EXECUTION COPY
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WARRANT AGREEMENT
Dated as of
February 1, 2002
between
Infocrossing, Inc.
as Issuer,
and
the Warrantholders Party Hereto
-----------------------------------
Common Stock Warrants
of
Infocrossing, Inc.
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WARRANT AGREEMENT
WARRANT AGREEMENT dated as of February 1, 2002, between, Infocrossing,
Inc., a Delaware corporation (the "Company"), and each of the warrantholders
party hereto (collectively, with their successors and assigns, the
"Warrantholders").
W I T N E S S E T H:
WHEREAS, the Company proposes, among other things, to issue and sell
pursuant to a Securities Purchase Agreement, dated the date hereof, among the
Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Strategic Partners Fund, L.P., a Delaware limited
partnership, Strategic Associates, L.P., a Delaware limited partnership, Camden
Partners Strategic Fund II-A, L.P., a Delaware limited partnership, Camden
Partners Strategic Fund II-B, L.P., a Delaware limited partnership (the
"Securities Purchase Agreement"), Senior Subordinated Debentures due 2005 in the
aggregate principal amount of $10,000,000 (the "Debentures"); and
WHEREAS, in connection with the issuance of the Debentures, the Company
agrees to issue to each of the Warrantholders warrants to purchase shares of the
common stock, par value $.01 of the Company (the "Common Stock") pursuant to the
terms and conditions set forth herein (the "Initial Warrants"); and
WHEREAS, the Company will issue additional warrants (the "Additional
Warrants" and, together with the Initial Warrants, the "Warrants") if and when
the Company pays interest accruing on the Debentures by the issuance of
additional Debentures (the "PIK Debentures"); and
WHEREAS, the execution and delivery of this Agreement is a condition to the
consummation of the transactions contemplated by the Securities Purchase
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements
herein, the Company hereby agrees as follows for the equal and ratable benefit
of the Warrantholders:
ARTICLE I
Definitions
Section 1.01. Definitions.
"Affiliate" means, with respect to (i) the Company, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, the Company; and (ii) the Warrantholders, any current or
former members of or any general or limited partners or retired partners of any
of the Purchasers, or any Person or entity that directly or indirectly, through
one or more intermediaries, controls, with the general partner of
Warrantholders, the Warrantholders. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing.
"Agreement" means this Warrant Agreement as amended or supplemented from
time to time.
"Board of Directors" or "Board" means the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day that is not a Saturday, Sunday or other day
on which banking institutions in New York, New York are authorized or required
by law to close.
"Cashless Exercise Ratio" means a fraction, the numerator of which is the
excess of the Current Market Value per share of Common Stock on the Exercise
Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations, rights or other equivalents
(however designated) of corporate stock and (ii) with respect to any other
Person, any and all partnership or other equity interests of such Person.
"Commission" means the United States Securities and Exchange Commission.
"Current Market Value" per share of Common Stock or any other security at
any date means (i) if the security is not registered under the Exchange Act, the
value of the security, determined in good faith by the Board of Directors and
certified in a board resolution, or (ii) if the security is registered under the
Exchange Act, the average of the daily closing bid prices (or the equivalent in
an over-the-counter market) for each Business Day during the period commencing
30 Business Days before such date and ending on the date one day prior to such
date, or if the security has been registered under the Exchange Act for less
than 30 consecutive Business Days before such date, the average of the daily
closing bid prices (or such equivalent) for all of the Business Days before such
date for which daily closing bid prices are available; provided, however, that
if the closing bid price is not determinable for at least five Business Days in
such period, the "Current Market Value" of the security shall be determined as
if the security were not registered under the Exchange Act.
"Debenture Issue Date" means the date on which the Debentures are issued.
"Exchange Act" means, as of any date, the Securities Exchange Act of 1934,
as amended through such date, and the rules and regulations promulgated
thereunder in effect on such date.
"Exercise Date" means, for a given Warrant, the day on which such Warrant
is exercised pursuant to Section 3.04.
"GAAP" means as of any date, United States generally accepted accounting
principles, consistently applied, as in effect on such date.
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"Holder" means the Person in whose name a Warrant is registered on the
Warrant Registrar's books.
"Indebtedness" means all of the amounts owed under the Debentures,
including, without limitation, all accrued and unpaid interest and all other
obligations arising thereunder.
"Issue Date" means the date on which the Warrants are initially issued.
"Officer" means the Chairman of the Board of Directors, the Chief Executive
Officer, the Chief Financial Officer, the President, any Vice President, the
Treasurer or the Secretary of the Company.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"PIK Debenture" has the meaning assigned to it in the Third Recital hereto.
"PIK Debenture Issue Date" means the date on which the PIK Debentures are
issued.
"Preferred Stock", as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over shares
of Capital Stock of any other class of such Person.
"Securities" means the Warrants and the Warrant Shares.
"Securities Act" means, as of any date, the Securities Act of 1933, as
amended as of such date and the rules and regulations of the Commission
promulgated thereunder in effect as of such date.
"Securities Purchase Agreement" has the meaning assigned to it in the
recitals hereto.
"Stockholders' Agreement" means the Second Amended and Restated
Stockholders' Agreement, dated as of the date hereof, to be entered into by and
between the Company and the parties thereto.
"Subsidiary" means, with respect to any Person (i) a corporation a majority
of whose capital stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such Person, by a
subsidiary of such Person, or by such Person and one or more subsidiaries of
such Person, (ii) a partnership in which such Person or a subsidiary of such
Person is, at the date of determination, a general partner of such partnership
and has the power to direct the policies and management of such partnership or
(iii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (A) at
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least a majority ownership interest or (B) the power to elect or direct the
election of a majority of the directors or other governing body of such Person.
"Uniform Commercial Code" shall mean the New York Uniform Commercial Code,
as in effect from time to time.
"Warrant Certificates" mean the registered certificates issued by the
Company under this Agreement representing the Warrants.
"Warrant Percentage" shall mean, with respect to a Warrantholder, the
percentage of Warrants held by such Warrantholder when compared to the number of
Warrants held by all Warrantholders. The Warrant Percentage for each
Warrantholder is set forth on Schedule A next to the name of such Warrantholder.
"Warrant Shares" mean the shares of Common Stock (and any other securities)
for which the Warrants are exercisable or which have been issued upon exercise
of Warrants.
Section 1.02. Other Definitions.
Term Defined in Section
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"Additional Warrants" Third Recital
"Additional Warrant Expiration Date" 3.02(b)
"Cashless Exercise" 3.04
"Common Stock" Second Recital
"Common Stock Record Date" 4.07
"Company" Preamble
"Debentures" First Recital
"Default" 2.14
"Exercise Price" 3.01
"Exercise Rate" 4.01
"Initial Warrants" Second Recital
"Initial Warrant Expiration Date 3.02(b)
"non-electing share" 4.05
"Partial Prepayment" 2.02
"Prepayment Fraction" 2.03
"protected purchaser" 2.11
"Stock Registrar" 3.07
"Stock Transfer Agent" 3.05
"Transfer Notice" 2.10
"Warrant" Third Recital
"Warrantholder" Preamble
"Warrant Registrar" 2.09
Section 1.03. Rules of Construction. Unless the context otherwise requires:
(i) a defined term has the meaning assigned to it;
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(ii) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP as in effect as of the date hereof;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation; and
(v) words in the singular include the plural and words in the plural
include the singular.
