-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, TcYzGo2/BmunAdfWoc1vrHHiP9NZcqXd8o3f2n7n/sKUaxwKm47JbznS26WB98F5 nEpvOKGoDplEX3mfBIjnBQ== 0000893816-03-000021.txt : 20031022 0000893816-03-000021.hdr.sgml : 20031022 20031022121200 ACCESSION NUMBER: 0000893816-03-000021 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20031021 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20031022 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFOCROSSING INC CENTRAL INDEX KEY: 0000893816 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 133252333 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20824 FILM NUMBER: 03951305 BUSINESS ADDRESS: STREET 1: 2 CHRISTIE HEIGHTS STREET CITY: LEONIA STATE: NJ ZIP: 07605 BUSINESS PHONE: 2018404700 MAIL ADDRESS: STREET 1: 2 CHRISTIE HEIGHTS STREET CITY: LEONIA STATE: NJ ZIP: 07605 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER OUTSOURCING SERVICES INC DATE OF NAME CHANGE: 19930328 8-K 1 k8a-deal.txt 8-K ANNOUNCING CLOSING OF TRANSACTIONS SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): October 22, 2003 Infocrossing, Inc. ---------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware 0-20824 13-3252333 --------------------------- ----------- ------------------ (State or Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 2 Christie Heights Street, Leonia, New Jersey 07605 ---------------------------------------------------------- (Address of Principal Executive Offices, including Zip Code) Registrant's telephone number, including area code: (201) 840-4700 Not Applicable ----------------------------------------------------------- (Former Name or Former Address, if Changed Since Last Report) Item 5. Other Events and Required FD Disclosure. Infocrossing, Inc. (the "Company") issued two press releases, each dated October 22, 2003, filed herewith under Item 7, one regarding the completion of a previously announced private placement of common stock and warrants to purchase common stock on October 21, 2003, and a second regarding the completion of the previously announced recapitalization of its series A preferred stock and series A warrants on October 21, 2003. In connection with the recapitalization, four members of the Company's board of directors, who had been nominated by the holders of the series A preferred stock and elected in accordance with the Company's certificate of incorporation and existing stockholders agreement, resigned on October 21, 2003. The existing stockholders agreement among the Company, the holders of series A preferred stock and other parties was terminated on October 21, 2003. Item 7. Financial Statements and Exhibits. (a) Financial statements of business acquired: None (b) Pro forma financial information: Included as Exhibit 99.1. (c) Exhibits: 4.1 Securities Purchase Agreement, dated as of October 16, 2003, by and among the Company and certain purchasers of common stock and warrants. 4.2 Registration Rights Agreement, dated as of October 16, 2003, by and among the Company and certain purchasers of common stock and warrants. 4.3 Exchange Agreement, dated as of October 16, 2003, by and among the Company and holders of series A preferred stock and series A warrants. 4.4 Second Amended and Restated Registration Rights Agreement, dated as of October 21, 2003, by and among the Company and certain stockholders of the Company. 10.1 Term Loan Agreement, dated as of October 21, 2003, by and among the Company, the Lenders named therein, and Infocrossing Agent, Inc. 10.2 Guaranty and Security Agreement, dated as of October 21, 2003, by and among the Company, the Company's subsidiaries, and Infocrossing Agent, Inc. 99.1 Unaudited Pro Forma condensed consolidated combined financial statements for the fiscal year ended December 30, 2002, and the six month period ended June 30, 2003. 99.2 Press release, dated October 22, 2003, regarding the completion of a previously announced private placement of common stock and warrants. 99.3 Press release, dated October 22, 2003, regarding the completion of the previously announced recapitalization of its series A preferred stock and series A warrants. Signatures Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Date: October 22, 2003 Infocrossing, Inc. (Registrant) /s/ William J. McHale ------------------------------------ William J. McHale Senior Vice President of Finance EX-99 2 ex99-3d.txt PRESS RELEASE FOR RECAPITALIZATION Exhibit 99.3 INFOCROSSING COMPLETES PREVIOUSLY ANNOUNCED RECAPITALIZATION OF SERIES A PREFERRED STOCK AND SERIES A WARRANTS Company Completes Exchange of Series A Preferred Stock and Series A Warrants for Loans and Cash and Repays Senior Subordinated Debentures LEONIA, NJ, October 22, 2003 - Infocrossing, Inc. (Nasdaq: IFOX), a leading provider of mainframe, AS/400 and open system outsourcing solutions, business process outsourcing and business continuity services, announced today that it completed the previously announced recapitalization of all outstanding shares of its redeemable 8% series A cumulative convertible participating preferred stock due 2008 and series A warrants exercisable for shares of the Company's common stock. Holders of the series A preferred stock and series A warrants exchanged with the Company for cancellation all of their outstanding securities for $25.0 million in aggregate principal amount of new senior secured term loans and $55.0 million in cash. 157,114.7 shares of series A preferred stock convertible into 2,283,455 shares of common stock (including conversion in respect of accrued dividends) and series A warrants exercisable for 2,806,539 shares of common stock were exchanged for cancellation. The new senior secured loans bear interest at 9% per year, payable quarterly, and mature in October 2008. The loans are secured by substantially all of the assets of the Company and its direct and indirect subsidiaries, including the capital stock of the Company's direct and indirect subsidiaries. In connection with the recapitalization, which was first announced on October 17, 2003, the Company repaid all $11.9 million in aggregate principal amount outstanding of its 12% senior subordinated debentures due 2005 for a total price of approximately $12.2 million, including accrued interest through the date of repayment. In connection with this repayment, the Company cancelled 937,500 of the 2,000,000 warrants to purchase common stock originally issued to the debentureholders, with the balance of the warrants remaining outstanding. The cash used to fund payments in the recapitalization, to repay the senior subordinated debentures and to pay related fees and expenses was obtained from a $76.5 million private placement of the Company's common stock and warrants exercisable for shares of the Company's common stock, which the Company completed yesterday. The Company issued in the private placement 9,739,111 shares of its common stock and five year warrants to purchase 3,408,689 shares of its common stock. The private placement was made only to accredited investors in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The Company has agreed to file a registration statement under the Securities Act providing for the resale of the common stock, warrants and the shares issuable on exercise of the warrants. For a description of the private placement transaction, please refer to the separate press release, also issued today. In connection with the recapitalization, four members of the Company's board of directors, who had been nominated by the holders of the series A preferred stock and elected in accordance with the Company's certificate of incorporation and existing stockholders agreement, resigned yesterday. The existing stockholders agreement among the Company, the holders of series A preferred stock and other parties was terminated yesterday in connection with the recapitalization. Zach Lonstein, Chairman and Chief Executive Officer of the Company, said, "This transaction, combined with the private placement greatly improves our balance sheet by converting a shareholders' deficit of $16.7 million to positive shareholders' equity of $30.7 million on a pro forma basis as of June 30, 2003, an increase of $47.4 million. In addition, it simplifies our income statement by eliminating the charges associated with the old preferred stock. As a result, we expect to have positive earnings per share in 2004." Mr. Lonstein concluded: "In summary, the restructuring rationalizes our financial statements and allows clear visibility into our positive operating metrics and financial condition. We believe that we are now positioned for continued growth in revenue. Collectively, our new and existing shareholders have the opportunity to participate in the future of a financially stronger company." This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, nor shall there be any sale of the securities in any jurisdiction in which such offering would be unlawful. About Infocrossing (www.infocrossing.com) Infocrossing, Inc. (Nasdaq: IFOX) is a premier provider of a full range of Information Technology outsourcing services, including mainframe and open system outsourcing, remote systems and network management, business process outsourcing, and Information Technology infrastructure consulting. With more than 18 years of experience managing large, mission-critical Information Technology systems, Infocrossing assures the optimal performance, security, reliability and scalability of customers' mainframes, distributed servers and networks, irrespective of where the systems components are located. Infocrossing maintains strategic alliances with leading technology providers, including IBM, Computer Associates, EMC, Sun Microsystems, Intel, and Cisco Systems. This release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. As such, final results could differ from estimates or expectations due to risks and uncertainties, including but not limited to: incomplete or preliminary information; changes in government regulations and policies; continued acceptance of the Company's products and services in the marketplace; competitive factors; technological changes; the Company's dependence upon third-party suppliers; intellectual property rights; and other risks. For any of these factors, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. EX-4 3 ex4-4d.txt SECOND REGISTRATION RIGHTS AGREEMENT EXHIBIT 4.4 SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT by and among INFOCROSSING, INC. (f/k/a Computer Outsourcing Services, Inc.), MIDOCEAN CAPITAL INVESTORS, L.P., SANDLER CAPITAL PARTNERS V, L.P., SANDLER CAPITAL PARTNERS V FTE, L.P., SANDLER CAPITAL PARTNERS V GERMANY, L.P., SANDLER TECHNOLOGY PARTNERS SUBSIDIARY, LLC. , SANDLER CO-INVESTMENT PARTNERS, L.P., PRICE FAMILY LIMITED PARTNERS, ZACH LONSTEIN, and CAHILL WARNOCK STRATEGIC PARTNERS FUND, L.P., STRATEGIC ASSOCIATES, L.P., CAMDEN PARTNERS STRATEGIC FUND II-A, L.P., and CAMDEN PARTNERS STRATEGIC FUND II-B, L.P. --------------------------------------------------------------------------- Dated as of: October 21, 2003 --------------------------------------------------------------------------- TABLE OF CONTENTS Page ARTICLE I DEFINITIONS......................................................3 Section 1.01 Definitions............................................3 Section 1.02 Internal References....................................8 ARTICLE II REGISTRATION RIGHTS.............................................9 Section 2.01 Demand Registration....................................9 Section 2.02 Piggyback Registration................................13 ARTICLE III REGISTRATION PROCEDURES.......................................15 Section 3.01 Filings; Information..................................15 Section 3.02 Registration Expenses.................................20 ARTICLE IV INDEMNIFICATION AND CONTRIBUTION...............................20 Section 4.01 Indemnification by the Company........................20 Section 4.02 Indemnification by Selling Holders....................21 Section 4.03 Conduct of Indemnification Proceedings................21 Section 4.04 Contribution..........................................22 ARTICLE V MISCELLANEOUS...................................................23 Section 5.01 Participation in Underwritten Registrations...........23 Section 5.02 Rule 144..............................................23 Section 5.03 Holdback Agreements...................................23 Section 5.04 Termination...........................................24 Section 5.05 Amendments, Waivers, Etc..............................24 Section 5.06 Counterparts..........................................24 Section 5.07 Entire Agreement......................................24 Section 5.08 Governing Law.........................................24 Section 5.09 Assignment of Registration Rights.....................24 Section 5.10 Specific Performance..................................25 Section 5.11 No Superior Registration Rights.......................25 Section 5.12 Additional Holders....................................25 SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT This SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is made as of October 21, 2003, by and among Infocrossing, Inc. (f/k/a Computer Outsourcing Services, Inc.), a Delaware corporation, (the "Company"), MidOcean Capital Investors, L.P. (the "Initial MidOcean Holder"), Sandler Capital Partners V, L.P., Sandler Capital Partners V FTE, L.P., Sandler Capital Partners V Germany, L.P., Sandler Technology Partners Subsidiary, LLC, Sandler Co-Investment Partners, L.P. and Price Family Limited Partners (each an "Initial Sandler Holder" and, collectively, the "Initial Sandler Holders"), Zach Lonstein, a resident of the State of New York ("Lonstein") and Cahill Warnock Strategic Partners Fund, L.P., Strategic Associates, L.P., Camden Partners Strategic Fund II-A, L.P., and Camden Partners Strategic Fund II-B, L.P. (each an "Initial Camden Holder" and, collectively, the "Initial Camden Holders"). W I T N E S S E T H: - - - - - - - - - - WHEREAS, the Company and the Initial MidOcean Holder and the Initial Sandler Holders entered into, or have been assigned an interest in, a Securities Purchase Agreement dated April 7, 2000 (the "Securities Purchase Agreement"); WHEREAS, pursuant to the terms of the Securities Purchase Agreement, the Company issued (x) 157,377 shares (the "Existing Shares") of the 8% Series A Cumulative Convertible Participating Preferred Stock of the Company (the "Existing Series A Preferred Stock"), which Existing Shares were initially convertible into 1,573,770 shares of the Common Stock, par value $.01 per share, of the Company ("Common Stock"), subject to adjustment in accordance with the terms of the Existing Series A Preferred Stock, and (y) Series A Common Stock Warrants (the "Existing Warrants") to purchase, initially 2,531,926 shares of Common Stock, subject to adjustment in accordance with the terms of the Existing Warrants; WHEREAS, immediately prior to the transactions contemplated by this Agreement, the Initial MidOcean Holder and the Initial Sandler Holders own, in the aggregate, all outstanding shares of the Existing Series A Preferred Stock and all the outstanding Existing Warrants; WHEREAS, Lonstein is the holder of 1,587,925 shares of Common Stock (the "Lonstein Shares"); WHEREAS, Lonstein has granted the Initial MidOcean Holder and the Initial Sandler Holders, or the Initial MidOcean Holder and the Initial Sandler Holders have been assigned an interest in, an option (the "Option") to purchase up to 750,000 shares of Common Stock currently owned by Lonstein; WHEREAS, on May 10, 2000, the Company, the Initial MidOcean Holder, the Initial Sandler Holders and Lonstein entered into, or have been assigned an interest in, a Registration Rights Agreement (the "Initial Registration Rights Agreement") pursuant to which each of them was granted certain registration rights; WHEREAS, on February 1, 2002, the Company entered into a Securities Purchase Agreement (the "Camden Purchase Agreement"), and a Warrant Agreement dated as of February 1, 2002 with the Initial Camden Holders; WHEREAS, pursuant to the terms of the Camden Purchase Agreement, the Company issued to the Initial Camden Holders an aggregate of (x) $10.0 million principal amount of Senior Subordinated Debentures due 2005, (y) warrants to purchase, initially 2,000,000 shares of Common Stock (the "Initial Camden Warrants") subject to adjustment in accordance with the terms of such Initial Camden Warrants and (z) warrants (the "Additional Camden Warrants") to purchase additional shares of Common Stock; WHEREAS, on February 1, 2002, each of the Initial MidOcean Holder, the Initial Sandler Holders, Lonstein and the Initial Camden Holders entered into, or have been assigned an interest in, an Amended and Restated Registration Rights Agreement (the "Existing Registration Rights Agreement"), which amended and restated the Initial Registration Rights Agreement to, among other things, grant certain registration rights to the Initial Camden Holders; WHEREAS, the Company has entered into an Exchange Agreement, dated as of October 16, 2003 (the "Exchange Agreement"), with the Initial MidOcean Holder and the Initial Sandler Holders, pursuant to which the parties thereto have agreed, among other things, to an exchange of the shares of Existing Series A Preferred Stock and the Existing Warrants for an aggregate consideration of (i) $55.0 million in cash and (ii) $25.0 million in aggregate principal amount of loans (the "Loans") pursuant to the Term Loan Agreement (as defined herein); WHEREAS, in connection with the transactions contemplated by the Exchange Agreement, the Company has agreed pursuant to the Term Loan Agreement and the Syndication Letter (as defined herein), among other things, (i) to issue, under certain circumstances, warrants to purchase initially up to 250,000 shares of Common Stock (the "Lender Warrants") to purchasers, transferees or assignees, if any (each an "Initial Lender Holder" and, collectively, the "Initial Lender Holders"), of the Loans and (ii) to admit such Initial Lender Holders as parties to this Agreement and grant them certain registration rights; WHEREAS, it is a condition to the consummation of the transactions contemplated by the Exchange Agreement that the parties hereto execute and deliver this Agreement; WHEREAS, the Company, the Initial MidOcean Holder, the Initial Sandler Holders, Lonstein and the Initial Camden Holders wish to amend and restate the Existing Registration Rights Agreement as set forth below; and WHEREAS, this Agreement replaces in its entirety the Existing Registration Rights Agreement. NOW THEREFORE, in consideration of the premises, mutual promises and covenants contained in this Agreement and intending to be legally bound, the parties hereto hereby agree as follows: ARTICLE I DEFINITIONS Section 1.01 Definitions. Terms defined in the Securities Purchase Agreement are used herein as therein defined. In addition, the following terms, as used herein, have the following meanings: "Additional Camden Warrants" has the meaning set forth in the recitals. "Affiliate" means, with respect to the Company and any Holder, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, the Company or such Holder, as the case may be. In addition, "Affiliate" means with respect to any Holder, any current or former members of or any general or limited partners or retired partners of such Holder, or any Person or entity that directly or indirectly, through one or more intermediaries, controls, with the general partner of such Holder, such Holder. 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" has the meaning set forth in the preamble. "Board of Directors" means the Company's Board of Directors. "Camden Holders" means the Initial Camden Holders, their direct and indirect successors and assigns and any direct or indirect transferee of any Registrable Securities initially held by any Initial Camden Holder. "Camden Purchase Agreement" has the meaning set forth in the recitals. "Camden Warrants" means all Initial Camden Warrants and all Additional Camden Warrants. "Camden Warrant Shares" means all shares of Common Stock or other securities issued upon the exercise of Camden Warrants. "Closing Date" means October 21, 2003. "Commission" means the Securities and Exchange Commission. "Common Stock" has the meaning set forth in the recitals. "Company" has the meaning set forth in the preamble. "Demand Registration" means a registration under the Securities Act requested in accordance with Section 2.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Exchange Agreement" has the meaning set forth in the recitals. "Excluded Holders" has the meaning set forth in Section 2.01(f). "Existing Registration Rights Agreement" has the meaning set forth in the recitals. "Existing Series A Preferred Stock" has the meaning set forth in the recitals. "Existing Shares" has the meaning set forth in the recitals. "Existing Warrants" has the meaning set forth in the recitals. "Holders" shall mean the MidOcean Holders, the Sandler Holders, the Lonstein Holders, the Camden Holders and the Lender Holders. "Indemnified Party" has the meaning set forth in Section 4.03. "Indemnifying Party" has the meaning set forth in Section 4.03. "Initial Camden Holder" and "Initial Camden Holders" have the meanings set forth in the preamble. "Initial Camden Warrants" has the meaning set forth in the recitals. "Initial Lender Holder" and "Initial Lender Holders" have the meanings set forth in the recitals. "Initial MidOcean Holder" has the meaning set forth in the preamble. "Initial Sandler Holder" and "Initial Sandler Holders" have the meanings set forth in the preamble. "Initial Registration Rights Agreement" shall have the meaning set forth in the recitals. "Lender Holders" means the Initial Lender Holders, their direct and indirect successors and assigns and any direct or indirect transferee of any Registrable Securities held by any Initial Lender Holder. "Lender Warrant Shares" means all shares of Common Stock or other securities issued upon exercise of the Lender Warrants. "Lender Warrants" has the meaning set forth in the recitals. "Loans" has the meaning set forth in the recitals. "Lonstein" has the meaning set forth in the preamble. "Lonstein Holders" means Lonstein, his direct and indirect heirs, successors and assigns and any direct or indirect transferee of any Registrable Securities initially held by Lonstein. "Lonstein Shares" has the meaning set forth in the recitals. "Losses" has the meaning set forth in Section 4.01. "Material Adverse Effect" has the meaning set forth in Section 2.01(f). "MidOcean Holders" means the Initial MidOcean Holder, its direct and indirect successors and assigns and any direct or indirect transferee of any Registrable Securities initially held by the Initial MidOcean Holder. "Option" has the meaning set forth in the recitals. "Option Shares" means any shares of Common Stock or other securities issued upon the exercise of the Option. "Person" means any individual, partnership, joint venture, corporation, limited liability company, limited liability partnership, trust incorporated organization, government, or agency or political subdivision thereof, or other entity. "Piggyback Registration" has the meaning set forth in Section 2.02(a). "Private Placement Registration Statement" means the registration statement required to be filed by the Company with the Commission pursuant to the terms of the Registration Rights Agreement entered into by and among the Company and the other parties thereto in connection with the private placement of the Company's Common Stock and warrants on October [ ], 2003 and covering the resale by the holders of such shares of Common Stock and also shares of Common Stock issuable upon the exercise of such warrants. "Registrable Camden Securities" means (a) any Registrable Common Stock acquired by any Camden Holder upon the exercise of any Registrable Camden Warrants and (b) any securities of the Company or any successor entity into which Registrable Common Stock or Registrable Camden Warrants may hereafter be reclassified, converted or changed. As to any particular Registrable Camden Securities, such securities shall cease to be Registrable Camden Securities upon the earlier to occur of (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of under such registration statement in accordance with the plan of distribution set forth therein; (ii) such securities shall have been transferred pursuant to Rule 144; (iii) such securities shall have been otherwise transferred or disposed of, and new certificates therefor not bearing a legend restricting further transfer shall have been delivered by the Company, and subsequent transfer of such securities shall not require registration or qualification under the Securities Act or any similar state law then in force; or (iv) such securities shall have ceased to be outstanding. "Registrable Camden Warrants" means the Camden Warrants, together with any additional shares of Common Stock or other securities issued in respect thereof (other than any Camden Warrant Shares) in connection with any stock split, stock dividend, merger, consolidation, reclassification, recapitalization or other similar event with respect to such Camden Warrants. "Registrable Common Stock" means the Option Shares, the Camden Warrant Shares and the Lender Warrant Shares, in each case, together with any additional shares of Common Stock or other securities issued in respect thereof in connection with any stock split, stock dividend, merger, consolidation, reclassification, recapitalization or similar event with respect to such shares of Common Stock. "Registrable Lender Securities" means (a) any Registrable Common Stock acquired by any Lender Holder upon the exercise of any Registrable Lender Warrants and (b) any securities of the Company or any successor entity into which Registrable Common Stock or Registrable Lender Warrants may hereafter be reclassified, converted or changed. As to any particular Registrable Lender Securities, such securities shall cease to be Registrable Lender Securities upon the earlier to occur of (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of under such registration statement in accordance with the plan of distribution set forth therein; (ii) such securities shall have been transferred pursuant to Rule 144; (iii) such securities shall have been otherwise transferred or disposed of, and new certificates therefor not bearing a legend restricting further transfer shall have been delivered by the Company, and subsequent transfer of such securities shall not require registration or qualification under the Securities Act or any similar state law then in force; or (iv) such securities shall have ceased to be outstanding. "Registrable Lender Warrants" means the Lender Warrants, together with any additional shares of Common Stock or other securities issued in respect thereof (other than any Lender Warrant Shares) in connection with any stock split, stock dividend, merger, consolidation, reclassification, recapitalization or similar event with respect to such Lender Warrants. "Registrable Lonstein Securities" means the Lonstein Shares (other than any Lonstein Shares subject to the Option), together with any additional shares of Common Stock or other securities issued in respect thereof in connection with any stock split, stock dividend, merger, consolidation, reclassification, recapitalization or similar event with respect to such shares of Common Stock. As to any particular Registrable Lonstein Securities, such securities shall cease to be Registrable Lonstein Securities upon the earlier to occur of (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of under such registration statement in accordance with the plan of distribution set forth therein; (ii) such securities shall have been transferred pursuant to Rule 144; (iii) such securities shall have been otherwise transferred or disposed of, and new certificates therefor not bearing a legend restricting further transfer shall have been delivered by the Company, and subsequent transfer of such securities shall not require registration or qualification under the Securities Act or any similar state law then in force; or (iv) such securities shall have ceased to be outstanding. "Registrable MidOcean Securities" means (a) any Registrable Common Stock acquired by any MidOcean Holder upon the exercise of the Option, and (b) any securities of the Company or any successor entity into which Registrable Common Stock may hereafter be reclassified, converted or changed. As to any particular Registrable MidOcean Securities, such securities shall cease to be Registrable MidOcean Securities upon the earlier to occur of (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of under such registration statement in accordance with the plan of distribution set forth therein; (ii) such securities shall have been transferred pursuant to Rule 144; (iii) such securities shall have been otherwise transferred or disposed of, and new certificates therefor not bearing a legend restricting further transfer shall have been delivered by the Company, and subsequent transfer of such securities shall not require registration or qualification under the Securities Act or any similar state law then in force; or (iv) such securities shall have ceased to be outstanding. "Registrable Sandler Securities" means (a) any Registrable Common Stock acquired by any Sandler Holders upon the exercise of the Option, and (b) any securities of the Company or any successor entity into which Registrable Common Stock may hereafter be reclassified, converted or changed. As to any particular Registrable Sandler Securities, such securities shall cease to be Registrable Sandler Securities upon the earlier to occur of (i) a registration statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been disposed of under such registration statement in accordance with the plan of distribution set forth therein; (ii) such securities shall have been transferred pursuant to Rule 144; (iii) such securities shall have been otherwise transferred or disposed of, and new certificates therefor not bearing a legend restricting further transfer shall have been delivered by the Company, and subsequent transfer of such securities shall not require registration or qualification under the Securities Act or any similar state law then in force; or (iv) such securities shall have ceased to be outstanding. "Registrable Securities" means the Registrable MidOcean Securities, the Registrable Sandler Securities, the Registrable Lonstein Securities, the Registrable Camden Securities and the Registrable Lender Securities. "Requesting Holders" means the Holders requesting a Demand Registration, and shall include parties deemed "Requesting Holders" pursuant to Sections 2.01(a)(vii), (viii), (ix), (x) and (xi). "Rule 144" means Rule 144 (or any successor rule of similar effect) promulgated under the Securities Act. "Sandler Holders" means the Initial Sandler Holders, their direct and indirect successors and assigns and any direct or indirect transferee of any Registrable Securities initially held by any Initial Sandler Holder. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Securities Purchase Agreement" has the meaning set forth in the recitals. "Selling Holder" means any Holder who is selling Registrable Securities pursuant to a public offering registered hereunder. "Shelf Registration" means a Demand Registration which is effected pursuant to Rule 415 under the Securities Act. "Syndication Letter" has the meaning set forth in the Term Loan Agreement. "Term Loan Agreement" means the Term Loan Agreement, dated as of the Closing Date, entered into by and among the Company, the Lenders (as defined therein) and the other parties signatory thereto. "Underwriter" means a securities dealer who purchases any Registrable Securities as principal in connection with a Demand Registration or a Piggyback Registration and not as part of such dealer's market-making activities. Section 1.02 Internal References. Unless the context indicates otherwise, references to Articles, Sections and paragraphs shall refer to the corresponding articles, sections and paragraphs in this Agreement, and references to the parties shall mean the parties to this Agreement. ARTICLE II REGISTRATION RIGHTS Section 2.01 Demand Registration. (a) (i) Holders of not less than a majority of the Registrable MidOcean Securities may make up to one written request for a Demand Registration (of which such Demand Registration may be a Shelf Registration) of all or any part of the Registrable MidOcean Securities held by such MidOcean Holders; provided that the MidOcean Holders shall not be entitled to a Demand Registration if, during the 6 months preceding such request, the Holders have requested a Demand Registration (unless such Demand Registration was preempted pursuant to Section 2.01(e)). (ii) Holders of not less than a majority of the Registrable Sandler Securities may make up to one written request for a Demand Registration (of which such Demand Registration may be a Shelf Registration) of all or any part of the Registrable Sandler Securities held by such Sandler Holders; provided that the Sandler Holders shall not be entitled to a Demand Registration if, during the 6 months preceding such request, the Holders have requested a Demand Registration (unless such Demand Registration was preempted pursuant to Section 2.01(e)). (iii) Holders of not less than a majority of the Registrable Lonstein Securities may make up to two written requests for a Demand Registration of all or any part of the Registrable Lonstein Securities held by such Lonstein Holders; provided that the Lonstein Holders shall not be entitled to a Demand Registration if, during the 6 months preceding such request, the Holders have requested a Demand Registration (unless such Demand Registration was preempted pursuant to Section 2.01(e)). (iv) Holders of not less than a majority of the Registrable Camden Securities may make one written request for a Demand Registration (of which such Demand Registration may be a Shelf Registration) of all or any part of the Registrable Camden Securities held by such Camden Holders; provided that the Camden Holders shall not be entitled to a Demand Registration if, during the 6 months preceding such request, the Holders have requested a Demand Registration (unless such Demand Registration was preempted pursuant to Section 2.01(e)). (v) Holders of not less than a majority of the Registrable Lender Securities may make one written request for a Demand Registration (of which such Demand Registration may be a Shelf Registration) of all or any part of the Registrable Lender Securities held by such Lender Holders; provided that the Lender Holders shall not be entitled to a Demand Registration if, during the 6 months preceding such request, the Holders have requested a Demand Registration (unless such Demand Registration was preempted pursuant to Section 2.01(e)). (vi) Any request for a Demand Registration will specify the aggregate number of shares of Registrable Securities proposed to be sold by the Requesting Holders and will also specify the intended method of disposition thereof. Any such request for a Demand Registration shall specify whether such registration will be a Shelf Registration. For so long as the Initial MidOcean Holder holds Registrable MidOcean Securities, no Demand Registration made by any MidOcean Holder shall be a Shelf Registration without the consent of the Initial MidOcean Holder. For so long as the Initial Sandler Holders hold Registrable Sandler Securities, no Demand Registration made by any Sandler Holder shall be a Shelf Registration without the consent of a majority in interest of the Initial Sandler Holders. For so long as the Initial Camden Holders hold Registrable Camden Securities, no Demand Registration made by any Camden Holder shall be a Shelf Registration without the consent of a majority in interest of the Initial Camden Holders. For so long as the Initial Lender Holders hold Registrable Lender Securities, no Demand Registration made by any Lender Holder shall be a Shelf Registration without the consent of a majority in interest of the Initial Lender Holders. A registration will not count as a Demand Registration until it has become effective. If the Requesting Holders withdraw or do not pursue the request for the Demand Registration (in each of the foregoing cases, provided that at such time the Company is in compliance in all material respects with its obligations under this Agreement), then such Demand Registration shall be deemed to have been effected, provided that (i) if the Demand Registration does not become effective because a material adverse change has occurred, or is reasonably likely to occur, in the condition (financial or otherwise), business, properties, assets, liabilities, operations or prospects of the Company and its subsidiaries taken as a whole subsequent to the date of the written request made by the Requesting Holders or (ii) if, after the Demand Registration has become effective, an offering of Registrable Securities pursuant to a registration is interfered with by any stop order, injunction, or other order or requirement of the Commission or other governmental agency or court then the Demand Registration shall not be deemed to have been effected and will not count as a Demand Registration. (vii) Upon receipt of any request for a Demand Registration by Holders of not less than a majority of the Registrable MidOcean Securities held by the MidOcean Holders, the Company shall promptly (but in any event within ten (10) days) give written notice of such proposed Demand Registration to all other Holders, and subject to Section 2.01(f), all such Holders shall have the right, exercisable by written notice to the Company within twenty (20) days of their receipt of the Company's notice, to elect to include in such Demand Registration such portion of their Registrable Securities as they may request. All such Holders requesting to have their Registrable Securities included in a Demand Registration in accordance with the preceding sentence shall be deemed to be "Requesting Holders" for purposes of this Section 2.01; provided that any Sandler Holders, any Lonstein Holders, any Camden Holders and any Lender Holders shall not be deemed to be "Requesting Holders" for purposes of Section 2.01(c). (viii) Upon receipt of any request for a Demand Registration by Holders of not less than a majority of the Registrable Sandler Securities held by the Sandler Holders, the Company shall promptly (but in any event within ten (10) days) give written notice of such proposed Demand Registration to all other Holders, and subject to Section 2.01(f), all such Holders shall have the right, exercisable by written notice to the Company within twenty (20) days of their receipt of the Company's notice, to elect to include in such Demand Registration such portion of their Registrable Securities as they may request. All such Holders requesting to have their Registrable Securities included in a Demand Registration in accordance with the preceding sentence shall be deemed to be "Requesting Holders" for purposes of this Section 2.01; provided that any MidOcean Holders, any Lonstein Holders, any Camden Holders and any Lender Holders shall not be deemed to be "Requesting Holders" for purposes of Section 2.01(c). (ix) Upon receipt of any request for a Demand Registration by Holders of a majority of the Registrable Lonstein Securities held by the Lonstein Holders, the Company shall promptly (but in any event within ten (10) days) give written notice of such proposed Demand Registration to all other Holders, and subject to Section 2.01(f), all such Holders shall have the right, exercisable by written notice to the Company within twenty (20) days of their receipt of the Company's notice, to elect to include in such Demand Registration such portion of their Registrable Securities as they may request. All such Holders requesting to have their Registrable Securities included in a Demand Registration in accordance with the preceding sentence shall be deemed to be "Requesting Holders" for purposes of this Section 2.01; provided that any MidOcean Holders, any Sandler Holders, any Camden Holders and any Lender Holders shall not be deemed to be "Requesting Holders" for purposes of Section 2.01(c). (x) Upon receipt of any request for a Demand Registration by Holders of not less than a majority of the Registrable Camden Securities held by the Camden Holders, the Company shall promptly (but in any event within ten (10) days) give written notice of such proposed Demand Registration to all other Holders, and subject to Section 2.01(f), all such Holders shall have the right, exercisable by written notice to the Company within twenty (20) days of their receipt of the Company's notice, to elect to include in such Demand Registration such portion of their Registrable Securities as they may request. All such Holders requesting to have their Registrable Securities included in a Demand Registration in accordance with the preceding sentence shall be deemed to be "Requesting Holders" for purposes of this Section 2.01; provided that any MidOcean Holders, any Sandler Holders, any Lonstein Holders and any Lender Holders shall not be deemed to be "Requesting Holders" for purposes of Section 2.01(c). (xi) Upon receipt of any request for a Demand Registration by Holders of not less than a majority of the Registrable Lender Securities held by the Lender Holders, the Company shall promptly (but in any event within ten (10) days) give written notice of such proposed Demand Registration to all other Holders, and subject to Section 2.01(f), all such Holders shall have the right, exercisable by written notice to the Company within twenty (20) days of their receipt of the Company's notice, to elect to include in such Demand Registration such portion of their Registrable Securities as they may request. All such Holders requesting to have their Registrable Securities included in a Demand Registration in accordance with the preceding sentence shall be deemed to be "Requesting Holders" for purposes of this Section 2.01; provided that any MidOcean Holders, any Sandler Holders, any Lonstein Holders and any Camden Holders shall not be deemed to be "Requesting Holders" for purposes of Section 2.01(c). (b) In the event that the Requesting Holders withdraw or do not pursue a request for a Demand Registration and, pursuant to Section 2.01(a) hereof, such Demand Registration is deemed to have been effected, the Holders may reacquire such Demand Registration (such that the withdrawal or failure to pursue a request will not count as a Demand Registration hereunder) if the Selling Holders reimburse the Company for any and all registration expenses pursuant to Section 3.02 actually incurred by the Company in connection with such request for a Demand Registration. (c) If the Requesting Holders so elect, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of a "firm commitment" underwritten offering. A majority in interest of the Requesting Holders shall have the right to select the managing Underwriters and any additional investment bankers and managers to be used in connection with any offering under this Section 2.01, subject to the Company's approval, which approval shall not be unreasonably withheld. (d) The Requesting Holders will inform the Company of the time and manner of any disposition of Registrable Securities (which may be pursuant to a Shelf Registration), and agree to take reasonable action to cooperate with the Company in effecting the disposition of the Registrable Securities in a manner that does not unreasonably disrupt the public trading market for the Common Stock. (e) The Company shall have the right for up to 180 days in any consecutive 360 day period to delay or suspend any Demand Registration in the event that the Board of Directors determines, in good faith, that it is in the best interest of the Company for the Company to proceed with its own offering of equity securities. The Company may so proceed by delivering written notice (within five business days after the Company has received a request for such Demand Registration) of such intention to the Selling Holder indicating that the Company has identified a specific business need and use for the proceeds of the sale of such securities and the Company shall use its best efforts to effect a primary registration within 60 days of such notice. In the ensuing primary registration, the Holders will have such piggyback registration rights as are set forth in Section 2.02 hereof. Upon the Company's preemption of a requested Demand Registration, such requested registration will not count as the Holders' Demand Registration. The Company may exercise the right to preempt only once in any 360-day period. Notwithstanding anything to the contrary contained herein, during any 360-day period the Company shall not exercise its right to preempt, delay or postpone the filing or effectiveness of any registration statement, pre- or post-effective amendment or supplement or prospectus supplement pursuant to this Section 2.01(e), the first proviso to Section 3.01(a), or Section 3.01(b) for more than 180 days in the aggregate for all such provisions during any period of 360 consecutive days. (f) No securities to be sold for the account of any Person (including the Company) other than a Requesting Holder shall be included in a Demand Registration unless the managing Underwriter or Underwriters shall advise the Company and the Requesting Holders in writing that the inclusion of such securities will not materially and adversely affect the price, distribution or timing of the offering (a "Material Adverse Effect"). Any additional securities to be included in a Demand Registration pursuant to this Section 2.01(f) shall be included in such Demand Registration in accordance with their relative rights. Furthermore, in the event the managing Underwriter or Underwriters shall advise the Company or the Requesting Holders that even after exclusion of all securities of other Persons (including the Company) pursuant to the immediately preceding sentence, the amount of Registrable Securities proposed to be included in such Demand Registration by Requesting Holders is sufficiently large to cause a Material Adverse Effect, the Registrable Securities of the Requesting Holders to be included in such Demand Registration shall equal the number of shares which the Company and the Requesting Holders are so advised can be sold in such offering without a Material Adverse Effect and such shares shall be allocated pro rata among the Requesting Holders on the basis of the number of Registrable Securities requested to be included in such registration by each such Requesting Holder. If any Registrable Securities requested to be registered pursuant to a Demand Registration under Section 2.01 are excluded from registration hereunder, then the Holder(s) having shares excluded ("Excluded Holders") shall have the right to withdraw all, or any part, of their shares from such registration; provided, further, that if less than 80% of the Registrable Securities requested to be included in such Demand Registration are actually included therein, such registration will not count as a Demand Registration for purposes of this Section 2.01. (g) Notwithstanding any request for Demand Registration made by any of the Holders pursuant to this Section 2.01, the Company shall not be required to file a registration statement pursuant to this Section 2.01 for the registration of Registrable Securities hereunder until such time as the Private Placement Registration Statement has been declared effective by the Commission. A true and correct copy of the Registration Rights Agreement for the Private Placement has previously been furnished to the Initial Sandler Holders and the Initial MidOcean Holder. Section 2.02 Piggyback Registration. (a) If the Company at any time proposes to file a registration statement under the Securities Act with respect to an offering of securities for its own account or for the account of another Person (other than a registration statement on Form S-4 or S-8 (or any substitute form that may be adopted by the Commission) and other than a Demand Registration hereunder and the Private Placement Registration Statement), the Company shall give written notice of such proposed filing to the Holders at the address set forth in the share register of the Company as soon as reasonably practicable (but in no event less than 15 days before the anticipated date on which such registration will be first filed with the Commission), undertaking to provide each Holder the opportunity to register on the same terms and conditions such number and type of Registrable Securities as such Holder may request (a "Piggyback Registration"). Each Holder will have ten business days after receipt of any such notice to notify the Company as to whether it wishes to participate in a Piggyback Registration (which notice shall not be deemed to be a request for a Demand Registration); provided that should a Holder fail to provide timely notice to the Company, such Holder will forfeit any rights to participate in the Piggyback Registration with respect to such proposed offering. In the event that the registration statement is filed on behalf of a Person other than the Company, the Company will use its best efforts to have the shares of Registrable Securities that the Holders wish to sell included in the registration statement. If the Company shall determine in its sole discretion not to register or to delay the proposed offering, the Company shall provide written notice of such determination to the Holders and (i) in the case of a determination not to effect the proposed offering, shall thereupon be relieved of the obligation to register such Registrable Securities in connection therewith, and (ii) in the case of a determination to delay a proposed offering, shall thereupon be permitted to delay registering such Registrable Securities for the same period as the delay in respect of the proposed offering. As between the Company and the Selling Holders, the Company shall be entitled to select the Underwriters in connection with any Piggyback Registration. (b) If the Registrable Securities requested to be included in the Piggyback Registration by any Holder differ from the type of securities proposed to be registered by the Company and the managing Underwriter advises the Company that due solely to such differences the inclusion of such Registrable Securities would cause a Material Adverse Effect, then (i) the number of such Holders' Registrable Securities to be included in the Piggyback Registration shall be reduced to an amount which, in the opinion of the managing Underwriter, would eliminate such Material Adverse Effect or (ii) if no such reduction would, in the opinion of the managing Underwriter, eliminate such Material Adverse Effect, then the Company shall have the right to exclude all such Registrable Securities from such Piggyback Registration, provided that no other securities of such type are included and offered for the account of any other Person in such Piggyback Registration. Any partial reduction in number of Registrable Securities of any Holder to be included in the Piggyback Registration pursuant to clause (i) of the immediately preceding sentence shall be effected pro rata based on the ratio which such Holder's requested shares bears to the total number of shares requested to be included in such Piggyback Registration by all Persons other than the Company who have the contractual right to request that their shares be included in such registration statement and who have requested that their shares be included. If the Registrable Securities requested to be included in the registration statement are of the same type as the securities being registered by the Company and the managing Underwriter advises the Company that the inclusion of such Registrable Securities would cause a Material Adverse Effect, the Company will be obligated to include in such registration statement, as to each Holder only a portion of the shares such Holder has requested be registered equal to the ratio which such Holder's requested shares bears to the total number of shares requested to be included in such registration statement by all Persons who have the contractual right to request that their shares be included in such registration statement and who have requested their shares be included; provided, however, that the provisions of this sentence shall not be applicable to the Person or Persons initiating such registration statement. If the Company initiated the registration, then the Company may include all of its securities in such registration statement before any such Holder's requested shares are included. If another security holder initiated the registration, then the Company may not include any of its securities in such registration statement unless all Registrable Securities requested to be included in the registration statement by all Holders are included in such registration statement. If as a result of the provisions of this Section 2.02(b) any Holder shall not be entitled to include all Registrable Securities in a registration that such Holder has requested to be so included, such Holder may withdraw such Holder's request to include Registrable Securities in such registration statement prior to its effectiveness. ARTICLE III REGISTRATION PROCEDURES Section 3.01 Filings; Information. In connection with the registration of Registrable Securities pursuant to Section 2.01 and Section 2.02 hereof, the Company will use its best efforts to effect the registration of such Registrable Securities as promptly as is reasonably practicable, and in connection with any such request: (a) Subject to Section 2.01(g) hereof, the Company will expeditiously prepare and file as soon as practicable (but in any event within 60 days) with the Commission a registration statement on any form for which the Company then qualifies and which counsel for the Company shall deem appropriate and available for the sale of the Registrable Securities to be registered thereunder in accordance with the intended method of distribution thereof, and use its reasonable best efforts to cause such filed registration statement to become and remain effective (i) with respect to any Demand Registration (other than a Shelf Registration) or Piggyback Registration, for such period, not to exceed 120 days, as may be reasonably necessary to effect the sale of such securities and (ii) with respect to a Shelf Registration, until the earlier of the sale of all Registrable Securities thereunder and the end of the 36th calendar month from the time the Shelf Registration becomes effective; provided that if the Company shall furnish to the Selling Holder a certificate signed by the Company's Chairman or President stating that the Board of Directors has determined in good faith that it would be detrimental or otherwise disadvantageous to the Company or its shareholders for such a registration statement to be filed as expeditiously as possible because the sale of Registrable Securities covered by such registration statement or the disclosure of information in any related prospectus or prospectus supplement would materially interfere with any acquisition, financing or other material event or transaction which is then intended or the public disclosure of which at the time would be materially prejudicial to the Company, the Company may postpone the filing or effectiveness of a registration statement for a period of not more than 180 days; provided, further, that the Company shall not exercise its right to preempt, delay or postpone any registration pursuant to Section 2.01(e), the first proviso to this Section 3.01(a), or Section 3.01(b) for more than 180 days in the aggregate for all such provisions during any period of 360 consecutive days; provided, further, that the Company may exercise its rights under Section 3.01(a) only once with respect to any particular registration statement; and provided, further, that if (i) the effective date of any registration statement filed pursuant to a Demand Registration would otherwise be at least 45 calendar days, but fewer than 90 calendar days, after the end of the Company's fiscal year, and (ii) the Securities Act requires the Company to include audited financial statements of the Company as of the end of such fiscal year, the Company may delay the effectiveness of such registration statement for such period as is reasonably necessary to include therein its audited financial statements for such fiscal year. (b) Anything in this Agreement to the contrary notwithstanding, it is understood and agreed that the Company shall not be required to keep any Shelf Registration effective or useable for offers and sales of the Registrable Securities, file a post effective amendment to a Shelf Registration statement or prospectus supplement or to supplement or amend any registration statement, if the Company is then involved in discussions concerning, or otherwise engaged in, any material financing or investment, acquisition or divestiture transaction or other material business purpose, if the Board of Directors has determined in good faith that the making of such a filing, supplement or amendment at such time would interfere with such transaction or purpose. The Company shall promptly give the Holders of Registrable Securities written notice of such postponement containing a general statement of the reasons for such postponement and an approximation of the anticipated delay. Upon receipt by a Holder of Registrable Securities of notice of an event of the kind described in this Section 3.01(b), such Holder shall forthwith discontinue such Holder's disposition of Registrable Securities until such Holder's receipt of notice from the Company that such disposition may continue and of any supplemented or amended prospectus indicated in such notice. Notwithstanding anything to the contrary contained herein, the Company shall not be entitled to preempt, delay or postpone the filing or effectiveness of any registration statement, pre- or post-effective amendment or supplement to any registration statement or prospectus supplement pursuant to Section 2.01(e), the first proviso of Section 3.01(a), or this Section 3.01(b) for more than 180 days in the aggregate for all such provisions during any period of 360 consecutive days. (c) Before filing a registration statement or prospectus or any amendments or supplements thereto, the Company will furnish to any Selling Holder and to the applicable managing Underwriters, if any, draft copies of all such documents proposed to be filed at least ten (10) business days prior thereto, which documents will be subject to the reasonable review of such Selling Holders, the applicable managing Underwriters, if any, and their respective counsel, agents and representatives, and the Company will not file any registration statement or amendment thereto or any prospectus or any supplement thereto (including such documents incorporated by reference) to which any Selling Holder or Underwriter shall reasonably object. (d) The Company will notify the Selling Holders requesting such registration and (if requested) confirm such advice in writing, as soon as practicable after notice thereof is received by the Company (i) when the registration statement or any amendment thereto has been filed or becomes effective, the prospectus or any amendment or supplement to the prospectus has been filed, (ii) of any request by the Commission for amendments or supplements to the registration statement or the prospectus or for additional information, (iii) if at any time the representations and warranties contemplated by Section 5.01 cease to be true and correct and (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for offering or sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. (e) After the filing of the registration statement, the Company will promptly notify the Selling Holders of any stop order issued, or, to the Company's knowledge, threatened to be issued, by the Commission and use its best efforts to prevent the entry of such stop order or to remove it if entered. (f) The Company will prepare and file with the Commission such amendments, post-effective amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for a period of not less than 120 days (or such shorter period which will terminate when all Registrable Securities covered by such registration statement have been sold or withdrawn, but not prior to the expiration of the applicable period referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if applicable), cause the prospectus to be supplemented by any required prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, 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 methods of disposition by the Selling Holders set forth in such registration statement. (g) The Company will furnish to each Selling Holder requesting such registration and the managing Underwriter, if any, without charge, one signed copy and such number of conformed copies of such registration statement, each amendment and supplement thereto, the prospectus included in such registration statement (including each preliminary prospectus) and any amendments or supplements thereto, any documents incorporated by reference therein and such other documents as any such Selling Holder or such managing Underwriter may reasonably request in order to facilitate the disposition of the Registrable Securities (it being understood that the Company consents to the use of the prospectus (including the preliminary prospectus) and any amendment or supplement thereto by the Selling Holder requesting such registration and the managing Underwriter, if any, in connection with the offering and sale of the Registrable Securities covered by the prospectus or any amendment or supplement thereto). (h) The Company will use its best efforts to qualify the Registrable Securities for offer and sale under such other securities or blue sky laws of such jurisdictions in the United States as the Selling Holders reasonably request; keep each such registration or qualification (or exemption therefrom) effective during the period in which such registration statement is required to be kept effective; and do any and all other acts and things which may be reasonably necessary or advisable to enable each Selling Holder to consummate the disposition of the Registrable Securities owned by such Selling Holder in such jurisdictions; provided that the Company will 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 3.01(h), (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction. (i) The Company will as promptly as is practicable notify the Selling Holders, at any time when a prospectus relating to the sale of the Registrable Securities is required by law to be delivered under the Securities Act, of the occurrence of any event requiring the preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will 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, in the light of the circumstances under which they were made, not misleading and promptly make available to the Selling Holders and to the Underwriters any such supplement or amendment. Upon receipt of any notice of the occurrence of any event of the kind described in the preceding sentence, Selling Holders will forthwith discontinue the offer and sale of Registrable Securities pursuant to the registration statement covering such Registrable Securities until receipt by the Selling Holders and the Underwriters of the copies of such supplemented or amended prospectus and, if so directed by the Company, the Selling Holders will deliver to the Company all copies, other than permanent file copies then in the possession of Selling Holders, of the most recent prospectus covering such Registrable Securities at the time of receipt of such notice. In the event the Company shall give such notice, the Company shall extend the period during which such registration statement shall be maintained effective as provided in Section 3.01(a) hereof by the number of days during the period from and including the date of the giving of such notice to the date when the Company shall make available to the Selling Holders such supplemented or amended prospectus. (j) The Company will enter into customary agreements (including an underwriting agreement in customary form, including customary representations, warranties, covenants, conditions and indemnities) and take such other actions as are required or reasonably requested by the Selling Holders or the managing Underwriter in order to expedite or facilitate the sale of such Registrable Securities. (k) At the request of any Underwriter in connection with an underwritten offering the Company will furnish (i) an opinion of counsel, addressed to the Underwriters, covering such customary matters as the managing Underwriter may reasonably request and (ii) a comfort letter or comfort letters (and updates thereof) from the Company's independent public accountants covering such customary matters as the managing Underwriter may reasonably request. (l) If requested by the managing Underwriter or any Selling Holder, the Company shall promptly incorporate in a prospectus supplement or post effective amendment such information as the managing Underwriter or any Selling Holder reasonably requests to be included therein, including without limitation, with respect to the Registrable Securities being sold by such Selling Holder, the purchase price being paid therefor by the Underwriters and with respect to any other terms of the underwritten offering of the Registrable Securities to be sold in such offering, and promptly make all required filings of such prospectus supplement or post effective amendment. (m) The Company shall promptly make available for inspection by any Selling Holder or Underwriter participating in any disposition pursuant to any registration statement, and any attorney, accountant or other agent or representative retained by any such Selling Holder or Underwriter, all financial and other records, pertinent corporate documents and properties of the Company, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information requested by any such Selling Holder or Underwriter in connection with such registration statement. (n) The Company shall cause the Registrable Securities included in any registration statement to be (A) listed on each securities exchange, if any, on which similar securities issued by the Company are then listed, or (B) authorized to be quoted and/or listed (to the extent applicable) on the Nasdaq National Market if the Registrable Securities so qualify. (o) The Company shall provide a CUSIP number, registrar and transfer agent for the Registrable Securities included in any registration statement not later than the effective date of such registration statement. (p) The Company shall cooperate with each Selling Holder and each Underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the National Association of Securities Dealers, Inc. (q) The Company shall during the period when the prospectus is required to be delivered under the Securities Act, promptly file all documents required to be filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act. (r) The Company will make generally available to its security holders, as soon as reasonably practicable, an earnings statement covering a period of 12 months, beginning within three months after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and the rules and regulations of the Commission thereunder. (s) The Company will use its best efforts to cause all such Registrable Securities to be listed on each securities exchange or quoted on each inter-dealer quotation system on which the Common Stock is then listed or quoted. The Company may require Selling Holders promptly to furnish in writing to the Company such information regarding such Selling Holders, the plan of distribution of the Registrable Securities and other information as may be legally required in connection with such registration. Section 3.02 Registration Expenses. The Company will pay all registration expenses of the Selling Holders in connection with any Demand and/or Piggyback Registrations including but not limited to (i) registration and filing fees with the Commission and the National Association of Securities Dealers, Inc., (ii) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel in connection with blue sky qualifications of the Registrable Securities), (iii) printing expenses, (iv) fees and expenses incurred in connection with the listing or quotation of the Registrable Securities, (v) fees and expenses of counsel to the Company and the reasonable fees and expenses of independent certified public accountants for the Company (including fees and expenses associated with the special audits or the delivery of comfort letters), (vi) the reasonable fees and expenses of any additional experts retained by the Company in connection with such registration, (vii) all roadshow costs and expenses not paid by the Underwriters, (viii) rating