-----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, UiyCKMnB9meMAvoQPpiMclLzsQDfnOac1ofRm9A71uYZlgzG3k75mCzHHseX5Tul Z1i/b1YOIvLIbSWlkligdg== 0000893816-03-000024.txt : 20031031 0000893816-03-000024.hdr.sgml : 20031031 20031031172826 ACCESSION NUMBER: 0000893816-03-000024 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20031031 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: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-110173 FILM NUMBER: 03970996 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 S-3 1 s3-deal.txt REGISTRATION STATEMENT As filed with the Securities and Exchange Commission on October 31, 2003 Registration No. 333- ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------------- FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 INFOCROSSING, INC. (Exact name of registrant as specified in its charter) ---------------- Delaware 13-3252333 (State or other jurisdiction (I.R.S. employer identification number) of incorporation or organization) 2 Christie Heights Street Leonia, NJ 07605 (201) 840-4700 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) ---------------- Nicholas J. Letizia, Esq. Senior Vice President and General Counsel Infocrossing, Inc. 2 Christie Heights Street Leonia, NJ 07605 (201) 840-4700 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: Robert A. Zuccaro, Esq. Latham & Watkins LLP 885 Third Avenue, Suite 1000 New York, New York 10022 (212) 906-1200 ---------------- Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this registration statement, as determined by market conditions. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ---------------- CALCULATION OF REGISTRATION FEE
========================== ===================== ======================= ===================== ====================== Title of each class of Amount to be Proposed maximum Proposed maximum Amount of securities registered(1)(2) aggregate price per aggregate registration fee to be registered share(3) offering price(3) - -------------------------- --------------------- ----------------------- --------------------- ---------------------- Common Stock, par value 13,147,800 shares $9.25 $121,617,150 $9838.83 $.01 per share ========================== ===================== ======================= ===================== ======================
(1) Includes the registration for resale by the selling stockholders of (i) 9,739,111 shares of common stock presently issued and outstanding and (ii) 3,408,689 shares of common stock issuable upon exercise of related outstanding common stock purchase warrants. (2) In the event of a stock split, stock dividend or similar transaction involving the common stock of the registrant, in order to prevent dilution, the number of shares of common stock registered hereby shall be automatically adjusted in accordance with Rule 416 under the Securities Act of 1933, as amended to cover the additional shares of common stock issuable upon exercise of the related outstanding common stock purchase warrants. (3) The price is estimated in accordance with Rule 457(c) under the Securities Act of 1933, as amended, solely for the purpose of calculating the registration fee and is $9.25 the average of the high and low prices of common stock of Infocrossing, Inc. as reported by The Nasdaq National Market on October 24, 2003. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said Section 8(a) may determine. ================================================================================ The information in this prospectus is not complete and may be changed. The selling securityholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. SUBJECT TO COMPLETION DATED OCTOBER 31, 2003 PROSPECTUS INFOCROSSING, INC. 13,147,800 shares of Common Stock ---------------- We sold 9,739,111 shares of our common stock and related warrants to purchase up to an additional 3,408,689 shares of our common stock in private transactions which closed on October 21, 2003. The selling stockholders of Infocrossing, Inc. listed in this prospectus may use this prospectus to offer and sell, from time to time, up to 13,147,800 shares of our common stock which include both the shares sold in that private placement and the shares issuable upon due exercise of those warrants. ---------------- All of the proceeds from the sale of the securities covered by this prospectus will be received by the selling stockholders. We will not receive any of the proceeds from any sale by any selling stockholder of the securities covered by this prospectus. The selling stockholders may offer the common stock through one or more of the methods described under the caption "Plan of Distribution" in this prospectus. Our common stock trades on The Nasdaq National Market under the ticker symbol "IFOX." On October 30, 2003, the closing price of one share of our common stock was $9.40. ---------------- This investment involves a high degree of risk. You should invest only if you can afford a complete loss of your investment. See "Risk Factors" beginning on page 6. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. ---------------- The date of this prospectus is ___________. FORWARD-LOOKING STATEMENTS This prospectus and the documents incorporated by reference in this prospectus contain "forward-looking statements" as defined by the Private Securities Litigation Reform Act of 1995. The forward-looking statements include certain statements pertaining to our capital resources, performance and results of operations. In addition, all statements regarding anticipated growth in our revenue, anticipated market conditions and results of operations are forward-looking statements. To identify forward-looking statements look for words like "believes," "expects," "may," "will," "should," "seeks," "intends," "plans," "estimates" or "anticipates" and similar words or phrases. Discussions of strategy, plans or intentions often contain forward-looking statements. These, and all forward-looking statements, necessarily depend on assumptions, data or methods that may be incorrect or imprecise. Such statements reflect the current views of the Company and its management with respect to future events and are subject to certain risks, uncertainties and assumptions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. Our actual results may differ materially from the results predicted or from any other forward-looking statements made by, or on behalf of, us and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among other things, those described under "Risk Factors" elsewhere in this prospectus. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, events, levels of activity, performance, or achievements. We do not assume responsibility for the accuracy and completeness of the forward-looking statements. We do not intend to update any of the forward-looking statements after the date of this prospectus to conform them to actual results. i TABLE OF CONTENTS Page Forward-Looking Statements..................................... i Prospectus Summary............................................. 1 Risk Factors................................................... 6 Use of Proceeds................................................ 12 Recent Market Prices of Common Stock and Dividend Policy....... 12 Description of Capital Stock................................... 13 Selling Stockholders........................................... 15 Plan of Distribution........................................... 18 Validity of Securities......................................... 20 Experts........................................................ 20 Where You Can Find More Information............................ 20 Incorporation of Certain Documents by Reference................ 20 --------------- You should rely only on the information contained or incorporated by reference in this prospectus and in any prospectus supplement. No one is authorized to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. The securities are not being offered in any jurisdiction where the offer or sale is not permitted. You should not assume that the information in this prospectus and in any prospectus supplement or information incorporated in such documents is accurate as of any date other than the date of such documents. Our business, financial condition, results of operations and prospects may have changed since that date. ii PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus and the documents incorporated into it by reference. Because it is a summary, it does not contain all of the information that you should consider before investing in our securities. You should read the entire prospectus and the documents incorporated by reference carefully, including the section entitled "Risk Factors" and the financial statements and related notes included in the documents incorporated by reference. As used in this prospectus, "Infocrossing," "company," "we," "our," and similar pronouns refer to Infocrossing, Inc. and its subsidiaries, except where the context otherwise requires or as otherwise indicated. GENERAL We are a leading provider of information technology, or IT, and business process outsourcing services to enterprise clients. We deliver a full suite of managed and outsourced solutions that enable clients to leverage our infrastructure and process expertise to improve their efficiency and reduce their operating costs. We have gained significant expertise in managing complex computing environments, beginning with traditional data center outsourcing services and evolving to a comprehensive set of managed solutions. Infocrossing maintains strategic alliances with leading technology providers, including IBM, Computer Associates, EMC, Sun Microsystems, Intel, and Cisco Systems. We support a variety of clients, including Global 2000 companies, and assure the optimal performance, security, reliability, and scalability of our clients' mainframes, distributed