REGISTRATION RIGHTS AGREEMENT
Exhibit 99.2
This Registration Rights Agreement (the “Agreement”) is made and entered into as of January 27,
2006 (the “Effective Date”) among INX Inc., a Delaware corporation (the “Company”), and Xxxxxxx
Xxxxx & Associates, Inc. (“Investor”).
RECITALS:
A. The Investor has the right to purchase shares of common stock, $0.01 par value, of the Company
pursuant to the Stock Purchase Warrant (the “Stock Purchase Warrant”) by and between the Company
and Investor.
B. The Company and the Investor desire to set forth the registration rights to be granted by the
Company to the Investor.
NOW, THEREFORE, in consideration of the mutual promises, representations, warranties, covenants,
and conditions set forth herein, in the Stock Purchase Warrant, or otherwise, the parties mutually
agree as follows:
AGREEMENT:
1. Certain Definitions. As used in this Agreement, the following terms shall have the
following respective meanings:
“Blackout Period” means, with respect to a registration, a period in each case commencing
on the day immediately after the Company notifies the Investor that they are required, pursuant to
Section 4(f), to suspend offers and sales of Registrable Securities during which the Company, in
the good faith judgment of its Board of Directors, determines (because of the existence of, or in
anticipation of, any acquisition, financing activity, or other transaction involving the Company,
or the unavailability for reasons beyond the Company’s control of any required financial
statements, disclosure of information which is in its best interest not to publicly disclose, or
any other event or condition of similar significance to the Company) that the registration and
distribution of the Registrable Securities to be covered by such registration statement, if any,
would be seriously detrimental to the Company and its shareholders and ending on the earlier of (1)
the date upon which the material non-public information commencing the Blackout Period is disclosed
to the public or ceases to be material and (2) such time as the Company notifies the selling
Holders that the Company will no longer delay such filing of the Registration Statement and
recommences taking steps to make such Registration Statement effective or allows sales pursuant to
such Registration Statement to resume.
“Business Day” means any day of the year, other than a Saturday, Sunday, or other day on
which the Commission is required or authorized to close.
“Closing Date” means January 27, 2006, or such other time as is mutually agreed between the
Company and the Investor for the closing of the sale referred to in Recital A above.
“Commission” means the Securities and Exchange Commission or any other federal agency at
the time administering the Securities Act.
“Common Stock” means the common stock, $0.01 par value, of the Company and any and all
shares of capital stock or other equity securities of (i) the Company which are added to or
exchanged or substituted for the Common Stock by reason of the declaration of any stock dividend or
stock split, the issuance of any distribution or the reclassification, readjustment,
recapitalization or other such modification of the capital structure of the Company; and (ii) any
other corporation, now or hereafter organized under the laws of any state or other governmental
authority, with which the Company is merged, which results from any consolidation or reorganization
to which the Company is a party, or to which is sold all or substantially all of the shares or
assets of the Company, if immediately after such merger, consolidation, reorganization or sale, the
Company or the stockholders of the Company own equity securities hating in the aggregate more than
50% of the total voting power of such other corporation.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Commission promulgated thereunder.
“Family Member” means (a) with respect to any individual, such individual’s spouse, any
descendants (whether natural or adopted), any trust all of the beneficial interests of which are
owned by any of such individuals or by any of such individuals together with any organization
described in Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, the estate of any
such individual, and any corporation, association, partnership or limited liability company all of
the equity interests of which are owned by those above described individuals, trusts or
organizations and (b) with respect to any trust, the owners of the beneficial interests of such
trust.
“Form S-1” means such form under the Securities Act as in effect on the date hereof.
“Holder” means Investor or any successor or Permitted Assignee of a Investor, who acquires
rights in accordance with this Agreement with respect to the Registrable Securities directly or
indirectly from an Investor, including from any Permitted Assignee.
“Inspector” means any attorney, accountant, or other agent retained by a Investor for the
purposes provided in Section 4(j).
