Contract
Exhibit 99.1
THIS WARRANT AND THE SECURITIES THAT MAY BE ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR UNDER THE
PROVISIONS OF ANY APPLICABLE STATE SECURITIES LAWS. NEITHER THIS WARRANT NOR THE SECURITIES THAT
MAY BE ACQUIRED UPON THE EXERCISE OF THIS WARRANT MAY BE SOLD, PLEDGED, TRANSFERRED, ASSIGNED OR
OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND APPLICABLE STATE SECURITIES LAWS OR UPON DELIVERY TO THE COMPANY OF AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAW IS NOT REQUIRED.
STOCK PURCHASE WARRANT
VOID AFTER 5:00 P.M., EASTERN STANDARD TIME
ON JANUARY 27, 2011
| Date of Issuance January 27, 2006 | Certificate No. [W- ] |
FOR VALUE RECEIVED, INX Inc., a Delaware corporation (the “Company”), hereby grants to Xxxxxxx
Xxxxx & Associates, Inc. or its registered assigns (the “Registered Holder”) the right to purchase
from the Company 40,000 shares of the Company’s Common Stock, $.01 par value per share (“Warrant
Stock” or “Warrant Shares”) at a price per share of $6.00 (as adjusted from time to time hereunder,
the “Exercise Price”). Certain capitalized terms used herein are defined in Section 6 hereof. The
amount and kind of securities obtainable pursuant to the rights granted hereunder and the purchase
price for such securities are subject to adjustment pursuant to the provisions contained in this
Warrant.
This Warrant is subject to the following provisions:
Section 1. Exercise of Warrant.
1A. Exercise Period. The Registered Holder may exercise, in whole or in part, the
purchase rights represented by this Warrant at any time and from time to time after the Date of
Issuance to and including the date of the 5 year anniversary of the effective date any Transaction
for which Xxxxxxx Xxxxx & Associates, Inc.’s services were utilized by the Company (the “Exercise
Period”).
1B. Exercise of Warrants.
(i) Method of Exercise. The Warrant evidenced hereby may be exercised by the
Registered Holder, in whole, by the delivery at the principal office of the Company (or at such
other office or agency of the Company as it may designate by notice in writing to the Registered
Holder), during normal business hours, of this Warrant and the Exercise Agreement (in the form
attached hereto as Exhibit I), duly completed and executed, and payment of the Purchase Price (as
such term is defined in Section IB(x) below) in cash, by wire transfer of immediately available
United States federal funds or by bank certified, treasurer’s or cashier’s check payable to the
order of the Company. Upon delivery of the Exercise Agreement, this Warrant and the Purchase
Price, the Company shall
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deliver to the Registered Holder that number of Warrant Shares which is equal to the Purchase
Price divided by the Exercise Price, as may be adjusted from time to time.
(ii) Cashless Exercise. In lieu of exercising the Warrant evidenced hereby pursuant
to Section 1B(i) above, the Registered Holder shall have the right during the Exercise Period to
exercise this Warrant, in whole or in part, by surrendering this Warrant to the Company accompanied
by the Form of Cashless Exercise (in the form attached hereto as Exhibit II), duly completed and
executed. Upon delivery of the Form of Cashless Exercise and this Warrant, the Company shall
deliver to the Registered Holder (without payment by the Registered Holder of any cash in respect
of the Purchase Price) that number of Warrant Shares which is equal to the amount obtained by
dividing (x) an amount equal to the difference between (1) the aggregate Market Price for the
Warrant Shares as to which the Cashless Exercise Right is then being exercised (the “Cashless
Exercise Shares”), determined as of immediately prior to the effective time of the exercise of the
Cashless Exercise Right, minus (2) the aggregate Exercise Price then applicable to the Cashless
Exercise Shares (such difference, the “Cashless Exercise Amount”), by (y) the Market Price of one
share of Common Stock determined as of the close of trading immediately after the effective time of
the exercise of the Cashless Exercise right. Upon exercise of the Cashless Exercise right, the
Cashless Exercise Amount shall be deemed to have been paid to the Company in respect of the Warrant
Shares so acquired. Any references in this Warrant to the “exercise” of this Warrant, and the use
of the term “exercise” herein, shall be deemed to include, without limitation, any exercise of the
Cashless Exercise right.