agency fees and (ix) fees and expenses of counsel to the holders of Registrable Securities. The Company will not be required to pay for any underwriting discounts and commissions attributable to the sale of Registrable Securities. ARTICLE IV INDEMNIFICATION AND CONTRIBUTION Section 4.01 Indemnification by the Company. The Company agrees to indemnify and hold harmless, to the fullest extent permitted by applicable law, each Selling Holder and its Affiliates and their respective officers, directors, partners, stockholders, members, employees, agents and representatives and each Person (if any) which controls a Selling Holder within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages, liabilities, costs and expenses (including attorneys' fees) (collectively, "Losses") caused by, arising out of, resulting from or related to any untrue statement or alleged untrue statement of a material fact contained in any registration statement, preliminary prospectus or prospectus relating to the Registrable Securities (as amended or supplemented from time to time), or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such Losses are caused by or contained in or based upon any information furnished in writing to the Company by or on behalf of such Selling Holder or any Underwriter expressly for use therein (which was not subsequently corrected in writing prior to or concurrently with the sale of Registrable Securities to the Person asserting the Loss) or by the Selling Holder's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Company has furnished the Selling Holder with copies of the same. The Company also agrees to indemnify any Underwriters of the Registrable Securities, their officers and directors and each Person who controls such Underwriters on substantially the same basis as that of the indemnification of the Selling Holders provided in this Section 4.01. Notwithstanding the foregoing, the Company shall have no obligation to indemnify under this Section 4.01 to the extent any such Losses have been finally and non-appealably determined by a court of competent jurisdiction to have resulted from a Selling Holder's or Underwriter's willful misconduct or gross negligence. Section 4.02 Indemnification by Selling Holders. The Selling Holders agree to indemnify and hold harmless, to the fullest extent permitted by applicable law, the Company and its Affiliates and their respective officers, directors, partners, stockholders, members, employees, agents and representatives and each Person (if any) which controls the Company within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all Losses caused by, arising out of, resulting from or related to any untrue statement or alleged untrue statement of a material fact contained in any registration statement, preliminary prospectus or prospectus relating to the Registrable Securities (supplemented from time to time) or any preliminary prospectus, or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, but only insofar as such Losses are caused by or contained in or based upon any information furnished in writing to the Company by or on behalf of such Selling Holder or any Underwriter expressly for use therein (which was not subsequently corrected in writing prior to or concurrently with the sale of Registrable Securities to the Person asserting the Loss). Notwithstanding the foregoing, the Selling Holder shall have no obligation to indemnify under this Section 4.02 to the extent that any such Losses have been finally and non-appealably determined by a court of competent jurisdiction to have resulted from the Company's willful misconduct or gross negligence. Section 4.03 Conduct of Indemnification Proceedings. In case any proceeding (including any governmental investigation) shall be instituted or threatened involving any Person in respect of which indemnity may be sought pursuant to Section 4.01 or Section 4.02, such Person (the "Indemnified Party") shall promptly notify the Person against whom such indemnity may be sought (the "Indemnifying Party") in writing (it being understood that the failure to give such notice shall not relieve any Indemnifying Party from any liability which it may have hereunder except to the extent the Indemnifying Party is actually and materially prejudiced by such failure) and the Indemnifying Party, upon the request of the Indemnified Party, shall retain counsel reasonably satisfactory to such Indemnified Party to represent such Indemnified Party and any other Persons the Indemnifying Party may designate in such proceeding and shall pay the fees and disbursements of such counsel related to such proceeding. If the Indemnifying Party does not elect within 15 days after receipt of the notice required hereby to assume the defense of any proceeding, the Indemnified Party may assume such defense with counsel of its choice at the cost and expense of the Indemnifying Party. In any such proceeding where the Indemnifying Party has assumed the defense, any Indemnified Party shall have the right to retain its own counsel and participate in the defense, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) the named parties to any such proceeding (including any impleaded parties) include both the Indemnified Party and the Indemnifying Party and, in the opinion of counsel for the Indemnified Party, representation of both parties by the same counsel would be inappropriate due to actual or potential conflicting interests between them or there exist defenses available to the Indemnified Party which are not available to the Indemnifying Party. It is understood that the Indemnifying Party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel for each such jurisdiction) at any time for all such Indemnified Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by the Indemnified Parties. The Indemnifying Party shall not settle any claim or proceeding without the written consent of the Indemnified Party, unless such settlement (x) requires no relief or penalty other than the payment of money damages, (y) does not require any Indemnified Party to admit culpability or fault in any respect and (z) contains a full and complete release of the Indemnified Party with respect to all matters arising from the facts giving rise to the underlying claim or proceeding. The Indemnifying Party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent (not to be unreasonably withheld), or if there be a final judgment for the plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from and against any loss or liability (to the extent stated above) by reason of such settlement or judgment. Section 4.04 Contribution. If the indemnification provided for in this Article IV is unavailable to an Indemnified Party in respect of any Losses in respect of which indemnity is to be provided hereunder, then each such Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall to the fullest extent permitted by law contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of such party in connection with the statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. The relative fault of the Company, each Selling Holder and the Underwriters shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by such party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and each Selling Holder agrees that it would not be just and equitable if contribution pursuant to this Section 4.04 were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Party as a result of the Losses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Article IV, no Selling Holder shall be required to indemnify for or contribute any amount in excess of the amount by which the net proceeds of the offering received by such Selling Holder exceeds the amount of any damages which such Selling Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. ARTICLE V MISCELLANEOUS Section 5.01 Participation in Underwritten Registrations. No Person may participate in any underwritten registered offering contemplated hereunder unless such Person (a) agrees to sell its securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements, (b) completes and executes all questionnaires, powers of attorney, custody arrangements, indemnities, underwriting agreements and other documents reasonably required under the terms of such underwriting arrangements and this Agreement and (c) furnishes in writing to the Company such information regarding such Person, the plan of distribution of the Registrable Securities and other information as the Company may from time to time request or as may be legally required in connection with such registration; provided, however, that no such Person shall be required to make any representations or warranties in connection with any such registration other than representations and warranties as to (i) such Person's ownership of his or its Registrable Securities to be sold or transferred free and clear of all liens, claims and encumbrances, (ii) such Person's power and authority to effect such transfer and (iii) such matters pertaining to compliance with securities laws as may be reasonably requested; provided further, however, that the obligation of such Person to indemnify pursuant to any such underwriting agreements shall be several, not joint and several, among such Persons selling Registrable Securities, and the liability of each such Person will be in proportion to, and limited to, the net amount received by such Person from the sale of such Person's Registrable Securities pursuant to such registration. Section 5.02 Rule 144. The Company covenants that it will file any reports required to be filed by it under the Securities Act and the Exchange Act and that it will take such further action as the Holders may reasonably request to the extent required from time to time to enable the Holders to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission. Upon the request of any Holder, the Company will deliver to such Holder a written statement as to whether it has complied with such reporting requirements. Section 5.03 Holdback Agreements. Each Holder agrees, in the event of an underwritten offering for the account of the Company, not to offer, sell, contract to sell or otherwise dispose of any Registrable Securities, or any securities convertible into or exchangeable or exercisable for such securities, including any sale pursuant to Rule 144 under the Securities Act (except as part of such underwritten offering), during the 14 days prior to, and during the 120 day period (or such lesser period as the lead or managing underwriters may require) beginning on, the effective date of the registration statement for such underwritten offering (or, in the case of an offering pursuant to an effective shelf registration statement pursuant to Rule 415, the pricing date for such underwritten offering). Section 5.04 Termination. The registration rights granted under this Agreement will terminate at such time as there shall no longer be any Registrable Securities. Section 5.05 Amendments, Waivers, Etc. This Agreement may not be amended, waived or otherwise modified or terminated except by an instrument in writing signed by the Company and Holders of at least 66-2/3% of the Registrable Securities then held by all Holders, if the amendment is to be effective against the Holders, provided that to the extent such amendment, waiver, discharge or termination could reasonably be expected to adversely affect the rights of a particular Holder or class of Holders in a manner different from its effect on all other Holders or classes of Holders, then such Holder (or a majority-in-interest determined by holdings of Registrable Securities on a fully-converted basis) of such class of Holders, as the case may be, must consent to such amendment, waiver, discharge or termination, provided further that each of the Holders hereby waives any notice requirement, approval or consent under this Agreement and the Existing Registration Rights Agreement in connection with, and grants any and all of its consents and approvals under this Agreement and the Existing Registration Rights Agreement to permit, the consummation of the Exchange and the Private Placement (as such terms are defined in the Exchange Agreement) and all transactions contemplated thereby and effected in connection therewith. Section 5.06 Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement. Each party need not sign the same counterpart. Section 5.07 Entire Agreement. This Agreement constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, including, without limitation, the Existing Registration Rights Agreement. Section 5.08 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof. Section 5.09 Assignment of Registration Rights. Each Holder of the Registrable Securities may assign all or any part of its rights under this Agreement to any Person to whom such Holder sells, transfers or assigns such Registrable Securities. In the event that the Holder shall assign its rights pursuant to this Agreement in connection with the transfer of less than all its Registrable Securities, the Holder shall also retain his rights with respect to its remaining Registrable Securities. Section 5.10 Specific Performance. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by the Holders by reason of any breach by it of the provisions of this Agreement and hereby agrees that the Holders, in addition to any remedies which they may have at law, including monetary damages, will be entitled to the remedy of specific performance. Section 5.11 No Superior Registration Rights. The Company will not grant registration rights superior to those of the Holders pursuant to this Agreement. Section 5.12 Additional Holders. In the event of a sale, transfer or assignment of any Loan under the Term Loan Agreement, as a result of, and in connection with, which the Company is required pursuant to the Syndication Letter to issue Lender Warrants to the purchaser, transferee or assignee, as the case may be, of such Loan, such purchaser, transferee or assignee, as the case may be, shall become a party to this Agreement as an "Initial Lender Holder" upon receipt from such purchaser, assignee or transferee, as the case may be, of a fully executed signature page hereto or other instrument of joinder reasonably acceptable to the Company. [Remainder of page intentionally left blank] - - IN WITNESS WHEREOF, the Company and the Holders have caused this Agreement to be signed on its behalf by its officer thereunto duly authorized as of the date first written above. INFOCROSSING, INC. By: /s/ Zach Lonstein --------------------------------------------- Name: Zach Lonstein Title: Chief Executive Officer MIDOCEAN CAPITAL INVESTORS, L.P. By: MidOcean Capital Partners, L.P., its general partner By: Existing Fund GP, LTD., its general partner By: /s/ Andrew Spring -------------------------------------------- Name: Andrew Spring Title: SANDLER CAPITAL PARTNERS V, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell -------------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V FTE, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell -------------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V GERMANY, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell -------------------------------------------- Name: Moira Mitchell Title: President SANDLER TECHNOLOGY PARTNERS, SUBSIDIARY, LLC By: Sandler Technology Partners, L.P., Manager By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell -------------------------------------------- Name: Moira Mitchell Title: President SANDLER CO-INVESTMENT PARTNERS, L.P. By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell -------------------------------------------- Name: Moira Mitchell Title: President PRICE FAMILY LIMITED PARTNERS By: /s/ Michael Price -------------------------------------------- Name: Michael Price Title: General Partner CAMDEN PARTNERS STRATEGIC FUND II-A, L.P. By: Camden Partners Strategic II, LLC., its General Partner By: /s/ David L. Warnock -------------------------------------------- Name: David L. Warnock Title: Managing Member CAMDEN PARTNERS STRATEGIC FUND II-B, L.P. By: Camden Partners Strategic II, LLC, its General Partner By: /s/ David L. Warnock -------------------------------------------- Name: David L. Warnock Title: Managing Member CAHILL, WARNOCK STRATEGIC PARTNERS FUND, L.P. By: Camden Partners Strategic II, LLC., its General Partner By: /s/ David L. Warnock -------------------------------------------- Name: David L. Warnock Title:General Partner STRATEGIC ASSOCIATES, L.P. By: Camden Partners Strategic II, LLC., its General Partner By: /s/ David L. Warnock -------------------------------------------- Name: David L. Warnock Title: General Partner EX-10 4 ex10-1d.txt TERM LOAN EXHIBIT 10.1 TERM LOAN AGREEMENT among INFOCROSSING, INC., The Several Lenders from Time to Time Parties Hereto and INFOCROSSING AGENT, INC. as Agent Dated as of October 21, 2003 TABLE OF CONTENTS Page SECTION 1. DEFINITIONS......................................................1 - ---------------------- 1.1 Defined Terms.............................................1 --- ------------- 1.2 Other Definitional Provisions............................16 --- ----------------------------- SECTION 2. GENERAL TERMS...................................................17 - ------------------------ 2.1 Loans....................................................17 --- ----- 2.2 Repayment of Loans; Evidence of Debt.....................17 --- ------------------------------------ 2.3 Prepayments..............................................18 --- ----------- 2.4 Interest Rates and Payment Dates.........................20 --- -------------------------------- 2.5 Computation of Interest..................................20 --- ----------------------- 2.6 Pro Rata Treatment and Payments..........................20 --- ------------------------------- 2.7 Requirements of Law......................................20 --- ------------------- 2.8 Taxes....................................................21 --- ----- 2.9 Indemnity................................................24 --- --------- 2.10 Agent Fee................................................24 ---- --------- SECTION 3. REPRESENTATIONS AND WARRANTIES..................................24 - ----------------------------------------- 3.1 Financial Condition......................................24 --- ------------------- 3.2 Absence of Certain Changes...............................25 --- -------------------------- 3.3 Corporate Existence; Compliance with Law.................26 --- ---------------------------------------- 3.4 Corporate Power; Authorization; Enforceable Obligations..26 --- ------------------------------------------------------- 3.5 No Legal Bar.............................................27 --- ------------ 3.6 No Material Litigation...................................27 --- ---------------------- 3.7 Contracts and No Default.................................27 --- ------------------------ 3.8 Ownership of Property; Liens.............................27 --- ---------------------------- 3.9 Intellectual Property....................................27 --- --------------------- 3.10 No Burdensome Restrictions...............................28 ---- -------------------------- 3.11 Taxes....................................................28 ---- ----- 3.12 Federal Regulations......................................29 ---- ------------------- 3.13 ERISA....................................................29 ---- ----- 3.14 Investment Company Act; Other Regulations................30 ---- ----------------------------------------- 3.15 Subsidiaries.............................................31 ---- ------------ 3.16 Environmental Matters....................................31 ---- --------------------- 3.17 Solvency.................................................32 ---- -------- 3.18 Full Disclosure..........................................32 ---- --------------- SECTION 4. CONDITIONS PRECEDENT TO CLOSING.................................32 - ------------------------------------------ SECTION 5. AFFIRMATIVE COVENANTS...........................................36 - -------------------------------- 5.1 Financial Statements.....................................36 --- -------------------- 5.2 Certificates; Other Information..........................37 --- ------------------------------- 5.3 Payment of Obligations...................................37 --- ---------------------- 5.4 Conduct of Business and Maintenance of Existence.........37 --- ------------------------------------------------ 5.5 Maintenance of Property; Insurance.......................38 --- ---------------------------------- 5.6 Books and Records; Inspection of Property................39 --- ----------------------------------------- 5.7 Notices..................................................39 --- ------- 5.8 Environmental Laws.......................................40 --- ------------------ 5.9 Further Assurances.......................................40 --- ------------------ 5.10 Additional Collateral....................................40 ---- --------------------- 5.11 Syndication..............................................42 ---- ----------- 5.12 Tax Returns..............................................42 ---- ----------- SECTION 6. NEGATIVE COVENANTS..............................................42 - ----------------------------- 6.1 Financial Condition Covenants............................42 --- ----------------------------- 6.2 Limitation on Indebtedness...............................43 --- -------------------------- 6.3 Limitation on Liens......................................44 --- ------------------- 6.4 Limitation on Fundamental Changes........................46 --- --------------------------------- 6.5 Limitation on Sale of Assets.............................46 --- ---------------------------- 6.6 Limitation on Amendments to Material Agreements..........47 --- ----------------------------------------------- 6.7 Limitation on Dividends..................................47 --- ----------------------- 6.8 Limitation on Capital Expenditures.......................48 --- ---------------------------------- 6.9 Limitation on Investments, Loans and Advances............48 --- --------------------------------------------- 6.10 Modifications of Debt Instruments........................49 ---- --------------------------------- 6.11 Limitation on Transactions with Affiliates...............49 ---- ------------------------------------------ 6.12 Limitation on Sales and Leasebacks.......................49 ---- ---------------------------------- 6.13 Limitation on Changes in Fiscal Year.....................49 ---- ------------------------------------ 6.14 Limitation on Negative Pledge Clauses....................49 ---- ------------------------------------- 6.15 Limitation on Lines of Business..........................50 ---- ------------------------------- SECTION 7. EVENTS OF DEFAULT...............................................50 - ---------------------------- SECTION 8. THE AGENT.......................................................52 - -------------------- 8.1 Appointment..............................................52 --- ----------- 8.2 Delegation of Duties.....................................52 --- -------------------- 8.3 Exculpatory Provisions...................................53 --- ---------------------- 8.4 Reliance by Agent........................................53 --- ----------------- 8.5 Notice of Default........................................53 --- ----------------- 8.6 Non-Reliance on Agent and Other Lenders..................54 --- --------------------------------------- 8.7 Indemnification..........................................54 --- --------------- 8.8 Agent in Its Individual Capacity.........................54 --- -------------------------------- 8.9 Successor Agent..........................................55 --- --------------- 8.10 Parity Obligations.......................................55 ---- ------------------ SECTION 9. MISCELLANEOUS...................................................55 - ------------------------ 9.1 Amendments and Waivers...................................55 --- ---------------------- 9.2 Notices..................................................56 --- ------- 9.3 No Waiver; Cumulative Remedies...........................57 --- ------------------------------ 9.4 Survival of Representations and Warranties...............57 --- ------------------------------------------ 9.5 Payment of Expenses and Taxes............................57 --- ----------------------------- 9.6 Successors and Assigns; Participations and Assignments...58 --- ------------------------------------------------------ 9.7 Adjustments; Set-off.....................................60 --- -------------------- 9.8 Counterparts.............................................61 --- ------------ 9.9 Severability.............................................61 --- ------------ 9.10 Integration..............................................61 ---- ----------- 9.11 GOVERNING LAW............................................61 ---- ------------- 9.12 Submission To Jurisdiction; Waivers......................61 ---- ----------------------------------- 9.13 Acknowledgements.........................................62 ---- ---------------- 9.14 WAIVERS OF JURY TRIAL....................................62 ---- --------------------- 9.15 Confidentiality..........................................62 ---- --------------- 9.16 Sharing of Liens.........................................63 ---- ---------------- SCHEDULES I Lenders' Addresses. 2.1 Lender's Commitments 2.2 Amortization of Loans 3.2 Absence of Certain Changes 3.4 Consents 3.9 Intellectual Property 3.11 Taxes 3.13 ERISA 3.16 Environmental Matters 6.1(a) Leverage Ratio 6.1(b) Minimum Consolidated EBITDA 6.1(c) Fixed Charge Ratio 6.2(d) Existing Indebtedness 6.3 Existing Liens EXHIBITS A Form of Note B Form of Assignment and Acceptance C Form of Borrower Deposit Account Control Agreement D Form of Security Agreement E Form of Subsidiary Deposit Account Control Agreement F Form of Stock Pledge Agreement G Form of Closing Certificate H Form of Opinion TERM LOAN AGREEMENT, dated as of October 21, 2003, among INFOCROSSING, INC., a Delaware corporation (the "Borrower"), the several banks and other financial institutions from time to time parties to this Agreement (the "Lenders") and Infocrossing Agent, Inc., as agent for the Lenders hereunder. W I T N E S S E T H : - - - - - - - - - - WHEREAS, the Borrower has issued Series A Cumulative Convertible Participating Preferred Stock, par value $.01 per share (the "Existing Preferred Stock") and warrants to purchase the Borrower's Common Stock at a purchase price of $.01 per share (the "Existing Warrants") to Sandler Capital Partners V, L.P., Sandler Capital Partners V FTE, L.P., Sandler Technology Partners Subsidiary, LLC, Sandler Co-Investment Partners, L.P., Sandler Capital Partners V Germany, L.P., Price Family Limited Partners and MidOcean Capital Investors, L.P. (collectively, the "Investors"); and WHEREAS, on the date hereof, pursuant to the Exchange Agreement (defined below), the Borrower will enter into a recapitalization transaction (the "Recapitalization") in which the Investors will exchange all of their outstanding Existing Preferred Stock and Existing Warrants of the Borrower for (i) $55,000,000 in cash and (ii) loans outstanding under this Agreement in the aggregate principal amount of $25,000,000 represented by promissory notes of the Borrower issued under this Agreement. The parties hereto hereby agree as follows: SECTION 1. DEFINITIONS 1.1 Defined Terms. As used in this Agreement, the following terms shall have the following meanings: "Affiliate": with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. 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. "Agent": Infocrossing Agent, Inc., as the agent for the Lenders under this Agreement and the other Loan Documents. "Agreement": this Term Loan Agreement, as amended, supplemented or otherwise modified from time to time. "Applicable Law": as to any Person (a) any United States federal, state, local or foreign law, statute, rule, regulation, order, writ, injunction, judgment, decree or permit of any Governmental Authority and (b) any rule or listing requirement of any applicable national stock exchange or listing requirement of any national stock exchange or SEC recognized trading market, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Assignee": as defined in subsection 9.6(c). "Assignment and Acceptance" means an assignment and acceptance entered into by a Lender and an Assignee (with the consent of any party whose consent is required by Section 9.6), and accepted by the Agent, in the form of Exhibit B. "Borrower Deposit Account Control Agreements": the Deposit Account Control Agreements to be executed and delivered by the Borrower, substantially in the form of Exhibit C or in a form acceptable to the Agent, as the same may be amended, supplemented or otherwise modified from time to time. "Borrower Property": as defined in subsection 3.16. "Borrower Security Documents": the collective reference to the Borrower Deposit Account Control Agreements, the Security Agreement and the Stock Pledge Agreement. "Business Day": a day other than a Saturday, Sunday or other day on which commercial banks in New York City are authorized or required by law to close. "Camden Debentures": the unsecured Debentures issued by the Borrower on February 1, 2002 to Cahill Warnock Strategic Partners Fund, L.P., Strategic Associates, L.P., Camden Partners Strategic Fund II-A, L.P. and Camden Partners Strategic Fund II-B, L.P., as purchasers, in the aggregate initial principal amount of $10,000,000 pursuant to a securities purchase agreement between the Borrower and such purchasers. "Capital Expenditures": for any period, with respect to any Person, the aggregate of all expenditures by such Person for the acquisition or leasing (pursuant to a capital lease) of fixed or capital assets or additions to equipment (including replacements, capitalized repairs and improvements during such period) which are or should be capitalized under GAAP on a balance sheet of such Person; provided that, Capital Expenditures shall not include investments that constitute a Permitted Acquisition pursuant to subsection 6.9(h). "Capital Stock": (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 and any and all warrants or options to purchase any of the foregoing. "Cash Equivalents": (a) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed or insured by the United States Government or any agency thereof, (b) certificates of deposit and eurodollar time deposits with maturities of one year or less from the date of acquisition and overnight bank deposits of any Lender or of any commercial bank having capital and surplus in excess of $500,000,000, (c) repurchase obligations of any Lender or of any commercial bank satisfying the requirements of clause (b) of this definition, having a term of not more than 30 days with respect to securities issued or fully guaranteed or insured by the United States Government, (d) commercial paper of a domestic issuer rated at least A-2 by Standard and Poor's Rating Group ("S&P") or P-2 by Moody's Investors Service, Inc. ("Moody's"), (e) securities with maturities of one year or less from the date of acquisition issued or fully guaranteed by any state, commonwealth or territory of the United States, by any political subdivision or taxing authority of any such state, commonwealth or territory or by any foreign government, the securities of which state, commonwealth, territory, political subdivision, taxing authority or foreign government (as the case may be) are rated at least A by S&P or A by Moody's, (f) securities with maturities of one year or less from the date of acquisition backed by standby letters of credit issued by any Lender or any commercial bank satisfying the requirements of clause (b) of this definition or (g) shares of money market mutual or similar funds which invest exclusively in assets satisfying the requirements of clauses (a) through (f) of this definition. "Change of Control": means the occurrence of any of the following events, whether in a single transaction or a series of related transactions, and any other similar events: (a) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total Voting Capital Stock of the Borrower; or (b) the Borrower consolidates with, or merges with or into, another Person or Persons or sells, assigns, conveys, transfers, leases or otherwise disposes of all or substantially all of its assets to any Person or Persons, or any Person or Persons consolidate with, or merge with or into the Borrower, in any such event pursuant to a transaction in which (i) the holders of the outstanding Voting Capital Stock of the Borrower immediately prior to such transaction hold less than 50% of the outstanding Voting Capital Stock of the surviving or transferee company or its direct or indirect parent company immediately after the transaction or (ii) immediately after such transaction any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all securities that such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total Voting Capital Stock of the surviving or transferee company or its direct or indirect parent company immediately after the transaction; or (c) during any consecutive two-year period, individuals who at the beginning of such period constituted the Board of Directors of the Borrower (together with any new directors whose election by the Board of Directors of the Borrower or whose nomination for election by the stockholders of the Borrower was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of the Borrower then in office provided, however, that the change in individuals constituting the Board of Directors in connection with the closing of the transactions contemplated by the Exchange Agreement shall be deemed not to result in a Change of Control pursuant to this clause (c); or (d) any transaction subject to Rule 13e-3 under the Exchange Act if following such Rule 13e-3 transaction such Person owns more than 50% of the total Voting Capital Stock of the Borrower. "Claim": for purposes of the definition of "Environmental Claims" contained in subsection 3.16, as defined herein. "Closing Date": the date on which the conditions precedent set forth in Section 4 shall be satisfied. "Code": the Internal Revenue Code of 1986, as amended from time to time. "Collateral": all assets of the Loan Parties, now owned or hereinafter acquired, upon which a Lien is purported to be created by any Security Document. "Commitment": with respect to each Lender, the commitment of such Lender with respect to the Loans hereunder on the Closing Date, expressed as an amount representing the maximum principal amount of the Loans to be held by such Lender hereunder on the Closing Date after giving effect to the Recapitalization. The amount of each Lender's Commitment is set forth on Schedule 2.1. The aggregate amount of the Lenders' Commitments is $25,000,000. "Commonly Controlled Entity": an entity, whether or not incorporated, which is under common control with the Borrower within the meaning of Section 4001 of ERISA or is part of a group which includes the Borrower and which is treated as a single employer under Section 414(b) or (c) of the Code. "Common Stock": the common stock, par value $.01 per share, of the Borrower. "Consolidated Current Assets": of any Person at any date, all amounts (other than cash and Cash Equivalents) that would, in conformity with GAAP, be set forth opposite the caption "total current assets" (or any like caption) on a consolidated balance sheet of such Person and its Subsidiaries at such date. "Consolidated Current Liabilities": of any Person at any date, all amounts that would, in conformity with GAAP, be set forth opposite the caption "total current liabilities" (or any like caption) on a consolidated balance sheet of such Person and its Subsidiaries at such date, but excluding, with respect to the Borrower, (a) the current portion of any Funded Debt of the Borrower and its Subsidiaries and (b), without duplication, all Indebtedness consisting of revolving credit loans to the extent otherwise included therein. "Consolidated EBITDA": for any period, Consolidated Net Income of the Borrower and its Subsidiaries for such period plus, without duplication and to the extent deducted in determining such Consolidated Net Income for such period, the sum of (a) consolidated income tax expense, (b) consolidated interest expense, amortization or writeoff of debt discount and debt issuance costs and commissions, discounts and other fees and charges associated with Indebtedness, (c) depreciation and amortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) and organization costs, (e) any extraordinary non-cash charges and (f) any other non-cash charges, and minus, to the extent included in determining such Consolidated Net Income for such period, the sum of (a) any extraordinary non-cash gains and (b) any other non-cash items, all as determined on a consolidated basis in accordance with GAAP. "Consolidated Fixed Charges": with respect to the Borrower and its Subsidiaries on a consolidated basis for any period, the aggregate of (i) regularly scheduled principal payments of all Funded Debt made or to be made by the Borrower and its Subsidiaries on a consolidated basis during such period and discount or premium relating to such Funded Debt for such period, whether expensed or capitalized, (ii) Consolidated Interest Expense during such period, both expensed and capitalized, and (iii) in respect of leases of real and personal property (other than finance leases), the aggregate amount of rental obligations or other commitments thereunder to make any direct or indirect payment, whether as rent or otherwise, for fixed or minimum rentals or percentage rentals or contingent rentals for such period, in each case determined on a consolidated basis in accordance with GAAP. "Consolidated Interest Expense": of any Person for any period, total cash interest expense (including that attributable to Financing Leases) of the Borrower and its Subsidiaries for such period with respect to all outstanding Indebtedness of the Borrower and its Subsidiaries (including, without limitation, all commissions, discounts and other fees and charges owed by such Person with respect to letters of credit and bankers' acceptance financing and net costs of such Person under hedge agreements in respect of interest rates to the extent such net costs are allocable to such period in accordance with GAAP). "Consolidated Net Income": for any period, the net income or loss of the Borrower and the Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded (a) the income of any Person (other than a Loan Party) in which any other Person (other than the Borrower or any Subsidiary or any director holding qualifying shares in compliance with applicable law) owns an equity interest, except to the extent of the amount of dividends or other cash distributions actually paid to the Borrower or any of the Subsidiaries during such period, and (b) the income or loss of any Person accrued prior to the date it becomes Subsidiary or is merged into or consolidated with the Borrower or any Subsidiary or the date that such Person's assets are acquired by the Borrower or any Subsidiary. "Consolidated Total Debt": as of any date, the sum of (a) the aggregate principal amount of Indebtedness of the Borrower and the Subsidiaries outstanding as of such date, in the amount that would be reflected on a balance sheet prepared as of such date on a consolidated basis in accordance with GAAP, plus (b) the aggregate principal amount of Indebtedness of the Borrower and the Subsidiaries outstanding as of such date that is not required to be reflected on a balance sheet in accordance with GAAP, determined on a consolidated basis, provided, that for purposes of clause (b) above, the term "Indebtedness" shall not include contingent obligations of the Borrower or any Subsidiary as an account party in respect of any letter of credit or letter or guaranty unless such letter of credit or letter of guaranty supports an obligation that constitutes Indebtedness. "Consolidated Working Capital": at any date, the difference of (a) Consolidated Current Assets of the Borrower and its Subsidiaries on such date less (b) Consolidated Current Liabilities of the Borrower and its Subsidiaries on such date. "Contractual Obligation": as to any Person, any provision of any security issued by such Person or of any agreement, instrument or other undertaking to which such Person is a party or by which it or any of its property is bound. "Default": any of the events specified in Section 7, whether or not any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Deposit Account Control Agreements": the collective reference to the Borrower Deposit Account Control Agreements and the Subsidiaries Deposit Account Control Agreements. "Dollars" and "$": dollars in lawful currency of the United States of America. "Domestic Subsidiary": any Subsidiary of the Borrower organized under the laws of any jurisdiction within the United States. "Environmental Claims": as defined in subsection 3.16. "Environmental Laws": as defined in subsection 3.16. "Equally and Ratably": means, in reference to sharing of any Liens on Collateral or proceeds of the sale, collection and realization thereof pursuant to the exercise of the rights and remedies of the Agent and the Lenders under the Loan Documents, as among the holders of Loan Obligations and Parity Obligations, shall be allocated and distributed to the holders of the Loan Obligations and the Parity Obligations ratably in proportion to their respective Obligations outstanding as of the date of such allocation or distribution. For this purpose: (1) Unfunded commitments to extend credit shall not be counted as outstanding Obligations; and (2) Obligations of the Borrower or any of its Subsidiaries in respect of outstanding letters of credit, bank guarantees, bankers' acceptances or other similar instruments which are part of the Parity Obligations shall be counted as outstanding Obligations (whether or not contingent) provided, that, (a) the sum of such Obligations under this clause (2), together with the principal amount of all other Obligations part of the Parity Obligations, shall not exceed the aggregate principal amount of the Parity Obligations secured pursuant to subsection 6.3(l), and (b)(i) if such instrument is collateralized by cash or Cash Equivalents, then such instrument shall not be counted as outstanding Obligations and (ii) if any such instrument thereafter expires without being funded, an equitable adjustment shall be made by the holders of the Parity Obligations and the holders of the Parity Obligations shall pay over to the Lenders the amount they would have received if such instrument had never been outstanding so that the amount applied with respect to such instrument is shared Equally and Ratably among the holders of the Parity Obligations and the Lenders. "ERISA": the Employee Retirement Income Security Act of 1974, as amended, and all regulations promulgated thereunder, as in effect from time to time. "Event of Default": any of the events specified in Section 7, provided that any requirement for the giving of notice, the lapse of time, or both, or any other condition, has been satisfied. "Excess Cash Flow": for any fiscal year of the Borrower, the difference, if any, of (a) the sum, without duplication, of (i) Consolidated Net Income for such fiscal year, (ii) the amount of all non-cash charges (including depreciation and amortization) deducted in arriving at such Consolidated Net Income, (iii) the amount of the decrease, if any, in Consolidated Working Capital for such fiscal year (without giving effect to any reduction in the realization reserve of deferred income tax benefits), (iv) the aggregate net amount of non-cash loss on the disposition of property by the Borrower and its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent deducted in arriving at such Consolidated Net Income and (v) the net increase during such fiscal year (if any) in long-term deferred tax accounts of the Borrower minus (b) the sum, without duplication, of (i) the amount of all non-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amount actually paid by the Borrower and its Subsidiaries in cash during such fiscal year on account of Capital Expenditures (except to the extent attributable to the incurrence of capital lease obligations or other Indebtedness in connection with such expenditures and except to the extent such expenditures are financed with the proceeds of any Reinvestment Deferred Amount), (iii) the aggregate amount of all optional prepayments of the Funded Debt during such fiscal year and mandatory prepayments made pursuant to subsection 2.3(b) with the proceeds of Prepayment Events described in clause (C) of the definition thereof during such year to the extent such proceeds are included in the calculation of Consolidated Net Income for such fiscal year, (iv) the aggregate amount of all regularly scheduled principal payments of Funded Debt of the Borrower and its Subsidiaries made during such fiscal year, (v) the amount of the increase, if any, in Consolidated Working Capital for such fiscal year (without giving effect to any increase in the realization reserve of deferred income tax benefits), (vi) the aggregate net amount of non-cash gain on the disposition of property by the Borrower and its Subsidiaries during such fiscal year (other than sales of inventory in the ordinary course of business), to the extent included in arriving at such Consolidated Net Income, and (vii) the net decrease during such fiscal year (if any) in long-term deferred tax accounts of the Borrower. "Exchange Act": Securities Exchange Act of 1934, as amended. "Exchange Agreement": the Exchange Agreement entered into between the Borrower and the Investors relating to the Recapitalization. "Existing Preferred Stock": as defined in the recitals. "Existing Warrants": as defined in the recitals. "Financing Lease": any lease of property, real or personal, the obligations of the lessee in respect of which are required in accordance with GAAP to be capitalized on a balance sheet of the lessee. "Fixed Early Prepayment Amount": an amount equal to 101% of the outstanding aggregate principal amount of the Loans to be prepaid. "Foreign Subsidiary": any Subsidiary of the Borrower organized under the laws of any jurisdiction outside the United States of America. "Funded Debt": means, with respect to the Borrower and its Subsidiaries as of the date of determination thereof, all Indebtedness of the Borrower and its Subsidiaries on a consolidated basis outstanding at such time (including the current portion thereof and amounts outstanding in the final year of any Funded Debt) which matures more than one year after the date of calculation, and any such Indebtedness maturing within one year from such date of calculation which is renewable or extendable at the option of the obligor to a date more than one year from such date and including in any event the Loans. "GAAP": generally accepted accounting principles in the United States of America, consistently applied, which are in effect on the date of this Agreement; provided, that, if any changes in GAAP are hereafter required or permitted by the rules, regulations, pronouncements and opinions of the Financial Accounting Standards Board or the American Institute of Certified Public Accountants (or successors thereto or agencies with similar functions) and are adopted by the Borrower with the agreement of its independent certified public accountants and such changes result in a change in the method of calculation of any of the covenants, standards or terms found in this Agreement, the Borrower may request that the parties hereto enter into negotiations in order to amend such provisions so as to equitably reflect such changes; provided, however, that no change in GAAP that would affect the method of calculation of any of the covenants, standards or terms shall be given effect in such calculations until such provisions are amended, in a manner satisfactory to the Required Lenders and the Borrower, to so reflect such change in GAAP. "Governmental Authority": (i) any foreign, Federal, state or local court or governmental or regulatory agency or authority, (ii) any arbitration board, tribunal or mediator and (iii) any national stock exchange or SEC recognized trading market on which securities issued by the Borrower or any of the Subsidiaries are listed or quoted. "Guarantee Obligation": as to any Person (the "guaranteeing person"), any obligation of (a) the guaranteeing person or (b) another Person (including, without limitation, any bank under any letter of credit) to induce the creation of which the guaranteeing person has issued a reimbursement, counterindemnity or similar obligation, in either case guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends or other obligations (the "primary obligations") of any other third Person (the "primary obligor") in any manner, whether directly or indirectly, including, without limitation, any obligation of the guaranteeing person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect security therefore, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. The amount of any Guarantee Obligation of any guaranteeing person shall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of the primary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amount for which such guaranteeing person may be liable pursuant to the terms of the instrument embodying such Guarantee Obligation, unless such primary obligation and the maximum amount for which such guaranteeing person may be liable are not stated or determinable, in which case the amount of such Guarantee Obligation shall be such guaranteeing person's maximum reasonably anticipated liability in respect thereof as determined by the Borrower in good faith. "Guarantor": any Person party to a Security Agreement other than the Borrower and the Agent. "Hazardous Materials": as defined in subsection 3.16. "Indebtedness": with respect to the Borrower or any specified Person, all obligations, contingent or otherwise, which in accordance with GAAP are required to be classified upon the balance sheet of the Borrower (or other specified Person) as liabilities, but in any event including (without duplication): (a) all indebtedness of such Person for borrowed money, (b) for the deferred purchase price of assets, securities, property or services, including related non-competition, consulting and stock repurchase obligations (other than current trade liabilities incurred in the ordinary course of business), (c) any other indebtedness of such Person which is evidenced by a note, bond, debenture or similar instrument, (d) all obligations of such Person upon which interest charges are customarily paid, (e) all obligations of such Person under conditional sale or other title retention agreements relating to property acquired by such Person, (f) all obligations of such Person under Financing Leases or synthetic leases or other similar off-balance sheet leases, (g) all obligations of such Person in respect of bankers' acceptances, letters of credit, hedging arrangements or similar facilities, (h) all liabilities secured by any Lien on any property owned or acquired by such Person even though such Person has not assumed or otherwise become liable for the payment thereof, (i) obligations that are immediately and directly due and payable out of the proceeds of or production from property, (j) mandatory redemption or cash dividend rights on Capital Stock (or other equity securities), or (k) all Guarantee Obligations in respect of the Indebtedness of others. "Insolvency": with respect to any Multiemployer Plan, the condition that such Plan is insolvent within the meaning of Section 4245 of ERISA. "Insolvent": pertaining to a condition of Insolvency. "Intellectual Property": domestic and foreign patents, patent applications, patent licenses, software licenses, know-how licenses, trade names, trademarks, copyrights, unpatented inventions, service marks, trademark registrations and applications, service mark registrations and applications, copyright registrations and applications, uniform resource locators, Internet domain names, trade secrets and other confidential and proprietary information. "Interest Payment Date": the last day of each March, June, September and December of each year. "Interest Rate": 9% per annum. "Investors": as defined in the recitals. "Leverage Ratio": on any date, with respect to the Borrower and its Subsidiaries on a consolidated basis, the ratio of (a) Consolidated Total Debt as of such date to (b) Consolidated EBITDA for the period of four consecutive fiscal quarters of the Borrower ended on such date (or, if such date is not the last day of a fiscal quarter, ended on the last day of the fiscal quarter of the Borrower most recently ended prior to such date). "Lien": any mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or other), charge or other security interest or any preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, any conditional sale or other title retention agreement and any Financing Lease having substantially the same economic effect as any of the foregoing). "Loan": any term loan held by any Lender pursuant to this Agreement and such term loans being referred to collectively as the "Loans". "Loan Documents": this Agreement, the Notes, the Syndication Letter, the Security Documents and all other agreements, instruments and certificates contemplated hereby and thereby, including documents contemplated under subsection 8.10. "Loan Obligations": (a) the due and punctual payment by the Borrower of (i) the principal of, and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower to the Agent and the Lenders under the Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Borrower under or pursuant to the Loan Documents, and (c) the due and punctual payment and performance of all the covenants, agreements, obligations and liabilities of the Guarantors under or pursuant to the Loan Documents. "Loan Parties": the Borrower and each Subsidiary of the Borrower which is a party to a Loan Document. "Material Adverse Effect": a material adverse effect on (a) the condition (financial or otherwise), business, properties, assets, liabilities, operations or results of operations of the Borrower and the Subsidiaries, taken as a whole or (b) the validity or enforceability of this or any of the other Loan Documents or the rights or remedies of the Agent or the Lenders hereunder or thereunder. "Maturity Date": October 21, 2008. "Multiemployer Plan": a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Proceeds": means, with respect to (a) any sale, transfer or other disposition of any property or asset of the Borrower or any Subsidiary, (b) any casualty or condemnation event or (c) any other event set forth in the definition of Prepayment Event, (i) the cash proceeds received in respect of such event, including (x) in the case of a casualty, insurance proceeds, and (y) in the case of a condemnation or similar event, condemnation awards and similar payments, net of (ii) the sum of (x) all reasonable fees and out-of-pocket expenses paid by the Borrower and the Subsidiaries to third parties (other than Affiliates) in connection with such event and (y) the amount of taxes paid or reasonably estimated to be payable as a result thereof (after taking into account any available tax credits or deductions and any tax sharing arrangements). "Non-Excluded Taxes": as defined in subsection 2.8(a). "Note": any of the promissory notes executed pursuant to subsection 2.2(e). "Obligations": means the principal, interest, premium, fees, indemnifications, reimbursements, expenses, damages and other liabilities payable under the documentation governing any Indebtedness. "Parity Obligations": all Obligations in respect of Indebtedness permitted to be incurred pursuant to subsection 6.2(i) but only to the extent that such Indebtedness is permitted to be and is actually secured by a pari passu Lien pursuant to subsection 6.3(l). "Participant": as defined in subsection 9.6(b). "PBGC": the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA. "Permitted Acquisition": the acquisition of all or any portion of the assets or stock or other equity interests of any Person engaged in a business that would be permitted under subsection 6.15, including pursuant to a merger or consolidation; provided that all such acquisitions are approved by the Board of Directors and stockholders, if required, of the Borrower and the acquiree and are not otherwise hostile and the Borrower is the surviving entity; and provided further, that (i) on the closing date of such acquisition, both before and immediately after giving effect to such proposed acquisition, no Default or Event of Default has occurred or will occur or be continuing, (ii) after giving effect to any such acquisition there shall be no negative effect on Consolidated EBITDA on a pro forma basis, and the Borrower would remain in compliance with the covenants set forth in subsection 6.1 on a pro forma basis (determined on a pro forma basis (A) as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available (computed on the basis of (X) balance sheet amounts as of the most recently completed fiscal quarter, and (Y) income statement amounts for the most recently completed period of four consecutive fiscal quarters) and (B) on the basis of twelve month projections updated to give effect to such acquisition) and the Borrower delivers a certificate of a Responsible Officer certifying compliance with this clause (ii) and (iii) any Person or business acquired becomes a wholly-owned Subsidiary of the Borrower or a Guarantor following such acquisition and becomes a Guarantor, and the Borrower shall, and shall cause any applicable Subsidiary to, execute any documents and take all actions that may be required under applicable law or that the Agent may reasonably request, in order to comply with subsection 5.10 herein, all in form and substance satisfactory to the Agent. "Person": an individual, partnership, corporation, business trust, joint stock company, trust, unincorporated association, joint venture, Governmental Authority or other entity of whatever nature. "Plan": at a particular time, any employee benefit plan which is covered by ERISA and in respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Prepayment Event": means (A) any sale, transfer or other disposition of any property or asset of the Borrower or any Subsidiary (including pursuant to a sale and leaseback transaction) (other than sales, transfers or other dispositions permitted under subsections 6.5(c), 6.5(d) and 6.5(e) hereof) or (B) any casualty or other insured damage to, or any taking under power of eminent domain or by condemnation or similar proceeding of, any property or asset of the Borrower or any Subsidiary after the Closing Date or (C) the receipt by the Borrower or any Subsidiary of any unscheduled payment in excess of $1,000,000 during any fiscal year of the Borrower under any contract with any third Person including, without limitation, an amount on account of early termination of such contract; provided that such events shall not constitute "Prepayment Events" to the extent that (1) the aggregate Net Proceeds from all such casualty events are less than $250,000 during any fiscal year of the Borrower or (2) the aggregate Net Proceeds from the sale, transfer or other disposition of assets of the Borrower or any Subsidiary are less than $250,000 during any fiscal year of the Borrower. "Private Placement": as defined in subsection 4(f). "Pro Rata Share: as to any Lender, at any time, the percentage which the aggregate principal amount of such Lender's Loans then outstanding constitutes of the aggregate principal amount of the total Loans then outstanding at such time. "Recapitalization": as defined in the recitals. "Register": as defined in subsection 9.6(d). "Regulation U": Regulation U of the Board of Governors of the Federal Reserve System as in effect from time to time. "Reinvestment Amount": with respect to any Reinvestment Event, the amount expended prior to the relevant Reinvestment Prepayment Date to acquire real property, equipment or other tangible assets used in or useful in the Borrower's business. "Reinvestment Deferred Amount": with respect to any Reinvestment Event, the aggregate Net Proceeds received by the Borrower or any of its Subsidiaries in connection therewith that are not applied to prepay the Loans pursuant to subsection 2.3(b) as a result of the delivery of a Reinvestment Notice. "Reinvestment Event": any Prepayment Event in respect of which the Borrower has delivered a Reinvestment Notice. "Reinvestment Notice": with respect to Net Proceeds from a Prepayment Event specified in paragraphs (A) or (B) of the definition of Prepayment Event, a written notice executed by a Responsible Officer stating (i) that no Default or Event of Default has occurred and is continuing, (ii) with respect to Net Proceeds from a Prepayment Event specified in paragraph (A) of the definition of Prepayment Event, the aggregate amount of Reinvestment Amounts expended by the Borrower with respect to Prepayment Events specified in paragraph (A) of the definition of Prepayment Event (directly or indirectly through a Subsidiary) during the term of this Agreement does not and will not exceed $5,000,000 (including the specified portion of the Net Proceeds the subject of such Reinvestment Notice) and specifying such aggregate amount of such Reinvestment Amounts to date and (iii) that the Borrower (directly or indirectly through a Subsidiary) intends and expects to use all or a specified portion of the Net Proceeds of any Prepayment Event to acquire real property, equipment or other tangible assets used in or useful in its business. "Reinvestment Prepayment Amount": with respect to any Reinvestment Event, the Reinvestment Deferred Amount relating thereto less the Reinvestment Amount relating thereto. "Reinvestment Prepayment Date": with respect to any Reinvestment Event, the earlier of (a) the date occurring 180 days after such Reinvestment Event and (b) the date on which the Borrower shall have determined not to, or shall have otherwise ceased to, acquire real property, equipment or other tangible assets used in or useful in the Borrower's business with all or any portion of the relevant Reinvestment Deferred Amount. "Release": as defined in subsection 3.16. "Reorganization": with respect to any Multiemployer Plan, the condition that such plan is in reorganization within the meaning of Section 4241 of ERISA. "Reportable Event": any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under subsections 13, 14, 16, 18, 19 or 20 of PBGC Reg.ss.2615. "Required Lenders": at any time, Lenders whose Pro Rata Shares aggregate at least 51%. "Requirement of Law": as to any Person, the Certificate of Incorporation and By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or regulation or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject. "Responsible Officer": the chief executive officer and the president of the Borrower or, with respect to financial matters, the chief financial officer of the Borrower. "Restricted Payment": means any dividend or other distribution (whether in cash, securities or other property) with respect to any Capital Stock in the Borrower or any Subsidiary, or any payment (whether in cash, securities or other property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Capital Stock or any option, warrant or other right to acquire any such Capital Stock. "SEC": United States Securities and Exchange Commission. "SEC Filings": all reports, registration statements and other filings filed by the Borrower with the SEC (and all notes, exhibits and schedules thereto and all documents incorporated by reference therein). "Securities Act": the Securities Act of 1933, as amended. "Security Agreement": the Guarantee and Security Agreement to be executed and delivered by the Borrower and the Subsidiaries, substantially in the form of Exhibit D, as the same may be amended, supplemented or otherwise modified from time to time. "Security Documents": the collective reference to the Deposit Account Control Agreements, the Security Agreement, the Stock Pledge Agreement and all other security documents hereafter delivered to the Agent granting a Lien on any asset or assets of any Person to secure the obligations and liabilities of the Borrower hereunder and under any of the other Loan Documents or to secure any guarantee of any such obligations and liabilities. "Single Employer Plan": any Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Stock Pledge Agreement": the Stock Pledge Agreement to be executed and delivered by the Borrower and each relevant Subsidiary, substantially in the form of Exhibit F, as the same may be amended, supplemented or otherwise modified from time to time. "Subsidiaries Deposit Account Control Agreements": the Deposit Account Control Agreements to be executed and delivered by each Subsidiary, substantially in the form of Exhibit E or in a form acceptable to the Agent, as the same may be amended, supplemented or otherwise modified from time to time. "Subsidiaries Security Documents": the collective reference to the Subsidiaries Deposit Account Control Agreements, the Security Agreement and the Stock Pledge Agreement. "Subsidiary": as to any Person, a corporation, partnership or other entity of which shares of stock or other ownership interests having ordinary voting power (other than stock or such other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other managers of such corporation, partnership or other entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person. Unless otherwise qualified, all references to a "Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or Subsidiaries of the Borrower. "Syndication Letter": the Syndication Letter, to be executed and delivered by the Borrower, the Agent and the Investors, as the same may be amended, supplemented or otherwise modified from time to time. "Transferee": as defined in subsection 9.6(f). "Voting Capital Stock": means with respect to any Person, securities of any class or classes of Capital Stock in such Person ordinarily entitling the holders thereof (whether at all times or at the times that such class of Capital Stock has voting power by reason of the happening of any contingency) to vote in the election of members of the board of directors or comparable governing body of such Person. 1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all terms defined in this Agreement shall have the defined meanings when used in any Notes or any certificate or other document made or delivered pursuant hereto. (b) As used herein and in any Notes, and any certificate or other document made or delivered pursuant hereto, accounting terms relating to the Borrower and its Subsidiaries not defined in subsection 1.1 and accounting terms partly defined in subsection 1.1, to the extent not defined, shall have the respective meanings given to them under GAAP. (c) The words "hereof", "herein" and "hereunder" and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement, and Section, subsection, Schedule and Exhibit references are to this Agreement unless otherwise specified. (d) The meanings given to terms defined herein shall be equally applicable to both the singular and plural forms of such terms. SECTION 2. GENERAL TERMS 2.1 Loans. (a) Immediately upon the effectiveness of this Agreement and on the Closing Date, pursuant to the Exchange Agreement, the Borrower agrees to exchange all of the outstanding Existing Preferred Stock and the outstanding Existing Warrants of the Borrower owned by the Investors for (i) $55,000,000 in cash and (ii) Loans outstanding under this Agreement in the aggregate principal amount of $25,000,000 represented by Notes issued by the Borrower in favor of the Investors in their capacity as initial Lenders, and deliver the aforementioned to the Investors. (b) Subject to the terms and conditions hereof, each Lender severally agrees to make a Loan to the Borrower on the Closing Date in an amount not to exceed the amount of the Commitment of such Lender then in effect by exchanging its Existing Preferred Stock and Existing Warrants as set forth in the Exchange Agreement. The Borrower agrees to issue Notes to the Lenders representing the Loans outstanding under this Agreement. Amounts paid or prepaid in respect of the Loans may not be reborrowed. The Lenders are under no obligation to make any additional loans to the Borrower hereunder after the Closing Date. 2.2 Repayment of Loans; Evidence of Debt. (a) (i) In the event that any of the Investors sells, transfers or assigns any of its Loans to an unaffiliated third Person who is not another Investor or an Affiliate thereof pursuant to subsection 9.6, the Borrower hereby unconditionally promises to pay to the Agent for the account of each Lender the percentage of the unpaid principal amount of the Loans sold, transferred or assigned by such Investor (or any additional assignee of such Loans) specified on Schedule 2.2 on each date set forth on Schedule 2.2, commencing December 31, 2003. (ii) To the extent not otherwise paid pursuant to subsection 2.2(a)(i), the Borrower hereby unconditionally promises to pay to the Agent for the account of each Lender the then unpaid principal amount of the Loan on the Maturity Date (or the then unpaid principal amount of such Loan, on the date that the Loans become due and payable pursuant to Section 7). (iii) In any event, to the extent not previously paid, all Loans shall be due and payable on the Maturity Date. (iv) The Borrower hereby further agrees to pay interest on the unpaid principal amount of the Loans from time to time outstanding from the date hereof until payment in full thereof at the rates per annum, and on the dates, set forth in subsection 2.4. (b) Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing indebtedness of the Borrower to such Lender, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. (c) The Agent shall maintain the Register pursuant to subsection 9.6(d), and a subaccount therein for each Lender, in which shall be recorded (i) the amount of Loan made hereunder, (ii) any assignments of Loans pursuant to subsection 9.6, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder and (iv) both the amount of any sum received by the Agent hereunder from the Borrower and each Lender's share thereof. (d) The entries made in the Register and the accounts of each Lender maintained pursuant to subsection 2.2(b) shall, to the extent permitted by applicable law, be prima facie evidence of the existence and amounts of the obligations of the Borrower therein recorded; provided, however, that the failure of any Lender or the Agent to maintain the Register or any such account, or any error therein, shall not in any manner affect the obligation of the Borrower to repay (with applicable interest and premium, if any) the Loans held by such Lender in accordance with the terms of this Agreement. (e) The Borrower agrees that, upon the request to the Agent by any Lender, the Borrower will execute and deliver to such Lender a promissory note of the Borrower evidencing the Loan of such Lender, substantially in the form of Exhibit A with appropriate insertions as to date and principal amount (a "Note"). 