“Permitted Assignee” means (a) with respect to a partnership, its partners or former
partners in accordance with their partnership interests, (b) with respect to a corporation, its
shareholders in accordance with their interest in the corporation, (c) with respect to a limited
liability company, its members or former members in accordance with their interest in the limited
liability company, (d) with respect to an individual party, any Family Member of such party, (e) an
entity that is controlled by, controls, or is under common control with a transferor, or (f) a
party to this Agreement.
The terms “register,” “registered,” and “registration” refers to a registration effected by
preparing and filing a registration statement in compliance with the Securities Act, and the
declaration or ordering of the effectiveness of such registration statement.
“Registrable Securities” means shares of Common Stock issued to Investor pursuant to the
Stock Purchase Warrant, but in each case excluding (A) any Registrable Securities that have been
publicly
sold or may be publicly sold immediately without registration under the Securities Act either
pursuant to Rule 144 of the Securities Act or otherwise; (B) any Registrable Securities sold by a
person in a transaction pursuant to a registration statement filed under the Securities Act or (C)
any Registrable Securities that are at the time subject to an effective registration statement
under the Securities Act.
“Registration Statement” means the registration statement required to be filed by the
Company pursuant to Section 3(a).
“Securities Act” means the Security Act of 1933, as amended, or any similar federal statute
promulgated in replacement thereof, and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
“SEC Effective Date” means the date the Registration Statement is declared effective by the
Commission.
2. Term. This Agreement shall continue in full force and effect for a period of five
(5) years from the Effective Date, unless terminated sooner hereunder.
3. Registration.
(a) Piggyback Registration. If the Company shall determine to register for sale for
cash any of its Common Stock, for its own account or for the account of others (other than the
Holders), other than (i) a registration relating solely to employee benefit plans or securities
issued or issuable to employees, consultants (to the extent the securities owned or to be owned by
such consultants could be registered on Form S-8) or any of their Family Members (including a
registration on Form S-8), (ii) a registration relating solely to a Commission Rule 145
transaction, a registration on Form S-4 in connection with a merger, acquisition, divestiture,
reorganization, or similar event, or (iii) a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities that are also being
registered, the Company shall promptly give to the Holders written notice thereof (and in no event
shall such notice be given less than 20 calendar days prior to the filing of such registration
statement), and shall, subject to Section 3(b), include in such registration (and any related
qualification under blue sky laws or other compliance) (a “Piggyback Registration”), all of the
Registrable Securities specified in a written request or requests, made within 10 calendar days
after receipt of such written notice from the Company, by any Holder or Holders. However, the
Company may, without the consent of the Holders, withdraw such registration statement prior to its
becoming effective if the Company or such other shareholders have elected to abandon the proposal
to register the securities proposed to be registered thereby.
(b) Underwriting. If a Piggyback Registration is for a registered public offering
involving an underwriting, the Company shall so advise the Holders in writing or as a part of the
written notice given pursuant to Section 3(a). In such event the right of any Holder to
registration pursuant to Section 3(a) shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the
extent provided herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and any other shareholders of the Company
distributing their securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such underwriting by the Company
or selling shareholders, as applicable. Notwithstanding any other provision of this Section 3(b),
if the underwriter or the Company
determines that marketing factors require a limitation of the number of shares to be
underwritten, the underwriter may exclude some or all Registrable Securities from such registration
and underwriting. The Company shall so advise all Holders (except those Holders who failed to
timely elect to distribute their Registrable Securities through such underwriting or have indicated
to the Company their decision not to do so), and the number of shares of Registrable Securities
that may be included in the registration and underwriting, if any, shall be allocated among such
Holders as follows:
(i) In the event of a Piggyback Registration that is initiated by the Company, the number of
shares that may be included in the registration and underwriting shall be allocated first to the
Company and then, subject to obligations and commitments existing as of the date hereof, to all
selling shareholders, including the Holders, who have requested to sell in the registration on a
pro rata basis according to the number of shares requested to be included; and
(ii) In the event of a Piggyback Registration that is initiated by the exercise of demand
registration rights by a shareholder or shareholders of the Company (other than the Holders), then
the number of shares that may be included in the registration and underwriting shall be allocated
first to such selling shareholders who exercised such demand and then, subject to obligations and
commitments existing as of the date hereof, to all other selling shareholders, including the
Holders, who have requested to sell in the registration, on a pro rata basis according to the
number of shares requested to be included.