servers, and networks, irrespective of where the systems' components are located. Strategic acquisitions, such as the acquisition of AmQuest, Inc. in February 2002, have contributed significantly to our historical growth and acquisitions remain an integral component of our long-term growth strategy. We offer IT outsourcing services across a broad range of IT functions, bundled into a customized, long-term contractual arrangement, whereby we assume responsibility for managing all or part of a client's information systems infrastructure and operations. Our IT outsourcing agreements center on data center operations, including mainframes, AS/400 or mid-range computing and NT/UNIX platforms, and extend to the infrastructure that facilitates the transmission of information across a client's enterprise. We believe that close attention to client service and support has been, and will continue to be, crucial to our success. We believe that because of our attention to client service, many of our client relationships have been long-term, extending well beyond the initial contract term. Our services are organized into six solution areas: (1) Mainframe Outsourcing, (2) Business Process Outsourcing, (3) Open Systems Management, (4) AS/400 Management, (5) Business Continuity and (6) IT Consulting. o Mainframe Outsourcing. We believe our mainframe outsourcing solution provides clients with a cost-effective, operationally superior alternative to running and managing a mainframe infrastructure in-house. We combine the scalability and reliability of mainframe systems with the world-class management of, and access to, hardware, systems software, and communications. We offer the latest technologies, including Virtual Tape Subsystems, IBM's zSeries technology and Linux on the mainframe, to provide greater uptime and more efficiency for our customers. We have experience in operating multiple computer systems running on different operating and complex enterprise environments. We provide high capacity in processing speed, connectivity, and storage management. o Business Process Outsourcing. Business process outsourcing involves clients contracting with us to perform functions that support their business, but are not their core competency. These functions, commonly called "back-office" processes, include services such as payroll, accounts receivable management, payment processing, logistics, data entry and customer care services. Back-office processes are often supported by an extensive IT infrastructure. By contracting with us, companies can improve their processes, reduce their costs, and concentrate on their core business. 1 We provide a variety of customized IT services designed to specific client requirements. These services include the development of proprietary software we utilize to meet the IT processing requirements of particular clients. We manage the software application and retain ownership of the software we develop. o Open Systems Management. We provide on-site hosting and remote management of customers' hardware and software running on Unix and Windows servers for both Internet based and other applications. Clients can choose from a wide range of options for their open systems - starting with basic on-site hosting all the way up to fully customized, fully managed services. This highly flexible approach makes it easy to support a variety of systems from a simple website or database application to a full-scale, multinational Enterprise Resource Plan system. With our IFOXcenter management tools, we can remotely manage systems located at our customers' own data centers or at a third-party location. o AS/400 and Iseries Management. We provide specialized support and outsourcing resources for companies that rely on midrange computers. With an experienced staff and infrastructure resources, we operate, administer, and maintain a client's midrange systems. Additionally, we have the expertise and flexibility to manage a client's system the way the client chooses to have it managed. With our IFOXcenter management tools, we can take full responsibility for managing a customer's systems even if the hardware is located outside of one of our data centers. o Business Continuity. Our business continuity solutions help assure clients that their operations can proceed in the face of disaster. We offer 24 x 7, high-availability services - including disaster-planning assistance. The disaster recovery solutions are integrated into a client's overall IT infrastructure, with the opportunity to balance IT processing between their own data center and dedicated systems at either of our production data centers. We provide a full alternate office site, including desktop workstations, phone systems, and conventional office infrastructure such as fax and copier machines, networked printers and conferencing facilities. o Consulting Services. We provide review and implementation services for the underlying infrastructure of an enterprise's IT operations, to reduce costs and improve services to the enterprise and end-user. Our extensive knowledge base and highly trained and experienced staff can assist with design through implementation and on-going support in the areas of network architecture, infrastructure integration, automation process control, operating systems, database administration and system stress testing. BENEFITS OF IT OUTSOURCING We believe that our full suite of managed and outsourced solutions provide the following benefits to our clients: o reduced costs; o improved service delivery; o increased resource availability; o access to new technology; and o increased flexibility. THE IT OUTSOURCING INDUSTRY According to International Data Corporation ("IDC"), revenue growth for IT outsourcing services is expected to remain strong over the next several years due to steady customer demand for broad, multi-service IT outsourcing engagements that improve clients' operating efficiencies and reduce their ongoing IT costs. IDC reports that spending on IT outsourcing services in the United States reached over $29 billion in 2001, nearly a 13% increase over 2000 and is expected to exceed $47 billion by 2006, representing an average 10.5% compound annual growth rate, or CAGR, through the period. 2 The growth of the IT outsourcing market is expected to continue for the following reasons: o the need for companies to reduce costs and improve operating margins; o a slowdown in capital spending on existing IT infrastructure; o the increasing complexity of information technology systems and the need to connect electronically with clients, suppliers and other internal systems; o the increasing requirements for rapid processing of information and the instantaneous communication of large amounts of data to multiple locations; o the desire of business and government organizations to focus on their core competencies; o the desire by business and government organizations to take advantage of the latest advances in technology without the cost and resource commitment required to maintain an in-house system; o the need to provide alternative or back-up locations for mission critical information; and o the proliferation of web-based and wireless technologies. Growth in IT outsourcing spending is expected to be particularly strong in our core target market of mid-sized enterprise companies whose aggregate spending growth is forecasted to outpace the overall industry. IDC predicts medium-sized companies with 1,000 to 10,000 employees will demonstrate a 13.2% CAGR through 2006, compared to an industry-wide CAGR of 10.5%. RECENT DEVELOPMENTS On October 21, 2003, or the closing date, we recapitalized all outstanding shares of our redeemable 8% series A cumulative convertible participating preferred stock due 2007 and series A warrants exercisable for shares of our common stock. In connection with the recapitalization, 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. In the recapitalization, all 157,114.7 outstanding shares of series A preferred stock, which were convertible into 2,283,455 shares of our common stock (including conversion in respect of accrued dividends), and series A warrants exercisable for 2,806,539 shares of our 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 our assets and the assets of our direct and indirect subsidiaries, including the capital stock of our direct and indirect subsidiaries. On the closing date, we also repaid all $11.9 million in aggregate principal amount outstanding of our 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, we cancelled 937,500 of the 2,000,000 warrants to purchase common stock originally issued to the debentureholders, with the balance of the warrants to remain outstanding. Also, on the closing date, we issued in a private placement the 9,739,111 shares of our common stock and five year warrants to purchase 3,408,689 shares of our common stock offered by this prospectus. The private placement was made only to accredited investors in a transaction exempt from the registration requirements of the Securities Act of 1933. The net proceeds of the private placement were principally used to fund the recapitalization and to pay related fees and expenses. The remainder is being used for working capital purposes. In connection with the recapitalization, four members of our board of directors, who had been nominated by the holders of the series A preferred stock and elected in accordance with our certificate of incorporation and existing stockholders agreement, resigned on the closing date. In addition, the existing stockholders agreement among us, the holders of series A preferred stock and other parties was terminated on the closing date. --------------- 3 We were organized as a New York corporation in October 1984 and reincorporated in Delaware on August 31, 1999. On June 5, 2000, we changed our name from Computer Outsourcing Services, Inc. to Infocrossing, Inc. Our principal executive offices are located at 2 Christie Heights Street, Leonia, New Jersey 07605, and our telephone number at that location is (201) 840-4700. Our web site is www.infocrossing.com. The information on our web site is not a part of this document. 