2.3 Prepayments. (a) The Borrower shall have the right at any time and from time to time to prepay the Loans in whole or in part subject to the requirements of this Section without penalty or premium; provided that if the Borrower has entered into an agreement for a Change of Control or the Borrower or any other Person otherwise has publicly announced its intention to consummate a transaction that would institute a Change of Control, the Borrower may only prepay the Loans at a prepayment amount equal to the Fixed Early Prepayment Amount, plus accrued and unpaid interest to the date of prepayment. (b) In the event and on each occasion that any Net Proceeds are received by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment Event, then, unless a Reinvestment Notice shall be delivered with respect to Net Proceeds from a Prepayment Event specified in paragraphs (A) or (B) of the definition of Prepayment Event, the Borrower shall, within three (3) Business Days after such Net Proceeds are received, prepay Loans in an aggregate amount equal to such Net Proceeds; provided, that, on each Reinvestment Prepayment Date, the Loans shall be repaid in an amount equal to the Reinvestment Prepayment Amount with respect to the Reinvestment Event. (c) Following the end of each fiscal year of the Borrower, commencing with the fiscal year that begins on January 1, 2005, for which there is any Excess Cash Flow, the Borrower shall prepay Loans in an aggregate amount equal to 75% of Excess Cash Flow for such fiscal year. Each prepayment pursuant to this paragraph shall be made on or before the date on which financial statements are delivered pursuant to subsection 5.1(a) with respect to the fiscal year for which Excess Cash Flow is being calculated (and in any event within 90 days after the end of such fiscal year). (d) In the event and on each occasion that the Borrower or any Subsidiary after the Closing Date receives cash proceeds from the sale of Capital Stock or other equity securities, or otherwise receives a cash capital contribution from any third Person, or raises any private or public capital in cash (other than cash proceeds received in connection with the exercise of options and warrants to acquire the common stock of the Borrower that are issued or outstanding on the date hereof or issued under a Plan or pursuant to the Syndication Letter, or pursuant to anti-dilution provisions in such options or warrants or applicable thereto), the Borrower shall, within three (3) Business Days after the receipt thereof, prepay Loans in an amount equal to 50% of the net amount received. (e) Upon the occurrence of a Change of Control, the Borrower shall, within three (3) Business Days after the occurrence thereof, prepay all of the Loans at a prepayment price equal to the Fixed Early Prepayment Amount, plus accrued and unpaid interest, if any, to the date of prepayment. (f) In the event of a prepayment hereunder, the Borrower shall give at least three (3) Business Days' irrevocable notice to the Agent and the Lenders, specifying the date, the reason for the prepayment and amount of prepayment. If any such notice is given, the amount specified in such notice shall be due and payable on the date specified therein, together with any amounts payable pursuant to subsection 2.9 and accrued interest to such date on the amount prepaid. Each prepayment of principal of the Loans pursuant to subsection 2.3(a) shall be applied pro rata against the remaining scheduled payments of principal under subsection 2.2. Partial prepayments of the Loans (other than pursuant to subsection 2.3(a)) shall be applied to the installments of principal thereof in the inverse order of their scheduled maturities. Amounts prepaid on account of the Loans may not be reborrowed. Partial prepayments under subsection 2.3(a) shall be in an aggregate principal amount of $250,000 or a whole multiple thereof. 2.4 Interest Rates and Payment Dates. (a) Each Loan shall bear interest at a rate per annum equal to the Interest Rate. (b) If all or a portion of (i) any principal of any Loan, (ii) any interest payable thereon or (iii) any other amount payable hereunder shall not be paid when due (whether at the stated maturity, by acceleration or otherwise), the principal of the Loans and any such overdue interest or other amount shall bear interest at a rate per annum equal to the Interest Rate plus 3%, in each case from the date of such non-payment until such overdue principal, interest or other amount is paid in full (as well after as before judgment). (c) Interest shall be payable in arrears on the last day of each March, June, September and December, commencing December 31, 2003 (each an "Interest Payment Date"), provided that interest accruing pursuant to paragraph (b) of this subsection shall be payable from time to time on demand. 2.5 Computation of Interest. (a) Interest shall be calculated on the basis of a 360-day year and payable for the actual number of days elapsed. (b) Each determination of an interest rate by the Agent pursuant to any provision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in the absence of manifest error. 2.6 Pro Rata Treatment and Payments. Each payment (including each prepayment) by the Borrower on account of principal of, interest and premium, if any, on the Loans shall be made pro rata according to the respective Pro Rata Share of the outstanding principal amount of the Loans then held by the Lenders. All payments (including prepayments) to be made by the Borrower hereunder, whether on account of principal, interest, fees or otherwise, shall be made without set off or counterclaim and shall be made prior to 12:00 Noon, New York City time, on the due date thereof to the Lenders (or, if the Agent so directs, directly to the account of the Agent at the office specified in subsection 9.2), for the account of the Lenders, at the offices of the Lenders notified from time to time to the Borrower by the Agent, in Dollars and in immediately available funds. The Agent shall distribute such payments to the Lenders promptly upon receipt in like funds as received. If any payment hereunder becomes due and payable on a day other than a Business Day, such payment shall be extended to the next succeeding Business Day, and, with respect to payments of principal, interest and premium, if any, thereon shall be payable at the then applicable rate during such extension. 2.7 Requirements of Law. (a) If the adoption of or any change in any Requirement of Law or in the interpretation or application thereof or compliance by any Lender with any request or directive (whether or not having the force of law) from any central bank or other Governmental Authority made subsequent to the date hereof: (i) shall subject any Lender to any tax of any kind whatsoever with respect to this Agreement, any Note or any Loan made by it, or change the basis of taxation of payments to such Lender in respect thereof (except for Non-Excluded Taxes and income taxes and franchise taxes); (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsory loan or similar requirement against assets held by, deposits or other liabilities in or for the account of, advances, loans or other extensions of credit by, or any other acquisition of funds by, any office of such Lender; or (iii) shall impose on such Lender any other condition; and the result of any of the foregoing is to increase the cost to such Lender, by an amount which such Lender deems to be material, of making, converting into, continuing or maintaining Loans or to reduce any amount receivable hereunder in respect thereof, then, in any such case, the Borrower shall promptly pay such Lender such additional amount or amounts as will compensate such Lender for such increased cost or reduced amount receivable. (b) If any Lender (other than an Investor) shall have determined that the adoption of or any change in any Requirement of Law regarding capital adequacy or in the interpretation or application thereof or compliance by such Lender or any corporation controlling such Lender with any request or directive regarding capital adequacy (whether or not having the force of law) from any Governmental Authority made subsequent to the date hereof shall have the effect of reducing the rate of return on such Lender's or such corporation's capital as a consequence of its obligations hereunder to a level below that which such Lender or such corporation could have achieved but for such adoption, change or compliance (taking into consideration such Lender's or such corporation's policies with respect to capital adequacy) by an amount deemed by such Lender to be material, then from time to time, the Borrower shall promptly pay to such Lender such additional amount or amounts as will compensate such Lender for such reduction. (c) If any Lender becomes entitled to claim any additional amounts pursuant to this subsection, it shall promptly notify the Borrower (with a copy to the Agent) of the event by reason of which it has become so entitled. A certificate as to any additional amounts payable pursuant to this subsection submitted by such Lender to the Borrower (with a copy to the Agent) shall be conclusive in the absence of manifest error. The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.8 Taxes. (a) (i) All payments made by the Borrower under this Agreement and any Notes shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise or similar taxes (imposed in lieu of net income taxes), including branch profits tax and minimum tax imposed on the Agent or any Lender as a result of a present or former connection between the Agent or such Lender and the jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing authority thereof or therein (other than any such connection arising solely from the Agent or such Lender having executed, delivered or performed its obligations or received a payment under, or enforced, this Agreement or any Note). If any such non-excluded taxes, levies, imposts, duties, charges, fees deductions or withholdings ("Non-Excluded Taxes") or Other Taxes are required to be withheld from any amounts payable to the Agent or any Lender hereunder or under any Note (A) the amounts so payable to the Agent or such Lender shall be increased as necessary so that after making all required deductions of Non-Excluded Taxes or Other Taxes (including deductions of Non-Excluded Taxes or Other Taxes applicable to additional sums payable under this subsection) the Agent or such Lender (as the case may be) receives an amount equal to the sum it would have received had no such deductions been made, and (B) the Borrower shall pay the full amount withheld to the relevant Governmental Authority in accordance with applicable law, provided, however, that the Borrower shall not be required to increase any such amounts payable to any Lender that is not organized under the laws of the United States of America or a state thereof (x) if such Lender fails to comply with the requirements of paragraph (b) of this subsection or (y) to the extent of any Non-Excluded Taxes that are in effect and would apply to a payment under this Agreement or any Note made to such Lender as of the date such Lender becomes a party to this Agreement or any Note, or, in the case of any other Lender which changes its lending office with respect to the Loans or any Note to an office outside the U.S., any Non-Excluded Taxes that are in effect and would apply to a payment to such Lender as of the date of the change of the lending office. (ii) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law. "Other Taxes" shall mean any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement. (iii) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly as possible thereafter the Borrower shall send to the Agent for its own account or for the account of such Lender, as the case may be, a certified copy of an original official receipt received by the Borrower showing payment thereof, or, if the Borrower cannot, using reasonable efforts, obtain such receipts, other evidence of such payment by the Borrower reasonably satisfactory to the Agent or such Lender. If the Borrower fails to pay any Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit to the Agent the required receipts or other required documentary evidence, the Borrower shall indemnify the Agent and the Lenders for any incremental taxes, interest or penalties that may become payable by the Agent or any Lender as a result of any such failure. (iv) The agreements in this subsection shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. (b) Each Lender that is not incorporated under the laws of the United States of America or a state thereof shall: (i) deliver to the Borrower and the Agent two duly completed copies of United States Internal Revenue Service Form W-8BEN or Form W-8ECI (or successor applicable form) claiming that amounts received by the Lender under this Agreement are either exempt from United States federal withholding tax under an applicable tax treaty or are effectively connected income, as the case may be, on or before the date it becomes a party to this Agreement; (ii) deliver to the Borrower and the Agent two further copies of any such form or certification on or before the date that any such form or certification expires or becomes obsolete and after the occurrence of any event requiring a change in the most recent form previously delivered by it to the Borrower; and (iii) obtain such extensions of time for filing and complete such forms or certifications as may reasonably be requested by the Borrower or the Agent; unless in any such case an event (including, without limitation, any change in treaty, law or regulation) has occurred prior to the date on which any such delivery would otherwise be required which renders all such forms inapplicable or which would prevent such Lender from duly completing and delivering any such form with respect to it and such Lender so advises the Borrower and the Agent. Such Lender shall certify that it is entitled to receive payments under this Agreement without deduction or withholding of any United States federal income taxes. Each Person that shall become a Lender or a Participant pursuant to subsection 9.6 shall, upon the effectiveness of the related transfer, be required to provide all of the forms and statements required pursuant to this subsection, provided that in the case of a Participant such Participant shall furnish all such required forms and statements to the Lender from which the related participation shall have been purchased. (c) If the Borrower is required to pay additional amounts to or for the account of any Lender pursuant to this subsection 2.8 as a result of a change in law or treaty occurring after such Lender first became a party to this Agreement, and such Lender has a lending office in another jurisdiction, then such Lender will, at the request of the Borrower, change the jurisdiction of its applicable lending office if such change (i) will eliminate or reduce any such additional payment which may thereafter accrue and (ii) is, in such Lender's sole, reasonable discretion, determined not to be materially disadvantageous or cause unreasonable hardship to such Lender, provided that fees, charges, costs or expenses that are related to such change shall be borne by the Borrower on behalf of a Lender, and the mere existence of such expenses, fees or costs shall not be deemed to be materially disadvantageous or cause undue hardship to the Lender. (d) If and to the extent that any Lender is able, in its sole opinion, to receive any tax refund arising out of or in conjunction with any deduction or withholding which gives rise to an obligation on the Borrower to pay any Non-Excluded Taxes or Other Taxes pursuant to this subsection 2.8 then such Lender shall, to the extent that in its sole opinion it can do so without prejudice to the retention of the refund and without any other adverse tax consequences for such Lender, reimburse to the Borrower at such time as such refund shall have actually been received by such Lender such amount as such Lender shall, in its sole opinion, have determined to be attributable to the relevant deduction or withholding and as will leave such Lender in no better or worse position than it would have been in if the payment of such Non-Excluded Taxes or Other Taxes had not been required. 2.9 Indemnity. The Borrower agrees to indemnify each Lender and to hold each Lender harmless from any loss or expense which such Lender may sustain or incur as a consequence of default by the Borrower in making any prepayment after the Borrower has given a notice thereof in accordance with the provisions of this Agreement. Such indemnification may include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the amount so prepaid, for the period from the date of such prepayment to the last day of such Interest Payment Date in each case at the applicable rate of interest for such Loans provided for herein over (ii) the amount of interest (as reasonably determined by such Lender) which would have accrued to such Lender on such amount by placing such amount on deposit for a comparable period with leading banks in the interbank eurodollar market. This covenant shall survive the termination of this Agreement and the payment of the Loans and all other amounts payable hereunder. 2.10 Agent Fee. In the event that any of the Lenders sells, transfers or assigns any of its Loans to an unaffiliated third Person who is not another Investor or an Affiliate thereof pursuant to subsection 9.6, the Borrower agrees to pay to the Agent for its own account an annual administrative fee of $25,000, payable in full on the effective date of such sale, transfer and assignment (such fee being pro-rated for the first year in which such fee becomes payable) and each annual anniversary of the Closing Date thereafter. SECTION 3. REPRESENTATIONS AND WARRANTIES To induce the Agent and the Lenders to enter into this Agreement and to make the Loans, the Borrower hereby represents and warrants to the Agent and each Lender that: 3.1 Financial Condition. (a) Since January 1, 2001, each of the Borrower and each Subsidiary have duly filed all forms, reports, schedules, proxy statements and documents required to be filed by it with the SEC. True and correct copies of all filings made by the Borrower and each Subsidiary with the SEC since such date and prior to the date hereof (the "SEC Reports"), whether or not under Requirement of Law and including any registration statement filed by the Borrower or a Subsidiary under the Securities Act, have been either made available or are publicly available to the Agent. As of their respective dates, the SEC Reports (other than preliminary material) complied in all material respects with the requirements of the Securities Act or the Exchange Act, as applicable, and the rules and regulations of the SEC thereunder applicable to such SEC Reports and none of the SEC Reports, at the time filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. No other Person included in the Loan Parties is subject to periodic reporting requirements of the Exchange Act or is otherwise required to file documents with the SEC or comparable Governmental Authority or any national securities exchange or quotation service. (b) The consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at December 31, 2002 and the related consolidated statements of income and of cash flows for the fiscal year ended on such date, reported on by Ernst & Young LLP, copies of which have heretofore been furnished to each Lender, present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the fiscal year then ended. The unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at June 30, 2003 and the related unaudited consolidated statements of income and of cash flows for the six-month period ended on such date, certified by a Responsible Officer, copies of which have heretofore been furnished to each Lender, present fairly the consolidated financial condition of the Borrower and its consolidated Subsidiaries as at such date, and the consolidated results of their operations and their consolidated cash flows for the six-month period then ended (subject to normal year-end audit adjustments and the absence of footnotes). All such financial statements, including the related schedules and notes thereto, have been prepared in accordance with GAAP applied consistently throughout the periods involved (except as approved by such accountants or Responsible Officer, as the case may be, and as disclosed therein). Neither the Borrower nor any of its consolidated Subsidiaries had, at the date of the most recent balance sheet referred to above, any material Guarantee Obligation, contingent liability or liability for taxes, or any long-term lease or unusual forward or long-term commitment, including, without limitation, any interest rate or foreign currency swap or exchange transaction, which is not reflected in the foregoing statements or in the notes thereto. During the period from June 30, 2003 to and including the date hereof there has been no sale, transfer or other disposition by the Borrower or any of its consolidated Subsidiaries of any material part of its business or property and no purchase or other acquisition of any business or property (including any capital stock of any other Person) material in relation to the consolidated financial condition of the Borrower and its consolidated Subsidiaries at June 30, 2003. 3.2 Absence of Certain Changes. (a) Except (i) for liabilities incurred in connection with this Agreement or the transactions contemplated hereby, (ii) as disclosed by the SEC Reports or (iii) as set forth in Schedule 3.2 to this Agreement, since December 31, 2002 (a) none of the Borrower or any Subsidiary have suffered any change, condition, event or development that has had, or could reasonably be expected to have, a Material Adverse Effect, (b) each of the Borrower or any Subsidiary have conducted in all material respects their respective businesses only in the ordinary course consistent with past practice, except for the negotiation and execution and delivery of this Agreement and (c) the Borrower has not (i) incurred any Indebtedness or Guarantee Obligation in excess of $100,000, (ii) granted any Lien in respect of any material asset to any Person, (iii) made any Restricted Payment or investment in excess of $250,000 or (iv) entered into any transaction (including any merger or consolidation) with any Person, except, in each case, as would be permitted under this Agreement. 3.3 Corporate Existence; Compliance with Law. Each of the Borrower and its Subsidiaries (a) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has the corporate power and authority, and the legal right, to own and operate its property, to lease the property it operates as lessee and to conduct the business in which it is currently engaged, (c) is duly qualified as a foreign corporation and in good standing under the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of its business requires such qualification and (d) is in compliance with all Requirements of Law, except in the case of the foregoing clauses (c) and (d), to the extent that the failure to be so qualified or to comply therewith could not, in the aggregate, reasonably be expected to have a Material Adverse Effect. 3.4 Corporate Power; Authorization; Enforceable Obligations. The Borrower has the corporate power and authority, and the legal right, to make, deliver and perform the Loan Documents to which it is a party and to borrow hereunder and has taken all necessary corporate action to authorize the borrowings on the terms and conditions of this Agreement and any Notes and to authorize the execution, delivery and performance of the Loan Documents to which it is a party. No consent or authorization of, filing with, notice to or other act by or in respect of, any Governmental Authority or any other Person (including, without limitation, Board of Directors, stockholder, warrant holder or NASDAQ consents, waivers and approvals) is required in connection with the Recapitalization, the borrowings hereunder or the issuance of Notes hereunder or with the execution, delivery, performance, validity or enforceability of the Loan Documents to which the Borrower is a party, except consents, authorizations, filings and notices described on Schedule 3.4. This Agreement has been, and each other Loan Document to which it is a party will be, duly executed and delivered on behalf of the Borrower. This Agreement constitutes, and each other Loan Document to which it is a party when executed and delivered will constitute, a legal, valid and binding obligation of the Borrower enforceable against the Borrower in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. Each of the Security Documents creates and grants to the Agent, for its own benefit and for the benefit of the Lenders, a legal, valid and duly perfected Lien in the Collateral identified therein prior and superior in right to all other Persons, except as of the date hereof and as of the Closing Date Liens permitted pursuant to subsection 6.3(f) and the Liens permitted under subsection 6.3 that have priority over the Agent's Lien by operation of law, and thereafter, Liens permitted pursuant to subsection 6.3(f), subsection 6.3(g), subsection 6.3(h) and subsection 6.3(l), and the Liens permitted under subsection 6.3 that have priority over the Agent's Lien by operation of law. Such Collateral is not subject to any other Liens whatsoever, except Liens permitted by Section 6.3 hereof. 3.5 No Legal Bar. The execution, delivery and performance of the Loan Documents to which the Borrower is a party and the borrowings hereunder will not violate any Requirement of Law or Contractual Obligation (other than as set forth on Schedule 3.4) of the Borrower or of any of its Subsidiaries and will not result in, or require, the creation or imposition of any Lien on any of its or their respective properties or revenues pursuant to any such Requirement of Law or Contractual Obligation (other than Liens created by the Security Documents). 3.6 No Material Litigation. No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened by or against the Borrower or any of its Subsidiaries or against any of its or their respective properties or revenues (a) with respect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or (b) that, if reasonably likely to be adversely determined, which could reasonably be expected to have a Material Adverse Effect. 3.7 Contracts and No Default. Each of the Borrower and the Subsidiaries is in compliance with respect to all of its Contractual Obligations, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No Default or Event of Default has occurred and is continuing. 3.8 Ownership of Property; Liens. Each of the Borrower and its Subsidiaries has good record and marketable title in fee simple to, or a valid leasehold interest in, all its real property, and good title to, or a valid leasehold interest in, all its other property, and none of such property is subject to any Lien except as permitted by subsection 6.3. 3.9 Intellectual Property. Schedule 3.9 contains an accurate and complete list of all material Intellectual Property which is used in the business of the Borrower or any of its Subsidiaries, other than off-the-shelf software that is commercially available. Unless otherwise indicated in the SEC Filings or on Schedule 3.9, as of the date hereof and as of the Closing Date the Borrower (or the Subsidiary indicated) owns the entire right, title and interest in and to the Intellectual Property listed on such Schedule 3.9 (including, without limitation, the exclusive right to sue and license the same) free and clear of any Liens, other than Liens permitted by subsection 6.3 hereof (and without obligation to pay any royalty or other fee with respect thereto) and each item constituting part of the Intellectual Property which is owned by the Borrower or any of its Subsidiaries and listed on Schedule 3.9 has been, to the extent indicated in Schedule 3.9, duly registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office or such other government entities, domestic or foreign, or a duly accredited and appropriate domain name registrar, as are indicated in Schedule 3.9 and such registrations, filings and issuances remain in full force and effect. As of the date hereof and as of the Closing Date, to the best knowledge of the Borrower, neither the Borrower's nor any of its Subsidiaries' use or practice of the Intellectual Property infringes any other Person's rights thereto. As of the date hereof and as of the Closing Date, no Intellectual Property set forth on Schedule 3.9 has been canceled, abandoned, or otherwise terminated and all renewal fees (if applicable) in respect thereof have been duly paid. Except as stated in Schedule 3.9, as of the Closing Date are no pending or to the best knowledge of the Borrower, threatened proceedings or litigation or other adverse claims affecting or with respect to the Intellectual Property listed on Schedule 3.9. Schedule 3.9 lists all notices or claims pending as of the Closing Date or received by the Borrower or any of its Subsidiaries during the two years immediately preceding the Closing Date which claim, as applicable, infringement, contributory infringement, inducement to infringe, misappropriation, misuse or breach by the Borrower or any of its Subsidiaries with respect to any Intellectual Property or license thereof and, except as set forth on Schedule 3.9, as of the Closing Date there is, to the knowledge of the Borrower, no reasonable basis upon which any such claim may be asserted. As of the date hereof and as of the Closing Date, to the best knowledge of the Borrower, except as indicated on Schedule 3.9, no Person is infringing, misappropriating or misusing any of the Intellectual Property. 3.10 No Burdensome Restrictions. No Requirement of Law or Contractual Obligation as of the date hereof and as of the Closing Date of the Borrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect. 3.11 Taxes. Except as set forth on Schedule 3.11: (a) Each of the Borrower and its Subsidiaries has timely filed or caused to be timely filed (including by way of permitted extensions) all income Tax Returns and all material other United States federal, state, county, local and foreign Tax Returns required to be filed by or with respect to it, and all such Tax Returns are complete and accurate in all material respects. Each of the Borrower and its Subsidiaries has timely paid all material Taxes for which it is directly or indirectly liable and any assessments made against it or any of its property and all other Taxes, fees or other charges imposed on it or any of its property by any Governmental Authority, other than any taxes, fees or other charges the amount or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which reserves in conformity with GAAP have been provided on the June 30, 2003 balance sheet of the Borrower. (b) There are no audits, examinations, actions, suits, proceedings, investigations, claims or assessments pending or, to the knowledge of the Borrower, threatened, against the Borrower or any of its Subsidiaries for any alleged deficiency in any Tax (a "Tax Controversy") and the Borrower has not been notified in writing of any proposed Tax Controversy against the Borrower or any of its Subsidiaries (other than a Tax Controversy set forth on Schedule 3.11 which is being contested in good faith). (c) For purposes of this Agreement, the term "Tax" means any United States federal, state, county or local, or foreign or provincial income, gross receipts, profits, capital gains, capital stock, occupation, severance, stamp, withholding, property, sales, use, license, excise, franchise, employment, payroll, value added, alternative or added minimum, ad valorem or transfer tax, or any other tax, levy, custom, duty or governmental fee or other like assessment or charge of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), together with all estimated taxes, deficiency assessments, additions to tax, interest or penalties imposed by any Governmental Authority, and shall include any liability for such amounts as a result either of being a member of a combined, consolidated, unitary or affiliated group or of a contractual obligation to indemnify any person or other entity. The term "Tax Return" means any and all reports, returns or other information (including any attached schedules or any amendments to such reports, returns or other information) required to be supplied to or filed with any Governmental Authority with respect to any Tax, including an information return, claim for refund, amended return or declaration or estimated Tax. 3.12 Federal Regulations. No part of the proceeds of any Loans will be used for "purchasing" or "carrying" any "margin stock" within the respective meanings of each of the quoted terms under Regulation U of the Board of Governors of the Federal Reserve System as now and from time to time hereafter in effect. If requested by any Lender or the Agent, the Borrower will furnish to the Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form G-1 or FR Form U-1 referred to in said Regulation U. 3.13 ERISA. (a) Schedule 3.13 sets forth as of the date hereof and as of the Closing Date a true and complete list of each "employee benefit plan" (as defined in Section 3(3) of ERISA) of the Borrower and its Subsidiaries in which current or former employees, agents, directors, or independent contractors of the Borrower or its Subsidiaries ("Employees") participate or pursuant to which the Borrower or any of its Subsidiaries may have a liability with respect to Employees (each, an "Employee Plan"). Except as disclosed in the SEC Filings or on Schedule 3.13, as of the date hereof and as of the Closing Date, neither the Borrower nor any of its Subsidiaries has any commitment to establish any additional Employee Plans or to modify or change materially any existing Employee Plan. The Borrower has made available to the Lenders with respect to each Employee Plan as of date hereof and as of the Closing Date: (i) a true and complete copy of all written documents comprising such Employee Plan (including amendments and individual agreements relating thereto) or, if there is no such written document, an accurate and complete description of such Employee Plan; and (ii) the most recent financial statements, if any. (b) Each Employee Plan has been established and maintained in substantial compliance with its terms and the requirements of all Applicable Law, and all contributions required to be made to the Employee Plans have been made in a timely fashion. (c) Each Employee Plan which is intended to be "qualified" within the meaning of Section 401(a) of the Code has received a favorable determination letter or opinion letter from the Internal Revenue Service and, to the Borrower's knowledge, no event has occurred and no condition exists which could reasonably be expected to result in the revocation of any such determination letter or opinion letter. (d) Neither the Borrower nor any of its Subsidiaries currently maintains or contributes to, or has at any time maintained or contributed to or been obligated to contribute to, any plan, program or arrangement covered by Title IV of ERISA or subject to Section 412 of the Code or Section 302 of ERISA. (e) Neither the Borrower nor any of its Subsidiaries, nor, to the Borrower's knowledge, any other "disqualified person" or "party in interest" (as defined in Section 4975(e)(2) of the Code and Section 3(14) of ERISA, respectively) has engaged in any transactions in connection with any Employee Plan that could reasonably be expected to result in the imposition of a material penalty pursuant to Section 502 of ERISA, material damages pursuant to Section 409 of ERISA or a material tax pursuant to Section 4975 of the Code. (f) There are no actions, suits, arbitrations, inquiries, investigations or other proceedings (other than routine claims for benefits) pending or, to the Borrower's knowledge, threatened, with respect to any Employee Plan, except for any of the foregoing that do not and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. (g) The Borrower and its Subsidiaries are in compliance in all material respects with the terms and provisions of the Immigration Reform and Control Act of 1986, as amended, and all related regulations promulgated thereunder (the "Immigration Laws"). As of the date hereof and as of the Closing Date, the Borrower and its Subsidiaries have never been the subject of any inspection or investigation relating to its compliance with or violation of the Immigration Laws, nor have they been warned, fined or otherwise penalized by reason of any such failure to comply with the Immigration Laws, nor is any such proceeding pending or to the Borrower's knowledge, threatened. (h) Except as set forth in the SEC Filings or on Schedule 3.13, the Borrower and its Subsidiaries are in compliance in all material respects with all Applicable Laws respecting employment and employment practices, terms and conditions and wages and hours. 3.14 Investment Company Act; Other Regulations. The Borrower is not an "investment company", or a company "controlled" by an "investment company", within the meaning of the Investment Company Act of 1940, as amended. The Borrower is not subject to regulation under any Federal or State statute or regulation (other than Regulation X of the Board of Governors of the Federal Reserve System) which limits its ability to incur Indebtedness. 3.15 Subsidiaries. The following constitute all the Subsidiaries of the Borrower at the date hereof and as of the Closing Date: Infocrossing Services, Inc., ETG, Inc., AmQUEST, Inc. and AmQUEST Services, Inc. 3.16 Environmental Matters. Except as set forth in the SEC Filings or on Schedule 3.16: (a) Hazardous Materials have not at any time been generated, use, treated or stored on, or transported to or from, any Borrower Property by the Borrower or any Subsidiary in a manner which has resulted or is reasonably likely to result in an Environmental Claim, (b) Hazardous Materials have not at any time been Released or disposed of on any Borrower Property in a manner which has resulted or is reasonably likely to result in an Environmental Claim, (c) the Borrower and each of its Subsidiaries are in compliance in all material respects with all applicable Environmental Laws and the requirements of any permits issued under such applicable Environmental Laws with respect to any Borrower Property, (d) there are no pending or, to the knowledge of the Borrower, threatened or unresolved past material Environmental Claims against the Borrower or any of its Subsidiaries or any Borrower Property, (e) there are no facts, conditions or circumstances that, to the knowledge of the Borrower, could reasonably be expected to form the basis of an Environmental Claim, and (f) there are not now and never have been any underground storage tanks located on any Borrower Property. For purposes of this Agreement, the following terms shall have the following meanings: (a) "Borrower Property" means any real property and improvements currently or formerly owned or leased by the Borrower or any of its Subsidiaries; (b) "Hazardous Materials" means (i) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or is reasonably likely to become friable, urea formaldehyde foam insulation, polychlorinated biphenyls, and radon gas; and (ii) any chemicals, materials or substances defined as or included in the definition of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants," or words of similar import, under any applicable Environmental Law; (c) "Environmental Law" means any federal, state or local statute, law, rule, regulation, ordinance, code or rule of common law in effect and in each case as amended as of the date hereof and as of the Closing Date, applicable to the Borrower or its operations or Borrower Property as of the date hereof and as of the Closing Date, including any judicial or administrative order, consent decree or judgment relating to the environment, occupational safety and health or Hazardous Materials; and (d) "Environmental Claims" means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations or proceedings under any Environmental Law or any permit issued under any such Environmental Law (for purposes of this subclause (d), "Claims"), including without limitation (i) any and all Claims by any Governmental Authority for enforcement, cleanup, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law and (ii) any and all Claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from Hazardous Materials or arising from alleged injury or threat of injury to health, safety or the environment; and (e) "Release" means disposing, discharging, injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying or seeping into or upon any land or water or air, or otherwise entering into the environment. 3.17 Solvency. As of the date hereof and as of the Closing Date and without regard to any inter-company debt obligations between the Loan Parties: (a) the amount of the "present fair saleable value" of the assets of each of the Loan Parties will, as of such date, exceed the amount of all "liabilities of such Loan Party, contingent or otherwise", as of such date, as such quoted terms are determined in accordance with applicable federal and state laws governing determinations of the insolvency of debtors, (b) the present fair saleable value of the assets of each Loan Party will, as of such date, be greater than the amount that will be required to pay the liability of such Loan Party on its debts as such debts become absolute and matured, (c) each Loan Party will not have, as of such date, an unreasonably small amount of capital with which to conduct its business, and (d) each Loan Party is then able and expects to be able to pay its debts as they mature. For purposes of this subsection 3.17, (i) "debt" means liability on a "claim", and (ii) "claim" means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured. 3.18 Full Disclosure. No statement of fact made by or on behalf of any Person other than the Lenders in this Agreement, the Security Documents, the documents relating to the Recapitalization or in any certificate or schedule furnished to the Lenders pursuant hereto or thereto contains any untrue statement of a material fact or omits to state any material fact necessary to make statements contained therein or herein not misleading. There is no fact presently known to the Borrower which has not been disclosed to the Lenders in writing which has had or, as far as the Borrower can reasonably foresee, could reasonably be expected to have a Material Adverse Effect. SECTION 4. CONDITIONS PRECEDENT TO CLOSING The making of the Loans hereunder and the agreement of each Lender to be a party to this Agreement is subject to the satisfaction, immediately prior to or on the Closing Date, of the following conditions precedent: (a) Loan Documents. The Lenders shall have received (i) this Agreement, executed and delivered by a duly authorized officer of the Borrower, (ii) the Notes, executed and delivered by a duly authorized officer of the Borrower, (iii) the Stock Pledge Agreement, each executed and delivered by a duly authorized officer of the parties thereto, (iv) the Security Agreement executed and delivered by a duly authorized officer of the parties thereto and (v) each of the Deposit Account Control Agreements, each executed and delivered by a duly authorized officer of the party thereto. (b) Related Agreements. (i) The Lenders shall have received true and correct copies, certified as to authenticity by the Borrower, of the Exchange Agreement and the other documents relating to the Recapitalization, each on terms mutually acceptable to the Lenders and the Borrower, and such other documents or instruments as may be reasonably requested by the Lenders, including, without limitation, a copy of any debt instrument, security agreement or other material contract to which the Borrower, or its Subsidiaries may be a party. (ii) The Lenders shall have received evidence satisfactory to them in their sole discretion that the closing conditions under the Exchange Agreement have been satisfied. (c) Closing Certificate. The Lenders shall have received a certificate of the Borrower, dated the Closing Date, substantially in the form of Exhibit G, with appropriate insertions and attachments, including financial statements requested by the Lenders, confirming compliance with the conditions set forth in Section 4, satisfactory in form and substance to the Lenders, executed by the Chairman of the Board, the President or any Vice President of the Borrower. (d) Corporate Proceedings of the Borrower. The Lenders shall have received a copy of the resolutions, in form and substance satisfactory to the Lenders, of the Board of Directors of the Borrower authorizing (i) the execution, delivery and performance of this Agreement and the other Loan Documents to which it is a party, (ii) the Loans contemplated hereunder and (iii) the granting by it of the Liens created pursuant to the Borrower Security Documents, certified by the Secretary or an Assistant Secretary of the Borrower as of the Closing Date, which certificate shall be in form and substance satisfactory to the Lenders and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (e) Borrower Incumbency Certificate. The Lenders shall have received a Certificate of the Borrower, dated the Closing Date, as to the incumbency and signature of the officers of the Borrower executing any Loan Document satisfactory in form and substance to the Lenders, executed by the President or any Vice President and the Secretary or any Assistant Secretary of the Borrower. (f) Private Placement. The Lenders shall have received at least $55,000,000 in cash from the net proceeds of a successfully consummated private placement of the Borrower's Common Stock (the "Private Placement"), which private placement shall have been consummated on terms and conditions (including, without limitation, the issuance price of the Common Stock) satisfactory to the Lenders. (g) Due Diligence. Satisfactory completion of due diligence by the Lenders, including legal and tax due diligence, to the satisfaction of the Lenders in their sole and absolute discretion. (h) Corporate Proceedings of Subsidiaries. The Lenders shall have received a copy of the resolutions, in form and substance satisfactory to the Lenders, of the Board of Directors of each Subsidiary of the Borrower which is a party to a Loan Document authorizing (i) the execution, delivery and performance of the Loan Documents to which it is a party and (ii) the granting by it of the Liens created pursuant to the Subsidiaries Security Documents to which it is a party, certified by the Secretary or an Assistant Secretary of each such Subsidiary as of the Closing Date, which certificate shall be in form and substance satisfactory to the Lenders and shall state that the resolutions thereby certified have not been amended, modified, revoked or rescinded. (i) Subsidiary Incumbency Certificates. The Lenders shall have received a certificate of each Subsidiary of the Borrower which is a Loan Party, dated the Closing Date, as to the incumbency and signature of the officers of such Subsidiaries executing any Loan Document, satisfactory in form and substance to the Lenders, executed by the President or any Vice President and the Secretary or any Assistant Secretary of each such Subsidiary. (j) Corporate Documents. The Lenders shall have received true and complete copies of the certificate of incorporation and by-laws of each Loan Party, certified as of the Closing Date as complete and correct copies thereof by the Secretary or an Assistant Secretary of such Loan Party. (k) Consents, Licenses and Approvals. The Lenders shall have received a certificate of a Responsible Officer of the Borrower (i) attaching copies of all consents, authorizations and filings referred to in subsection 3.4 (other than the consent of Dell Financial under operating leases relating to Master Lease 1558532), and (ii) stating that such consents, licenses and filings attached are in full force and effect, and each such consent, authorization and filing attached shall be in form and substance satisfactory to the Lenders in their sole and absolute discretion. (l) Fees. As of the date hereof and as of the Closing Date, all fees owed to the Agent, the Lenders and their respective Affiliates under this Agreement and all legal fees and expenses of counsel to the Agent and the Lenders incurred through such date shall have been paid in full. (m) Legal Opinions. The Lenders shall have received the following executed legal opinions: (i) the executed legal opinion of Latham & Watkins LLP, counsel to the Borrower and the other Loan Parties substantially in the form of Exhibit H; and (ii) the executed legal opinion of Troutman Sanders LLP, special Georgia counsel to the Borrower. Each such legal opinion shall cover such other matters incident to the transactions contemplated by this Agreement as the Lenders may require in their sole and absolute discretion. (n) Pledged Stock; Stock Powers. The Agent shall have received the certificates representing the shares pledged pursuant to the Stock Pledge Agreement, together with an undated stock power for each such certificate executed in blank by a duly authorized officer of the pledgor thereof. (o) Actions to Perfect Liens. The Lenders shall have received evidence in form and substance satisfactory to it that all filings, recordings, registrations and other actions, including, without limitation, the filing of duly executed financing statements on form UCC-1, necessary or, in the opinion of the Lenders, desirable to perfect the first priority Liens created by the Security Documents shall have been completed. (p) Lien Searches. The Lenders shall have received the results of a recent search by a Person satisfactory to the Lenders, of the Uniform Commercial Code, judgment and tax lien filings which may have been filed with respect to personal property of the Borrower, and the results of such search shall be satisfactory to the Lenders in their sole and absolute discretion. (q) Representations and Warranties. Each of the representations and warranties made by the Borrower and the Subsidiaries in or pursuant to the Loan Documents shall be true and correct in all material respects on and as the date hereof and as of the Closing Date; provided that any such representations and warranties that by their express terms are made as of a specific date shall have been true and correct as of such specific date. (r) No Default. At the time of and immediately after giving effect to the making of the Loans, no Default shall have occurred and be continuing. (s) Additional Matters. All corporate and other proceedings, and all documents, instruments and other legal matters in connection with the transactions contemplated by this Agreement, the other Loan Documents and the Exchange Agreement shall be satisfactory in form and substance to the Lenders, and the Lenders shall have received such other documents in respect of any aspect or consequence of the transactions contemplated hereby or thereby as it shall reasonably request. (t) Closing. The Closing Date shall have occurred before November 1, 2003, unless otherwise agreed to by the Lenders in their sole and absolute discretion. (u) Camden Debentures. The Lenders shall have received evidence of the repayment of the Camden Debentures and termination of the Debentures and the related securities purchase agreement simultaneously with the closing of this Agreement, satisfactory to the Lenders in their sole and absolute discretion. (v) Insurance. The Lenders shall have received evidence of the compliance by the Borrower with subsection 5.5, satisfactory to the Lenders in their sole and absolute discretion. SECTION 5. AFFIRMATIVE COVENANTS The Borrower hereby agrees that, so long as any amount is owing to any Lender or the Agent hereunder or under any other Loan Document, the Borrower shall and (except in the case of delivery of financial information, reports and notices) shall cause each of its Subsidiaries to: 5.1 Financial Statements. Furnish to each Lender: (a) as soon as available, but in any event within 90 days after the end of each fiscal year of the Borrower, a copy of the consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such year and the related consolidated statements of income and retained earnings and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, reported on without a "going concern" or like qualification or exception, or qualification arising out of the scope of the audit, by Ernst & Young LLP or other independent certified public accountants of nationally recognized standing; (b) as soon as available, but in any event not later than 45 days after the end of each of the first three quarterly periods of each fiscal year of the Borrower, the unaudited consolidated balance sheet of the Borrower and its consolidated Subsidiaries as at the end of such quarter and the related unaudited consolidated statements of income and retained earnings and of cash flows of the Borrower and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through the end of such quarter, setting forth in each case in comparative form the figures for the previous year, certified by a Responsible Officer as being fairly stated in all material respects (subject to normal year-end audit adjustments and the absence of footnotes); and (c) as soon as available, but in any event not later than 30 days after the end of each month, the monthly unaudited consolidated statements of income and retained earnings and of cash flows of the Borrower and its consolidated Subsidiaries for such months and the portion of the fiscal year through the end of such month, setting forth in each case in comparative form the figures for the previous month and the figures from the budget, together with a narrative of the performance of the Borrower and its consolidated Subsidiaries for such period in the same form as delivered to the Board of Directors or the senior executives of the Borrower, certified by a Responsible Officer as being fairly stated in all material respects; all such financial statements shall be complete and correct in all material respects and shall be prepared in reasonable detail and in accordance with GAAP applied consistently throughout the periods reflected therein and with prior periods (except as approved by such accountants or officer, as the case may be, and disclosed therein). 5.2 Certificates; Other Information. Furnish to each Lender: (a) concurrently with the delivery of the financial statements referred to in subsection 5.1(a), a certificate of the independent certified public accountants reporting on such financial statements stating that in making the examination necessary therefore no knowledge was obtained of any Default or Event of Default, except as specified in such certificate; (b) concurrently with the delivery of the financial statements referred to in subsections 5.1(a), (b) and (c), a certificate of a Responsible Officer stating that, to the best of such Officer's knowledge, during such period (i) no Subsidiary has been formed or acquired (or, if any such Subsidiary has been formed or acquired, the Borrower has complied with the requirements of subsection 5.10 with respect thereto, (ii) neither the Borrower nor any of its Subsidiaries has changed its name, its principal place of business, its chief executive office or the location of any material item of tangible Collateral without complying with the requirements of this Agreement and the Security Documents with respect thereto and (iii) the Borrower has observed or performed all of its covenants and other agreements contained in this Agreement and the other Loan Documents to be observed, performed or satisfied by it, and that such Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate; (c) not later than thirty days prior to the end of each fiscal year of the Borrower, a copy of the projections by the Borrower of the operating budget and cash flow budget of the Borrower and its Subsidiaries for the succeeding fiscal year, such projections to be accompanied by a certificate of a Responsible Officer stating that such projections are based on estimates, information and assumptions reasonably believed by such Responsible Officer to be reasonable on the date of delivery thereof; (d) within five days after the same are sent, copies of all financial statements and reports which the Borrower sends to its stockholders, and within five days after the same are filed, copies of all financial statements and reports which the Borrower may make to, or file with, the SEC or any successor or analogous Governmental Authority; and (e) promptly, such additional financial and other information as any Lender may from time to time reasonably request. 5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or before maturity or before they become delinquent, as the case may be, all its obligations of whatever nature, except where the amount or validity thereof is currently being contested in good faith by appropriate proceedings and reserves in conformity with GAAP with respect thereto have been provided on the books of the Borrower or its Subsidiaries, as the case may be. 5.4 Conduct of Business and Maintenance of Existence. (a) Continue to engage in business of the same general type as now conducted by it and preserve, renew and keep in full force and effect its corporate existence and take all reasonable action to maintain all rights, privileges and franchises material to the normal conduct of its business except as otherwise permitted pursuant to subsection 6.5; and (b) comply with all Contractual Obligations and Requirements of Law except to the extent that failure to comply therewith could not, in the aggregate, be reasonably expected to have a Material Adverse Effect. 5.5 Maintenance of Property; Insurance. (a) Maintain in all material respects all property necessary and useful in the conduct of its business, in good operating condition and repair, ordinary wear and tear excepted. (b) Maintain with financially sound and reputable insurers having a rating of at least A- or better by Best Rating Guide, insurance against loss or damage by fire with extended coverage; theft, burglary, pilferage and loss in transit; public liability and third party property damage; larceny, embezzlement or other criminal liability; business interruption and such other hazards or of such other types as is customary for Persons engaged in the same or similar business. Without limiting the foregoing, in the event that any real estate owned or leased by any Loan Party on which is located any inventory or equipment of a Loan Party is determined to be located within an area that has been identified by the Director of the Federal Emergency Management Agency as a Special Flood Hazard Area ("SFHA"), such Loan Party shall purchase and maintain flood insurance on the improved real estate and any equipment and inventory located on such real estate. The amount of said flood insurance will be reasonably determined by the Agent, and such insurance shall, at a minimum (subject to customary deductibles), comply with applicable federal regulations as required by the Flood Disaster Protection Act of 1973, as amended. Such Loan Party shall also maintain flood insurance for its inventory and equipment which is, at any time, located in a SFHA. (c) Cause the Agent, for the ratable benefit of the Agent and the Lenders, to be named as secured party or mortgagee and loss payee as its interest may appear or additional insured, in a manner reasonably acceptable to the Agent on each policy of insurance of such Loan Party. Such Loan Party shall use commercially reasonable efforts to cause each policy of insurance of such Loan Party to contain a clause or endorsement requiring the insurer to give not less than thirty (30) days' prior written notice to the Agent in the event of cancellation of the policy for any reason whatsoever (other than non-payment of premiums, in which case not less than ten (10) days' prior written notice is sufficient). Each policy of such Loan Party for property insurance shall contain a clause or endorsement stating that the interest of the Agent shall not be impaired or invalidated by any act or neglect of any Loan Party or any of its Subsidiaries or the owner of any real estate for purposes more hazardous than are permitted by such policy. All premiums for such insurance shall be paid by such Loan Party when due, and certificates of insurance and, if requested by the Agent or any Lender, photocopies of the policies, shall be delivered to the Agent, in each case in sufficient quantity for distribution by the Agent to each of the Lenders. If a Loan Party fails to procure such insurance or to pay the premiums therefore when due, the Agent may do so, but at the Borrowers' expense and without any responsibility on the Agent's part for obtaining the insurance, the solvency of the insurance companies, the adequacy of the coverage, or the collection of claims. (d) Such Loan Party shall promptly notify the Agent and the Lenders of any loss, damage or destruction to any of the Collateral in an amount in excess of $250,000, whether or not covered by insurance. To the extent that the Borrower or its Subsidiaries are not permitted to reinvest insurance and condemnation proceeds hereunder, the Agent is hereby authorized to collect all insurance and condemnation proceeds in respect of Collateral and directly after deducting from such proceeds the reasonable expenses, if any, incurred by the Agent in the collection or handling thereof, the Agent shall apply such proceeds to the payment of the Loans in the manner provided for in this Agreement. 5.6 Books and Records; Inspection of Property. (a) Keep proper books of records and account in which full, true and correct entries in conformity with GAAP and all Requirements of Law shall be made of all dealings and transactions in relation to its business and activities. (b) Permit representatives of the Agent and Lenders (at the expense of the Loan Parties) to visit and inspect any of its properties, to examine its corporate, financial and operating records, and make copies thereof or abstracts therefrom and to discuss its affairs, finances and accounts with its directors (or Persons serving a similar function), officers and independent public accountants, at such reasonable times during normal business hours and as soon as may be reasonably desired, upon reasonable advance notice to such Loan Party; provided, however, when an Event of Default exists, the Agent or any Lender may do any of the foregoing at the expense of the Loan Parties at any time during normal business hours and without advance notice. 5.7 Notices. Promptly give notice to the Agent and each Lender of: (a) the occurrence of any Default or Event of Default; (b) any (i) default or event of default under any Contractual Obligation of the Borrower or any of its Subsidiaries or (ii) litigation, investigation or proceeding which may exist at any time between the Borrower or any of its Subsidiaries and any Governmental Authority, which in either case, if not cured or if reasonably likely to be adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect; (c) any litigation or proceeding affecting the Borrower or any of its Subsidiaries in which the amount involved is $250,000 or more and not covered by insurance or in which injunctive or similar relief is sought; (d) the following events, as soon as possible and in any event within 30 days after the Borrower knows thereof: (i) the occurrence or expected occurrence of any Reportable Event with respect to any Plan, a failure to make any required contribution to a Plan, the creation of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution of proceedings or the taking of any other action by the PBGC or the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with respect to the withdrawal from, or the terminating, Reorganization or Insolvency of, any Plan; and (e) any development or event which could reasonably be expected to have a Material Adverse Effect. Each notice pursuant to this subsection shall be accompanied by a statement of a Responsible Officer setting forth details of the occurrence referred to therein and stating what action the Borrower proposes to take with respect thereto. 5.8 Environmental Laws. (a) Comply with, and ensure compliance by all of Borrower's tenants and subtenants on any Borrower Property, if any, with, all applicable Environmental Laws and obtain and comply with and maintain, and ensure that all such tenants and subtenants obtain and comply with and maintain, any and all licenses, approvals, notifications, registrations or permits required by applicable Environmental Laws except, in each case, to the extent that failure to do so could not be reasonably expected, individually or in the aggregate, to have a Material Adverse Effect. (b) Conduct and complete all investigations, studies, sampling and testing, and all remedial, removal and other actions that the Borrower or any of its Subsidiaries are required to complete and conduct under applicable Environmental Laws and promptly comply with all related lawful orders and directives of all Governmental Authorities regarding applicable Environmental Laws except to the extent that (i) the same are being contested, if deemed reasonably necessary to contest by the Borrower, in good faith by appropriate proceedings and (ii) such investigations, action or compliance could not be reasonably expected to have a Material Adverse Effect. 