made without registration under the Securities Act or (c) such Security can be
sold pursuant to Rule 144. Each Purchaser agrees to sell all Securities,
including those represented by a certificate(s) from which the Legend has been
removed, or which were originally issued without the Legend, (i) pursuant to an
effective registration statement and to deliver a prospectus in connection with
such sale or (ii) in compliance with an exemption from the registration
requirements of the Securities Act. In the event the Legend is removed from
any Security or any Security is issued without the Legend and thereafter the
effectiveness of a registration statement covering the resale of such Security
is suspended or a supplement or amendment thereto is required by applicable
securities laws, then upon reasonable advance notice to any Purchaser holding
such Security, the Company may require that the Legend be placed on any such
Security that cannot then be sold pursuant to an effective registration
statement or Rule 144 or with respect to which the opinion referred to in
clause (b) next above has not been rendered, which Legend shall be removed when
such Security may be sold pursuant to an effective registration statement or
Rule 144 or such holder provides the opinion with respect thereto described in
clause (b) next above. Except for the Legend required pursuant to this Section
5.1, the Securities shall bear no legend.
5.2 TRANSFER AGENT INSTRUCTIONS. The Company shall instruct its
transfer agent to issue certificates, registered in the name any Purchaser or
its nominee, for the Shares and Warrant Shares in such amounts as specified
from time to time by such Purchaser to the Company. Such certificates shall
bear a legend only in the form of the Legend and only to the extent permitted
by Section 5.1 above. The Company warrants that no instruction other than such
instructions referred to in this Article 5, and no stop transfer instructions
other than stop transfer instructions to give effect to Section 2.6 hereof in
the case of the Shares and Warrant Shares prior to registration thereof under
the Securities Act, will be given by the Company to its transfer agent and that
the Securities shall otherwise be freely transferable on the books and records
of the Company. Nothing in this Section shall affect in any way the
Purchasers' obligations and agreements set forth in Section 5.1 hereof to
resell the Securities pursuant to an effective registration statement and to
deliver a prospectus in connection with such sale or in compliance with an
exemption from the registration requirements of applicable securities laws.
Without limiting any other rights of the Purchasers or obligations of the
Company, if (a) any Purchaser provides the Company with an opinion of counsel,
which opinion of counsel shall be in form, substance and scope customary for
opinions of counsel in comparable transactions (the reasonable cost of which
shall be borne by the Company), to the effect that the Securities to be sold or
transferred may be sold or transferred pursuant to an exemption from
registration or (b) any Purchaser transfers Securities pursuant to Rule 144,
the Company shall permit the transfer, and promptly instruct its transfer agent
to issue one or more certificates in such name and in such denomination as
specified by Purchaser in order to effect such a transfer or sale. The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Purchasers by vitiating the intent and purpose of the
transaction contemplated hereby. Accordingly, the Company acknowledges that the
remedy at law for a breach of its obligations under this Article 5 will be
inadequate and agrees, in the event of a breach or threatened breach by the
Company of the provisions of this Article 5, that any Purchaser shall be
entitled, in addition to all other available remedies, to an injunction
restraining any breach and
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requiring immediate issuance and transfer, without the necessity of showing
economic loss and without any bond or other security being required.
5.3 FAILURE TO REMOVE LEGEND. If the Company fails to remove any
legend as required by this Article 5 (a "Legend Removal Failure"), then
beginning on the tenth (10th) day following such failure, if the Company
continues to fail to remove such legend, the Company shall pay to the Purchaser
holding shares subject to a Legend Removal Failure an amount equal to one
percent (1%) of the fair market value of the Shares and Warrant Shares then held
by the Purchaser per day that such failure continues. For purposes hereof, the
number of Warrant Shares held by the Purchaser shall be calculated as though the
Warrants held by the Purchaser were fully exercised, without regard to any
limitations on the exercise thereof.
ARTICLE 6
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
6.1 CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The obligation of
the Company hereunder to issue and sell the Shares and Warrants to each
Purchaser at the Closing is subject to the satisfaction, as of the date of the
Closing and with respect to each Purchaser, of each of the following conditions
thereto, provided that these conditions are for the Company's sole benefit and
may be waived by the Company at any time in its sole discretion:
(i) Each Purchaser shall have executed the signature page to
this Agreement and the Registration Rights Agreement and delivered the
same to the Company.
(ii) Each Purchaser shall deliver the applicable Purchase Price
for the Shares and the Warrants purchased at the Closing.