ARTICLE II
Warrant Certificates
Section 2.01. Issuance of Warrants. On the date hereof, the Company shall
issue to the Warrantholders Initial Warrants to purchase an aggregate of
2,000,000 shares of Common Stock. Each Warrantholder shall receive a warrant for
the number of shares of Common Stock set forth next to such Warrantholder's name
on Schedule A attached hereto.
Section 2.02. Reduction of Initial Warrants Upon Repayment in Full. Subject
to Section 2.14, if the Company repays all of the Indebtedness under the
Debentures before the first anniversary of the Debenture Issue Date, 1,500,000
Initial Warrants will be immediately cancelled. If the Company repays all of the
Indebtedness under the Debentures after the first anniversary and before the
third anniversary of the Debenture Issue Date, the amount of shares for which
the Initial Warrants are exercisable shall be reduced by multiplying 62,500
shares by the number of full months between the date of the repayment in full
and the third anniversary of the Debenture Issue Date; it being understood that
at no time will the Company be permitted to cancel more than 1,500,000 Initial
Warrants, provided, however, that if the Company exercises its right to make a
partial prepayment as set forth in Section 3.1(b) of the Debenture (a "Partial
Prepayment"), this Section 2.02 shall not apply and the shares for which the
Initial Warrants are exercisable shall be reduced in accordance with Section
2.03 below.
Section 2.03. Reduction of Initial Warrants upon Partial Prepayment.
Subject to Section 2.14, if the Company makes a Partial Prepayment, the amount
of shares for which the Initial Warrants are exercisable shall be reduced in an
amount equal to the product of (x) the number of Initial Warrants that would
then be reduced pursuant to Section 2.02, assuming full repayment of the
Debentures, and (y) a fraction, the numerator of which shall be the aggregate
principal amount of Debentures actually prepaid and the denominator of which
shall be equal to the aggregate principal amount of Debentures outstanding on
the date of such Partial Prepayment (the "Prepayment Fraction").
Section 2.04. Reduction of Initial Warrants upon Full Prepayment Following
Partial Prepayment. Subject to Section 2.14, in the event of a full repayment of
all of the Indebtedness under the Debenture that is both (i) after a Partial
Prepayment; and (ii) before the third anniversary of the Debenture Issuance
Date, the amount of shares for the which the Initial Warrants are exercisable
shall be further reduced in an amount equal to the product of (x) the number of
Initial Warrants that would then be reduced pursuant to Section 2.02, assuming
full repayment of the Debentures, and (y) one (1) minus the Prepayment Fraction.
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Section 2.05. Issuance of Additional Warrants. In the event that the
Company elects to repay any portion of the interest due on the Debentures in the
form of PIK Debentures, the Company shall upon and as of the due date of such
interest payment, issue Additional Warrants (on terms and conditions identical
to the Initial Warrants) to purchase the number of shares of Common Stock equal
to one share for each ten dollars ($10.00) of interest paid in the form of PIK
Debentures, provided, however, that the Additional Warrants shall not be issued
until the two-year anniversary of the Debenture Issue Date, provided, further,
subject to Section 2.14, that no Additional Warrants shall be issued if all of
the Indebtedness outstanding under the Debentures has been repaid in full before
the two year anniversary of the Debenture Issue Date; and provided, further,
that the exercise price of the Additional Warrants shall be the price equal to
the average of the daily closing bid prices (or the equivalent in an
over-the-counter market) for each Business Day during the period commencing 30
Business Days before such date and ending on the date one day prior to such
date, or if the security has been registered under the Exchange Act for less
than 30 consecutive Business Days before such date, the average of the daily
closing bid prices (or such equivalent) for all of the Business Days before such
date for which daily closing bid prices are available.
Section 2.06. Multiple Warrantholders. All Warrants issued by the Company
shall be issued separately to the Warrantholders in accordance with each
Warrantholder's Warrant Percentage set forth on Schedule A.
Section 2.07. Form and Dating. The Warrant Certificates shall each be
substantially in the form of Exhibit A hereto, which is hereby incorporated in
and expressly made a part of this Agreement. The Warrant Certificates may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage. Each Warrant
Certificate shall be dated the date that it is executed by the Company.
Section 2.08. Execution and Countersignature. Two Officers shall sign the
Warrant Certificates for the Company by manual or facsimile signature. If an
Officer whose signature is on a Warrant Certificate no longer holds that office
at the time the Company issues the Warrant Certificate, the Warrant Certificate
shall be valid nevertheless.
Section 2.09. Warrant Registrar. The Company shall maintain an office or
agency where Warrants may be presented for registration of transfer, exchange or
exercise (the "Warrant Registrar"). The Warrant Registrar shall keep a register
of the Warrants and of their transfer, exchange or exercise. The Company may
have one or more co-registrars. The Company may act as Warrant Registrar. The
term Warrant Registrar includes any co-registrars. The Company shall initially
serve as Warrant Registrar in connection with the Warrants.
The Company shall enter into an appropriate agency agreement with any
Warrant Registrar not a party to this Agreement. The agreement shall implement
the provisions of this Agreement that relate to such agent. The Company shall
notify the Warrantholders of the name and address of any such agent. If the
Company fails to maintain a Warrant Registrar, the Company shall act as such.
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The Company may remove any Warrant Registrar upon written notice to such
Warrant Registrar and to the Warrantholders; provided, however, that no such
removal shall become effective until (1) acceptance of an appointment by a
successor as evidenced by an appropriate agreement entered into by the Company
and such successor Warrant Registrar and delivered to the Warrantholders or (2)
notification to the Warrantholders that the Company shall serve as Warrant
Registrar until the appointment of a successor in accordance with clause (1)
above. The Warrant Registrar may resign at any time upon written notice. The
Company and the Warrant Registrar may deem and treat the Person in whose name a
Warrant Certificate is registered as the absolute owner of such Warrant
Certificate for all purposes whatsoever and neither the Company and the Warrant
Registrar shall be affected by notice to the contrary.
Section 2.10. Transfer and Exchange. The Warrants shall be issued in
registered form and shall be transferable only upon the surrender of a Warrant
Certificate for registration of transfer and in compliance with the provisions
of this Agreement. When a Warrant is presented to the Warrant Registrar with a
request to register a transfer, the Warrant Registrar shall register the
transfer as requested if the requirements of Section 8-401(a) of the Uniform
Commercial Code are met. When Warrants are presented to the Warrant Registrar
with a request to exchange them for an equal number of Warrants of other
denominations, the Warrant Registrar shall make the exchange as requested if the
requirements of Section 8-401(a)(1) and (2) of the Uniform Commercial Code are
met. To permit registration of transfers and exchanges, the Company shall
execute Warrant Certificates at the Warrant Registrar's request. The Company may
require payment of a sum sufficient to pay all taxes, assessments or other
governmental charges in connection with any transfer, exchange or exercise
pursuant to this Section 2.10.