4 THE OFFERING Issuer................................... Infocrossing, Inc. Common stock offered by the selling stockholders.................. 13,147,800 shares Common stock offered by Infocrossing.......................... None Common stock outstanding before this offering.................. 15,126,527 shares Common stock to be outstanding immediately after this offering....... 18,535,216 shares (1) Use of Proceeds.......................... All of the proceeds from the sale of the securities covered by this prospectus will be received by the selling stockholders. We will not receive any of the proceeds from any sale by any selling stockholder of the securities covered by this prospectus. See "Use of Proceeds." Nasdaq National Market symbol............ IFOX - ----------- (1) The number of shares of our common stock to be outstanding immediately after this offering is based on 15,126,527 shares outstanding as of October 22, 2003 plus the additional 3,408,689 shares of common stock being offered hereby which are issuable upon exercise of outstanding warrants, assuming all of those warrants are exercised in full. This number does not include: o 594,990 shares of common stock held in our treasury; o 1,157,500 shares of common stock issuable upon exercise of all other outstanding warrants; o 1,414,550 shares of common stock issuable upon exercise of outstanding stock options issued to employees, directors and others; and o 869,100 additional shares of common stock reserved for future issuances under our 2002 Stock Option and Stock Appreciation Rights Plan. 5 RISK FACTORS You should carefully consider the following risk factors and warnings before making an investment decision. If any of the following risks actually occur, our business, financial condition, or results of operations could be materially and adversely affected. In such case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should also refer to the other information set forth and incorporated by reference in this Prospectus, including our consolidated financial statements and the related notes. This prospectus and the incorporated documents also contain forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result o f certain factors, including the risks faced by us described below and elsewhere in this prospectus. LOSS OF MAJOR CLIENTS COULD ADVERSELY AFFECT OUR BUSINESS Our customers include commercial enterprises, institutions, and government agencies. Our two largest clients accounted for approximately 35% of our consolidated revenue for the six months ended June 30, 2003, 40% of our consolidated revenue for the year ended December 31, 2002, 34% of our consolidated revenue for the year ended December 31, 2001, 33% of our consolidated revenue for the two-month period ended December 31, 2000 and 27% of our consolidated revenue for the fiscal year ended October 31, 2000. Two clients, ADT Security Services, Inc. and Alicomp, a division of Alicare, Inc., each accounted for more than 10% of our consolidated revenue during the six months ended June 30, 2003 and the years ended December 31, 2002 and 2001. For the two-month period ended December 31, 2000, and the fiscal year ended October 31, 2000, Alicomp and International Masters Publishers, Inc. accounted for in excess of 10% of our consolidated revenue. Our success depends substantially upon the retention of our major customers as clients. Generally, we may lose a client as a result of a contract expiration, merger or acquisition, business failure, or the selection of another provider of information technology services. The contract with our second largest client based on revenue expired in September 2002 but has been extended pending our negotiations for a new agreement. We cannot be sure that we will be able to retain long-term relationships or secure renewals of short-term relationships with our major clients in the future. OUR CONTRACTS CONTAIN TERMINATION PROVISIONS AND PRICING RISKS Many of our contracts with clients permit termination upon ninety days notice and payment of an early termination fee. The ability of our clients to terminate contracts creates an uncertain revenue stream. If clients are not satisfied with our level of performance, pricing or other attributes, our reputation in the industry may suffer, which may also materially and adversely affect our business, financial condition, and results of operations. Some of our contracts contain pricing provisions that require the payment of a set fee by the client for our services regardless of the costs we incur in performing these services and/or provide for penalties in the event we fail to achieve certain contract standards. These pricing provisions, particularly in the case of long-term outsourcing agreements, require us to make estimates and assumptions at the time we enter into the contracts that could differ from actual results. These estimates may not necessarily reflect the actual costs to provide the contracted services. Any increased or unexpected costs or unanticipated delays in the performance of these engagements, including delays caused by factors out of our control, could cause us to lose money on these fixed price contracts and the losses could be substantial. WE OPERATE IN HIGHLY COMPETITIVE MARKETS We operate in highly competitive markets. Our current and potential competitors include other independent computer service companies and divisions of diversified enterprises, as well as the internal information technology departments of existing and potential customers. Among the most significant of 6 the Company's competitors are IBM Corporation; Electronic Data Systems Corporation; Affiliated Computer Services, Inc.; Computer Sciences Corp.; and Sungard Data Systems, Inc. In general, the outsourcing services industry is fragmented, with numerous companies offering services in limited geographic areas, vertical markets, or product categories. Many of our larger competitors have substantially greater financial and other resources than we do. We compete on the basis of a number of factors, including price, quality of service, technological innovation, breadth of services offered and responsiveness. Some of these factors are beyond our control. We cannot be sure that we will be able to compete successfully against our competitors in the future. If we fail to compete successfully against our current or future competitors with respect to these or other factors, our business, financial condition, and results of operations will be materially and adversely affected. CHANGES IN TECHNOLOGY COULD ADVERSELY AFFECT OUR BUSINESS The markets for our services change rapidly because of technological innovation, new product and service introductions, and changes in customer requirements, among other factors. New products and services and new technology often render existing information services or technology infrastructure obsolete, costly, or otherwise unmarketable. As a result, our success depends on our ability to timely innovate and integrate new technologies into our service offerings. We cannot be sure that we will be successful at adopting and integrating new technologies into our service offerings in a timely manner. Advances in technology also require us to expend substantial resources to acquire and utilize new technologies in our business. We must continue to commit resources to train our personnel in the use of these new technologies. We must also continue to train personnel to maintain the compatibility of existing hardware and software systems with these new technologies. We cannot be sure that we will be able to continue to commit the resources necessary to update our technology infrastructure at the rate demanded by our markets. OUR SYSTEMS AND PROCESSES ARE NOT PROTECTED BY PATENTS OR BY REGISTERED COPYRIGHTS, TRADEMARKS, TRADE NAMES, OR SERVICE MARKS We believe that because of the rapid pace of technological change in the computer industry, copyright and other forms of intellectual property protection are of less significance than factors such as the knowledge and experience of management and other personnel, and our ability to develop, enhance, market, and acquire new systems and services. As a result, our systems and processes are not protected by patents or by registered copyrights, trademarks, trade names, or service marks. To protect our proprietary services and software from illegal reproduction, we rely on certain mechanical techniques in addition to trade secret laws, restrictions in certain of our customer agreements with respect to use of our services and disclosure to third parties, and internal non-disclosure safeguards, including confidentiality restrictions with certain employees. Despite these efforts, it may be possible for our competitors or clients to copy aspects of our trade secrets. This could have a material adverse effect on our business, financial condition, and results of operations. INTELLECTUAL PROPERTY LITIGATION COULD HARM OUR BUSINESS In recent years, there has been significant litigation in the United States involving patent and other intellectual property rights. We are not currently involved in any material intellectual property litigation. We may, however, be a party to intellectual property litigation in the future to protect our trade secrets or know-how. Our suppliers, customers, and competitors may have patents and other proprietary rights that cover technology employed by us. Such persons may also seek patents in the future. Due to the confidential nature of United States patent applications, we are not aware of all patents or other intellectual property rights of which our services