No Registrable Securities excluded from the underwriting by reason of the underwriter’s
marketing limitation shall be included in such registration. If any Holder disapproves of the
terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter. The Registrable Securities and/or other securities so withdrawn
from such underwriting shall also be withdrawn from such registration; provided, however, that, if
by the withdrawal of such Registrable Securities a greater number of Registrable Securities held by
other Holders may be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have included Registrable
Securities in the registration the right to include additional Registrable Securities pursuant to
the terms and limitations set forth herein in the same proportion used above in determining the
underwriter limitation.
(c) Right to Terminate Registration. The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 3 prior to the effectiveness of such
registration whether or not any Holder has elected to include securities in such registration. The
registration expenses of such withdrawn registration shall be borne by the Company in accordance
with Section 6 hereof.
4. Registration Procedures. In the case of each registration, qualification, or
compliance effected by the Company pursuant to Section 3 hereof, the Company will keep each Holder
including securities therein reasonably advised in writing (which may include e-mail) as to the
initiation of each registration, qualification, and compliance and as to the completion thereof.
With respect to any registration statement filed pursuant to Section 3, the Company will use its
commercially reasonable best efforts to:
(a) prepare and file with the Commission with respect to such Registrable Securities, a
registration statement on Form S-l, or any other form for which the Company then
qualifies or which counsel for the Company shall deem appropriate, and which form shall be
available for the sale of the Registrable Securities in accordance with the intended method(s) of
distribution thereof, and use its commercially reasonable efforts to cause such registration
statement to become and remain effective at least for a period ending with the first to occur of
(i) the sale of all Registrable Securities covered by the registration statement, (ii) the
availability under Rule 144 for the Holder to immediately, freely resell without restriction all
Registrable Securities covered by the registration statement, (iii) 90 days after a Piggyback
Registration is declared effective by the Commission (in each case, the “Effectiveness Period”);
provided that no later than two business days before filing with the Commission a registration
statement or prospectus or any amendments or supplements thereto, the Company shall (i) furnish to
one special counsel (“Holders Counsel”) selected by the Company for the benefit of the Holders,
copies of all such documents proposed to be filed (excluding any exhibits other than applicable
underwriting documents), in substantially the form proposed to be filed, which documents shall be
subject to the review of such Holders Counsel, and (ii) notify each Holder of Registrable
Securities covered by such registration statement of any stop order issued or threatened by the
Commission and take all reasonable actions required to prevent the entry of such stop order or to
remove it if entered;
(b) if a registration statement is subject to review by the Commission, promptly respond to
all comments and diligently pursue resolution of any comments to the satisfaction of the
Commission;
(c) prepare and file with the Commission such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to keep such
registration statement effective during the Effectiveness Period (but in any event at least until
expiration of the 90-day period referred to in Section 4(3) of the Securities Act and Rule 174, or
any successor thereto, thereunder, if applicable), and comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by such registration statement during
such period in accordance with the intended method(s) of disposition by the sellers thereof set
forth in such registration statement;
(d) furnish, without charge, to each Holder of Registrable Securities covered by such
registration statement (i) a reasonable number of copies of such registration statement (including
any exhibits thereto other than exhibits incorporated by reference), each amendment and supplement
thereto as such Holder may request, (ii) such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and any other prospectus filed under
Rule 424 under the Securities Act) as such Holders may request, in conformity with the requirements
of the Securities Act, and (iii) such other documents as such Holder may reasonably request in
order to facilitate the disposition of the Registrable Securities owned by such Holder, but only
during the Effectiveness Period;