Subject to the restrictions set forth in this Section 2.10, each
Warrantholder may at any time and from time to time freely transfer its Warrant
and the Warrant Shares in whole or in part. No Warrant has been, and the Warrant
Shares at the time of their issuance may not be, registered under the Securities
Act, and, except as provided in any separate agreement providing for
registration rights, nothing herein contained shall be deemed to require the
Company to so register any Warrant or Warrant Shares. The Warrants and the
Warrant Shares are issued or issuable subject to the provisions and conditions
contained herein, and every Holder of a Warrant or Warrant Shares by accepting
such Warrant or Warrant Shares agrees with the Company to such provisions and
conditions, and represents to the Company that such Warrant has been acquired
and the Warrant Shares will be acquired for the account of such Warrantholder
for investment and not with a view to or for sale in connection with any
distribution thereof.
Except as otherwise permitted by this Section 2.10, each Warrant (including
each Warrant issued upon the transfer of any Warrant) and all Warrant Shares
shall be stamped or otherwise imprinted with legends in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS AGAINST TRANSFER SET FORTH IN A SECOND AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT (THE "STOCKHOLDERS' AGREEMENT") DATED AS OF
FEBRUARY 1, 2002, AS MAY BE AMENDED FROM TIME TO TIME. A COPY OF SUCH
STOCKHOLDERS AGREEMENT HAS BEEN FILED IN THE OFFICE OF THE COMPANY LOCATED
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AT ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, WHERE THE SAME MAY
BE INSPECTED DAILY DURING BUSINESS HOURS.
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. SUCH SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH
REGISTRATION REQUIREMENTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THAT
CERTAIN WARRANT AGREEMENT (THE "WARRANT AGREEMENT") DATED AS OF FEBRUARY 1,
2002. PURSUANT TO SECTION 2 OF THE WARRANT AGREEMENT THE NUMBER OF SHARES
MAY BE SUBJECT TO REDUCTION FOR WHICH THIS WARRANT MAY BE EXERCISED AS
PROVIDED THEREIN. A COPY OF SUCH WARRANT AGREEMENT HAS BEEN FILED IN THE
OFFICE OF THE COMPANY LOCATED AT ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, WHERE THE SAME MAY BE INSPECTED DAILY DURING BUSINESS HOURS.
Transfers of Warrants and Warrant Shares are subject to restrictions as
provided in the Stockholders' Agreement. Prior to any transfer or attempted
transfer of any Warrants, the Holder of such Warrants shall give 10 days' prior
written notice (a "Transfer Notice") to the Company of such Holder's intention
to effect such transfer, describing the manner and circumstances of the proposed
transfer, and, if requested by the Company, obtain from counsel to such Holder
who shall be reasonably satisfactory to the Company, an opinion that the
proposed transfer of such Warrants may be effected without registration under
the Securities Act. After receipt of the Transfer Notice and opinion, the
Company shall, within five days thereof, so notify the Holder of such Warrants
and such Holder shall thereupon be entitled to transfer such Warrants, in
accordance with the terms of the Transfer Notice. Each Warrant issued upon such
transfer shall bear the restrictive legends set forth above, unless, with
respect to the legend in paragraph (a) above, in the opinion of such counsel
such legend is not required in order to ensure compliance with the Securities
Act. The Holder of the Warrants giving the Transfer Notice shall not be entitled
to transfer such Warrants until receipt of notice from the Company under this
Section 2.10.
Section 2.11. Replacement Certificate. If a mutilated Warrant is
surrendered to the Company or if a Warrantholder claims that the Warrant
Certificate has been lost, destroyed or wrongfully taken, the Company shall use
all reasonable efforts to execute a replacement Warrant Certificate if the
requirements of Section 8-405 of the Uniform Commercial Code are met, such that
the Warrantholder (i) notifies the Company within a reasonable time after he has
notice of such loss, destruction or wrongful taking and the Company does not
register a transfer prior to receiving such notification, (ii) makes such
request to the Company prior to the Warrant being acquired by a protected
purchaser as defined in Section 8-303 of the Uniform Commercial Code (a
"protected purchaser") and (iii) satisfies any other reasonable requirements of
the Company. If required by the Company, such Warrantholder shall furnish an
indemnity bond sufficient in the reasonable judgment of the Company to protect
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the Company from any loss that it may suffer if a Warrant is replaced. The
Company may charge the Warrantholder for its expenses in replacing a Warrant
Certificate. Every replacement Warrant is an additional obligation of the
Company.
The provisions of this Section 2.11 are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
of mutilated, lost, destroyed or wrongfully taken Securities.
Section 2.12. Outstanding Warrants. Warrants outstanding at any time are
all Warrant Certificates executed by the Company except for those canceled by
it, those delivered to it for cancellation and those described in this Section
2.12 as not outstanding. A Warrant does not cease to be outstanding because an
Affiliate of the Company holds the Warrant. A Warrant ceases to be outstanding
if the Company holds the Warrant.
If a Warrant Certificate is replaced pursuant to Section 2.11, it ceases to
be outstanding unless the Company receives proof satisfactory to it that the
replaced Warrant Certificate is held by a protected purchaser.
Section 2.13. Cancellation. The Company at any time may cancel Warrant
Certificates which have been surrendered for registration of transfer, exchange,
exercise or cancellation. The Company and no one else shall cancel all Warrant
Certificates surrendered for registration of transfer, exchange, exercise or
cancellation. The Company may not issue new Warrant Certificates to replace
Warrants Certificates that have been exercised or Warrants which the Company has
purchased or otherwise acquired.
Section 2.14. Default. Notwithstanding anything to the contrary contained
herein, upon the occurrence of a Default (as defined in the Debenture) all
Initial Warrants will no longer be subject to reduction as set forth in Sections
2.02, 2.03 or 2.04 and all Additional Warrants (if any) shall immediately be
issued notwithstanding the application of Section 2.05.
ARTICLE III
Exercise Terms
Section 3.01. Exercise. Each Warrant shall initially entitle the Holder
thereof, subject to adjustment pursuant to the terms of this Agreement, to
purchase one (1) share of Common Stock. The exercise price (the "Exercise
Price") of each Warrant is $5.86 per share (which is equal to the Current Market
Value on the date hereof), subject to adjustment pursuant to Article IV hereof.
Section 3.02. Time of Exercise; Separability
(a) Subject to the terms and conditions set forth herein, the Warrants
shall be exercisable at any time and from time to time on any Business Day
on or after the Issue Date; provided, that no Initial Warrant shall be
exercisable until it is no longer subject to cancellation. Further, until
approval of the Company has been received pursuant to Section 5.7 of the
Purchase Agreement, no Warrants may be exercised if such exercise, together
with all exercises of Warrants results in the issuance by the Company of
more than 1,066,705 shares of Common Stock (which equals 19.999% of the
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number of shares of Common Stock outstanding on the trading day immediately
preceding the date hereof).
(b) No Initial Warrant shall be exercisable after January 30, 2007
(the "Initial Warrant Expiration Date") and no Additional Warrant shall be
exercisable after the five-year anniversary of the issue date of such
Additional Warrants (the "Additional Warrant Expiration Date").