may pose a risk of infringement. Others asserting rights against us could force us to defend ourselves against alleged infringement of intellectual property rights. We could incur substantial costs to prosecute or defend any such litigation, and intellectual property litigation could force us to do one or more of the following: 7 o cease selling or using services that incorporate the challenged technology; o redesign those services that incorporate the challenged technology; and o obtain from the holder of the infringed intellectual property right a license to sell or use the relevant technology, which may require us to pay royalties, which could be substantial. In addition, we generally agree in our contracts to indemnify our clients for any expenses or liabilities they may incur resulting from claimed infringements of the intellectual property rights of third parties. In some instances, the amount of these indemnities may be greater than the revenues we receive from the client. FAILURE TO PROPERLY MANAGE GROWTH COULD ADVERSELY AFFECT OUR BUSINESS We have expanded our operations rapidly in recent years. We intend to expand our operations in the foreseeable future to pursue existing and potential market opportunities. This growth places a significant demand on management and operational resources. In order to manage growth effectively, we must implement and improve our operational systems and controls on a timely basis. If we fail to implement these systems and controls, our business, financial condition, and results of operations will be materially and adversely affected. ACQUISITIONS WE MAKE MAY NOT PROVIDE EXPECTED BENEFITS We may acquire businesses or technologies in the future that we believe are a strategic fit with our business. These acquisitions may result in unforeseen operating difficulties and expenditures and may absorb significant management attention that would otherwise be available for ongoing development of our business. In addition, the integration of businesses or technologies may prove to be more difficult than expected, and we may be unsuccessful in maintaining and developing relations with the employees, customers and business partners of acquisition targets. Since we will not be able to accurately predict these difficulties and expenditures, it is possible that these costs may outweigh the value we realize from the acquisitions. Future acquisitions could also result in issuances of equity securities that would reduce our stockholders' ownership interest, the incurrence of debt, contingent liabilities, deferred stock based compensation or expenses related to the valuation of goodwill or other intangible assets and the incurrence of large, immediate write-offs. LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS Our success depends largely on the skills, experience, and performance of some key members of our management, including our Chairman and Chief Executive Officer, Zach Lonstein. The loss of any key members of our management may materially and adversely affect our business, financial condition, and results of operations. OUR FAILURE TO RECRUIT, TRAIN, AND RETAIN SKILLED PERSONNEL COULD INCREASE COSTS OR LIMIT GROWTH We must continue to grow by hiring and training technically-skilled people in order to perform services under our existing contracts and new contracts that we will enter into. The people capable of filling these positions are in great demand and recruiting and training qualified personnel require substantial resources. Our business also experiences significant turnover of technically-skilled people. If we fail to attract, train, and retain sufficient numbers of these technically-skilled people, our business, financial condition, and results of operations will be materially and adversely affected. WE MAY HAVE DIFFICULTY ACHIEVING AND SUSTAINING PROFITABILITY AND MAY EXPERIENCE ADDITIONAL LOSSES IN THE FUTURE Since 1999, we have incurred significant net losses. As of June 30, 2003, we had an accumulated deficit of approximately $75.1 million, although we 8 had positive net worth on a pro forma basis giving effect to the financing and recapitalization transactions described under the caption "Prospectus Summary - Recent Developments." Nonetheless, there is no assurance that we will generate positive net income in the future. WE MAY NOT BE ABLE TO RAISE ADDITIONAL CAPITAL ON TERMS THAT ARE ACCEPTABLE TO US We may need to raise additional capital to develop or enhance our technologies, to fund expansion, or to acquire complementary products, businesses or technologies. Additional financing may not be available on terms that are acceptable to us. If we raise additional funds through the issuance of equity securities or securities convertible into or exercisable for equity securities, the percentage ownership of our other stockholders would be reduced. Additionally, these securities might have rights, preferences and privileges senior to those of our current stockholders. If adequate funds are not available on terms acceptable to us, our ability to develop and enhance our services, fund expansion, and otherwise take advantage of unanticipated opportunities would be significantly limited. OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATIONS UNDER OUR OUTSTANDING INDEBTEDNESS We have a significant amount of indebtedness. On June 30, 2003, after giving pro forma effect to the financing and the recapitalization transactions described under the caption "Prospectus Summary - Recent Developments," we would have had total indebtedness of $28.7 million (of which $25.0 million would have consisted of the new senior secured term loans incurred in the recapitalization and the balance would have consisted of other debt and capitalized leases). OUR SUBSTANTIAL INDEBTEDNESS COULD HAVE IMPORTANT CONSEQUENCES TO YOU. FOR EXAMPLE, IT COULD: o make it more difficult for us to satisfy our obligations with respect to our outstanding indebtedness, including the new senior secured term loans; o increase our vulnerability to general adverse economic and industry conditions; o require us to dedicate a substantial portion of our cash flow from operations to payments on our indebtedness, thereby reducing the availability of our cash flow to fund working capital, capital expenditures, research and development efforts and other general corporate purposes; o limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; o place us at a competitive disadvantage compared to our competitors that have less debt; and o limit our ability to borrow additional funds. In addition, our new term loans contain financial and other restrictive covenants that will limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness. WE HAVE NOT PAID CASH DIVIDENDS ON OUR COMMON STOCK AND DO NOT EXPECT TO DO SO We have never declared or paid a cash dividend on our common stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. 9 OUR STOCK PRICE IS VOLATILE AND COULD DECLINE SUBSTANTIALLY The price of our common stock has been, and is likely to continue to be, volatile. The market price of our common stock may fluctuate significantly in response to a number of factors, some of which are beyond our control, including: o quarterly variations in our operating results; o announcements we make regarding significant contracts, acquisitions, strategic partnerships, or joint ventures; o additions or departures of key personnel; o changes in market valuations of information technology service companies; o changes in financial estimates by securities analysts; and o sales of our common stock. In addition, the stock market in general, and companies whose stock is listed on The Nasdaq National Market, have experienced extreme price and volume fluctuations that have often been disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our actual operating performance. VARIABILITY OF QUARTERLY OPERATING RESULTS We expect our revenues and operating results to vary from quarter to quarter. These variations are likely to be caused by many factors that are, to some extent, outside our control, including: o the mix and timing of client engagements; o significant technological and other capital expenditures; and o one time non-recurring and unusual charges. Accordingly, we believe that quarter-to-quarter comparisons of operating results for preceding quarters are not necessarily meaningful. You should not rely on the results of one quarter as an indication of our future performance. AVAILABILITY OF SIGNIFICANT AMOUNTS OF OUR COMMON STOCK FOR SALE COULD ADVERSELY AFFECT ITS MARKET PRICE If our stockholders sell substantial amounts of our common stock in the public market following this offering or the perception exists that such sales could occur, including shares issued upon exercise of outstanding common stock purchase warrants, the market price of our common stock could fall. As of October 22, 2003, there were 15,126,527 shares of our common stock outstanding. Of those outstanding shares, 9,739,111 shares, plus an additional 3,408,698 shares issuable under outstanding warrants are being registered for resale under this prospectus. A sale of all or a significant portion of these shares could have an adverse impact on our stock price. As of October 22, 2003, Zach Lonstein, our Chairman and Chief Executive Officer, beneficially owned 1,587,925 shares of our common stock. Substantially all of those shares are available for sale in the public market pursuant to Rule 144 under the Securities Act, subject to certain volume, manner of sale and 10 other restrictions. In addition, holders of 2,650,425 shares, including Zach Lonstein and shares issuable upon exercise of other outstanding warrants, may require us to register the resale of their shares, under certain conditions, under a registration rights agreement that we entered into with them. PROVISIONS OF OUR CERTIFICATE OF INCORPORATION AND BYLAWS, THE STOCKHOLDER AGREEMENT AND DELAWARE LAW COULD DETER TAKEOVER ATTEMPTS Some provisions of our certificate of incorporation and bylaws, the stockholder agreement and Delaware law could delay, prevent, or make more difficult a merger, tender offer, or proxy contest involving us. Among other things: o under our certificate of incorporation, our board of directors may issue up to 3,000,000 shares of our preferred stock and may determine the price, rights, preferences, privileges and restrictions, including voting and conversion rights, of these shares of preferred stock; o under our certificate of incorporation, our board of directors has three classes of directors, with each director serving for a term of three years; and o under our certificate of incorporation, our stockholders may remove our directors at any time, but only for cause. Delaware law limits transactions between us and persons that acquire significant amounts of our stock without approval of our board of directors. 