(e) use its commercially reasonable best efforts to register or qualify such Registrable
Securities under such other applicable securities or blue sky laws of such jurisdictions as any
Holder of Registrable Securities covered by such registration statement reasonably requests as may
be necessary for the marketability of the Registrable Securities (such request to be made by the
time the applicable registration statement is deemed effective by the Commission) and do any and
all other acts and things which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of the Registrable Securities owned by such
Holder; provided that the Company shall not be required to (i) qualify generally to do business in
any
jurisdiction where it would not otherwise be required to qualify but for this paragraph (e),
(ii) subject itself to taxation in any such jurisdiction, or (iii) consent to general service of
process in any such jurisdiction;
(f) as promptly as practicable after becoming aware of such event, notify each Holder of such
Registrable Securities at any time when a prospectus relating thereto is required to be delivered
under the Securities Act of the happening of any event which comes to the Company’s attention if as
a result of such event the prospectus included in such registration statement contains an untrue
statement a material fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and the Company shall promptly prepare and
furnish to such Holder a supplement or amendment to such prospectus (or prepare and file
appropriate reports under the Exchange Act) so that, as thereafter delivered to the purchasers of
such Registrable Securities, such prospectus shall not contain an untrue statement of a material
fact or omit to state any material fact required to be stated therein or necessary to make the
statements therein not misleading, unless suspension of the use of such prospectus otherwise is
authorized herein or in the event of a Blackout Period, in which case no supplement or amendment
need be furnished (or Exchange Act filing made) until the termination of such suspension or
Blackout Period;
(g) comply, and continue to comply during the period that such registration statement is
effective under the Securities Act, in all material respects with the Securities Act and the
Exchange Act and with all applicable rules and regulations of the Commission with respect to the
disposition of all securities covered by such registration statement, and make available to its
security holders, as soon as reasonably practicable, an earnings statement covering the period of
at least 12 months, but not more than 18 months, beginning with the first full calendar month after
the SEC Effective Date, which earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act.
(h) as promptly as practicable after becoming aware of such event, notify each Holder of
Registrable Securities being offered or sold pursuant to the Registration Statement of the issuance
by the Commission of any stop order or other suspension of effectiveness of the Registration
Statement at the earliest possible time;
(i) permit the Holders of Registrable Securities being included in the Registration Statement
and their legal counsel, at such Holders’ sole cost and expense (except as otherwise specifically
provided in Section 6) to review and have a reasonable opportunity to comment on the Registration
Statement and all amendments and supplements thereto at least two Business Days prior to their
filing with the Commission;
(j) make available for inspection by any Holder and any Inspector retained by such Holder, at
such Holder’s sole expense, all Records as shall be reasonably necessary to enable such Holder to
exercise its due diligence responsibility, and cause the Company’s officers, directors, and
employees to supply all information which such Holder or any Inspector may reasonably request for
purposes of such due diligence; provided, however, that such Holder shall hold in confidence and
shall not make any disclosure of any record or other information which the Company determines in
good faith to be confidential, and of which determination such Holder is so notified at the time
such Holder receives such information, unless (i) the disclosure of such record is necessary to
avoid or correct a misstatement or omission in the Registration Statement and a reasonable time
prior to such disclosure the Holder shall have informed the Company of the need to so correct such
misstatement or omission
and the Company shall have failed to correct such misstatement of omission, (ii) the release
of such record is ordered pursuant to a subpoena or other order from a court or governmental body
of competent jurisdiction or (iii) the information in such record has been made generally available
to the public other than by disclosure in violation of this or any other agreement. 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 a confidentiality agreement with the