(c) The Initial Warrants will be separately transferable, subject to
compliance with applicable securities laws, on the Debenture Issue Date and
the Additional Warrants will be separately transferable, subject to
compliance with applicable securities laws on the PIK Debenture Issue Date.
Section 3.03. Expiration. An Initial Warrant shall terminate and become
void as of the earlier of (i) the close of business on the Initial Warrant
Expiration Date or (ii) the date such Initial Warrant is exercised. An
Additional Warrant shall terminate and become void as of the earlier of (i) the
close of business on the Additional Warrant Expiration Date or (ii) the date
such Additional Warrant is exercised. The Company shall give notice not less
than 90, and not more than 120, days prior to the Initial Warrant Expiration
Date or Additional Warrant Expiration Date, as applicable, to the Holders of all
then outstanding Warrants to the effect that the Warrants will terminate and
become void as of the close of business on the Initial Warrant Expiration Date
or Additional Warrant Expiration Date, as applicable; provided, however, that if
the Company fails to give notice as provided in this Section 3.03, the Initial
Warrants will nevertheless terminate on the Initial Warrant Expiration Date and
the Additional Warrants will nevertheless terminate on the Additional Warrant
Expiration Date.
Section 3.04. Manner of Exercise. Warrants may be exercised upon (i)
surrender to the Warrant Registrar at its office of the related Warrant
Certificate, together with the form of election attached thereto to purchase
Common Stock duly filled in and signed by the Holder thereof; (ii) payment to
the Company of the Exercise Price for each Warrant Share or other security
issuable upon the exercise of such Warrants then exercised; or (iii) by the
election of Cashless Exercise set forth below. Such payment shall be made (i) in
cash or by certified or official bank check payable to the order of the Company
or by wire transfer of funds to an account designated by the Company for such
purpose or (ii) without the payment of cash, by reducing the number of shares of
Common Stock obtainable upon the exercise of a Warrant and payment of the
Exercise Price in cash so as to yield a number of shares of Common Stock upon
the exercise of such Warrant equal to the product of (a) the number of shares of
Common Stock issuable as of the Exercise Date upon the exercise of such Warrant
(if payment of the Exercise Price were being made in cash) and (b) the Cashless
Exercise Ratio. An exercise of a Warrant in accordance with the immediately
preceding clause (ii) is herein called a "Cashless Exercise". Upon surrender of
a Warrant Certificate representing more than one Warrant in connection with the
Holder's option to elect a Cashless Exercise, the number of shares of Common
Stock deliverable upon a Cashless Exercise shall be equal to the number of
shares of Common Stock issuable upon the exercise of Warrants that the Holder
specifies are to be exercised pursuant to a Cashless Exercise multiplied by the
Cashless Exercise Ratio. All provisions of this Agreement shall be applicable
with respect to a surrender of a Warrant Certificate pursuant to a Cashless
Exercise for less than the full number of Warrants represented thereby. Subject
to Section 3.02, the rights represented by the Warrants shall be exercisable at
the election of the Warrantholders thereof either in full at any time or from
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time to time in part and in the event that a Warrant Certificate is surrendered
for exercise of less than all the Warrants represented by such Warrant
Certificate at any time prior to the Initial Warrant Expiration Date in the case
of the Initial Warrants and the Additional Warrant Expiration Date in the case
of Additional Warrants, a new Warrant Certificate representing the remaining
Warrants shall be issued.
Section 3.05. Issuance of Warrant Shares. Subject to Section 2.11, upon the
surrender of Warrant Certificates and payment of the per share Exercise Price or
election of a Cashless Exercise, as set forth in Section 3.04, the Company shall
issue and cause the transfer agent for the Common Stock ("Stock Transfer Agent")
to countersign and deliver to or upon the written order of the Warrantholder and
in such name or names as the Holder may designate, a certificate or certificates
for the number of full Warrant Shares so purchased upon the exercise of such
Warrants or other securities or property to which it is entitled, registered or
otherwise, to the Person or Persons entitled to receive the same (including any
depositary institution so designated by a Warrantholder), together with cash as
provided in Section 3.06 in respect of any fractional Warrant Shares otherwise
issuable upon such exercise. Such certificate or certificates shall be deemed to
have been issued and any Person so designated therein shall be deemed to have
become a Holder of record of such Warrant Shares as of the date of the surrender
of such Warrant Certificates and payment of the per share Exercise Price or
election of a Cashless Exercise, as aforesaid; provided, however, that if, at
such date, the transfer books for the Warrant Shares shall be closed, the
certificates for the Warrant Shares in respect of which such Warrants are then
exercised shall be issuable as of the date on which such books shall next be
opened and until such date the Company shall be under no duty to deliver any
certificates for such Warrant Shares; provided further, however, that such
transfer books, unless otherwise required by law, shall not be closed at any one
time for a period longer than 90 calendar days.
Section 3.06. Fractional Warrant Shares. The Company shall not be required
to issue fractional Warrant Shares on the exercise of Warrants. If more than one
Warrant shall be exercised in full at the same time by the same Warrantholder,
the number of full Warrant Shares which shall be issuable upon such exercise
shall be computed on the basis of the aggregate number of Warrant Shares which
may be purchasable pursuant thereto. If any fraction of a Warrant Share would,
except for the provisions of this Section 3.06, be issuable upon the exercise of
any Warrant (or specified portion thereof), the Company shall pay an amount in
cash equal to the Current Market Value per Warrant Share, as determined on the
day immediately preceding the date the Warrant is presented for exercise,
multiplied by such fraction, computed to the nearest whole cent.
Section 3.07. Reservation of Warrant Shares. The Company shall at all times
keep reserved out of its authorized shares of Common Stock a number of shares of
Common Stock sufficient to provide for the exercise of all outstanding Warrants.
The registrar for the Common Stock (the "Stock Registrar") shall at all times
until the Initial Warrant Expiration Date in the case of the Initial Warrants
and the Additional Warrant Expiration Date in the case of the Additional
Warrants reserve such number of authorized shares as shall be required for such
purpose. The Company will keep a copy of this Agreement on file with the Stock
Transfer Agent. The Company will supply such Stock Transfer Agent with duly
executed stock certificates for such purpose and will itself provide or
otherwise make available any cash which may be payable as provided in Section
11
3.06. The Company will furnish to such Stock Transfer Agent a copy of all
notices of adjustments (and certificates related thereto) transmitted to each
Holder.
The Company covenants that all Warrant Shares which may be issued upon
exercise of Warrants shall, upon issue, be fully paid, nonassessable, free from
all taxes and free from all liens, charges and security interests with respect
to the issue thereof.
Section 3.08. No Dilution or Impairment. The Company (a) will not permit
the par or nominal value of any Warrant Shares issuable upon the exercise of
Warrants to exceed the amount payable therefor upon such exercise, (b) will take
all reasonable action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Warrant
Shares on the exercise of the Warrants from time to time outstanding and (c)
will not take any action which results in any adjustment of the Exercise Rate
(as such term is defined in Section 4.01 below) if the total number of shares of
Common Stock (or other securities) issuable after the action upon the exercise
of all of the Warrants would exceed the total number of shares of Common Stock
(or other securities) then authorized by the Company's Certificate of
Incorporation and available for the issuance of shares of Common Stock (or other
securities) upon such exercise.