11 USE OF PROCEEDS The net proceeds from the sale of the securities covered by this prospectus will be received by the selling stockholders. We will not receive any of the proceeds from any sale by any selling stockholder of the securities covered by this prospectus. RECENT MARKET PRICES OF COMMON STOCK AND DIVIDEND POLICY Our common stock is listed and traded on The Nasdaq National Market under the symbol "IFOX." For the periods reported below, the following table sets forth the high and low bid quotations for our common stock as reported by The Nasdaq National Market. On October 30, 2003 the last reported sale price for our common stock was $9.40 per share. Bid Range High Low - ------------------------------------------------------ ----------- ------------ 2001 First Quarter.................................... $ 8.938 $ 5.000 Second Quarter................................... 9.300 4.110 Third Quarter.................................... 7.150 4.000 Fourth Quarter................................... 6.200 3.750 2002 First Quarter.................................... 7.000 5.050 Second Quarter................................... 6.890 4.555 Third Quarter.................................... 10.050 5.607 Fourth Quarter................................... 8.100 5.990 Fiscal 2003 First Quarter.................................... 7.150 5.890 Second Quarter................................... 7.300 6.220 Third Quarter ................................... 8.500 7.040 Fourth Quarter (through October 30, 2003)........ 9.470 7.280 - ------------------------------------------------------------------------------- As of October 22, 2003, we had approximately 110 stockholders of record. In addition, we believe that there are approximately 500 beneficial owners holding their shares in "street name." We have never declared or paid any cash dividends on our common stock. We currently intend to retain any future earnings to finance the growth and development of our business. Therefore, we do not anticipate that we will declare or pay any cash dividends on our common stock in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of our board of directors and will be dependent upon our financial condition, results of operations, capital requirements, restrictions under any existing indebtedness and other factors the board of directors deems relevant. 12 DESCRIPTION OF CAPITAL STOCK As of October 22, 2003, the Company was authorized to issue: o 50,000,000 shares of common stock, $0.01 par value, of which 15,126,527 shares were outstanding; and o 3,000,000 shares of preferred stock, $0.01 par value, none of which were outstanding. The following summary does not purport to be complete and is qualified in its entirety by reference to the applicable provisions of Delaware law and our Amended Restated Certificate of Incorporation, as amended, which we refer to as the Certificate of Incorporation. Holders of common stock are entitled to receive such dividends, if any, as may from time to time be declared by our Board of Directors out of funds legally available therefore. Pursuant to our Certificate of Incorporation, holders of common stock are entitled to one vote per share on all matters on which the holders of common stock are entitled to vote and do not have cumulative voting rights. Holders of common stock have no preemptive, conversion, redemption or sinking fund rights. In the event of a liquidation, dissolution or winding-up of our company, holders of common stock are entitled to share equally and ratably in the assets of our company, if any, remaining after the payment of all debts and liabilities of our company and the liquidation preference of any outstanding preferred stock. The outstanding shares of common stock being offered by this prospectus are, and the shares of common stock offered hereby upon due exercise of the relevant warrants, when issued will be, fully paid and nonassessable. The rights, preferences and privileges of holders of common stock are subject to any series of preferred stock which we may issue in the future. As a result of the consummation of the recapitalization on October 21, 2003, no shares of preferred stock are presently outstanding and as of the date of this prospectus we do not have any present plan to issue any shares of preferred stock. DELAWARE ANTI-TAKEOVER LAW We are subject to Section 203 of the Delaware General Corporation Law, an anti-takeover law. In general, Section 203 prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date that the stockholder became an interested stockholder, unless: o prior to that date, the board of directors of the corporation approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder; o upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of shares outstanding those shares owned by persons who are directors and also officers and by excluding employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or o on or subsequent to that date, the business combination is approved by the board of directors of the corporation and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66?% of the outstanding voting stock that is not owned by the interested stockholder. Section 203 defines "business combination" to include the following: o any merger or consolidation involving the corporation and the interested stockholder; o any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder; 13 o subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder; o any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or o the receipt by the interested stockholder or the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation. In general, Section 203 defines an interested stockholder as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by any of these entities or persons. 14 SELLING STOCKHOLDERS We are registering these shares of our common stock for resale by the selling stockholders identified below. The shares are being registered to permit public secondary trading of the shares, and the selling stockholders may offer the shares for resale from time to time. We agreed to register these shares pursuant to the Registration Rights Agreement, dated as of October 16, 2003, by and among our company and the selling stockholders. Please see "Plan of Distribution." The following table sets forth certain information by the named selling stockholders, as of the date they completed a selling securityholder questionnaire (dates ranging from October 13, 2003 to October 30, 2003) with respect to the number of shares of our common stock that each selling stockholder reported to us as being beneficially owned by such selling stockholder, the number of shares of our common stock that may be offered for resale for the account of each of the selling stockholders pursuant to this prospectus and the number of shares of our common stock to be held by the selling stockholders assuming the sale of all of the shares by the selling stockholders. Percentage ownership is based on 15,126,527 shares of common stock outstanding, which excludes treasury shares, as of October 22, 2003. The selling stockholders may sell all, some or none of the common stock being offered. This information in the table is based upon information provided by each respective selling stockholder.
Shares Shares Beneficially Offered by Shares Beneficially Owned Owned Prior to This Subsequent Name of Selling Stockholder the Offering (1) Prospectus to the Offering (1)(2) --------------------------- Shares Percent Shares Percent Atlas Capital (Q.P.), L.P. 222,209 1.5% 222,209 -- -- Atlas Capital Master Fund, L.P. 765,386 5.0% 765,386 -- -- Baron Small Cap Fund, a series of Baron Asset Fund 858,504 5.6% 858,504 -- -- Benchmark Partners, L.P. 134,141 * 134,141 -- -- Bonanza Master Fund Ltd. 343,512 2.3% 343,512 -- -- Brookbend & Co., Nominee for Janus Investment Fund on behalf of its series Janus Venture Fund 2,012,118 12.9% 2,012,118 -- -- BTG Investments, LLC 343,512 2.3% 343,512 -- -- Cahill, Warnock Strategic Partners Fund, L.P.(3) 1,913,783 11.7% 406,847 1,509,936 9.3% Corsair Capital Partners, L.P. 257,634 1.7% 257,634 -- -- Crestwood Capital International, Ltd. 82,899 * 82,899 -- -- Crestwood Capital Partners II, LP 37,024 * 37,024 -- -- Crestwood Capital Partners, LP 282,501 1.9% 282,501 -- -- Federated Kaufmann Fund, a Portfolio of Federated Equity Funds 1,374,046 8.9% 1,374,046 -- -- Federated Kaufmann Small-Cap Fund, a Portfolio of Federated Equity Funds 343,512 2.3% 343,512 -- -- Gruber & McBaine International 68,703 * 68,703 -- -- J Patterson McBaine 25,763 * 25,763 -- -- Jon D. Gruber & Linda W. Gruber 25,763 * 25,763 -- -- Lagunitas Partners LP 223,282 1.5% 223,282 -- -- Neal Goldman IRA Rollover 85,877 * 85,877 -- -- Neptune Partners, L.P. 51,527 * 51,527 -- -- Pequot Navigator Onshore Fund, L.P. 128,817 * 128,817 -- -- Pequot Scout Fund, L.P. 128,817 * 128,817 -- -- Pleiades Investment Partners - R, L.P. 111,337 * 111,337 -- -- Potomac Capital International Ltd. 31,751 * 31,751 -- -- Potomac Capital Partners, LP 148,897 1.0% 148,897 -- -- Precept Capital Master Fund, G.P. 240,458 1.6% 240,458 -- -- Sherleigh Associates Inc. Profit Sharing Plan 537,252 3.5% 537,252 -- -- Southwell Partners, L.P. 858,778 5.6% 858,778 -- -- Strategic Associates, L.P.(4) 1,529,480 9.4% 22,544 1,509,936 9.3% The Pinnacle Fund, L.P. 1,341,413 8.7% 1,341,413 -- -- TRUSTMAN c/o STI Classic Small Cap Growth Fund 536,564 3.5% 536,564 -- -- Walker Smith Capital Master Fund 262,786 1.7% 262,786 -- -- Walker Smith International Fund, Ltd. 252,481 1.7% 252,481 -- -- Westpark Capital, L.P. 257,634 1.7% 257,634 -- -- WS Opportunity Fund International, Ltd. 109,752 * 109,752 -- -- WS Opportunity Master Fund 233,759 1.5% 233,759 -- -- - --------------------------------------------------------------------------------