(iii) Certificates for shares of Warrant Stock purchased upon exercise of this Warrant shall
be delivered by the Company to the Registered Holder as soon as practicable after surrender of the
Warrant and either (a) payment of the Purchase Price and delivery of the Exercise Agreement or
(b) delivery of the Form of Cashless Exercise to the Company, and in any event within ten (10) days
after such surrender, payment and delivery to the Company in the manner described above. Unless
this Warrant has expired or all of the purchase rights represented hereby have been exercised, the
Company shall prepare a new Warrant, substantially identical hereto, in the name of Registered
Holder, representing the rights formerly represented by this Warrant which have not expired or been
exercised and shall, as soon as practicable, deliver such new Warrant to the Registered Holder or
to such Person as the Registered Holder has designated for delivery.
(iv) The Warrant Stock issuable upon the exercise of this Warrant shall be deemed to have been
issued to the Registered Holder as of the close of business on the date on which this Warrant shall
have been surrendered to the Company and delivery of (1) the Purchase Price and Exercise Agreement
or (2) Form of Cashless Exercise has been made to the Company, and the Registered Holder shall be
deemed for all purposes to have become the record holder of such Warrant Stock on that date.
(v) The issuance of certificates for shares of Warrant Stock upon exercise of this Warrant
shall be made without charge to the Registered Holder with respect to any issuance tax or other
cost incurred by the Company in connection with such exercise and the related issuance of shares of
Warrant Stock. Each share of Warrant Stock issuable upon exercise of this Warrant shall, upon
payment of the Exercise Price therefor, be duly authorized, validly issued, fully paid and
nonassessable and free from all liens and charges with respect to the issuance thereof.
(vi) The Company shall not close its books against the transfer of this Warrant or of any
share of Warrant Stock issued or issuable upon the exercise of this Warrant in any manner which
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interferes with the timely exercise of this Warrant. The Company shall from time to time take
all such action as may be necessary to insure that the par value per share of the unissued Warrant
Stock acquirable upon exercise of this Warrant is at all times equal to or less than the Exercise
Price then in effect.
(vii) The Company shall assist and cooperate with any Registered Holder required to make any
governmental filings or obtain any governmental approvals prior to, or in connection with, the
exercise of this Warrant.
(viii) The Company shall at all times reserve and keep available out of its authorized but
unissued shares of Warrant Stock, solely for the purpose of issuance upon the exercise of the
Warrants, at least such number of shares of Warrant Stock issuable upon the exercise in full of all
outstanding Warrants. The Company shall take all such actions as may be necessary to insure that
all such shares of Warrant Stock may be so issued without violation of any applicable law or
governmental regulation or any requirements of any domestic securities exchange upon which shares
of Warrant Stock may be listed (except for official notice of issuance which shall be immediately
delivered by the Company upon each such issuance). The Company shall not take any action which
would cause the number of authorized but unissued shares of Warrant Stock to be less than the
number of such shares required to be reserved hereunder for issuance upon exercise of the Warrants.
(ix) If the shares of Warrant Stock issuable by reason of exercise of this Warrant are
convertible into or exchangeable for any other stock or securities of the Company, the Company
shall, at the Registered Holder’s option and upon surrender of this Warrant by such holder as
provided above, together with any notice, statement or payment required to effect such conversion
or exchange of Warrant Stock, deliver to such holder (or such other Person specified by such
holder) a certificate or certificates representing the stock or securities into which the shares of
Warrant Stock issuable by reason of such conversion are convertible or exchangeable, registered in
such name or names and in such denomination or denominations as such holder has specified.
(x) Purchase Price. The Purchase Price shall be the amount equal to the product of
the Exercise Price multiplied by the number of shares of Warrant Stock being purchased upon such
exercise.