Company with respect thereto, substantially in the form of this Section 4(j), which agreement shall
permit such Inspector to disclose records to the Holder who has retained such Inspector. Each
Holder 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 the Company’s expense, to undertake appropriate action to
prevent disclosure of, or to obtain a protective order for, the records deemed confidential. The
Company shall hold in confidence and shall not make any disclosure of information concerning a
Holder provided to the Company pursuant to this Agreement unless (i) disclosure of such information
is necessary to comply with federal or state securities laws, (ii) disclosure of such information
to the Staff of the Division of Corporation Finance is necessary to respond to comments raised by
the Staff in its review of the Registration Statement, (iii) disclosure of such information is
necessary to avoid or correct a misstatement or omission in the Registration Statement, (iv)
release of such information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, or (v) such information has been made generally
available to the public other than by disclosure in violation of this or any other agreement. The
Company agrees that it shall, upon learning that disclosure of such information concerning a Holder
is sought in or by a court or governmental body of competent jurisdiction or through other means,
give prompt notice to such Holder and allow such Holder, at such Holder’s expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order for, such information;
(k) use its best efforts to cause all the Registrable Securities covered by the Registration
Statement to be listed or quoted on the principal securities market on which securities of the same
class or series issued by the Company are then listed or traded;
(l) provide a transfer agent and registrar, which may be a single entity, for the Registrable
Securities at all times;
(m) cooperate with the Holders of Registrable Securities being offered pursuant to the
Registration Statement 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
Holders may reasonably request and registered in such names as the Holders may request; and
(n) take all other reasonable actions necessary to expedite and facilitate disposition by the
Holders of the Registrable Securities pursuant to the Registration Statement.
5. Suspension of Offers and Sales. Each Holder of Registrable Securities agrees that,
upon receipt of any notice from the Company of the happening of any event of the kind described in
Section 4(f) hereof or of the commencement of an Blackout Period, such Holder shall discontinue
disposition of Registrable Securities pursuant to the registration statement covering such
Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended
prospectus contemplated by Section 4(f) hereof or notice of the end of the Blackout Period, and, if
so directed by
the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies
(including, without limitation, any and all drafts), other than permanent file copies, then in such
Holder’s possession, of the prospectus covering such Registrable Securities current at the time of
receipt of such notice.
6. Registration Expenses. The Company shall pay all expenses in connection with any
registration, including, without limitation, all registration, filing, stock exchange and NASD
fees, printing expenses, all fees and expenses of complying with securities or blue sky laws, the
fees and disbursements of counsel for the Company and of its independent accountants, and the
reasonable fees and disbursements of a Holders Counsel; provided that, in any underwritten
registration, each party shall pay for its own underwriting discounts and commissions and transfer
taxes. Except as provided above in this Section 6 and Section 9, the Company shall not be
responsible for the expenses of any attorney or other advisor employed by a Holder of Registrable
Securities.
7. Assignment of Rights. No Holder may assign its rights under this Agreement to any
party without the prior written consent of the Company; provided, however, that a Holder may assign
its rights under this Agreement without such restrictions to a Permitted Assignee as long as (a)
such transfer or assignment is effected in accordance with applicable securities laws; (b) such
transferee or assignee agrees in writing to become subject to the terms of this Agreement; and (c)
the Company is given written notice by such Holder of such transfer or assignment, stating the name
and address of the transferee or assignee and identifying the Registrable Securities with respect
to which such rights are being transferred or assigned.
8. Information by Holder. The Holder or Holders of Registrable Securities included in
any registration shall furnish to the Company such information regarding such Holder or Holders and
the distribution proposed by such Holder or Holders as the Company may request in writing.