5.9 Further Assurances. Upon the request of the Agent, promptly perform or cause to be performed any and all acts and execute or cause to be executed any and all documents (including, without limitation, financing statements and continuation statements) for filing under the provisions of the Uniform Commercial Code or any other Requirement of Law which are necessary or advisable to maintain in favor of the Agent, for the benefit of the Lenders, a fully perfected Lien on the Collateral prior and superior in right to all other Persons except Liens permitted pursuant to subsection 6.3(f), subsection 6.3(g), subsection 6.3(h) and subsection 6.3(l) and other Liens permitted under subsection 6.3 that have priority over the Agent's Lien by operation of law. 5.10 Additional Collateral. (a) With respect to any assets acquired after the Closing Date by the Borrower or any of its Domestic Subsidiaries that are intended to be subject to the Lien created by any of the Security Documents but which are not so subject (other than (x) any assets described in paragraph (b) or (c) of this subsection, (y) immaterial assets a Lien on which cannot be perfected by filing UCC-1 financing statements and (z) property acquired by a Foreign Subsidiary), promptly (and in any event within 30 days after the acquisition thereof): (i) execute and deliver to the Agent such amendments to the relevant Security Documents or such other documents as the Agent shall deem necessary or advisable to grant to the Agent, for the benefit of the Lenders, a Lien on such assets, (ii) take all actions necessary or advisable to cause such Lien to be duly perfected in accordance with all applicable Requirements of Law, including, without limitation, the filing of financing statements in such jurisdictions as may be requested by the Agent, and (iii) if requested by the Agent, deliver to the Agent legal opinions relating to the matters described in clauses (i) and (ii) immediately preceding, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Agent. (b) With respect to any Person that, subsequent to the Closing Date, becomes a Subsidiary (other than a Foreign Subsidiary), promptly upon the request of the Agent: (i) execute and deliver to the Agent, for the benefit of the Lenders, a new pledge agreement or such amendments to the Stock Pledge Agreement as the Agent shall deem necessary or advisable to grant to the Agent, for the benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary which is owned by the Borrower or any of its Subsidiaries, (ii) deliver to the Agent the certificates representing such Capital Stock, together with undated stock powers executed and delivered in blank by a duly authorized officer of the Borrower or such Subsidiary, as the case may be, (iii) cause such new Subsidiary (A) to become a party to the Security Agreement, in each case pursuant to documentation which is in form and substance satisfactory to the Agent, and (B) to take all actions necessary or advisable to cause the Lien created by the Security Agreement to be duly perfected in accordance with all applicable Requirements of Law, including, without limitation, the filing of financing statements in such jurisdictions as may be requested by the Agent and (iv) if requested by the Agent, deliver to the Agent legal opinions relating to the matters described in clauses (i), (ii) and (iii) immediately preceding, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Agent. (c) With respect to any Person that, subsequent to the Closing Date, becomes a Foreign Subsidiary, promptly upon the request of the Agent: (i) execute and deliver to the Agent a new pledge agreement or such amendments to the Stock Pledge Agreement as the Agent shall deem necessary or advisable to grant to the Agent, for the benefit of the Lenders, a Lien on the Capital Stock of such Subsidiary which is owned by the Borrower or any of its Subsidiaries (provided that in no event shall more than 65% of the Capital Stock of any such Subsidiary be required to be so pledged), (ii) deliver to the Agent any certificates representing such Capital Stock, together with undated stock powers executed and delivered in blank by a duly authorized officer of the Borrower or such Subsidiary, as the case may be, and take or cause to be taken all such other actions under the law of the jurisdiction of organization of such Foreign Subsidiary as may be necessary or advisable to perfect such Lien on such Capital Stock and (iii) if requested by the Agent, deliver to the Agent legal opinions relating to the matters described in clauses (i) and (ii) immediately preceding, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Agent. (d) Notwithstanding anything to the contrary in this subsection 5.10, paragraphs (a), (b) and (c) shall not apply to any property, Subsidiary or Foreign Subsidiary created or acquired after the Closing Date, as applicable, to which the Agent has determined in its sole discretion that the collateral value thereof is insufficient to justify the difficulty, time and/or expense of obtaining a perfected security interest therein. (e) If the Borrower or any Subsidiary creates any initial or additional Lien pursuant to subsection 6.3(l) upon any of its property, assets or revenues to secure Indebtedness incurred under subsection 6.2(i), such Borrower or Subsidiary shall simultaneously grant a pari passu Lien on such property, assets or revenues to secure the Loan Obligations. If any Subsidiary that is not a Guarantor guarantees the payment of Indebtedness incurred under subsection 6.2(i) of the Borrower or any Subsidiary, then such Subsidiary shall simultaneously become a party to the Security Agreement and a Guarantor. 5.11 Syndication. To assist the Investors in their syndication efforts, upon the request of the Agent or any Investor, promptly provide such information to such Investor as the Agent may request with respect to the Borrower and its Subsidiaries in such form as the Agent or such Investor may reasonably request (including, without limitation, a true, correct and complete schedule of material contracts to which the Borrower or any of its Subsidiaries is a party). 5.12 Tax Returns. At the request of the Agent or the Required Lenders, the Borrower will deliver to the Lenders correct and complete copies of all United States federal, state, and foreign income Tax Returns (to the extent filed as of the date hereof or, if not filed, correct and complete copies of extensions thereof), examination reports, statements of deficiencies assessed against or agreed to by the Borrower and any of its Subsidiaries, or any other similar correspondence from a taxing authority, relating to taxable years 2000, 2001 and 2002. SECTION 6. NEGATIVE COVENANTS The Borrower hereby agrees that, so long as any amount is owing to any Lender or the Agent hereunder or under any other Loan Document, the Borrower shall not, and (except with respect to subsection 6.1) shall not permit any of its Subsidiaries to, directly or indirectly: 6.1 Financial Condition Covenants. (a) Leverage. Permit the Leverage Ratio at any time during any period set forth on Schedule 6.1(a) to be greater than the ratio set forth opposite such period specified on Schedule 6.1(a). (b) Minimum Consolidated EBITDA. Permit Consolidated EBITDA for any period of four consecutive fiscal quarters ending on the date set forth on Schedule 6.1(b) to be less than the amount set forth opposite such period specified on Schedule 6.1(b). (c) Fixed Charge Ratio. Permit for any period of four consecutive fiscal quarters ending on the date set forth on Schedule 6.1(c), the ratio of Consolidated EBITDA for such period to Consolidated Fixed Charges for such period to be less than the amount set forth opposite such period specified on Schedule 6.1(c). 6.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, except: (a) Indebtedness of the Borrower and its Subsidiaries under the Loan Documents; (b) Indebtedness of the Borrower to any Subsidiary which is a Loan Party and of any Subsidiary to the Borrower or any other Subsidiary which is a Loan Party; (c) Indebtedness of the Borrower and any of its Subsidiaries incurred to finance the acquisition of fixed or capital assets (whether pursuant to a loan, a Financing Lease or otherwise) in an aggregate principal amount not exceeding as to the Borrower and its Subsidiaries $2,000,000 at any time outstanding, provided that such Indebtedness shall be created substantially simultaneously with the capitalization or recapitalization of such fixed or capital assets on the balance sheet of the Borrower and its Subsidiaries; (d) Indebtedness of the Borrower or any of its Subsidiaries outstanding on the date hereof and listed on Schedule 6.2(d) and extensions, renewals and replacements of any such Indebtedness that do not increase the outstanding principal amount thereof or interest thereon (other than with respect to any reasonable fees) or shorten any maturity or average life to maturity thereof and otherwise on substantially similar terms to such existing Indebtedness; (e) Indebtedness of a Person which becomes a Subsidiary after the date hereof, provided that (i) such indebtedness existed at the time such corporation became a Subsidiary and was not created in anticipation thereof, (ii) such indebtedness is in an aggregate principal amount not exceeding as to the Borrower and its Subsidiaries $5,000,000 at any time outstanding and (iii) immediately after giving effect to the acquisition of such Person by the Borrower no Default or Event of Default shall have occurred and be continuing; (f) Guarantee Obligations made in the ordinary course of business by the Borrower or any of its Subsidiaries of obligations of the Borrower or any other Loan Party which obligations are otherwise permitted under this Agreement; (g) Indebtedness of the Borrower or any of its Subsidiaries in respect of worker's compensation claims, performance, bid and surety bonds and completion guarantees, in each case, in the ordinary course of business; (h) Indebtedness of the Borrower or any of its Subsidiaries consisting of customary overdraft and similar protections in connection with deposit accounts; and (i) Indebtedness of the Borrower or any of its Subsidiaries in an aggregate principal amount (for the Borrower and all Subsidiaries) not to exceed $5,000,000 at any time outstanding. 6.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired, except for: (a) Liens for taxes not yet due or which are being contested in good faith by appropriate proceedings, provided that adequate reserves with respect thereto are maintained on the books of the Borrower or its Subsidiaries, as the case may be, in conformity with GAAP; (b) carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like Liens arising in the ordinary course of business which are not overdue for a period of more than 60 days or which are being contested in good faith by appropriate proceedings; (c) pledges or deposits in connection with workers' compensation, unemployment insurance and other social security legislation and deposits securing liability to insurance carriers under insurance or self-insurance arrangements; (d) deposits to secure the performance of bids, trade contracts (other than for borrowed money), leases, statutory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature incurred in the ordinary course of business; (e) easements, rights-of-way, restrictions and other similar encumbrances incurred in the ordinary course of business which, in the aggregate, are not substantial in amount and which do not in any case materially detract from the value of the property subject thereto or materially interfere with the ordinary conduct of the business of the Borrower or such Subsidiary; (f) Liens in existence on the date hereof listed on Schedule 6.3, securing Indebtedness permitted by subsection 6.2(d), provided that no such Lien is spread to cover any additional property after the Closing Date and that the amount of Indebtedness secured thereby is not increased; (g) Liens securing Indebtedness of the Borrower and its Subsidiaries permitted by subsection 6.2(c) incurred to finance the acquisition of fixed or capital assets, provided that (i) such Liens and the Indebtedness secured thereby shall be created or incurred substantially simultaneously with the capitalization or recapitalization of such fixed or capital assets on the balance sheet of the Borrower and its Subsidiaries, (ii) such Liens do not at any time encumber any property other than the property financed by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased and (iv) the principal amount of Indebtedness secured by any such Lien shall at no time exceed 100% of the original purchase price of such property at the time it was acquired; (h) Liens on the property or assets of a corporation which becomes a Subsidiary after the date hereof securing Indebtedness permitted by subsection 6.2(e), provided that (i) such Liens existed at the time such corporation became a Subsidiary and were not created in anticipation thereof, (ii) any such Lien is not spread to cover any property or assets of such corporation after the time such corporation becomes a Subsidiary, and (iii) the amount of Indebtedness secured thereby is not increased; (i) Liens created pursuant to the Security Documents; (j) any interest or title of a lessor under any lease entered into by the Borrower or any of its Subsidiaries in the ordinary course of its business and covering only the assets so leased and any Lien arising from precautionary Uniform Commercial Code financing statements (or equivalent filings, registrations or agreements in foreign jurisdictions) relating to and covering only equipment leased in accordance with any Loan Document (and such Lien does not apply to any additional property or assets of the Borrower or any Subsidiary); (k) Liens arising from judgments and attachments in connection with court proceedings provided that the attachment or enforcement of such Liens would not result in an Event of Default hereunder and such Liens are being contested in good faith by appropriate proceedings, adequate reserves have been set aside, no material property is subject to a material risk of loss or forfeiture, the claims in respect of such Liens are fully covered by insurance (subject to ordinary and customary deductibles) and a stay of execution pending appeal or proceeding for review is in effect; and (l) Liens securing Indebtedness of the Borrower or any of its Subsidiaries permitted under subsection 6.2(i), provided, that, (a) such Lien shall only be permitted hereunder if the Leverage Ratio of the Borrower and its Subsidiaries calculated at the time of incurrence of such Indebtedness and after giving effect thereto and using Consolidated EBITDA for the most recently completed period of four consecutive fiscal quarters is less than 3.00:1.00; (b) such Lien shall be pari passu with the Lien securing the Loan Obligations; (c) the aggregate amount of Indebtedness secured by such Lien does not exceed (i) $2,500,000 if the Leverage Ratio at the time of such incurrence and after giving effect thereto is less than 3.0:1.0 and greater than or equal to 2.0:1.0 or (ii) $5,000,000 if the Leverage Ratio at the time of such incurrence and after giving effect thereto is less than 2.0:1.0; provided that for purposes of this subsection 6.3(l), the time of incurrence with respect to Indebtedness under any revolving credit facility shall be deemed to be the date such revolving credit facility was established and the amount incurred shall be the full committed amount of such revolving credit facility and (d) (i) no portion of the principal of such Indebtedness is stated to be payable or is required to be paid prior to the Maturity Date, (ii) the material terms, conditions and restrictive covenants contained in the instrument governing such Indebtedness, taken as a whole, are no less favorable to the Borrower or any of its Subsidiaries, as the case may be, than the terms, conditions and restrictive covenants contained in this Agreement and (iii) no Default or Event of Default shall be in effect at the time of or shall have occurred after giving effect to the incurrence of such Indebtedness. 6.4 Limitation on Fundamental Changes. Enter into any merger, consolidation or amalgamation, or liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer or otherwise dispose of, all or substantially all of its property, business or assets, or make any material change in its present method of conducting business, except that, if at the time thereof and immediately after giving effect thereto, no Default or Event of Default shall have occurred and be continuing: (a) any Subsidiary of the Borrower may be merged or consolidated with or into the Borrower (provided that the Borrower shall be the continuing or surviving corporation) or with or into any one or more wholly owned Subsidiaries of the Borrower (provided that the wholly owned Subsidiary or Subsidiaries shall be the continuing or surviving corporation and is a Loan Party); (b) any wholly owned Subsidiary may sell, lease, transfer or otherwise dispose of any or all of its assets (upon voluntary liquidation or otherwise) to the Borrower or any other wholly owned Subsidiary of the Borrower that is a Loan Party; and (c) the Borrower or any Subsidiary thereof may merge with any Person organized or existing under the laws of the United States of America, any State thereof or the District of Columbia in connection with a Permitted Acquisition; provided that if such transaction involves the Borrower, the Borrower shall be the continuing or surviving corporation and, if such transaction involves any other Loan Party, the surviving person must be a Domestic Subsidiary and must become a Guarantor of the obligations of the Borrower hereunder. 6.5 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or otherwise dispose of any of its property, business or assets (including, without limitation, receivables and leasehold interests), whether now owned or hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares of such Subsidiary's Capital Stock to any Person other than the Borrower or any wholly owned Subsidiary, except: (a) the sale or other disposition of obsolete or worn out property in the ordinary course of business; (b) the sale or other disposition of any property in the ordinary course of business, provided that (other than inventory) the aggregate book value of all assets so sold or disposed of in any period of twelve consecutive months shall not exceed 10% of consolidated total assets of the Borrower and its Subsidiaries as at the beginning of such twelve-month period; (c) the sale of inventory in the ordinary course of business; (d) the sale or discount without recourse of accounts receivable arising in the ordinary course of business in connection with the compromise or collection thereof; (e) as permitted by subsection 6.4(b); and (f) dispositions of equipment in exchange for other equipment of reasonably equivalent or greater value in the ordinary course of business. 6.6 Limitation on Amendments to Material Agreements. The Borrower will not, nor will it permit any Subsidiary to, amend, modify or waive any of its rights under its certificate of incorporation, by-laws or other organizational documents (other than to change its name), except, in each case, for such amendments, modifications or waivers that could not be reasonably expected to effect any change materially adverse to the interests and rights of the Agent or the Lenders under any Loan Document. 6.7 Limitation on Dividends. Declare or pay any dividend (other than dividends payable solely in common stock of the Borrower) on, or make any payment on account of, or set apart assets for a sinking or other analogous fund for, the purchase, redemption, defeasance, retirement or other acquisition of, any shares of any class of Capital Stock of the Borrower or any warrants or options to purchase any such Capital Stock, whether now or hereafter outstanding, or make any other distribution in respect thereof, either directly or indirectly, whether in cash or property or in obligations of the Borrower or any Subsidiary, except (i) any Subsidiary may make Restricted Payments to the Borrower or any Subsidiary Guarantor; (ii) the Borrower may declare and pay dividends with respect to its Capital Stock payable solely in additional Capital Stock; (iii) so long as no Default or Event of Default shall have occurred and be continuing, the Borrower may purchase its common stock or common stock options from present or former officers or employees of the Borrower or any Subsidiary upon the death, disability or termination of employment of such officer or employee, provided, that the aggregate amount of payments under this clause (iii) subsequent to the date hereof (net of any proceeds received by the Borrower subsequent to the date hereof in connection with resales of any common stock or common stock options so purchased) shall not exceed $250,000; (iv) the Borrower may consummate repurchases of Capital Stock that are deemed to occur upon the non-cash exercise of permitted stock options and warrants; and (v) the Borrower and its Subsidiaries may consummate the Recapitalization. 6.8 Limitation on Capital Expenditures. Make or commit to make (by way of the acquisition of securities of a Person or otherwise) any Capital Expenditures (excluding any such asset acquired in connection with normal replacement and maintenance programs properly charged to current operations) except for Capital Expenditures in the ordinary course of business not exceeding, in the aggregate for the Borrower and its Subsidiaries during any of the fiscal years of the Borrower, the amount set forth opposite the applicable Leverage Ratio (determined on the last day of the prior fiscal year) for the Borrower and its Subsidiaries, Leverage Ratio Amount Greater than or equal to 3.00:1.00 $3,500,000 Less than 3.00:1.00 but greater than or equal to 2.50:1.0 $4,000,000 Less than 2.5:1.00 $4,250,000 provided, that (i) if at the end of any fiscal year of the Borrower, the amount specified pursuant to this section for such Capital Expenditures during such fiscal year exceeds the aggregate amount of Capital Expenditures made or incurred by the Borrower and its Subsidiaries on a consolidated basis during such fiscal year (the amount of such excess being referred to herein as the "Excess Amount"), the Borrower and its Subsidiaries shall be entitled to make additional Capital Expenditures in the succeeding fiscal year (and only in such succeeding fiscal year) in an aggregate amount equal to the Excess Amount and (ii) Capital Expenditures made pursuant to this subsection 6.8 during any fiscal year shall be deemed made first, in respect of amounts permitted for such fiscal year as provided above (without giving effect to amounts carried over from the prior fiscal year pursuant to clause (i) above) and second, in respect of the Excess Amount carried over from the prior fiscal year pursuant to clause (i) above. 6.9 Limitation on Investments, Loans and Advances. Make any advance, loan, extension of credit or capital contribution to, or purchase any stock, bonds, notes, debentures or other securities of or any assets constituting a business unit of, or make any other investment in, any Person, except: (a) extensions of trade credit in the ordinary course of business; (b) investments in Cash Equivalents; (c) loans and advances to employees of the Borrower or its Subsidiaries for travel, entertainment and relocation expenses in the ordinary course of business in an aggregate amount for the Borrower and its Subsidiaries not to exceed $100,000 at any one time outstanding; (d) investments and advances by the Borrower in its Subsidiaries which are Loan Parties and investments and advances by such Subsidiaries in the Borrower and in other Subsidiaries which are Loan Parties; (e) investments in real property, equipment or other tangible assets useful in the Borrower's or the applicable Subsidiaries business made by the Borrower or any of its Subsidiaries with the proceeds of any Reinvestment Deferred Amount; (f) investments, loans and advances consisting of pay-in-kind interest on employee loans existing as of the date hereof; (g) investments received in connection with the bankruptcy, reorganization or settlement of delinquent agreements or disputes with customers and suppliers, in each case, in the ordinary course of business; and (h) Permitted Acquisitions by the Borrower or any of its Subsidiaries in an aggregate amount (valued at cost) not to exceed $10,000,000 during the term of this Agreement. 6.10 Modifications of Debt Instruments. Amend, modify or change, or consent or agree to any amendment, modification or change to any of the terms of any material Indebtedness (including terms of any Parity Obligations), except for such amendments, modifications or waivers that could not reasonably be expected to effect any change materially adverse to the interests and rights of the Agent or the Lenders under any Loan Document. 6.11 Limitation on Transactions with Affiliates. Enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of property or the rendering of any service, with any Affiliate unless such transaction is (a) not prohibited under this Agreement, (b) in the ordinary course of the Borrower's or such Subsidiary's business and (c) upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary, as the case may be, than it would obtain in a comparable arm's length transaction with a Person which is not an Affiliate. 6.12 Limitation on Sales and Leasebacks. Enter into any arrangement with any Person providing for the leasing by the Borrower or any Subsidiary of real or personal property which has been or is to be sold or transferred by the Borrower or such Subsidiary to such Person or to any other Person to whom funds have been or are to be advanced by such Person on the security of such property or rental obligations of the Borrower or such Subsidiary. 6.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of the Borrower to end on a day other than December 31. 6.14 Limitation on Negative Pledge Clauses. Enter into with any Person any agreement, other than (a) this Agreement, (b) the Recapitalization documents, (c) any industrial revenue bonds, purchase money mortgages or Financing Leases permitted by this Agreement (in which cases, any prohibition or limitation shall only be effective against the assets securing such Indebtedness) and (d) any secured Indebtedness permitted under subsection 6.2(i), which prohibits or limits the ability of the Borrower or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property, assets or revenues, whether now owned or hereafter acquired. 6.15 Limitation on Lines of Business. Enter into any business, either directly or through any Subsidiary, except for those businesses in which the Borrower and its Subsidiaries are engaged on the date of this Agreement or which are directly related thereto. SECTION 7. EVENTS OF DEFAULT If any of the following events shall occur and be continuing: (a) The Borrower shall fail to pay any principal of any Loan when due in accordance with the terms thereof or hereof; or the Borrower shall fail to pay any interest on any Loan, or any other amount payable hereunder, within five days after any such interest or other amount becomes due in accordance with the terms thereof or hereof; or (b) Any representation or warranty made or deemed made by the Borrower or any other Loan Party herein or in any other Loan Document or which is contained in any certificate, document or financial or other statement furnished by it at any time under or in connection with this Agreement or any such other Loan Document shall prove to have been incorrect in any material respect on or as of the date made or deemed made; or (c) The Borrower or any other Loan Party shall default in the observance or performance of any agreement contained in subsections 5.4(a), 5.5, 5.7, 5.9 or Section 6 hereof or in the Syndication Letter; or (d) The Borrower or any other Loan Party shall default in the observance or performance of any other agreement contained in this Agreement or any other Loan Document (other than as provided in paragraphs (a) through (c) of this Section), and such default shall continue unremedied for a period of 30 days; or (e) The Borrower or any of its Subsidiaries shall (i) default in any payment of principal of or interest of any Indebtedness (other than the Loans) or in the payment of any Guarantee Obligation, beyond the period of grace (not to exceed 30 days), if any, provided in the instrument or agreement under which such Indebtedness or Guarantee Obligation was created; or (ii) default in the observance or performance of any other agreement or condition relating to any such Indebtedness or Guarantee Obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur or condition exist, the effect of which default or other event or condition is to cause, or to permit the holder or holders of such Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such Indebtedness to become due prior to its stated maturity or such Guarantee Obligation to become payable; provided, that a default, event or condition described in clause (i), or (ii) of this paragraph (e) shall not at any time constitute an Event of Default unless, at such time, one or more defaults, events or conditions of the type described in clauses (i) and (ii) of this paragraph (e) shall have occurred and be continuing with respect to Indebtedness the outstanding principal amount of which exceeds in the aggregate $250,000; or (f) (i) The Borrower or any of its Subsidiaries shall commence any case, proceeding or other action (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian, conservator or other similar official for it or for all or any substantial part of its assets, or the Borrower or any of its Subsidiaries shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of 60 days; or (iii) there shall be commenced against the Borrower or any of its Subsidiaries any case, proceeding or other action seeking issuance of a warrant of attachment, execution, distraint or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within 60 days from the entry thereof; or (iv) the Borrower or any of its Subsidiaries shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the Borrower or any of its Subsidiaries shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due; or (g) (i) Any Person shall engage in any "prohibited transaction" (as defined in Section 406 of ERISA or Section 4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302 of ERISA), whether or not waived, shall exist with respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on the assets of the Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall occur with respect to, or proceedings shall commence to have a trustee appointed, or a trustee shall be appointed, to administer or to terminate, any Single Employer Plan, which Reportable Event or commencement of proceedings or appointment of a trustee is, in the reasonable opinion of the Required Lenders, likely to result in the termination of such Plan for purposes of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes of Title IV of ERISA, (v) the Borrower or any Commonly Controlled Entity shall, or in the reasonable opinion of the Required Lenders is likely to, incur any liability in connection with a withdrawal from, or the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any other event or condition shall occur or exist with respect to a Plan; and in each case in clauses (i) through (vi) above, such event or condition, together with all other such events or conditions, if any, could reasonably be expected to have a Material Adverse Effect; or (h) One or more judgments or decrees shall be entered against the Borrower or any of its Subsidiaries involving in the aggregate a liability (not paid or fully covered by insurance) of $250,000 or more, and all such judgments or decrees shall not have been vacated, discharged, stayed or bonded pending appeal within 60 days from the entry thereof; or (i) Any of the Security Documents shall cease, for any reason, to be in full force and effect, or the Borrower or any other Loan Party which is a party to any of the Security Documents shall so assert or (ii) the Lien created by any of the Security Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby (other than by reason of the express release thereof pursuant to the Security Documents); then, and in any such event, (A) if such event is an Event of Default specified in clause (i) or (ii) of paragraph (f) of this Section with respect to the Borrower, automatically the Commitments shall immediately terminate and the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement shall immediately become due and payable, and (B) if such event is any other Event of Default, with the consent of the Required Lenders, the Agent may, or upon the request of the Required Lenders, the Agent shall, by notice to the Borrower declare the Loans hereunder (with accrued interest thereon) and all other amounts owing under this Agreement to be due and payable forthwith, whereupon the same shall immediately become due and payable. Except as expressly provided above in this Section, presentment, demand, protest and all other notices of any kind are hereby expressly waived. SECTION 8. THE AGENT 8.1 Appointment. Each Lender hereby irrevocably designates and appoints the Agent as the agent of such Lender under this Agreement and the other Loan Documents, and each such Lender irrevocably authorizes the Agent, in such capacity, to take such action on its behalf under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Agreement and the other Loan Documents, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement, the Agent shall not have any duties or responsibilities, except those expressly set forth herein, or any fiduciary relationship with any Lender, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or any other Loan Document or otherwise exist against the Agent. 8.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement and the other Loan Documents by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible for the negligence or misconduct of any agents or attorneys in-fact selected by it. 8.3 Exculpatory Provisions. Neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document (except for its or such Person's own gross negligence or willful misconduct) or (ii) responsible in any manner to any of the Lenders for any recitals, statements, representations or warranties made by the Borrower or any officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document or for any failure of the Borrower to perform its obligations hereunder or thereunder. The Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document, or to inspect the properties, books or records of the Borrower. 8.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including, without limitation, counsel to the Borrower), independent accountants and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless a written notice of assignment, negotiation or transfer thereof shall have been filed with the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate or it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Required Lenders, and such request and any action taken or failure to act pursuant thereto shall be binding upon all the Lenders and all future holders of the Loans. 8.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default hereunder unless the Agent has received notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a "notice of default". In the event that the Agent receives such a notice, the Agent shall give notice thereof to the Lenders. The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until the Agent shall have received such directions, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. 8.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges that neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representations or warranties to it and that no act by the Agent hereinafter taken, including any review of the affairs of the Borrower, shall be deemed to constitute any representation or warranty by the Agent to any Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, financial and other condition and creditworthiness of the Borrower and made its own decision to make its Loans hereunder and enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, financial and other condition and creditworthiness of the Borrower. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of the Borrower which may come into the possession of the Agent or any of its members, partners, officers, directors, employees, agents, attorneys-in-fact or Affiliates. 8.7 Indemnification. The Lenders agree to indemnify the Agent in its capacity as such (to the extent not reimbursed by the Borrower and without limiting the obligation of the Borrower to do so), ratably according to their respective Pro Rata Share in effect on the date on which indemnification is sought, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever which may at any time (including, without limitation, at any time following the payment of the Loans) be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of, the Commitments, this Agreement, any of the other Loan Documents or any documents contemplated by or referred to herein or therein or the transactions contemplated hereby or thereby or any action taken or omitted by the Agent under or in connection with any of the foregoing; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the Agent's gross negligence or willful misconduct. The agreements in this subsection shall survive the payment of the Loans and all other amounts payable hereunder. 8.8 Agent in Its Individual Capacity. The Agent and its Affiliates may make loans to, make investments in, hold equity interest in, accept deposits from and generally engage in any kind of business with the Borrower as though the Agent were not the Agent hereunder and under the other Loan Documents. With respect to the Loans made by it, the Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any Lender and may exercise the same as though it were not the Agent, and the terms "Lender" and "Lenders" shall include the Agent in its individual capacity. 8.9 Successor Agent. The Agent may resign as Agent upon 10 days' notice to the Lenders and the Borrower. If the Agent shall resign as Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, which successor agent (provided that it shall have been approved by the Borrower), shall succeed to the rights, powers and duties of the Agent hereunder. Effective upon such appointment and approval, the term "Agent" shall mean such successor agent, and the former Agent's rights, powers and duties as Agent shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement or any holders of the Loans. After any retiring Agent's resignation as Agent, the provisions of this Section 8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents. 8.10 Parity Obligations. The Lenders authorize the Agent to enter into (i) a collateral trust agreement or other arrangement on terms acceptable to the Agent and the Required Lenders to secure on an Equal and Ratable basis with the Loan Obligations, any Parity Obligations, and (ii) an intercreditor agreement on terms acceptable to the Agent and the Required Lenders with the holders of Parity Obligations. SECTION 9. MISCELLANEOUS 9.1 Amendments and Waivers. Neither this Agreement nor any other Loan Document, nor any terms hereof or thereof may be amended, supplemented or modified except in accordance with the provisions of this subsection. The Required Lenders may, or, with the written consent of the Required Lenders, the Agent may, from time to time, (a) enter into with the Borrower written amendments, supplements or modifications hereto and to the other Loan Documents (other than the Syndication Letter) for the purpose of adding any provisions to this Agreement or the other Loan Documents (other than the Syndication Letter) or changing in any manner the rights of the Lenders or of the Borrower hereunder or thereunder or (b) waive, on such terms and conditions as the Required Lenders or the Agent, as the case may be, may specify in such instrument, any of the requirements of this Agreement or the other Loan Documents (other than the Syndication Letter) or any Default or Event of Default and its consequences; provided, however, that no such waiver and no such amendment, supplement or modification shall (i) reduce the amount or extend the scheduled date of maturity of any Loan or of any installment thereof, or reduce the stated rate of any interest or fee payable hereunder or extend the scheduled date of any payment thereof or increase the amount or extend the expiration date of any Lender's Commitments, in each case without the consent of each Lender affected thereby, or (ii) amend, modify or waive any provision of this subsection or reduce the percentage specified in the definition of Required Lenders or consent to the assignment or transfer by the Borrower of any of its rights and obligations under this Agreement and the other Loan Documents or release all or substantially all of the Collateral, in each case without the written consent of all the Lenders or (iii) amend, modify or waive any provision of Section 8 without the written consent of the then Agent. Any such waiver and any such amendment, supplement or modification shall apply equally to each of the Lenders and shall be binding upon the Borrower, the Lenders, the Agent and all future holders of the Loans. In the case of any waiver, the Borrower, the Lenders and the Agent shall be restored to their former positions and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right consequent thereon. 9.2 Notices. All notices, requests and demands to or upon the respective parties hereto to be effective shall be in writing (including by facsimile transmission) and, unless otherwise expressly provided herein, shall be deemed to have been duly given or made (a) in the case of delivery by hand, when delivered, (b) in the case of delivery by mail, three days after being deposited in the mails, postage prepaid, or (c) in the case of delivery by facsimile transmission, when sent and receipt has been confirmed, addressed as follows in the case of the Borrower and the Agent, and as set forth in Schedule I in the case of the other parties hereto, or to such other address as may be hereafter notified by the respective parties hereto: The Borrower: Infocrossing, Inc. 2 Christie Heights Street Leonia, New Jersey 07605 Attention: Nicholas J. Letizia, Esq., Senior Vice President and General Counsel Fax: (201) 840-7126 The Agent: Infocrossing Agent, Inc. C/ MidOcean Capital Investors, L.P. 345 Park Avenue, 16th Floor New York, New York 10154 Attention: Timothy W. Billings Fax: (212) 336-0875 And C/ Sandler Capital Partners V, L.P. 767 Fifth Avenue, 45th Floor New York, New York 10153 Attention: Richard Keller Fax: (212) 754-8183 with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 Attn: Douglas A. Cifu, Esq. Telephone: (212) 373-3000 Fax: (212) 757-3990 and Kirkland & Ellis LLP 665 Fifteenth Avenue N.W. Washington, D.C. 20005 Attn: Mark D. Director, Esq. Telephone: (202) 879-5151 Fax: (202) 879-5200 provided that any notice, request or demand to or upon the Agent or the Lenders shall not be effective until received. 9.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in exercising, on the part of the Agent or any Lender, any right, remedy, power or privilege hereunder or under the other Loan Documents shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. 9.4 Survival of Representations and Warranties. All representations and warranties made hereunder, in the other Loan Documents and in any document, certificate or statement delivered pursuant hereto or in connection herewith shall survive the execution and delivery of this Agreement and the making of the Loans hereunder. 9.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or reimburse the Agent and each Lender and their Affiliates for all their reasonable out-of-pocket costs and expenses incurred in connection with the development, preparation and execution of, and any amendment, supplement, waiver or modification to, this Agreement and the other Loan Documents and any other documents prepared in connection herewith or therewith (including, for all purposes of subsection 9.5, documents prepared pursuant to subsection 8.10), and the consummation and administration of the transactions contemplated hereby and thereby, including, without limitation, the reasonable fees and disbursements of counsel to the Agent and each Lender and their Affiliates, provided, that, from and after the Closing Date, such reimbursement for legal fees shall be limited to the fees and disbursements of one primary counsel except (i) as provided in clause (b) of this subsection 9.5, and (ii) for so long as the Investors together comprise the Required Lenders, (b) to pay or reimburse each Lender and the Agent and their Affiliates for all its costs and expenses incurred in connection with the enforcement or preservation of any rights under this Agreement, the other Loan Documents and any such other documents, including, without limitation, the fees and disbursements of counsel to each Lender and of counsel to the Agent, (c) to pay, indemnify, and hold each Lender and the Agent and their Affiliates and the respective members, partners, directors, officers, employees, agents and advisors of such Person and such Person's Affiliates harmless from, any and all recording and filing fees and any and all liabilities with respect to, or resulting from any delay in paying, stamp, excise and other taxes, if any, which may be payable or determined to be payable in connection with the execution and delivery of, or consummation or administration of any of the transactions contemplated by, or any amendment, supplement or modification of, or any waiver or consent under or in respect of, this Agreement, the other Loan Documents and any such other documents, and (d) to pay, indemnify, and hold each Lender and the Agent and their Affiliates and the respective members, partners, directors, officers, employees, agents and advisors of such Person and such Person's Affiliates harmless from and against any and all other liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever with respect to the execution, delivery, enforcement, performance and administration of this Agreement, the other Loan Documents, documents in connection with the Recapitalization and any such other documents, including, without limitation, any of the foregoing relating to any Environmental Claims or noncompliance with Environmental Laws applicable to the operations of the Borrower, any of its Subsidiaries or any of the Borrower Property (all the foregoing in this clause (d), collectively, the "indemnified liabilities"), provided that the Borrower shall have no obligation hereunder to the Agent or any Lender with respect to indemnified liabilities to the extent determined in the final non-appealable judgment of a court of competent jurisdiction to have arisen from the gross negligence or willful misconduct of the Agent or any such Lender. The agreements in this subsection shall survive repayment of the Loans and all other amounts payable hereunder. 9.6 Successors and Assigns; Participations and Assignments. (a) This Agreement shall be binding upon and inure to the benefit of the Borrower, the Lenders, the Agent and their respective successors and assigns, except that the Borrower may not assign or transfer any of its rights or obligations under this Agreement without the prior written consent of each Lender. (b) Any Lender may at any time sell to one or more banks or other entities ("Participants") participating interests in any Loan owing to such Lender or any other interest of such Lender hereunder and under the other Loan Documents. In the event of any such sale by a Lender of a participating interest to a Participant, such Lender's obligations under this Agreement to the other parties to this Agreement shall remain unchanged, such Lender shall remain solely responsible for the performance thereof, such Lender shall remain the holder of any such Loan for all purposes under this Agreement and the other Loan Documents, and the Borrower and the Agent shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement and the other Loan Documents. No Lender shall be entitled to create in favor of any Participant, in the participation agreement pursuant to which such Participant's participating interest shall be created or otherwise, any right to vote on, consent to or approve any matter relating to this Agreement or any other Loan Document except for those specified in clauses (i) and (ii) of the proviso to subsection 9.1. The Borrower agrees that if amounts outstanding under this Agreement are due or unpaid, or shall have been declared or shall have become due and payable upon the occurrence of an Event of Default, each Participant shall, to the maximum extent permitted by applicable law, be deemed to have the right of setoff in respect of its participating interest in amounts owing under this Agreement to the same extent as if the amount of its participating interest were owing directly to it as a Lender under this Agreement, provided that, in purchasing such participating interest, such Participant shall be deemed to have agreed to share with the Lenders the proceeds thereof as provided in subsection 9.7(a) as fully as if it were a Lender hereunder. The Borrower also agrees that each Participant shall be entitled to the benefits of subsections 2.7, 2.8 and 2.9 (Requirements of Law, Taxes and Indemnity) with respect to its participation in the Loans outstanding from time to time as if it was a Lender; provided that, in the case of subsection 2.8 (Taxes), such Participant shall have complied with the requirements of said subsection and provided, further, that no Participant shall be entitled to receive any greater amount pursuant to any such subsection than the transferor Lender would have been entitled to receive in respect of the amount of the participation transferred by such transferor Lender to such Participant had no such transfer occurred. (c) Any Lender may at any time and from time to time assign to any Lender, any affiliate thereof or any other entity having total assets in excess of $5,000,000 (an "Assignee") all or any part of its rights and obligations under this Agreement and the other Loan Documents pursuant to an Assignment and Acceptance, executed by such Assignee, such assigning Lender (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Agent) and delivered to the Agent for its acceptance and recording in the Register, provided that, in the case of any such assignment to any Person other than an Affiliate of a Lender, the sum of the aggregate principal amount of the Loans being assigned and, if such assignment is of less than all of the rights and obligations of the assigning Lender, the sum of the aggregate principal amount of the Loans remaining with the assigning Lender are each not less than 5% of the aggregate principal amount of the Loans then outstanding (or such lesser amount as may be agreed to by the Borrower and the Agent). A Lender may assign its rights and obligations under this Agreement and the other Loan Documents relating to the Loans without assigning its rights and obligations with respect to any warrants that it may own. Upon such execution, delivery, acceptance and recording, from and after the effective date determined pursuant to such Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the extent provided in such Assignment and Acceptance, have the rights and obligations of a Lender hereunder as set forth therein, and (y) the assigning Lender thereunder shall, to the extent provided in such Assignment and Acceptance, be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of an assigning Lender's rights and obligations under this Agreement, such assigning Lender shall cease to be a party hereto). At the request of the Assignee and/or the assigning Lender, new Notes shall be executed and delivered by the Borrower for any assignment. (d) The Agent, on behalf of the Borrower, shall maintain at the address of the Agent referred to in subsection 9.2 a copy of each Assignment and Acceptance delivered to it and a register (the "Register") for the recordation of the names and addresses of the Lenders the principal amount(s) of the Loans owing to each Lender from time to time. The entries in the Register shall be conclusive, in the absence of manifest error, and the Borrower, the Agent and the Lenders may (and, in the case of any Loan or other obligation hereunder not evidenced by a Note, shall) treat each Person whose name is recorded in the Register as the owner of a Loan or other obligation hereunder as the owner thereof for all purposes of this Agreement and the other Loan Documents, notwithstanding any notice to the contrary. Any assignment of any Loan or other obligation hereunder not evidenced by a Note shall be effective only upon appropriate entries with respect thereto being made in the Register. Any assignment of any Loan or other obligation hereunder evidenced by a Note shall be effective only if effected by the surrender of the Note to the Borrower (or other acceptable affidavit of lost or misplaced Note from the applicable Lender). (e) Upon its receipt of an Assignment and Acceptance executed by an assigning Lender and an Assignee (and, in the case of an Assignee that is not then a Lender or an affiliate thereof, by the Agent) together with payment to the Agent of a registration and processing fee of $4000, the Agent shall (i) promptly accept such Assignment and Acceptance and (ii) on the effective date determined pursuant thereto record the information contained therein in the Register and give notice of such acceptance and recordation to the Lenders and the Borrower. (f) The Borrower authorizes each Lender to disclose to any Participant or Assignee (each, a "Transferee") and any prospective Transferee, any and all financial information in such Lender's possession concerning the Borrower and its Affiliates which has been delivered to such Lender by or on behalf of the Borrower pursuant to this Agreement or which has been delivered to such Lender by or on behalf of the Borrower in connection with such Lender's credit evaluation of the Borrower and its Affiliates prior to becoming a party to this Agreement. (g) For avoidance of doubt, the parties to this Agreement acknowledge that the provisions of this subsection concerning assignments of Loans and Notes relate only to absolute assignments and that such provisions do not prohibit assignments creating security interests, including, without limitation, any pledge or assignment by a Lender of any Loan or Note to any Federal Reserve Bank in accordance with applicable law. 9.7 Adjustments; Set-off. (a) If any Lender (a "benefited Lender") shall at any time receive any payment of all or part of its Loans, or interest thereon, or receive any collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7(f), or otherwise), in a greater proportion than any such payment to or collateral received by any other Lender, if any, in respect of such other Lender's Loans, or interest thereon, such benefited Lender shall purchase for cash from the other Lenders a participating interest in such portion of each such other Lender's Loan, or shall provide such other Lenders with the benefits of any such collateral, or the proceeds thereof, as shall be necessary to cause such benefited Lender to share the excess payment or benefits of such collateral or proceeds ratably with each of the Lenders; provided, however, that if all or any portion of such excess payment or benefits is thereafter recovered from such benefited Lender, such purchase shall be rescinded, and the purchase price and benefits returned, to the extent of such recovery, but without interest. (b) In addition to any rights and remedies of the Lenders provided by law, each Lender shall have the right, without prior notice to the Borrower, any such notice being expressly waived by the Borrower to the extent permitted by applicable law, upon any amount becoming due and payable by the Borrower hereunder (whether at the stated maturity, by acceleration or otherwise) to set-off and appropriate and apply against such amount any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Lender or any branch or agency thereof to or for the credit or the account of the Borrower. Each Lender agrees promptly to notify the Borrower and the Agent after any such set-off and application made by such Lender, provided that the failure to give such notice shall not affect the validity of such set-off and application. 9.8 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separate counterparts (including by facsimile transmission), and all of said counterparts taken together shall be deemed to constitute one and the same instrument. A set of the copies of this Agreement signed by all the parties shall be lodged with the Borrower and the Agent. 9.9 Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 9.10 Integration. This Agreement, the Syndication Letter and the other Loan Documents represent the agreement of the Borrower, the Agent and the Lenders with respect to the subject matter hereof, and there are no promises, undertakings, representations or warranties by the Agent or any Lender relative to subject matter hereof not expressly set forth or referred to herein, in the Syndication Letter or in the other Loan Documents. 9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. 9.12 Submission To Jurisdiction; Waivers. The Borrower hereby irrevocably and unconditionally: (a) submits for itself and its property in any legal action or proceeding relating to this Agreement and the other Loan Documents to which it is a party, or for recognition and enforcement of any judgment in respect thereof, to the non-exclusive general jurisdiction of the Courts of the State of New York, the courts of the United States of America for the Southern District of New York, and appellate courts from any thereof; (b) consents that any such action or proceeding may be brought in such courts and waives any objection that it may now or hereafter have to the venue of any such action or proceeding in any such court or that such action or proceeding was brought in an inconvenient court and agrees not to plead or claim the same; (c) agrees that service of process in any such action or proceeding may be effected by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, to the Borrower at its address set forth in subsection 9.2 or at such other address of which the Agent shall have been notified pursuant thereto; (d) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law or shall limit the right to sue in any other jurisdiction; and (e) waives, to the maximum extent not prohibited by law, any right it may have to claim or recover in any legal action or proceeding referred to in this subsection any special, exemplary, punitive or consequential damages. 9.13 Acknowledgements. The Borrower hereby acknowledges that: (a) it has been advised by counsel in the negotiation, execution and delivery of this Agreement and the other Loan Documents; (b) neither the Agent nor any Lender has any fiduciary relationship with or duty to the Borrower arising out of or in connection with this Agreement or any of the other Loan Documents, and the relationship between Agent and Lenders, on one hand, and the Borrower, on the other hand, in connection herewith or therewith is solely that of debtor and creditor; and (c) no joint venture is created hereby or by the other Loan Documents or otherwise exists by virtue of the transactions contemplated hereby among the Lenders or among the Borrower and the Lenders. 9.14 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN. 9.15 Confidentiality. (a) Each of the Agent and the Lenders agrees to keep confidential all non-public information provided to it by the Borrower or any Subsidiary pursuant to this Agreement that is designated by the Borrower or such Subsidiary as confidential; provided that nothing herein shall prevent the Agent or any Lender from disclosing any such information (i) to the Agent, any other Lender or any affiliate of any thereof, (ii) to any Transferee or prospective Transferee that agrees to comply with the provisions of this Section or substantially equivalent provisions, (iii) to any of its employees, directors, agents, attorneys, accountants and other professional advisors, (iv) upon the request or demand of any Governmental Authority having jurisdiction over it, (v) in response to any order of any court or other Governmental Authority or as may otherwise be required pursuant to any Requirement of Law, (vi) that has been publicly disclosed other than in breach of this Section, (vii) to the National Association of Insurance Commissioners or any similar organization or any nationally recognized rating agency that requires access to information about a Lender's investment portfolio in connection with ratings issued with respect to such Lender. (b) Notwithstanding anything to the contrary in this Agreement, any party to this Agreement (and each employee, representative, or other agent of any party to this Agreement) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement, and all materials of any kind (including opinions or other tax analyses) related to such tax treatment and tax structure; provided that this sentence shall not permit any Person to disclose the name of, or other information that would identify, any party to such transactions or to disclose confidential commercial information regarding such transactions not otherwise permitted hereunder. 9.16 Sharing of Liens. Notwithstanding (i) anything to the contrary contained in the Loan Documents or any other document executed in connection therewith, (ii) the time of incurrence of any of the Loan Obligations or the Parity Obligations, (iii) the order or method of attachment or perfection of any Liens securing the Parity Obligations, (iv) the time or order of filing or recording of financing statements, mortgages or other documents filed or recorded to perfect any Lien upon the Collateral, (v) the time of taking possession or control over any Collateral, or (vi) the rules for determining priority under any law governing relative priorities of Liens: (x) all Liens at any time granted by the Borrower or its Subsidiaries in the Collateral to secure the Loan Obligations or the Parity Obligations shall secure Equally and Ratably all liabilities of the Borrower and such Subsidiary under or in respect of the Loan Obligations or the Parity Obligations; and (y) all proceeds of the sale, collection and realization of Collateral pursuant to the exercise of the rights and remedies of the Agent and the Lenders under the Loan Documents subject to a Lien at any time granted by the Borrower or any of its Subsidiaries in the Collateral to secure the Loan Obligations or the Parity Obligations shall be allocated and distributed Equally and Ratably on account of the liabilities of the Borrower or such Subsidiary under or in respect of the Loan Obligations or the Parity Obligations. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the day and year first above written. INFOCROSSING, INC. By: /s/ Zach Lonstein ________________________________ Name: Zach Lonstein Title:Chairman and Chief Executive Officer INFOCROSSING AGENT, INC., as Agent By: /s/ Tyler Zachem ________________________________ Name: Tyler Zachem Title: President MIDOCEAN CAPITAL INVESTORS, L.P., as a Lender By: MidOcean Capital Partners, L.P., its general partner By: Existing Fund GP, Ltd., its general partner By: /s/ Andrew Spring ________________________________ Name: Andrew Spring Title: SANDLER CAPITAL PARTNERS V, L.P., as a Lender By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell ________________________________ Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V FTE, L.P., as a Lender By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell ________________________________ Name: Moira Mitchell Title: President SANDLER TECHNOLOGY PARTNERS SUBSIDIARY, LLC, as a Lender By: Sandler Technology Partners, L.P., Manager By: Sander Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell ________________________________ Name: Moira Mitchell Title: President SANDLER CO-INVESTMENT PARTNERS, L.P., as a Lender By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell ________________________________ Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V GERMANY, L.P., as a Lender By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell ________________________________ Name: Moira Mitchell Title: President PRICE FAMILY LIMITED PARTNERS, as a Lender By: /s/ Michael Price ________________________________ Name: Michael Price Title: General Partner Schedule I Lender's Addresses MidOcean Capital Investors, L.P. 345 Park Avenue, 16th Floor New York, New York 10154 Attention: Timothy W. Billings Fax: (212) 336-0875 Sandler Capital Partners V, L.P. 767 Fifth Avenue, 45th Floor New York, New York 10153 Attention: Richard Keller Fax: (212) 754-8183 Sandler Capital Partners V FTE, L.P. 767 Fifth Avenue, 45th Floor New York, New York 10153 Attention: Richard Keller Fax: (212) 754-8183 Sandler Technology Partners Subsidiary, LLC 767 Fifth Avenue, 45th Floor New York, New York 10153 Attention: Richard Keller Fax: (212) 754-8183 Sandler Co-Investment Partners, L.P. 767 Fifth Avenue, 45th Floor New York, New York 10153 Attention: Richard Keller Fax: (212) 754-8183 Sandler Capital Partners V Germany, L.P. 767 Fifth Avenue, 45th Floor New York, New York 10153 Attention: Richard Keller Fax: (212) 754-8183 Price Family Limited Partners 65 East 55th Street, 33rd Floor C/ Evercore Partners, Inc. New York, New York 10022 Attention: Michael Price Fax: (212) 857-3172 Schedule 2.1 Lender's Commitment MidOcean Capital Investors, L.P. $12,520,875.00 Sandler Capital Partners V Germany, L.P. $301,308.00 Sandler Capital Partners V, L.P. $8,097,892.00 Sandler Capital Partners V FTE, L.P. $2,994,801.00 Sandler Technology Partners Subsidiary, LLC $834,724.00 Sandler Co-Investment Partners, L.P. $208,675.00 Price Family Limited Partners $41,725.00 --------------- Total Commitment: $25,000,000.00 Schedule 2.2 Amortization of Loans Payment Date Amount December 31, 2003 0.25% March 31, 2004 0.25% June 30, 2004 0.25% September 30, 2004 0.25% December 31, 2004 0.25% March 31, 2005 0.25% June 30, 2005 0.25% September 30, 2005 0.25% December 31, 2005 0.25% March 31, 2006 0.25% June 30, 2006 0.25% September 30, 2006 0.25% December 31, 2006 0.25% March 31, 2007 0.25% June 30, 2007 0.25% September 30, 2007 0.25% December 31, 2007 0.25% March 31, 2008 0.25% June 30, 2008 0.25% Maturity Date 100% less amounts previously paid --------------------------------- Schedule 6.1(a) Leverage Ratio Fiscal quarter ended Ratio --------------------- ----- December 31, 2003 3.65 to 1.00 March 31, 2004 3.50 to 1.00 June 30, 2004 3.25 to 1.00 September 30, 2004 3.00 to 1.00 December 31, 2004 2.75 to 1.00 March 31, 2005 2.50 to 1.00 June 30, 2005 2.35 to 1.00 September 30, 2005 2.25 to 1.00 December 31, 2005 2.00 to 1.00 March 31, 2006 1.25 to 1.00 June 30, 2006 1.25 to 1.00 September 30, 2006 1.25 to 1.00 December 31, 2006 1.25 to 1.00 March 31, 2007 0.75 to 1.00 June 30, 2007 0.75 to 1.00 September 30, 2007 0.75 to 1.00 December 31, 2007 0.75 to 1.00 March 31, 2008 0.75 to 1.00 June 30, 2008 0.75 to 1.00 September 30, 2008 0.75 to 1.00 Schedule 6.1(b) Minimum Consolidated EBITDA Fiscal quarter ended Amount December 31, 2003 $9,000,000 March 31, 2004 $9,500,000 June 30, 2004 $10,200,000 September 30, 2004 $11,000,000 December 31, 2004 $12,000,000 March 31, 2005 $12,000,000 June 30, 2005 $12,500,000 September 30, 2005 $13,200,000 December 31, 2005 $13,900,000 March 31, 2006 $14,900,000 June 30, 2006 $15,900,000 September 30, 2006 $15,900,000 December 31, 2006 $15,900,000 March 31, 2007 $18,200,000 June 30, 2007 $18,200,000 September 30, 2007 $18,200,000 December 31, 2007 $18,200,000 March 31, 2008 $20,000,000 June 30, 2008 $20,000,000 September 30, 2008 $20,000,000 Schedule 6.1(c) Fixed Charge Ratio Fiscal quarter ended Ratio --------------------- ----- December 31, 2003 0.90 to 1.00 March 31, 2004 0.95 to 1.00 June 30, 2004 1.00 to 1.00 September 30, 2004 1.00 to 1.00 December 31, 2004 1.00 to 1.00 March 31, 2005 1.10 to 1.00 June 30, 2005 1.20 to 1.00 September 30, 2005 1.30 to 1.00 December 31, 2005 1.40 to 1.00 March 31, 2006 1.50 to 1.00 June 30, 2006 1.50 to 1.00 September 30, 2006 1.50 to 1.00 December 31, 2006 1.50 to 1.00 March 31, 2007 1.50 to 1.00 June 30, 2007 1.50 to 1.00 September 30, 2007 1.50 to 1.00 December 31, 2007 1.50 to 1.00 March 31, 2008 1.50 to 1.00 June 30, 2008 1.50 to 1.00 September 30, 2008 1.50 to 1.00 EX-10 5 ex10-2d.txt GUARANTEE AGREEMENT EXHIBIT 10.2 THIS GUARANTY and SECURITY AGREEMENT (this "Agreement") is entered into as of October 21,2003 among Infocrossing, Inc., a Delaware corporation (the "Borrower"), certain Subsidiaries of the Borrower listed on the signature pages hereto (individually a "Guarantor" and collectively the "Guarantors"; together with the Borrower, individually an "Obligor", and collectively the "Obligors") and Infocrossing Agent, Inc., in its capacity as agent (in such capacity, the "Agent") for the ratable benefit of the lenders from time to time party to the Term Loan Agreement described below (the "Lenders"). RECITALS WHEREAS, pursuant to that certain Term Loan Agreement, dated as of the date hereof (as amended, modified, extended, renewed or replaced from time to time, the "Term Loan Agreement"), among the Borrower, the Agent and the Lenders, the Lenders have agreed to hold loans (the "Loans") upon the terms and subject to the conditions set forth therein; and WHEREAS, it is a condition precedent to the effectiveness of the Term Loan Agreement that the Obligors shall have executed and delivered this Agreement to the Agent for the ratable benefit of the Lenders. NOW, THEREFORE, in consideration of these premises and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Definitions. (a) Unless otherwise defined herein, capitalized terms used herein shall have the meanings ascribed to such terms in the Term Loan Agreement, and the following terms which are defined in Article 9 of the Uniform Commercial Code (the "UCC") in effect in the State of New York on the date hereof are used herein as so defined: Accessions, Accounts, As-Extracted Collateral, Chattel Paper, Commercial Tort Claim, Consumer Goods, Deposit Accounts, Documents, Electronic Chattel Paper, Equipment, Farm Products, Fixtures, General Intangibles, Goods, Instruments, Inventory, Investment Property, Letter-of-Credit Rights, Manufactured Home, Proceeds, Software, Supporting Obligation and Tangible Chattel Paper. (b) In addition, the following terms shall have the following meanings: "Contracts": all licenses or other agreements to which an Obligor is a party, as each may be amended, supplemented or otherwise modified from time to time, including, without limitation, (a) all rights of an Obligor to receive moneys due and to become due to it thereunder or in connection therewith, (b) all rights of an Obligor to damages arising out of or for breach or default in respect thereof and (c) all rights of an Obligor to exercise all remedies thereunder. "Control": (i) with respect to Electronic Chattel Paper, "control" (within the meaning of Section 9-105 of the UCC) over such Electronic Chattel Paper, (ii) with respect to Deposit Accounts , "control" (within the meaning of Section 9-104 of the UCC) over such Deposit Accounts, (iii) with respect to Investment Property constituting certificated securities, uncertificated securities, securities accounts, securities entitlements, commodity accounts or commodity contracts (each as referred to in the UCC), "control" (within the meanings of Sections 8-106 and 9-106 of the UCC) over such Investment Property, and (iv) with respect to Letter-of-Credit Rights, "control" (within the meaning of Section 9-107 of the UCC) with respect to such Letter-of-Credit Rights. "Copyright Licenses": any written agreement, naming any Obligor as licensor, granting any right under any Copyright including, without limitation, any thereof referred to in Schedule 5(h) hereto. "Copyrights": (a) all registered United States copyrights in all Works, now existing or hereafter created or acquired, all registrations and recordings thereof, and all applications in connection therewith, including, without limitation, registrations, recordings and applications in the United States Copyright Office including, without limitation, any thereof referred to in Schedule 5(h) hereto, and (b) all renewals thereof including, without limitation, any thereof referred to in Schedule 5(h) hereto. "Notes": all notes issued by the Borrower to the Lenders pursuant to the terms of the Term Loan Agreement. "Patent License": all agreements, whether written or oral, providing for the grant by or to an Obligor of any right to manufacture, use or sell any invention covered by a Patent, including, without limitation, any thereof referred to in Schedule 5(h) hereto. "Patents": (a) all letters patent of the United States or any other country and all reissues and extensions thereof, including, without limitation, any thereof referred to in Schedule 5(h) hereto, and (b) all applications for letters patent of the United States or any other country and all divisions, continuations and continuations-in-part thereof, including, without limitation, any thereof referred to in Schedule 5(h) hereto. "Secured Obligations": (a) the due and punctual payment by the Borrower of (i) the principal of, and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, and (ii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of the Borrower to the Agent and the Lenders under the Loan Documents, (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of the Borrower under or pursuant to the Loan Documents, and (c) the due and punctual payment and performance of all the covenants, agreements, obligations and liabilities of the Guarantors under or pursuant to the Loan Documents. "Trademark License": means any agreement, written or oral, providing for the grant by or to an Obligor of any right to use any Trademark, including, without limitation, any thereof referred to in Schedule 5(h) hereto. "Trademarks": (a) all trademarks, trade names, corporate names, company names, business names, fictitious business names, trade styles, service marks, logos and other source or business identifiers, and the goodwill associated therewith, now existing or hereafter adopted or acquired, all registrations and recordings thereof, and all applications in connection therewith, whether in the United States Patent and Trademark Office or in any similar office or agency of the United States, any State thereof or any other country or any political subdivision thereof, or otherwise, including, without limitation, any thereof referred to in Schedule 5(h) hereto, and (b) all renewals thereof. "Work": any work which is subject to copyright protection pursuant to Title 17 of the United States Code. 2. Guaranty. (a) The Guarantee. Each of the Guarantors hereby jointly and severally guarantees, as a primary obligor and not merely as a surety, to each Lender and to the Agent as hereinafter provided, the prompt payment and performance of the Secured Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise) strictly in accordance with the terms thereof. The Guarantors hereby further agree that if any of the Secured Obligations are not paid in full when due (whether at stated maturity, as a mandatory prepayment, by acceleration or otherwise), the Guarantors will, jointly and severally, promptly pay the same, without any demand or notice whatsoever, and that in the case of any extension of time or payment or renewal of any of the Secured Obligations, the same will be promptly paid in full when due (whether at extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the terms of such extension or renewal. Each Guarantor agrees that this is a continuing guarantee of payment and not of collection. Notwithstanding any provision to the contrary contained herein or in any other of the Loan Documents, the obligations of each Guarantor hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the Bankruptcy Code or any comparable provisions of any applicable state law. (b) Obligations Unconditional. The obligations of the Guarantors under Section 2 hereof are joint and several, absolute, irrevocable and unconditional, irrespective of the value, genuineness, validity, regularity or enforceability of any of the Loan Documents, or any other agreement or instrument referred to therein, or any substitution, release or exchange of any other guarantee of or security for any of the Secured Obligations, and, to the fullest extent permitted by applicable law, irrespective of any other circumstance whatsoever which might otherwise constitute a legal or equitable discharge or defense of a surety or guarantor, it being the intent of this Section 2 that the obligations of the Guarantors hereunder shall be absolute, irrevocable and unconditional under any and all circumstances. Each Guarantor agrees that such Guarantor shall have no right of subrogation, indemnity, reimbursement or contribution against the Borrower or any other Guarantor of the Secured Obligations for amounts paid under this guaranty until such time as the Lenders have been paid in full. Without limiting the generality of the foregoing, it is agreed that, to the fullest extent permitted by law, the occurrence of any one or more of the following shall not alter or impair the liability of any Guarantor hereunder which shall remain absolute, irrevocable and unconditional as described above: (i) at any time or from time to time, without notice to any Guarantor, the time for any performance of or compliance with any of the Secured Obligations shall be extended, or such performance or compliance shall be waived; (ii) any of the acts mentioned in any of the provisions of any of the Loan Documents or any other agreement or instrument referred to in the Loan Documents shall be done or omitted; (iii) the maturity of any of the Secured Obligations shall be accelerated, or any of the Secured Obligations shall be modified, supplemented or amended in any respect, or any right under any of the Loan Documents or any other agreement or instrument referred to in the Loan Documents shall be waived or any other guarantee of any of the Secured Obligations or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with; (iv) any Lien granted to, or in favor of, the Agent or any Lender or Lenders as security for any of the Secured Obligations shall fail to attach or be perfected; or (v) any of the Secured Obligations shall be determined to be void or voidable (including, without limitation, for the benefit of any creditor of any Guarantor) or shall be subordinated to the claims of any Person (including, without limitation, any creditor of any Guarantor). With respect to its obligations hereunder, each Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and all notices whatsoever, and any requirement that the Agent or any Lender exhaust any right, power or remedy or proceed against any Person under any of the Loan Documents or any other agreement or instrument referred to in the Loan Documents, or against any other Person under any other guarantee of, or security for, any of the Secured Obligations. (c) Reinstatement. The obligations of the Guarantors under this Section 2 shall be automatically reinstated if and to the extent that for any reason any payment by or on behalf of any Person in respect of the Secured Obligations is rescinded or must be otherwise restored by any holder of any of the Secured Obligations, whether as a result of any proceedings in bankruptcy or reorganization or otherwise, and each Guarantor agrees that it will indemnify the Agent and each Lender on demand for all reasonable costs and expenses (including, without limitation, fees and expenses of counsel) incurred by the Agent or any Lender and each of their Affiliates and their respective members, partners, directors, officers, employees, agents and advisors of the Agent, each Lender and each of their Affiliates (each such Person being called an "Indemnitee") in connection with such rescission or restoration, including any such costs and expenses incurred in defending against any claim alleging that such payment constituted a preference, fraudulent or similar payment under any bankruptcy, insolvency or similar law; provided that such indemnity shall not be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. (d) Certain Additional Waivers. Each Guarantor further agrees that such Guarantor shall have no right of recourse to security for the Secured Obligations until such time as all of the Secured Obligations have been paid in full and all of the Loan Documents have been terminated. (e) Remedies. The Guarantors agree that, to the fullest extent permitted by law, as between the Guarantors, on the one hand, and the Agent and the Lenders on the other hand, the Secured Obligations may be declared to be forthwith due and payable as provided in Section 7 of the Term Loan Agreement (and shall be deemed to have become automatically due and payable in the circumstances provided in said Section 7) for purposes of this Section 2, notwithstanding any stay, injunction or other prohibition preventing such declaration (or preventing the Secured Obligations from becoming automatically due and payable) as against any other Person and that, in the event of such declaration (or the Secured Obligations being deemed to have become automatically due and payable), the Secured Obligations (whether or not due and payable by any other Person) shall forthwith become due and payable by the Guarantors for purposes of this Section 2. (f) Continuing Guarantee. The guarantee in this Section 2 is a continuing guarantee, and shall apply to all Secured Obligations whenever arising. 3. Grant of Security Interest in the Collateral. To secure the prompt payment and performance in full when due, whether by lapse of time, acceleration, mandatory prepayment or otherwise, of the Secured Obligations, each Obligor hereby grants to the Agent, for the ratable benefit of the Lenders, a continuing security interest in, and a right to set off against, any and all right, title and interest of such Obligor in and to the personal property of such Obligor, whether now owned or existing or owned, acquired, or arising hereafter (collectively, the "Collateral") including, without limitation, the following: (a) all Accounts; (b) all cash and Cash Equivalents; (c) all Chattel Paper; (d) those certain Commercial Tort Claims set forth on Schedule 2(d) attached hereto; (e) all Contracts; (f) all Copyrights; (g) all Copyright Licenses; (h) all Deposit Accounts; (i) all Documents; (j) all Equipment; (k) all Fixtures; (l) all General Intangibles; (m) all Instruments; (n) all Inventory; (o) all Investment Property; (p) all Letter-of-Credit Rights; (q) all Patents; (r) all Patent Licenses; (s) all Software; (t) all Supporting Obligations; (u) all Trademarks; (v) all Trademark Licenses; (w) all Accessions; and (x) to the extent not otherwise included, all Proceeds and products of any and all of the foregoing and all collateral security and guarantees given by any Person with respect to any of the foregoing; provided however, the Collateral shall not include contract rights in any agreement (i) the grant of a security interest in which would violate the agreement under which such rights arise except to the extent provided under the UCC, or (ii) to the extent that the pledge or assignment of such agreement requires the consent of any third party unless such third party has consented thereto except to the extent provided under the UCC. The Obligors and the Agent, on behalf of the Lenders, hereby acknowledge and agree that the security interest created hereby in the Collateral constitutes continuing collateral security for all of the Secured Obligations, whether now existing or hereafter arising. 4. Provisions Relating to Accounts/Contracts. (a) Anything herein to the contrary notwithstanding, each of the Obligors shall remain liable under each of the Accounts to observe and perform all the conditions and obligations to be observed and performed by it thereunder, all in accordance with the terms of any agreement giving rise to each such Account. Neither the Agent nor any Lender shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Agent or any Lender of any payment relating to such Account pursuant hereto, nor shall the Agent or any Lender be obligated in any manner to perform any of the obligations of an Obligor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (b) At any time after the occurrence and during the continuation of an Event of Default, the Agent shall have the right, but not the obligation, to make test verifications of the Accounts in any manner and through any medium that it reasonably considers advisable, and the Obligors shall furnish all such assistance and information as the Agent may reasonably require in connection with such test verifications. Furthermore, at any time after the occurrence and during the continuation of an Event of Default, upon the Agent's request and at the expense of the Obligors, the Obligors shall cause independent public accountants or others satisfactory to the Agent to furnish to the Agent reports showing reconciliations, aging and test verifications of, and trial balances for, the Accounts. At any time after the occurrence and during the continuation of an Event of Default, or after having provided written notice to the Borrower upon a determination by the Agent that that communication is reasonably necessary, the Agent in its own name or in the name of others may communicate with account debtors on the Accounts to verify with them to the Agent's satisfaction the existence, amount and terms of any Accounts. (c) Neither the Agent nor any Lender shall have any obligation or liability under any Contract by reason of or arising out of this Agreement or the receipt by the Agent or any such Lender of any payment relating to such Contract pursuant hereto, nor shall the Agent or any Lender be obligated in any manner to perform any of the obligations of an Obligor under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by it or as to the sufficiency of any performance by any party under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts which may have been assigned to it or to which it may be entitled at any time or times. (d) (i) At any time after the occurrence and during the continuation of an Event of Default or (ii) in connection with any audit of the Contracts by the Agent or any other Person designated by the Agent, after having provided written notice to the Borrower, the Agent in its own name or in the name of others may communicate with parties to the Contracts to verify with them to the Agent's satisfaction the existence, amount and terms of any Contract. (e) At the Agent's request after the occurrence and during the continuance of an Event of Default, the Obligors shall deliver to the Agent all original and other documents in their possession or control (or as to which they have a right or ability to get) evidencing, and relating to, the agreements and transactions which gave rise to the Accounts. 5. Representations and Warranties. Each Obligor hereby represents and warrants to the Agent, for the ratable benefit of the Lenders: (a) Legal Name and Location of Obligor; Location of Collateral. As of the Closing Date, each Obligor's exact legal name and state of formation is (and for the prior four months has been) as shown on the signature pages to this Agreement. As of the Closing Date, the principal place of business and chief executive office of each Obligor is as set forth on Schedule 5(a) attached hereto. As of the Closing Date, no Obligor has in the past four months changed its name, been party to a merger, consolidation or other change in structure or used any tradename except as set forth in Schedule 5(a) attached hereto. (b) Location of Collateral. As of the Closing Date, the location of all Collateral owned by each Obligor is as shown on Schedule 5(b) attached hereto. (c) Ownership. Each Obligor is the legal and beneficial owner of its Collateral and has the right to pledge, sell, assign or transfer the same. (d) Security Interest/Priority. This Agreement creates a valid security interest in favor of the Agent, for the ratable benefit of the Lenders, in the Collateral of such Obligor and, when properly perfected by filing, shall constitute a valid first priority perfected security interest in such Collateral (except with respect to any Collateral subject to Liens permitted by Section 6.3(f) of the Term Loan Agreement as of the Closing Date, and thereafter any Collateral subject to Liens permitted by Sections 6.3(f), (g), (h) and (l) of the Term Loan Agreement), to the extent such security can be perfected by filing under the UCC and/or by filing in the United States Copyright Office or the United States Patent and Trademark Office, free and clear of all Liens except for Liens permitted by Section 6.3 of the Term Loan Agreement. (e) Types of Collateral. None of the Collateral consists of, or is the Proceeds of, Farm Products, As-Extracted Collateral, Consumer Goods, Manufactured Homes or timber to be cut. (f) Accounts. (i) Each Account of the Obligors and the papers and documents relating thereto are genuine and in all material respects what they purport to be, (ii) each Account arises out of (A) a bona fide sale of goods sold and delivered by such Obligor (or is in the process of being delivered) or (B) services theretofore actually rendered by such Obligor to, the account debtor named therein, (iii) no Account of an Obligor relating to an amount in excess of $100,000 is evidenced by any Instrument or Chattel Paper unless such Instrument or Chattel Paper has been theretofore endorsed over and delivered to, or submitted to the Control of, the Agent and (iv) no surety bond was required or given in connection with any Account of an Obligor or the contracts or purchase orders out of which they arose, other than as permitted by the Term Loan Agreement. (g) Inventory. No Inventory is held by an Obligor pursuant to consignment, sale or return, sale on approval or similar arrangement. (h) Copyrights, Patents and Trademarks. (i) As of the Closing Date, to the best of each Obligor's knowledge, each Copyright, Patent and Trademark of such Obligor is valid, subsisting, unexpired, enforceable and has not been abandoned. (ii) As of the Closing Date, except as set forth in Schedule 5(h) attached hereto, none of such Copyrights, Patents and Trademarks is the subject of any licensing or franchise agreement. (iii) As of the Closing Date, no holding, decision or judgment has been rendered against any Obligor by any Governmental Authority which would limit, cancel or question the validity of any Copyright, Patent or Trademark. (iv) No action or proceeding is pending against any Obligor seeking to limit, cancel or question the validity of any material Copyright, Patent or Trademark, or which, if adversely determined, would have a material adverse effect on the value of such Copyright, Patent or Trademark. (v) As of the Closing Date, all applications pertaining to the material Copyrights, Patents and Trademarks of each Obligor have been duly and properly filed, and all registrations or letters pertaining to such material Copyrights, Patents and Trademarks have been duly and properly filed and issued, and all of such material Copyrights, Patents and Trademarks are valid and enforceable. (vi) No Obligor has made any assignment or agreement in conflict with the security interest in the Copyrights, Patents or Trademarks of each Obligor hereunder. (i) Contracts. (i) Each material Contract is in full force and effect and constitutes a valid and legally enforceable obligation of the parties thereto, except as affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) and an implied covenant of good faith and fair dealing. (ii) No consent or authorization of, filing with or other act by or in respect of any Governmental Authority is required in connection with the execution, delivery, performance, validity or enforceability of any of the Contracts by any party thereto other than those which have been duly obtained, made or performed, are in full force and effect and do not subject the scope of any such Contract to any material adverse limitation, either specific or general in nature. (iii) No Obligor nor (to the best of any Obligor's knowledge) any other party to any material Contract is in default or is likely to become in default in the performance or observance of any of the terms thereof. (iv) The Obligors have fully performed in all material respects all their obligations under each material Contract. (v) The right, title and interest of any Obligor in, to and under each material Contract are not subject to any defense, offset, counterclaim or claim which would materially adversely affect the value of such Contract as Collateral, nor have any of the foregoing been asserted or alleged against any Obligor as to any material Contract. (vi) The Obligors have delivered, or made available, to the Agent a complete and correct copy of each material Contract requested by the Agent, including all amendments, supplements and other modifications thereto. (vii) No amount payable to any Obligor under or in connection with any Contract in excess of $100,000 is evidenced by any Instrument or Chattel Paper which has not been delivered to the Agent. (viii) None of the parties to any material Contracts is a Governmental Authority. 6. Covenants. Each Obligor covenants that, so long as any Loans remain outstanding or any other amount is due and owing to any Lender or the Agent under the Term Loan Agreement or under any other Loan Document, such Obligor shall: (a) Other Liens. Defend the Collateral against the claims and demands of all other parties claiming an interest therein, keep the Collateral free from all Liens, except for Liens permitted by Section 6.3 of the Term Loan Agreement. Neither the Agent nor any Lender authorizes any Obligor to, and no Obligor shall sell, exchange, transfer, assign, lease or otherwise dispose of the Collateral or any interest therein, except as permitted under the Term Loan Agreement or this Agreement. (b) Preservation of Collateral. Keep the Collateral in good order, condition and repair (other than any Collateral that has become obsolete or is not material to such Obligor) and not use the Collateral in violation of the provisions of this Agreement or any other agreement relating to the Collateral or any policy insuring the Collateral or any applicable statute, law, bylaw, rule, regulation or ordinance. (c) Instruments/Tangible Chattel Paper/Negotiable Documents. If any amount payable in excess of $100,000 under or in connection with any of the Collateral shall be or become evidenced by any Instrument or Tangible Chattel Paper, or if any property constituting Collateral with a value in excess of $100,000 shall be stored or shipped subject to a negotiable document, such Obligor shall ensure that such Instrument, Tangible Chattel Paper or negotiable document is either in the possession of such Obligor at all times or, if requested by the Agent to perfect its security interest in such Collateral, is delivered to the Agent duly indorsed in a manner satisfactory to the Agent. Such Obligor shall ensure that any Collateral consisting of Tangible Chattel Paper is marked with a legend acceptable to the Agent indicating the Agent's security interest in such Tangible Chattel Paper. (d) Change in Organizational Structure or Location. Not, without providing 30 days prior written notice to the Agent and without filing such amendments to any previously filed financing statements as the Agent may reasonably require, (i) alter its corporate existence or, in one transaction or a series of transactions, merge into or consolidate with any other entity, or sell all or substantially all of its assets, (ii) change its state of incorporation or formation or (iii) change its registered legal name. (e) Inspection. Allow the Agent or its representatives to visit and inspect the Collateral as set forth in Section 5.6 of the Term Loan Agreement. (f) Perfection of Security Interest. Each Obligor hereby authorizes the Agent to prepare and file such financing statements (including renewal statements) or amendments thereof or supplements thereto or other instruments as the Agent may from time to time deem reasonably necessary or appropriate in order to perfect and maintain the security interests granted hereunder in accordance with the UCC, which financing statements may be without the signature of such Obligor (to the extent such signature is not required under the laws of any applicable jurisdiction), and which may describe the Collateral as "all assets" or "all personal property" or words of like import. Each Obligor shall also execute and deliver to the Agent such agreements, assignments or instruments (including affidavits, notices, reaffirmations and amendments and restatements of existing documents, as the Agent may reasonably request) and do all such other things as the Agent may reasonably deem necessary or appropriate (i) to assure to the Agent its security interests hereunder, including (A) with regard to Copyrights, a Notice of Grant of Security Interest in Copyrights in the form of Schedule 6(f)(i) attached hereto, (B) with regard to Patents, a Notice of Grant of Security Interest in Patents for filing with the United States Patent and Trademark Office in the form of Schedule 6(f)(ii) attached hereto, (C) with regard to Trademarks, a Notice of Grant of Security Interest in Trademarks for filing with the United States Patent and Trademark Office in the form of Schedule 6(f)(iii) attached hereto and (D) with regard to Deposit Accounts, Investment Property, Letter-of-Credit Rights and Electronic Chattel Paper, all agreements, assignments, instruments or other documents as requested by the Agent for the purpose of obtaining and maintaining Control, including any deposit account control agreements, (ii) to consummate the transactions contemplated hereby and (iii) to otherwise protect and assure the Agent of its rights and interests hereunder. To that end, each Obligor hereby irrevocably makes, constitutes and appoints the Agent, its nominee or any other person whom the Agent may designate, as such Obligor's attorney in fact with full power and for the limited purpose to sign in the name of such Obligor any such notices or similar documents which in the Agent's reasonable discretion would be necessary, appropriate or convenient in order to perfect and maintain perfection of the security interests granted hereunder, such power, being coupled with an interest, being and remaining irrevocable for so long as this Agreement is in effect and until this Agreement is terminated in accordance with Section 13(a) hereof. Each Obligor hereby agrees that a carbon, photographic or other reproduction of this Agreement or any such financing statement is sufficient for filing as a financing statement by the Agent without notice thereof to such Obligor wherever the Agent may in its sole discretion desire to file the same. In the event for any reason the law of any jurisdiction other than New York becomes or is applicable to the Collateral of any Obligor or any part thereof, or to any of the Secured Obligations, such Obligor agrees to execute and deliver all such instruments and to do all such other things as the Agent in its sole discretion reasonably deems necessary or appropriate to preserve, protect and enforce the security interests of the Agent under the law of such other jurisdiction (and, if an Obligor shall fail to do so promptly upon the request of the Agent, then the Agent may execute any and all such requested documents on behalf of such Obligor pursuant to the power of attorney granted hereinabove). If any Collateral having a value of $100,000 or more is in the possession or control of a warehouseman, bailee or any agent or processor of an Obligor and the Agent so requests, such Obligor agrees to (i) notify such agents in writing of the Agent's security interest therein, (ii) instruct them to hold all such Collateral for the Lenders' account and subject to the Agent's instructions and (iii) obtain an acknowledgment from such Person that it is holding such Collateral for the benefit of the Agent. Each Obligor agrees to mark its books and records to reflect the security interest of the Agent in the Collateral. (g) Treatment of Accounts. Not grant or extend the time for payment of any Account, or compromise or settle any Account for less than the full amount thereof, or release any person or property, in whole or in part, from payment thereof, or allow any credit or discount thereon, other than as normal and customary in the ordinary course of an Obligor's business. (h) Covenants Relating to Copyrights. (i) Employ the Copyrights included in the Collateral for each material published Work with such notice of copyright as may be required by law to secure copyright protection. (ii) Not do any act or knowingly omit to do any act whereby any material Copyright included in the Collateral may become invalidated and (A) not do any act, or knowingly omit to do any act, whereby any material Copyright included in the Collateral may become injected into the public domain; (B) notify the Agent immediately if it knows, or has reason to know, that any material Copyright included in the Collateral may become injected into the public domain or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any court or tribunal in the United States or any other country) regarding an Obligor's ownership of any such Copyright or its validity; (C) take all necessary steps as it shall deem appropriate under the circumstances, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of each material Copyright owned by an Obligor including, without limitation, filing of applications for renewal where necessary; and (D) promptly notify the Agent of any material infringement of any material Copyright of an Obligor of which it becomes aware and take such actions as it shall reasonably deem appropriate under the circumstances to protect such Copyright, including, where appropriate, the bringing of suit for infringement, seeking injunctive relief and seeking to recover any and all damages for such infringement, unless, in such Obligor's reasonable good faith judgment, there is a valid business reason to taking or omitting to take any such action. (iii) Not make any assignment or agreement in conflict with the security interest in the Copyrights of each Obligor hereunder. (i) Covenants Relating to Patents and Trademarks. (i) (A) Continue to use each material Trademark on each and every trademark class of goods applicable to its current line as reflected in its current catalogs, brochures and price lists in order to maintain such material Trademark in full force free from any claim of abandonment for non-use, (B) maintain as in the past the quality of products and services offered under such material Trademark, (C) employ such Trademark with the appropriate notice of registration, (D) not adopt or use any mark which is confusingly similar or a colorable imitation of such Trademark unless the Agent, for the ratable benefit of the Lenders, shall obtain a perfected security interest in such mark pursuant to this Agreement, and (E) not (and not permit any licensee or sublicensee thereof to) do any act or knowingly omit to do any act whereby any material Trademark may become invalidated. (ii) Not do any act, or omit to do any act, whereby any Patent may become abandoned or dedicated unless, in such Obligor's reasonable good faith judgment, there is a valid business reason to taking or omitting to take any such action. (iii) Notify the Agent and the Lenders immediately if it knows, or has reason to know, that any application or registration relating to any material Patent or Trademark included in the Collateral may become abandoned or dedicated, or of any adverse determination or development (including, without limitation, the institution of, or any such determination or development in, any proceeding in the United States Patent and Trademark Office or any court or tribunal in any country) regarding an Obligor's ownership of any material Patent or Trademark or its right to register the same or to keep and maintain the same. (iv) Unless, in such Obligor's reasonable good faith judgment, there is a valid business reason to taking or omitting to take any such action, take all reasonable and necessary steps, including, without limitation, in any proceeding before the United States Patent and Trademark Office, or any similar office or agency in any other country or any political subdivision thereof, to maintain and pursue each application (and to obtain the relevant registration) and to maintain each registration of each Patent and each Trademark included in the Collateral, including, without limitation, filing of applications for renewal, affidavits of use and affidavits of incontestability. (v) Promptly notify the Agent and the Lenders after it learns that any material Patent or Trademark included in the Collateral is infringed, misappropriated or diluted by a third party and promptly sue for infringement, misappropriation or dilution, to seek injunctive relief where appropriate and to recover any and all damages for such infringement, misappropriation or dilution, or take such other actions as it shall reasonably deem appropriate under the circumstances to protect such Patent or Trademark unless, in such Obligor's reasonable good faith judgment, there is a valid business reason to taking or omitting to so sue, seek, recover or take any such action. (vi) Not make any assignment or agreement in conflict with the security interest in the Patents or Trademarks of each Obligor hereunder. (j) New Patents, Copyrights and Trademarks. Promptly provide the Agent (i) with respect to Copyrights, a duly executed Notice of Security Interest in Copyrights, (ii) with respect to Patents, a duly executed Notice of Security Interest in Patents, (iii) with respect to Trademarks, a duly executed Notice of Security Interest in Trademarks or (iv) such other duly executed documents as the Agent may request in a form acceptable to counsel for the Agent and suitable for recording to evidence the security interest in the Copyright, Patent or Trademark which is the subject of such new application. (k) Insurance. Insure, repair and replace the Collateral of such Obligor as required in Section 5.5 of the Term Loan Agreement. All insurance proceeds shall be subject to the security interest of the Agent hereunder. (l) Covenants Relating to Contracts. (i) The Obligors will perform and comply with all their respective obligations under material Contracts and all its other contractual obligations relating to the Collateral. (ii) Except as otherwise provided in the Term Loan Agreement, the Obligors will not fail to exercise promptly and diligently each and every material right which it may have under each Contract except in the exercise of reasonable business judgment. (iii) The Obligors will deliver to the Agent a copy of each material demand, notice or document received by it relating in any way to any material Contract. (iv) In any suit, proceeding or action brought by the Agent or any Lender under any Contract for any sum owing thereunder, or to enforce any provisions of any Contract, the Obligors will save, indemnify and keep the Agent and such Lender harmless from and against all expense, loss or damage suffered by reason of any defense, setoff, counterclaim, recoupment or reduction or liability whatsoever of the obligor thereunder, arising out of a breach by any Obligor of any obligation thereunder or arising out of any other agreement, indebtedness or liability at any time owing to or in favor of such obligor or its successors from any Obligor except for any such expense, loss or damage which results from the gross negligence of the willful misconduct of the Agent or such Lender. (m) Commercial Tort Claims; Notice of Litigation. (i) Promptly forward to the Agent written notification of any and all Commercial Tort Claims in excess of $100,000, including, but not limited to, any and all actions, suits, and proceedings before any court or Governmental Authority by or affecting such Obligor or any of its Subsidiaries and (ii) execute and deliver such statements, documents and notices and do and cause to be done all such things as may be reasonably required by the Agent, or required by law, including all things which may from time to time be necessary under the UCC to fully create, preserve, perfect and protect the priority of the Agent's security interest in any Commercial Tort Claims. (n) Deposit Accounts. (i) Maintain the current use of JP Morgan Chase Bank, Account #026-1-156012, which shall not be required to be subject to a control agreement so long as such account is used exclusively in connection with the administration of an employee benefits program, and (ii) not open any new Deposit Account, without providing prior written notice to the Agent and simultaneously therewith executing and delivering to the Agent a control agreement, in form and substance reasonably satisfactory to the Agent, unless the Agent (in its sole discretion) has waived such requirement of a control agreement. (o) At all times maintain the Collateral as personal property and not affix any of the Collateral to any real property in a manner which would change its nature from personal property to real property or a Fixture to real property. 7. Advances by Lenders. On failure of any Obligor to perform any of the covenants and agreements contained herein, the Agent may, at its sole option and in its sole discretion, perform the same and in so doing may expend such sums as the Agent may reasonably deem advisable in the performance thereof, including, without limitation, the payment of any insurance premiums, the payment of any taxes, a payment to obtain a release of a Lien or potential Lien, expenditures made in defending against any adverse claim and all other expenditures which the Agent or the Lenders may make for the protection of the security hereof or which may be compelled to make by operation of law. All such sums and amounts so expended shall be repayable by the Obligors on a joint and several basis promptly upon timely notice thereof and demand therefor, shall constitute additional Secured Obligations and shall bear interest from the date said amounts are expended at the default rate specified in Section 2.4(b) of the Term Loan Agreement. No such performance of any covenant or agreement by the Agent or the Lenders on behalf of any Obligor, and no such advance or expenditure therefor, shall relieve the Obligors of any default under the terms of this Agreement or the other Loan Documents. The Lenders may make any payment hereby authorized in accordance with any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax assessment, sale, forfeiture, tax lien, title or claim except to the extent such payment is being contested in good faith by an Obligor in appropriate proceedings and against which adequate reserves are being maintained in accordance with GAAP provided, that the Agent has given written notice to the applicable Obligor of its intent to pay such sums. 8. Events of Default. The occurrence of an event which under the Term Loan Agreement would constitute a Default or Event of Default shall be a Default or Event of Default, as the case may be, hereunder. 9. Remedies. (a) General Remedies. Upon the occurrence of an Event of Default and during continuation thereof, the Lenders shall have, in addition to the rights and remedies provided herein, in the Loan Documents or by law (including, but not limited to, levy of attachment, garnishment and the rights and remedies set forth in the UCC of the jurisdiction applicable to the affected Collateral), the rights and remedies of a secured party under the UCC (regardless of whether the UCC is the law of the jurisdiction where the rights and remedies are asserted and regardless of whether the UCC applies to the affected Collateral), and further, the Agent may, with or without judicial process or the aid and assistance of others, to the extent permitted by the UCC, (i) enter on any premises on which any of the Collateral may be located and, without resistance or interference by the Obligors, take possession of the Collateral, (ii) dispose of any Collateral on any such premises, (iii) require the Obligors to assemble and make available to the Agent at the expense of the Obligors any Collateral at any place and time designated by the Agent which is reasonably convenient to both parties, (iv) remove any Collateral from any such premises for the purpose of effecting sale or other disposition thereof, and/or (v) without demand and without advertisement, notice, hearing or process of law, all of which each of the Obligors hereby waives to the fullest extent permitted by law, at any place and time or times, sell and deliver any or all Collateral held by or for it at public or private sale, by one or more contracts, in one or more parcels, for cash, upon credit or otherwise, at such prices and upon such terms as the Agent deems advisable, in its sole discretion (subject to any and all mandatory legal requirements). Neither the Agent's compliance with any applicable state or federal law in the conduct of such sale, nor its disclaimer of any warranties relating to the Collateral, shall be considered to adversely affect the commercial reasonableness of such sale. In addition to all other sums due the Agent and the Lenders with respect to the Secured Obligations, the Obligors shall pay the Agent and each of the Lenders all reasonable documented costs and expenses incurred by the Agent or any such Lender, including, but not limited to, reasonable attorneys' fees and court costs, in obtaining or liquidating the Collateral, in enforcing payment of the Secured Obligations, or in the prosecution or defense of any action or proceeding by or against the Agent or the Lenders or the Obligors concerning any matter arising out of or connected with this Agreement, any Collateral or the Secured Obligations, including, without limitation, any of the foregoing arising in, arising under or related to a case under the Bankruptcy Code, to the extent that the Borrower would be obligated to pay such costs and expenses pursuant to Section 9.5 of the Term Loan Agreement. To the extent the rights of notice cannot be legally waived hereunder, each Obligor agrees that any requirement of reasonable notice shall be met if such notice is personally served on or mailed, postage prepaid, to the Borrower in accordance with the notice provisions of Section 9.2 of the Term Loan Agreement at least 10 days before the time of sale or other event giving rise to the requirement of such notice. The Agent and the Lenders shall not be obligated to make any sale or other disposition of the Collateral regardless of notice having been given. To the extent permitted by law, any Lender may be a purchaser at any such sale. To the extent permitted by applicable law, each of the Obligors hereby waives all of its rights of redemption with respect to any such sale. Subject to the provisions of applicable law, the Agent and the Lenders may postpone or cause the postponement of the sale of all or any portion of the Collateral by announcement at the time and place of such sale, and such sale may, without further notice, to the extent permitted by law, be made at the time and place to which the sale was postponed, or the Agent and the Lenders may further postpone such sale by announcement made at such time and place. (b) Remedies relating to Accounts. Upon the occurrence of an Event of Default and during the continuation thereof, whether or not the Agent has exercised any or all of its rights and remedies hereunder, the Agent shall have the right to enforce any Obligor's rights against any account debtors and obligors on such Obligor's Accounts. Each Obligor acknowledges and agrees that the Proceeds of its Accounts remitted to or on behalf of the Agent in accordance with the provisions hereof shall be solely for the Agent's own convenience and that such Obligor shall not have any right, title or interest in such Accounts or in any such other amounts except as expressly provided herein. The Agent and the Lenders shall have no liability or responsibility to any Obligor for acceptance of a check, draft or other order for payment of money bearing the legend "payment in full" or words of similar import or any other restrictive legend or endorsement or be responsible for determining the correctness of any remittance. Each Obligor hereby agrees to indemnify the Agent and the Lenders from and against all liabilities, damages, losses, actions, claims, judgments, costs, expenses, charges and attorneys' fees suffered or incurred by each Indemnitee (as defined in Section 2(c) above) because of the maintenance of the foregoing arrangements; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. In the case of any investigation, litigation or other proceeding, the foregoing indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by an Obligor, its directors, shareholders or creditors or an Indemnitee or any other Person or any other Indemnitee is otherwise a party thereto. (c) Access. In addition to the rights and remedies hereunder, upon the occurrence of an Event of Default and during the continuance thereof, the Agent shall have the right to enter and remain upon the various premises of the Obligors without cost or charge to the Agent, and use the same, together with materials, supplies, books and records of the Obligors for the purpose of collecting and liquidating the Collateral, or for preparing for sale and conducting the sale of the Collateral, whether by foreclosure, auction or otherwise. In addition, the Agent may remove Collateral, or any part thereof, from such premises and/or any records with respect thereto, in order to effectively collect or liquidate such Collateral. (d) Nonexclusive Nature of Remedies. Failure by the Agent or the Lenders to exercise any right, remedy or option under this Agreement, any other Loan Document or as provided by law, or any delay by the Agent or the Lenders in exercising the same, shall not operate as a waiver of any such right, remedy or option. No waiver hereunder shall be effective unless it is in writing, signed by the party against whom such waiver is sought to be enforced and then only to the extent specifically stated, which in the case of the Agent or the Lenders shall only be granted as provided herein. To the extent permitted by law, neither the Agent, the Lenders, nor any party acting as attorney for the Agent or the Lenders, shall be liable hereunder for any acts or omissions or for any error of judgment or mistake of fact or law other than their gross negligence or willful misconduct hereunder. The rights and remedies of the Agents and the Lenders under this Agreement shall be cumulative and not exclusive of any other right or remedy which the Agent or the Lenders may have. (e) Retention of Collateral. The Agent may, after providing the notices required by Sections 9-620 and 9-621 of the UCC or otherwise complying with the requirements of applicable law of the relevant jurisdiction, accept or retain the Collateral in satisfaction of the Secured Obligations. Unless and until the Agent shall have provided such notices, however, the Agent shall not be deemed to have retained any Collateral in satisfaction of any Secured Obligations for any reason. (f) Deficiency. In the event that the proceeds of any sale, collection or realization are insufficient to pay all amounts to which the Agent or the Lenders are legally entitled, the Obligors shall be jointly and severally liable for the deficiency, together with interest thereon at the default rate specified in Section 2.4(b) of the Term Loan Agreement together with the costs of collection and the reasonable fees of any attorneys employed by the Agent to collect such deficiency. Any surplus remaining after the full payment and satisfaction of the Secured Obligations shall be returned to the Obligors or to whomsoever a court of competent jurisdiction shall determine to be entitled thereto. 10. Rights of the Agent. (a) Power of Attorney. In addition to other powers of attorney contained herein, each Obligor hereby designates and appoints the Agent, on behalf of the Lenders, and each of its designees or agents, as attorney-in-fact of such Obligor, irrevocably and with power of substitution, with authority to take any or all of the following actions upon the occurrence and during the continuance of an Event of Default: (i) to demand, collect, settle, compromise, adjust, give discharges and releases, all as the Agent may reasonably determine; (ii) to commence and prosecute any actions at any court for the purposes of collecting any Collateral and enforcing any other right in respect thereof; (iii) to defend, settle or compromise any action brought and, in connection therewith, give such discharge or release as the Agent may deem reasonably appropriate; (iv) receive, open and dispose of mail addressed to an Obligor and endorse checks, notes, drafts, acceptances, money orders, bills of lading, warehouse receipts or other instruments or documents evidencing payment, shipment or storage of the goods giving rise to the Collateral of such Obligor on behalf of and in the name of such Obligor, or securing, or relating to such Collateral; (v) sell, assign, transfer, make any agreement in respect of, or otherwise deal with or exercise rights in respect of, any Collateral or the goods or services which have given rise thereto, as fully and completely as though the Agent were the absolute owner thereof for all purposes; (vi) adjust and settle claims under any insurance policy relating thereto; (vii) execute and deliver all assignments, conveyances, statements, financing statements, renewal financing statements, agreements, affidavits, notices and other agreements, instruments and documents that the Agent may determine necessary in order to perfect and maintain the security interests and liens granted in this Agreement and in order to fully consummate all of the transactions contemplated therein; (viii) institute any foreclosure proceedings that the Agent may deem appropriate; and (ix) do and perform all such other acts and things as the Agent may reasonably deem to be necessary, proper or convenient in connection with the Collateral. This power of attorney is a power coupled with an interest and shall be irrevocable and shall remain in full force and effect for so long as this Agreement is in effect and until this Agreement is terminated in accordance with Section 13(a) hereof. The Agent shall be under no duty to exercise or withhold the exercise of any of the rights, powers, privileges and options expressly or implicitly granted to the Agent in this Agreement, and shall not be liable for any failure to do so or any delay in doing so. The Agent shall not be liable for any act or omission or for any error of judgment or any mistake of fact or law in its individual capacity or its capacity as attorney-in-fact except acts or omissions resulting from its gross negligence or willful misconduct. This power of attorney is conferred on the Agent solely to protect, preserve and realize upon its security interest in the Collateral. (b) Performance by the Agent of Obligations. If any Obligor fails to perform any agreement or obligation contained herein, after notice by the Agent to the Obligor the Agent itself may perform, or cause performance of, such agreement or obligation, and the expenses of the Agent incurred in connection therewith shall be payable by the Obligors on a joint and several basis pursuant to Section 9 hereof. (c) Assignment by the Agent. Upon the occurrence of an Event of Default, or as otherwise permitted under the Term Loan Agreement, the Agent may assign the Secured Obligations and any portion thereof and/or the Collateral and any portion thereof, and the assignee shall be entitled to all of the rights and remedies of the Agent under this Agreement in relation thereto. (d) The Agent's Duty of Care in Respect of Pledged Collateral. The Agent's sole duty with respect to the safe custody of the Collateral, while being held by the Agent hereunder, under Section 9-207 of the UCC, shall be substantially equal to that which the Agent accords its own property. Other than this duty, the Agent shall have no duty or liability to preserve rights pertaining thereto, it being understood and agreed that the Obligors shall be responsible for the preservation of all rights in the Collateral of such Obligor, and the Agent shall be relieved of all responsibility for Collateral upon surrendering it or tendering the surrender of it to the Obligors. It is understood and agreed that the Agent shall not have responsibility for cleaning up, repairing or otherwise preparing the Collateral for sale in the event of a public or private sale of Collateral pursuant to Section 8 hereof. 11. Application of Proceeds. Upon the acceleration of the Secured Obligations pursuant to Section 7 of the Term Loan Agreement, any payments in respect of the Secured Obligations and any proceeds of the Collateral, when received by the Agent or any of the Lenders in cash or its equivalent, will be applied first, to the payment of costs and expenses of the Agent in connection with the collection or sale or otherwise in connection with this Agreement, any other Loan Document or any of the Secured Obligations, including all court costs and the fees and expenses of its agents and legal counsel, the repayment of all advances made by the Agent hereunder or under any other Loan Document on behalf of any Obligor and any other costs or expenses incurred in connection with the exercise of any right or remedy hereunder or under any other Loan Document, and second, in reduction of the Secured Obligations in the order set forth in this Agreement and the Term Loan Agreement, and each Obligor irrevocably waives the right to direct the application of such payments and proceeds and acknowledges and agrees that the Agent shall have the continuing and exclusive right to apply and reapply any and all such payments and proceeds in the Agent's sole discretion, notwithstanding any entry to the contrary upon any of its books and records. 12. Costs of Counsel. At all times hereafter, the Obligors agree to promptly pay upon demand any and all reasonable costs and expenses of the Agent or the Lenders, (a) as required under Section 9.5 of the Term Loan Agreement and (b) subject to the limitations on the fees of counsel to the Agent and the Lenders set forth in Section 9.5 of the Term Loan Agreement, as reasonably necessary to protect the Collateral or to exercise any rights or remedies under this Agreement or with respect to any Collateral, including the costs and expenses of the Agent's counsel and of any experts or agents that the Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, sale or collection of, or realization upon, any Collateral or (iii) the failure of an Obligor to perform or observe any covenant or agreement hereunder. All of the foregoing costs and expenses shall constitute Secured Obligations hereunder. 13. Continuing Agreement. (a) This Agreement shall be a continuing agreement in every respect and shall remain in full force and effect until the Secured Obligations have been paid in full (other than any contingent indemnification obligations set forth in the Loan Documents). Upon such payment in full this Agreement shall be automatically terminated and the Agent and the Lenders shall, upon the request and at the expense of the Obligors, forthwith release all of its liens and security interests hereunder and shall execute and deliver all UCC termination statements and/or other documents reasonably requested by the Obligors evidencing such termination. (b) This Agreement shall continue to be effective or be automatically reinstated, as the case may be, if at any time payment, in whole or in part, of any of the Secured Obligations is rescinded or must otherwise be restored or returned by the Agent or any Lender as a preference, fraudulent conveyance or otherwise under any bankruptcy, insolvency or similar law, all as though such payment had not been made; provided that in the event payment of all or any part of the Secured Obligations is rescinded or must be restored or returned, all reasonable costs and expenses (including without limitation any reasonable legal fees and disbursements) incurred by the Agent or any Lender in defending and enforcing such reinstatement shall be deemed to be included as a part of the Secured Obligations. 14. Indemnity. Without limitation of its indemnification obligations under the other Loan Documents, each Obligor jointly and severally agrees to indemnify each Indemnitee (as defined in Section 2(c) above) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses, including the fees, charges and disbursements of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of, in connection with, or as a result of, the execution, delivery or performance of this Agreement or any claim, litigation, investigation or proceeding relating hereto or to the Collateral, whether or not any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnitee. 15. Amendments; Waivers; Modifications. This Agreement and the provisions hereof may not be amended, waived, modified, changed, discharged or terminated except as set forth in Section 9.1 of the Term Loan Agreement. 16. Successors in Interest. This Agreement shall create a continuing security interest in the Collateral and shall be binding upon each Obligor, its successors and assigns and shall inure, together with the rights and remedies of the Agent and the Lenders hereunder, to the benefit of the Agent and the Lenders and their successors and permitted assigns; provided, however, that none of the Obligors may assign its rights or delegate its duties hereunder without the prior written consent of each Lender or the Required Lenders, as required by the Term Loan Agreement. To the fullest extent permitted by law, each Obligor hereby releases the Agent and each Lender, and its successors and assigns, from any liability for any act or omission relating to this Agreement or the Collateral, except for any liability arising from the gross negligence or willful misconduct of the Agent, or such Lender, or its officers, employees or agents. 17. Notices. All notices required or permitted to be given under this Agreement shall be in conformance with Section 9.2 of the Term Loan Agreement. 18. Counterparts. This Agreement may be executed in any number of counterparts, each of which where so executed and delivered shall be an original, but all of which shall constitute one and the same instrument. It shall not be necessary in making proof of this Agreement to produce or account for more than one such counterpart. 19. Headings. The headings of the sections and subsections hereof are provided for convenience only and shall not in any way affect the meaning or construction of any provision of this Agreement. 20. Governing Law; Submission to Jurisdiction; Venue. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. The parties hereto irrevocably submit to the exclusive jurisdiction of any state or federal court sitting in the County of New York, in the State of New York over any suit, action or proceeding arising out of or relating to this Agreement, the Term Loan Agreement, the other Loan Documents or the transactions contemplated thereby. To the fullest extent they may effectively do so under applicable law, the parties hereto irrevocably waive and agree not to assert, by way of motion, as a defense or otherwise, any claim that they are not subject to the jurisdiction or any such court, any objection that they may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. 21. Waiver of Jury Trial. TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 22. Severability. If any provision of any of the Agreement is determined to be illegal, invalid or unenforceable, such provision shall be fully severable and the remaining provisions shall remain in full force and effect and shall be construed without giving effect to the illegal, invalid or unenforceable provisions. 23. Entirety. This Agreement and the other Loan Documents represent the entire agreement of the parties hereto and thereto, and supersede all prior agreements and understandings, oral or written, if any, including any commitment letters or correspondence relating to the Loan Documents or the transactions contemplated herein and therein. 24. Survival. All representations and warranties of the Obligors hereunder shall survive the execution and delivery of this Agreement and the other Loan Documents, the delivery of the Notes and the making of the Loans. 25. Other Security. To the extent that any of the Secured Obligations are now or hereafter secured by property other than the Collateral (including, without limitation, real property and securities owned by an Obligor), or by a guarantee, endorsement or property of any other Person, then the Agent and the Lenders shall have the right to proceed against such other property, guarantee or endorsement upon the occurrence and continuation of any Event of Default, and the Agent and the Lenders have the right, in their sole discretion, to determine which rights, security, liens, security interests or remedies the Agent and the Lenders shall at any time pursue, relinquish, subordinate, modify or take with respect thereto, without in any way modifying or affecting any of them or any of the Agent's and the Lenders' rights or the Secured Obligations under this Agreement, under any other of the Loan Documents. 26. Joint and Several Obligations of Obligors. (a) Each of the Obligors is accepting joint and several liability hereunder in consideration of the financial accommodation to be provided by the Lenders under the Term Loan Agreement, for the mutual benefit, directly and indirectly, of each of the Obligors and in consideration of the undertakings of each of the Obligors to accept joint and several liability for the obligations of each of them. (b) Each of the Obligors jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Obligors with respect to the payment and performance of all of the Secured Obligations arising under this Agreement and the other Loan Documents, it being the intention of the parties hereto that all of the Secured Obligations shall be the joint and several obligations of each of the Obligors without preferences or distinction among them. (c) Notwithstanding any provision to the contrary contained herein, in any other of the Loan Documents, the obligations of each Guarantor under the Term Loan Agreement and the other Loan Documents shall be limited to an aggregate amount equal to the largest amount that would not render such obligations subject to avoidance under Section 548 of the Bankruptcy Code or any comparable provisions of any applicable state law. 27. Rights of Required Lenders. All rights of the Agent hereunder, if not exercised by the Agent, may be exercised by the Required Lenders. [remainder of page intentionally left blank] Each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written. BORROWER: INFOCROSSING, INC. a Delaware corporation By: /s/ Nicholas J. Letizia Name: Nicholas J. Letizia Title: Senior Vice President GUARANTORS: AMQUEST, INC., a Georgia corporation By: /s/ Nicholas J. Letizia Name: Nicholas J. Letizia Title: Vice President ETG, INC. a Delaware corporation By: /s/ Nicholas J. Letizia Name: Nicholas J. Letizia Title: Vice President INFOCROSSING SERVICES, INC., a Delaware corporation By: /s/ Nicholas J. Letizia Name: Nicholas J. Letizia Title: Vice President AMQUEST SERVICES, INC., a Georgia corporation By: /s/ Nicholas J. Letizia Name: Nicholas J. Letizia Title: Vice President Accepted and agreed to as of the date first above written. INFOCROSSING AGENT, INC., as Agent By: /s/ Tyler Zachem ________________________________ Name: Tyler Zachem Title: President EX-99 6 ex99-1d.txt PRO FORMA INFORMATION Exhibit 99.1 Unaudited pro forma condensed consolidated combined financial statements for the fiscal year ended December 30, 2002, and the six month period ended June 30, 2003 On October 21, 2003, the Company closed two related transactions previously announced on October 17, 2003: (1) a private placement of common stock and warrants to purchase common stock (the "Offering") and (2) an exchange of its 8% Series A Cumulative Convertible Participating Preferred Stock and related series A warrants for cash and 9% five-year term loans (the "Recapitalization"). Also on October 21, 2003, the Company repaid its outstanding Senior Subordinated Debt (altogether, the "Transactions"). The following unaudited consolidated Pro Forma financial information illustrates the effect of the Transactions described below, as if such Transactions occurred on the first day of the periods presented in the unaudited Pro Forma Statements of Operations (January 1, 2002 for the year ended December 31, 2002; and January 1, 2003 for the six months ended June 30, 2003) and on the last day of the period for the unaudited Pro Forma Balance Sheet: o issuance of 9,739,111 shares of common stock and warrants to purchase 3,408,689 shares of common stock in the Offering at an assumed aggregate offering price of $7.86 per unit; o the exchange of all outstanding 8% Series A Cumulative Convertible Participating Preferred Stock (the "Series A Preferred Stock") and outstanding warrants to purchase 2,744,703 shares of common stock held by holders of such Series A Preferred Stock for the following consideration: 1. $55 million from cash raised in the offering, and 2. $25 million in term loans with, if certain conditions are satisfied, warrants to purchase up to 250,000 shares of common stock; o the repayment of $12.2 million of Senior Subordinated Debt and accrued interest and the related cancellation of outstanding warrants to purchase 1,187,500 shares of common stock; and o payment of an estimated $7.5 million of fees, commissions, and expenses in connection with the Transactions. The Pro Forma financial information is based on the Company's historical statements as of and for the six-month period ended June 30, 2003 and the year ended December 31, 2002, the details of the Transactions, and assumptions the Company believes to be reasonable. Changes in such assumptions could materially impact this presentation. Management has prepared the Pro Forma financial information without audit. The Pro Forma financial information does not purport to be indicative of results or financial condition that would have been achieved had the Transactions occurred on the dates indicated, nor does it purport to indicate the results or financial condition that might be obtained in the future. The Pro Forma financial information should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2002 and the Quarterly Report on Form 10-Q for the six months ended June 30, 2003.