1C. Fractional Shares. If a fractional share of Warrant Stock would be issuable upon
exercise of the rights represented by this Warrant, the Company shall, as soon as practicable after
the date of exercise, deliver to the Registered Holder a check payable to the Registered Holder, in
lieu of such fractional share, in an amount equal to the difference between (x) the Market Price of
such fractional share as of the date of the Exercise Time and (y) the Exercise Price of such
fractional share.
Section 2. Adjustment of Exercise Price and Number of Shares. In order to prevent dilution
of the rights granted under this Warrant, the Exercise Price shall be subject to adjustment from
time to time as provided in this Section 2, and the number of shares of Warrant Stock obtainable
upon exercise of this Warrant shall be subject to adjustment from time to time as provided in this
Section 2.
2A. Adjustments of Number of Shares/Price. In the event of a subdivision or
combination of the Common Stock, a stock dividend with respect to the Common Stock, a
recapitalization, or a reclassification of the Common Stock, the number of and kind of shares
issuable upon exercise of this Warrant, and the Exercise Price per share, shall be equitably
adjusted by the Company’s Board of
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Directors as it deems necessary, and in its sole discretion, to prevent dilution of the rights
of the Registered Holder set forth in this Warrant. Promptly following any such adjustment, the
Company shall provide the Registered Holder with a certificate stating the nature of the event
giving rise to the adjustment and setting forth the adjusted Exercise Price and the number and kind
of shares for which this Warrant shall then be exercisable.
2B. Subdivision or Combination of Common Stock. If the Company at any time subdivides
(by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision shall be proportionately reduced and the number of shares of
Warrant Stock obtainable upon exercise of this Warrant shall be proportionately increased. If the
Company at any time combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination shall be proportionately increased and the number of shares
of Warrant Stock obtainable upon exercise of this Warrant shall be proportionately decreased.
2C. Reorganization, Reclassification, Consolidation, Merger or Sale. Any
recapitalization, reorganization, reclassification, consolidation, merger, sale of all or
substantially all of the Company’s assets or other transaction, which in each case is effected in
such a way that the holders of Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in exchange for Common Stock
is referred to herein as an “Organic Change.” Prior to the consummation of any Organic Change, the
Company shall make appropriate provision (in form and substance reasonably satisfactory to the
Registered Holders of the Warrants, representing a majority of the Warrant Stock obtainable upon
exercise of all Warrants then outstanding) to insure that each of the Registered Holders of the
Warrants shall thereafter have the right to acquire and receive, in lieu of or in addition to (as
the case may be) the shares of Warrant Stock immediately theretofore acquirable and receivable upon
the exercise of such holder’s Warrant, such shares of stock, securities or assets as may be issued
or payable with respect to or in exchange for the number of shares of Warrant Stock immediately
theretofore acquirable and receivable upon exercise of such holder’s Warrant had such Organic
Change not taken place. In any such case, the Company shall make appropriate provision (in form
and substance reasonably satisfactory to the Registered Holders of the Warrants representing a
majority of the Warrant Stock obtainable upon exercise of all Warrants then outstanding) with
respect to such holders’ rights and interests to insure that the provisions of this Section 2 and
Sections I, 3 and 4 hereof shall thereafter be applicable to the Warrants (including, in the case
of any such consolidation, merger or sale in which the successor entity or purchasing entity is
other than the Company, an immediate adjustment of the Exercise Price to the value for the Common
Stock reflected by the terms of such consolidation, merger or sale, and a corresponding immediate
adjustment in the number of shares of Warrant Stock acquirable and receivable upon exercise of the
Warrants, if the value so reflected is less than the Exercise Price in effect immediately prior to
such consolidation, merger or sale). The Company shall not effect any such consolidation, merger
or sale, unless prior to the consummation thereof, the successor entity (if other than the Company)
resulting from consolidation or merger or the entity purchasing such assets assumes by written
instrument (in form and substance satisfactory to the Registered Holders of Warrants representing a
majority of the Warrant Stock obtainable upon exercise of all the Warrants then outstanding), the
obligation to deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to acquire.