* Represents less than 1% of the issued and outstanding shares. (1) Beneficial ownership is determined in accordance with the rules of the Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to warrants which are currently exercisable, or will become exercisable within 60 days of October 22, 2002, are deemed outstanding for computing the percentage of the person or entity holding such securities but are not deemed outstanding for computing the percentage of any other person or entity. To our knowledge the persons named in the table above have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them except as noted otherwise. (2) Assumes the sale of all shares offered hereby. (3) Shares beneficially owned prior to this offering include the following: Cahill, Warnock Strategic Partners Fund, L.P. is the beneficial owner of 301,368 shares of common stock and warrants to purchase 105,479 shares of common stock offered hereby as well as an additional 412,981 shares of common stock and warrants to purchase 476,684 shares of common stock. Cahill, Warnock Strategic Partners Fund, L.P. may also be deemed a beneficial owner of securities owned by Strategic Associates, L.P. Strategic Associates, L.P. is the beneficial owner of 16,699 shares of common stock and warrants to purchase 5,845 shares of common stock offered hereby as well as an additional 22,883 shares of common stock and warrants to purchase 10,013 shares of common stock. Strategic Associates, L.P. may be deemed to be the beneficial owner of securities owned by Cahill, Warnock Strategic Partners Fund, L.P. The general partner of both Cahill, Warnock Strategic Partners Fund, L.P. and Strategic Associates, L.P. is Cahill, Warnock Strategic Partners, L.P. Cahill, Warnock Strategic Partners Fund, L.P. and Strategic Associates, L.P. may also be deemed the beneficial owner of securities owned by Camden Partners Strategic Fund II-A, L.P. and Camden Partners Strategic Fund II-B, L.P. The general partners of Cahill, Warnock Strategic Partners L.P. are similar to the managing members of Camden Partners Strategic II, LLC, the general partner of Camden Partners Strategic Fund II-A, L.P. and Camden Partners Strategic Fund II-B, L.P. Camden Partners Strategic Fund II-A owns 551,650 warrants to purchase shares of common stock and Camden Partners Strategic Fund II-B, L.P. owns 32,725 warrants to purchase shares of common stock. Only 405,847 shares beneficially owned by Cahill, Warnock Strategic Partners Fund, L.P. are being offered by this prospectus. (4) Shares beneficially owned prior to this offering include the following: Strategic Associates, L.P. is the beneficial owner of 16,699 shares of common stock and warrants to purchase 5,845 shares of common stock offered hereby as well as an additional 22,883 shares of common stock and warrants to purchase 10,013 shares of common stock. Strategic Associates, L.P. may be deemed to be the beneficial owner of securities owned by Cahill, Warnock Strategic Partners Fund, L.P. Cahill, Warnock Strategic Partners Fund, L.P. is the beneficial owner of 301,368 shares of common stock and warrants to purchase 105,479 shares of common stock offered hereby as well as an additional 412,981 shares of common stock and warrants to purchase 476,684 shares of common stock. Cahill, Warnock Strategic Partners Fund, L.P. may also be deemed a beneficial owner of securities owned by Strategic Associates, L.P. The general partner of both Cahill, Warnock Strategic Partners Fund, L.P. and Strategic Associates, L.P. is Cahill, Warnock Strategic Partners, L.P. Cahill, Warnock Strategic Partners Fund, L.P. and Strategic Associates, L.P. may also be deemed the beneficial owner of securities owned by Camden Partners Strategic Fund II-A, L.P. and Camden Partners Strategic Fund II-B, L.P. The general partners of Cahill, Warnock Strategic Partners L.P. are similar to the managing members of Camden Partners Strategic II, LLC, the general partner of Camden Partners Strategic Fund II-A, L.P. and Camden Partners Strategic Fund II-B, L.P. Camden Partners Strategic Fund II-A owns 551,650 warrants to purchase shares of common stock and Camden Partners Strategic Fund II-B, L.P. owns 32,725 warrants to purchase shares of common stock. Only 22,544 shares beneficially owned by Strategic Associates, L.P. are being offered by this prospectus. 17 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 of common stock 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. 18 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. 19 VALIDITY OF SECURITIES The validity of the securities being offered hereby will be passed upon for us by Latham & Watkins LLP, New York, New York. EXPERTS The consolidated financial statements and financial statement schedule of Infocrossing, Inc. and subsidiaries incorporated by reference in Infocrossing, Inc. and subsidiaries' Annual Report (Form 10-K) for the year ended December 31, 2002, have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements and financial statement schedule are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Exchange Act and in accordance therewith file reports, proxy statements and other information with the SEC. These reports, proxy statements and other information may be inspected and copied at the Public Reference Room of the SEC at 450 Fifth Street, N.W., Room 1024, Judiciary Plaza, Washington, D.C. 20549-1004. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. Reports, proxy and information statements and other information, including the registration statement of which this prospectus is a part, filed electronically with the SEC are available at the SEC's website at www.sec.gov. The information in this prospectus may not contain all the information that may be important to you. You should read the entire prospectus, as well as the documents incorporated by reference in the prospectus, and the registration statement of which this prospectus is a part, including the exhibits thereto, before making an investment decision. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE In this prospectus, we have incorporated by reference certain information we have filed, or will file, with the SEC. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. Any statement contained in any document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded, for purposes of this prospectus, to the extent that a statement contained in or omitted from this prospectus, or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this prospectus. We incorporate by reference the documents listed below: (a) Our Annual Report on Form 10-K for the fiscal year ended December 31, 2002; (b) Our Quarterly Reports on Form 10-Q filed on May 12, 2003 and August 14, 2003, respectively; (c) Our Current Reports on Form 8-K filed on April 10, 2003, May 7, 2003, August 7, 2003, September 19, 2003 and October 17, 2003, respectively and the unaudited pro forma condensed consolidated financial information included in Item 7(b) and the exhibits, other than the press releases filed as exhibits 99.2 and 99.3 which are not incorporated, contained in Item 7(c), in our Form 8-K filed on October 22, 2003; and 20 (d) The description of capital stock contained in Form 8-A filed on November 18, 1992 and the related description of capital stock contained in the registration statement on form 10-SB filed on October 28, 1992. In addition, all documents filed by us under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after the date of this prospectus and before the sale of all of the common stock covered hereby or the termination of this offering shall be deemed to be incorporated by reference into this prospectus from the respective dates of filing of such documents. Upon request, we will provide you without charge, a copy of any or all of the documents incorporated by reference, other than exhibits to such documents unless the exhibits are specifically incorporated by reference in the documents. Please direct requests to the Secretary, Infocrossing, Inc., 2 Christie Heights Street, Leonia, NJ 07605, telephone number (201) 840-4700. 21 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the fees and expenses in connection with the resales of the securities registered hereunder. We will pay all of the costs identified below. Except for the SEC registration fee, all amounts are estimates. SEC registration fee............................. $ 9,838.83 Legal fees and expenses.......................... 100,000.00 Accounting fees and expenses..................... 10,000.00 Miscellaneous expenses........................... 