Pro Forma Statements of Operations For the Six Months Ended June 30, 2003 (In Thousands, Except Per Share Data) (Unaudited) Pro Forma Pro Forma Historical Adjustments ------------- ------------- ------ ------------- Income Statement Data: Revenues......................... $ 26,711 $ -- $ 26,711 Cost and expenses................ Operating costs................ $ 16,957 $ -- $ 16,957 Selling and promotional costs.. $ 1,646 $ -- $ 1,646 General and administrative expenses ..................... $ 3,623 $ -- $ 3,623 Other depreciation and amortization .................. $ 2,889 $ -- $ 2,889 ------------- ------------- ------ ------------- Income from operations........... $ 1,596 $ -- $ 1,596 Interest income.................. $ (37) $ -- $ (37) Interest expense ................ $ 1,230 $ 381 (f)(i) $ 1,611 ------------- ------------- ------ ------------- Income (loss) before income taxes $ 403 $ (381) $ 22 Income tax (benefit) expense .... $ 28 $ (152) (g) $ (124) ------------- ------------- ------ ------------- Net income (loss) ............... $ 375 $ (229) $ 146 Accretion and dividends on redeemable preferred stock................ $ (4,949) $ (1,928) (h) $ (6,877) ------------- ------------- ------ ------------- Net loss to common stockholders......... $ (4,574) $ (2,157) $ (6,731) ============= ============= ====== ============= Basic and diluted loss per share................. $ (0.85) $ (0.45) ============= ============= Weighted average common shares outstanding.................... 5,381 (a) 15,120 ============= =============
See notes to unaudited Pro Forma financial information.
Pro Forma Statements of Operations For the Year Ended December 31, 2002 (In Thousands, Except Per Share Data) (Unaudited) Pro Forma Pro Forma Historical Adjustments ------------- ------------- ------ ------------- Income Statement Data: Revenues......................... $ 50,774 $ -- $ 50,774 Cost and expenses................ Operating costs................ $ 31,472 $ -- $ 31,472 Selling and promotional costs.. $ 3,140 $ -- $ 3,140 General and administrative expenses ..................... $ 7,619 $ -- $ 7,619 Leased facilities and office closings ...................... $ (290) $ -- $ (290) Amortization of restricted stock award ......................... $ -- $ -- $ -- Amortization of goodwill ...... $ -- $ -- $ -- Other depreciation and amortization .................. $ 5,939 $ -- $ 5,939 ------------- ------------- ---- ------------- Income from operations........... $ 2,894 $ -- $ 2,894 Interest income.................. $ (172) $ -- $ (172) Interest expense ................ $ 2,137 $ 819 (f)(i)$ 2,956 ------------- ------------- ---- ------------- Income (loss) before income taxes $ 929 $ (819) $ 110 Income tax benefit .............. $ (208) $ (328) (g) $ (536) ------------- ------------- ---- ------------- Net income (loss) ............... $ 1,137 $ (491) $ 646 Accretion and dividends on redeemable preferred stock................ $ (9,293) $ (6,812) (h) $ (16,105) ------------- ------------- ---- ------------- Net loss to common stockholders......... $ (8,156) $ (7,303) $ (15,459 ============= ============= ==== ============= Basic and diluted loss per share................. $ (1.52) $ (1.02) ============= ============= Weighted average common shares outstanding.................... 5,353 (a) 15,092 ============= =============
See notes to unaudited Pro Forma financial information.
Pro Forma Balance Sheet Data As of June 30, 2003 (In Thousands) (Unaudited) Pro Forma Historical Adjustments Pro Forma -------------- ------------- --------- ------------- Assets Current Assets Cash and cash equivalents. $ 8,083 $ 2,097 (a)(c)(d) $ 10,180 Other current assets...... $ 5,583 $ (156) (c) $ 5,427 Property and equipment, net.. $ 19,760 $ -- $ 19,760 Other assets................. $ 31,896 $ 500 (i) $ 32,396 -------------- ------------- --------- ------------- Total assets......... $ 65,322 $ 2,441 $ 67,763 ============== ============= ========= ============= Liabilities and Stockholder's Deficit Current liabilities.......... $ 10,251 $ (578) (c) $ 9,673 Long term liabilities Debentures due in 2005, net of unaccreted discount..... $ 10,288 $ (10,288) (c) $ -- New debt issued in recapitalization........... $ -- $ 24,031 (b) $ 24,031 Other long term liabilities.. $ 3,380 $ -- $ 3,380 -------------- ------------- --------- ------------- Total liabilities.... $ 23,919 $ 13,170 $ 37,084 -------------- ------------- --------- ------------- Redeemable series A preferred stock ...... $ 58,138 $ (58,138) (d) $ -- -------------- ------------- --------- ------------- Stockholder's equity (deficit) Common stock, par value $0.01....... $ 60 $ 97 (a) $ 157 $110,490 Additional paid in capital $ 61,179 $ 49,311 (a)(b)(c)(d) Accumulated deficit....... $(75,123) $ (1,994) (c)(e) $(77,117) Treasury stock............ $ (2,851) $ -- $ (2,851) -------------- ------------- --------- ------------- Total stockholders' equity (deficit).............. $(16,735) $ 47,414 $ 30,679 -------------- ------------- --------- ------------- Total liabilities and stockholder's deficit ........... $ 65,322 $ 2,441 $ 67,763 ============== ============= ========= =============
See notes to unaudited Pro Forma financial information. Notes to unaudited Pro Forma financial information: a) The Offering raised $68.9 million after the payment of fees, including $500,000 which are treated as deferred financing costs (see Note i), and there will be 9,739,111 shares of common stock, par value $0.01, issued in the Offering. b) We have assumed that 250,000 warrants will be issued in connection with the $25 million term loan, and that the original book value of the term loan will be reduced by the fair value of these warrants, estimated to be $969,000. The difference between the face value of the term loan and the original book value will be amortized over time, using the interest method, by means of a charge to interest expense. These warrants will only be issued if certain conditions occur in the first year after the closing of the Transactions. c) The Transactions include the repayment of Senior Subordinated Debt, amounting to $11,798,000 at June 30, 2003 including accrued interest thereon, and expensing the remaining balance of certain costs we had incurred in connection with the issuance of this debt. We have also assumed the cancellation of certain warrants granted in connection with the issuance of the Senior Subordinated Debt valued at $1,021,000. For each full month between the date the Senior Subordinated Debt is repaid in full and February 1, 2005, the Company can cancel 62,500 of the 2,000,000 warrants originally granted, up to a maximum of 1,500,000. For the unaudited Pro Forma Statement of Operations for the year ended December 31, 2002, we have assumed that the Senior Subordinated Debt and the related warrants were never issued. d) In the Recapitalization, the Company is exchanging $55 million of cash and the $25 million term loan noted above for all of the currently outstanding Series A Preferred Stock and all of the warrants valued at $19.9 million originally issued in connection with the Series A Preferred Stock. e) The Series A Preferred Stock was recorded in May 2000 at a discount to its face value of $60 million, and the difference has been recorded through a charge to accretion expense in determining Net Loss to Common Stockholders. The fair value of the Series A Preferred Stock and dividends payable thereon at June 30, 2003 has been estimated at approximately $60 million, and the difference between the current accreted book value and the fair value has been recorded as an adjustment to accretion expense in the income statement. f) The 9% interest and amortization of loan discount connected with the new term loan has been expensed in the unaudited Pro Forma Statements of Operations, and the 12% interest and other expenses connected with the Senior Subordinated Debt have been eliminated. g) A rate of 40% has been assumed for the tax effect of the above transactions in the Pro Forma Statements of Operations. h) Because the Transactions are assumed to occur at the beginning of each of the periods presented in the Pro Forma Operating Statements (January 1, 2002 for the year ended December 31, 2002 and January 1, 2003 for the six months ended June 30, 2003), and the Series A Preferred Stock would have had a lower book value on those dates, the adjustment to accretion expense (discussed in note e above) is greater than that recorded at June 30, 2003. i) Professional fees of $500,000 are treated as deferred financing costs and amortized as interest expense over the five-year term of the $25 million term loan. EX-99 7 ex99-2d.txt PRESS RELEASE FOR OFFERING Exhibit 99.2 INFOCROSSING COMPLETES PREVIOUSLY ANNOUNCED $76.5 MILLION PRIVATE PLACEMENT OF COMMON STOCK AND WARRANTS LEONIA, NJ, October 22, 2003 - Infocrossing, Inc. (Nasdaq: IFOX), a leading provider of mainframe, AS/400 and open system outsourcing solutions, business process outsourcing and business continuity services, announced today that it completed a previously announced $76.5 million private placement of 9,739,111 shares of its common stock and warrants to purchase 3,408,689 shares of its common stock. The net proceeds of the private placement, which was first announced on October 17, 2003, were principally used to fund a recapitalization of the Company in a transaction which was completed yesterday and to pay related fees and expenses. The remainder is being used for working capital purposes. For a description of the recapitalization transactions, please refer to the separate press release, also issued today. Of the net proceeds from the private placement, $55.0 million was paid to holders of the Company's series A preferred stock and series A warrants as partial consideration for the cancellation of all of those outstanding securities in connection with the recapitalization. Approximately $12.2 million of the net proceeds was used to repay all $11.9 million in aggregate principal amount outstanding of the Company's 12% senior subordinated debentures due 2005, plus accrued interest through the date of repayment. The warrants issued yesterday in the private placement have an exercise price of $7.86 per share of common stock and expire in October 2008. The private placement was made only to accredited investors in a transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"). The shares of common stock and warrants being issued, and the shares of common stock issuable upon exercise of the warrants, have not been registered under the Securities Act, or any state securities laws, and unless so registered, may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any securities, nor shall there be any sale of the securities in any jurisdiction in which such offering would be unlawful. About Infocrossing (www.infocrossing.com) Infocrossing, Inc. (Nasdaq: IFOX) is a premier provider of a full range of Information Technology outsourcing services, including mainframe and open system outsourcing, remote systems and network management, business process outsourcing, and Information Technology infrastructure consulting. With more than 18 years of experience managing large, mission-critical Information Technology systems, Infocrossing assures the optimal performance, security, reliability and scalability of customers' mainframes, distributed servers and networks, irrespective of where the systems components are located. Infocrossing maintains strategic alliances with leading technology providers, including IBM, Computer Associates, EMC, Sun Microsystems, Intel, and Cisco Systems. This release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. As such, final results could differ from estimates or expectations due to risks and uncertainties, including but not limited to: incomplete or preliminary information; changes in government regulations and policies; continued acceptance of the Company's products and services in the marketplace; competitive factors; technological changes; the Company's dependence upon third-party suppliers; intellectual property rights; and other risks. For any of these factors, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. EX-4 8 ex4-3d.txt EXCHANGE AGREEMENT EXHIBIT 4.3 EXECUTION COPY EXCHANGE AGREEMENT by and among INFOCROSSING, INC., MIDOCEAN CAPITAL INVESTORS, L.P., SANDLER CAPITAL PARTNERS V, L.P., SANDLER CAPITAL PARTNERS V FTE, L.P., SANDLER CAPITAL PARTNERS V GERMANY, L.P., SANDLER TECHNOLOGY PARTNERS SUBSIDIARY, LLC, SANDLER CO-INVESTMENT PARTNERS, L.P. and THE OTHER PARTY NAMED HEREIN --------------------------------- Dated as of October 16, 2003 --------------------------------- Table of Contents Page # ARTICLE I DEFINITIONS.........................................................2 - --------------------- 1.1 Definitions...............................................2 --- ----------- ARTICLE II EXCHANGE 5 - ------------------- 2.1 Agreement to Exchange.....................................5 --- --------------------- 2.2 Closing...................................................6 --- ------- ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................8 - ---------------------------------------------------------- 3.1 Organization and Standing.................................8 --- ------------------------- 3.2 Authorization; Enforceability.............................8 --- ----------------------------- 3.3 No Violation; Consents....................................9 --- ---------------------- 3.4 Commission Filings.......................................10 --- ------------------ 3.5 Absence of Certain Changes...............................10 --- -------------------------- 3.6 Private Offering.........................................10 --- ---------------- 3.7 Litigation...............................................11 --- ---------- 3.8 Permits and Licenses.....................................11 --- -------------------- 3.9 Investment Company.......................................11 --- ------------------ 3.10 Brokers and Finders......................................11 ---- ------------------- ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR..................12 - ----------------------------------------------------------- 4.1 Organization; Authorization; Enforceability..............12 --- ------------------------------------------- 4.2 No Violation; Consents...................................12 --- ---------------------- 4.3 Title to Securities......................................13 --- -------------------- ARTICLE V COVENANTS OF THE COMPANY...........................................13 - ---------------------------------- 5.1 Operation of Business....................................13 --- --------------------- 5.2 Agreement to Take Necessary and Desirable Actions........15 --- ------------------------------------------------- 5.3 Compliance with Conditions...............................15 --- -------------------------- 5.4 Consents and Approvals...................................15 --- ---------------------- 5.5 Private Placement........................................16 --- ------------------ 5.6 Waiver of Preemptive Rights..............................16 --- ---------------------------- ARTICLE VI COVENANTS OF EACH INVESTOR........................................16 - ------------------------------------- 6.1 Agreement to Take Necessary and Desirable Actions........16 --- ------------------------------------------------- 6.2 Compliance with Conditions; Best Efforts.................16 --- ---------------------------------------- 6.3 Consents and Approvals...................................16 --- ---------------------- ARTICLE VII CONDITIONS PRECEDENT TO CLOSING..................................17 - ------------------------------------------- 7.1 Conditions to the Company's Obligations..................17 --- --------------------------------------- 7.2 Conditions to Each Investor's Obligations................18 --- ----------------------------------------- ARTICLE VIII MISCELLANEOUS...................................................20 - -------------------------- 8.1 Survival; Indemnification................................20 --- ------------------------- 8.2 Notices..................................................22 --- ------- 8.3 Governing Law............................................23 --- ------------- 8.4 Termination..............................................23 --- ----------- 8.5 Entire Agreement.........................................24 --- ---------------- 8.6 Modifications and Amendments.............................24 --- ---------------------------- 8.7 Waivers and Extensions...................................24 --- ---------------------- 8.8 Titles and Headings......................................25 --- ------------------- 8.9 Exhibits and Schedules...................................25 --- ---------------------- 8.10 Expenses.................................................25 ---- -------- 8.11 Press Releases and Public Announcements..................25 ---- --------------------------------------- 8.12 Assignment; No Third Party Beneficiaries.................26 ---- ---------------------------------------- 8.13 Severability.............................................26 ---- ------------ 8.14 Counterparts.............................................26 ---- ------------ 8.15 Further Assurances.......................................26 ---- ------------------ 8.16 Remedies Cumulative......................................26 ---- ------------------- 8.17 Specific Performance.....................................27 ---- -------------------- 8.18 No Investor Affiliate Liability..........................27 ---- ------------------------------- 8.19 Confidentiality..........................................27 ---- --------------- 8.20 Legal Representation.....................................28 ---- --------------------- SCHEDULES Schedule A .........Exchange Schedule 3.3 .........Violations; Consents Schedule 3.5 .........Absence of Certain Changes Schedule 3.7 .........Litigation EXHIBITS Exhibit A Form of Amended Registration Rights Agreement Exhibit B Form of Termination of Stockholders' Agreement Exhibit C Form of Term Loan Agreement Exhibit D Form of Opinion of Latham & Watkins LLP EXCHANGE AGREEMENT EXCHANGE AGREEMENT dated as of October 16, 2003 (this "Agreement"), by and among Infocrossing, Inc. (f/k/a Computer Outsourcing Services, Inc.), a Delaware corporation (the "Company"), MidOcean Capital Investors, L.P., a Delaware limited partnership (the "MidOcean Investor"), Sandler Capital Partners V, L.P., a Delaware limited partnership ("Sandler V"), Sandler Capital Partners V FTE, L.P., a Delaware limited partnership ("Sandler V FTE"), Sandler Capital Partners V Germany, L.P., a Delaware limited partnership, ("Sandler V Germany"), Sandler Technology Partners Subsidiary, LLC, a Delaware limited liability company ("Sandler Technology"), and Sandler Co-Investment Partners, a Delaware limited partnership ("Sandler Co-Investment" and, together with Sandler V, Sandler V FTE, Sandler V Germany and Sandler Technology, the "Sandler Investors"), and Price Family Limited Partners (the "Price Investor"). Each of the MidOcean Investor, the Sandler Investors and the Price Investor are hereinafter referred to individually as an "Investor" and collectively as the "Investors." W I T N E S S E T H: WHEREAS, pursuant to that certain Securities Purchase Agreement, dated as of April 7, 2000, by and among the Company and the other parties thereto, the Company issued and sold 157,377 shares of its 8% Series A Cumulative Convertible Participating Preferred Stock due 2007, par value $0.01 per share (the "Original Preferred Stock"), together with Series A Common Stock Warrants (the "Original Warrants") to purchase initially an aggregate of 2,531,926 shares of common stock, par value $0.01 per share, of the Company (the "Common Stock"), to be issued upon exercise of the Original Warrants; WHEREAS, the Investors own, in the aggregate, all outstanding shares of the Original Preferred Stock and all the outstanding Original Warrants; and WHEREAS, upon the terms and subject to the conditions of this Agreement, the Investors and the Company have agreed to an exchange, pursuant to which, among other things, the Original Preferred Stock and the Original Warrants will be exchanged by the Investors for an aggregate consideration of (i) $25,000,000 in aggregate principal amount of loans represented by the notes in substantially the form attached as Exhibit A to the Term Loan Agreement (as defined herein) (the "Notes") and (ii) $55,000,000 in cash (the "Cash Proceeds"). NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows. ARTICLE I DEFINITIONS 1.1 Definitions. (a) As used in this Agreement, the following terms shall have the following meanings: "Affiliate" means, with respect to any Person, any other Person directly or indirectly controlling, controlled by, or under direct or indirect common control with, such Person. 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. "Amended Registration Rights Agreement" means the Second Amended and Restated Registration Rights Agreement, to be dated as of the Closing Date, to be entered into by and among the Company, the Investors and the other parties thereto, in substantially the form attached hereto as Exhibit A. "Applicable Law" means (a) any United States federal, state, local or foreign law, statute, rule, regulation, order, writ, injunction, judgment, decree or permit of any Governmental Authority and (b) any rule or listing requirement of any applicable national stock exchange or listing requirement of any national stock exchange or Commission recognized trading market on which securities issued by the Company or any of the Subsidiaries are listed or quoted. "Business Day" means any day other than a Saturday, a Sunday, or a day when banks in The City of New York are authorized by Applicable Law to be closed. "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. "Commission Filings" means all reports, registration statements and other filings filed by the Company with the Commission (and all notes, exhibits and schedules thereto and all documents incorporated by reference therein). "Company Disclosure Schedule" shall mean the Company Disclosure Schedule delivered by the Company to the Investors concurrently with the date hereof. "Confidential Information" shall mean any and all secret, confidential or proprietary technical and non-technical information, knowledge or data regarding the business, affairs, products and accounts of the Company and the Subsidiaries; provided, however, that any information disclosed by a disclosing party will be considered "Confidential Information" of such party by the receiving party only if such information (a) if provided as information fixed in a tangible medium of expression, is conspicuously designated as "Confidential", "Proprietary" or some similar designation, or (b) if provided orally, is identified as confidential at the time of disclosure and confirmed in writing within thirty (30) days of disclosure. Notwithstanding anything to the contrary contained herein, "Confidential Information" shall not include any information, knowledge or data which (a) was in the public domain at or subsequent to the time such portion was communicated to the receiving party by the disclosing party through no fault of the receiving party, (b) was rightfully in the receiving party's possession free of any obligation of confidence at or subsequent to the time such portion was communicated to the receiving party by the disclosing party, (c) was developed by employees or agents of the receiving party independently of and without reference to any information communicated to the receiving party by the disclosing party, or (d) was communicated by the disclosing party to an unaffiliated third party free of any obligation of confidence. "Contract" means any contract, lease, loan agreement, mortgage, security agreement, trust indenture, note, bond, instrument, or other agreement or arrangement (whether written or oral). "Exchange Act" means the Securities Exchange Act of 1934, and the rules and regulations of the Commission promulgated thereunder. "Governmental Authority" means (i) any foreign, federal, state or local court or governmental or regulatory agency or authority, (ii) any arbitration board, tribunal or mediator and (iii) any national stock exchange or Commission recognized trading market on which securities issued by the Company or any of the Subsidiaries are listed or quoted. "Investor Affiliate" means (a) any direct or indirect holder of any equity interests or securities in any Investor (whether limited or general partners, members, stockholders or otherwise), (b) any Affiliate of any Investor, (c) any director, officer, employee, representative or agent of (i) any Investor, (ii) any Affiliate of any Investor or (iii) any holder of equity interests or securities referred to in clause (a) above or (d) any person who is a "control person" of any Investor, as defined under Section 15 of the Securities Act or Section 20 of the Exchange Act. "Lien" means any mortgage, pledge, lien, security interest, claim, restriction, charge or encumbrance of any kind. "Material Adverse Effect" means a material adverse effect on the condition (financial or otherwise), business, properties, assets, liabilities, operations or results of operations of the Company and the Subsidiaries, taken as a whole. "Permitted Transferee" means, with respect to any Investor, or any Permitted Transferee of any Investor, any Investor Affiliate or an Affiliate of such holder or any successor in interest of any of them, whether by merger, consolidation, dissolution, liquidation, or otherwise. "Person" means any individual, partnership, corporation, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, government or agency or political subdivision thereof, or other entity. "Private Placement" means the private placement of Common Stock and warrants for proceeds in an amount not less than $75,000,000 on or before November 1, 2003 on terms and conditions (including, without limitation, the issuance price of the Common Stock) satisfactory to the MidOcean Investor, the Sandler Investors and the Company. "Securities Act" means the Securities Act of 1933, and the rules and regulations of the Commission promulgated thereunder. "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 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. "Subsidiary" means a subsidiary of the Company. "Termination of Stockholders' Agreement" means the Termination of Stockholders' Agreement, to be dated as of the Closing Date, to be entered into by and among the Company, the Investors and the other parties thereto, in substantially the form attached hereto as Exhibit B. "Term Loan Agreement" means the Term Loan Agreement, to be dated as of the Closing Date, to be entered into by and among the Company, the Lenders (as defined therein) and Infocrossing Agent, Inc., as agent for the Lenders, in the form attached hereto as Exhibit C. "Transaction Documents" means this Agreement, the Termination of Stockholders' Agreement, the Amended Registration Rights Agreement and the Term Loan Agreement. "Transactions" means the transactions contemplated by this Agreement, including, without limitation, the Exchange and the Private Placement. (b) As used in this Agreement, the following terms shall have the meanings given thereto in the Sections set forth opposite such terms: Term Section ----- ------- Agreement Preamble Cash Proceeds Recitals Closing 2.2 Closing Date 2.2 Common Stock Recitals Company Preamble DGCL 2.2 Exchange 2.1 Governmental Licenses 3.8 Indemnified Party 8.1(c) indemnified person 8.1(b) Indemnifying Party 8.1(c) Investor or Investors Preamble Losses 8.1(b) MidOcean Investor Preamble Notes Recitals Notices 8.2 Opinion 2.2(b)(v) Original Preferred Stock Recitals Original Warrants Recitals Price Investor Preamble Sandler Co-Investment Preamble Sandler Investors Preamble Sandler Technology Preamble Sandler V Preamble Sandler V FTE Preamble Sandler V Germany Preamble ARTICLE II EXCHANGE 2.1 Agreement to Exchange. On the Closing Date, and upon the terms and subject to the conditions set forth in this Agreement, the Company agrees with each Investor, and each Investor, severally and not jointly, agrees with the Company, as follows: (a) Each Investor, severally and not jointly, shall exchange with, and deliver to, the Company (i) the aggregate number of shares of Original Preferred Stock set forth opposite such Investor's name on Schedule A hereto and (ii) the aggregate number of Original Warrants set forth opposite such Investor's name on Schedule A hereto; and (b) The Company shall exchange with, and deliver to each Investor (i) Notes in an aggregate principal amount set forth opposite such Investor's name on Schedule A hereto and (ii) the pro rata portion of the Cash Proceeds set forth opposite such Investor's name on Schedule A hereto. The Company shall use $55,000,000 of the net proceeds from the Private Placement to pay the Cash Proceeds to the Investors. The transactions contemplated by this Section 2.1 are herein referred to collectively as the "Exchange." 2.2 Closing. Subject to the satisfaction or waiver of the conditions set forth in this Agreement, the closing of the Exchange (the "Closing") shall take place at 10:00 a.m. at the offices of Bryan Cave LLP at 1290 Avenue of the Americas, New York, New York, on the date upon which the conditions set forth in Article VII have been satisfied or on such other date as the parties shall mutually agree upon (the "Closing Date"). At the Closing: (a) each Investor shall deliver to the Company: (i) against delivery by the Company to such Investor of the Notes in an aggregate principal amount and the pro rata portion of the Cash Proceeds set forth opposite such Investor's name on Schedule A hereto, (A) a certificate or certificates representing the aggregate number of shares of Original Preferred Stock set forth opposite such Investor's name on Schedule A hereto, which shall be in definitive form and registered in the name of such Investor, in proper form for transfer, and (B) a certificate or certificates representing the aggregate number of Original Warrants set forth opposite such Investor's name on Schedule A hereto, which shall be in definitive form and registered in the name of such Investor, in proper form for transfer; (ii) a copy of the Term Loan Agreement executed by such Investor; (iii) a copy of the Amended Registration Rights Agreement executed by such Investor; (iv) a copy of the Termination of Stockholders' Agreement executed by such Investor; and (v) letters of resignation of each of the two directors designated by the Sandler Investors as holders of Original Preferred Stock and each of the two directors designated by the MidOcean Investor as a holder of Original Preferred Stock. (b) The Company shall deliver to each Investor: (i) against delivery by such Investor to the Company of certificates representing the aggregate number of shares of Original Preferred Stock and the aggregate number of Original Warrants set forth opposite such Investor's name on Schedule A hereto, (A) a Note or Notes in the aggregate principal amount set forth opposite such Investor's name on Schedule A hereto, which shall be in definitive form and registered in the name of such Investor or its nominee or designee and in a single Note or several Notes as such Investor shall request not later than two Business Days prior to the Closing Date, and (B) the pro rata portion of the Cash Proceeds set forth opposite such Investor's name on Schedule A hereto via wire transfer of immediately available funds to such bank account as such Investor shall designate not later than two Business Days prior to the Closing Date; (ii) a copy of the Term Loan Agreement executed by the Company; (iii) a copy of the Amended Registration Rights Agreement executed by the Company and the parties thereto other than the Investors; (iv) a copy of the Termination of Stockholders' Agreement executed by the Company and the parties thereto other than the Investors]; (v) an opinion of Latham & Watkins LLP (the "Opinion"), in connection with the transactions contemplated by this Agreement, dated the Closing Date, covering such matters as are customarily covered by such opinions, substantially in the form attached hereto as Exhibit D; (vi) an officer's certificate of the Company as contemplated by Section 7.2(d); (vii) a certificate of the Secretary of the Company setting forth (a) copies of all resolutions of the Company authorizing the Transactions, and (b) an incumbency certificate setting forth the name, title and authorized signature of each officer of the Company who will execute documents in connection with the transactions contemplated hereby; (viii) a long-form good standing certificate of the Company and each Subsidiary issued by the Secretary of State of the State of Delaware; and (ix) evidence of the payment by the Company of all costs and expenses of the Investors required to be reimbursed by the Company pursuant to Section 8.10. (c) The Company shall have received the written opinion of Evercore Partners, Inc. to the effect that the consideration to be paid by the Company in the recapitalization of the Original Preferred Stock is fair to the holders of the Common Stock from a financial point of view. After the Closing, the Company shall file a Certificate of Elimination with the State of Delaware pursuant to Section 151(g) of the Delaware General Corporation Law ("DGCL") to eliminate all shares of the Original Preferred Stock. ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY The Company hereby represents and warrants to each Investor on the date hereof and on and as of the Closing Date as follows: 3.1 Organization and Standing. Each of the Company and the Subsidiaries is a corporation duly organized, validly existing and in good standing under the laws of its state of incorporation and has all requisite corporate power and authority to own, lease and operate its properties and assets and to carry on its business as it is now being conducted and as proposed to be conducted. Each of the Company and the Subsidiaries is duly qualified to transact business as a foreign corporation and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or the nature of its business makes such qualification necessary, except for any such failures to so qualify or be in good standing that would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has delivered to the Investors true and complete copies of the Company's Certificate of Incorporation, as amended to date, and by-laws, as in effect on the date hereof and the certificates of incorporation, by-laws or other similar organizational documents of the Subsidiaries, in each case, as amended through the date hereof. 3.2 Authorization; Enforceability. The Company has all necessary power and authority to execute, deliver and perform its obligations under each of the Transaction Documents and the transactions contemplated thereby, and has taken all action necessary to authorize the execution, delivery and performance by it of each of such Transaction Documents and to consummate the Exchange and the other transactions contemplated by the Transaction Documents to occur on the Closing Date. No corporate or stockholder proceeding on the part of the Company is necessary for such authorization, execution, delivery, performance and consummation. The Company has duly executed and delivered this Agreement and, at the Closing, the Company will have duly executed and delivered each of the other Transaction Documents to be executed and delivered at or prior to Closing. This Agreement constitutes, and each of the other Transaction Documents when executed and delivered by the Company, will constitute, a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application and as any rights to indemnity or contribution thereunder may be limited by public policy considerations. 3.3 No Violation; Consents. (a) The execution, delivery and performance by the Company of each of the Transaction Documents and the consummation by the Company of the Exchange and the other transactions contemplated by the Transaction Documents to occur on the Closing Date do not and will not contravene any Applicable Law, including, without limitation, Section 160 of the DGCL. Except as set forth on Schedule 3.3 of the Company Disclosure Schedule, the execution, delivery and performance by the Company of each of the Transaction Documents and the consummation of the Exchange and the other transactions contemplated by the Transaction Documents to occur on the Closing Date (i) will not (a) violate, result in a breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any Contract to which the Company or any Subsidiary is a party or by which the Company or any Subsidiary is bound or to which any of their respective assets are subject, or (b) result in the creation or imposition of any Lien upon any of the assets of the Company or any Subsidiary, except for any such violations, breaches, defaults or Liens that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of the Company to perform its obligations under the Transaction Documents and (ii) will not conflict with or violate any provision of the certificate of incorporation or by-laws or other governing documents of the Company or the Subsidiaries. (b) Except for filings by the Company, if any, required by applicable federal and state securities laws, which shall be made (to the extent required) on or prior to the Closing Date, no consent, authorization or order of, or filing or registration with, any Governmental Authority or other Person is required to be obtained or made by the Company for the execution, delivery and performance of this Agreement or the consummation by the Company of the Exchange or other transactions contemplated by the Transaction Documents, or for the execution, delivery and performance by the Company of the other Transaction Documents, except (A) where the failure to obtain such consents, authorizations or orders, or make such filings or registrations, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect or a material adverse effect on the ability of the Company to perform its obligations under the Transaction Documents or (B) for consents that have been obtained or will be obtained as of the Closing Date. Notwithstanding the foregoing, (i) no vote of any class or series of the Company's Capital Stock is necessary to adopt this Agreement and approve the Transactions, and (ii) the execution, delivery and performance by the Company of this Agreement and the transactions contemplated hereby, including, without limitation, the authorization and issuance of the shares of Common Stock and warrants to purchase Common Stock in connection with the Private Placement, shall not require the approval of The Nasdaq National Market, or violate the listing or maintenance requirements of the rules or regulations of The Nasdaq National Market. 3.4 Commission Filings. The Company has timely filed all reports, registration statements and other filings, together with any amendments or supplements required to be made with respect thereto, that it has been required to file with the Commission under the Securities Act and the Exchange Act. As of the respective dates of their filing with the Commission, the Commission Filings complied in all material respects with the applicable provisions of the Securities Act and the Exchange Act and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. 3.5 Absence of Certain Changes. Except as disclosed in the Commission Filings filed prior to the date hereof or on Schedule 3.5 of the Company Disclosure Schedule, since June 30, 2003, (i) there has not been any event, occurrence or development of a state of circumstances or facts (or the failure of any of the foregoing to occur) that has had, or would reasonably be expected to have a material adverse effect on the ability of the Company to perform its obligations under this Agreement or the other Transaction Documents. 3.6 Private Offering. The offer and sale of the securities issued in connection with the Private Placement is exempt from the registration and prospectus delivery requirements of the Securities Act. Neither the Company, nor anyone acting on behalf of it, has offered or sold or will offer or sell any securities, or has taken or will take any other action (including, without limitation, any offering of any securities of the Company under circumstances that would require, under the Securities Act, the integration of such offering with the offering and sale of the securities issued in connection with the Private Placement), which would subject the issuance of securities in connection with the Private Placement to the registration provisions of the Securities Act. 3.7 Litigation. Except as disclosed in the Commission Filings or as set forth in Schedule 3.7 of the Company Disclosure Schedule, there is no action, suit, proceeding at law or in equity, or any arbitration or any administrative or other proceeding by or before (or to the knowledge of the Company any investigation by) any Governmental Authority, pending, or, to the best knowledge of the Company, threatened, against or affecting the Company or any of the Subsidiaries, or any of their properties or rights which would be reasonably likely to prevent or materially delay consummation of the Transactions. There are no such suits, actions, claims, proceedings or investigations pending or, to the knowledge of the Company, threatened, seeking to prevent or challenging the transactions contemplated by this Agreement. 3.8 Permits and Licenses. The Company and the Subsidiaries have obtained all governmental permits, licenses, franchises and authorizations required for the Company and the Subsidiaries to conduct their respective businesses as currently conducted (collectively, "Governmental Licenses"), except for those of which the failure to obtain would not be reasonably expected to prevent or materially delay the consummation of the Transactions; the Company and the Subsidiaries, except where the failure to so comply would not, singly or in the aggregate, reasonably be expected to prevent or materially delay the consummation of the Transactions, are in compliance with the terms and conditions of all such Governmental Licenses; all of the Governmental Licenses are valid and in full force and effect, except when the invalidity of such Governmental Licenses or the failure of such Governmental Licenses to be in full force and effect would not reasonably be expected to prevent or materially delay the consummation of the Transactions; and neither the Company nor any of the Subsidiaries has received any notice of proceedings relating to the revocation or modification of any such Governmental Licenses which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be expected to prevent or materially delay the consummation of the Transactions. 3.9 Investment Company. Neither the Company nor any Subsidiaries will be an "investment company" or "promoter" or "principal underwriter" for an "investment company," as such terms are defined in the Investment Company Act of 1940, as amended, and the rules and regulations thereunder. 3.10 Brokers and Finders. Except as disclosed to the Investors, no agent, broker, Person or firm acting on behalf of the Company is, or will be, entitled to any fee, commission or broker's or finder's fees from any of the parties hereto, or from any Person controlling, controlled by, or under common control with any of the parties hereto, in connection with this Agreement or any of the transactions contemplated hereby. ARTICLE IV REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR Each Investor hereby severally, and not jointly, represents and warrants to the Company, as to itself and as to no other person, as of the date hereof and as of the Closing Date as follows: 4.1 Organization; Authorization; Enforceability. Such Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization and has all requisite power and authority to own its properties and assets and to carry on its business as it is now being conducted and as currently proposed to be conducted. Such Investor has the power to execute, deliver and perform its obligations under each of the Transaction Documents to which it is a party and has taken all action necessary to authorize the execution, delivery and performance by it of such Transaction Documents and to consummate the transactions contemplated hereby and thereby. No other proceedings on the part of such Investor are necessary for such authorization, execution, delivery and consummation. Such Investor has duly executed and delivered this Agreement and, at the Closing, such Investor will have duly executed and delivered each of the other Transaction Documents to be executed and delivered at or prior to Closing. This Agreement constitutes, and each of the other Transaction Documents to which such Investor is a party, when executed and delivered by such Investor, will constitute, a legal, valid and binding obligation of such Investor, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application and as any rights to indemnity or contribution thereunder may be limited by public policy considerations. 4.2 No Violation; Consents. (a) The execution, delivery and performance by such Investor of each of the Transaction Documents to which it is a party and the consummation of the Transactions to occur on the Closing Date do not and will not contravene any Applicable Law. The execution, delivery and performance by such Investor of each of the Transaction Documents to which it is a party and the consummation of the Transactions contemplated therein to occur on the Closing Date (i) will not violate, result in a breach of or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under any Contract to which such Investor is party or by which such Investor is bound or to which any of its assets is subject, except for any such violations, breaches or defaults that would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Investor to perform its obligations under this Agreement, and (ii) will not conflict with or violate any provision of the certificate of incorporation or by-laws or other governing documents of such Investor. (b) Except for filings by such Investor, if any, required by the Commission pursuant to the Exchange Act, which shall be made (to the extent required) on or prior to the Closing Date, no consent, authorization or order of, or filing or registration with, any Governmental Authority or other Person is required to be obtained or made by such Investor for the execution, delivery and performance of any of the Transaction Documents to which it is a party or the consummation of any of the transactions contemplated therein, except where the failure to obtain such consents, authorizations or orders, or make such filings or registrations, would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the ability of such Investor to perform its obligations under this Agreement. 4.3 Title to Securities. Such Investor owns beneficially and of record the shares of Original Preferred Stock and the aggregate number of Original Warrants set forth opposite such Investor's name on Schedule A hereto and has good and valid title to such shares of Original Preferred Stock and such Original Warrants, free and clear of all Liens (other than those Liens under the Second Amended and Restated Stockholders' Agreement, dated as of February 1, 2002, by and among the Company and the other parties thereto, and under applicable securities laws). Such Investor has the unrestricted power and authority to transfer such shares of Original Preferred Stock and such Original Warrants to the Company, free and clear of any and all Liens (other than those Liens under the Second Amended and Restated Stockholders' Agreement, dated as of February 1, 2002, by and among the Company and the other parties thereto, and under applicable securities laws). ARTICLE V COVENANTS OF THE COMPANY 5.1 Operation of Business. The Company covenants and agrees that, except as permitted, required or specifically contemplated by, or otherwise described in, this Agreement or the other Transaction Documents or otherwise consented to or approved in writing by the MidOcean Investor and the Sandler Investors during the period commencing on the date hereof and ending on the Closing Date: (a) The Company and each of the Subsidiaries will conduct their respective operations only according to their ordinary and usual course of business consistent with past practice and will use their reasonable best efforts to preserve intact their respective business organization, keep available the services of their officers and employees and maintain satisfactory relationships with licensors, suppliers, distributors, clients, joint venture partners, and others having significant business relationships with them; (b) Each of the Company and the Subsidiaries shall: (i) operate its business in all material respects in the ordinary course and in material compliance with Applicable Laws; (ii) not adopt any amendment to its Certificate of Incorporation or by-laws or comparable organizational documents; (iii) not split, combine or reclassify any shares of the Company's Capital Stock; (iv) not declare or pay any dividend or distribution (whether in cash, stock or property) in respect of its Capital Stock or increase the number of shares subject to any stock incentive or option plan with respect to the Capital Stock of the Company or any Subsidiary; (v) not take any action, or knowingly omit to take any action, that would, or that would reasonably be expected to, result in (a) any of the representations and warranties of the Company set forth in Article III becoming untrue or (b) any of the conditions to the obligations of the Investors set forth in Section 7.2 not being satisfied or (c) the triggering of any of the anti-dilution adjustments under the Certificate of the Powers, Designations, Preferences and Rights relating to the Original Preferred Stock; (vi) not issue or sell any shares of its Capital Stock (other than (a) in connection with the exercise of options or warrants outstanding on the date hereof or (b) in connection with the Private Placement) or any of its other securities, or issue any securities convertible into, or options, warrants or rights to purchase or subscribe to, or enter into any arrangement or contract with respect to the issuance or sale of, any shares of its Capital Stock or any of its other securities, or make any other changes in its capital structure; (vii) not acquire (by merger, consolidation, or acquisition of stock or assets) any corporation, partnership or other business or division thereof; (viii) not, except to the extent required under existing employee and director benefit plans, agreements or arrangements as in effect on the date of this Agreement, increase the compensation or fringe benefits of any of its directors, officers or employees, except for increases in salary or wages of employees of the Company or any Subsidiaries who are not officers of the Company in the ordinary course of business in accordance with past practice, or grant any severance or termination pay not currently required to be paid under existing severance plans or enter into any employment, consulting or severance agreement or arrangement with any present or former director, officer or other employee of the Company or any of the Subsidiaries, or establish, adopt, enter into or amend or terminate any collective bargaining, bonus, profit sharing, thrift, compensation, stock option, restricted stock, pension, retirement, deferred compensation, employment, termination, severance or other plan, agreement, trust, fund, policy or arrangement for the benefit of any directors, officers or employees; (ix) not adopt a plan of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization of the Company or any of the Subsidiaries; (x) incur any material liability for taxes other than in the ordinary course of business; or enter into any settlement or closing agreement with a taxing authority that materially affects or may materially affect the tax liability of the Company or any of the Subsidiaries; or (xi) not enter into any agreement or commitment to do any of the foregoing. 5.2 Agreement to Take Necessary and Desirable Actions. The Company shall (a) subject to the satisfaction of the conditions set forth in Section 7.1, execute and deliver the Transaction Documents and such other documents, certificates, agreements and other writings and (b) take such other actions, in each case, as may be necessary or reasonably requested by any Investor in order to consummate or implement the Exchange in accordance with the terms of this Agreement. 5.3 Compliance with Conditions. The Company shall use its reasonable best efforts to cause all of the obligations imposed upon it by this Agreement to be duly complied with, and to cause all conditions precedent to the obligations of the Company and the Investors to be satisfied. Upon the terms and subject to the conditions of this Agreement, the Company will use its reasonable best efforts to take, or cause to be taken, all action, and do, or cause to be done, all things necessary, proper or advisable consistent with Applicable Law to consummate and make effective in the most expeditious manner practicable the Exchange in accordance with the terms of this Agreement. 5.4 Consents and Approvals. The Company (a) shall use its reasonable best efforts to obtain all necessary consents, waivers, authorizations and approvals of all Governmental Authorities and of all other Persons required in connection with the execution, delivery and performance of the Transaction Documents or the consummation of the Exchange and (b) shall diligently assist and cooperate with the Investors in preparing and filing all documents required to be submitted by the Investors to any Governmental Authority in connection with the Exchange (which assistance and cooperation shall include, without limitation, timely furnishing to the Investors all information concerning the Company and the Subsidiaries that counsel to any of the Investors determines is required to be included in such documents or would be helpful in obtaining any such required consent, waiver, authorization or approval). 5.5 Private Placement. The Company shall use its reasonable best efforts to consummate the Private Placement on or before November 1, 2003 on terms and conditions (including, without limitation, the issuance price of the Common Stock) satisfactory to the MidOcean Investor, the Sandler Investors and the Company. The Company shall use $55,000,000 of the net proceeds from the Private Placement to pay the Cash Proceeds to the Investors in connection with the Exchange. 5.6 Waiver of Preemptive Rights. Effective immediately prior to the consummation of the transactions contemplated by this Agreement, each of the Investors, in its capacity as a holder of shares of Original Preferred Stock, hereby waives any preemptive rights (and any notice requirement relating thereto) to which it is entitled under the Certificate of the Powers, Designations, Preferences and Rights relating to the Original Preferred Stock, in connection with the transactions contemplated by this Agreement, including, without limitation, the Private Placement. ARTICLE VI COVENANTS OF EACH INVESTOR 6.1 Agreement to Take Necessary and Desirable Actions. Each Investor shall (a) subject to the satisfaction of the conditions set forth in Section 7.2, execute and deliver each of the Transaction Documents to which it is a party and such other documents, certificates, agreements and other writings and (b) take such other actions as may be reasonably necessary, desirable or requested by the Company in order to consummate or implement the Exchange with respect to such Investor in accordance with the terms of this Agreement. 6.2 Compliance with Conditions; Best Efforts. Each Investor will use its reasonable best efforts to cause all of the obligations imposed upon it in this Agreement to be duly complied with, and to cause all conditions precedent to the obligations of the Company and such Investor to be satisfied. Upon the terms and subject to the conditions of this Agreement, each Investor will use its reasonable best efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable consistent with Applicable Law to consummate and make effective in the most expeditious manner practicable the Exchange with respect to such Investor in accordance with the terms of this Agreement. 6.3 Consents and Approvals. Each Investor (a) shall use its reasonable best efforts to obtain all necessary consents, waivers, authorizations and approvals of all Governmental Authorities, and of all other Persons required in connection with the execution, delivery and performance of this Agreement or the consummation of the Exchange with respect to such Investor and (b) shall assist and cooperate with the Company in preparing and filing all documents required to be submitted by the Company to any Governmental Authority in connection with such Transactions (which assistance and cooperation shall include, without limitation, timely furnishing to the Company all information concerning such Investor that counsel to the Company reasonably determines is required to be included in such documents or would be helpful in obtaining any such required consent, waiver, authorization or approval). ARTICLE VII CONDITIONS PRECEDENT TO CLOSING 7.1 Conditions to the Company's Obligations. The obligations of the Company with respect to the Investors required to be performed on the Closing Date shall be subject to the satisfaction or waiver in writing, at or prior to the Closing, of the following conditions: (a) The representations and warranties of each Investor contained in this Agreement which are qualified by any "materiality", "material adverse effect" or any similar qualifier shall be true and correct in all respects and the representations and warranties of such Investor which are not so qualified shall be true and correct in all material respects, in each case on and as of the date hereof and on and as of the Closing Date, as if made on and as of the Closing Date. (b) Each Investor shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants contained in this Agreement to be performed and complied with by such Investor at or prior to the Closing Date. (c) No provision of any Applicable Law, injunction, order or decree of any Governmental Authority shall be in effect which has the effect of making the Transactions illegal or shall otherwise restrain or prohibit the consummation of the Transactions. (d) The Company shall have received from each Investor certificates representing the aggregate number of shares of Original Preferred Stock and the aggregate number of Original Warrants set forth opposite such Investor's name on Schedule A hereto concurrently with each Investor's receipt from the Company of the Notes in an aggregate principal amount and the pro rata portion of the Cash Proceeds set forth opposite such Investor's name on Schedule A hereto. (e) Each Investor shall have executed and delivered the Term Loan Agreement. (f) Each Investor shall have executed and delivered the Amended Registration Rights Agreement. (g) Each Investor shall have executed and delivered the Termination of Stockholders' Agreement. (h) The Company shall have received the written opinion of Evercore Partners, Inc., as contemplated by Section 2.2(c). (i) The Company shall have received letters of resignation of each of the two directors designated by the Sandler Investors as holders of Original Preferred Stock and each of the two directors designated by the MidOcean Investor as a holder of Original Preferred Stock. 