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2D. Notices.
(i) Immediately upon any adjustment of Exercise Price, the Company shall give written notice
thereof to the Registered Holder, setting forth in reasonable detail and certifying the calculation
of such adjustment.
(ii) The Company shall give written notice to the Registered Holder at least twenty (20) days
prior to the date on which the Company closes its books or takes a record (x) with respect to any
dividend or distribution upon the Common Stock, (y) with respect to any pro rata subscription offer
to holders of Common Stock, or (z) for determining rights to vote with respect to any Organic
Change, dissolution or liquidation.
(iii) The Company also shall give written notice to the Registered Holder at least twenty (20)
days prior to the date on which any Organic Change, dissolution or liquidation shall take place.
Section 3. Liquidating Dividends. If the Company declares or pays a dividend upon the
Common Stock that is payable otherwise than in cash out of earnings or earned surplus (determined
in accordance with generally accepted accounting principles, consistently applied) (except for a
stock dividend payable in shares of Common Stock) (a “Liquidating Dividend”), then the Company
shall pay to the Registered Holder of this Warrant at the time of payment thereof the Liquidating
Dividend which would have been paid to such Registered Holder on the Warrant Stock had this Warrant
been fully exercised immediately prior to the date on which a record is taken for such Liquidating
Dividend, or, if no record is taken, the date as of which the record holders of Common Stock
entitled to such dividends are to be determined.
Section 4. Purchase Rights. If at any time the Company grants, issues or sells any
Options, Convertible Securities or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the “Purchase Rights”), then the
Registered Holder of this Warrant shall be entitled to acquire, upon the terms applicable to such
Purchase Rights, the aggregate Purchase Rights which such holder could have acquired if such holder
had held the number of shares of Warrant Stock acquirable upon complete exercise of this Warrant
immediately before the date on which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date of which the record holders of Common
Stock are to be determined for the grant, issue or sale of such Purchase Rights.
Section 5. Registration Rights. Concurrent with the execution and delivery of this
Warrant, the Company and the Registered Holder have entered into that certain Registration Rights
Agreement (in the form of Addendum C hereto).
Section 6. Definitions. The following terms have meanings set forth below:
“Common Stock” means, collectively, the Company’s Common Stock and any capital stock
of any class of the Company hereafter authorized which is not limited to a fixed sum or percentage
of par or stated value in respect to the rights of the holders thereof to participate in dividends
or in the distribution of assets upon any liquidation, dissolution or winding up of the Company.
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“Convertible Securities” means any stock or securities (directly or indirectly)
convertible into or exchangeable for Common Stock.
“Market Price” means as to any security the average of the closing prices, averaged
over a period of twenty-one (21) days consisting of the day as of which “Market Price” is being
determined and the twenty (20) consecutive business days prior to such day, of such security’s
sales on all domestic securities exchanges on which such security may be listed at the time, or, if
there have been no sales on any such exchange on that day, the average of the highest bid and
lowest asked prices on all such exchanges at the end of such day, or, if on any day such security
is not so listed, the average of the representative bid and asked prices quoted in the NASDAQ
System as of 4:00 P.M., New York time, on such day, or, if on any day such security is not quoted
in the NASDAQ System, the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau, Incorporated, or any
similar successor organization; provided that, if such security is listed on any domestic
securities exchange, the term “business days” as used in this sentence means business days on which
such exchange is open for trading. If at any time such security is not listed on any domestic
securities exchange or quoted in the NASDAQ System or the domestic over-the-counter market, the
“Market Price” shall be the fair value thereof determined jointly by the Company and the Registered
Holders of Warrants representing a majority of the Warrant Stock purchasable upon exercise of all
the Warrants then outstanding; provided that if such parties are unable to reach agreement within a
reasonable period of time such fair value shall be determined by an appraiser jointly selected by
the Company and the Registered Holders of Warrants representing a majority of the Warrant Stock
purchasable upon exercise of all the Warrants then outstanding. The determination of such
appraiser shall be final and binding on the Company and the Registered Holders of the Warrants, and
the fees and expenses of such appraiser shall be paid by the Company.