(iii) The representations and warranties of each Purchaser shall
be true and correct as of the date when made and as of the Closing as
though made at that time, and each Purchaser shall have performed,
satisfied and complied in all material respects with the covenants and
agreements required by this Agreement to be performed or complied with by
such Purchaser at or prior to the Closing. The Company shall have
received a certificate executed by each Purchaser dated the Closing Date
as to such matters as may be reasonably requested by the Company.
(iv) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which restricts or prohibits the consummation of any
of the transactions contemplated by this Agreement.
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ARTICLE 7
CONDITIONS TO PURCHASER'S OBLIGATION TO PURCHASE
7.1 CONDITIONS TO THE CLOSING. The obligation of the Purchasers
hereunder to purchase the Shares and Warrants to be purchased by it on the
Closing Date is subject to the satisfaction of each of the following conditions,
provided that these conditions are for Purchasers' sole benefit and may be
waived by the Purchasers at any time in the Purchasers' sole discretion:
(i) the Company shall have executed the signature page to this
Agreement and the Registration Rights Agreement and delivered the same to
Purchaser.
(ii) The Company shall have delivered duly executed certificates
for the Shares (in such denominations as the Purchasers shall reasonably
request) and Warrants being so purchased by Purchaser at the Closing.
(iii) At or prior to the Closing, Castle Creek Technology
Partners LLC shall have purchased from the Company Shares and Warrants
for an aggregate consideration of Three Million Five Hundred Thousand
Dollars ($3,500,000) on terms substantially similar to terms contained
herein.
(iv) The ADSs, including all Shares and Warrant Shares, shall
be listed on the Nasdaq and trading in the ADSs shall not have been
suspended by the Nasdaq, the SEC or other regulatory authority and no
de-listing or suspension shall be reasonably likely for the
foreseeable future.
(v) The representations and warranties of the Company shall be
true and correct as of the date when made and as of the Closing as though
made at that time and the Company shall have performed, satisfied and
complied with the covenants and agreements required by this Agreement to
be performed or complied with by the Company at or prior to the Closing.
The Purchasers shall have received a certificate, executed by the Chief
Executive Officer or Chief Financial Officer of the Company, dated as of
the Closing to the foregoing effect and as to such other matters as may
be reasonably requested by the Purchasers.
(vi) No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or
endorsed by any court or governmental authority of competent jurisdiction
or any self-regulatory organization having authority over the matters
contemplated hereby which prohibits the consummation of any of the
transactions contemplated by this Agreement.
(vii) The Purchasers shall have received the officer's
certificate described in Section 3.3, dated as of the Closing and there
shall be no material changes from the date of signing of this Agreement
to the date of the Closing other than as a result of issuance of ADSs
pursuant to options, warrants and other obligations disclosed on
Schedule 3.3 as of the date of this Agreement.
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(viii) The Purchasers shall have received opinions of the
Company's counsel, dated as of the Closing, in the form attached hereto
as Exhibit D.
(ix) The Company's Depositary shall have agreed to act in
accordance with irrevocable instructions in the form attached hereto as
Exhibit E.
(x) the Company shall have filed a Form D with respect to the
Securities with the SEC (or shall do so following the Closing) as
required under Regulation D and shall have provided (or shall provide) a
copy thereof to the Purchasers.
(xi) The Company shall have filed an Additional Listing
Application (and no additional time is required for the effectiveness
thereof) with respect to all Shares and Warrant Shares with the National
Association of Securities Dealers and has provided a copy thereof to the
Purchasers.
ARTICLE 8
GOVERNING LAW; MISCELLANEOUS
8.1 GOVERNING LAW; JURISDICTION. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed in the State of New York. The parties hereto
irrevocably consent to the jurisdiction of the United States federal courts
located in the State of New York and the state courts located in the County of
New York in the State of New York in any suit or proceeding based on or arising
under this Agreement or the transactions contemplated hereby and irrevocably
agree that all claims in respect of such suit or proceeding may be determined in
such courts. The Company irrevocably waives the defense of an inconvenient
forum to the maintenance of such suit or proceeding. The Company further agrees
that service of process upon the Company mailed by the first class mail shall be
deemed in every respect effective service of process upon the Company in any
suit or proceeding arising hereunder. Nothing herein shall affect the
Purchasers' right to serve process in any other manner permitted by law. The
parties hereto agree that a final non-appealable judgment in any such suit or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on such judgment or in any other lawful manner.