9. Indemnification.
(a) In the event of the offer and sale of Registrable Securities held by Holders under the
Securities Act, the Company shall, and hereby does, indemnify and hold harmless, to the fullest
extent permitted by law, each Holder, its directors, officers, partners, each other person who
participates as an underwriter in the offering or sale of such securities, and each other person,
if any, who controls or is under common control with such Holder or any such underwriter within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages or liabilities,
joint or several, and expenses to which the Holder or any such director, officer, partner or
underwriter or controlling person may become subject under the Securities Act or otherwise, insofar
as such losses, claims, damages, liabilities or expenses (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained in any registration statement under which
such shares were registered under the Securities Act, any preliminary prospectus, final prospectus
or summary prospectus contained therein, or any amendment or supplement thereto, or any omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein in light of the circumstances in which they were made not misleading,
and the Company shall reimburse the Holder, and each such director, officer, partner, underwriter
and controlling person for any legal or any other expenses reasonably incurred by them in
connection with investigating, defending or settling any such loss, claim, damage, liability,
action or proceeding; provided that the foregoing shall not apply to, and the Company shall not be
liable, in any such case (i) to the extent that any such loss,
claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of
or is based upon an untrue statement or alleged untrue statement in or omission or alleged omission
from such registration statement, any such preliminary prospectus; final prospectus, summary
prospectus, amendment or supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on behalf of such Holder
specifically stating that it is for use in the preparation thereof, (ii) provided that the Company
has complied with its obligations hereunder to furnish such Holder with copies of the applicable
prospectus, if the person asserting any such loss, claim, damage, liability (or action or
proceeding in respect thereof) who purchased the Registrable Securities that are the subject
thereof did not receive a copy of an amended preliminary prospectus or the final prospectus (or the
final prospectus as amended or supplemented) at or prior to the written confirmation of the sale of
such Registrable Securities to such person because of the failure of such Holder or underwriter to
so provide such amended preliminary or final prospectus and the untrue statement or alleged untrue
statement or omission or alleged omission of a material fact made in such preliminary prospectus
was corrected in the amended preliminary or final prospectus (or the final prospectus as amended or
supplemented), or (iii) provided that the plan of distribution mechanics described in the
applicable prospectus are, in form and substance, reasonable and customary for transactions of this
type, to the extent that the Holders failed to comply with the terms of such plan of distribution
mechanics. Such indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Holders, or any such director, officer, partner, underwriter or
controlling person and shall survive the transfer of such shares by the Holder.
(b) As a condition to including any Registrable Securities to be offered by a Holder in any
registration statement filed pursuant to this Agreement, each such Holder agrees to be bound by the
terms of this Section 9 and to indemnify and hold harmless, to the fullest extent permitted by law,
the Company, its directors and officers, and each other person, if any, who controls the Company
within the meaning of Section 15 of the Securities Act, legal counsel and accountants for the
Company, any underwriter, any other Holder selling securities in such registration statement and
any controlling person within the meaning of the Securities Act of any such underwriter or other
Holder, against any losses, claims, damages or liabilities, joint or several, to which the Company
or any such director or officer or controlling person may become subject under the Securities Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based upon (i) an untrue
statement or alleged untrue statement in or omission or alleged omission from such registration
statement, any preliminary prospectus, final prospectus or summary prospectus contained therein, or
any amendment or supplement thereto, if such statement or alleged statement or omission or alleged
omission was made in reliance upon and in conformity with written information about such Holder as
a Holder of the Company furnished to the Company, (ii) provided that the Company has complied with
its obligations hereunder to furnish such Holder with copies of the applicable prospectus, if the
Person asserting any such loss, claim, damage, liability (or action or proceeding in respect
thereof) who purchased the Registrable Securities that are the subject thereof did not receive a
copy of an amended preliminary prospectus or the final prospectus (or the final prospectus as
amended or supplemented) at or prior to the written confirmation of the sale of such Registrable
Securities to such person because of the failure of such Holder or underwriter to so provide such
amended preliminary or final prospectus and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact made in such preliminary prospectus was corrected
in the amended preliminary or final prospectus (or the final prospectus as amended or
supplemented), or (iii) provided that the plan of distribution mechanics described in the
applicable prospectus are, in form and substance, reasonable and
customary for transactions of this type, to the extent that the Holders failed to comply with
the terms of such plan of distribution mechanics. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of the Holders, or any such director,
officer, partner, underwriter or controlling person and shall survive the transfer of such shares
by the Holder, and such Holder shall reimburse the Company, and each such director, officer, legal
counsel and accountants, underwriter, other Holder, and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating, defending, or settling and
such loss, claim, damage, liability, action, or proceeding; provided, however, that such indemnity
agreement found in this Section 9(b) shall in no event exceed the gross proceeds from the offering
received by such Holder. Such indemnity shall remain in full force and effect, regardless of any
investigation made by or on behalf of the Company or any such director, officer or controlling
person and shall survive the transfer by any Holder of such shares.