“Options” means any rights or options to subscribe for or purchase Common Stock or
Convertible Securities.
“Person” means an individual, a partnership, a joint venture, a corporation, a limited
liability company, a trust, an unincorporated organization and a government or any department or
agency thereof.
“Securities Act” means the Securities Act of 1933, as amended.
“Warrant Stock” or “Warrant Shares” means the Company’s Common Stock; provided
that, if there is a change such that the securities issuable upon exercise of the Warrants are
issued by an entity other than the Company or there is a change in the type class of securities so
issuable, then the term “Warrant Stock” shall mean one share of the security issuable upon exercise
of the Warrants if such security is issuable in shares, or shall mean the smallest unit in which
such security is issuable if such security is not issuable in shares.
Section 7. Warrant Transferable. Subject to the transfer conditions referred to in the
legend endorsed hereon, this Warrant and all rights hereunder are transferable, in whole or in
part, without charge to the Registered Holder, upon surrender of this Warrant with a properly
executed Assignment (in the form of Exhibit III hereto) at the principal office of the Company.
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Section 8. NASD Matters. Notwithstanding anything to the contrary in this Warrant, the
Company agrees to modify any terms of the Warrant as requested by the Registered Holder so as to
enable the Registered Holder to comply with the Conduct Rules of the NASD.
Section 9. Warrant Exchangeable for Different Denominations. This Warrant is exchangeable,
upon the surrender hereof by the Registered Holder at the principal office of the Company, for new
Warrants of like tenor representing in the aggregate the purchase rights hereunder, and each of
such new Warrants shall represent such portion of such rights as is designated by the Registered
Holder at the time of such surrender. The date the Company initially issues this Warrant shall be
deemed to be the “Date of Issuance” hereof regardless of the number of times new certificates
representing the unexpired and unexercised rights formerly represented by this Warrant shall be
issued. All Warrants representing portions of the rights hereunder are referred herein as the
“Warrants.”
Section 10. Replacement. Upon receipt of evidence reasonably satisfactory to the Company
(an affidavit of the Registered Holder shall be satisfactory) of the ownership and the loss, theft,
or destruction, or mutilation of any certificate evidencing this Warrant, and in the case of any
such loss, theft or destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that, if the holder is a financial institution or other institutional investor, its own
agreement shall be satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Company shall (at its expense) execute and deliver in lieu of such certificate a
new certificate of like kind representing the same rights represented by such lost, stolen,
destroyed or mutilated certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate.
Section 11. Notices. Except as otherwise expressly provided herein, all notices referred
to in this Warrant shall be in writing and shall be delivered by registered or certified mail,
return receipt requested, postage prepaid or sent by reputable overnight courier service (charges
prepaid) and shall be deemed to have been given when so mailed or sent (1) to the Company, at its
principal executive offices and (2) to the Registered Holder of this Warrant, at such holder’s
address as it appears in the records of the Company (unless otherwise indicated by any such
holder).
Section 12. Descriptive Headings Governing Law. The descriptive headings of the several
Sections and paragraphs of this Warrant are inserted for convenience only and do not constitute a
part of this Warrant. The corporation laws of the State of New York shall govern all issues
concerning the relative rights of the Company and its shareholders. All other questions concerning
the construction, validity, enforcement and interpretation of this Warrant shall be governed by the
internal law of the State of New York, without giving effect to any choice of law or conflict of
law provision or rule (whether of the State of New York or any other jurisdictions) that would
cause the application of the laws of any jurisdictions other than the State of New York.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested by its duly
authorized officers under its corporate seal and to be dated the Date of Issuance hereof.
| INX Inc. | ||||
By: |
/s/ Xxxxx Xxxxxxx |
|||
| Name Xxxxx Xxxxxxx | ||||
| Its Chief Financial Officer | ||||
| Attest: | ||||
| /s/ Xxxxxx Horcepa | ||||
| Secretary | ||||
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