ARTICLE IV
ANTIDILUTION PROVISIONS
Section 4.01. General. The number of shares of Common Stock issuable upon
the exercise of each Warrant (the "Exercise Rate") is subject to adjustment from
time to time upon the occurrence of the events enumerated in this Article IV.
The Exercise Rate shall initially be 1.0000.
Section 4.02. Adjustment for Common Stock Dividends. If the Company shall
hereafter pay a dividend or make a distribution to holders of any of its
securities in shares of Common Stock, the Exercise Rate in effect at the opening
of business on the date following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall be
increased by multiplying such Exercise Rate by a fraction of which the numerator
shall be the sum of the number of shares of Common Stock outstanding at the
close of business on the Common Stock Record Date (as defined in Section 4.07)
and the total number of shares constituting such dividend or other distribution
and the denominator shall be the number of shares of Common Stock outstanding at
the close of business on the Common Stock Record Date fixed for such
determination, such increase to become effective immediately after the opening
of business on the day following the Common Stock Record Date. If any dividend
or distribution of the type described in this Section 4.02 is declared but not
so paid or made, the Exercise Rate shall again be adjusted to the Exercise Rate
which would then be in effect if such dividend or distribution had not been
declared.
Section 4.03. Adjustment for Issuances of Common Stock, Options, Warrants,
Rights and Convertible or Exchangeable Securities. If the Company shall issue,
sell or distribute any shares of Common Stock or offer or issue, sell or
distribute options, rights or warrants to any Person entitling them to subscribe
12
for or purchase shares of Common Stock or issue, sell or distribute convertible
or exchangeable securities which are convertible or exchangeable for shares of
Common Stock, in each case, at a price per share less than the Exercise Price,
the Exercise Rate shall be adjusted so that the same shall equal the rate
determined by multiplying the Exercise Rate in effect at the opening of business
on the date immediately prior to such sale, issuance or distribution of shares,
options, rights, warrants or exchangeable or convertible securities by a
fraction of which the numerator shall be the number of shares of Common Stock
outstanding at the close of business on such date plus the total number of
additional shares of Common Stock to be issued, sold or distributed or subject
to such options, rights, warrants or exchangeable or convertible securities for
subscription or purchase and of which the denominator shall be the number of
shares of Common Stock outstanding at the close of business on such date plus
the number of shares of Common Stock which the aggregate offering price of the
total number of shares of Common Stock to be issued, sold or distributed or
subject to such options, rights, warrants or exchangeable or convertible
securities would purchase at the Exercise Price. Such adjustment shall become
effective immediately after the opening of business on the day following the
issuance, sale or distribution of such shares, options, rights, warrants or
exchangeable or convertible securities. To the extent that shares of Common
Stock are not delivered pursuant to such options, rights, warrants or
exchangeable or convertible securities, upon the expiration or termination of
such options, rights, warrants or exchangeable or convertible securities the
Exercise Rate shall again be adjusted to be the Exercise Rate which would then
be in effect had the adjustments made upon the issuance, sale or distributions
of such options, rights, warrants or exchangeable or convertible securities been
made on the basis of delivery of only the number of shares of Common Stock
actually delivered. If such shares, options, rights, warrants or exchangeable or
convertible securities are not so issued, the Exercise Rate shall again be
adjusted to be the Exercise Rate which would then be in effect if such date
fixed for the determination of shareholders entitled to receive such shares,
options, rights, warrants or exchangeable or convertible securities had not been
fixed. In determining whether any shares, options, rights, warrants or
exchangeable or convertible securities entitle the Holders to subscribe for or
purchase shares of Common Stock at less than the Exercise Price per share, and
in determining the aggregate offering price of such shares of Common Stock,
there shall be taken into account any consideration received for such options,
rights, warrants or exchangeable or convertible securities, with the value of
such consideration, if other than cash, to be determined in good faith by the
Board of Directors and the amount of any exercise price or subscription price
required to be paid upon exercise of such options, rights, warrants or
exchangeable or convertible securities. No adjustment of the Exercise Rate shall
be made if such adjustment would result in a decrease of the number of shares
issuable upon application of the adjusted Exercise Rate.
Section 4.04. Adjustment upon Subdivision, Reclassification or Combination
of Common Stock. If the outstanding shares of Common Stock shall be subdivided
or reclassified into a greater number of shares of Common Stock, the Exercise
Rate in effect at the opening of business on the day following the day upon
which such subdivision or reclassification becomes effective shall be
proportionately increased, and, conversely, if the outstanding shares of Common
Stock shall be combined into a smaller number of shares of Common Stock, the
Exercise Rate in effect at the opening of business on the day following the day
upon which such combination becomes effective shall be proportionately reduced,
such increase or reduction, as the case may be, to become effective immediately
after the opening of business on the day following the day upon which such
subdivision or combination becomes effective.
13
Section 4.05. Adjustments for Mergers, Consolidations, etc. In case of any
consolidation of the Company with, or merger of the Company into, any other
corporation, or in case of any merger of another corporation into the Company
(other than a merger that does not result in any reclassification, conversion,
exchange or cancellation of outstanding shares of Common Stock of the Company),
or in case of any sale, conveyance or transfer of all or substantially all the
assets of the Company, the Holder of each Warrant shall have the right
thereafter, during the period such Warrant shall be exercisable in accordance
with its terms, to exercise such Warrant for the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, conveyance
or transfer by a holder of the number of shares of shares of Common Stock of the
Company into which such Warrant might have been exercised immediately prior to
such consolidation, merger, conveyance or transfer, assuming such Holder of
shares of Common Stock of the Company failed to exercise his rights of election,
if any, as to the kind or amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer (provided
that, if the kind or amount of securities, cash and other property receivable
upon such consolidation, merger, conveyance or transfer is not the same for each
Common Share of the Company in respect of which such rights of election shall
not have been exercised ("nonelecting share"), then for the purpose of this
Section 4.05 the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer by each
nonelecting share shall be deemed to be the kind and amount so receivable per
share by a plurality of the nonelecting shares). Such securities shall provide
for adjustments which, for events subsequent to the effective date of the
triggering event, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Article IV. The above provisions of this
Section 4.05 shall similarly apply to successive consolidations, mergers,
conveyances or transfers. The Company shall deliver written notice at least five
(5) Business Days prior to any consummation of the events enumerated in the
first sentence of this Section 4.05.
Section 4.06. Other Events. If any event occurs as to which the foregoing
provisions of this Article IV are not strictly applicable or, if strictly
applicable, would not, in the good faith judgment of the Board of Directors,
fairly and adequately protect the purchase rights of the Warrants in accordance
with the essential intent and principles of such provisions, then such Board of
Directors shall make such adjustments in the application of such provisions, in
accordance with such essential intent and principles, as shall be reasonably
necessary, in the good faith opinion of such Board of Directors, to protect such
purchase rights as aforesaid, but in no event shall any such adjustment have the
effect of decreasing the Exercise Rate or decreasing the number of Warrant
Shares issuable upon exercise of the Warrants.