(c) Promptly after receipt by an indemnified party of notice of the commencement of any action
or proceeding involving a claim referred to in Section 9(a) or (b) hereof (including any
governmental action), such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the indemnifying party of the commencement of
such action; provided that the failure of any indemnified party to give notice as provided herein
shall not relieve the indemnifying party of its obligations under Section 9(a) or (b) hereof,
except to the extent that the indemnifying party is actually prejudiced by such failure to give
notice. In case any such action is brought against an indemnified party, unless in the reasonable
judgment of counsel to such indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist or the indemnified party may have defenses not available to the
indemnifying party in respect of such claim, the indemnifying party shall be entitled to
participate in and to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by the latter in connection
with the defense thereof, unless in such indemnified party’s reasonable judgment a conflict of
interest between such indemnified and indemnifying parties arises in respect of such claim after
the assumption of the defenses thereof or the indemnifying party fails to defend such claim in a
diligent manner, other than reasonable costs of investigation. Neither an indemnified nor an
indemnifying party shall be liable for any settlement of any action or proceeding effected without
its consent. No indemnifying party shall, without the consent of the indemnified party, consent to
entry of any judgment or enter into any settlement, which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation. Notwithstanding anything to the contrary set
forth herein, and without limiting any of the rights set forth above, in any event any party shall
have the right to retain, at its own expense, counsel with respect to the defense of a claim.
(d) In the event that an indemnifying party does or is not permitted to assume the defense of
an action pursuant to Section 9(c) or in the case of the expense reimbursement obligation set forth
in Section 9(a) and (b), the indemnification required by Section 9(a) and (b) hereof shall be made
by periodic payments of the amount thereof during the course of the investigation or defense, as
and when bills received or expenses, losses, damages, or liabilities are incurred.
(e) If the indemnification provided for in this Section 9 is held by a court of competent
jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim,
·damage or expense referred to herein, the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall (i) contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense as is appropriate
to reflect the proportionate relative fault of the indemnifying party on the one hand and the
indemnified party on the other (determined by reference to, among other things, whether the untrue
or alleged untrue statement of a material fact or omission relates to information supplied by the
indemnifying party or the indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or omission), or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law or provides a lesser
sum to the indemnified party than the amount hereinafter calculated, not only the proportionate
relative fault of the indemnifying party and the indemnified party, but also the relative benefits
received by the indemnifying party on the one hand and the indemnified party on the other, as well
as any other relevant equitable considerations. No indemnified party guilty of fraudulent
misrepresentation (within the meaning of Section l1(f) of the Securities Act) shall be entitled to
contribution from any indemnifying party who was not guilty of such fraudulent misrepresentation.
(f) Indemnification similar that specified in the preceding subsections of this Section 9
(with appropriate modifications) shall be given by the Company and each Holder of Registrable
Securities with respect to any required registration or other qualification of securities under any
federal or state law or regulation or governmental authority other than the Securities Act.
10. Rule 144 Reporting. With a view to making available to the Holders the benefits
of certain rules and regulations of the Commission which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees to use its reasonable efforts to:
(a) Make and keep public information available, as those terms are understood and defined in
Rule 144 or any similar or analogous rule promulgated under the Securities Act, at all times after
the effective date of the first registration filed by the Company for an offering of its securities
to the general public;
(b) File with the Commission, in a timely manner, all reports and other documents required of
the Company under the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon
request: a written statement by the Company as to its compliance with the reporting requirements
of said Rule 144 of the Securities Act, and of the Exchange Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing it to sell any such securities without
registration.