5 161.17 ---------- Total................................... $ 125,000.00 ---------- ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Infocrossing, Inc. is a Delaware corporation. Subsection (b)(7) of Section 102 of the Delaware General Corporation Law (the "Delaware General Corporation Law") enables a corporation in its original certificate of incorporation or an amendment thereto to eliminate or limit the personal liability of a director to the corporation or its stockholders for monetary damages for violations of the director's fiduciary duty, except (1) for any breach of the director's duty of loyalty to the corporation or its stockholders, (2) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (3) pursuant to Section 174 of the Delaware General Corporation Law (providing for liability of directors for unlawful payment of dividends or unlawful stock purchases or redemptions) or (4) for any transaction from which a director derived an improper personal benefit. Article 9 of Infocrossing, Inc.'s Certificate of Incorporation, as amended, provides that "the directors shall have the authority to provide in the by-laws for the indemnification of directors and officers to the fullest extent permitted by law." Subsection (a) of Section 145 of the Delaware General Corporation Law empowers a corporation to indemnify any director or officer, or former director or officer, who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with such action, suit or proceeding provided that such director or officer acted in good faith in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, provided further that such director or officer had no reasonable cause to believe his conduct was unlawful. Subsection (b) of Section 145 empowers a corporation to indemnify any director or officer, or former director or officer, who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorneys' fees) actually and reasonably incurred in connection with the defense or settlement of such action or suit provided that such director or officer acted in good faith and in a manner reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification may be made in respect to any claim, issue or matter as to which such director or officer shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all of the circumstances of the case, such director or officer is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or such other court shall deem proper. Section 145 further provides that to the extent a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to in subsections (a) and (b) or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys fees) actually and reasonably incurred by him in connection therewith; that indemnification and advancement of expenses provided for, by, or granted pursuant to Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and empowers the corporation to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against him or incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liabilities under Section 145. Article VIII, Section 1 of the By-Laws of Infocrossing, Inc. provides: "The Corporation shall indemnify any present or former officer or director of the Corporation or the personal representatives thereof, to the fullest extent permitted by the General Corporation Law." Infocrossing, Inc. maintains insurance covering itself and its officers and directors against certain liabilities incurred in their capacities as such. ITEM 16. EXHIBITS. This registration statement includes the following exhibits: Exhibit Number Description 3.1A Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Infocrossing's Form 10-KSB for the period ended October 31, 1999. 3.1B Certificate of Amendment to Infocrossing's Restated Certificate of Incorporation, filed May 8, 2000 to increase the number of authorized shares and to remove Article 11, incorporated by reference to Exhibit 3.1B to Infocrossing's Form 10-Q for the period ended April 30, 2000. 3.1C* Certificate of Elimination, dated as of October 23, 2003, eliminating all outstanding shares of Infocrossing's redeemable 8% series A cumulative convertible participating preferred stock due 2007. 3.2 Amended and Restated By-Laws, incorporated by reference to Exhibit 3.2 to Infocrossing's Form 10-KSB for the period ended October 31, 1999. 4.1* Form of certificate for common stock. 4.2* Form of Warrant, dated as of October 21, 2003. 4.3 Securities Purchase Agreement, dated as of October 16, 2003, by and among Infocrossing, Inc. and the purchasers listed on the signature pages thereto incorporated by reference to Exhibit 4.1 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. 4.4 Registration Rights Agreement, dated as of October 16, 2003, between Infocrossing, Inc. and the investors named on the signature pages thereto incorporated by reference to Exhibit 4.2 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. 4.5 Exchange Agreement, dated as of October 16, 2003, by and among the Company and holders of series A preferred stock and series A warrants incorporated by reference to Exhibit 4.3 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. 5.1* Opinion of Latham & Watkins. 23.1* Consent of Ernst & Young LLP, independent auditors. 23.2* Consent of Latham & Watkins (included in Exhibit 5.1). 24.1* Power of Attorney (included on the signature page hereto). 99.1 Term Loan Agreement, dated as of October 21, 2003, by and among the Company, the Lenders named therein, and Infocrossing Agent, Inc. incorporated by reference to Exhibit 10.1 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. 99.2 Guaranty and Security Agreement, dated as of October 21, 2003, by and among the Company, the Company's subsidiaries, and Infocrossing Agent, Inc. incorporated by reference to Exhibit 10.2 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. - ----------- *Filed herewith; all other exhibits were previously filed. ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by Section 10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of shares of common stock offered (if the total dollar value of shares of common stock offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of a prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that information required to be included in a post-effective amendment by paragraphs (a)(1)(i) and (a)(1)(ii) above may be contained in periodic reports filed by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the shares of common stock being registered which remain unsold at the termination of the offering. The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of our annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. To the extent that indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the provisions described under Item 15 above, or otherwise, the registrant has been advised that in the Commission's opinion, this indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. If a claim for indemnification against these liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by a director, officer or controlling person of the registrant in connection with these securities, the registrant will submit to a court of appropriate jurisdiction the question of whether indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of this issue, unless its counsel advises it that the issue has been settled by controlling precedent. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Leonia, State of New Jersey, on October 31, 2003. INFOCROSSING, INC. By: /s/ ZACH LONSTEIN Zach Lonstein Chairman of the Board of Directors and Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below does hereby constitute and appoint Zach Lonstein and William J. McHale and each of them, with full power of substitution and full power to act without the other, his true and lawful attorney-in-fact and agent to act for him in his name, place and stead, in any and all capacities, to sign a registration statement on Form S-3 and any or all amendments thereto (including without limitation any post-effective amendments thereto), and any registration statement for the same offering that is to be effective under Rule 462(b) of the Securities Act, and to file each of the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises in order to effectuate the same as fully, to all intents and purposes, as they, he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated. /s/ ZACH LONSTEIN Chairman of the Board of Directors October 31, and Chief Executive Officer 2003 (Principal Executive Officer) /s/ WILLIAM J. MCHALE Senior Vice President of Finance October 31, (Principal Financial Officer and 2003 Principal Accounting Officer) /s/ PETER DAPUZZO Director October 31, 2003 /s/ KATHLEEN A. PERONE Director October 31, 2003 /s/ MICHAEL B. TARGOFF Director October 31, 2003 /s/ ROBERT B. WALLACH Director October 31, 2003 NY\831261.8 INFOCROSSING, INC. REGISTRATION STATEMENT ON FORM S-3 EXHIBIT INDEX Exhibit Number Description 3.1A Restated Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to Infocrossing's Form 10-KSB for the period ended October 31, 1999. 3.1B Certificate of Amendment to Infocrossing's Restated Certificate of Incorporation, filed May 8, 2000 to increase the number of authorized shares and to remove Article 11, incorporated by reference to Exhibit 3.1B to Infocrossing's Form 10-Q for the period ended April 30, 2000. 3.1C* Certificate of Elimination, dated as of October 23, 2003, eliminating all outstanding shares of Infocrossing's redeemable 8% series A cumulative convertible participating preferred stock due 2007. 3.2 Amended and Restated By-Laws, incorporated by reference to Exhibit 3.2 to Infocrossing's Form 10-KSB for the period ended October 31, 1999. 4.1* Form of certificate for common stock. 4.2* Form of Warrant, dated as of October 21, 2003. 4.3 Securities Purchase Agreement, dated as of October 16, 2003, by and among Infocrossing, Inc. and the purchasers listed on the signature pages thereto incorporated by reference to Exhibit 4.1 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. 4.4 Registration Rights Agreement, dated as of October 16, 2003, between Infocrossing, Inc. and the investors named on the signature pages thereto incorporated by reference to Exhibit 4.2 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. 