Section 4.07. Certain Definitions. For purposes of this Article IV, the
following term shall have the meaning indicated:
"Common Stock Record Date" shall mean, with respect to any dividend,
distribution or other transaction or event in which the holders of Common Stock
have the right to receive any cash, securities or other property or in which the
Common Stock (or other applicable security) is exchanged for or converted into
any combination of cash, securities or other property, the date fixed for
determination of shareholders entitled to receive such cash, securities or other
property (whether such date is fixed by the Board of Directors or by statute,
contract or otherwise).
14
Section 4.08. Deferral of Certain Adjustments. No adjustment in the
Exercise Rate shall be required unless such adjustment would require an increase
or decrease of at least 1% in such rate; provided, however, that any adjustments
which by reason of this Section 4.08 are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this Article IV shall be made by the Company and shall be
rounded to fourth decimal place. No adjustment need be made for a change in the
par value or no par value of the Common Stock.
Section 4.09. Officers Certificate; Notice of Adjustment. Whenever the
Exercise Rate is adjusted as herein provided, the Company shall promptly file
with the Warrant Registrar an Officers' certificate setting forth the Exercise
Rate after such adjustment and setting forth a brief statement of the facts
requiring such adjustment. Promptly after delivery of such certificate, the
Company shall prepare a notice of such adjustment of the Exercise Rate setting
forth the adjusted Exercise Rate and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Exercise Rate to
each Warrantholder at such Warrantholder's last address appearing on the
register of Warrantholders maintained by the Warrant Registrar for that purpose
within 20 days of the effective date of such adjustment. Failure to deliver such
notice shall not affect the legality or validity of any such adjustment.
Section 4.10. Right to Delay Issuance of Incremental Common Stock. In any
case in which this Article IV provides that an adjustment shall become effective
immediately after a Common Stock Record Date for an event, the Company may defer
until the occurrence of such event issuing to any holder of Warrants exercised
after such Common Stock Record Date and before the occurrence of such event the
additional shares of Common Stock issuable upon such exercise by reason of the
adjustment required by such event over and above the shares of Common Stock
issuable upon such exercise before giving effect to such adjustment.
Section 4.11. Treasury Shares Disregarded. For purposes of this Article IV,
the number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company. The Company shall not pay any
dividend or make any distribution on shares of Common Stock held in the treasury
of the Company.
Section 4.12. No Adjustment for Certain Issuances. Notwithstanding anything
to the contrary set forth herein, this Article IV shall not apply, and no
adjustment to the Exercise Rate shall be made with respect to (i) compensatory
or incentive stock options (or any shares of Common Stock issued upon the
exercise thereof) issued pursuant to employee stock option plans of the Company
which have been approved by the Board of Directors of the Company, (ii)
issuances of Common Stock to employees, officers, directors and consultants of
the Company, pursuant to employee benefit plans approved by the Board of
Directors of the Company, (iii) shares of Common Stock issued upon the
conversion of the Series A Preferred Stock; (iv) shares of Common Stock issuable
under warrants, options or convertible securities (including shares issued as a
result of the operation of any anti-dilution provisions contained therein) of
the Company outstanding on the date hereof; (v) shares of Common Stock (or
options, rights, warrants or exchangeable or convertible securities) issued or
issuable as an inducement to senior lenders of the Company to advance sums or
otherwise to make financial accommodations, or as compensation to senior lenders
for advancing sums or otherwise making financial accommodations, to the Company
or one or more of its Subsidiaries, to the extent such issuance is approved by
the Board of Directors which in the aggregate (together with issuances pursuant
to clause (vi) hereof) shall not exceed 5% of the Company's equity securities on
15
a fully-diluted basis as of the date hereof; or (vi) shares of Common Stock (or
options, rights, warrants or exchangeable or convertible securities) issued or
issuable in consideration of the acquisition by the Company of the assets,
Capital Stock or other equity interests on, or in connection with a joint
venture with, another entity (including, without limitation, shares issued to
key employees of such sellers), to the extent such issuance is approved by the
Board of Directors which in the aggregate (together with issuances pursuant to
clause (v) hereof) shall not exceed 5% of the Company's equity securities on a
fully-diluted basis as of the date hereof.
Section 4.13. Notice of Certain Adjustments. If the Company shall take any
action requiring an adjustment to the Exercise Rate pursuant to this Article IV,
then the Company shall cause to be filed with the Warrant Registrar, and shall
cause to be mailed to all Warrantholders at their last addresses as they shall
appear in the Warrant Register, at least 20 Business Days (or 10 Business Days
in any case specified in clause 4.02 or 4.03 above) prior to the applicable date
hereinafter specified, a notice stating (x) the date on which a record is to be
taken for the purpose of such dividend, distribution, rights or warrants, or, if
a record is not to be taken, the date as of which the holders of shares of
Common Stock of record to be entitled to such dividend, distribution, rights or
warrants are to be determined or (y) the date on which a reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective, and the date as of which it is expected that
holders of shares of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding-up. Failure to give the notice required by this Section
4.13 or any defect therein shall not affect the legality or validity of any
dividend, distribution, right, warrant, reclassification, consolidation, merger,
sale transfer, dissolution, liquidation or winding-up, or the vote upon any such
action.
Section 4.14. Adjustment to Warrant Certificate. The form of Warrant
Certificate need not be changed because of any adjustment made pursuant to this
Article IV, and Warrant Certificates issued after such adjustment may state the
same Exercise Price and the same number of shares of Common Stock issuable upon
exercise of the Warrants as are stated in the Warrant Certificates initially
issued pursuant to this Agreement. The Company, however, may at any time in its
sole discretion make any change in the form of Warrant Certificate that it may
deem appropriate to give effect to such adjustments and that does not affect the
substance of the Warrant Certificate, and any Warrant Certificate thereafter
issued or countersigned, whether in exchange or substitution for an outstanding
Warrant Certificate or otherwise, may be in the form as so changed.
ARTICLE V
Miscellaneous
Section 5.01. Persons Benefiting. Nothing in this Agreement is intended or
shall be construed to confer upon any Person other than the Company and the
Warrantholders any right, remedy or claim under or by reason of this Agreement
or any part hereof.
16
Section 5.02. Rights of Warrantholders. Holders of unexercised Warrants are
not entitled to (i) receive dividends or other distributions, (ii) receive
notice of or vote at any meeting of the stockholders, (iii) consent to any
action of the stockholders, (iv) receive notice of any other proceedings of the
Company, (v) exercise any preemptive right or (vi) exercise any other rights
whatsoever as stockholders of the Company with respect to the unexercised
Warrants, but if such Holder is a stockholder, nothing in this Agreement shall
be construed as diminishing the rights of conferred upon such Holder in its
capacity as a stockholder.
Section 5.03. Amendment. Any amendment or supplement to this Agreement
shall require the written consent of the Warrantholders of a majority of the
then outstanding Warrants. The consent of each Warrantholder affected shall be
required for any amendment pursuant to which the Exercise Price would be
increased, the Exercise Rate would be decreased (other than pursuant to
adjustments provided herein) or the antidilution provisions in Article IV are
altered in a manner which adversely affects the Warrantholders. In determining
whether the Warrantholders of the required number of Warrants have concurred in
any direction, waiver or consent, Warrants owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding. Also, subject to the foregoing, only Warrants outstanding at the
time shall be considered in any such determination.