7.2 Conditions to Each Investor's Obligations. The obligations of each Investor required to be performed on the Closing Date shall be subject to the satisfaction or waiver in writing, at or prior to the Closing, of the following conditions: (a) The representations and warranties of the Company contained in this Agreement which are qualified by any "materiality", "material adverse effect" or any similar qualifier shall be true and correct in all respects and the representations and warranties of the Company which are not so qualified shall be true and correct in all material respects, in each case on and as of the date hereof and on and as of the Closing Date, as if made on and as of the Closing Date. (b) The Company shall have performed in all material respects all of its obligations and agreements, and complied with covenants contained in this Agreement to be performed and complied with at or prior to the Closing Date. (c) No provision of any Applicable Law, injunction, order or decree of any Governmental Authority shall be in effect which has the effect of making the Transactions illegal or shall otherwise restrain or prohibit the consummation of the Transactions. (d) The Company shall have delivered to such Investor a certificate executed by it or on its behalf by a duly authorized representative, dated the Closing Date, to the effect that each of the conditions specified in paragraph (a) through (c) and (l) of this Section 7.2 has been satisfied. (e) The Company shall have delivered to such Investor the certificate executed by the Secretary of the Company, dated the Closing Date, as contemplated by Section 2.2(b)(vii). (f) The Company and each of the other parties thereto (other than the Investors) shall have executed and delivered the Term Loan Agreement, and such Investor shall have received evidence satisfactory to it in its sole discretion that the closing conditions under the Term Loan Agreement have been satisfied and the transactions contemplated thereby shall be consummated simultaneously with the Exchange. (g) The Company and each of the parties thereto (other than the Investors) shall have executed and delivered the Amended Registration Rights Agreement. (h) The Company and the each of the parties thereto (other than the Investors) shall have executed and delivered the Termination of Stockholders Agreement. (i) Such Investor shall have received the Opinion, dated as of the Closing Date, and addressed to such Investor in form and substance reasonably acceptable to the MidOcean Investor and the Sandler Investors. (j) Such Investor shall have received a long-form good standing certificate of the Company and each Subsidiary, dated as of a date as close as practicable to the Closing Date, issued by the Secretary of State of the State of Delaware, as contemplated by Section 2.2(b)(viii). (k) Such Investor shall have received the Notes in an aggregate principal amount and the pro rata portion of the Cash Proceeds set forth opposite such Investor's name on Schedule A hereto concurrently with the Company's receipt of the certificates representing the aggregate number of shares of Original Preferred Stock and the aggregate number of Original Warrants set forth opposite such Investor's name on Schedule A hereto. (l) There shall not have occurred any event, circumstance, condition, fact, effect or other matter which has had or would reasonably be expected to have a material adverse effect (x) on the condition (financial or otherwise), business, properties, assets, liabilities, operations or results of operations of the Company and the Subsidiaries, taken as a whole or (y) on the ability of the Company and the Subsidiaries to perform on a timely basis any material obligation under this Agreement or to consummate the Exchange contemplated hereby. (m) The Private Placement shall have been successfully consummated by the Company on terms and conditions (including, without limitation, the issuance price of the Common Stock) satisfactory to the MidOcean Investor and the Sandler Investors. (n) The Company shall have received the written opinion of Evercore Partners, Inc., as contemplated by Section 2.2(c). (o) All other Investors shall have elected to consummate simultaneously the transactions contemplated by this Agreement and the other Transaction Documents. (p) The Company's outstanding Senior Subordinated Debentures due 2005 shall have been repaid in full, and satisfactory evidence thereof shall have been delivered to the Investors. (q) The Company shall have delivered to such Investor evidence of the payment of all costs and expenses of such Investor required to be reimbursed by the Company pursuant to Section 8.10. ARTICLE VIII MISCELLANEOUS 8.1 Survival; Indemnification. (a) All representations, warranties and covenants contained in this Agreement or in any certificate delivered in connection with the Closing shall survive the Closing for 12 months (except covenants that are required to be performed after the Closing Date and the representations contained in Sections 3.1, 3.2 and 3.3, which shall survive indefinitely). Notwithstanding the foregoing, with respect to claims asserted pursuant to this Section 8.1 before the expiration of the applicable representation or warranty, such claims shall survive until the date they are finally adjudicated or otherwise resolved. (b) The Company agrees to indemnify and hold harmless each Investor, each Investor Affiliate and each of their respective officers, directors, agents, employees, partners, members, representatives, heirs, successors and assigns (each an "indemnified person") net of tax benefits, from and against (and to reimburse each indemnified person as the same are incurred) any and all losses (including, but not limited to, impairment of the value of the Notes as of the date such loss first becomes known) claims, damages, liabilities, costs and expenses (collectively, "Losses") to which any indemnified person may become subject or which any indemnified person may incur based upon, arising out of, or in connection with (i) a breach of any representation or warranty of this Agreement by the Company, (ii) any breach of any covenant or agreement contained herein by the Company or (iii) any claim, litigation, investigation or proceeding brought by or on behalf of any Person other than the Company relating to the Transactions, and to reimburse each indemnified person upon demand for any reasonable legal or other reasonable out of pocket expenses incurred in connection with investigating or defending any of the foregoing, provided (a) the Company shall have no obligation to indemnify any indemnified person for any Loss resulting from any breach of any representation or warranty hereunder (other than representations and warranties contained in Sections 3.1, 3.2 or 3.3, which shall be indemnified from the first dollar of Loss) unless and until the aggregate amount of all such Losses exceeds $1,000,000 (and then only to the extent of such excess) and (b) the maximum amount indemnifiable to indemnified persons for breaches of the representations or warranties contained in this Agreement shall not exceed $25,000,000. (c) If a Person entitled to indemnity hereunder (an "Indemnified Party") asserts that the Company (the "Indemnifying Party") has become obligated to the Indemnified Party pursuant to Section 8.1(b), or if any suit, action, investigation, claim or proceeding is begun, made or instituted as a result of which the Indemnifying Party may become obligated to the Indemnified Party hereunder, the Indemnified Party shall notify the Indemnifying Party promptly and shall cooperate with the Indemnifying Party, at the Indemnifying Party's expense, to the extent reasonably necessary for the resolution of such claim or in the defense of such suit, action or proceedings, including making available any information, documents and things in the possession of the Indemnified Party. Notwithstanding the foregoing notice requirement, the right to indemnification hereunder shall not be affected by any failure to give, or delay in giving, notice unless, and only to the extent that, the rights and remedies of the Indemnifying Party shall have been actually and materially prejudiced as a result of such failure or delay. (d) In fulfilling its obligations under this Section 8.1, after the Indemnifying Party has provided each Indemnified Party with a written notice of its acceptance of liability under this Section 8.1, as between such Indemnified Party and the Indemnifying Party, the Indemnifying Party shall have the right to investigate, defend, settle or otherwise handle, with the aforesaid cooperation, any claim, suit, action or proceeding brought by a third party in such manner as the Indemnifying Party may in its sole discretion reasonably deem appropriate; provided, that (i) counsel retained by the Indemnifying Party is reasonably satisfactory to the Indemnified Party and (ii) the Indemnifying Party will not consent to any settlement or entry of judgment imposing any obligations on any other party hereto other than financial obligations for which such party will be indemnified hereunder, unless such party has consented in writing to such settlement or judgment (which consent may be given or withheld in its sole discretion) and (iii) the Indemnifying Party will not consent to any settlement or entry of judgment unless, in connection therewith, the Indemnifying Party obtains a full and unconditional release of the Indemnified Party from all liability with respect to such suit, action, investigation claim or proceeding. Notwithstanding the Indemnifying Party's election to assume the defense or investigation of such claim, action or proceeding, the Indemnified Party shall have the right to employ separate counsel and to participate in the defense or investigation of such claim, action or proceeding, which participation shall be at the expense of the Indemnifying Party, if (i) on the advice of counsel to the Indemnified Party use of counsel of the Indemnifying Party's choice could be expected to give rise to a material conflict of interest, (ii) the Indemnifying Party shall not have employed counsel reasonably satisfactory to the Indemnified Party to represent the Indemnified Party within a reasonable time after notice of the assertion of any such claim or institution of any such action or proceeding, (iii) if the Indemnifying Party shall authorize the Indemnified Party to employ separate counsel at the Indemnifying Party's expense or (iv) such action shall seek relief other than monetary damages against the Indemnified Party. (e) The Company and the Investors agree that any payment of Losses made hereunder will be treated by the parties on their tax returns as an adjustment to the purchase price of and the Notes. If, notwithstanding such treatment by the parties, a final determination with respect to the Indemnified Party or any of its Affiliates causes any such payment not to be treated as an adjustment to purchase price of and the Notes, then the Indemnifying Party shall indemnify the Indemnified Party for any taxes payable by the Indemnified Party or any subsidiary by reason of the receipt of such payment (including any payments under this 8.1(e)), determined at an assumed marginal tax rate equal to the highest marginal tax rate then in effect for corporate taxpayers in the relevant jurisdiction. (f) The obligations of the Indemnifying Party under this Section 8.1 shall survive the transfer or redemption of the Notes, or the closing or termination of any Transaction Document. The agreements contained in this Section 8.1 shall be in addition to any other rights of the Indemnified Party against the Indemnifying Party or others. The Indemnifying Party consents to personal jurisdiction, service and venue in any court in the State of New York. (g) All obligations of the Investors hereunder shall be several and not joint. If any Investor fails to exchange shares of Original Preferred Stock or Original Warrants for the Notes and its pro rata portion of the Cash Proceeds or otherwise defaults on any liability or obligation under this Agreement, no other Investor will have any obligation to purchase any such Notes or take or refrain from taking any action on account of such defaulting Investor. 8.2 Notices. All notices, demands, requests, consents, approvals or other communications (collectively, "Notices") required or permitted to be given hereunder or which are given with respect to this Agreement shall be in writing and shall be personally served, delivered by reputable air courier service with charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile, addressed as set forth below, or to such other address as such party shall have specified most recently by written notice. Notice shall be deemed given on the date of service or transmission if personally served or transmitted by telegram, telex or facsimile. Notice otherwise sent as provided herein shall be deemed given on the next Business Day following delivery of such notice to a reputable air courier service. Notices shall be delivered as follows: (a) If to the Company: Infocrossing, Inc. 2 Christie Heights Street Leonia, New Jersey 07605 Attn: Zach Lonstein, Chief Executive Officer Telephone: (201) 840-4700 Fax: (201) 840-7126 with a copy to: Latham & Watkins LLP 885 Third Avenue New York, New York 10022-4802 Attn: Robert A. Zuccaro, Esq. Telephone: (212) 906-1295 Fax: (212) 751-4864 (b) if to any Investor, to such Investor at its address as set forth on Schedule A: with a copy to: Paul, Weiss, Rifkind, Wharton & Garrison LLP 1285 Avenue of the Americas New York, New York 10019-6064 Attn: Douglas A. Cifu, Esq. Telephone: (212) 373-3000 Fax: (212) 757-3990 and Kirkland & Ellis LLP 665 Fifteenth Avenue N.W. Washington, D.C. 20005 Attn: Mark D. Director, Esq. Telephone: (202) 879-5151 Fax: (202) 879-5200 8.3 Governing Law. This Agreement shall be governed by, interpreted under, and construed in accordance with the laws of the State of New York, regardless of the laws that might otherwise govern under applicable principles of conflicts of law thereof. 8.4 Termination. (a) This Agreement may be terminated as between the Company and any Investor (i) at any time prior to the Closing Date by mutual written agreement of the Company and such Investor, (ii) if the Closing shall not have occurred on or prior to November 1, 2003, by either the Company or such Investor, at any time after November 1, 2003, provided that the right to terminate this Agreement under this Section 8.4(a)(ii) shall not be available to any party whose failure to fulfill any obligation under this Agreement was the cause of or resulted in the failure of the Closing to occur on or before such date, (iii) if any Governmental Authority shall have issued a nonappealable final order, decree or ruling or taken any other action having the effect of permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, by either the Company or such Investor, (iv) if either the Company or such Investor shall have breached any of its material obligations under this Agreement, by the non-breaching party, or (v) if an event described in Section 7.2(l) shall have occurred, by such Investor. Any party desiring to terminate this Agreement pursuant to clauses 8.4(a)(ii), (iii), (iv) or (v) shall promptly give notice of such termination to the other parties. (b) If this Agreement is terminated as between the Company and any Investor, as permitted by Section 8.4(a), such termination shall be without liability of any party (or any stockholder, director, officer, partner, employee, agent, consultant or representative of such party) to any other party to this Agreement; provided, that if such termination shall result from the willful (a) failure of any party to fulfill a condition to the performance of the obligations of the other parties, (b) failure to perform a covenant of this Agreement or (c) breach by any party hereto of any representation or warranty contained herein, such failing or breaching party shall be fully liable for any and all losses incurred or suffered by the other parties as a result of such failure or breach. The provisions of Sections 1.1, 8.2, 8.3, this Section 8.4, Sections 8.5, 8.8, 8.10, 8.11, 8.12, 8.13, 8.14, 8.16, 8.18 and 8.19 and shall survive any termination hereof pursuant to Section 8.4(a). 8.5 Entire Agreement. As between the Company and the Investors, this Agreement and the Transaction Documents (including all agreements entered into pursuant hereto and thereto and all certificates and instruments delivered pursuant hereto and thereto) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede all prior and contemporaneous agreements, representations, understandings, negotiations and discussions between the parties, whether oral or written, with respect to the subject matter hereof. 8.6 Modifications and Amendments. No amendment, modification or termination of this Agreement as between the Company and the Investors shall be binding on the Company and all Investors unless executed in writing by the Company, the MidOcean Investor and the Sandler Investors, provided that no such action which adversely affects the rights of any Investor in a manner that does not adversely affect all other Investors equally may be made without such Investor's written consent. 8.7 Waivers and Extensions. Any party to this Agreement may waive any condition, right, breach or default that such party has the right to waive, provided that such waiver will not be effective against the waiving party unless it is in writing, is signed by such party, and specifically refers to this Agreement; provided, however, that the MidOcean Investor and the Sandler Investors may waive any condition, right, breach or default on behalf of all Investors unless such waiver adversely affect the rights of any Investor in a manner that does not adversely affect all other Investors equally in which case such Investor must consent to such waiver. Waivers may be made in advance or after the right waived has arisen or the breach or default waived has occurred. Any waiver may be conditional. No waiver of any breach of any agreement or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof nor of any other agreement or provision herein contained. No waiver or extension of time for performance of any obligations or acts shall be deemed a waiver or extension of the time for performance of any other obligations or acts. 8.8 Titles and Headings. Titles and headings of sections of this Agreement are for convenience only and shall not affect the construction of any provision of this Agreement. 8.9 Exhibits and Schedules. Each of the Exhibits and schedules referred to herein and attached hereto is an integral part of this Agreement and is incorporated herein by reference. 8.10 Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense; provided, however, that upon the Closing, the Company shall reimburse the Investors and their Affiliates or pay, upon presentation of reasonably satisfactory documentation, the reasonable out-of-pocket costs, fees and expenses incurred by the Investors and their Affiliates (including, without limitation, the fees and expenses of no more than one law firm for each of the MidOcean Investor and its Affiliates, on the one hand, and the Sandler Investors and their Affiliates, on the other hand, and the fees and expenses of tax and accounting consultants and advisors) in connection with the due diligence, examination, review, documentation, and/or the closing of the Exchange and the transactions contemplated by this Agreement. 8.11 Press Releases and Public Announcements. All public announcements or disclosures relating to the Exchange or this Agreement shall be made only if mutually agreed upon by the Company and the Investors, except to the extent the Company or any Investor determines, in good faith, after consulting with counsel, that such disclosure is necessary or appropriate under Applicable Law, provided that (a) any such required disclosure shall only be made, to the extent consistent with Applicable Law and (b) no such announcement or disclosure (except as required by Applicable Law) shall identify any Investor without such Investor's prior consent. 8.12 Assignment; No Third Party Beneficiaries. This Agreement and the rights, duties and obligations hereunder may not be assigned or delegated by the Company without the prior written consent of the MidOcean Investor and the Sandler Investors, and may not be assigned or delegated by any Investor without the Company's prior written consent (not to be unreasonably withheld) except that any Investor may assign any or all of its rights and obligations under this Agreement to any one or more of its Permitted Transferees that expressly assumes the obligations of such Investor hereunder in a writing in form and substance reasonably satisfactory to the Company. Any assignment or delegation of rights, duties or obligations hereunder made by the Company without the prior written consent of the Investor, shall be void and of no effect. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and their respective successors and permitted assigns. This Agreement is not intended to confer any rights or benefits on any Persons other than the parties hereto, except as expressly set forth in Section 8.1, this Section 8.12 or Section 8.18. 8.13 Severability. This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable. 8.14 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. 8.15 Further Assurances. As between the Company and the Investors, each party hereto, upon the request of any other party hereto, shall do all such further acts and execute, acknowledge and deliver all such further instruments and documents as may be necessary or desirable to carry out the transactions contemplated by this Agreement, including, in the case of the Company, such acts, instruments and documents as may be necessary or desirable to convey and transfer to the Investors to be purchased by them hereunder. 8.16 Remedies Cumulative. The remedies provided herein shall be cumulative and shall not preclude the assertion by any party hereto of any other rights or the seeking of any remedies against the other party hereto. 8.17 Specific Performance. The parties hereto agree that the remedy at law for any breach of this Agreement may be inadequate, and that as between the Company and the Investors, any party by whom this Agreement is enforceable shall be entitled to specific performance in addition to any other appropriate relief or remedy. Such party may, in its sole discretion, apply to a court of competent jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement as between the Company and the Investors, or prevent any violation hereof, and, to the extent permitted by Applicable Law as between the Company and the Investors, each party waives any objection to the imposition of such relief. 8.18 No Investor Affiliate Liability. No Investor Affiliate shall have any liability or obligation of any nature whatsoever in connection with or under this Agreement or the transactions contemplated hereby, and the Company hereby waives and releases all claims of any such liability and obligation, it being understood that no such Person or entity (other than the Investors) shall be liable for or in respect of this Agreement with the transactions contemplated hereby. 8.19 Confidentiality. (a) Each of the parties hereto agrees that it will not (i) use, disseminate, or in any way disclose any Confidential Information disclosed to it by the other party hereto, to any person, firm or business, except to the extent necessary (x) in the case of any Investor, to manage its investment (including any sale of all or any portion thereof), to discharge its fiduciary or regulatory obligations or for any other purpose which the Company may hereafter authorize in writing and (y) in the case of the Company, in order to discharge any fiduciary or regulatory obligation or for any other purpose which the MidOcean Investor and the Sandler Investors may hereafter authorize in writing, or (ii) use any Confidential Information of the other party for its own benefit or the benefit of any third party. Each of the parties, agrees that such it shall treat all Confidential Information received from the other party, with the same degree of care as the receiving party accords to its own Confidential Information, but in no case less than reasonable care. (b) Notwithstanding anything to the contrary contained in the immediately preceding paragraph (a) the disclosure by any party hereto of any Confidential Information of the other party (i) to any Affiliate of such party, or to any officer, director, employee, agent, representative, attorney or other advisor of such party or any Affiliate of such party, who agrees to be bound by the provisions of this Section 8.19, (ii) to any foreign or domestic governmental or quasi-governmental regulatory authority, including, without limitation, the Federal Reserve Bank of New York or any stock exchange or other self-regulatory organization having jurisdiction over such party, (iii) in response to an order by a court or other Governmental Authority, (iv) which is otherwise required by Applicable Law or regulation (including any rule or regulation of any stock exchange or automated quotation system on which such party is listed or traded) or (v) which is necessary or advisable to establish the rights of either party under this Agreement, shall not be considered to be a breach of this Agreement by the party making such disclosure; provided, however, that the party required to make such disclosure pursuant to clause (iii), (iv) or (v) hereof shall provide written notice thereof to the party which owns such Confidential Information to enable such party to seek a protective order or otherwise prevent such disclosure of its Confidential Information. (c) Notwithstanding anything to the contrary in this Section 8.19, any party to this Agreement (and each employee, representative, or other agent of any party to this Agreement) may disclose to any and all Persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated by this Agreement, and all materials of any kind (including opinions or other tax analyses) related to such tax treatment and tax structure; provided that this sentence shall not permit any Person to disclose the name of, or other information that would identify, any party to such transactions or to disclose confidential commercial information regarding such transactions. 8.20 Legal Representation. It is acknowledged by each of the Investors that the Sandler Investors have retained Paul, Weiss, Rifkind, Wharton & Garrison LLP to act as their counsel in connection with the transactions contemplated by the Transaction Documents and that Paul, Weiss, Rifkind, Wharton & Garrison LLP has not acted as counsel for any of the other Investors in connection with the transaction contemplated by the Transaction Documents and that none of such other Investors has the status of a client of Paul, Weiss, Rifkind, Wharton & Garrison for conflict of interest or any other purposes as a result thereof. [Remainder of page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. INFOCROSSING, INC. By: /s/ Zach Lonstein ---------------------------------------- Name: Zach Lonstein Title: Chairman and Chief Executive Officer MIDOCEAN CAPITAL INVESTORS, L.P. By: MidOcean Capital Partners, L.P., its General Partner By: Existing Fund GP, Ltd., its General Partner By: /s/ Andrew Spring ----------------------------------------- Name: Andrew Spring Title: SANDLER CAPITAL PARTNERS V, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell ---------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V FTE, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell ---------------------------------------- Name: Moira Mitchell Title: President SANDLER CAPITAL PARTNERS V GERMANY, L.P. By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell ---------------------------------------- Name: Moira Mitchell Title: President SANDLER TECHNOLOGY PARTNERS SUBSIDIARY, LLC By: Sandler Technology Partners, L.P., Manager By: Sandler Investment Partners, L.P., General Partner By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell --------------------------------------- Name: Moira Mitchell Title: President SANDLER CO-INVESTMENT PARTNERS, L.P. By: Sandler Capital Management, General Partner By: MJDM Corp., a General Partner By: /s/ Moira Mitchell ---------------------------------------- Name: Moira Mitchell Title: President PRICE FAMILY LIMITED PARTNERS By: /s/ Michael Price --------------------------------------- Name: Michael Price Title: General Partner Schedule A
- ---------------------------- -------------------------- ------------------ ----------------- --------------------- ----------------- Name Address Original Preferred Original Warrants Aggregate Principal Cash Proceeds Stock Amount of Notes - ---------------------------- -------------------------- ------------------ ----------------- --------------------- ----------------- MidOcean Capital 345 Park Avenue 78,688.5 1,265,963.0 $12,520,875.00 $27,545,925.00 Investors, L.P. 16th Floor New York, NY 10154 Fax: Attn: - ---------------------------- -------------------------- ------------------ ----------------- --------------------- ----------------- Sandler Capital Partners 767 Fifth Avenue 50,892.0 818,763.0 $8,097,892.00 $17,815,362.00 V, L.P. 45th Floor New York, NY 10153 Fax: (212) 754-8183 Attn: - ---------------------------- -------------------------- ------------------ ----------------- --------------------- ----------------- Sandler Capital Partners V 767 Fifth Avenue 18,821.0 302,799.0 $2,994,801.00 $6,588,563.00 FTE, L.P. 45th Floor New York, NY 10153 Fax: (212) 754-8183 Attn: - ---------------------------- -------------------------- ------------------ ----------------- --------------------- ----------------- Sandler Capital Partners V 767 Fifth Avenue 1,893.5 30,464.3 $301,308.00 $662,879.00 Germany, L.P. 45th Floor New York, NY 10153 Fax: (212) 754-8183 Attn: - ---------------------------- -------------------------- ------------------ ----------------- --------------------- ----------------- Sandler Technology 767 Fifth Avenue 5,245.9 84,397.5 $834,724.00 $1,836,392.00 Partners Subsidiary, LLC 45th Floor New York, NY 10153 Fax: (212) 754-8183 Attn: - ---------------------------- -------------------------- ------------------ ----------------- --------------------- ----------------- Sandler Co- Investment 767 Fifth Avenue 1,311.5 21,099.4 $208,675.00 $459,084.00 Partners L.P. 45th Floor New York, NY 10153 Fax: (212) 754-8183 Attn: - ---------------------------- -------------------------- ------------------ ----------------- --------------------- ----------------- Price Family Limited 262.3 4,219.9 $41,725.00 $91,795.00 Partners - ---------------------------- -------------------------- ------------------ ----------------- --------------------- ----------------- Total: 157,114.7 2,527,706.1 $25,000,000.00 $55,000,000.00 - ---------------------------- -------------------------- ------------------ ----------------- --------------------- -----------------
EX-4 9 ex4-1d.txt SECURITIES PURCHASE AGREEMENT EXHIBIT 4.1 SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "Agreement") is dated as of October 16, 2003, among Infocrossing, Inc., a Delaware corporation (the "Company"), and the purchasers identified on the signature pages hereto (each, a "Purchaser" and collectively, the "Purchasers"). WHEREAS, subject to the terms and conditions set forth in this Agreement and pursuant to Section 4(2) of the Securities Act (as defined below) and Rule 506 promulgated thereunder, the Company desires to issue and sell to the Purchasers, and the Purchasers, severally and not jointly, desire to purchase from the Company certain securities of the Company, as more fully described in this Agreement. NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Purchasers agree as follows: ARTICLE I. DEFINITIONS 1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1: "Action" means any action, suit, inquiry, notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened against or affecting the Company in a writing delivered to the Company or such Subsidiary (as the case may be), any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility. "Affiliate" means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144. "Business Day" means any day except Saturday, Sunday and any day which shall be a federal legal holiday or a day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close. "Closing" means the closing of the purchase and sale of the Securities pursuant to Article II. "Closing Date" means the date of the Closing. "Commission" means the Securities and Exchange Commission. "Common Stock" means the common stock of the Company, $0.01 par value per share, and any securities into which such common stock may hereafter be reclassified. "Company Counsel" means Latham & Watkins LLP. "Disclosure Materials" has the meaning set forth in Section 3.1(h). "Effective Date" means the date that the Registration Statement required by Section 2(a) of the Registration Rights Agreement is first declared effective by the Commission. "Escrow Agent" means the Escrow Agent under the Escrow Agreement. "Escrow Agreement" means the Escrow Agreement, dated as of the date of this Agreement, among the Company, the Purchasers and the Escrow Agent, in the form of Exhibit C. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Investment Amount" means, with respect to each Purchaser, the investment amount indicated below such Purchaser's name on the signature page of this Agreement. "Lien" means any lien, charge, encumbrance, security interest or right of first refusal. "Per Unit Purchase Price" equals $7.86, comprised of $7.81 for each Share and $.04375 for each Warrant (rounded up to the nearest penny). "Person" means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind. "Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. "Purchaser Percentage" means, with respect to a Purchaser, the percentage equal to the product of (x) a fraction, the numerator of which shall be the Investment Amount paid by such Purchaser on the Closing Date and the denominator of which shall be the aggregate Investment Amount paid by all Purchasers on the Closing Date times (y) 100. "Registration Statement" means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchasers of the Shares and the Warrant Shares. "Registration Rights Agreement" means the Registration Rights Agreement, dated as of the date of this Agreement, among the Company and the Purchasers, in the form of Exhibit B. "Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "SEC Reports" has the meaning set forth in Section 3.1(h). "Securities" means the Shares, the Warrants and the Warrant Shares. "Securities Act" means the Securities Act of 1933, as amended. "Shares" means the shares of Common Stock issued or issuable to the Purchasers at the Closing. "Subsidiary" means any "significant subsidiary" as defined in Rule 1-02(w) of the Regulation S-X promulgated by the Commission under the Exchange Act. "Trading Day" means (i) a day on which the Common Stock is traded on a Trading Market, or (ii) if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded in the over-the-counter market, as reported by the OTC Bulletin Board or the National Quotation Bureau Incorporated, or (iii) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over-the-counter market as reported by the National Quotation Bureau Incorporated (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed or quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a Business Day. "Trading Market" means whichever of the New York Stock Exchange, the American Stock Exchange, the NASDAQ National Market or the NASDAQ SmallCap Market, on which the Common Stock is listed or quoted for trading on the date in question. "Transaction Documents" means this Agreement, the Warrants, the Registration Rights Agreement, the Escrow Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder. "Warrants" means the Common Stock purchase warrants in the form of Exhibit A, which are issuable to the Purchasers at the Closing. "Warrant Shares" means the shares of Common Stock issuable upon exercise of the Warrants. ARTICLE II. PURCHASE AND SALE 2.1 Purchase of Shares; Closing. Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to each Purchaser, and each Purchaser shall, severally and not jointly, purchase from the Company, the Shares and the Warrants representing such Purchaser's Investment Amount. The Closing shall take place at the offices of Bryan Cave LLP, 1290 Avenue of the Americas, New York, NY 10104 or at such other location or time as the parties may agree on the date that the last of the conditions listed in Article V shall have been satisfied or waived by the appropriate parties. 2.2 Closing Deliveries. (a) At the Closing, the Company shall deliver or cause to be delivered to each Purchaser the following (collectively, the "Company Deliverables"): (i) a certificate evidencing a number of Shares equal to such Purchaser's Investment Amount divided by the Per Unit Purchase Price, registered in the name of such Purchaser, or such nominee name as designated by Purchaser; (ii) a Warrant, registered in the name of such Purchaser, pursuant to which such Purchaser shall have the right to acquire the number of shares of Common Stock equal to 35% of the number of Shares issuable to such purchaser in accordance with Section 2.2(a)(i); (iii) the legal opinion of Company Counsel, in agreed form, addressed to the Purchasers; and (iv) the Registration Rights Agreement and the Escrow Agreement, each duly executed by the Company. (b) At the Closing, each Purchaser shall deliver or cause to be delivered the following: (i) to the Escrow Agent, for deposit and distribution in accordance with the terms of the Escrow Agreement, such Purchaser's Investment Amount, in United States dollars and in immediately available funds, by wire transfer to the account designated for such purpose in the Escrow Agreement; and (ii) the Registration Rights Agreement and the Escrow Agreement, each duly executed by such Purchaser. ARTICLE III. REPRESENTATIONS AND WARRANTIES 3.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to each Purchaser: (a) Subsidiaries. The Company has no direct or indirect Subsidiaries other than those listed in Schedule 3.1(a). Except as disclosed in Schedule 3.1(a), the Company owns, directly or indirectly, all of the capital stock of each Subsidiary free and clear of any and all Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights. (b) Organization and Qualification. Each of the Company and each Subsidiary is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and each Subsidiary is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, would not, individually or in the aggregate, have or reasonably be expected to result in (i) an adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse impairment to the Company's ability to perform on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a "Material Adverse Effect"). (c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company in connection therewith. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application and as any rights to indemnity or contribution thereunder may be limited by public policy considerations. (d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company's or any Subsidiary's certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. (e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) the filing with the Commission of one or more Registration Statements in accordance with the requirements Registration Rights Agreement or the filing of a Form D with the Commission, (ii) any filings required by state securities laws, (iii) the filings required in accordance with Section 4.5, and (iv) those that have been made or obtained prior to or as of the date of this Agreement. (f) Issuance of the Securities. The Shares have been duly authorized and, when issued and paid for in accordance with this Agreement, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The Warrants have been duly authorized and, when issued and paid for in accordance with this Agreement and duly executed and delivered, will be duly and validly issued, free and clear of all Liens. The Warrant Shares have been duly authorized and, when issued and paid for in accordance with the terms of the Warrants, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens. The Company has reserved from its duly authorized capital stock the number of Warrant Shares issuable pursuant to the Warrant. (g) Capitalization. The number of shares and type of all authorized, issued and outstanding capital stock of the Company, and all shares of Common Stock reserved for issuance under the Company's various option and incentive plans, is set forth in Schedule 3.1(g). Except as set forth in Schedule 3.1(g), no securities of the Company are entitled to preemptive or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents. Except as a result of the purchase and sale of the Securities and except as disclosed in Schedule 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except as set forth in Schedule 3.1(g), the issue and sale of the Securities will not, immediately or with the passage of time, obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchasers) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under such securities. (h) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twelve months preceding the date hereof (or such shorter period as the Company was required by law to file such reports) (the foregoing materials being collectively referred to herein as the "SEC Reports" and, together with the Schedules to this Agreement, the "Disclosure Materials") on a timely basis or has timely filed a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the Commission promulgated thereunder, and none of the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with generally accepted accounting principles applied on a consistent basis during the periods involved ("GAAP"), except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, in each case in accordance with GAAP, subject, in the case of unaudited statements, to normal, nonrecurring, year-end audit adjustments. (i) Press Releases. The press releases disseminated by the Company during the one (1) year preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. (j) Material Changes. Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, (i) there has been no event, occurrence or development that has had or that would have or reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company's financial statements pursuant to GAAP or required to be disclosed in filings made with the Commission, (iii) the Company has not adopted material changes in accounting principles or changed its auditors, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans. The Company does not have pending before the Commission any request for confidential treatment of information. (k) Litigation. There is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) would, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act. (l) Labor Relations. No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company which would have or reasonably be expected to result in a Material Adverse Effect. (m) Compliance. Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental protection, occupational health and safety, product quality and safety and employment, labor matters and gaming matters, except in each case as would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. The Company is in compliance with the applicable requirements of the Sarbanes-Oxley Act of 2002 and the rules and regulations thereunder promulgated by the Commission, except where such noncompliance would not have or reasonably be expected to result in a Material Adverse Effect and except that the Company does not currently have a financial expert on its audit committee. (n) Regulatory Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect ("Material Permits"), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit. (o) Title to Assets. The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to their respective businesses and good and marketable title in all personal property owned by them that is material to their respective businesses, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries or Liens pursuant to the Term Loan Agreement, dated the Closing Date, among the Company, the Lenders named therein and Infocrossing Agent, Inc., as Agent. Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company and the Subsidiaries are in compliance, except as would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. (p) Patents and Trademarks. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, copyrights, licenses and other similar rights that are necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect (collectively, the "Intellectual Property Rights"). Neither the Company nor any Subsidiary has received a written notice that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person. Except as set forth in the SEC Reports, to the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights. (q) Insurance. The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged. The Company has no reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary on market terms. (r) Transactions With Affiliates and Employees. There are no transactions between the Company or any Subsidiary on the one hand and any officer or director of the Company on the other and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), in each case, that are required to be described in the SEC Reports pursuant to Item 404 of Regulation S-K and are not so described in accordance therewith. (s) Internal Accounting Controls. The Company and the Subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management's general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management's general or specific authorization, and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. (t) Solvency. Based on the financial condition of the Company as of the Closing Date (and assuming that the Closing shall have occurred), (i) the Company's fair saleable value of its assets exceeds the amount that will be required to be paid on or in respect of the Company's existing debts and other liabilities (including known contingent liabilities) as they mature; (ii) the Company's assets do not constitute unreasonably small capital to carry on its business for the current fiscal year as now conducted and as proposed to be conducted including its capital needs taking into account the particular capital requirements of the business conducted by the Company, and projected capital requirements and capital availability thereof; and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in respect of its debt when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt). (u) Certain Fees. Except as described in Schedule 3.1(u), no brokerage or finder's fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement. The Purchasers shall have no obligation with respect to any fees or with respect to any claims (other than such fees or commissions owed by a Purchaser pursuant to written agreements executed by such Purchaser which fees or commissions shall be the sole responsibility of such Purchaser) made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by this Agreement. (v) Certain Registration Matters. Assuming the accuracy of the Purchasers' representations and warranties set forth in Section 3.2(b)-(i), no registration under the Securities Act is required for the offer and sale of the Shares and Warrant Shares by the Company to the Purchasers under the Transaction Documents. The Company is eligible to register the resale of its Common Stock for resale by the Purchasers under Form S-3 promulgated under the Securities Act. Except as described in Schedule 3.1(v), the Company has not granted or agreed to grant to any Person any rights (including "piggy-back" registration rights) to have any securities of the Company registered with the Commission or any other governmental authority that have not been satisfied. (w) Listing and Maintenance Requirements. Except as specified in the SEC Reports or that have been cured, the Company has not, in the two years preceding the date hereof, received notice from any Trading Market to the effect that the Company is not in compliance with the listing or maintenance requirements thereof. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be (other than with respect to minimum price requirements), in compliance with the current listing and maintenance requirements for continued listing of the Common Stock on the NASDAQ Stock Market. The issuance and sale of the Securities under the Transaction Documents does not contravene the rules and regulations of the Trading Market on which the Common Stock is currently listed or quoted, and no approval of the shareholders of the Company thereunder is required for the Company to issue and deliver to the Purchasers the maximum number of Securities contemplated by Transaction Documents, including such as may be required pursuant to Nasdaq Rule Filing SR-NASD-2003-40 (March 14, 2003) concerning shareholder approval requirements when officers and directors participate in discounted private placements. (x) Investment Company. The Company is not, and is not an Affiliate of, an "investment company" within the meaning of the Investment Company Act of 1940, as amended. (y) No Additional Agreements. The Company does not have any agreement or understanding with any Purchaser with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents. (z) Disclosure. The Company confirms that neither it nor any Person acting on its behalf has provided any of the Purchasers or their agents or counsel with any information that the Company believes constitutes material, non-public information except insofar as the existence and terms of the proposed transactions hereunder may constitute such information. The Company understands and confirms that the Purchasers will rely on the foregoing representations and covenants in effecting transactions in securities of the Company. All disclosure provided to the Purchasers regarding the Company, its business and the transactions contemplated hereby, furnished by or on behalf of the Company (including the Company's representations and warranties set forth in this Agreement) are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 3.2 Representations and Warranties of the Purchasers. Each Purchaser hereby, for itself and for no other Purchaser, represents and warrants to the Company as follows: (a) Organization; Authority. Such Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by such Purchaser of the transactions contemplated by this Agreement has been duly authorized by all necessary corporate or, if such Purchaser is not a corporation, such partnership, limited liability company or other applicable like action, on the part of such Purchaser. Each of this Agreement and the Registration Rights Agreement has been duly executed by such Purchaser, and when delivered by such Purchaser in accordance with terms hereof, will constitute the valid and legally binding obligation of such Purchaser, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors' rights and remedies or by other equitable principles of general application and as any rights to indemnity or contribution thereunder may be limited by public policy considerations. Such Purchaser is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with its execution, delivery and performance of the Transaction Documents other than those that have been made or obtained prior to the date of the Agreement. (b) Investment Intent. Such Purchaser understands that the Securities are "restricted securities" (as defined in Rule 144 under the Securities Act) and have not been registered under the Securities Act or any applicable state securities law and such Purchaser is acquiring the Securities as principal for its own account for investment purposes only and not for the account of any other Person or with a view to any resale or distribution thereof or any part thereof, without prejudice, however, to such Purchaser's right at all times to sell or otherwise dispose of all or any part of such Securities in compliance with applicable federal and state securities laws. Subject to the immediately preceding sentence, nothing contained herein shall be deemed a representation or warranty by such Purchaser to hold the Securities for any period of time. Such Purchaser is acquiring the Securities hereunder in the ordinary course of its business. Such Purchaser does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities. (c) Purchaser Status. At the time such Purchaser was offered the Securities, it was, and at the date hereof it is, and on each date on which it exercises the Warrants it will be, an "accredited investor" as defined in Rule 501(a) under the Securities Act. Except as described in Schedule 3.2(c), no Purchaser is a registered broker-dealer under Section 15 of the Exchange Act. (d) General Solicitation. Such Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement. (e) Access to Information. Such Purchaser acknowledges that it has reviewed the Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Shares and the merits and risks of investing in the Securities; (ii) access to information about the Company and the Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of such Purchaser or its representatives or counsel shall modify, amend or affect such Purchaser's right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company's representations and warranties contained in the Transaction Documents. (f) International Actions. Such Purchaser acknowledges, represents and agrees that no action has been or will be taken in any jurisdiction outside the United States by the Company that would permit an offering of the Securities, or possession or distribution of offering materials in connection with the issue of the Securities, in any jurisdiction outside the United States. If such Purchaser is located outside the United States, it has or will take all actions necessary for the sale of the Securities to comply with all applicable laws and regulations in each foreign jurisdiction in which it purchases, offers, sells or delivers Securities or has in its possession or distributes any offering material, in all cases at its own expense. (g) Experience of such Purchaser. Such Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Purchaser has carefully considered the potential risks relating to the Company and a purchase of the Securities, and fully understands that the Securities are speculative investments which involve a high degree of risk of loss of such Purchaser's entire investment. Such Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. (h) Limited Ownership. The purchase by such Purchaser of the Shares and Warrants issuable to it at the Closing (including the Warrant Shares that would be issuable upon the exercise of such Purchaser's Warrants) will not result in such Purchaser (individually or together with other Persons with whom such Purchaser has identified, or will have identified, itself as part of a "group" in a public filing made with the Commission involving the Company's securities), acquiring, or obtaining the right to acquire, in excess of 14.999% of the Common Stock or the voting power of the Company on a post transaction basis that assumes that the Closing shall have occurred. Such Purchaser will not, alone or together with others, make a public filing with the Commission to disclose that it has (or that it together with such other Persons have) acquired, or obtained the right to acquire, as a result of the Closing (when added to any other securities of the Company that it or they then own or have the right to acquire), in excess of 14.999% of the Common Stock or the voting power of the Company on a post transaction basis that assumes that the Closing shall have occurred. Such Purchaser acknowledges and agrees that the Company has not approved the investment by such Purchaser, nor the Purchaser as an "interested stockholder", in either case for purposes of Section 203 of the Delaware General Corporate Law, with the result that the restrictions on "business combinations" set forth therein are applicable to such Purchaser. (i) Information. Such Purchaser represents that the information contained in this Section 3.2 is accurate and may be relied upon by the Company, and such Purchaser will notify the Company immediately of any material change in any of such information prior to the Closing. The Company acknowledges and agrees that each Purchaser does not make or has not made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in this Section 3.2. ARTICLE IV. OTHER AGREEMENTS OF THE PARTIES 4.1 (a) Securities may only be disposed of in compliance with state and federal securities laws. In connection with any transfer of the Securities other than pursuant to an effective registration statement, to the Company or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably satisfactory to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act. (b) Certificates evidencing the Securities will contain the following legend, so long as is required by this Section 4.1(b) or Section 4.1(c): [NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES HAVE BEEN REGISTERED] [THESE SECURITIES HAVE NOT BEEN REGISTERED] WITH THE SECURITIES AND EXCHANGE COMMISSION OR SECURITIES REGULATORS OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE, NOR MAY ANY INTEREST THEREIN BE, OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY, SUBJECT TO CERTAIN EXCEPTIONS, A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, IN FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. [THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES] [THESE SECURITIES] MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES IN ACCORDANCE WITH APPLICABLE LAWS. The Company acknowledges and agrees that a Purchaser may from time to time make a bona fide pledge, and/or grant of a security interest in some or all of the Securities pursuant to a bona fide margin agreement in connection with a bona fide margin account and, if required under the terms of such agreement or account, such Purchaser may deliver pledged or secured Securities to the pledgees or secured parties. Such a pledge or transfer would not be subject to approval or consent of the Company and no legal opinion of legal counsel to the pledgee, secured party or pledgor shall be required in connection with the pledge, but such legal opinion may be required in connection with a subsequent transfer following default by the Purchaser transferee of the pledge. No notice shall be required of such pledge. At the appropriate Purchaser's expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities including the preparation and filing of any required amended registration statement or prospectus supplement under Rule 424(b)(3) of the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder. (c) Certificates evidencing the Shares and Warrant Shares shall not contain any legend (including the legend set forth in Section 4.1(b)): (i) following any sale of such Shares or Warrant Shares pursuant to an effective registration statement under the Securities Act, or (ii) following any sale of such Shares or Warrant Shares pursuant to and in compliance with Rule 144 and upon receipt by the Company of customary representation letters from selling Holders and their brokers, or (iii) following receipt by the Company of customary representation letters from the selling Holders evidencing such Holder's eligibility to make resales under Rule 144(k). The Company shall promptly cause its counsel to issue any legal opinion or instruction required by the Company's transfer agent to effect the de-legending contemplated in this section. Following the Effective Date or at such earlier time as a legend is no longer required for the Shares and Warrant Shares under this Section 4.1(c), the Company will, no later than three Trading Days following the delivery by a Purchaser to the Company or the Company's transfer agent of a certificate representing Shares or Warrant Shares containing a restrictive legend, deliver or cause to be delivered to such Purchaser a certificate representing such Shares or Warrant Shares that is free from all restrictive and other legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section except as it may reasonably determine are necessary or appropriate to comply or to ensure compliance with those applicable laws that are enacted or modified after the Closing such as to require such notation or instructions. 4.2 Furnishing of Information. As long as any Purchaser owns the Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act. Upon the request of any such Person, the Company shall deliver to such Person a written certification of a duly authorized officer as to whether it has complied with the preceding sentence. As long as any Purchaser owns Securities, if the Company is not required to file reports pursuant to such laws, it will prepare and furnish to the Purchasers and make publicly available in accordance with Rule 144(c) such information as is required for the Purchasers to sell the Shares and Warrant Shares under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, all to the extent required from time to time to enable such Person to sell such Shares and Warrant Shares without registration under the Securities Act within the limitation of the exemptions provided by Rule 144. 4.3 Integration. The Company shall not, and shall use its best efforts to ensure that no Affiliate of the Company shall, sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchasers, or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market, and the Company represents that it has not engaged in such sales, offers or solicitations during the six months immediately preceding the date hereof. 4.4 Subsequent Registrations. Other than pursuant to the Registration Statement, prior to the Effective Date, the Company may not file any registration statement (other than on Form S-8) with the Commission with respect to any securities of the Company. 4.5 Securities Laws Disclosure; Publicity. By 8:30 a.m. (New York City time) on the Closing Date, the Company shall issue a press release reasonably acceptable to the Purchasers disclosing the transactions contemplated hereby and file a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby. In addition, the Company will make such other filings and notices in the manner and time required by the Commission and the Trading Market on which the Common Stock is listed. Notwithstanding the foregoing, the Company shall not publicly disclose the name of any Purchaser, or include the name of any Purchaser in any press release or any filing with the Commission (other than the Registration Statement and any exhibits to filings made in respect of this transaction in accordance with periodic filing requirements under the Exchange Act and Form D filings with the Commission) or any regulatory agency or Trading Market, without the prior written consent of such Purchaser, except to the extent such disclosure is required by law or Trading Market regulations, in which case the Company shall provide the Purchasers with prior notice of such disclosure. 4.6 Limitation on Issuance of Future Priced Securities. During the six months following the Closing Date, the Company shall not issue any "Future Priced Securities" as such term is described by NASD IM-4350-1, other than issuances of warrants to acquire Common Stock that contain customary anti-dilution protection (which the parties agree shall not include adjustments tied to other issuances of Company securities). 4.7 Indemnification of Purchasers. In addition to the indemnity provided in the Registration Rights Agreement, the Company will indemnify and hold the Purchasers and their directors, trustees, officers, shareholders, partners, members, employees and agents (each, a "Purchaser Party") harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys' fees and costs of investigation (collectively, "Losses") that any such Purchaser Party may suffer or incur as a result of or relating to (a) any misrepresentation, breach or inaccuracy of any representation, warranty, covenant or agreement made by the Company in any Transaction Document or (b) Section 16(b) of the Exchange Act solely as a result of being deemed to be part of a group or having acquired beneficial ownership of Securities beneficially owned by one or more of the other Purchasers, in either case in respect of this clause (b), solely as a consequence of entering into this Agreement as determined in a final nonappealable judgment of a court of competent jurisdiction. 4.8 Non-Public Information. The Company covenants and agrees that neither it nor any other Person acting on its behalf will provide any Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto such Purchaser shall have executed a written agreement regarding the confidentiality and use of such information. The Company understands and confirms that each Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company. 4.9 Use of Proceeds. Concurrently with the Closing, the Company shall use the net proceeds from the sale of the Securities hereunder to repurchase or cancel all of the outstanding warrants issued by the Company to the holders of the Company's Redeemable 8% Series A Cumulative Convertible Participating Preferred Stock, to redeem all outstanding shares of the Company's Redeemable 8% Series A Cumulative Convertible Participating Preferred Stock and to repay all of its outstanding Senior Subordinated Debentures due February 1, 2005. Any balance shall be used for working capital purposes, but not to settle any outstanding Action. 4.10 Listing of Common Stock. From the date hereof through the Effectiveness Period (as such term is defined in the Registration Rights Agreement) the Company agrees, (i) if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application the Shares, and will take such other action as is necessary or desirable in the reasonable opinion of the Purchasers to cause the Shares to be listed on such other Trading Market as promptly as possible and (ii) it will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all material respects with the Company's reporting, filing and other obligations under the bylaws or rules of the Trading Market. ARTICLE V. CONDITIONS PRECEDENT TO CLOSING 5.1 Conditions Precedent to Obligations of the Purchasers. Each Purchaser's obligation to purchase the Shares and Warrants at the Closing is subject to the satisfaction or waiver by such Purchaser of the following conditions: (a) Representations and Warranties. The representations and warranties of the Company set forth in this Agreement shall be true and correct in all material respects (except for those qualified as to materiality, which shall be true and correct) as of the date of this Agreement and as of the Closing Date (except to the extent that such representation or warranty speaks of an earlier date, in which case such representation or warranty shall be true and correct in all material respects (or if qualified by materiality, which shall be true and correct) as of such date) as though made on and as of the Closing Date. (b) Performance of Obligations. The Company shall have performed in all material respects all agreements and covenants required to be performed by it under this Agreement prior to the Closing Date. (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or by the NASDAQ National Market which prohibits the consummation of any of the transactions contemplated by the Transaction Documents. (d) No Material Adverse Effect. Between the execution of this Agreement and the Closing, no event or series of events (other than stock price fluctuations) shall have occurred which reasonably would be expected to have or result in a Material Adverse Effect. (e) Company Deliverables. The Company shall have delivered to the Escrow Agent all of the Company Deliverables for distribution in accordance with the Escrow Agreement. (f) Minimum Subscriptions. The aggregate of all Purchasers' Investment Amounts delivered to the Escrow Agent or the Company in accordance with the Escrow Agreement shall not be less than $75,000,000, less such amount not to exceed $5,000,000 as the holders of the Company's Series A Cumulative Convertible Participating Preferred Stock being exchanged in exchange for shares of Common Stock and warrants, at such holder's option, to acquire Common Stock in such number as would be issuable at the Per Unit Purchase Price in lieu of cash in respect of repurchases or cancellation as contemplated by Section 4.9 (such securities, the "Exchange Securities"). (g) Nasdaq Listing. The Nasdaq Stock Market shall have provided a written interpretation to the Company that the issuance of the Securities and the Exchange Securities, if any, does not require approval by the shareholders of the Company. (h) Closing Date. The Closing shall have occurred by November 1, 2003. 