4.5 Exchange Agreement, dated as of October 16, 2003, by and among the Company and holders of series A preferred stock and series A warrants incorporated by reference to Exhibit 4.3 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. 5.1* Opinion of Latham & Watkins. 23.1* Consent of Ernst & Young LLP, independent auditors. 23.2* Consent of Latham & Watkins (included in Exhibit 5.1). 24.1* Power of Attorney (included on the signature page hereto) 99.1 Term Loan Agreement, dated as of October 21, 2003, by and among the Company, the Lenders named therein, and Infocrossing Agent, Inc. incorporated by reference to Exhibit 10.1 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. 99.2 Guaranty and Security Agreement, dated as of October 21, 2003, by and among the Company, the Company's subsidiaries, and Infocrossing Agent, Inc. incorporated by reference to Exhibit 10.2 to Infocrossing's Current Report on Form 8-K filed October 22, 2003. - ----------- *Filed herewith; all other exhibits were previously filed. EX-23 3 ex23_s3.txt EXHIBIT 23 - E&Y CONSENT EXHIBIT 23 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in the Registration Statement (Form S-3) and related Prospectus of Infocrossing, Inc. and subsidiaries for the registration of 13,147,800 shares of its common stock and to the incorporation by reference therein of our report dated February 19, 2003, with respect to the consolidated financial statements and schedule of Infocrossing, Inc. and subsidiaries included in its Annual Report (Form 10-K) for the year ended December 31, 2002, filed with the Securities and Exchange Commission. /s/ Ernst & Young LLP New York, New York October 29_, 2003 EX-3 4 x3-1c_s3.txt EXHIBIT 3.1C - CERTIFICATE OF ELIMINATION EXHIBIT 3.1C State of Delaware Secretary of State Division of Corporations Delivered 04:41 PM 10/23/2003 FILED 04:41 PM 10/23/2003 SRV 030682549 - 3046613 FILE CERTIFICATE OF ELIMINATION OF 8% SERIES A CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK DUE 2007 OF INFOCROSSING, INC. (Pursuant to Section 151(g) of the Delaware General Corporation Law) Infocrossing, Inc., a corporation organized and existing under the Delaware General Corporation Law (the "Company"), does hereby certify that the following resolutions respecting 8% Series A Cumulative Convertible Participating Preferred Stock due 2007 (the "Preferred Stock") were duly adopted by the Company's Board of Directors (the Recapitalization, as defined in such board resolutions, having closed on October 21, 2003): RESOLVED, that following the consummation of the Recapitalization, no shares of the Preferred Stock will be outstanding and that no shares of the Preferred Stock will be issued subject to the certificate of designations previously filed with respect to the Preferred Stock; and RESOLVED FURTHER, that the officers of the Company are directed to file with the Secretary of State of the State of Delaware a certificate pursuant to Section 151(g) of the Delaware General Corporation Law setting forth these resolutions in order to eliminate from the Company's certificate of incorporation all matters set forth in the certificate of designations with respect to the Preferred Stock. IN WITNESS WHEREOF, the Company has caused this Certificate of Elimination to be signed by its duly authorized officer this 23rd day of October, 2003. INFOCROSSING, INC. By: /s/ -------------------------------- Name: Nicholas J, Letizia Title: Secretary DELAWARE -------- The First State PAGE 1 I, HARRIET SMITH WINDSOR, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE CERTIFICATE OF DESIGNATION OF "INFOCROSSING, INC.", FILED IN THIS OFFICE ON THE TWENTY-THIRD DAY OF OCTOBER, A.D. 2003, AT 4:41 O'CLOCK P.M. A FILED COPY OF THIS CERTIFICATE HAS BEEN FORWARDED TO THE NEW CASTLE COUNTY RECORDER OF DEEDS. [SEAL] /s/ ------------------------------ Harriet Smith Windsor, Secretary of State 3046613 8100 AUTHENTICATION: 2710153 030682549 DATE: 10/24/03 EX-4 5 ex4-1_s3.txt EXHIBIT 4.1 - FORM OF COMMON STOCK CERTIFICATE EXHIBIT 4.1 FORM OF COMMON STOCK CERTIFICATE FRONT OF CERTIFICATE COMMON STOCK COMPANY COMMON STOCK NUMBER LOGO SHARES INF - (Number of shares) ------------------------- ------------------ INFOCROSSING, INC. INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE THIS CERTIFICATE IS TRANSFERABLE IN CUSIP 45664X 10 9 THE CITY OF NEW YORK, NY SEE REVERSE FOR CERTAIN DEFINITIONS This Certifies That (Name of Stockholder) (Number of shares ------------------------------- ----------------- (Address of printed as a ------------------------------- ----------------- Stockholder) Number) ------------------------------- ---------------- is the owner of (Number of shares written out) ------------------------------- FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK OF THE PAR VALUE $.01 EACH OF Infocrossing, Inc. transferable on the books of the Corporation by the holder hereof, in person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar. Witness the facsimile seal of said Corporation and the facsimile signatures of its duly authorized officers. Dated: Countersigned and Registered: Continental Stock Transfer & Trust Company /s/ /s/ ------------- ------------ Transfer Agent and Registrar (Infocrossing Nicholas J. Zach Corporate Letizia Lonstein Seal) Secretary Chairman By & CEO - ---------------------------- Authorized Officer FORM OF COMMON STOCK CERTIFICATE (CONTINUED) REVERSE OF CERTIFICATE The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations: TEN COM - as tenants in common UNIF GIFT MIN ACT- Custodian TEN ENT - as tenants ----- ----- by the entireties (Cust) (Minor) JT TEN - as joint tenants with right of Under Uniform Gifts to Minors survivorship and not as tenants Act in common ------------------------- (State) UNIF TRF MIN ACT- Custodian (until age) ----- ----- (Cust) under Uniform Transfers ----- (Minor) to Minors Act ----------------- (State) Additional abbreviations may also be used though not in the above list. FOR VALUE RECEIVED, hereby sell, assign and transfer unto Please Insert Social Security or Other Identifying Number of Assignee (Please Print of Typewrite Name and Address, Including Zip Code, of Assignee) Shares - ------------------------------------------------------------------------------- of the capital stock represented by the within Certificate, and do hereby irrevocably constitute and appoint Attorney - ------------------------------------------------------------------------------- to transfer the said stock on the books of the within Corporation with full power of substitution in the premises. FORM OF COMMON STOCK CERTIFICATE (CONTINUED) REVERSE OF CERTIFICATE (CONTINUED) Dated ------------------------- X -------------------------------------- X -------------------------------------- NOTICE: The Signature to this Assignment Must Correspond With the Name as Written Upon the Face of the Certificate In Every Particular Without Alteration or Enlargement or Any Change Whatever Signature(s) Guaranteed: By ---------------------------------------------------------------------------- THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17 Ad-15. EX-4 6 ex4-2_s3.txt EXHIBIT 4.2 - FORM OF WARRANT 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: - -------------------------- -------- EX-5 7 ex5-1_s3.txt EXHIBIT 5.1 - OPINION & CONSENT OF LATHAM EXHIBIT 5.1 53rd at Third 885 Third Avenue New York, New York 10022-4802 Tel: (212) 906-1200 Fax: (212) 751-4864 www.lw.com LATHAM & WATKINS LLP FIRM / AFFILIATE OFFICES Boston New Jersey Brussels New York Chicago Northern Virginia Frankfurt Orange County Hamburg Paris Hong Kong San Diego London San Francisco Los Angeles Silicon Valley Milan Singapore Moscow Tokyo Washington, D.C. File No. 030975-0005 October 31, 2003 Infocrossing, Inc. 2 Christie Heights Street Leonia, NJ 07605 Re: Infocrossing Inc. Registration of 13,147,800 Shares of Common Stock, par value $0.01 Ladies and Gentlemen: In connection with the registration by Infocrossing, Inc., a Delaware corporation (the "Company"), of 13,147,800 shares (the "Shares") of the Company's common stock, par value $0.01 per share (the "Common Stock"), under the Securities Act of 1933, as amended, on Form S-3 filed with the Securities and Exchange Commission on October 31, 2003 (the "Registration Statement") for resale by the selling stockholders named therein, you have requested our opinion set forth below. The Shares consist of 9,739,111 shares of Common Stock issued and outstanding as of the date hereof (the "Issued Shares") and 3,408,689 shares of Common Stock (the "Warrant Shares") issuable upon exercise of warrants that were issued by the Company on October 21, 2003 (the "Warrants"). In our capacity as your special counsel in connection with such registration, we are familiar with the proceedings taken by the Company in connection with the authorization, issuance and sale of the Issued Shares and the Warrants. In addition, we have examined such matters of fact and questions of law as we have considered appropriate for purposes of this letter. We are opining herein as to the effect on the subject transaction only of the General Corporation Law of the State of Delaware, and we express no opinion with respect to the applicability thereto, or the effect thereon, of any other laws. Subject to the foregoing, it is our opinion that as of the date hereof: 1. The Issued Shares have been duly authorized by all necessary corporate action of the Company, have been validly issued and are fully paid and non-assessable. 2. The Warrant Shares have been duly authorized by all necessary corporate action of the Company and when issued and paid for in accordance with the terms of the Warrants, will be validly issued, fully paid and non-assessable. We consent to your filing this opinion as an exhibit to the Registration Statement and to the reference to our firm contained under the heading "Validity of Securities." Very truly yours, /s/ -------------------------- Latham & Watkins LLP -----END PRIVACY-ENHANCED MESSAGE-----