Section 5.04. Notices. Any notice or communication shall be in writing and
delivered in person or mailed by first-class mail addressed as follows:
Infocrossing, Inc.
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇, Chief Executive Officer
with a copy to:
White & Case LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇. ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
The Company by notice to the Warrantholders may designate additional or
different addresses for subsequent notices or communications.
Any notice or communication mailed to a Warrantholder shall be mailed to
the Warrantholder at the Warrantholder's address as it appears on the Company's
records and shall be sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a party hereto or any defect
in it shall not affect its sufficiency with respect to other parties hereto. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
17
Section 5.05. Governing Law. THIS AGREEMENT AND THE WARRANTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE
EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE
REQUIRED THEREBY.
Section 5.06. Successors. All agreements of the Company in this Agreement
and the Warrant Certificates shall bind its successors.
Section 5.07. Multiple Originals; Fax Signatures. The parties may sign any
number of copies of this Agreement. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Agreement. Any signature page delivered by a fax machine or telecopy
machine shall be binding to the same extent as an original signature page, with
regard to any agreement subject to the terms hereof or any amendment thereto.
Any party who delivers such a signature page agrees to later deliver an original
counterpart to any party which requests it.
Section 5.08. Table of Contents. The table of contents and headings of the
Articles and Sections of this Agreement have been inserted for convenience of
reference only, are not intended to be considered a part hereof and shall not
modify or restrict any of the terms or provisions hereof.
Section 5.09. Severability. The provisions of this Agreement are severable,
and if any clause or provision shall be held invalid, illegal or unenforceable
in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Agreement in any jurisdiction.
Signatures on following page.
18
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
INFOCROSSING, INC.
By:
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Chief Executive Officer
WARRANTHOLDERS:
CAMDEN PARTNERS STRATEGIC FUND II-A, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Member
CAMDEN PARTNERS STRATEGIC FUND II-B, L.P.
By: Camden Partners Strategic II, LLC,
its General Partner
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Member
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ STRATEGIC PARTNERS FUND, L.P.
By: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Strategic Partners, LP,
its General Partner
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Partner
STRATEGIC ASSOCIATES, L.P.
By: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Strategic Partners, L.P.,
its General Partner
By:
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: General Partner
EXHIBIT A
FORM OF FACE OF
COMMON STOCK WARRANT
OF
INFOCROSSING, INC.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS AGAINST TRANSFER SET FORTH IN A SECOND AMENDED AND RESTATED
STOCKHOLDERS' AGREEMENT (THE "STOCKHOLDERS' AGREEMENT") DATED AS OF FEBRUARY 1,
2002, AS MAY BE AMENDED FROM TIME TO TIME. A COPY OF SUCH STOCKHOLDERS AGREEMENT
HAS BEEN FILED IN THE OFFICE OF THE COMPANY LOCATED AT ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, WHERE THE SAME MAY BE INSPECTED DAILY DURING
BUSINESS HOURS.
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. SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THAT CERTAIN
WARRANT AGREEMENT (THE "WARRANT AGREEMENT") DATED AS OF FEBRUARY 1, 2002.
PURSUANT TO SECTION 2 OF THE WARRANT AGREEMENT THE NUMBER OF SHARES MAY BE
SUBJECT TO REDUCTION FOR WHICH THIS WARRANT MAY BE EXERCISED AS PROVIDED
THEREIN. A COPY OF SUCH WARRANT AGREEMENT HAS BEEN FILED IN THE OFFICE OF THE
COMPANY LOCATED AT ▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, WHERE
THE SAME MAY BE INSPECTED DAILY DURING BUSINESS HOURS.
No. [ ]
COMMON STOCK WARRANT
OF
INFOCROSSING, INC.
THIS CERTIFIES THAT [ ], or its registered assigns, is the registered
holder of Common Stock Warrants (the "Warrants"). Each Warrant entitles the
holder thereof (the "Holder"), at its option and subject to the provisions
contained herein and in the Warrant Agreement referred to below, to purchase
from Infocrossing, Inc., a Delaware corporation ("the Company"), [_____] shares
of Common Stock, par value of $.01 per share, of the Company, subject to
adjustment from time to time pursuant to Section [__] of the Warrant Agreement
(the "Common Stock") at the per share exercise price of $[___] (the "Exercise
Price") or by Cashless Exercise referred to below. This Warrant shall terminate
and become void as of the close of business on [January ___, 2007] (the
"Expiration Date") or upon the exercise hereof as to all the shares of Common
Stock subject hereto. The number of shares issuable upon exercise of the
Warrants and the Exercise Price per share shall be subject to adjustment from
time to time as set forth in the Warrant Agreement (as defined below).
This Warrant Certificate is issued under and in accordance with a Warrant
Agreement dated as of February __, 2002 (the "Warrant Agreement"), between the
Company and various Warrantholders party thereto (the "Warrantholders"), and is
subject to the terms and provisions contained in the Warrant Agreement, to all
of which terms and provisions the Holder of this Warrant Certificate consents by
acceptance hereof. The Warrant Agreement is hereby incorporated herein by
reference and made a part hereof. Reference is hereby made to the Warrant
Agreement for a full statement of the respective rights, limitations of rights,
duties and obligations of the Company and the Warrantholders. Capitalized terms
used but not defined herein shall have the meanings ascribed thereto in the
Warrant Agreement. A copy of the Warrant Agreement may be obtained for
inspection by the Holder hereof upon written request to the Company at ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Chief Executive
Officer.
Subject to the terms of the Warrant Agreement, the Warrants may be
exercised in whole or in part (i) by presentation of this Warrant Certificate
with the Election to Purchase attached hereto duly executed and with the
simultaneous payment of the Exercise Price in cash (subject to adjustment) to
the Company for the account of the Company or (ii) by Cashless Exercise. Payment
of the Exercise Price in cash shall be made by certified or official bank check
payable to the order of the Company or by wire transfer of funds to an account
designated by the Company for such purpose. Payment by Cashless Exercise shall
be made without the payment of cash by reducing the amount of Common Stock that
would be obtainable upon the exercise of a Warrant and payment of the Exercise
Price in cash so as to yield a number of shares of Common Stock upon the
exercise of such Warrant equal to the product of (1) the number of shares of
Common Stock for which such Warrant is exercisable as of the Exercise Date (if
the Exercise Price were being paid in cash) and (2) a fraction, the numerator of
which is the excess of the Current Market Value per share of Common Stock on the
Exercise Date over the Exercise Price per share as of the Exercise Date and the
denominator of which is the Current Market Value per share of the Common Stock
on the Exercise Date.
As provided in the Warrant Agreement and subject to the terms and
conditions therein set forth, the Warrants shall be exercisable at any time and
from time to time on any Business Day after the Issue Date; provided, however,
that no Warrant shall be exercisable after the Expiration Date.
As provided in the Warrant Agreement, the Exercise Rate is subject to
adjustment upon the happening of certain events.