8.2 OFFICER AND DIRECTOR TRANSACTIONS. If any executive officer or
director of the Company, directly or indirectly, including through family
members, trusts or other entities related to such executive officer or director,
disposes or provides or files any public notice, including pursuant to Rule 144
of the Securities Act, of a bona fide intent to dispose, of any Ordinary Shares
or ADSs beneficially owned by him during the period beginning on the Closing
Date and ending on the date which is six (6) months after the Effective Date,
the Company shall pay to each Purchaser an amount equal to (x) the number of
Shares and Warrant Shares (without giving effect to any exercise or limitation
on exercise thereof) then held by the Purchaser times (y) the difference between
(m) the closing bid price of the ADSs on the trading day immediately preceding
the day on which such disposal was publicly announced (the "Announcement Date")
and (n) the lowest closing bid price of the ADSs during the thirty (30) trading
day period
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beginning on the Announcement Date; provided, however, that any individual
executive officer or director may transfer up to ten percent (10%) of the
Ordinary Shares and/or ADSs beneficially owned by such executive officer or
director (which includes ADSs and Ordinary Shares to be received upon
exercise of existing options) after the Effective Date without triggering the
Company's payment obligations pursuant to this Section 8.2.
8.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, including, without limitation, by facsimile transmission, all of
which counterparts 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. In the event any signature page is delivered by facsimile
transmission, the party using such means of delivery shall cause additional
original executed signature pages to be promptly delivered to the other parties.
8.4 HEADINGS. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
8.5 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 or
the validity or enforceability of this Agreement in any other jurisdiction.
8.6 SCOPE OF AGREEMENT; AMENDMENTS. This Agreement and the documents
and 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, no Purchaser makes any representation,
warranty, covenant or undertaking with respect the transactions contemplated
hereby. No provision of this Agreement may be waived other than by an
instrument in writing signed by the party to be charged with enforcement and no
provision of this Agreement may be amended other than by an instrument in
writing signed by the Company and the Purchaser.
8.7 NOTICE. Any notice herein required or permitted to be given shall
be in writing and may be personally served or delivered by courier or by
facsimile-machine confirmed telecopy, and shall be deemed delivered at the time
and date of receipt (which shall include telephone line facsimile transmission).
The addresses for such communications shall be:
If to the Company:
Insignia Solutions plc
41300 Christy Street
Fremont, CA 94538
Telecopy: (510)360-3702
Attention: Stephen M. Ambler
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with a copy to:
Ritchey Fisher Whitman & Klein PC
1717 Embarcadero Road
P. O. Box 51050
Palo Alto, California 94303
Telecopy: (650)857-1288
Attention: Peter A. Whitman, Esq.
If to the Purchasers, at the address set forth on
Schedule A hereto.
with a copy to:
Irell & Manella, LLP
333 South Hope Street
Los Angeles, CA 90071
Telecopy: (213) 229-0515
Attention: Anthony T. Iler, Esq.
8.8 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor the Purchasers shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other. This
provision shall not limit the Purchasers' right to transfer the Securities
pursuant to the terms of this Agreement. In addition, and notwithstanding
anything to the contrary contained in this Agreement, the Warrants or the
Registration Rights Agreement, the Securities may be pledged, and all rights of
the Purchasers under this Agreement or any other agreement or document related
to the transaction contemplated hereby may be assigned, without further consent
of the Company, to a bona fide pledgee in connection with a Purchaser's margin
or brokerage accounts.
8.9 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.
8.10 SURVIVAL. The representations, warranties, covenants and
agreements of the Company in this Agreement shall survive each and every Closing
hereunder notwithstanding any due diligence investigation conducted by or on
behalf of the Purchasers. The Company agrees to indemnify and hold harmless the
Purchasers and each of Purchasers' officers, directors, employees, partners,
agents and affiliates for loss or damage to the extent arising as a result of or
related to (a) any breach by the Company of any of its representations or
covenants set forth herein or (b) any cause of action, suit or claim brought or
made against such indemnitee (other than by the Company solely for breach of
this Agreement, the Warrants or the Registration Rights Agreement by the
indemnitee or by governmental or regulatory authorities) and arising out of or
resulting from the execution, delivery, performance or enforcement of this
Agreement or any other instrument, document or agreement executed pursuant
hereto or contemplated hereby, any transaction financed or to be financed in
whole or in part, directly or indirectly, with
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the proceeds of the issuance of the Securities or the status of the
Purchasers as an investor in the Company, except to the extent that such
actual loss or damage arises out of or results from a breach by such
indemnitee of this Agreement, the Warrants or the Registration Rights
Agreement or from Purchaser's violation of law. The right to indemnification
shall include the right to advancement of expenses as they are incurred.