5.2 Conditions Precedent to Obligations of the Company. The Company's obligation to issue and sell the Shares and Warrants to each Purchaser at the Closing is subject to the satisfaction, or waiver by the Company, of the following conditions: (a) Representations and Warranties. The representations and warranties of such Purchaser set forth in this Agreement shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date (except to the extent that such representation or warranty speaks of an earlier date, in which case such representation or warranty shall be true and correct in all material respects as of such date) as though made on the Closing Date. (b) Performance of Obligations. Such Purchaser shall have performed in all material respects all agreements and covenants required to be performed by it under this Agreement prior to the Closing Date. (c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction or by the NASDAQ National Market which prohibits the consummation of any of the transactions contemplated by the Transaction Documents. (d) Minimum Subscriptions. The aggregate of all Purchasers' Investment Amounts delivered to the Escrow Agent or the Company in accordance with the Escrow Agreement shall not be less than $75,000,000, less such amount not to exceed $5,000,000 as the holders of the Company's Series A Cumulative Convertible Participating Preferred Stock being exchanged in exchange for the Exchange Securities. (e) Nasdaq Listing. The Nasdaq Stock Market shall have provided a written interpretation to the Company that the issuance of the Securities or the Exchange Securities, if any, does not require approval by the shareholders of the Company. (f) Closing Date. The Closing shall have occurred by November 1, 2003. ARTICLE VI. MISCELLANEOUS 6.1 Fees and Expenses. At the Closing, the Company shall pay to Bryan Cave LLP, upon presentation of an invoice, $25,000 in connection with the preparation of the Transaction Documents, it being understood that Bryan Cave LLP has only rendered legal advice to Roth Capital Partners LLC, and not to the Company or any Purchaser in connection with the transactions contemplated hereby, and that each of the Company and each Purchaser has relied for such matters on the advice of its own respective counsel. Except as specified in the immediately preceding sentence and in the Registration Rights Agreement, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of the Transaction Documents. The Company shall pay all stamp and other taxes and duties levied in connection with the sale of the Securities. 6.2 Entire Agreement. The Transaction Documents, together with the Exhibits and Schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules. 6.3 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Company: Infocrossing, Inc. 2 Christie Heights Street Leonia, NJ 07605 Attn: Chief Executive Officer Facsimile No.: (201) 840-7126 With a copy to: Latham & Watkins LLP 885 Third Avenue, Suite 1000 New York, NY 10022-4802 Attn: Robert A. Zuccaro, Esq. Facsimile No.: (212) 751-4864 If to a Purchaser: To the address set forth under such Purchaser's name on the signature pages hereof; or such other address as may be designated in writing hereafter, in the same manner, by such Person. 6.4 Amendments; Waivers. No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the holders of two-thirds of the Shares then outstanding (without regard to Warrant Shares) or, in the case of a waiver, by the party against whom enforcement of any such waiver is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of either party to exercise any right hereunder in any manner impair the exercise of any such right. 6.5 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents. 6.6 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Purchasers. Any Purchaser may assign any or all of its rights under this Agreement to any Person to whom such Purchaser assigns or transfers any Securities in other than a registered resale or a resale pursuant to Rule 144, provided such transfer is in compliance with Section 4.1 and the transferee undertakes in writing to the Company to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the Purchasers. 6.7 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.7. 6.8 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan (the "New York Courts"). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorney's fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding. 6.9 Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Shares and Warrants for a period of two years from the Closing. The agreements and covenants contained herein shall survive the Closing in accordance with their respective terms. 6.10 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile signature page were an original thereof. 6.11 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement. 6.12 Rescission and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of) the Transaction Documents, whenever any Purchaser exercises a right, election, demand or option under a Transaction Document and the Company does not timely perform its related obligations within the periods therein provided, then such Purchaser may rescind or withdraw, in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or in part without prejudice to its future actions and rights. 6.13 Replacement of Securities. If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity, if requested. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities. If a replacement certificate or instrument evidencing any Securities is requested due to a mutilation thereof, the Company may require delivery of such mutilated certificate or instrument as a condition precedent to any issuance of a replacement. 6.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchasers and the Company will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate. 6.15 Payment Set Aside. To the extent that the Company makes a payment or payments to any Purchaser pursuant to any Transaction Document or a Purchaser enforces or exercises its rights thereunder, and such payment or payments or the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiver or any other person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 6.16 Independent Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser under any Transaction Document are several and not joint with the obligations of any other Purchaser, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser under any Transaction Document. The decision of each Purchaser to purchase Securities pursuant to the Transaction Documents has been made by such Purchaser independently of any other Purchaser. Nothing contained herein or in any Transaction Document, and no action taken by any Purchaser pursuant thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Document. Each Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection with making its investment hereunder and that no Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents. Each Purchaser shall be entitled to independently protect and enforce its rights, including without limitation the rights arising out of this Agreement or out of the other Transaction Documents, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. 6.17 Limitation of Liability. Notwithstanding anything herein to the contrary, the Company acknowledges and agrees that the liability of any Purchaser arising directly or indirectly, under any Transaction Document, of any and every nature whatsoever, shall be satisfied solely out of the assets of such Purchaser, and that no trustee, officer, other investment vehicle affiliated with such Purchaser or any investor, shareholder or holder of shares of beneficial interest of such a Purchaser shall be personally liable for any liabilities of such Purchaser. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOLLOW] IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above. INFOCROSSING, INC. /s/ Zach Lonstein ----------------------------------------- Name: Zach Lonstein Title:Chairman and Chief Executive Officer [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES FOR PURCHASERS FOLLOW] IN WITNESS WHEREOF, the parties have executed this Securities Purchase Agreement as of the date first written above. [FUND NAME] By:_____________________________________ Name: Title: Investment Amount: $ Address for Notice: Facsimile No.: Attn: EXHIBIT A TO THE SECURITIES PURCHASE AGREEMENT NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORS OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE, NOR MAY ANY INTEREST THEREIN BE, OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY, SUBJECT TO CERTAIN EXCEPTIONS, A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, IN FORM AND SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED BY SUCH SECURITIES IN ACCORDANCE WITH APPLICABLE LAWS. INFOCROSSING, INC. WARRANT Warrant No. [ ] Date of Original Issuance: October [ ], 2003 Infocrossing, Inc., a Delaware corporation (the "Company"), hereby certifies that, for value received, [ ] or its registered assigns (the "Holder"), is entitled to purchase from the Company up to a total of [ ] shares of common stock, par value $.01 per share (the "Common Stock"), of the Company (each such share, a "Warrant Share" and all such shares, the "Warrant Shares") at an exercise price equal to $7.86 per share (as adjusted from time to time as provided in Section 9, the "Exercise Price"), at any time and from time to time from and after the date hereof and through and including October [__], 2008 (the "Expiration Date"), and subject to the following terms and conditions: 1. Definitions. In addition to the terms defined elsewhere in this Warrant, capitalized terms that are not otherwise defined herein shall have the meanings given to such terms in the Securities Purchase Agreement of even date herewith to which the Company and the original Holder are parties (the "Purchase Agreement"). 2. Registration of Warrant. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "Warrant Register"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary from the transferee and transferor. 3. Registration of Transfers. Subject to Section 6, the Company shall register the transfer of any portion of this Warrant in the Warrant Register, upon surrender of this Warrant, with the Form of Assignment attached hereto duly completed and signed, to the Company at its address specified herein. As a condition to the transfer, the Company may request a legal opinion as contemplated by the legend. Upon any such registration or transfer, a new Warrant to purchase Common Stock, in substantially the form of this Warrant (any such new Warrant, a "New Warrant"), evidencing the portion of this Warrant so transferred shall be issued to the transferee and a New Warrant evidencing the remaining portion of this Warrant not so transferred, if any, shall be issued to the transferring Holder. The acceptance of the New Warrant by the transferee thereof shall be deemed the acceptance by such transferee of all of the rights and obligations of a holder of a Warrant. 4. Exercise and Duration of Warrants. This Warrant shall be exercisable by the registered Holder at any time and from time to time on or after the date hereof to and including the Expiration Date. At 6:30 p.m., New York City time on the Expiration Date, the portion of this Warrant not exercised prior thereto shall be and become void and of no value. The Company may not call or redeem all or any portion of this Warrant without the prior written consent of the Holder. 5. Delivery of Warrant Shares. (a) To effect exercises hereunder, the Holder shall not be required to physically surrender this Warrant unless the aggregate Warrant Shares then represented by this Warrant is being exercised. Upon delivery of the Exercise Notice to the Company (with the attached Warrant Shares Exercise Log) at its address for notice set forth herein and upon payment of the Exercise Price multiplied by the number of Warrant Shares that the Holder intends to purchase hereunder, the Company shall promptly (but in no event later than three Trading Days after the Date of Exercise (as defined herein)) issue and deliver to the Holder, a certificate for the Warrant Shares issuable upon such exercise, which, unless otherwise required by the Purchase Agreement, shall be free of restrictive legends. The Company shall, upon request of the Holder and subsequent to the date on which a registration statement covering the resale of the Warrant Shares has been declared effective by the Securities and Exchange Commission, use its best efforts to deliver Warrant Shares hereunder electronically through the Depository Trust Corporation or another established clearing corporation performing similar functions, if available, provided, that, the Company may, but will not be required to change its transfer agent if its current transfer agent cannot deliver Warrant Shares electronically through the Depository Trust Corporation. A "Date of Exercise" means the date on which the Holder shall have delivered to Company: (i) the Exercise Notice (with the Warrant Exercise Log attached to it), appropriately completed and duly signed and (ii) if such Holder is not utilizing the cashless exercise provisions set forth in this Warrant, payment in full of the Exercise Price in immediately available funds or federal funds for the number of Warrant Shares so indicated by the Holder to be purchased. (b) If by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), then the Holder will have the right to rescind such exercise. (c) If by the third Trading Day after a Date of Exercise the Company fails to deliver the required number of Warrant Shares in the manner required pursuant to Section 5(a), and if after such third Trading Day and prior to the receipt of such Warrant Shares, the Holder purchases in a bona fide arm's length transaction for fair market value (in an open market transaction or otherwise) the number of shares of Common Stock necessary to deliver in satisfaction of a bona fide arm's length sale for fair market value by the Holder of the Warrant Shares which the Holder was entitled to receive upon such exercise (a "Buy-In"), then the Company shall (1) pay in cash to the Holder the amount by which (x) the Holder's total purchase price (including brokerage commissions, if any) for the shares of Common Stock so purchased exceeds (y) the Holder's total sales price (including brokerage commissions, if any) for the shares of Common Stock so sold and (2) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number of Warrant Shares for which such exercise was not honored or deliver to the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise and delivery obligations hereunder. The Holder shall provide the Company written notice and reasonably detailed documentation indicating the amounts requested by the Holder in respect of the Buy-In. (d) The Company's obligations to issue and deliver Warrant Shares in accordance with the terms hereof are absolute and unconditional, irrespective of any action or inaction by the Holder to enforce the same, any waiver or consent with respect to any provision hereof, the recovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder or any other Person of any obligation to the Company or any violation or alleged violation of law by the Holder or any other Person, and irrespective of any other circumstance which might otherwise limit such obligation of the Company to the Holder in connection with the issuance of Warrant Shares. Nothing herein shall limit a Holder's right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to the Company's failure to timely deliver certificates representing shares of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof. 6. Charges, Taxes and Expenses. Issuance and delivery of certificates for shares of Common Stock upon exercise of this Warrant shall be made without charge to the Holder for any issue or transfer tax, withholding tax, transfer agent fee or other incidental tax or expense in respect of the issuance of such certificates, all of which taxes and expenses shall be paid by the Company; provided, however, that the Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the registration of any certificates for Warrant Shares or Warrants in a name other than that of the Holder. The Holder shall be responsible for all other tax liability that may arise as a result of holding or transferring this Warrant or receiving Warrant Shares upon exercise hereof. 7. Replacement of Warrant. If this Warrant is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation hereof, or in lieu of and substitution for this Warrant, a New Warrant, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction and customary and reasonable indemnity (which may include a surety bond), if requested. Applicants for a New Warrant under such circumstances shall also comply with such other reasonable regulations and procedures and pay such other reasonable third-party costs as the Company may prescribe. If a New Warrant is requested as a result of a mutilation of this Warrant, then the Holder shall deliver such mutilated Warrant to the Company as a condition precedent to the Company's obligation to issue the New Warrant. 8. Reservation of Warrant Shares. The Company covenants that it will at all times reserve and keep available out of the aggregate of its authorized but unissued and otherwise unreserved Common Stock, solely for the purpose of enabling it to issue Warrant Shares upon exercise of this Warrant as herein provided, the number of Warrant Shares which are then issuable and deliverable upon the exercise of this entire Warrant, free from preemptive rights or any other contingent purchase rights of persons other than the Holder (taking into account the adjustments and restrictions of Section 9). The Company covenants that all Warrant Shares so issuable and deliverable shall, upon issuance and the payment of the applicable Exercise Price in accordance with the terms hereof, be duly and validly authorized, issued and fully paid and nonassessable. 9. Certain Adjustments. The Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant are subject to adjustment from time to time as set forth in this Section 9. (a) Stock Dividends and Splits. If the Company, at any time while this Warrant is outstanding, (i) pays a stock dividend on its Common Stock or otherwise makes a distribution on any class of capital stock that is payable in shares of Common Stock, (ii) subdivides outstanding shares of Common Stock into a larger number of shares, or (iii) combines outstanding shares of Common Stock into a smaller number of shares, then in each such case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock outstanding immediately before such event and of which the denominator shall be the number of shares of Common Stock outstanding immediately after such event. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of stockholders entitled to receive such dividend or distribution, and any adjustment pursuant to clause (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. If any event requiring an adjustment under this paragraph occurs during the period that an Exercise Price is calculated hereunder, then the calculation of such Exercise Price shall be adjusted appropriately to reflect such event. (b) Pro Rata Distributions. If the Company, at any time while this Warrant is outstanding, distributes to all holders of Common Stock (i) evidences of its indebtedness, (ii) any security (other than a distribution of Common Stock covered by the preceding paragraph), (iii) rights or warrants to subscribe for or purchase any security, or (iv) any other asset (in each case, "Distributed Property"), then, at the request of any Holder delivered before the 90th day after the record date fixed for determination of stockholders entitled to receive such distribution, the Company will deliver to such Holder, within five Trading Days after such request (or, if later, on the effective date of such distribution), the Distributed Property that such Holder would have been entitled to receive in respect of the Warrant Shares for which such Holder's Warrant could have been exercised immediately prior to such record date. If such Distributed Property is not delivered to a Holder pursuant to the preceding sentence, then upon any exercise of the Warrant that occurs after such record date, such Holder shall be entitled to receive, in addition to the Warrant Shares otherwise issuable upon such conversion, the Distributed Property that such Holder would have been entitled to receive in respect of such number of Warrant Shares had the Holder been the record holder of such Warrant Shares immediately prior to such record date. (c) Fundamental Transactions. If, at any time while this Warrant is outstanding, (1) the Company effects any merger or consolidation of the Company with or into another Person, (2) the Company effects any sale of all or substantially all of its assets in one or a series of related transactions, (3) any tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to tender or exchange their shares for other securities, cash or property, or (4) the Company effects any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property (in any such case, a "Fundamental Transaction"), then the Holder shall have the right thereafter to receive, upon exercise of this Warrant, the same amount and kind of securities, cash or property as it would have been entitled to receive upon the occurrence of such Fundamental Transaction if it had been, immediately prior to such Fundamental Transaction, the holder of the number of Warrant Shares then issuable upon exercise in full of this Warrant (the "Alternate Consideration"). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. At the Holder's option and request, any successor to the Company or surviving entity in such Fundamental Transaction shall issue to the Holder a new warrant substantially in the form of this Warrant and consistent with the foregoing provisions and evidencing the Holder's right to purchase the Alternate Consideration for the aggregate Exercise Price upon exercise thereof. Any such successor or surviving entity shall be deemed to be required to comply with the provisions of this paragraph (c) and shall insure that the Warrant (or any such replacement security) will be similarly adjusted upon any subsequent transaction analogous to a Fundamental Transaction. (d) Number of Warrant Shares. Simultaneously with any adjustment to the Exercise Price pursuant to paragraph (a) of this Section, the number of Warrant Shares that may be purchased upon exercise of this Warrant shall be increased or decreased proportionately, so that after such adjustment the aggregate Exercise Price payable hereunder for the adjusted number of Warrant Shares shall be the same as the aggregate Exercise Price in effect immediately prior to such adjustment. (e) Calculations. All calculations under this Section 9 shall be made to the nearest cent or the nearest 1/100th of a share, as applicable. The number of shares of Common Stock outstanding at any given time shall not include shares owned or held by or for the account of the Company, and the disposition of any such shares shall be considered an issue or sale of Common Stock. (f) Notice of Adjustments. Upon the occurrence of each adjustment pursuant to this Section 9, the Company at its expense will promptly compute such adjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment, including a statement of the adjusted Exercise Price and adjusted number or type of Warrant Shares or other securities issuable upon exercise of this Warrant (as applicable), describing the transactions giving rise to such adjustments and showing in detail the facts upon which such adjustment is based. Upon written request, the Company will promptly deliver a copy of each such certificate to the Holder and to the Company's Transfer Agent. No adjustment in the Exercise Price 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 9(f) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. (g) Notice of Corporate Events. If the Company (i) declares a dividend or any other distribution of cash, securities or other property in respect of its Common Stock, including without limitation any granting of rights or warrants to subscribe for or purchase any capital stock of the Company or any Subsidiary, (ii) authorizes or approves, enters into any agreement contemplating or solicits stockholder approval for any Fundamental Transaction or (iii) authorizes the voluntary dissolution, liquidation or winding up of the affairs of the Company, then the Company shall deliver to the Holder a notice describing the material terms and conditions of such transaction, at least 20 calendar days prior to the applicable record or effective date on which a Person would need to hold Common Stock in order to participate in or vote with respect to such transaction, and the Company will take all steps reasonably necessary in order to insure that the Holder is given the practical opportunity to exercise this Warrant prior to such time so as to participate in or vote with respect to such transaction; provided, however, that the failure to deliver such notice or any defect therein shall not affect the validity of the corporate action required to be described in such notice. 10. Payment of Exercise Price. The Holder may pay the Exercise Price in one of the following manners: (a) Cash Exercise. The Holder may deliver immediately available funds; or (b) Cashless Exercise. The Holder may notify the Company in an Exercise Notice of its election to utilize cashless exercise, in which event the Company shall issue to the Holder the number of Warrant Shares determined as follows: X = Y [(A-B)/A] where: X = the number of Warrant Shares to be issued to the Holder. Y = the number of Warrant Shares with respect to which this Warrant is being exercised. A = the average of the closing prices for the five Trading Days immediately prior to (but not including) the Exercise Date. B = the Exercise Price. For purposes of Rule 144 promulgated under the Securities Act, it is intended, understood and acknowledged that the Warrant Shares issued in a cashless exercise transaction shall be deemed to have been acquired by the Holder, and the holding period for the Warrant Shares shall be deemed to have commenced, on the date this Warrant was originally issued. 11. Limitation on Exercise. Notwithstanding anything to the contrary contained herein, the number of shares of Common Stock that may be acquired by the Holder upon any exercise of this Warrant (or otherwise in respect hereof) shall be limited to the extent necessary to insure that, following such exercise (or other issuance), the total number of shares of Common Stock then beneficially owned by such Holder and its Affiliates and any other Persons whose beneficial ownership of Common Stock would be aggregated with the Holder's for purposes of Section 13(d) of the Exchange Act, does not exceed [9.999%] [4.999%] of the total number of issued and outstanding shares of Common Stock (including for such purpose the shares of Common Stock issuable upon such exercise). For such purposes, beneficial ownership shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. Each delivery of an Exercise Notice hereunder will constitute a representation by the Holder that it has evaluated the limitation set forth in this paragraph and determined that issuance of the full number of Warrant Shares requested in such Exercise Notice is permitted under this paragraph. This provision shall not restrict the number of shares of Common Stock which a Holder may receive or beneficially own in order to determine the amount of securities or other consideration that such Holder may receive in the event of a merger or other business combination or reclassification involving the Company as contemplated in Section 9 of this Warrant. This restriction may not be waived. 12. No Fractional Shares. No fractional shares of Warrant Shares will be issued in connection with any exercise of this Warrant. In lieu of any fractional shares which would, otherwise be issuable, the Company shall pay cash equal to the product of such fraction multiplied by the closing price of one Warrant Share as reported by Bloomberg L.P. (or the successor to its function of reporting share prices) on the date of exercise. 13. Notices. Any and all notices or other communications or deliveries hereunder (including, without limitation, any Exercise Notice) shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile number specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (New York City time) on any Trading Day, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The addresses for such communications shall be: (i) if to the Company, to Infocrossing, Inc., 2 Christie Heights Street, Leonia, New Jersey 07605, Attn: Chief Executive Officer, Facsimile No.: (201) 840-7126, or (ii) if to the Holder, to the address or facsimile number appearing on the Warrant Register or such other address or facsimile number as the Holder may provide to the Company in accordance with this Section. 14. Warrant Agent. The Company shall serve as warrant agent under this Warrant. Upon 30 days' notice to the Holder, the Company may appoint a new warrant agent. Any corporation into which the Company or any new warrant agent may be merged or any corporation resulting from any consolidation to which the Company or any new warrant agent shall be a party or any corporation to which the Company or any new warrant agent transfers substantially all of its corporate trust or shareholders services business shall be a successor warrant agent under this Warrant without any further act. Any such successor warrant agent shall promptly cause notice of its succession as warrant agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder's last address as shown on the Warrant Register. 15. Miscellaneous. (a) This Warrant shall be binding on and inure to the benefit of the parties hereto and the respective successors and assigns of the Holder it being understood that transfers of this Warrant by the Holder are subject to the legend set forth of the face hereof. Subject to the preceding sentence, nothing in this Warrant shall be construed to give to any Person other than the Company and the Holder any legal or equitable right, remedy or cause of action under this Warrant. This Warrant may be amended only in writing signed by the Company and the Holder and their successors and assigns. (b) All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of this Warrant and the transactions herein contemplated ("Proceedings") (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan (the "New York Courts"). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Warrant or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of this Warrant, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorney's fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding. (c) The headings herein are for convenience only, do not constitute a part of this Warrant and shall not be deemed to limit or affect any of the provisions hereof. (d) In case any one or more of the provisions of this Warrant shall be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Warrant shall not in any way be affected or impaired thereby and the parties will attempt in good faith to agree upon a valid and enforceable provision which shall be a commercially reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Warrant. 35% of the number of Shares issuable to such Holder at Closing. This clause may be deleted as to any Purchaser at its request prior to closing. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK, SIGNATURE PAGE FOLLOWS] IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed by its authorized officer as of the date first indicated above. INFOCROSSING, INC. By: ---------------------------------------- Name: Title: EXERCISE NOTICE To Infocrossing, Inc.: The undersigned hereby irrevocably elects to purchase _____________ shares of common stock, par value $.01 per share, of Infocrossing, Inc. ("Common Stock"), pursuant to Warrant No. [ ], originally issued October [ ], 2003 (the "Warrant"), and, if such Holder is not utilizing the cashless exercise provisions set forth in the Warrant, encloses herewith $________ in cash, federal funds or other immediately available funds, which sum represents the aggregate Exercise Price (as defined in the Warrant) for the number of shares of Common Stock to which this Exercise Notice relates, together with any applicable taxes payable by the undersigned pursuant to the Warrant. By its delivery of this Exercise Notice, the undersigned represents and warrants to the Company that in giving effect to the exercise evidenced hereby the Holder will not beneficially own in excess of the number of shares of Common Stock (determined in accordance with Section 13(d) of the Securities Exchange Act of 1934) permitted to be owned under Section 11 of this Warrant to which this notice relates. The undersigned requests that certificates for the shares of Common Stock issuable upon this exercise be issued in the name of PLEASE INSERT SOCIAL SECURITY OR TAX IDENTIFICATION NUMBER (Please print name and address) Warrant Shares Exercise Log - ------ -------------------------- ------------------- --------------------- Date Number of Warrant Shares Number of Warrant Number of Warrant Available to be Exercised Shares Exercised Shares Remaining to be Exercised - ------ -------------------------- ------------------- --------------------- - ------ -------------------------- ------------------- --------------------- FORM OF ASSIGNMENT [To be completed and signed only upon transfer of Warrant] FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ________________________________ the right represented by the within Warrant to purchase ____________ shares of Common Stock of Infocrossing, Inc. to which the within Warrant relates and appoints ________________ attorney to transfer said right on the books of the Company with full power of substitution in the premises. Dated: _______________, ____ --------------------------------------- (Signature must conform in all respects to name of holder as specified on the face of the Warrant) --------------------------------------- Address of Transferee --------------------------------------- --------------------------------------- Tax Identification Number or Social Security Number of Transferee ----------------------------------------- In the presence of: - -------------------------- -------- 1 35% of the number of Shares issuable to such Holder at Closing. 2 This clause may be deleted as to any Purchaser at its request prior to closing. EX-4 10 ex4-2d.txt REGISTRATION RIGHTS EXHIBIT 4.2 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into as of October 16, 2003, by and among Infocrossing, Inc., a Delaware corporation (the "Company"), and the investors signatory hereto (each a "Purchaser" and collectively, the "Purchasers"). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof among the Company and the Purchasers (the "Purchase Agreement"). The Company and the Purchasers hereby agree as follows: 1. Definitions. Capitalized terms used and not otherwise defined herein that are defined in the Purchase Agreement shall have the meanings given such terms in the Purchase Agreement. As used in this Agreement, the following terms shall have the respective meanings set forth in this Section 1: "Effective Date" means the date that the Registration Statement filed pursuant to Section 2(a) is first declared effective by the Commission. "Effectiveness Date" means the earlier of (a) the 90th day following the Closing Date; provided, that, if the Commission reviews and has written comments to the filed Registration Statement that would require the filing of a pre-effective amendment thereto with the Commission, then the Effectiveness Date under this clause (a) shall be the 120th day following the Closing Date, and (b) the fifth Trading Day following the date on which the Company is notified by the Commission that the Registration Statement will not be reviewed or is no longer subject to further review and comments. "Effectiveness Date" shall also have the meaning specified in Section 2(b). "Effectiveness Period" shall have the meaning set forth in Section 2(a). "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Filing Date" means the 30th day following the Closing Date. "Holder" or "Holders" means the holder or holders, as the case may be, from time to time of Registrable Securities. "Indemnified Party" shall have the meaning set forth in Section 5(c). "Indemnifying Party" shall have the meaning set forth in Section 5(c). "Losses" shall have the meaning set forth in Section 5(a). "Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. "Prospectus" means the prospectus included in a Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. "Registrable Securities" means (i) the Shares, and (ii) the shares of Common Stock issuable upon exercise of the Warrants. "Registration Statement" means the initial registration statement required to be filed in accordance with Section 2(a) and any additional registration statement(s) required to be filed under Section 2(b), including (in each case) the Prospectus, amendments and supplements to such registration statements or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statements. "Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Securities Act" means the Securities Act of 1933, as amended. "Shares" means the shares of Common Stock issued or issuable to the Purchasers pursuant to the Purchase Agreement. "Special Counsel" means Bryan Cave LLP. "Warrants" means the Warrants issued or issuable under the Purchase Agreement. 2. Registration. (a) On or prior to the Filing Date, the Company shall prepare and file with the Commission a Registration Statement covering the resale of all Registrable Securities not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form for such purpose) and shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) the "Plan of Distribution" attached hereto as Annex A. The Company shall use its reasonable best efforts to cause the Registration Statement to be declared effective under the Securities Act as soon as possible but, in any event, no later than the Effectiveness Date, and shall use its reasonable best efforts to keep the Registration Statement continuously effective under the Securities Act (subject to Section 6(d) hereof) until the earlier of (i) the date that all Registrable Securities covered by such Registration Statement have been publicly sold, or (ii) the later of (A) the second anniversary that a Warrant is exercised or (B) the date on which all Registrable Securities covered by the Registration Statement may be sold without volume restrictions pursuant to Rule 144(k) and, if requested by an affected Holder or the Company's transfer agent, as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company's transfer agent and such affected Holders (the "Effectiveness Period"). (b) If for any reason the Commission does not permit all of the Shares and all Warrant Shares to be included in the Registration Statement filed pursuant to Section 2(a), or for any other reason any Registrable Securities are not permitted by the Commission to be included in a Registration Statement filed under this Agreement, then the Company shall use its reasonable best efforts to prepare and file as soon as possible after the date on which the Commission shall indicate as being the first date or time that such filing may be made, but in any event by the 30th day following such date, an additional Registration Statement covering the resale of all Registrable Securities not already covered by an existing and effective Registration Statement for an offering to be made on a continuous basis pursuant to Rule 415, on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form for such purpose). Each such Registration Statement shall contain (except if otherwise required pursuant to written comments received from the Commission upon a review of such Registration Statement) the "Plan of Distribution" attached hereto as Annex A. The Company shall use its reasonable best efforts to cause each such Registration Statement to be declared effective under the Securities Act as soon as possible but, in any event, no later than the 90th day following the date on which the Company becomes aware that such Registration Statement is required under this Agreement (each such 90th day, the "Effectiveness Date" for such Registration Statement), and shall use its reasonable best efforts to keep such Registration Statement continuously effective under the Securities Act during the entire Effectiveness Period, subject to Section 6(d) hereof. (c) Notwithstanding anything contained herein to the contrary, including Sections 3(c) and 6(d) (and without regard to the efforts of the Company to avoid such occurrence), if: (i) a Registration Statement is not filed on or prior to its Filing Date (if the Company files a Registration Statement without affording the Holders the opportunity to review and comment on the same as required by Section 3(a) hereof, the Company shall not be deemed to have satisfied this clause (i)), or (ii) a Registration Statement is not declared effective by the Commission on or prior to the required Effectiveness Date, or (iii) after the Effective Date, such Registration Statement ceases to be effective and available to the Holders as to all Registrable Securities to which it is required to cover (1) for an aggregate of 20 Trading Days (which need not be consecutive Trading Days) during the two years following the Effective Date, and (2) for 20 Trading Days in each year thereafter through the expiration of the Effectiveness Period (it being understood that any unused allocation during any one year may not be carried forward to subsequent years) (any such failure or breach being referred to as an "Event," and for purposes of clauses (i) or (ii) the date on which such Event occurs, or for purposes of clause (iii) the date which an applicable 20 Trading Day-period(s) is exceeded, being referred to as "Event Date"), then, in addition to any other rights available to the Holders: (x) on each such Event Date the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to .000333333% of the product of (1) the number of Shares then held by such Holder plus the number of Warrant Shares issuable under the Warrants then held by such Holder and (2) the closing sales price of the common Stock on the Event Date (except that, Shares that maybe resold by the Holder pursuant to Rule 144(k), as evidenced by a legal opinion provided by Company counsel and paid for by the Company that is acceptable to the transfer agent for the Company to reissue all of such Holder's Shares without any restrictive or other legends, shall be excluded for these purposes) for each day until the applicable Event is cured upon the occurrence of such filing in the case of clause (i) and upon the effectiveness of the Registration Statement in the case of clause (ii) and (iii); provided, however, that the Company shall not in any event be required to pay such liquidated damages for more than one Event or Event Date at any given time and the aggregate amount of such liquidated damages shall not exceed 1.0% of the aggregate unsold portion of the Investment Amount with respect to any calendar month, which shall be deemed to have 30 days for purposes of this Section 2(c). If the Company fails to pay any liquidated damages pursuant to this Section in full within seven days after the date payable, the Company will pay interest thereon at a rate of 9% per annum (or such lesser maximum amount that is permitted to be paid by applicable law) to the Holder, accruing daily from the date such liquidated damages are due until such amounts, plus all such interest thereon, are paid in full. 3. Registration Procedures In connection with the Company's registration obligations hereunder, the Company shall: (a) Not less than three Trading Days prior to the filing of a Registration Statement or in the case of any related Prospectus or any amendment or supplement thereto such shorter notice, but in no event less than two Trading Days prior to the applicable filing, as may be reasonable under the circumstances, the Company shall furnish to the Holders and the Special Counsel copies of all such documents (other than those incorporated by reference) proposed to be filed which documents will be subject to the review of such Holders and the Special Counsel. The Company shall not file a Registration Statement or any such Prospectus or any amendments or supplements thereto to which the Holders of a majority of the Registrable Securities or the Special Counsel shall reasonably object in good faith. (b) (i) Prepare and file with the Commission such amendments, including post-effective amendments, to each Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement continuously effective as to the applicable Registrable Securities for its Effectiveness Period; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible to any comments received from the Commission with respect to each Registration Statement or any amendment thereto and, as promptly as reasonably possible provide the Holders true and complete copies of all correspondence from and to the Commission relating to such Registration Statement that would not result in the disclosure to the Holders of material and non-public information concerning the Company; and (iv) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the Registration Statements and the disposition of all Registrable Securities covered by each Registration Statement. (c) Notify the Holders and the Special Counsel as promptly as reasonably possible (and, in the case of (i)(A) below, not less than three Trading Days prior to such filing) and (if requested by any such Person) confirm such notice in writing no later than one Trading Day following the day (i)(A) when a Prospectus or any Prospectus supplement or post-effective amendment to a Registration Statement is proposed to be filed; (B) when the Commission notifies the Company whether there will be a "review" of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders and the Special Counsel that pertain to the Holders as a Selling Stockholder or to the Plan of Distribution, but not information which the Company believes would constitute material and non-public information); and (C) with respect to each Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other Federal or state governmental authority for amendments or supplements to a Registration Statement or Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of a Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; (v) of the occurrence of any event or passage of time that makes the financial statements included in a Registration Statement ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or the Prospectus, as the case may be, it will not contain any 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, in light of the circumstances under which they were made, not misleading and (vi) when the continued effectiveness of a Registration Statement would require the Company to disclose a material financing, acquisition or other corporate transaction, which disclosure the Company shall have determined in good faith is not in the best interests of the Company and its stockholders at that time. (d) Use its reasonable best efforts to avoid the issuance of, or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of a Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, at the earliest practicable moment. (e) Furnish to each Holder, without charge, at least one conformed copy of each Registration Statement and each amendment thereto and all exhibits to the extent requested by such Person (including those previously furnished) promptly after the filing of such documents with the Commission. (f) Promptly deliver to each Holder, without charge, as many copies of each Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such Persons may reasonably request. Subject to Section 6(d), the Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by each of the selling Holders in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto. (g) Prior to any public offering of Registrable Securities, use its reasonable best efforts to register or qualify or cooperate with the selling Holders in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as the selling Holders may reasonably request, to keep each such registration or qualification (or exemption therefrom) effective during the Effectiveness Period and to do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the Registration Statements; provided, that the Company shall not be required to qualify generally to do business or become subject to general service of process in any jurisdiction where it is not then so qualified or subject, or to subject the Company to any taxation in any such jurisdiction where it is not then so subject. (h) Cooperate with the Holders to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Registration Statements, which certificates shall be free, to the extent permitted by the Purchase Agreement, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Holders may request. (i) Upon the occurrence of any event contemplated by Section 3(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the affected Registration Statements or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, no Registration Statement nor any Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (j) The Company may require each selling Holder to furnish in writing to the Company a selling security holder questionnaire in the form attached hereto as Annex B (a "Selling Holder Questionnaire"). (k) The Company shall not be required to include the Registrable Securities of any Holder in the Registration Statement and shall not be required to pay any liquidated or other damages under Section 2(c) hereof to any Holder who fails to furnish to the Company a fully completed Selling Holder Questionnaire at least three (3) Trading Days prior to the Filing Date or any other information that the Commission's staff may require as a condition to allowing such Registration Statement to be declared effective under the Securities Act (as evidenced by written comments made by the Commission in it is review of such Registration Statement). 4. Registration Expenses. All fees and expenses incident to the performance of or compliance with this Agreement by the Company shall be borne by the Company whether or not any Registrable Securities are sold pursuant to a Registration Statement. The fees and expenses referred to in the foregoing sentence shall include, without limitation, (i) all registration and filing fees (including, without limitation, fees and expenses (A) with respect to filings required to be made with any Trading Market on which the Common Stock is then listed for trading, and (B) in compliance with applicable state securities or Blue Sky laws), (ii) printing expenses (including, without limitation, expenses of printing certificates for Registrable Securities and of printing prospectuses if the printing of prospectuses is reasonably requested by the holders of a majority of the Registrable Securities included in the Registration Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and disbursements of counsel for the Company and up to $5,000 of the fees and disbursements of Special Counsel for each Registration Statement upon presentation of an invoice, (v) Securities Act liability insurance, if the Company so desires such insurance, and (vi) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement. In addition, the Company shall be responsible for all of its internal expenses incurred in connection with the consummation of the transactions contemplated by this Agreement (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit and the fees and expenses incurred in connection with the listing of the Registrable Securities on any securities exchange as required hereunder. 5. Indemnification. (a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless each Holder, the officers, directors, partners, agents, investment advisors, members and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation and reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising out of or relating to any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any Prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use therein (it being understood that the Holder has expressly and in writing approved Annex A hereto for this purpose) or (2) in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v), the use by such Holder of a Prospectus after the Company has notified such Holder in writing or promptly confirmed in writing that in writing that a Suspension Event has occurred and prior to the receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected. The Company shall notify the Holders promptly of the institution, threat or assertion of any Proceeding of which the Company is aware in connection with the transactions contemplated by this Agreement. (b) Indemnification by Holders. Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees of each of them, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising solely out of or based solely upon: (x) such Holder's failure to comply with the prospectus delivery requirements of the Securities Act or (y) any untrue statement of a material fact contained in any Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising solely out of or based solely upon any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading to the extent, but only to the extent that, (1) such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder's proposed method of distribution of Registrable Securities and was reviewed and expressly approved in writing by such Holder expressly for use in the Registration Statement (it being understood that the Holder has expressly and in writing approved Annex A hereto for this purpose), such Prospectus or such form of Prospectus or in any amendment or supplement thereto or (2) in the case of an occurrence of a Suspension Event, the use by such Holder of a Prospectus after the Company has notified such Holder in writing that a Suspension Event has occurred and prior to the receipt by such Holder of an Advice or an amended or supplemented Prospectus, but only if and to the extent that following the receipt of the Advice or the amended or supplemented Prospectus the misstatement or omission giving rise to such Loss would have been corrected. In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation. (c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an "Indemnified Party"), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the "Indemnifying Party") in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party. An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party has expressly agreed in writing in advance to pay such fees and expenses; (2) the Indemnifying Party shall have failed promptly to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of the Indemnified Party and such counsel shall be at the expense of the Indemnifying Party); provided that under no circumstances shall the Indemnifying Party be responsible for the fees and expenses of more than three separate counsel for all Indemnified Parties with respect to a Proceeding arising out of the same claim. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding. All fees and expenses of the Indemnified Party consistent with this Section (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within ten Trading Days following written notice thereof and submission of reasonably satisfactory documentation to the Indemnifying Party (provided, that the Indemnified Party must expressly undertake in advance in writing to the Indemnifying Party to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder). (d) Contribution. If a claim for indemnification under Section 5(a) or 5(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms. The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 5(d), no Holder shall be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by such Holder from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties. 6. Miscellaneous (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. The Company and each Holder agree that monetary damages would not provide adequate compensation for any losses incurred by reason of a breach by it of any of the provisions of this Agreement and hereby further agrees that, in the event of any action for specific performance in respect of such breach, it shall waive the defense that a remedy at law would be adequate. (b) No Piggyback on Registrations. Except as and to the extent specified in Schedule 6(b) hereto, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in the Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right to any of its security holders. Except as and to the extent specified in Schedule 6(b) hereto, the Company has not previously entered into any agreement granting any registration rights with respect to any of its securities to any Person which have not been fully satisfied. (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. As a condition to the inclusion of its Registrable Securities in a Registration Statement, a Holder shall, at least three (3) Trading Days prior to the filing of such Registration Statement, furnish to the Company a completed Selling Holder Questionnaire and any other information that the Commission's staff may require as a condition to allowing such Registration Statement to be declared effective under the Securities Act (as evidenced by written comments made by the Commission in it is review of such Registration Statement); provided, that if any Holder who shall have failed to provide such information or Selling Holder Questionnaire prior to the filing of a Registration Statement shall thereafter and prior to such Registration Statement's Effective Date provide such information or such Selling Holder Questionnaire, then the Company shall promptly make such amendments to such Registration Statement as are reasonably necessary to include such Holder's Registrable Securities therein; provided, that if the Registration Statement has not been declared effective by the Commission at such time, any period of delay in becoming effective resulting therefrom shall be deemed to extend the Effectiveness Date by such period. (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Section 3(c), such Holder will forthwith discontinue disposition of such Registrable Securities under the Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement (the period from the date which such Holder receives a Suspension Notice to the date on which such Holder receives copies of the supplemental or amended Prospectus being herein called the "Suspension Period"). (e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if within fifteen days after receipt of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such holder requests to be registered, subject to customary underwriter cutbacks applicable to all holders of registration rights. (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of at least two-thirds of the then outstanding Registrable Securities. Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates, provided, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. (g) Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Section prior to 6:30 p.m. (New York City time) on a Trading Day, (ii) the Trading Day after the date of transmission, if such notice or communication is delivered via facsimile at the facsimile telephone number specified in this Agreement later than 6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City time) on such date, (iii) the Trading Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given. The address for such notices and communications shall be as follows: If to the Company: Infocrossing, Inc. 2 Christie Heights Street Leonia, NJ 07605 Attn: Chief Executive Officer Facsimile No.: (201) 840-7126 With a copy to: Latham & Watkins LLP 885 Third Avenue, Suite 1000 New York, NY 10022-4802 Attn: Robert A. Zuccaro, Esq. Facsimile No.: (212) 751-4864 If to a Purchaser: To the address set forth under such Purchaser's name on the signature pages hereto. If to Special Counsel: Bryan Cave LLP 1290 Avenue of the Americas New York, NY 10101 Attn.: Eric L. Cohen, Esq. Fax No.: (212) 541-1432 If to any other Person who is then the registered Holder: To the address of such Holder as it appears in the stock transfer books of the Company or such other address as may be designated in writing hereafter, in the same manner, by such Person. (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in the manner and to the Persons as permitted under the Purchase Agreement. (i) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. (j) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of conflicts of law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the state and federal courts sitting in the City of New York, Borough of Manhattan (the "New York Courts"). Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any New York Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of this Agreement, then the prevailing party in such Proceeding shall be reimbursed by the other party for its attorney's fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding. (k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. (l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable best efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (m) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (n) Independent Nature of Purchasers' Obligations and Rights. The obligations of each Purchaser hereunder is several and not joint with the obligations of any other Purchaser hereunder, and no Purchaser shall be responsible in any way for the performance of the obligations of any other Purchaser hereunder. The decision of each Purchaser to purchase Securities pursuant to the Transaction Documents has been made independently of any other Purchaser. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Purchaser pursuant hereto or thereto, shall be deemed to constitute the Purchasers as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Purchasers are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement. Each Purchaser acknowledges that no other Purchaser has acted as agent for such Purchaser in connection with making its investment hereunder and that no Purchaser will be acting as agent of such Purchaser in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Documents. Each Purchaser shall be entitled to protect and enforce its rights, including without limitation the rights arising out of this Agreement, and it shall not be necessary for any other Purchaser to be joined as an additional party in any proceeding for such purpose. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES TO FOLLOW] IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. INFOCROSSING, INC. By: /s/ Zach Lonstein _________________________________ Name: Zach Lonstein Title:Chairman and Chief Executive Officer [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK SIGNATURE PAGES OF PURCHASER TO FOLLOW] IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. [FUND NAME] By:_____________________________________ Name: Title: Address for Notice: Facsimile No.: Attn: Annex A Plan of Distribution The Selling Stockholders and any of their pledgees, donees, assignees and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Stockholders may use any one or more of the following methods when selling shares: o ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; o block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; o purchases by a broker-dealer as principal and resale by the broker-dealer for its account; o an exchange distribution in accordance with the rules of the applicable exchange; o privately negotiated transactions; o short sales o broker-dealers may agree with the Selling Stockholders to sell a specified number of such shares at a stipulated price per share; o a combination of any such methods of sale; and o any other method permitted pursuant to applicable law. The Selling Stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus. Broker-dealers engaged by the Selling Stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the Selling Stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The Selling Stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. The Selling Stockholders may from time to time pledge or grant a security interest in some or all of the Shares or Warrant Shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell shares of Common Stock from time to time under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus. Upon the Company being notified in writing by a Selling Stockholder that any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such Selling Stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the shares of Common Stock were sold, (iv)the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction. In addition, upon the Company being notified in writing by a Selling Stockholder that a donee or pledge intends to sell more than 500 shares of Common Stock, a supplement to this prospectus will be filed if then required in accordance with applicable securities law. The Selling Stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus. The Selling Stockholders and any broker-dealers or agents that are involved in selling the shares may be deemed to be "underwriters" within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Each Selling Stockholders has represented and warranted to the Company that it does not have any agreement or understanding, directly or indirectly, with any person to distribute the Common Stock. The Company is required to pay all fees and expenses incident to the registration of the shares. The Company has agreed to indemnify the Selling Stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act. -----END PRIVACY-ENHANCED MESSAGE-----