11. Miscellaneous.
(a) Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York and the United States of America, both substantive and
remedial. Any judicial proceeding brought against either of the parties to this agreement or any
dispute arising out of this Agreement or any matter related hereto shall be brought in the courts
of the State of New York and, by its execution and delivery of this agreement, each party to this
Agreement
accepts the jurisdiction of such courts. The foregoing consent to jurisdiction shall not be
deemed to confer rights on any person other than the parties to this Agreement.
(b) Successors and Assigns. Except as otherwise provided herein, the provisions
hereof shall inure to the benefit of, and be binding upon, the successors, Permitted Assigns,
executors and administrators of the parties hereto. In the event the Company merges with, or is
otherwise acquired by, a direct or indirect subsidiary of a publicly traded company, the Company
shall condition the merger or acquisition on the assumption by such parent company of the Company’s
obligations under this Agreement.
(c) Entire Agreement. This Agreement constitutes the full and entire understanding
and agreement between the parties with regard to the subjects hereof.
(d) Notices, etc. All notices or other communications which are required or permitted
under this Agreement shall be in writing and sufficient if delivered by hand, by facsimile
transmission, by registered or certified mail, postage pre-paid, by electronic mail, or by courier
or overnight carrier, to the persons at the addresses set forth below (or at such other address as
may be provided hereunder), and shall be deemed to have been delivered as of the date so delivered:
If to the Company: INX Inc.
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
0000 Xxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
With a copy to: Xxxxx Xxxxx Xxxx & Maw
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxx, Xx.
Facsimile: (000) 000-0000
000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx X. Xxxx, Xx.
Facsimile: (000) 000-0000
If to Investor: Xxxxxxx Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxx / Investment Banking
Facsimile: (000) 000-0000
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxx / Investment Banking
Facsimile: (000) 000-0000
With a copy to: Xxxxxxx Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx / Investment Banking
Facsimile: (000) 000-0000
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxxx / Investment Banking
Facsimile: (000) 000-0000
or at such other address as any party shall have furnished to the other parties in writing.
(e) Delays or Omissions. No delay or omission to exercise any right, power or remedy
accruing to any Holder of any Registrable Securities, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy of such Holder nor
shall it be construed to be a waiver of any such breach or default, or an acquiescence
therein, or of or in any similar breach or default thereunder occurring; nor shall any waiver of
any single breach or default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part
of any Holder of any breach or default under this Agreement, or any waiver on the part of any
Holder of any provisions or conditions of this Agreement, must be in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either under this
Agreement, or by law or otherwise afforded to any holder, shall be cumulative and not alternative.
(f) Counterparts. This Agreement may be executed in any number of counterparts, each
of which shall be enforceable against the parties actually executing such counterparts, and all of
which together shall constitute one instrument.
(g) Severability. In the case any provision of this Agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.
(h) Amendments. The provisions of this Agreement may be amended at any time and from
time to time, and particular provisions of this Agreement may be waived, with and only with an
agreement or consent in writing signed by the Company and by the holders of a majority of the
number of shares of Registrable Securities outstanding as of the date of such amendment or waiver.
The Investor acknowledge that by the operation of this Section 10(h), the holders of a majority of
the outstanding Registrable Securities may have the right and power to diminish or eliminate all
rights of the Investor under this Agreement.
This Registration Rights Agreement is hereby executed as of the date first above written.
| COMPANY: | ||||||
| INX Inc. | ||||||
| By: | /s/ Xxxxx Xxxxxxx | |||||
| Name: | Xxxxx Xxxxxxx | |||||
| Title: | Chief Financial Officer | |||||
| INVESTOR | ||||||
| XXXXXXX XXXXX & ASSOCIATES, INC. | ||||||
| By: | /s/ Xxxx X. Xxxx | |||||
| Name: | Xxxx X. Xxxx | |||||
| Title: | Vice President | |||||