8.11 PUBLIC FILINGS; PUBLICITY. Immediately following execution of
this Agreement, the Company shall issue a press release with respect to the
transactions contemplated hereby. Prior to the issuance, filing or other
submission of any press releases (including the foregoing press release), SEC
or other filings, or any other public statements, with respect to the
transactions contemplated hereby, the Company shall provide such press releases,
filings or statements to the Purchasers and their counsel for comment and
approval, provided, however, that the such approval shall be rendered within 48
hours after receipt thereof by the Purchasers and shall not be unreasonably
withheld or delayed and the Company shall be entitled, without the prior
approval of the Purchasers, to make any press release or SEC, Nasdaq, NASD or
exchange filings with respect to such transactions as is required by applicable
law and regulations (although the Purchasers shall (to the extent time permits)
be consulted by the Company in connection with any such press release prior to
its release and shall be provided with a copy thereof).
8.12 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, including, without limitation, the filing of
all appropriate documentation and notifications with Nasdaq with respect to the
Warrant Shares immediately following each of any applicable Shareholder
Approval, any applicable Nasdaq Approval and any applicable Second Nasdaq
Approval.
8.13 REMEDIES. No provision of this Agreement providing for any remedy
to the Purchasers shall limit any remedy which would otherwise be available to
the Purchasers at law or in equity. Nothing in this Agreement shall limit any
rights the Purchasers may have with any applicable federal or state securities
laws with respect to the investment contemplated hereby.
8.14 DIRECTLY OR INDIRECTLY. Where any provision in this Agreement
refers to action to be taken by any person or entity, or which such person or
entity is prohibited from taking, such provision shall be applicable whether the
action in question is taken directly or indirectly by such person or entity.
8.15 REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Agreement shall be cumulative
and in addition to all other remedies available under this Agreement, at law or
in equity (including a decree of specific performance and/or other injunctive
relief), no remedy contained herein shall be deemed a waiver of compliance with
the provisions giving rise to such remedy and nothing herein shall limit the
Purchasers' right to actual damages for any failure by the Company to comply
with the terms of this Agreement. The Company covenants to the Purchasers that
there shall be no characterization concerning this instrument other than as
expressly provided herein. Amounts
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<PAGE>
set forth or provided for herein with respect to payments and the like (and
the computation thereof) shall be the amounts to be received by the
Purchasers and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The
Company acknowledges that a breach by it of its obligations hereunder will
cause irreparable harm to the Purchasers and that the remedy at law for any
such breach may be inadequate. The Company therefore agrees that, in the
event of any such breach or threatened breach, that the Purchasers 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.
8.16 PAYMENT OF CASH; DEFAULTS. Whenever the Company is required to
make any cash payment to the Purchasers under this Agreement, such cash payment
shall be due on the date (the "Cash Due Date") that any Purchaser delivers
written notice from that Purchaser to the Company. Such cash payment shall be
made to the Purchaser by the method (by certified or cashier's check or wire
transfer of immediately available funds) elected by such Holder. If such
payment is not delivered within two (2) days of the Cash Due Date, the Purchaser
shall thereafter be entitled to interest on the unpaid amount at a per annum
rate equal to the lower of eighteen percent (18%) and the highest interest rate
permitted by applicable law until such amount is paid in full to the Holder.
8.17 FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the part
of any Purchaser 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.
8.18 TERMINATION. In the event that the Closing shall not have
occurred on or before two (2) business days after the date of this agreement,
unless the parties agree otherwise, this Agreement shall terminate at the close
of business on such date.
* * *
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<PAGE>
IN WITNESS WHEREOF, the undersigned Purchasers and the Company have
caused this Agreement to be duly executed as of the date first above written.
COMPANY:
INSIGNIA SOLUTIONS PLC
By: s/Richard M. Noling
Name: Richard M. Noling
Title: President and CEO
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<PAGE>
SECURITIES PURCHASE AGREEMENT
(continued)
PURCHASERS:
VINCENT S. and ROSEMARY PINO
By s/Vincent S. Pino
VINCENT S. PINO
By s/Rosemary Pino
ROSEMARY PINO
RICHARD N. and BARBARA ZEHNER
By s/Richard N. Zehner
RICHARD N. ZEHNER
By s/Barbara Zehner
BARBARA ZEHNER
By s/Robert Waley-Cohen
ROBERT WALEY-COHEN
AVALON PANAMA S.A.
By s/Avalon Panama S.A.
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<PAGE>
SCHEDULE A
<TABLE>
<CAPTION>
Name, Address and Purchase Shares Warrants
Telecopy Number of Purchaser Price Purchased Purchased
- ---------------------------- -------- --------- ---------
<S> <C> <C> <C>
Vincent S. and Rosemary Pino $250,000 59,084 17,725
Richard N. and Barbara Zehner $250,000 59,084 17,725
Robert Waley-Cohen $250,000 59,084 17,725
Avalon Panama S.A. $250,000 59,084 17,725
</TABLE>
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