The Company may require payment of a sum sufficient to pay all taxes,
assessments or other governmental charges in connection with the transfer or
exchange of the Warrant Certificates pursuant to the terms of the Warrant
Agreement, but not for any exchange or original issuance (not involving a
transfer) with respect to temporary Warrant Certificates, the exercise of the
Warrants or the Warrant Shares.
Upon any partial exercise of the Warrants, there shall be countersigned and
issued to the Warrantholder hereof a new Warrant Certificate representing those
Warrants which were not exercised. This Warrant Certificate may be exchanged at
the office of the Company by presenting this Warrant Certificate properly
endorsed with a request to exchange this Warrant Certificate for other Warrant
Certificates evidencing an equal number of Warrants. No fractional Warrant
Shares will be issued upon the exercise of the Warrants, but the Company shall
pay an amount in cash equal to the Current Market Value per Warrant Share on the
day immediately preceding the date the Warrant is exercised, multiplied by the
fraction of a Warrant Share that would be issuable on the exercise of any
Warrant.
All shares of Common Stock issuable by the Company upon the exercise of the
Warrants shall, upon such issue, be duly and validly issued and fully paid and
non-assessable.
The Warrantholder in whose name the Warrant Certificate is registered may
be deemed and treated by the Company as the absolute owner of the Warrant
Certificate for all purposes whatsoever and the Company shall not be affected by
notice to the contrary.
The Warrants do not entitle any Warrantholder hereof to any of the rights
of a stockholder of the Company.
(Signature page follows)
This Warrant Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Company.
INFOCROSSING, INC.
By:
---------------------------------------
Name:
Title:
Attest:
-------------------------------
Name:
Title:
DATED:
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(to be executed only upon exercise of Warrants)
INFOCROSSING, INC.
The undersigned hereby irrevocably elects to exercise __________________
Warrants to acquire shares of Common Stock, par value $.001 per share, of
Infocrossing, Inc. (the "Company"), (i) at an exercise price per share of Common
Stock of $[___] (subject to adjustment as provided in the Warrant Agreement) or
(ii) through Cashless Exercise and otherwise on the terms and conditions
specified in the Warrant Certificate and the Warrant Agreement, surrenders this
Warrant Certificate and all right, title and interest therein to the Company and
directs that the shares of Common Stock deliverable upon the exercise of such
Warrants be registered or placed in the name and at the address specified below
and delivered thereto.
Check method of exercise:
Exercise at $[___] per share of Common Stock (subject to adjustment as
provided in the Warrant Agreement): ___
Cashless Exercise: _____
Date:
------------------, -------
(1)
-------------------------------------------------------------
(Signature of Owner)
(Street Address)
-------------------------------------------------------------
(City) (State) (Zip Code)
Signature Guaranteed by:
-------------------------------------------------------------
Securities and/or check to be issued to:
--------------
(1) The signature must correspond with the name as written upon the face of the
Warrant Certificate in every particular, without alteration or enlargement or
any change whatever, and must be guaranteed by a national bank or trust company
or by a member firm of any national securities exchange.
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
A new Warrant Certificate evidencing any unexercised Warrants evidenced by the
within Warrant Certificate is to be issued to:
Please insert social security or identifying number:
Name:
Street Address:
City, State and Zip Code:
Schedule A
Purchaser Committed Investment Amounts
Camden Partners Strategic Fund II-A, L.P. $ 5,192,000.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Camden Partners Strategic Fund II-B, L.P. $ 308,000.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Strategic Partners Fund, L.P. $ 4,410,000.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Strategic Associates, L.P. $ 90,000.00
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
TOTAL: $10,000,000.00
ASSIGNMENT FORM
To assign this Warrant, fill in the form below:
I or we assign and transfer this Warrant to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this Warrant on the books of
the Company. The agent may substitute another to act for him.
-----------------------------------------------------------------
Date: Your Signature:
----------------- -----------------------------------------
--------------
(1) The signature must correspond with the name as written upon the face of the
Warrant Certificate in every particular, without alteration or enlargement or
any change whatever, and must be guaranteed by a national bank or trust company
or by a member firm of any national securities exchange.
TABLE OF CONTENTS
Page
ARTICLE I Definitions.........................................................1
Section 1.01. Definitions....................................................1
Section 1.02. Other Definitions..............................................4
Section 1.03. Rules of Construction..........................................4
ARTICLE II Warrant Certificates...............................................5
Section 2.01. Issuance of Warrants...........................................5
Section 2.02. Reduction of Initial Warrants Upon Repayment in Full...........5
Section 2.03. Reduction of Initial Warrants upon Partial Prepayment..........5
Section 2.04. Reduction of Initial Warrants upon Full Prepayment
Following Partial Prepayment...................................5
Section 2.05. Issuance of Additional Warrants................................6
Section 2.06. Multiple Warrantholders........................................6
Section 2.07. Form and Dating................................................6
Section 2.08. Execution and Countersignature.................................6
Section 2.09. Warrant Registrar..............................................6
Section 2.10. Transfer and Exchange..........................................7
Section 2.11. Replacement Certificate........................................8
Section 2.12. Outstanding Warrants...........................................9
Section 2.13. Cancellation...................................................9
Section 2.14. Default........................................................9
ARTICLE III Exercise Terms....................................................9
Section 3.01. Exercise...................................................... 9
Section 3.02. Time of Exercise; Separability................................ 9
Section 3.03. Expiration....................................................10
Section 3.04. Manner of Exercise............................................10
Section 3.05. Issuance of Warrant Shares....................................11
Section 3.06. Fractional Warrant Shares.....................................11
Section 3.07. Reservation of Warrant Shares.................................11
Section 3.08. No Dilution or Impairment.....................................12
ARTICLE IV ANTIDILUTION PROVISIONS...........................................12
Section 4.01. General.......................................................12
Section 4.02. Adjustment for Common Stock Dividends.........................12
Section 4.03. Adjustment for Issuances of Common Stock, Options,
Warrants, Rights and Convertible or Exchangeable
Securities....................................................12
Section 4.04. Adjustment upon Subdivision, Reclassification or
Combination of Common Stock...................................13
Section 4.05. Adjustments for Mergers, Consolidations, etc..................14
Section 4.06. Other Events..................................................14
Section 4.07. Certain Definitions...........................................14
Section 4.08. Deferral of Certain Adjustments...............................15
Section 4.09. Officers Certificate; Notice of Adjustment....................15
Section 4.10. Right to Delay Issuance of Incremental Common Stock...........15
Section 4.11. Treasury Shares Disregarded...................................15
Section 4.12. No Adjustment for Certain Issuances...........................15
Section 4.13. Notice of Certain Adjustments.................................16
Section 4.14. Adjustment to Warrant Certificate.............................16
ARTICLE V Miscellaneous......................................................16
Section 5.01. Persons Benefiting............................................16
Section 5.02. Rights of Warrantholders......................................17
Section 5.03. Amendment.....................................................17
Section 5.04. Notices.......................................................17
Section 5.05. Governing Law.................................................18
Section 5.06. Successors....................................................18
Section 5.07. Multiple Originals; Fax Signatures............................18
Section 5.08. Table of Contents.............................................18
Section 5.09. Severability..................................................18